Disney World should not be confused with reality; ditto Wall Street.
Tender Mercies: For incomprehensible reasons (Hint: Follow the money) five Senate Democrats have condemned Americans to continued servitude to the health insurance industry. The Senate, you may remember, was designed to represent the property owners. Nice to see the system still works.
Down is Still Down: House prices fell another 13.3% y/y in July. The data is not seasonally adjusted nor was the effect of the $8,000 buyers bribe considered. Prices are back to their 2003 level.
Two Rights Make a Wrong: Iran has the right to develop a nuclear power industry. And yes, it has the right to develop missiles. But nowhere is it written that they have to be so damned stupid about these things, especially when the US is more than willing to misunderstand.
On the Never-Never: The FDIC wants the banks to give it an advance on its allowance. A three year advance, as the banks pay their 2010, 11, and 12 assessments now, giving the FDIC $45 billion to use to rescue failed banks - an undertaking the FDIC has said will require at least another $100 billion. How this solves the problem was unclear. What have you got planned for 2013?
Training Wheels: Not only do Fannie and Freddie and the FHA now underwrite 90% of mortgages, the Fed buys up more than 100% of them. Ah, capitalism. And Bernanke says he's going to wean the housing market from government support.
Trouble Now, Trouble Later : US bank loans have been defaulting at an annualized 14% rate this summer. US car sales are expected to finish September 40% down y/y, and new house sales are still 70% below their peak rate. Private credit is contracting on both sides of the Atlantic and the M3 money data indicates deflation for much of the world next year.
New Indoor Record: In 2010 and 2011, for the first time, Social Security will take in less than it pays out. Previously, Social Security has run surpluses - $142 billion in FY 2009 – which Congress has gleefully spent on other things and left IOU's on Social Security's desk. Next year the federal government will have to find tax income to replace the $142 billion, plus come up with $10 billion or so more to start paying back what they've so gladly borrowed over the years. The big surprise is not that the day is here already, it wasn't expected until 2017 or later, but the economic crash moved things along.
Tangles: Physicists have figured out how to make quantum entanglement (sort of telepathy for tiny things like photons) visible to the human eye. Now if they could just make it understandable to the human brain.
Planning Ahead: If the US does not solve its health cost problems, solving the other financial problems facing the country is immaterial.
Excess Excesses: No mater how bright the brains behind derivatives are – or were - it is not possible for the cumulative value of the “products” after slicing and dicing to be higher than the original loan. There is no free lunch, no matter how many times you cut the sandwich up and slap it back together.
Egress: To get out of the unemployment swamp, the US must crate a quarter million jobs every month for the next five years. That would bring unemployment down to the 5% range. This would require a GDP growth rate of about 7% each year for the next five years. Neither is going to happen.
A Quote: "The recovery is not real... Deep structural problems haven't been solved and it's unclear how we will create jobs and get the economy growing again -- that's long been my thesis and it still is."
Porn O'Graph: The Peak Housing curve.