Middle East

The Americas?


After the great crash of 2008, things went a little quiet for the first 24 months, but in the background nothing really changed. In other words, little or reform took placing to prevent a new housing bubble which many experts are warning is due to manifest this year or next. But that’s not the worst of it…

After all the trouble and strife, still, if you have a mortgage, banks are selling those loans to third parties many times and these new corporate ‘owners’ of your home are then foreclosing, and evicting residents, sometimes for no reason at all. After they remove the residents, they then sell the property for well below market value – leaving the ex-homeowner with the price shortfall to pay.

How do you fight this international racket? One way is for people to start taking the banks to court…

CBS News
Warren and Maureen Nyerges paid cash when they bought a home from Bank of America in the Golden Gate Estates section of Collier, County, Fla., according to CBS affiliate WINK-TV in Ft. Myers.

But that didn’t stop Bank of America from trying to foreclose on them.
They took their case to court and, a year-and-a-half later, the foreclosure action was dropped.
A Collier County judge said Bank of America had to pay the couple’s $2,534 legal fees, since it had made the mistake.

After more than five months, the bank still hadn’t paid up. So, the homeowners’ lawyer, Todd Allen, began proceedings to did just what a bank would have to get its money: legally seize bank assets.
On Friday, sheriff’s deputies and moving vans showed up at the bank.

“I instructed the deputy to go in and take desks, computers, copiers, and filing cabinets, including cash in the drawers,” Allen says.

Inside, says WINK, “The homeowners’ attorney was locked out of the bank manager’s office by deputies while the bank manger tried to figure out what to do.”…

Continue this story at CBS News

Feb 07- GEFONT has organised Special Campaign in  Eastern Region to organise the Bank, Cooperative, Finnace,  Micro Finance and Bima Company workers to form the National Federation of those workers.

Under the coordination of GEFONT Secretary Dinesh Rai, one team has been organising various gatherings in Eastern Region. In Morang Six gatherings have been completed with the participation of around one thousand workers of Bank, Cooperative, Finance, and Micro Finance Sectors. Likewise, two gatherings have been completed in Sunsari with around 400 workers.  During the Gathering Secretary Dinesh Rai, social security as well as problems of workers in Bank & Finance sectors.
GEFONT Bagmati Zonal President Ram Hari Nepal, GEFONT Youth Committee President Damodar Sapkota and UNITRAV General Secretary were mobilized for the Campaign.

GEFONT organisational mobilization & membership recruitment campaign was launched on Jan 31 2016 from Kathmandu and aimed to conduct in various parts of Eastern Region and will end reaching the Western rn Region. Afterward organising the Wider Conference,   GEFONT will establish  the National Federation of Bank and Finance sectors workers.

Reuters has reported that Iran is requesting euros for all new and outstanding oil payments. Another nail in the dollar's coffin:

A source at state-owned National Iranian Oil Co (NIOC) told Reuters that Iran will charge in euros for its recently signed oil contracts with firms including French oil and gas major Total (TOTF.PA), Spanish refiner Cepsa CPF.GQ and Litasco, the trading arm of Russia's Lukoil (LKOH.MM).

"In our invoices we mention a clause that buyers of our oil will have to pay in euros, considering the exchange rate versus the dollar around the time of delivery," the NIOC source said.

Lukoil and Total declined to comment, while Cepsa did not respond to a request for comment.

Iran has also told its trading partners who owe it billions of dollars that it wants to be paid in euros rather than U.S. dollars, said the person, who has direct knowledge of the matter.

Analysts say that the move is not just politically motivated: Now that sanctions have been lifted, Europe has become one of Iran's top trading partners. So why use dollars?

But the decision seems to be yet another act of defiance against dollar dominance. This week Russia became China's biggest oil partner, thanks in part to Moscow accepting payment in yuan. And last month, Iran and India announced that they intend to settle all outstanding crude oil payments in rupees, as part of a joint strategy to dump the dollar and trade instead in national currencies.

We wouldn't be surprised if, one day not too far from now, #DumpTheDollar will be trending on Twitter.

Following the action of the world's central bankers is often quite instructive.  But Lordy, is it dull.  Institutional Analysis postulates that members of the same occupation tend eventually to think in similar ways—conformity is the #1 unofficial job requirement.  But there is arguably no occupation more conformist than the world of central banking—not even the Vatican's Curia.  And because the central bankers set the agenda in economics, we have a profession that is ridiculously ridged and insists on strict adherence to the lessons of unbelievable fairy tales.

In fact, believing the economic unbelievable is the primary requirement for entrance into the profession.  Wrap this all up in high-end math and our economic marching orders come from math nerds who seem fulfilled by arguments over how many angels can dance on a dimensionless point in space. Actually, their arguments always have a predetermined outcome—the creditors are always right and thus have first claim on a society's goodies.

So even though the global economy is teetering on catastrophic slowdown, the Fed finally agreed to start raising interest rates.  Normally this is done to slow down the economy but this time, I believe they raised interest rates simply because they thought 0-1% rates were inherently immoral.  Ah yes, economics as bad theology.

On Dec. 16, 2015, the U.S. central bank, the Federal Reserve raised short term interest rates. The move ended more than seven years during which the Fed kept rates at a near zero 0.25 percent or less.

The move raises critical questions about the global economy for 2016, already slowing significantly since 2014. Further global slowdown is now almost certain in 2016 – with global oil prices now in the mid-US$35 range and projected to go lower, with commodity prices globally still deflating, with Europe’s economy continuing barely growing and Japan’s in yet another recession, and with major emerging market economies experiencing spreading economic instability with collapsing currencies, capital flight, slowing exports, rising import inflation, and growing political unrest.

The rate hike also means the U.S. economy, already not doing all that well, may slow further in 2016 as well, contrary to what U.S. media and ‘spin doctor’ economists are claiming. Ignored in the U.S. press is the fact that, in the past four years in a row, every winter quarter the U.S. economy collapsed to near zero or negative in GDP. Will that now happen again – a fifth time – this coming January-March 2016 as a result of the Fed rate rise? Quite possibly.

The U.S. Fed reduced short term rates to nearly zero in 2008-09. The excuse was the rates were necessary to generate economic recovery. But even recent Fed studies have concluded the zero rates since 2008 have had minimal effect on the U.S. real economy.

Is the U.S. Economy on the Brink?

The real U.S. economy since 2008 has grown at only roughly half to two-thirds its normal rate. Decent paying jobs in manufacturing and construction today are still a million short of 2007 levels. Median wages for non-managers are still below what they were in 2007, and households are piling on new debt again to pay for rising medical costs, rents, autos, and education. Retail sales are slowing. Construction activity is only two-thirds what it was and U.S. manufacturing is contracting again. The gas-oil fracking industrial boom of 2012-2014 – a major source of growth – has ended this past year and mass layoffs in the hundreds of thousands are now occurring in mining, manufacturing and transport. Reflecting the true weakness of the U.S. economy, prices are slowing and are now at a historic low of 1.3 percent and heading lower, as the United States – like Japan and Europe – is drifting toward deflation.

The Fed’s 0.25 percent rate hike will do nothing positive for this scenario for the U.S. economy. It can only have a further negative effect on all the already weakening trends. The only question is how much negative.

The Fed rate hike will raise the value of the dollar as it further drives up long term U.S. interest rates, already having risen by more than 1 percent the past year. The further rising dollar and interest rates will slow U.S. manufacturing and exports – already contracting – even more. U.S. construction will shift from modest growth to contraction. Job creation will slow. Working class real wage income will decline even more in 2016.

Central Banks in Europe and Japan

Central banks in Europe and Japan, flooding their economies with QE money injections since 2013, waited the Fed’s recent rate rise and held off in recent months from further expanding their QE programs and thus further devaluing their own currencies for the time being. The Fed’s rate hike, by raising the U.S. dollar, has done that for them – for now. Europe and Japan central banks will thus absorb Fed hike, wait a few more months, and then add more QE more devaluations again later in 2016.

That means both current, and more coming, Euro-Yen devaluations that will further intensify global currency wars already underway, as more sectors of the global economy fight over a shrinking global trade pie by trying to ‘beggar their trading neighbors’ by stealing exports from each other.

The central banks of United States, Europe and Japan enriched their corporations and financial investors by tens of trillions of dollars since 2008 with their zero rates and QE policies, while leaving the rest of the economy behind and struggling. Their policies failed miserably – for all but the rich – for the past seven years. Now they are about to fail again, with further disastrous results.

As central banks in the advanced economies shift policies again – the U.S. raising rates and Europe-Japan adding to QE programs – the combined effects are intensifying global currency wars, setting in motion economic ‘cat fights’ worldwide over shrinking exports, while running the risk (in the United States) of even slower growth and stagnation.

In other words, central banks in the United States, Europe and Japan are ‘mucking up’ the global economy again.

China’s Central Bank

Anticipating the rise in U.S. rates, and responding to the QE-driven devaluations by Japan and Europe, the People’s Bank of China, its central bank, last August devalued its currency, the Yuan, by almost 4 percent. This was the lowest possible, given that China has had a policy of pegging the Yuan to the U.S. dollar since the 2008 crisis. However, China and the IMF last week agreed to have the Yuan become a global trading currency. This means the Yuan will become de-pegged from the dollar. So as Fed rates and the dollar rises, the Yuan will in effect devalue in turn.

With more devaluation of the Yuan inevitable, China has will now fully join the ranks of the global currency war. It cannot continue to allow the Yuan to continue to rise against the Yen or the Euro, as it has in recent years by more than 30 percent and 20 percent, respectively, with its own exports and economy slowing. Nor can it allow the Yuan to rise with the dollar, inevitable if it remains pegged.

The Yuan’s devaluation will allow China to recover some of its lost exports. But a declining Yuan will lead to other Asian economies devaluing their currencies as well. That will mean that Japan will expand QE and devalue further in 2016 in response to the Yuan and other Asian currencies. Europe will then almost certain follow. Competitive devaluations and more intense currency war is the outcome.

The Fed’s rate rise has thus sets in motion a further slowing of the U.S. economy, more QEs, further currency devaluations in Europe, Japan, China, resulting in intensifying currency wars, and more in fighting over a slowing global export and trade pie.

Emerging Market Economies

Those impacted the most negatively will be emerging markets – caught between Fed rate hikes and competitive devaluations by Europe, Japan and soon China as well. Emerging markets will be forced to devalue their currencies even further and will do so even more rapidly. That means accelerating import price inflation, faster capital flight out of their economies, slow investment into them, at the cost of jobs, rising unemployment, social services cuts, and even more social and political destabilization and unrest.

In short, central banks in the advanced economies have begun ‘exporting their economic stagnation’ to emerging market economies. Can emerging markets repay the interest on their US$40 trillion increase in corporate debt since 2010? Probably not. It is therefore looking increasingly likely the next global financial crisis will originate in emerging markets with more corporate and sovereign debt defaults. It’s just a matter of time, and which comes first. But whichever, the crisis origins is traceable to the central banks of Europe, Japan, and United States.

The world's central bankers have painted themselves into a corner.  Since the early 1980s when Paul Volcker made naked usury public policy in USA, when he raised the prime to over 21% in a brutal attempt to curb inflation, we have seen the central bankers make successful attempts to slow dow the economy while their attempts to get the economy to grow have been pathetic.  The worst side effect of usury as public policy is that it bred a whole generation of people who are hyper-vigilent about the possibility, however remote, that inflation is about to break out.  And that the "good" fight against inflation is always worth fighting because it gives added powers and riches to the creditor classes.

Russia was confronted with sanctions over Crimea / Ukraine in 2014 which caused shortages that led to an outbreak of inflation.  As "luck" would have it, their central bank was being led by a Yale-educated economist named Elvira Nabiullina who immediately hiked interest rates.  And like the prescription for blood-letting of old, this policy immediately made things MUCH worse.  We tend to forget that when the USSR abandoned Marxism, the advisors who swooped in to "help" were some of the most doctrinaire neoliberals on the planet.  Russia has recovered a little since 1991, but not much, because most of her new leadership became enthusiastic neoliberals—including Putin.
Lest we in USA gloat, our newly minted Fed chief is just as goofy as her Russian counterpart.  They are singing from the same hymnal, after all.  So even though the global economy is teetering on the brink of a major slowdown, Janet Yellen announced in December that USA would raise its prime rate.  Below we see Dave Lindorff try to make some sense out of a move so obviously foolish.  I am glad someone is trying because I have pretty much come to the conclusion that such central banker "wisdom" is probably just another manifestation of dementia.

Much has been written and broadcast over the past few weeks in the financial media and the business pages of general-interest newspapers debating the wisdom of the decision in December by Fed Chair Janet Yellen and the Federal Reserve Board to raise interest rates for the first time in almost a decade.

On one side of this debate are people who say that the Fed needs to do this to prevent inflation from taking off. On the other side are people who warn that pushing up interest rates at a time when unemployment is still at a historically high level (and when real unemployment is more than double the official 5% rate) risks making things worse.

The increase of 0.25% in the Federal Reserve's benchmark federal funds rate -- the rate banks charge each other for holding short-term funds -- was pretty minimal, but the arguments for raising the rate at all are absurd on their face.

The New York Times quoted Yellen as saying interest rates needed to be pushed up lest the economy begin "overheating"! As she put it, had rates not been raised last month, ""We would likely end up having to tighten policy (meaning raising rates) relatively abruptly to prevent the economy from overheating," which she said could then throw the US back into recession.

What planet, or more specifically, what national economy does Yellen inhabit?

The US is so far from being an "overheating" economy it's not funny. Official unemployment has remained stalled at 5.1% for three months now, but that is really a bogus number created during the Clinton administration when the Labor Department obligingly eliminated longer-term unemployed people who had given up trying to find a job from the tally of the unemployed, so their numbers wouldn't embarrass the administration. The real unemployment rate -- called the U-6 rate by the Labor Dept.-- which includes discouraged workers who have temporarily stopped trying to find nonexistent jobs, as well as people who are involuntarily working at part-time jobs but who want to return to full-time employment, is actually still above 10%. And if people who have simply left the labor market because there is no work for them, are added in, as they really should be, the the real jobless rate [1]rises to 22.9%, or almost one in four working-age Americans.

Anyone who thinks an economy with that much slack in its labor force is in danger of imminent "overheating", as defined by rising pressures on wages and rising prices due to increased demand for goods and services, is nuts.

Raising interest rates in a economy that's still in a funk makes no sense...unless you think the economy's about to tank and you are stuck at a 0% with nowhere to drop rates as a stimulus.

Another argument offered for raising rates now has been a supposed need to "reassure" investors (this at a time that equities markets are trading at something around a frothy 18X future earnings, which hardly suggests investors who are in need of encouragement!).

Here all one can do is stare dumbfounded at whoever makes such idiotic statements, Yellen included. Investors do not want to see interest rates go up! They never do. In fact, anytime interest rates get raised, you can watch equities markets drop. That's how it works, and in fact we're seeing it happen now, with markets down almost 10% in the new year -- making 2016 the worst start of a new year in stock-market history..

So what's really going on here?

My own theory is that the Federal Reserve Board recognizes that its gimmick of pumping up equities markets artificially through former Fed Chairman Ben Bernanke's "quantitative easing" ploy of basically printing free speculative cash to hand to Wall Street Banks at no interest -- a popular give-away to the rich that has done nothing for the average American -- is running out of gas. The US economy, which has never really recovered from the 2007 crash and subsequent Great Recession, is starting to wheeze and gasp for air. A new recession is looking increasingly likely even though there never really was a recovery from the last one. (How could there have been in an economy that depends for 70% of economic activity on consumer spending, but where those "consumers" are still experiencing reduced income in real dollars from what they were earning in the 1990s, their savings and home values are still shriveled, and many are actually unemployed.)

So put yourself in the Fed's shoes. A new recession, quite possibly even worse than the disastrous one we just went though, is in the offing, and the only tool the Federal Reserve has in a country where both parties have ditched Keynesianism and just want to cut (non-military) government spending, when it comes to trying to stimulate the economy, is cutting interest rates.

And you cannot cut interest rates that are already at 0%.

This means the Fed has to raise interest rates now and in short order, probably getting the rate back up to at least 1% or maybe more by year's end, if only so that it can then knock the rate back down again in hopes of trying to get investors and companies investing again.

Nobody in authority is going to say that. The official line, echoed obligingly by the media talking heads and "experts," continues to be that things are great, the economy is "growing," unemployment is "falling," and America is "back."


The really funny part about this charade is that when the interest rate in a country is raised, one of the immediate impacts of that move is that that country's currency then rises against other currencies where interest rates stay put or fall. Not surprisingly, the dollar is continuing to rise against the Euro, the Yen, the British Pound Sterling and the Chinese Renminbi. That is hardly what the US needs, since a rising dollar means that what goods are still produced in the US become more expensive to foreign buyers, making them less competitive, and thus damaging economic activity and employment in the US. It also means foreign goods are cheaper for US buyers, and so people turn to imports at the expense of domestic producers -- again not a great thing for an economy in a slump.

No matter. It's clear that the Fed, even if it cannot bring itself to be honest about what it's doing, feels it needs to get interest rates back up before the bottom falls out of the US economy once again.

This time, of course, it won't be the bottom falling out of a new car. It will be more like an 20-year-old Karman Ghia I once owned where you could look down and watch the road go by through shoe-sized holes in the rusted-out floor panels, and the pieces will just keep falling off making those holes even bigger.
I have never seen the Atlanta Fed take as long to post a scheduled update to their GDP Forecast as they did today. Their forecast came out late this afternoon, but it did beat the market close.

Latest forecast — January 15, 2016

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2015 is 0.6 percent on January 15, down from 0.8 percent on January 8. The forecast for fourth quarter real consumer spending growth fell from 2.0 percent to 1.7 percent after this morning's retail sales report from the U.S. Census Bureau and the industrial production release from the Federal Reserve.

5 Disastrous Economic Reports From Today

  1. Inventory to Sales: Manufacturing Inventories Decline But Inventory-to-Sales Ratio Doesn't Budge; Another Recessionary Looking Chart
  3. Producer Prices: Producer Prices Decline More Than Expected, Services Disappoint; Oil Approaches $29
  5. Industrial Production: Industrial Production Numbers and Revisions Shockingly Bad; Autos Have Peaked
  7. Empire State Manufacturing: Empire State Manufacturing Index Posts Horrific -19.37, Lowest Reading Since April 2009
  9. Retail Sales: December Retail Sales Negative; Other Economic Data Horrid

That's likely the worst set of economic reports since the last recession.

Fed Futures Target 1 Hike in 2016

Following today's set of horrific reports, odds of rate hikes in 2016 dropped substantially. Fed Fund Futures analysis show the March hike odds shrank all the way to 31% from 55% last month.

The first hike is now expected in July, but barely. And looking all the way out to December, the futures still suggest only one hike.

Note the significant 33.9% chance of no more hikes for the entire year!

Nonetheless, a parade of Fed governors attempted to talk up the strength of the economy over the past few days, even today.

The market laughed in their face.

Mike "Mish" Shedlock