SAR 12031

Investors keep fleeing to the dollar for safety. Scary.

Investment 101: People buy US Treasuries not for their high yield, but to preserve their capital. What sort of an economy is anticipated if 10-year Treasuries are returning 1.84% and 10-year TIPS yield 0.49%?

Follow The Money: The US insists that Iran must be punished for trying to develop nuclear weapons, although there is no credible evidence that Iran is doing so. What Iran is doing is accepting things other than dollars as payment for oil. And that will not be tolerated - just ask Saddam or Qaddafi. Oh, wait...

Magic Decoder Ring: It has been 3 months since MF Global went bankrupt, and all the experts can say about the $1.2 billion in customers' money simply vaporized. It just went 'poof'. They are not allowed to say that a significant amount was stolen, because the Wall Street subset of the US judicial code does not admit that such an even could ever happen.

Mrs. Lincoln: Austerity was going to fix the British and Italian and Greek economies - how are things working out? We'll skip Greece because that's outright embarrassing, and move on to Great Britain – which is doing worse in GDP terms that it did back during the Great Depression. And Italy? Well, Italy has become a dictatorship, but one of EU design and not yet fascistic. The US, on a national level, has only just dabbled in austerity cuts, but the states and cities have embraced the idea with a vengeance. And that's just the word for it, vengeance.

More is More: There is a fundamental problem facing us: no matter what the energy source, no matter what you use the energy for, using energy creates heat. The more energy we use, the more waste heat we generate. There is no such thing as "clean energy" on the usage end of the cycle.

Unintended Consequences: If - and it's a big if - Greece and its IIF private sector investors reach some agreement on the degree of haircut, the result would be worse than the dreaded "credit event". It would be the "non-credit event". If investors are forced to take a 50% haircut - or more - 'voluntarily' so as to not trigger CDS settlements, no one will buy another euro's worth of Portuguese, Spanish or Italian bonds. Because if they cannot be sure to get their money back either from the government or from the CDS insurance, investors will not venture their money. Which is not quite what the goal was. Or was it?

There's Something (Not) Happening Here: Since 2005, while global crude oil production has hovered around 74 mbd, European consumption has fallen by 1.5 mbd and US consumption is down 2 mbd. Internal consumption by the producing countries and significant growth in demand by the developing world has taken up the slack, while prices have climbed from $65 to $100 a barrel. Why hasn't production increased 2 or 3 mbd to take advantage of the increased price per barrel? It has, but that just made up for the decline in production from older fields. The future seems to have snuck in unannounced.

Porn O'Graph: The Little Engine that couldn't.

SAR #12030

Mankind has never been particularly adept at reading entrails.

One Step Over the Line:Lots of chatter this weekend over Greece's rejection of Germany's demand that Brussels ( that is, Germany) be given complete control over the Greek budgetary process. Let's clarify one thing: Germany does not expect this to happen. What they seem to expect (and very much seem to want) is for Greece to use this threat as a reason to default and leave the euro. And Portugal and Spain are also supposed to take the hint.

Ozymandius: Jesuit Bill Bichsel is in prison for protesting a proposed nuclear weapons plant. He is being held in solitary confinement as additional punishment because two Buddhist monks prayed for him outside the jail. The 83-year old desperado, now in his second week of a hunger strike, is forced to wear shackles for his appearances in court. Behold the power of the state.

Braking News: The US, it says here, is planning for perpetual warfare. Planning?

Money, Money, Money: Many US corporations have squirreled away impressive amounts of cash; the cash held by the NASDAQ 100's top eight companies comes to nearly nearly $300 billion. Apple, alone, has some $97 billion sitting around. Sitting around because “nothing productive or value-generating can be done with it.” Houston, do we have a problem here?

Talking Point: Define and illustrate the following: legal, moral, ethical... as in “Ethically, everything corporations do is moral as long as it is legal.” Representative Ryan (R-KY), why don't you start us off.

Proportional Response: According to Oakland storm troopers police, they were forced to use tear gas, rubber bullets, night sticks and pepper spray, injuring 4 in the process of arresting 400 #Occupy demonstrators in response to the vandalizing of three privately owned vehicles. Oakland City Council President Larry Reid said “There is no excuse for the behavior we experienced this evening.” Agreed.

Unchained Melody: Have housing prices stopped falling? No. Are they near the bottom? No. How much farther will they fall? Historically when a bubble pops, prices tend to crash far below fair market values. So says Professor Shiller, who adds that after reaching bottom there's nothing to suggest they'll start back up for a while. Quite a while.

Inevitability: As a general rule, that which cannot continue, doesn't. For example, Portugal must have an annual budget surplus of over 10% of the nation's entire GDP in order to get control of its debt. And that's if its GDP grows at 2% a year. Haircuts all 'round. Any questions?

Steady As She Goes: The United States is forging ahead with plans to further encircle China with a ring of bases extending from Afghanistan to the Philippines and on to Japan and South Korea. The US continues to make it clear that it intends to keep East Asia under its control influence and protection, despite restiveness by hundreds of thousands of Pakistanis who object to US drones killing them at random.

This Just In: Bigotry is stupid, and vice versa.

SAR #12028

Some psychopaths end up in jail, others lead corporations, many enter politics.

Growth Spurt: The US economy grew at a reported 2.8% annualized pace in the fourth quarter, but 1.94% of the upside was attributable to a rise in inventory restocking and another 0.3% came from the auto sector (based on low/no-interest six year loans), which means the rest of the economy grew at a 0.5% pace, even with a fair number of folks spending their mortgage payment money on big screen TVs.

Game Theory: Iran is considering a law immediately halting all oil exports to the European Union, which will hurt the Europeans a great deal and Iran not so much since China, India and Japan are quite ready to pickup the .8 mbd that doesn't go to Europe. Let those who don't want none have memories of not having had any.

G'way, Y'Bothering Me: If we are now a couple of years into The Recovery^TM and everything is looking peachy, why is Bernanke going to keep interest rates "exceptionally low" for another three years?

Trivia: Anyone whose holdings are as large and widespread as Romney's are is bound to overlook odds and ends when toting up his income. Especially if it involves 11 different funds held in tax havens like the Cayman Island. He didn't list them on his tax forms because – dummy – they're held in the Caymans to avoid having to list them on his tax form. His campaign maintains that the income generated by the 23 non-listed funds and partnerships is inadvertent, inconsequential and “trivial”.

Ante Up: Indiana will require that union members pay “dues” for those who chose not to join the union while they freeload and enjoy the benefits gained by the union. Existing law already requires a union represent all of the workers at a plant, so this law is simply an attempt to cut union membership by making it more expensive than it needs to be.

Wholly Mackerel: Jack mackerel, a fish rich in oily protein that is a staple in Africa, is being fished to extinction. No, not to feed the poor, but to be ground  up and fed to swine and pen-raised salmon.

Mein Kampf: Germany is pushing to make Greece relinquish control over its budget policy to European (that is, German) institutions as a precondition for any further bailout money - along with steep cuts in defense and health spending, 'reform' (deep cuts) in pensions, and replacing only 1 out of 5 departing civil servants. This is no different than invading the country and putting one’s own puppet government in place, without the messy 'invading' part.

Price Tags: Global warming is a massive fraud perpetrated by tens of thousands of scientists who hope to gain greater funding, in cooperation with tens of thousands of pretend environmentalists bent on controlling every part of our daily life. Or so the Wall Street Journal claims.

Into The Abyss: A year into a cure-all austerity programme, the UK economy is growing at a heart-warming minus 0.8%. Perhaps someone should let US austerity advocates of austerity in on the news.

In The Abstract: Reduced oil consumption leads to lower economic growth and less capacity for debt. Lower debt levels lead to debt defaults, reduced credit,and falling home prices. If world oil supply remains level, as it has since 2005, continuing recession in OECD countries is probable as emerging markets consume a greater share of the available oil.

SAR #12027

The human race is desperately in need of new management. Yves Smith.

Revisionism: Pick a week, any week, in unemployment: 402,000, 352,000, 377,000. Then pretend you can see a trend.

Dominoes: If you were the leader of a country - say Ireland, Spain, Portugal, or Italy, pick one - and you saw that Greece was sloughing off 50-60-70% of its debt, wouldn't you be remiss if you didn't open a barber shop?

About that Housing Recovery: New home sales – 21,000 total - in December were down 2.2% m/m and 7.3% y/y. Pending sales are also down and the median new house price is back to October 2010 levels.

Dear Victim Google User: We all got Google emails saying that starting March 1 Google will gather all of your personal data and browsing history and sell it to anyone (Homeland Security?) who wants it. PS: You can't do anything about it.

Emperor/Clothes: While California rather politely claims that the $25-billion mortgage settlement is 'inadequate', Arizona is complaining that the Bank of America settlement will let the crooks get away Scott free impede, if not prevent, investigation of BofA for fraud.

Down To The Sea In Slips: The Baltic Dry Index has fallen 42% below its seasonal norm and is now down 50% since the first of the year. The causation seems split between a decrease in demand for commodities and an excess of capacity having recently been built. Either way, European banks are looking at repossessing a lot of empty ships and writing off $100 billion in shipping loans.

Policy Intricacies: Bernanke has decided to buy another round of crappy bonds from the top five bankers, so they can pretend to have adequate capital. No, you are mistaken. We are assured this is not QU 3.5, nor is it a bailout. It's three card Monte.

Foot Shooting: If the EU goes through with an embargo on Iranian oil, refinery shut-downs in Europe are likely to seriously harm the European economy – never mind what it does or doesn't do to Iran.

Essentials: The essence of the Obama mortgage refinancing program is to get the government to refinance not only GSE held mortgages, but also all those loans backed by the private sector, and to have the government guarantee them all. This would encourage the banks to stop working with homeowners on mortgage defaults and go straight to Evict & collect $200. Or $200,000. Whatever. It is a way of guaranteeing the banks get their money and the taxpayers get evicted.

No Win Situation: God's reported forgiveness of Newt for this and that is wholly beside the point. He is not going to become president because "nobody's third wife is going to be First Lady". America is full of divorced first wives and insecure current wives and they will not stand for some bleach-blond=Monica Lewinsky-Trophy Wife taking up residence in the White House.

Want Fries With That? A remarkably poor investigation reports that eating fried food poses no threat to your health as long as you eat it in Spain, where the frying is done in olive oil. Before you Supersize the next bunch of French fries, pause to reflect that those eating fried foods in Spain are eating moderate portions of the Mediterranean diet - which has long been known to be good for your health - and are likely getting more exercise than you.

SAR #12026

Pick one: War is peace. Slavery is freedom. Ignorance is strength.

Perspective: Apple made $13.6 billion in iProfits.  Human costs are built into iStuff; 13 year-olds working for 70 cents an hour is just the start. Enjoy.

Apostasy: IMF director Christine Lagaard has suggested that the public sector (for which read 'Germany') should absorb at least some of the pending losses on Greek bonds if a way can't be found to force the private sector to accept 70% haircuts. This seems to be tacit recognition that the hedgies have absolutely no interest in anything short of a total Greek default. But Greece will be just the first  to default on sovereign debts once the precedent for massive forgiveness is set in Athens.

Down Is The New Up: Pending home sales in December declined 3.5%, reversing a November's 7.3% surge. But the Federal Housing Finance Agency reported that house prices increased 1.0%, after a 0.7% decline in October.

You Are Here: In a world where a third of the people are poor, a gathering of the rich to bellyache about the global burdens of inequality sticks in the throat is nauseating. They realize "it's time to stave off disaster," for "survival is the most important thing,” according to George Soros, who foresees riots in the streets that will lead to a brutal clampdown curtailing civil liberties in the US and a global economic system descending into chaos and conflict.

Extra, Extra: Thirty of the largest US companies spend more lobbying congress than they pay in taxes. And they're getting their money's worth, too.

Exactly: “TSA airport security has nothing to do with security, and everything to do with making sure that every human being who transits within or through a US commercial airport knows exactly who is in charge. The idea is to desensitize people to government intrusion.”

Where's Mine? Obama plans on giving "every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates." Responsible seems to mean those who bought more house than they can pay for or paid far more for a house than it is worth. What about those of us who were irresponsible and bought houses we can afford in areas that avoided the bubble mania? Will I get $3,000, too? As always it's a question of who gets the cream and who gets creamed.

Runaways: Under cover of a storm, 300,000 salmon ran away from their caged homes off Scotland. The fear is that they'll start partying with the wild bunch and upset the gene pool.

Street Scene: The LAPD is cordoning off streets and providing "support" for the US military to conduct training exercises in urban environments "without negatively impacting the citizens." The aim, of course, is to ready the military for real deployments which would be designed to negatively impact the citizens.

Object Lesson: Do not criticize Israel. Do not criticize Israel for its treatment of those who were brushed aside to make room for Israel. Do not criticize Israel's manipulation of the US political process. Do not criticize AIPAC. Or else.

Bravado: Nancy Pelosi assures us that Newt's "not going to be President of the United States. That's not going to happen... There is something I know." Cue the suspense-building music.

Don't Sweat The Small Stuff: Airbus says that the small cracks in the wings of its A380 jumbo planes are not dangerous, insisting that “The cracks do not compromise the airworthiness of the aircraft." So, they're a design feature?

Porn O'Graph: Hey big spenders...

SAR #12025

Greed and fear, the financial fundamentals.

Pig In A Poke: No public version exists of the treaty establishing the European Stability Mechanism - the one that will give unelected technicians in Brussels veto approval over national budgets. Rumors say that the treaty must be ratified by all 17 of the euro nations by July of this year - actual discussion of the terms can wait.

Just War: United States Marine Corps Staff Sergeant Frank Wuterich, commander of the unit that killed 10 unarmed Iraqi women and children at point-blank range as the huddled in a bedroom, will serve 3 months in confinement and have his pay cut. The other members of the squad "have been exonerated".

The Revisions: The IMF now says the world economy will grow only 3.5% in 2012, down from an earlier estimate of 4%. US growth is predicted to be 1.8% of GDP while the Euro nations will show a decline of about 5%. Sharp contractions were forecast for Italy and Spain. All this in an attempt to bully Germany into putting up more money to rescue failing European economies.

Civics Lesson: Which is more shameful, that Mitt paid only 13.9% of his 2010 income in taxes, or that his income was $21.6 million? He made the average American worker's yearly income of $42,000 every four hours and garnered enough in the first week of the year to be in the top 1%.

Clear and Present Danger: Previous plans to save the euro have failed, the current proposals seem doomed to fail, many euro countries cannot continue to fund their debts at current levels. It would take €5 trillion just to save the PIIGS and there isn't €5 trillion to be had. Several sovereign defaults are likely. The risk of systemic collapse in a week, a month, or a year is real and will not disappear quickly or easily. There is simply too much debt. So says Simon Johnson, former IMF economist, who adds "A rapid shift from low-level crisis to collapse is very plausible."

Some Are More Equal: Andrew Adler, editor/publisher of the Atlanta Jewish Times, called for the assassination of Barak Obama by agents of Israel's Mossad. If a follower of Islam had made such a suggestion, his waterboarding would be underway at Guantanamo.

Double Dipping: Okay, maybe Dick Cheney earned his $125,976 a year pension – after all, starting wars is hard work. And I'd have no problem with Newt drawing $100,200 a year in his retirement – as long as he stays off the Federal payroll.

Stupid Is As Stupid Does: Hedge funds escape a lot of regulation because their customers are supposedly drawn from the financially sophisticated. So sophisticated that they happily give billions of dollars to hedgies who keep 98% of the profits for themselves.

Without Comment: Oklahoma State Senator Ralph Shortey has filed a bill that bans foods or products using aborted human fetuses, claiming “there is a potential that there are companies that are using aborted human babies in their research and development of basically enhancing flavor for artificial flavors.”

Essay Question: Why do we lock so many of our fellow citizens up? [Note: “Because they're black” is not an acceptable reason.]

Translation: Tennessee Tea Party leaders insist that "no portrayal of minority experience in the history which actually occurred shall obscure the experience or contributions of the Founding Fathers, or the majority of citizens.” in textbooks or classroom teaching. That is, no mention of "made-up criticism" of the Founding Fathers by mentioning that they owned slaves or slaughtered Indians. "We seek to compel the teaching (of) the truth regarding the history of our nation and the nature of its government.” Me, too. Try Howard Zinn's "A People's History".

Posturing: Researchers have found that using tablet computers like the Apple iPad on your lap can cause neck and shoulder stress. Microsoft assisted in the research.

SAR #12024

Investment advice: if it burns, buy it.

Open Marriage: The Eu has agreed to stop buying oil from Iran... in six months. C'mon, isn't that like asking for a divorce effective in six months, but until then wanting spousal privileges? And as part of the divorce, they don't want Iran to change the locks on the front door block the Strait of Hormuz. These guys have been taking marriage advice from Newt.

Let's Make A Deal: You never thought Obama was actually going to investigate and prosecute the banking giants for their part in the housing debacle, so why act surprised at the spineless giveaway? Or do you think that giving $1,800 consolation prizes to 10% of those who have been swindled out of their homes is adequate? No jail time & a hollow promise not to get caught again. Phah. [This trial balloon appears to have crashed & burned.]

Echo: Folks making $30,000 a year, buying $600,000 apartments, expecting a 20-30% return in less than a year are now finding that their apartment is worth only $400,000 and there are no 'bigger fools' around to buy at even that price. Sound familiar? Well, that's because China's housing bubble resembles the US bubble, except theirs is just starting to pop. But don't worry, it'll be contained.

One For Our Side: The Supreme Court has ruled that the cops can't physically attach a GPS device on your car without a warrant. At least, that is, if they want to track you "for an extended period of time." So the government can spy on us, just not continuously.

Rose Is Rose: House Republicans say that their budget plan - which hasn't been formulated yet - will include an alternative vision to the “cradle-to-grave welfare state". Specifically the unwritten document will specify substantial cuts in Medicare and turn it over to the  insurance companies.

Leaks vs. Leaks: A former CIA official who publicly confirmed the use of waterboarding in interrogations and in doing so revealed the identity of two CIA officers now faces 20 years in prison, which is considerably longer than Dick Cheney got for outing a CIA covert officer.

Bushite Iraq: Under a law called "Freedom of Expression of Opinion, Assembly, and Peaceful Demonstration," Prime Minister Nuri al-Maliki is intimidating, beating, detaining and torturing those who are foolish enough to express an opinion that does not meet government approval.

Anomaly Is As Anomaly Does: TSA at Nashville said "an anomaly" on Senator Rand Paul's right leg "triggered an alert" that resulted in his being escorted from the screening area by police when he declined to be patted down. A half-hour later, rebooked on a different flight, Paul went through the same screening devices without triggering an alarm, raising the question of the validity of either the first or the second screening.

Pick A Number: Joe Granville claims the Dow will fall 4000 points by year's end. Optimist.

Nation Building: Political factions are tearing apart what little central government the US and David Petraeus were able to cobble together before declaring victory and skedaddling. Opposition politicians are particularly upset over Obama's recent characterization of Maliki's government as inclusive, efficient, independent and transparent - none of which terms can be applied to anything in Iraq, much less Maliki's government.

Priorities: KY Gov. Beasher's  budget cuts higher education and basic services and - he admits - "is inadequate for the needs of the state's people." There is, however, $43 million to help a creationist theme park teach Bible lessons to the uneducated, much like the art in medieval churches.

Porn O'Graph: Down in the valley...

SAR #12023

What's the future? Who's got the map? Where are we going?

Short Take: The fact that the Mario Brothers (Italian PM Mario Monti and ECB President Mario Draghi) are working on a permanent European rescue fund should tell you all you need to know about the future of Greece and the euro. They want the €500 million European Stability Mechanism (doesn't that sound really, really technical?) doubled. Germany's Finance Minister Wolfgang Schaüble politely said no, that “We are sticking to what was agreed in December.” [Program note: A weak euro bolsters Germany's exports.]

Because I'm Bigger: The US used an unmanned drone to kill a British citizen of Lebanese origin in Somalia. The US is not at war with Great Britain, Lebanon, or Somalia.

Slippery Slope: If Greece gets to knock off about half of what it owes to “public” holders of its debt and get a very low interest rate on the rescheduled balance, why should anyone else – Hungary, Ireland, Spain, Portugal, Italy – even pretend to try to make their payments?

Keystone Kop: John Boehner says he may hold millions of dollars in tax breaks for American workers hostage in order to play mind games with Obama over the Keystone XL pipeline, insisting the pipeline construction be approved before an extension of the payroll tax holiday is considered.

Q&A: Should the West intervene in Syria? Depends, how much oil do they have?

Moral Deficit Reduction: Instead of simply reforming taxes so they revert back to the progressive taxation of say the 1950's, why not retroactively reform them to that level, making those in the top 10% - who have gained almost all the increase in income in the last 30 years – start paying back what they really owe the country?

Know Snow: The big story isn't the mildness of the winter, it's the lack of snow – the dryness. Those who drink the snow melt come summer best be doing the snow dance.

Precisely: Studies suggest that students drop out of engineering coursework because they don't want to do the homework. Which is fine with me, I want my engineering done by someone who did the extra credit homework. That attitude towards working at some goal also explains a lot of other things.

SAR #12021

Should we surrender to the bankers now, or wait until we have nothing left?

On The Up and Up: Sales of previously owned houses were up 3.6% in December, y/y, the third consecutive month showing gains. For the year, 2011's previously owned house sales were up 1.7% over 2010. Taking a bit of the luster from the sales numbers were the sales prices, which were down. Again. Some more.

Candide, Indeed: Two months ago the European banking system was in such bad shape that a coordinated intervention by the European Central Banks was rushed into existence, and billions were shoveled into the banks, which turned around and parked them at the Central Banks. What did that solve? The banks still have a 26 to 1 leveraging, where a strong wind of a 4% decline in their already worthless assets would doom them. The LTRO charade was the best the ECB could come up with to hide their monetizing EU bonds - except that it was neither successfully hidden nor did the banks buy the sovereign bonds they were supposed to. So how is it everything is getting better over in the best of all possible worlds?

Fine Print: A couple of wives years ago, Newt insisted that “the people have every right to ask the tough questions.” Yesterday he said that asking about past dishonesty and moral lapses was “despicable”. Not the dishonesty and the moral lapse, mind you. Just the asking.

Finer Print: Gingrich also refused to release documents relating to $300,000 fine levied after the House investigated what they could find of his ethics.

Cow/Cabbage: The bloom is slipping from the rose of global growth projections. The IMF now sees two years of recession in Italy, while “the global recovery is threatened by the growing tensions in the euro area." Overall, world GDP growth is projected to be 3.3% in 2012 and 4% next year – both downgrades from earlier guesses.

True or False? “We now live in an era of unmitigated propaganda that is accepted much as propaganda in wartime.”

Civilized Discourse: Maine's governor, Tea Partiest Paul LePage, asserts that if the state's Health and Human Services budget isn't decimated, he will permanently close the state's public school system. The 61% of Maine voters who did not vote for LePage are less than thrilled, especially those the governor wants to toss off of Medicaid in order to fund his tax cut for the rich last year.

Chocolates: Debt-to-GDP has declined in only 3 countries since the current crisis began - the US, South Korea and Australia. US households are, it is thought, about one-third of the way through their required deleveraging, and attempts to re-inflate the economy through bubblicious credit is not helping. Deleveraging has been mostly absent in Europe - the UK and Spain get singled out as the worst miscreants.

Surprise! Analysts say that Romney's tax plan would only increase the national deficit by $600 billion in 2015. That makes Mitt the better of the tax and spend wannabes; Gingrich, Perry and Santorum's plans would all increase the annual deficit by over a trillion. All of them achieve this by cutting taxes for the rich and slashing social spending for the rest of us.

SAR #12020

Someone is watching, someone is always watching.

Up + Down = Even: December's CPI was essentially flat. Energy costs declined enough to offset increases in nearly everything else. For the year, food prices have risen 4.7%, while gasoline prices increased 10%.

Offense/Defense: Yves makes a good argument that Madame Lagarde did not ask for more money because she thought the IMF would get another $500 million, but because it wouldn't and thus she'd be able to say “I tried... “

Trust, Inc. The Fed, having secretly sold $7 billion in crummy assets to Credit Suisse for an unknown amount said it had determined that "the winning bid represented good value for the public." How good a good value, we're not allowed to know.

Unclear On The Concept: The Republicans held a debate on abortion, with each candidate being asked to describe the punishment they would mete out to baby-killing doctors and the mothers who willingly participated in the murder of their unborn.

Roller Coaster: New unemployment claims were claimed to decrease 50,000 (12.5%) to 352,000. The experts expected 384,000.

A Nation of Laws: Newt Gingrich is again promising that he will faithfully execute all US laws that he agrees with. But he also promises to point out those instances where the Supreme Court has made errors and pay no attention to rulings he personally does not like. Earlier he threatened to arrest federal judges who didn't learn from their mistakes. Someone should tell Newt that promising to "faithfully execute the laws" doesn't mean killing them.

Unexpectedly #472: December housing starts fell 4.1%, while the experts agreed they would fall less than 1%. Of course in November the same report unexpectedly jumped 9.3%. As Artie Shaw used to say, "Verrry interesting."

If You're Doing Nothing Wrong... NYPD - with the DoD as interested observer - is planning to equip cops with x-ray vision glasses Terahertz Imaging Detection scanners to provide a fig leaf for their extensive and illegal 'stop-and-frisk' operations. The goal is to remove guns from the hands of citizens criminals. The device will only be used in “reasonably suspicious circumstances”, in which the Second and Forth Amendments do not apply.

Asked & Answered: Is it different this time? Historically, deliberate governmental decisions to adopt austerity programs have been followed by hard times. Define 'hard times'.

Can't Anybody Here Play This Game? Bloomberg had two stories following the release of the DOE Gasoline Inventory survey. The first read "Oil Extends Gain After DOE Reports Unexpected Decrease in Inventories." Soon thereafter there was, "Crude Futures Decline as Gasoline Inventories Increase to 10-Month High."

I Know This Much Is True: Romney's taxes put the lie to the GOP's constant "the rich are over-taxed" bullshit.,

Long/Short: Why will the Presidential rejection of the Keystone XL pipeline have no effect on the continued mining of Canadian tar sands? The long answer is "Peak Oil" and the short answer is "Profits".

Unopposed: To qualify as a GOP wannabe, the candidate must demonstrate a belief in things that are patently false. This has resulted in a field composed of those who are not very smart, those who are not rational and those who are simply cynical. Some have managed to combine more than one of these qualities.

SAR #12019

There are no possible worlds where the impossible happens.

The Greek Train Robbery: A group of hedge funds that picked up Greek bonds at very distressed prices is threatening to block attempts to avoid a Greek default unless they are awarded enormous profits on their blackmail investment. After all, the hedgies have CDS that (theoretically) will pay them when Greece defaults. Say, remember AIG?

Because I Said So: The Florida Senates rules committee is considering a bill that would permit privatization of state programs and services be accomplished in secret.

Cup/Lip: Saudi Arabia produced 10,047,000 barrels a day in November, 1,788,000 b/d more than November 2010, but their net exports have fallen from 9.1 mbd in 2005 to about 8 mbd now as internal consumption grows. And the increased production means an increase in the rate of depletion, too, suggesting Saudi Arabia will approach zero net petroleum exports in less than 20 years.

Eggs/Basket: The US electrical industry is turning from expanding wind and nuclear generation to building new gas-fired plants to take advantage of the currently abundant supplies of cheap natural gas. “Currently abundant” being the key phrase.

Present at the Destruction: Bats may soon be joining the American bison and the passenger pigeon in extinction. White-nose fungus has already killed nearly 7 million bats.

Odds On Favorite: Swiss mathematicians have shown that the risk of extreme climate events is largely underestimated. They have developed a model that takes into account parameters such as climate change, allowing researchers to predict extreme risks more precisely. According to standard weather models, the 2003 heat wave was statistically impossible. Actually, there was a five in ten thousand chance for the event to occur. But it is six times more likely to recur by 2050.

"All Hope Abandon..." The scientists behind The Limits to Growth have said that there will not be another sequel to their study. If they start from current conditions, there is no plausible outcome other than over shoot followed by collapse; remember the petri dish experiments?

SAR #12018

Actually, you are the other guy, the one with the short straw.

Clip & Save: Fitch Ratings says that Greece will default on its debts before the March 20th bond payments (€14.5 billion, which it cannot pay) are due. What's 50% of nothing?

Modesty: Mitt Romney - whose income puts him into the top one-tenth of one percent - not the 1%, but the 0.1% - says he pays "about 15%" of his income in taxes. He goes on to explain that his income isn't really income, but rewards he's still earning for putting people out of work in his Bain Capital days. Oh, sure, he has some other income, including a "modest" amount from speaking fees. Only $370,000 last year.

It's A Gas: Natural gas continues its plunge into unprofitably, with a million Btu priced at its lowest point in a decade, going for $2.46, down from a 52-week high of $5.28. The problem with getting rich fracking around is the oversupply that the fracking around only makes worse.

Let Us Count The Ways: I'm glad I live in a free, democratic society governed by laws, and not someplace where the government continually monitors its citizens' telephone conversations and Internet use, conducts warrantless searches, indefinitely detains citizens without trail or judicial review or ships them overseas to be tortured by others, or simply murders them. Sure, in the US  the president can take away your freedom on his own authority, but you have rights. Right?

Plan Ahead: The government say it plans to develop effective treatments for Alzheimer’s by 2025.  Plan accordingly.

Renting Out The Commons: Here's an interesting discussion on how on-street parking should be priced, which is a great introduction to the moral economics of the commons. Pro/con 1,000 word essays are due by the end of the week.

Location, Location, Location: For your daughter's wedding, why not rent the Acropolis for the day? At $2,000 it's a steal. You have to pretend you're making a feature film and clean up afterward, but the neighbors will be jealous and that's the whole point anyway.

Walking the Floor Over You: After a trauma, don't go try to sleep it off. Research shows that sleep preserves the negative emotional response, while staying awake tends to lessen the strength of the emotional connection. Ernest Tubb had the right idea.

SAR #12017

Amusingly, the US was founded to protect the citizenry from the government.

Text Evasion: The saddest part of the NY Times-instigated discussion of truth's place in the news is that it is a serious discussion about whether printing lies qualifies as news. If a politician lies the story should not spread the lie, but point out that he (or she) lied. Not that lying politicians is exactly news. Wouldn't the world have been a better place if the Times had headlined "Bush & Cheney tell more lies about Iraq!"?

Decryption: The US says it has told Israel not to attack Iran just yet intensified its coordination with Israel over policy on Iran.

Supplying Demands: In response to the expected decline in world petroleum demand caused by the effects of the worsening financial crisis in the euro zone, OPEC has cut its forecast for 2012's growth in petroleum demand by one tenth of one percent. OPEC is currently producing at its highest level in over 3 years. Norway, the world's eighth-largest oil exporter, expects its production will decline this year. Regardless of demand levels, according to Saudi Oil Minister al-Naimi, the price of power is $100 a barrel. Not the cost to produce petroleum, but the price they Saudis need in order to buy off their restless citizens and stay in power.

Discuss: "the use of fossil fuels should be made a crime against humanity"

Echo: John Bolton, the former Bush administration nutcase who went around assuring everyone that Saddam had WMD – nuclear, biological, yougurt-based, whatever - now says that the sky is falling and Iran is closer to being able to build a nuclear bomb than anyone but he and a few other neocons realize. The people pushing for war against Iran are the same neocons who pushed for the invasion of Iraq. Sorry, John, I gave at the office.

Allowance: My teen-aged granddaughters love their iPhones. Their parents love their iPads and Apple's iProfits. They, like CNBC announcers, like Steve Jobs, pretend not to know that Apple's iProfits are made by 13-year old Chinese kids living 15 to a 12 by 12 foot dorm, working 16 hours a day for 70 cents an hour. Hey, I bet there's an app for that.

Crime Beyond Punishment: Authorities in Florida suspect that an arsonist destroyed one of the oldest cypress trees in the world. The 3,500-year-old tree, known locally as “The Big Tree,” went up in flames early Monday morning, Sometimes I'm not overly proud to be human.

SAR #12016

The experiment in unlimited monetary expansion will continue.

Static: Completely ignoring S&P's observation that “a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating”, Frau Merkel still insists that Greece (and others) embrace even more austerity, citing cases of IMF imposed austerity where “very strong phases of growth come after a certain phase of recession." No, don't tell her the IMF now says that austerity is wrong. Now. For Europe.

War Games: The US is keeping two carrier strike groups in the Persian Gulf and sending extra combat troops to the region. The Pentagon says the deployments are not a prelude to war, but are simply “a contingency force”. What contingency? War, of course.

Debtors' Prism: Banks made a lot of really bad loans with a lot of highly leveraged funds. These loans are not going to be paid back. Those who took the loans are essentially bankrupt and can't pay the banks. The banks, in turn, cannot pay back the borrowing (leveraging) they did to make the loans and do not have the capital resources to cover them; they too are bankrupt. This means those whose funds the loan-makers used will not be getting their funds back, either. Anyone who says this can all be worked out without massive suffering is either a Wall Street lackey or a central banker. Or both.

Crime Pays: There is no evidence that for-profit prisons save taxpayers money. There is mounting evidence that for-profit prisons are more violent than state run ones.  And there is a strong suspicion that they benefit politicians handsomely. Or so some in Florida are saying.

Extortion: European banks have sold much of their holdings of Greek sovereign debt to hedge funds, which is holding up the Greek restructuring negotiations because the hedgies think they are in the driver's seat and can demand less in the way of a haircut or get paid by the CDS bets they've made.

Back Of The Envelope: If an effective embargo on Iranian oil comes about (big if), what will really happen is that those Iranian customers the US can lean on will buy their oil elsewhere and those who don't kowtow to Uncle will up their purchases and the world will wobble along. If conflict escalated and Iran's production was taken off the market, a 25 - 50% increase in price would be expected. If the Straits of Hormuz are blocked and 20% of the world's production (and 35% of the export-available production) lost, car-pooling would be the least of your concerns.

Ex-pats: When Obama, on signing the NADA act, said he wouldn't use its indefinite detention provisions against US citizens. That's because the Enemy Expatriation Act was on the way, giving him the power to strip US citizens of their citizenship and then  tuck them away forever without trial.

Porn O'Graph: My, how big you've grown.

SAR #12014

The United States has given war a bad name.

Kristallnacht: Finally. S&P's long expected downgrade of everything European arrived with no great surprises - 'BB' Portugal; 'BBB' Ireland, Italy; 'A' Spain and, most importantly, France steps down to 'AA'. This leaves Germany even more power among the EU equals. S&P explained “Today's rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone." The downgrades will have more political than economic impact, and leave serious questions about the status of the ESFS and the overall international monetary system. Will S&P follow-up with similar downgrades for major European banks?

Deck Chairs: President Obama says that by merging six trade and business agencies into a single, export-oriented bureau the US can double its exports. It was not immediately clear who needed more US munitions.

Arrested Development: Participation in the US labor market has dropped by 4.8 million workers over the last 3 years. If they were still considered as unemployed instead of having been disappeared by the BLS, the US unemployment rate would be 11.3%. Out of sight, out of mind.

Dealing Off The Bottom: Goldman Sachs has offered the NY Fed $3 billion for $20 billion of crappy AIG bonds the Fed swallowed back in 2008. Don't polish up the altruism award just yet, they're in it for the money.

Healthy Care Costs: Stop me if you've heard this one: AstraZeneca raised list prices for its drugs by 9.5%, Novartis raised prices 8.5%, and Pfizer 7%. Inflation? Nah, it's just about the profits.

Greeks Not Bearing Gifts: Restructuring talks between Greece and its private bondholders have broken down, raising the likelihood of a hard default by Greece before the end of March. An agreement was a necessary precondition for the next installment of bailout funding. Now the ECB, EU and IMF have the excuse they needed to stand aside and let Athens implode.

Porn O'Graph: My, how you haven't grown.

SAR #12013

Mitt's persistence suggests Republican voters are not crazy after all.

Recess: The EU, understanding that a the last thing the euro needs is further economic contraction brought on by soaring oil prices, wants to delay implementing the Iranian oil embargo by six months. Which is wildly optimistic time table.

Dead Man Walking: Sears has lost its access to the credit financing that bridges the span between paying for inventory and selling the inventory. This is the step immediately before suppliers demand cash on delivery, which is the precursor to bankruptcy filling. K-Mart is also rumored to be consulting bankruptcy advisors. Save up for the blue-light specials.

Or Else: The European Union has given Hungary "a final warning" that it would start legal action (?) unless the current government reversed its march toward single-party dictatorship.

Present At The Creation: TransCanada & the GOP are back, zombielike, insisting that the Keystone pipeline project will create 20,000 American jobs. It will, but only if hiring a guy in December and not firing him until January counts as creating 2 jobs. And if you can count jobs created in Canada – about a third of the purported 20,000 - as 'American', and can count jobs that have already been finished (mostly in Canada) as jobs that the pipeline will create. And you certainly don't want to acknowledge the jobs the pipeline will destroy in the US. And these are all transitory, temporary jobs. The pipeline will create, at best, a couple of hundred permanent jobs. Parts is parts.

Occam's Razor: Why do well-off people shoplift? The standard answer is a bunch of psychobabble about depression, lack of control, getting even for perceived slights and so on. Maybe it's simply who they really are when nobody's watching.

What Big Teeth You Have, Grandma: The IMF says it will give further help to Greece only if it can convince its bondholders to take even larger haircuts. Germany says it will give further help to Greece only if it meets conditions that no Greek government can accede to and survive. But then, who said Germany and the IMF have much interest in Greece's survival?

Take a Pew: The wealthy should not dismiss the #Occupy movement lightly. Recent research confirms that two-thirds of Americans believe there are serious conflicts between the rich and the poor in the country. Even those making over $67,000 a year agree, as do 55% of Republicans. Another sign that the American myth is evaporating.

Why Don't They Eat Cake? Europe's leaders seem puzzled that the euro crisis hasn't gone away. They don't seem to understand that demand-reducing austerity measures reduce economic activity, that those who have their pensions cut or lose their jobs don't have any money, so they can't spend and so the economy stalls and tax revenues dive. Seems like a simple concept, but perhaps it doesn't translate well. Eventually these same leaders will be stunned when angry voters throw out the EU/IMF appointed governments.

Silly Question: Are drones watching you? Better question: Whose drones are watching you?

Stopped Clock: Mitt Romney thinks that class warfare in the US is based on the envy the 99% of us feel for the "millionaires and billionaires and executives and Wall Street." Keep it up folks, we're starting to get through to them.

End Run: Republicans are reportedly planning to use the commerce clause of the Constitution as their authority to approve the Keystone XL pipeline without Presidential involvement. Don't they know the Constitution doesn't apply anymore?

Cheer Up: Over 46 million Americans live in poverty, and things are likely to get worse before they get better. If they ever do. While the recession is technically over ^TM, the cuts in social support payments and the poor wages of available jobs will continue to force families into poverty for several more years, as the long-term unemployed discover that the jobs they once had no longer exist.

Porn O'Graph: I can get it for you retail.

SAR #12012

My interest in these things is more than idle curiosity...

Hangover: The unemployment figure rose 26,000 last week, to 399,000. Unexpectedly.

Photo Finish: Will oil keep climbing, or will the price collapse? Continued deterioration of the European economy would cut demand and thus price. But an interruption of the flow of oil from the Persian Gulf would spike prices higher. Eneey, Meeny...

They're Back: Two US drones attacked a hovel in Pakistan's tribal region, killing four people who, being dead, were obviously militants.

Trust Us: Researchers have now demonstrated what was feared all along - some of the genetic modifications made to food crops can survive digestion and take up residence in the blood and organs of humans who eat them. But it is far too late to panic - GM crops of corn, rice, soybeans, cotton, alfalfa and others have become ubiquitous, thanks in no small part to the US State Department pushing Monsanto's little darlings on client states around the world.

Three Guesses: Iranian nuclear scientist Mostafa Ahmadi-Roshan was assassinated by a bomb planted by ________ agents.

Size Matters: The Transportation Security Administration says that cupcakes with a thick layer of icing are a security threat. It also says that ““In general, cakes and pies are allowed in carry-on luggage, however the officer in this case was hungry.”

Nevermore: Drones now account for 31 percent of all military aircraft. The Army, for example, has 5,346 Ravens, a tiny flying spy used to monitor battlefields and civilian populations.

Resolution: A 2% growth rate leads to doubling about every 80 years. The human population has grown at about that rate for the last 200 years, fed by fossil fuels and the unrestrained exploitation of natural resource and the unfettered despoliation of the environment – land, sea and air. This cannot continue, and thus will not. We must very rapidly reduce both our population and our thoughtlessness, or Ms. Nature will close our account. People ask “What level of human population is sustainable?” as if there were a positive integer that would answer the question.

Thirsty Business: A bill in the Florida legislature would transfer public drinking water to the care and keeping of a privately owned entity. What could go wrong?

Yes, But... Using the 'we're bigger than you are' defense, the US declines to be taken to court over experiments involving sexually transmitted diseases conducted on unsuspecting Guatemalans. The US does not deny conducting the experiments, it just denies the victims and their descendants the right to take the US to court. Besides, we ran the syphilis experiments here at home.

'Nuff Said: The RNC, following up the Roberts' Court ruling on corporate campaign donations, wants to overturn the 1908 law that bans corporations from directly buying political candidates. Logic, if not prudence, is on their side.

Porn O'Graph: It's the oil, stupid.

SAR #12011

The history of humanity is written by the survivors.

War Drums: It is becoming clear that President Obama is prepared to use military force against Iran if it is necessary for his re-election.

Economic Silence: The appalling results of applying severe austerity measures to the Greek economy explain why conducting morality based experiments on whole populations is a poor idea.

House That Again? After over three years of pretending the gorilla was just a house pet, the executive branch has suddenly seen the light and is focusing on the housing, foreclosure, social unrest aspects of the dysfunctional economy. The banks are deep in trouble again and need more money injected, the housing rental program may well do the trick, while conning the public into thinking the project is for their benefit.

Volunteers: France and Germany have instructed Greece to accept the debt deal offered them, and has told private creditors they must take bigger losses. The 'or else' is a promise that promised EU/ECB/IMF funds will not arrive as promised. “We must see progress on the voluntary restructuring of Greek debt,” Merkel said. You, you, and you – step forward.

Sports Quiz: Does God care who wins a football game?

Fire Drill: China's imports increased only 11.8% y/y in December. Only. That's down from a 22% gain in November. This reflects a slowdown in China's rate of growth, which threatens the global economy, as if it weren't shaky enough already.

Look Ma! No Hands: Chris Cook delivers a long article about manipulating the price of oil, demonstrating it is possible to write a long article about oil without actually mentioning oil.

Ratings Game: Fitch Ratings says Italy, Spain, Belgium, Ireland, Slovenia and Cyprus may see their credit ratings downgraded by one or two notches by the end of this month. Italy is the one to watch for, as Fitch says, “The future of the euro will be decided at the gates of Rome.”

Draining Swamps: Muddling through as a strategy assumes that there is an end to the muddle. Bailing out a Ponzi scheme with a new and bigger Ponzi scheme is also a questionable undertaking.

Mythology: Studies have repeatedly shown that the US is far less open and mobile in social and economic terms than other comparable nations. The studies also show that Americans do not believe this is true, which is why it continues to be true. US society is so unequal that it is hard to pretend the inequalities are not deliberate.

Trust: European banks have half a trillion dollars squirreled away at the ECB, rather than lend it to other banks & financial institutions or – heaven forbid – risk it on sovereign bonds or investments in the real economy.

The Cost Is Clear: A Florida Atlantic University study found that the sea level increase now anticipated over the next 20 to 30 years will bring flooding to South Florida cities, salinate drinking water, and drive up utility bills. Maybe the increased costs will drive home the point Dr. Hansen has been making for the last 20 or 30 years.

Porn O'Graph: Credit where credit is more or less not due.

SAR #12010

Pending catastrophes are probably farther away than advertised.

Let Them Eat... The Merkozy are meeting again to solve the eurozone crisis again, this time through some form of Tobin tax. But the undercurrent at their meeting is the question of how many more chances Sarkozy will have and what happens if he loses out to a replacement who is less likely to turn over French budget and tax powers to Brussels.

On The Horizon: There is a major administration effort underway to create expectations around "solving the housing crisis" by converting foreclosed houses into rental units. Such a program would depend on "bulk REO sales to investors", but only if a way is found to pay the banks more than the houses are worth and let the investors buy them for less than they are worth. Guess who gets to cover the spread.

Bigger Truck: They lined up two deep in Berlin to lend Germany their money for six months for free. Actually, the interest rate was a negative 0.01%. Don't they know they're supposed to be worried about hyperinflation? The Netherlands sold securities due in March at a yield of zero a few days ago. It's not about the return on their money, but their worry about the return of their money.

Footnote: The last time Brent oil reached 88.50 euro/barrel was in August 2008, just before the wheels came off the wagon.

Clip & Save: United States Secretary of Defense ( and former director of the CIA) Leon Panetta acknowledged publicly that Iran is not pursuing nuclear weapons. "Are they trying to develop a nuclear weapon? No." Contrast that with reports from unnamed 'diplomats' claiming that Iran is building bombs in a secret underground bunker. Probably the same bunker where Cheney was held all those months.... The US is also reported to have nuclear weapons.

Unexpectedly: Americans spent $13.6 billion they didn't have on cars in November, and put $5.6 billion more on their credit cards as non-revolving credit debt increased 10% and revolving charges went up 8.5% over previous months. And in America, where the entire economy depends on ever increasing debt, this was a good thing.

Caution, Men At Work: Since unemployment bottomed in December 2009, over 90% of all new jobs have gone to men - men have gained about 1.5 million jobs while women have lost 750,000 in the same time.

Careful Wording: Norway's Statoil says it has discovered "a second major oil reserve in the Arctic" with a possible 300 million barrels of recoverable oil equivalents. Note that it is "oil equivalents". Note also that 300 million barrels sounds a lot better than "has found enough oil to supply the world for three and a half days."

Philosophy 101: Should unemployment benefits be conditional on moral behavior? The Republicans, in December, wanted to deny benefits to those who do not have a high school diploma. Several GOPers want to drug-test applicants. Maybe we could require proof of attendance at church or Wednesday night bible study...

Succinct: The Romney campaign lies, all the time, about everything.

Microcosm: If you held any lingering hope at all that we were intelligent enough to avoid catastrophic global climate change, the GOP's success in preventing new energy-efficiency standards from going into effect should disabuse you of that fantasy. The American public insists it has the right to piss in the commons keep dumping CO2 into the atmosphere until there is no more carbon to burn and to hell with the consequences.

D'ya Think? Locals living along the Gulf Coast say that BP's slick PR campaign, aimed at making people think the environment has recovered from the massive oil spill, is simply propaganda.

SAR #12009

Science doesn't care whether you believe.

Coming Attractions: American, British, Israeli and Iranian warships are reported to be steaming towards the same stretch of water near the Straits of Hormuz. What could possibly go wrong?

Grimm Tales: Spain's unemployment is fast approaching 1 out of 4, Europe as a whole has over 10% unemployed. Italy is paying well over 7% on its bonds. German industrial production dropped 8% while retail sales on the continent sputtered and fell sharply in Germany. Belgium, Malta and Cyprus all face fines from the EU for not being able to control their debt (thus they have more money taken away from them... Good Idea.) France is rushing to impose a form of Tobin transaction tax. And the technocrats in Brussels want a new pact that will allow them to spank countries that break the rules.

Freedom to Suppress: Speaker John Boenher's office, which controls the use of TV camera in the chamber, has once again refused to let C-SPAN broadcast the charade that is supposedly the House in Session (but only 'pro forma' to prevent Obama from getting on with the business of governing) when only two or three Republicans are present and Democrats are not permitted to speak.

Book Talk: UBS warns that the Greek sovereign debt crisis "will deteriorate further than the stressed levels of late November. We do not believe that Greek PSI will take place in a “voluntary” fashion but instead expect coercive restructuring of Greek debt... triggering CDS contracts. Is this an honest prediction or just UBS looking for someone, anyone to bail out the banks? And Greece is just the beginning. The holding company that controls Portugal's second largest retailer has moved to Holland due to worry that Portugal will leave the euro.

Bypass Operations: Global trade is still done in the world's reserve currency, the US dollar. Except for certain trade between China and Japan, China and Iran, India and Japan, China and Russia, Russia and Iran.

Take Two Aspirin: In the US there were shortages of 267 prescription drugs during 2011, a 20% increase from 2010. At least 15 deaths were attributed to the the shortages, which have set successively higher records in each of the last 5 years, up from 58 in 2004. The FDA also said it had prevented more than 100 other shortages during the year. Some shortages were due to plants shut due to contamination or quality problems, some were orphaned when manufactures closed product lines due to a lack of profitability.

Prophets and Losses: SocGen says that a full-blown EU embargo of Iranian oil would push Brent crude into the $125 - $140 a barrel range, and that a shutdown of the Straits of Hormuz would push Brent towards $200 a barrel. Either would be a windfall for Saudi Arabia, but that's a secondary consideration, isn't it?

Times Change: The US once believed that while everyone benefited from good schools, excellent roads, decent parks and playgrounds and public transit, the rich benefited proportionally more and thus should pay proportionally more in taxes. But the rich figured out that they could afford to turn to private replacements for shoddy public goods and services, so they stopped paying taxes and let the country's shared spaces deteriorate. “Public spending on education, infrastructure, and basic research has dropped from 12% of GDP in the 1970s to less than 3% by 2011." The public be damned.

SAR #12007

It's only funny when someone else steps on the banana peel.

Free Lunch: Freddie Mac will “forbear” mortgage payments from the unemployed for up to a year. Details were not immediately available, but massive abuse is easily predicted, as is the Republican reaction.

Advancing To The Rear: Acknowledging that the American Empire has crested and is in retreat, Obama announced that the US can no longer afford to blunder around the world causing unnecessary pain and suffering and will be reducing its military by half a million troops over the next ten years. In the future the Pentagon will focus on countering terrorism at home and containing the Chinese.

Datenpunkt: German factory orders fell 4.8% m/m in November and foreign orders fell 7.8%, while European retail sales declined 0.7%. Austerity, all around.

Bandwagon: The BLS reported 200,000 new jobs (42,000 of which were part time workers for places like FedX and UPS and will be gone next month) and an unemployment rate of 8.5%. Twenty percent of the jobs previously reported for November were revised away, leaving only 100,000. For the year, the economy added 1.64 million total non-farm jobs and the economy has 6.0 million fewer jobs than in 2007. The number of people not in the labor force (and thus not officially unemployed) is up 7.5 million since 2007 and now stands at 13.1 million. Labor force participation is now at a 27 year low of 64%,The real unemployment rate, using a realistic labor force participation rate, would be 11.4%. Following the BLS approach, when the participation rate reaches 58.5% there will be no unemployed people in the US and the stimulus will have worked.

The Art of War: The object of war is to inflict serious harm on the enemy, generally by military means, but the long history of warfare has often included blockades and sieges. The trade and financial sanctions being imposed on Iran by the US and its dependencies can thus be considered acts of war. As the sanctions reduce the options available to the Iranian regime, the negative costs for doing something catastrophically irrational become less and less. And this is just the beginning.

Speak Softly: Last week Spain's new leaders caved in to US State Department threats and enacted a version of the SOPA, giving copyright holders the right to shut down Internet sites by simply alleging infringement. No legal process, just their say so. Same thing is coming soon to the US, as part of the drive to eliminate tiresome aspects of the Bill of Rights.

Preview: Heavily armed Federal Protective Service officers, wearing body armor and accompanied by dog teams, surrounded the Leesburg, Florida Social Security offices and began stopping seniors and demanding identification in a search for "unauthorized persons involved in potentially disruptive or dangerous activities." DHS said it was "a random training operation". Training for what?

Lock, Stock & Barrel: As part of the negotiations seeking a 50% writedown on its debt, Greece has agreed that the new bonds to be issued would be governed by English law, which permits creditors to seize Greek assets when if the country defaults on its payments.

Warning, Curves Ahead: Following up on Bernanke's prodding Congress to 'help' banks and investors turn REO housing into rental units, Fed officials are publicly suggesting moves to help re-inflate the housing bubble market, such as having the Fed buy more MBS (that is, buy the dogs from the banks at inflated prices). They also are urging Congress to task Fannie and Freddie to "provide cheaper mortgages to a broader pool of homeowners." This, it is suggested, will help lower unemployment. Somehow.

Porn O'Graph: The good news in perspective.

SAR #12006

If you want a better world, elect better leaders.

Peak Money: "The world is running out of money. If money is credit, and credit relies on confidence, there is not enough confidence in the financial system to supply the world with the money it needs. ... credit and money have been withdrawn from the system in such staggering amounts that international trade can no longer grow. The world’s central banks are playing a rear guard action by acting as lender of last resort to banks that no longer trust each other and have stopped lending in the interbank market. As liquidity flows out from the system, the rottenness that has corrupted the foundations of global finance is now exposed for all to see." And so on.

Rin-Tin-Tenner: Tax evasion and the movement of ill-gotten gains out of the country has become such a severe problem that the Italian financial police are deploying dogs trained to sniff out euro notes.

Triage: Investors (?) holding Greek sovereign debt are seeing their "voluntary haircut" go from a 50% crew-cut to an 80% Mohawk. Some at the ECB want to abandon the effort to “involve the private sector” and make the Greeks pay far more, while “restoring trust” in the rest of the euro zone thus reducing their financing costs. Except, of course for Ireland, Portugal, Spain and Italy.

Data Dump: Unemployment initial claims were reported at 372,000, down 15,000, and the 4-week average stands at 373,250 – the lowest it has been since June 2008. Light vehicle sales, at 13.56 million SAAR, were up 8.9% y/y and were the strongest since June 2008. Gift horses, do not look too closely.

Sampler: Where once Americans dreamed of owning a home, now they dream of affording an apartment.

Sticks and Stones: Despite our expectations and the forecasts of experts, there are not going to be any dramatic changes, just continued, unrelenting decay all around. Oil prices are never going to come down, house prices are not going to go up, and US wages will continue to erode, year after year. True, the system is broken, but it has tremendous inertia.

Motivation: In the legislation to convert REO/foreclosed houses to rental units, expect investors to get access to federal money at below-market rates, banks (and the GSEs) to receive above-market prices for houses they cannot sell, and the taxpayers of 2045 to foot the bill.

Clarification: The non-partisan Tax Policy Center says that Romney's tax plan would increase taxes on low-income families by 60% while cutting taxes for the middle-class 2% and reducing taxes on the rich by 15%. Any questions?

As Easy As 1 – 2 – 3: First the financial/economic crisis discredited America's free-market brand of capitalism. Then the European version collapsed. Now the Chinese approach (socialized state capitalism) is wobbling badly. How then shall we next try to organize the economy? Is there any absolutely sure way of generating wealth and prosperity? No.

Beautification Project: The US defines its foreign policy and foreign military adventures as being “pro-democracy”, while even the most casual observation reveals that “democracy” to the US power elite denotes a country whose leadership will serve America's interests, while dictatorships are countries that do not take orders from Washington. Democracy in terms of the various countries internal politics is of no concern to America, Inc.

Ipso Facto: Three New Hampshire GOPers want the state to adopt a requirement that all legislation must trace its origin directly from the Magna Carta. Beats insisting on implementing the Ten Commandments.

Reminder: “Remember when teachers, public employees, Planned Parenthood, NPR and PBS crashed the stock market, wiped out half of our 401Ks, took trillions in taxpayer funded bailouts, spilled oil in the Gulf of Mexico, gave themselves billions in bonuses, and paid no taxes? Yeah, me neither...”