July 2011

Industrial Production & Capacity Utilization for June 2011

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The Federal Reserve's Factory Production report shows a measly 0.2% increase for June 2011 Industrial Production, otherwise known as output for factories and mines. May was revised downward to -0.1%. Manufacturing industrial production flat lined with no change and Japan supply disruptions are to blame according to the Fed. Autos & Parts did drop -2.0% in June, yet generally the market and industry group monthly changes were a mixed bag.

Moody's Downgrade Threat

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All hail the almighty credit rating agency. Yesterday Moody's threatened to downgrade the United States:

Moody's Investors Service has placed the Aaa bond rating of the government of the United States on review for possible downgrade given the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on US Treasury debt obligations. On June 2, Moody's had announced that a rating review would be likely in mid July unless there was meaningful progress in negotiations to raise the debt limit.

In conjunction with this action, Moody's has placed on review for possible downgrade the Aaa ratings of financial institutions directly linked to the US government: Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks. We have also placed on review for possible downgrade securities either guaranteed by, backed by collateral securities issued by, or otherwise directly linked to the US government or the affected financial institutions.

The Wall Street Journal points out:

For the dollar, this would spell disaster.

The triple-A rating on U.S. government bonds is one of the main reasons why many investors, including other major central banks, hold these dollar assets.

Take this top-level rating away and many will be forced to sell. The diversification flows into other major currencies, which have been a major source of dollar weakness in recent years, will only accelerate.

Wal-Mart the Latest Victim of Global Labor Arbitrage

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Originally published on The Agonist

As we enter another round of quarterly earnings “surprises” on the upside for American corporations, one company continues to stand out from the crowd – Wal-Mart. The distinction is not one that Sam Walton would ever have wanted or expected: Wal-Mart has endured eight straight quarters of declining sales in stores opened for at least one year. This is the most important measure of success in retailing, because it strips out the distortions in revenue that come from adding new stores. Consider in particular how difficult it is for a retailer like Wal-Mart to achieve even one quarter of declining same-store sales; Wal-Mart’s two high-volume products are gasoline and food, both of which have experienced percentage price increases in the double digits. It should be easy for the company to achieve substantial revenue growth just on inflation alone, which means something has gone seriously wrong with the business model of the company that is a poster child for globalization.

Is News Corp Finished - Senator Rockefeller Tells Feds to Investigate Fox Hacking of 9/11 Victims

There are some crimes so universally offensive that even mentioning the suspected crime  has devastating effects.  Senator Jay Rockefeller (D-WV) raised just such a question yesterday.  In a brief press statement, the Senator said:

"The reported hacking by News Corporation newspapers against a range of individuals - including children - is offensive and a serious breach of journalistic ethics. This raises serious questions about whether the company has broken U.S. law, and I encourage the appropriate agencies to investigate to ensure that Americans have not had their privacy violated. I am concerned that the admitted phone hacking in London by the News Corp. may have extended to 9/11 victims or other Americans. If they did, the consequences will be severe." Senator John D. Rockefeller IV, July 12

UPDATE July 14 FBI launches investigation into allegations that 9/11 victims' phones were targeted

Dead White Girl Destroys Octogenarian's Criminal Empire! (Details Inside, Nudie Pics on Page 3!)

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Originally published on The Agonist

Rupert Murdoch has always prided himself on his ability to make or break prime ministers, presidents, and princes, but in the end it was a lowly 13-year-old schoolgirl who has reached out from the grave to bring him down. Milly Dowler, a murdered British teenager, has extracted revenge against Rupert Murdoch for his many crimes, something the wealthy and the powerful have never been able to do.

Rupert Murdoch has been about wealth and power from his earliest days as a newspaper proprietor in Australia, but it is power that he lusts after. The power to shape and move public opinion is intoxicating for ambitious men like Murdoch, and when he first got into the business, merely owning a megaphone like the editorial page of a large national newspaper was enough to provide him the tools to guide the general public into a particular voting direction. Those days are long gone. Murdoch may own respectable newspapers like The Times of London, or The Wall Street Journal, but their editorial pages carry a fraction of the influence they had a quarter century ago. The reading audience – or more particularly the voting public – have long since moved on to television, and more recently cable television and the internet. To maintain his influence over the public, and to continue to intimidate, bribe, and possibly blackmail politicians, Rupert Murdoch has had to step up his game in a very nefarious way.

Making a Dying Business Pay

Bank of America's "Settlement" Will Cause More People to Lose Their Homes

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An analysis of the Bank of America $8.5 billion settlement for derivatives backed by toxic, worthless mortgages, that were sold to investors means more people will get kicked out of their homes.

Tens of thousands of Bank of America’s most distressed borrowers could be evicted and lose their homes more quickly as a result of a proposed settlement between the bank, which is the country’s largest mortgage servicer, and investors in its troubled mortgage securities.

But guess who makes out? The investors of course:

While powerful investors stand to benefit from the $8.5 billion settlement over the bank’s bundling of shoddy mortgages as securities, the fallout for the nearly 275,000 borrowers who took out those loans depends greatly on how deep they are in the foreclosure process and whether they earn enough money to dig themselves out.

There seems to be a new standard where only 31% of one's gross monthly income can go to a mortgage payment. Imagine all of the self-employed who will be locked out of buying a home with that criteria.

The reason this will kick people out of their homes is because so many are in foreclosure already but the processing is that bogged down from these mortgaged backed derivative bundles and backlogs. Additionally, many will not qualify for a mortgage modification now, mainly the customers of Countrywide.

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