SAR #11237

Our habits blind us.

As Ordered: New orders for durable goods rose 4.0% in July (seasonally adjusted), the largest gain since March. Before you get all enthused it is important to note that most of the boost came from aircraft orders now that Boeing seems to have the 787 in salable shape. Absent those orders the durable goods zoomed up a paltry 0.7%. Business spending on durable goods (the non-aircraft, non war stuff) actually fell 1.5%. Pays to read the fine print.

Follow Punish the Leader: Because he wants to do his job and put criminals in jail, NY AG Eric Schneiderman has been kicked off the executive committee of the 50-state AGs trying to paper-over working toward a settlement with the banks over their foreclosure-related activities. This follows a "heated conversation", between Schneiderman and Kathryn Wylde of the NY Fed over the foreclosure settlement deal. The problem is that the politicians want to give the banks (especially Bank of America?) get-out-of-jail-free indemnity in return for pocket change, and a few AGs - led by Schneiderman - want to hold those who committed crimes responsible for their actions.

Sheep Dip: In our modern democracy, just because an elected official is holding public meetings with his constituents doesn't mean you can record it with your cell phone or camera. It's forbidden, at least in some Republican districts, for suspected Democrats to film public events. But participatory democracy always worked best as a theory.

Everything, Explained: Free trade is “almost always the best answer.” but sometimes there are “short-run distributional consequences that fall on some segments of the population” (ie. massive unemployment) that “we can always use protectionism” prevent. If slashing your arm is a good idea except for the need for bandages, I say put the knife down.

Fine Print: The US Geological Survey estimates there are 84 trillion cubic feet of "technically recoverable natural gas" contained in the Marcellus Shale – 80% less than earlier claimed by the US Energy Information Agency. Easy come, easy go.

One More Time: The government plans to transfer sell its enormous portfolio of REO housing held by HUD, Fannie & Freddie to selected, pre-approved vultures investors from the hedge fund and “private investor” communities ( i.e. Goldman Sachs and friends). You? No, you cannot participate in this, the largest transfer of wealth from the public to the private sector since the railroad right-of-way bonanza in the 19^th century.

Quoted: “The world economy is now in the grips of a damaging feedback loop involving deteriorating fundamentals, lagging policy responses and destabilized financial markets. ...the world risks slipping into a prolonged recession with worrisome institutional, political and social consequences.” PIMCO's El Erian.

Chapter 13: Last year the US spent over $1 trillion on national defense, adding to the nation's bankruptcy. For that money the US could have given every unemployed citizen with a job paying $50,000 a year, with over $200 billion left over for health insurance, job training...

It's Only Make Believe: The Congressional Budget Office is projecting that unemployment will remain above 8% well into 2013. They also are predicting GDP growth of 2.3% for 2011 (which seems most unlikely at this point) and 2.7% for 2012. It also claimed that if the BUsh tax cuts are not extended and the agreed upon budget cuts are enacted, the federal deficit will fall below 3.5% of GDP in two years. More likely, government budget cuts and the associated slowing of the economy will result in a much bleaker reality.

Neverland: A new study by the Congressional Budget Office claims (with a straight face) the budget deal will cut the US deficit in half over the next decade.

99 Bottles of Beer on the Wall, 99 Bottles of Beer... The Fed is still paying banks not to lend out money. Instead the get to lodge it with the Fed at 0.25% (which is more than a 2 year T-bill pays) as “excess reserves” - and $1.6 trillion is pretty excessive. If they couldn't earn income on this money, maybe they'd actually loan it to customers.