North Dakota, with a population of less than 700,000, was the best place to be looking for work last year according to another Gallup survey deemed worth sharing today, outpacing even the Washington D.C. area labor market.

The Job Creation Index above is calculated by subtracting the percentage of employers who said they were more likely to let workers go from the percentage of employers more likely to hire and, in the case of North Dakota, those numbers were 8 percent and 42 percent respectively. Rhode Island had the lowest score of any state with just +4.

Perhaps more interesting than the above graphic is the well-being portion of Gallup’s State of the States survey, those of us living in the north central part of the country apparently a little better off when considering such factors as obesity, exercise, and diabetes.

North Dakota does pretty well on this measure too, ranking third behind Hawaii and Wyoming, though things don’t look too good in the rustbelt and the south (except for Georgia, for some reason), while Nevada stands alone as below average in the West.

I didn’t watch Fed Chief Ben Bernanke’s appearance before the Senate Budget Committee yesterday, but there was an interesting exchange with Sen. Pat Toomey (R-PA) recounted in this Wall Street Journal story($) on the subject of the central bank creating market distortions that they may not be able to counter if and when sentiment changes.

At issue is the Fed’s continuing policy of bond-buying. While the central bank has stopped expanding its balance sheet with new asset purchases, it is engaged in a plan to sell short-dated Treasury bonds and replace them with a like amount of long-dated government debt. The result? Ten-year Treasury borrowing rates are around historic lows, and with them, mortgage rates.

For Bernanke, this is by design, not accident. He told Toomey a significant aim of the Fed is to gobble up enough risk-free Treasury debt so that investors are forced into riskier investments that will in principle generate better levels of growth.

“We don’t want to go too far,” Bernanke told the committee. He said the Fed was “very attentive” to signs that its stimulus was in the process of generating imbalances, and added the central bank had “greatly expanded” its surveillance of financial markets, in a bid not too be caught off guard.
…
“The effects of Fed policy, independent of all the other factors, on Treasury rates [are] modest,” Bernanke said. The bigger problem is investor confidence in future government borrowing. “Rates will rise eventually, and if investors were to lose confidence in U.S. federal fiscal policy, there is nothing the Fed can do to stop those rates from rising”.

If memory serves, it was Ken Rogoff (of This Time is Different fame) who observed that, throughout history, there is virtually no warning for when the bond market turns on a nation’s sovereign debt (so much for the Fed’s “attentiveness”) and, when combined with Bernanke’s warning above that there’s little they’ll be able to do under those circumstances, this sets the stage for one monster U.S. sovereign credit crisis somewhere down the road.

The big question now is that of sustainability – what happens in the months ahead – but, since the crisis over the debt-ceiling increase was (temporarily) solved last summer and the jobless rate began to turn down, we ‘Mericans have become an optimistic bunch and this Gallup survey provides the latest confirmation.

And optimistic ‘Mericans tend to borrow and spend, more of that being confirmed in yesterday’s report on consumer credit that showed another monthly gain for outstanding credit card balances after declining steadily for years after the 2008 financial creisis and recession. Jake has details on that in this item at EconomPicData.

MUST READS
Proposed bank settlement dealt a setback – Washington Post
Banks Paying Homeowners to Avoid Foreclosures – Bloomberg
Frustrations soar as Greeks seek elusive bailout deal – Reuters
Eurozone crisis live: Greek bailout talks delayed again – Guardian
Opinion: It’s Time To End the Greek Rescue Farce – Spiegel
Credit-Card Borrowing Surged Over Holiday Period – WSJ
Bernanke-Led Economy Proves Critics Clueless About Fed – BusinessWeek
Why China’s housing market will slow, not collapse – CNN/Money
China releases plan to create 45 million jobs – China Daily
Gold standard believers are anti-government: FBI – Commodity Online
Ron Paul’s Flinty Worldview Was Forged in Early Family Life – NY Times
The Sad Spectacle of Obama’s Super PAC – Robert Reich

MARKETS/INVESTING
Oil rises above $99 after US crude supply drop – AP
Gold on solid ground as Greece lifts euro – Reuters
Bottom to Natural Gas at long last – Peter Brandt
Investing for Inflation (and Deflation) – WSJ
Three Phases of the Rally to Watch Out For – CNBC
Brent-WTI spread wider on Iran fears and US supplies – Sober Look
Hong Kong’s 2011 gold exports to China more than triple – Reuters
Yields trump capital gains – Dividend strategies are working – MarketWatch
India,Iran reach oil payment deal without gold – BullionStreet
Silver: The Bastard – Commodity Online

ECONOMY/WORLD/HOUSING/BANKING
Economic Confidence Climbs for Fifth Straight Month – Gallup
Business cycles, interest rates, and NGDP – The Money Illusion
Chinese Electricity Consumption Fell Massively In January – Business Insider
As Growth Slows, India Awakens to Need for Foreign Investment – NY Times
Merkel Approval Climbs to Highest Level Since 2009 Re-Election – Bloomberg
China to help first-time home buyers – MarketWatch
Mortgage mods in 2011 down 40% from prior year – Housing Wire
Fannie Mae: Outlook for Home Prices Rises Again – WSJ
Fed’s REO-to-Rental Experiment Begins – Housing Finance
Sessions Criticizes Fed’s Lack of Foresight – WSJ
The Fed’s Quasi-Fiscal Policies – Mises
Bernanke’s Anti-Stimulus – Cato

Former Reagan Administration budget director David Stockman doesn’t seem to think too much of the Obama Administration’s proposal to refinance underwater homeowners at up to 140 percent loan-to-value and he shared his views at The Daily Ticker.

Says Stockman:

This is ultimately, at the end of the day, a bailout for JP Morgan and Wells Fargo. They’re the big writers of second mortgages and home equity lines. Those – and there’s two or three or four hundred billion dollars in the top three or four banks – are in great jeopardy in the case of of homeowners who have mortgages, that are primary mortgages, that are way under water on primary mortgages and are likely to default or throw in the keys at some point down the road.

Good point…

While the debate about whether the U.S. housing market has hit bottom is certainly heating up, hopefully it won’t rise to the current temperature of the brouhaha over whether last Friday’s labor market report was good, bad, indifferent, or just an outright fabrication by the Obama administration in an increasingly contentious election year.

I don’t know about you, but I can’t tell the politics from the statistics when trying to make sense of  last Friday’s monthly jobs report and, at this point, I don’t care anymore.

As for the housing market, none other than Bill McBride at the wildly popular Calculated Risk blog weighed in on the subject yesterday declaring The Housing Bottom Is Here, a view that you find out at the end of the article isn’t quite as strongly held as you might think from just reading the title.

Bill notes there are two housing markets – new home construction and existing home sales – and, while the former has clearly made a bottom, the latter is likely to do so next month, though he qualifies that prediction with words like “I think that house prices are close to a bottom” and there being “a reasonable chance that the bottom is here”.

Now, caveats notwithstanding, this is still a big deal since Calculated Risk isn’t just an ordinary offering out there in the blogosphere. This particular blog happened to be calling the US housing market a bubble back when few had an inkling of the trouble to come and, for that reason alone, his is an opinion worth listening to.

It was back in late-2004 and early-2005 that a few people in Southern California – one of the many “ground zeros” for the late, great housing bubble – started writing about the remarkable rise in home prices and how it could not be sustained.

Yours truly was one of them and I’ve learned much from Bill over the years.

I recall reading commentary by Bill and Mish over at Silicon Valley insider as they set about creating what are two of the most influential financial blogs in the country today, so, it’s not as if any of us are “Johnny-come-latelies”.

Another of the original housing bubble bloggers was Rich Toscano at Piggington.com and, as long as we’ve begun to gather data points, it’s worth noting that Rich is in the process of buying a home in the San Diego area, something he characterized as Jumping the Shark.

Recall that San Diego was ahead of the crowd, housing-bubble-wise, over last decade and, today, it’s certainly no Las Vegas, where home prices just keep falling month after month, year after year.

According to the latest data from Case-Shiller, San Diego home prices are four or five percent above their recession lows in early 2009, and, when factoring in the Federal Reserve’s freakishly low interest rates and the reality that, to most people, it’s not the house price, but the monthly payment that is most important, a home purchased there at this time would seem to make good sense.

Of course, my wife and I purchased a home here in Montana just over a year ago, so, actions normally speaking louder than words, you have a pretty good idea about how we feel about property prices in this part of the country.

And if you go a few hundred miles or so east of here to where the shale energy boom is underway in North Dakota, you’d think it’s 2005 again.

In the Bay area, there’s Patrick Killelea of Patrick.net fame who has yet to fall in line with some of the other capitulating 2005-era housing bubble bloggers and, given his proximity to what appears to be another inflating Silicon Valley tech bubble, I wouldn’t expect him to do so anytime soon.

It’s funny to think back to about 12 years ago when I was working in Southern California and was visited by co-workers from Northern California who told tall tales of run-of-the-mill 1,000 square foot homes selling for a half million dollars.

Little did we know that large portions of the rest of the country would experience that same phenomenon just a few years later. As it turns out, Northern California seems to get a new bubble every five years or so, something that makes it particularly hard to call a housing market bottom there due to the spill-over effect of these non-housing bubble bubbles.

I don’t know – conditions are different depending on where you are and, in most cases, national home price trends have little meaning for an individual contemplating a home purchase.

Surely, with a couple years of home price history now in the books, housing bubble spotter Dean Baker was right to buy a house near Washington D.C. a few years back since the market there seemed to make a bottom just as the freshly printed and borrowed money started gushing from the nation’s capital.

One thing is certain, I’d much rather be writing about whether the housing market has hit bottom than whether the labor market has turned a corner as the November elections draw nearer because that discussion has become way too toxic for my tastes.

Reuters reports that it’s been a good first month of the year for hedge funds as last year’s losers are turning into this year’s winners following the reversal of the late-2011 decline in early-2012. Even John Paulson seems to be doing well lately, his Advantage Plus Fund already up 5 percent this year after tumbling more than 50 percent last year.

This graphic from the Economist’s Daily Chart depicts how trying it’s been recently, particularly last year when many investors were probably wondering why they were paying big fees to hedge fund managers who underperformed a low cost stock index fund.

Interestingly, according to the Reuters story, after plunging 42 percent last year, the $116 million Henderson European Absolute Return fund claims the top spot in performance this year with a gain of 14 percent through late-January. This compares to a gain of almost 12 percent for the Iacono Research model portfolio so far in 2012 after a decline of 5 percent last year, the same as the average hedge fund performance in 2011.

MUST READS
The Housing Bottom is Here – Calculated Risk
Forty States Sign On to ‘Robo’ Settlement – CNBC
Debt crisis and Greek debt talks: live – Telegraph
Greece exit would not end euro, says EU commissioner – BBC
Citigroup: Risk of Greek Exit From Euro Has Risen to 50% – WSJ
Bernanke testimoney likely to back low-rate stance – Washington Post
Europe’s Banks Reluctant to Lend to Companies in Need of Cash – DealBook
Study links low intelligence with right-wing beliefs – Globe & Mail
To Rush Limbaugh: A Lesson in Seasonal Adjustments – Bondad Blob
Never Mind the Tax Cheats – Go After the Tax Code – Bloomberg
Illusion of Recovery – Feelings Versus Facts – The Burning Platform
Withholding Consent from the Khan – Mises

MARKETS/INVESTING
Oil drops below $97 as traders eye US supplies – AP
Gold eases towards $1,710/oz, all eyes on Greece – Reuters
State media: Iran is ready to ban oil exports to Europe – CNN
Stock gains turn hedge fund losers into winners – Reuters
China gold imports surge 250% in 2011 – Commodity Online
A Closer Look at Bubbles: Natural Gas & Gold – Profitimes
The two sides of the Gold coin – Peter Brandt
Grumpy Old Permabear – Financial Armageddon
It’s 1980 Again – Mises

ECONOMY/WORLD/HOUSING/BANKING
Last word: BLS Decennial Census Adjustment – TBP
Participation rate shows a troubling trend – Sober Look
Fiscal policy: What does ‘Keynesian’ mean? – voxeu
The Downward Mobility of the American Middle Class – Robert Reich
China to Aid Home Buyers to Balance Crackdown on Speculators – Bloomberg
China growth estimate for 2012 cut to 8.25% – China Daily
Greece to Eliminate 15,000 Government Jobs – NY Times
If Greece Doesn’t Reform, ‘It Can’t Expect Solidarity’ – Spiegel
How did Australia avoid the 2009 recession? – The Money Illusion
Japan Adopts Stealth Intervention to Slow Yen Gains – Bloomberg
Mortgage servicers to begin using new HAMP standards in May – Housing Wire
The Federal Reserve’s Explicit Goal: Devalue The Dollar 33% – Forbes
Fed should raise rates in 2013, Bullard says – Reuters

The Greek government is again trying the patience of their creditors, namely, the European Commission, European Central Bank, and IMF, as Prime Minister Lucas Papademos announced at least another day’s delay in securing government approval for the latest Greek bailout deal, required to forestall a messy sovereign default next month.

An agreement has been “imminent” for two weeks now on what are believed to be “very large haircuts” on Greek debt  that seem to get bigger with each day that goes by without a deal in what, so far, appears to be a very successful “Blazing Saddles” style of negotiating.

[Following are excerpts from the current issue of the Weekend Update at Iacono Research.]

After marching steadily higher early in the week, gold and silver saw their biggest one-day losses in more than a month on Friday as hopes for more Fed money printing were dashed after the better-than-expected labor report. Still, both metals maintain impressive gains for 2012 after a disappointing end to 2011 as more attention is focused on demand in China and actions by central banks, two of the most important price drivers in recent months.

After rising above $1,760 an ounce for the first time since November, the spot gold price ended the week 0.7 percent lower, down from $1,737.30 an ounce to $1,725.90, as the silver price surged past the $34 mark before reversing course, ending the week down 0.9 percent, from $33.99 an ounce to $33.67. The gold price is now up 10.2 percent for the year, but down 10.3 percent from its 2011 high, and silver has risen 20.8 percent in 2012, down 32.0 percent from its peak last spring.

We’ll find out soon enough if Friday’s sell-off was anything more than a one-day event.

Clearly, there have been many good reasons for the price of precious metals to head higher over the last month – demand from China, loosening monetary policy by central banks, and increased gold purchases by central banks topping that list – and many technical analysts have been shocked by the ease which previous resistance levels have so quickly been surpassed and now function as support. Up until Friday, technical factors were unquestionably positive, but, with the late-week reversal, some now argue that the metals have come too far, too fast and the Friday correction will continue.

[To continue reading this story, please visit Seeking Alpha.]

Referenced in this Cumberland Advisors commentary by David Kotok on the subject of central banks and gold was the graphic below depicting how the balance sheets of major central banks around the world have changed since the world changed back in 2008.

If you were to extend the chart to the left, you’d see that bank assets rose modestly for decades while the many economic/financial imbalances were being built up as the end of “The Great Moderation” signaled the beginning of “The Great Central Bank Intervention”.

In all, there are a dozen or so more images in this depressingly good collection of charts(.pdf) at Cumberland that will make you wonder anew where this is all headed.

MUST READS
Bailout talks to resume in Greece – BBC
Greece lets another deadline slip in bailout poker – Reuters
Greek Leaders Wrestle With Spending Cuts Demanded for Rescue – Bloomberg
A Few Thoughts on the Employment Situation – The Big Picture
Seasonal Factors & January’s Encouraging Labor Report – Capital Spectator
Larry Summers on the Labor Force Participation Rate – Bruce Krasting
Why the 8.3% jobless rate is phony and what it means for Obama – The American
Another Unemployment Rate Fairy Tale – Real Clear Markets
Cashless Society: BofA Refuses Cash for Mortgage Payment – Activist Post
The Big, Big Business of Super Bowl XLVI – Fiscal Times
Things Are Not O.K. – Krugman, NY Times
Wonder Dog – NY Magazine

MARKETS/INVESTING
Oil below $97 as traders eye Greece – AP
Gold slips on Greek bailout talks – Reuters
Kuwait: Oil may hit $160 amid tension – AFP
The End of Wall Street As They Knew It – NY Magazine
Stocks: All eyes on Greece – CNN/Money
Gas Boom Goes Bust – The Oil Drum
Stocks hmmm — gold maybe? – MarketWatch
Central Bank Demand Driving Gold Higher: CEO – CNBC
Gold prices may correct, but trend remains up – Commodity Online
Notes on Risk Management – Warts and All – Hussman Funds

ECONOMY/WORLD/HOUSING/BANKING
Economic conditions improving – Econbrowser
A Bleak Outlook for Long-Term Growth – NY Times
Hussman’s, ECRI’s recession warnings invalidated – Bonddad Blog
French socialists’ Latin revolt against Germany – Telegraph
China’s hard landing odds, updated – FT Alphaville
Yet Another Make-Or-Break Week For Europe – Dollar Collapse
A messy monetary policy suits the world just fine – Telegraph
IMF: China growth could halve if Europe crisis worsens – Reuters
A Lost Decade-Plus for San Diego Home Prices – Piggington
Foreclosure Deal Deadline Arrives as States Must Choose Whether to Sign On – Bloomberg
Apparently the Bank Transfer Day was about moving cash TO large banks – Sober Look
Another Experiment? – Fed Watch