Shovel Ready Not as Ready as we Thought

"Shovel Ready Not as Ready as we Thought" - President Obama

Harry Reid Proclaims "I saved the world"

“But for me, we’d be in a worldwide depression.”

If Harry Reid hadn’t agressively pursued his patriotic constitutional duty of spending as much money as possible, the world would be in a bread line as we speak.

Somehow acting as Barack Obama’s rubber stamp in adding as much new debt in less than two years — $3 trillion at last check — an amount that took from 1776 to 1990 to accumulate, saved the world.

Is a Crash Coming? Ten Reasons to Be Cautious

The Big Interview with David Rosenberg

1. The market is already expensive. Stocks are about 20 times cyclically-adjusted earnings, according to data compiled by Yale University economics professor Robert Shiller. That's well above average, which, historically, has been about 16. This ratio has been a powerful predictor of long-term returns. Valuation is by far the most important issue for investors. If you're getting paid well to take risks, they may make sense. But what if you're not?

2. The Fed is getting nervous. This week it warned that the economy had weakened, and it unveiled its latest weapon in the war against deflation: using the proceeds from the sale of mortgages to buy Treasury bonds. That should drive down long-term interest rates. Great news for mortgage borrowers. But hardly something one wants to hear when the Dow Jones Industrial Average is already north of 10000.

3. Too many people are too bullish. Active money managers are expecting the market to go higher, according to the latest survey by the National Association of Active Investment Managers. So are financial advisers, reports the weekly survey by Investors Intelligence. And that's reason to be cautious. The time to buy is when everyone else is gloomy. The reverse may also be true.

4. Deflation is already here. Consumer prices have fallen for three months in a row. And, most ominously, it's affecting wages too. The Bureau of Labor Statistics reports that, last quarter, workers earned 0.7% less in real terms per hour than they did a year ago. No wonder the Fed is worried. In deflation, wages, company revenues, and the value of your home and your investments may shrink in dollar terms. But your debts stay the same size. That makes deflation a vicious trap, especially if people owe way too much money.

5. People still owe way too much money. Households, corporations, states, local governments and, of course, Uncle Sam. It's the debt, stupid. According to the Federal Reserve, total U.S. debt—even excluding the financial sector—is basically twice what it was 10 years ago: $35 trillion compared to $18 trillion. Households have barely made a dent in their debt burden; it's fallen a mere 3% from last year's all-time peak, leaving it twice the level of a decade ago.

6. The jobs picture is much worse than they're telling you. Forget the "official" unemployment rate of 9.5%. Alternative measures? Try this: Just 61% of the adult population, age 20 or over, has any kind of job right now. That's the lowest since the early 1980s—when many women stayed at home through choice, driving the numbers down. Among men today, it's 66.9%. Back in the '50s, incidentally, that figure was around 85%, though allowances should be made for the higher number of elderly people alive today. And many of those still working right now can only find part-time work, so just 59% of men age 20 or over currently have a full-time job. This is bullish?

Brett Arends tells Simon Constable and Michael Casey a few of his ten reasons why investors should be cautious ahead.

(Today's bonus question: If a laid-off contractor with two kids, a mortgage and a car loan is working three night shifts a week at his local gas station, how many iPads can he buy for Christmas?)

7. Housing remains a disaster. Foreclosures rose again last month. Banks took over another 93,000 homes in July, says foreclosure specialist RealtyTrac. That's a rise of 9% from June and just shy of May's record. We're heading for 1 million foreclosures this year, RealtyTrac says. And naturally the ripple effects hurt all those homeowners not in foreclosure, by driving down prices. See deflation (No. 4) above.

8. Labor Day is approaching. Ouch. It always seems to be in September-October when the wheels come off Wall Street. Think 2008. Think 1987. Think 1929. Statistically, there actually is a "September effect." The market, on average, has done worse in that month than any other. No one really knows why. Some have even blamed the psychological effect of shortening days. But it becomes self-reinforcing: People fear it, so they sell.

9. We're looking at gridlock in Washington. Election season has already begun. And the Democrats are expected to lose seats in both houses in November. (Betting at InTrade, a bookmaker in Dublin, Ireland, gives the GOP a 62% chance of taking control of the House.) As our political dialogue seems to have collapsed beyond all possible hope of repair, let's not hope for any "bipartisan" agreements on anything of substance. Do you think this is a good thing? As Davis Rosenberg at investment firm Gluskin Sheff pointed out this week, gridlock is only a good thing for investors "when nothing needs fixing." Today, he notes, we need strong leadership. Not gonna happen.

10. All sorts of other indicators are flashing amber. The Institute for Supply Management's manufacturing index, while still positive, weakened again in July. So did ISM's new-orders indicator. The trade deficit has widened, and second-quarter GDP growth was much lower than first thought. ECRI's Weekly Leading Index has been flashing warning lights for weeks (though the most recent signals have looked somewhat better). Europe's industrial production in June turned out considerably worse than expected. Even China's steamroller economy is slowing down. Tech bellwether Cisco Systems has signaled caution ahead. Individually, each of these might mean little. Collectively, they make me wonder. In this environment, I might be happy to buy shares if they were cheap. But not so much if they're expensive. See No. 1 above.

Private Sector Hiring Disappoints, Again

Private Sector Hiring Disappoints, Again
Posted Aug 06, 2010 11:45am EDT by Aaron Task

"Tepid", "anemic", "desultory" and "punk" are among the adjectives being used to describe Friday's July jobs report.

At 131,000 the headline payroll loss was worse than expected. In addition, the tally for May and June was revised down by nearly 100,000, further evidence the U.S. economy cooled considerably after its first-quarter spurt.

"This remains a terribly slow pace of job growth," writes Dan Greenhaus, chief economic strategist at Miller Tabak.

The big disappointment was private sector hiring, which totaled 71,000 last month, weaker than anticipated. (As expected, government payrolls fell by 143,000 as temporary census workers were let go.)

"The private sector number is the most disturbing," Tig Gilliam, CEO of Adecco Group North America, says in the accompanying video. "It's great that we have a positive number but we're really not seeing an acceleration of private sector jobs, which is what we need to see fairly soon."

Year-to-date, the private sector had added about 630,000 jobs, far short of the level needed to replace the nearly 8 million jobs lost since the recession officially began in December 2007. The unemployment rate held steady at 9.5% while the "real" unemployment rate (U6) remained at 16.5%. With 14.6 million Americans out of work (44% for six months or longer), the unemployment rate being unchanged is not good news because it shows many Americans remain discouraged or are dropping out of the labor force -- and out of the official tally.

"We've got to expect that number to go up because we have so many potential workers sitting on the sidelines," Gilliam says. "As the job market gets better, more people will get active and engaged and that will have the effect of increasing the unemployment rate."

Gilliam notes temporary hiring continues to improve, which is traditionally a good leading indicator for future employment growth (and good for Adecco.) Both average hourly earnings and the average workweek rose in July, which are positive signs, but, overall, the U.S. employment picture remains grim.

Economic future: "Obama makes it Impossible to be Optimistic"

Charles Ortel, managing director at Newport Value Partners. “It’s impossible for me to understand how you can be optimistic about the future,” based on continued weak private sector job market.

Treasury Secretary Timothy Geithner also admits we’ve got a long way to go.

Despite inflation worries, Bernanke signals another rate cut

Visit msnbc.com for breaking news, world news, and news about the economy

July 21 (Bloomberg)

Treasuries rose, pushing two-year yields to the fourth record low in five days, as Federal Reserve Chairman Ben S. Bernanke said the economic outlook is “unusually uncertain” and policy makers are prepared “to take further policy actions as needed.”

Ten-year note yields touched a 15-month low as Bernanke told the Senate Banking Committee that central bankers are ready to act to aid growth even as they prepare to eventually raise interest rates from almost zero and shrink a record balance sheet.

“An unusual outlook may call for unusual measures, and that means the Fed may take more action as needed, which would lead to lower rates,” said Suvrat Prakash, an interest-rate strategist in New York at BNP Paribas, one of the 18 primary dealers that trade with the central bank.

The benchmark 10-year note yield dropped 7 basis points, or 0.07 percentage point, to 2.88 percent at 4:42 p.m. in New York. It touched 2.85 percent, the lowest level since April 21. The 3.5 percent security due in May 2020 rose 5/8, or $6.25 per $1,000 face amount, to 105 1/4.

The two-year Treasury note yield fell as much as 2 basis points to touch 0.5520 percent, the lowest ever, before trading at 0.5601 percent. It previously reached record lows July 15, 16 and yesterday. Thirty-year bond yields slid 9 basis points to 3.89 percent.

U.S. stocks tumbled after fluctuating earlier.

No Decisions

The Fed chief, responding to questions, outlined options for further steps, including giving more information on the Fed’s commitment to low interest rates. Tools to boost the economy also include reducing the rate paid on banks’ reserves held at the Fed and using the central bank’s balance sheet, he said. Officials haven’t decided which they might use, he said.

Economic data over the past month that were weaker than analysts projected have prompted investor speculation the Fed may increase monetary stimulus in a bid to keep the economy growing and reduce a jobless rate from close to a 26-year high.

Policy makers have kept the target for overnight loans between banks in a record low range of zero to 0.25 percent since December 2008.

‘Extended Period’

Bernanke today affirmed the central bank’s policy of keeping rates low for an “extended period,” saying it expects moderate growth, a decline in the jobless rate and “subdued inflation” over several years.

Policy makers at their June policy meeting lowered their forecast for growth this year to a range of between 3 percent and 3.5 percent, from 3.2 percent to 3.7 percent in April, minutes released last week showed.

In his eight-page statement to the Senate panel, the Fed chairman devoted almost 10 times as many words to discussing the exit from stimulus as he did to potential actions to boost growth. Exit options include reinvesting proceeds from maturing Treasuries into shorter-term issues, selling housing debt and raising the interest rate paid on the $1 trillion of bank deposits at the Fed, Bernanke said.

Exit-Strategy Focus

“The market was looking for some kind of groundwork of what further accommodation would look like,” said Steve Rodosky, head of Treasury and derivatives trading at Newport Beach, California-based Pacific Investment Management Co., which runs the world’s largest bond fund. “If anything there was more of a focus on an exit strategy.”

A gauge of trader expectations for inflation, the gap between rates on 10-year notes and Treasury Inflation Protected Securities, narrowed to 1.71 percentage points from this year’s high of 2.49 percentage points in January. It touched 1.68 percentage points yesterday, the least since October.

The U.S. will auction $39 billion in 2-year notes, $37 billion in 5-year securities and $29 billion in 7-year debt next week, according to the median estimate in the Bloomberg survey of primary dealers. The sales will take place on three consecutive days beginning July 27.

The $105 billion total would mark the third straight month the government has reduced its offering of the notes, and would be the lowest since it sold $104 billion of them 13 months ago.

‘Heavy Lifting’ Done

The U.S. budget deficit in June shrank from a year earlier, to $68.4 billion from $94.3 billion, the Treasury reported on July 13. Even so, the deficit this fiscal year is forecast to reach a record $1.6 trillion as the government funds efforts to revive growth and employment.

Matthew Rutherford, the Treasury’s deputy assistant secretary for federal finance, said earlier this year the department was confident the “deficit situation” would improve and that auction sizes had reached their peak. “The heavy lifting is done,” he said at a Feb. 3 press conference.

Two-year interest-rate swap spreads widened today for the first time in eight days after Bernanke damped speculation that policy makers were considering reducing the interest rate paid on reserves. The Fed will need to increase that rate at some point in the future when it begins lowering the support it provides the economy, Bernanke said told lawmakers.

--With assistance from Susanne Walker and Oliver Biggadike in New York. Editors: Greg Storey, Dave Liedtka

CHICAGO VIOLENCE MAY REQUIRE THE NATIONAL GUARD

http://chicagoist.com/2010/04/26/state_reps_call_for_national_guard.php

In order to curb Chicago’s rampant and increasing outbreak of violence, State Representatives John Fritchey (D-11th District) and LaShawn Ford (D-8th District) want to call in the National Guard. Yesterday, the legislators urged city and state officials to use the Guard to bolster a thinly stretched Chicago Police. “As we speak, National Guard members are working side-by-side with our troops to fight a war halfway around the world,” said Representative Fritchey via press release, “…we have another war that is just as deadly taking place right in our backyard.”

While rampant violence is always cause for alarm, not everyone in Chicago is exactly on board with the idea. Police Superintendent Jody Weis said “As much as I'd like to have as much help as possible, I'm not sure that mixing the National Guard with local law enforcement is the solution.” Professor Dennis Rosenbaum, a criminologist at the University of Illinois Chicago backed Weis’s position, pointing out in an interview with ABC that military training does not extend to concepts like search and seizure or evidence protection. Mayor Daley responded by saying “I don’t think it’s a long term solution, but I understand what the community is thinking.”

Of course, this isn't the first time the suggestion has been made.

Reactionary methods to combat crime in this manner have popped up before. In 2008, then Governor Blagojevich floated the idea, but ultimately backed away. Former Governor Jim Thompson faced the same issue two decades ago and also declined. While deploying troops in our streets might seem like a good idea in the face of the abhorrent violence the city has seen, a military presence does not address the root causes of crime and violence.

In fact, thus far, 2010's numbers seem on par with, if not a bit below, previous years' totals. Chicago had 134 murders from January to April in 2008, 109 for the same period in 2009 and 106 so far this year. There's been more media scrutiny due to more high profile acts of violence, like the visceral video of Darrion Albert's beating death last fall and last week's shooting death of a toddler caught in gang-related cross-fire. That's not to say something doesn't need to be done; it does. Whether it's more funding for police, better training, perhaps another shuffle at the top of the CPD, there are steps that can be taken. But calling in the National Guard doesn't seem to be the correct course, a quick fix instead of digging deeper into a local solution of how to fix the city's cycle of violence.

In addition, the consequences for civil liberties could be disastrous. While Fritchey and Ford have attempted to disconnect a National Guard presence from martial law, it’s hard to look at a uniformed military presence any other way. When there's already a distrust in the community of the police, how will they feel about armed, uniformed guards in their neighborhoods? They may not be “talking about rolling tanks down the street,” but dealing with drugs and gangs isn’t the same as dealing with insurgents or disaster relief efforts.

CATERPILLAR reports OBAMACARE will COST them $100 MILLION in it's very FIRST YEAR

Obama and his cronies harbor chastisement and disdain for capitalism.

There is no connection between what is being purposed and it's effect on business, this is largely because the administration has NO business experience.

"Caterpillar Inc. said the health-care overhaul legislation being considered by the U.S. House of Representatives would increase the company's health-care costs by more than $100 million in the first year alone."

Click the link for the complete article:
http://www.chicagobreakingbusiness.com/2010/03/caterpillar-health-care-bill-would-cost-it-100m.html

Bank Failures Find F.D.I.C. Has Fallen Into Red

http://www.nytimes.com/2009/11/25/business/economy/25fdic.html

The fund had a negative balance of $8.2 billion at the end of the third quarter, federal regulators said Tuesday. Bank customers, however, should remain confident that their deposits would be protected since most of the amount reflects money that Federal Insurance Deposit Corporation has already set aside to cover the losses from future bank failures.

Nobel Prize-winning economist: Says U.S. Recovery Prospect 'Very Weak'

BBC NEWS http://ow.ly/opnt
US recovery prospect 'very weak'

Nobel Prize-winning economist Joseph Stiglitz has cast doubt on the strength of any US economic recovery, warning it may be hit by a "double-dip" recession.

More positive economic data has convinced many analysts that the US is starting to improve.

But Mr Stiglitz, a former World Bank chief economist, said "the prospects of a robust recovery are very, very weak".

He said there was a "significant chance" that the economy could contract again after a period of growth.

This is what economists refer to as a "double-dip" recession.

'Negative shock'

"We are not seeing a recovery of sustained consumption," Mr Stiglitz said.

He highlighted the fact that any recovery would be the result of government stimulus packages, which could not continue indefinitely.

"The withdrawal of stimulus packages in 2011 will be a negative shock to the economy," he said.

He also highlighted continuing risks in the commercial property sector.

Recent data has suggested a more upbeat view of the US economy.

Last week, figures showed that US manufacturing grew in August for the first time in 19 months and that home sales hit a two-year high in July.

Last month, figures showed consumer spending continuing to rise and durable goods orders jumping sharply.

A picture is worth a THOUSAND words

The Congressional Budget office says the U.S. debt outlook worsening. Ahh, what do they know? http://ow.ly/ltOo

Federal Reserve official says the real US unemployment rate at 16% http://ow.ly/ltN0

Swine Flu Cause found / Cartoon