Testosterone Pit - Home - Deaths From All Causes: The Short (But Not Necessarily Happy) Life Of Americans

Favorite Reads

INDEX

DEBTOR NATION

RUMBLINGS FROM THE PIT

Friday, May 24, 2013

Alarm bell: US margin debt at all-time record high in April: investors borrowed $384.4 billion in their brokerage accounts against their stocks, up 1.3% from March, and up 29% from last year. The previous record was set in June 2007 at $381.4 billion, even as the financial crisis was seeping through cracks in the veneer. High margin debt, a sign of euphoria and the concomitant blindness to risk, is a leading indicator of a market selloff ... which will trigger margin calls and forced selling that drives down markets even further. Been through that many times. In 2007, the swoon started in November; and of course in 1999.... Nothing new here. History in this respect is doomed to repeat itself.

Mercury in Chinese medicine stirred up debate in China after Hong Kong's Health Department forced Beijing Tong Ren Tang Group Co., one of the largest producers and retailers of Chinese medicine, to recall a batch of its stuff due to excess levels of mercury. Now people are debating the general safety of Chinese medicine as herbs might contain heavy metals, pesticides, and other goodies found in Chinese soil, water, and air. They worry that governments with their outdated equipment cannot monitor the medicines. And there are structural problems: “because these companies are either state-owned enterprises or large taxpayers, local governments protect them," said Zeng Danhua, a senior analyst at the China Capital Investment Group, and the fines for companies using contaminated herbs were too low to be a deterrent.

Inflation to hit Japanese consumers: largest bread maker in the country, Yamazaki Baking, announced that it would raise prices by 3% to 6% for bread and by 2% to 6% for pastries. Culprit? Not rising demand or optimism or rising wages, but the devalued yen that pushed up the cost of imported flower. The costs of other ingredients have also risen recently. How increasing the cost of food will crank up the economy remains one of the mysteries of Abenomics.

Stability in the Japanese government bond market is "extremely desirable," said Bank of Japan Gov. Haruhiko Kuroda after the turmoil and craziness that his policies have unleashed upon it. “We are going to conduct our market operations in a flexible manner to head off, as much as possible, volatility in long-term interest rates,” he explained. I thought the BOJ could control the JGB market with an iron fist because of the omnipotence of the printing press and the support of state-owned or controlled institutions that hold a big chunk of the JGBs. But on April 5, I started having doubts. That was the day when 10-year yields dropped to 0.315%, only to more than triple over a period of six weeks to 1.0% yesterday. The BOJ was able to force them down by throwing a truckload of money at the market yesterday. And today again it mopped up ¥900 billion ($8.9 billion) in bonds. Efforts that were aided by the crashing stock market. The jump in yields is the opposite of what the BOJ wants to achieve as institutions and individuals are bailing out. If the BOJ is losing control of the JGB market, if in the end, it's the only one buying these despicable JGBs while everyone else is dumping them.... But Kuroda refused to comment on the “daily movements” of the markets.

Worry in the eyes of Prime Minister Shinzo Abe: “Sharp increases in long-term interest rates could have a grave impact on the economy and the government’s fiscal conditions,” he told parliament. “We expect the BOJ to respond appropriately to any developments in the market.” Because the BOJ might be the only one buying. And he also talked dreamily of creating “a fiscal structure that will be sustainable in the long term.” At the rate and direction they’re going: snowball’s chance in hell.

Insanity in Japanese stock market continues: the Nikkei, which had jumped over 500 points to 15,008 in the early moments of trading in a bout of post-crash buy-buy-buy, maybe by the BOJ, went on to crash over 1,000 points to 13,982, about 500 points below yesterday's close of 14,484, before the BOJ's buying boosted it 600 points to 14,612, ending up 128 points, or 0.88%, for the day. What rollercoaster craziness.

Thursday, May 23, 2013

Eurozone manufacturing and services mired in contraction, sez the Purchasing Managers Index, at 47.7 (below 50 = contraction). Germany, miracle economy that can do no wrong, shrank again, though upticks are visible. France continues to slide downhill rapidly. "The Eurozone's second recession in five years looks set to drag on into a seventh successive quarter," the report said. Accelerating decline of new orders in the service sector; job shedding picking up, companies trying to cut capacity, order backlogs shrinking further, now for almost two years.... Very ugly.

Hitting the China jobs wall: a record 7 million students will graduate from university this year, 190,000 more than last year, according to the Ministry of Education. Yet job openings are down 15%, based on a February survey of 500 companies. It's going to be tough for these educated young people finding an appropriate slot.

Japanese government bonds go crazy again, lose their footing, with yields on the 10-year JGB spiking, briefly kissing 1.0% Thursday morning, the highest in a year, over triple the 0.315% on April 5. The goal of Abenomics and the Bank of Japan's money-printing and bond-buying frenzy is to push down yields, while creating a wave of inflation, thus devaluing the debt, and causing losses for everyone who owns it. In response, investors have been dumping JGBs. The BOJ tried to put a stop to the rout by handing out ¥2 trillion ($19 billion) in the morning. Thankfully, for the BOJ, the Nikkei began to crash, and suddenly these despicable JGBs seemed like a pretty good deal; demand picked up, yields dropped to 0.84%. The BOJ has bought equities before to prop up the Nikkei, but Thursday it was busy propping up JGBs and had to let the Nikkei go. When push comes to shove, it will always support bonds, its number one priority, and let stocks swoon.

China manufacturing contracts in May, after months of fitful near-stagnation, sez the HSBC Purchasing Managers' Index which dropped to 49.6 from 50.4 in April (under 50 = contraction), a seven-month low. A harbinger: New Orders in April had dropped to a five-month low. Ominously, in May, New Orders as well as New Export Orders fell again, as did Employment, Backlog of Work, Quantity of Purchases, among others. “The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds,” said Hongbin Qu, Chief Economist of Asian Economic Research at HSBC. “A sequential slowdown is likely in the middle of 2Q, casting downside risk to China’s fragile growth recovery.” Not very pretty. Though we’ve seen the manufacturing slowdown coming, the reaction on the Asian stock markets is brutal....

Nikkei crashed over 1,460 points, a 9.2% dive peak-to-bottom from its morning high of 15,943, after having been up 300 points early on, to 14,484. For the day, it’s down 1,143 points, or 7.3%. That’s what happens when the air hisses out of a central-bank money-printing induced bubble. The hot money wants to get out.

Wednesday, May 22, 2013

H-P revenues plunged 10.1%, worse than expected, with PC revenues down 20%. Only uptick: lowly printing supplies, such as cartridges, paper, ink, up a measly 2%. Earning didn't "completely crater" like Dell's earnings, CEO Meg Whitman consoled her investors. But H-P had a huge write-off not long ago, and who knows what they plowed into it to make subsequent quarters look better. They always do that. Write-off accounting puts some lipstick on expenses, though it can’t do much about revenues. Props up operating income. “You can feel the turnaround taking hold at H-P,” Whitman said. Indeed, feel. Because there's no visible turnaround in the numbers. Nevertheless, stock jumped 13% after hours.

Justice Department admits: drones killed 4 Americans, in a letter sent to Congressional leaders. One of them was Anwar al-Awlaki, in September 2011 in Yemen. While widely reported, the government had never fessed up to it. The other three were Samir Khan (in the same strike); Awlaki’s son Abdulrahman al-Awlaki, also in Yemen; and Jude Mohammed, in Pakistan. Last year, Attorney General Eric Holder had outlined the government’s legal rationalizations behind knocking off Americans overseas – for example when they pose an “imminent threat of violent attack” and when capturing them is inconvenient. While the whole concept is iffy, the rubbery term "imminent" came under particular fire. But certainly, it won’t be abused; after all, there’s a Nobel Peace Prize winner in the White House.

Delta Air Lines rebels against taxpayer subsidies for Boeing because they benefit state-owned foreign airlines that compete with Delta. The US Export-Import bank is helping Boeing sell wide-body jets by helping foreign airlines buy them. CEO Richard Anderson said Delta would be “perfectly willing” to accept a “total moratorium” on financing of jets, which it also benefits from. "We are trying to do whatever we can to get a level playing field in a world where my government decides that they would rather have my competitors in the marketplace than Delta," he said. In April, Delta sued the Ex-Im Bank to put a stop to these shenanigans. It noted that 46% of the $106.6 billion in the Ex-Im Bank's activities are for aircraft loans or loan guarantees. Emirates and Korean Air were among the biggest beneficiaries, and as Anderson told Reuters, they could get funding without "the balance sheet of the US government." Ah the complex web of government handouts.

BOJ Governor Haruhiko Kuroda accepts jumpy yields on Japanese Government Bonds that nearly tripled from the April 5 low of 0.315% to today’s 0.90%, exact opposite of what money-printing and bond-buying is supposed to accomplish. Japanese investors have been fleeing JGBs; inflation, if it rises to 2% or more as per plan, will eat them up without compensation from yield. Add yen devaluation to make a nasty investment. He lost a bit of his brashness: "I am not expecting long-term interest rates to increase sharply considering the strong downward pressure being exerted on them by our quantitative and qualitative easing," he said at the press conference after the BOJ’s two-day huddle that left monetary policy unchanged, with the spigot wide open, committed to buying ¥50 trillion in JGBs a year, or 70% of all new bonds the government is issuing. "I believe it is quite possible to prevent any spikes in long-term interest rates," he said with even less certainty, then submitted to fate and accepted rising yields: "If expectations for economic recovery and inflation strengthen sharply, that could outweigh the risk-premium reducing effect and result in increases in interest rates," he said.

Japan trade deficit soars 69.7% in April to ¥879.9 billion, from April a year ago, the tenth months in a row of trade deficits, the worst series since 1980, and the worst April ever. For each of the last three Aprils, the deficit was worse than in the prior one; same for March, February, and January. The trend is relentlessly awful. Abenomics is deepening the hole, but it’s digging at a faster rate. The weaker yen nudged up exports 3.8%, but imports jumped 9.4%. Don’t blame oil: imported crude oil volume dropped 2.2%. Exports to China stagnated, but imports jumped 13.3%; the deficit skyrocketed 60.2%. However, exports to the US rose 14.8% while imports stagnated; the trade surplus leaped 32.5%. Japan exports twice as much to the US as it imports. Perhaps someone in the White House will someday get Japan to open up its auto market. The trade balance with Western Europe flipped from a surplus a year ago to a deficit; exports fell 3.5% and imports rose 11.4%. Abenomics and the money-printing binge have heated up consumption of imported luxury goods and other items that can’t be produced in Japan. For the rest, Abenomics appears to be a giant miscalculation. The graph for the years 2011, 2012, and 2013 shows the worsening trend:

Despite the awful trade data that was much worse than economists had hoped for, the Nikkei jumped 246 points or 1.6%, to 15,627 – oblivious to reality for months now, drunken with money the Bank of Japan is printing.

Tuesday, May 21, 2013

“Apple does not use tax gimmicks,” Apple wrote without twitching an eyebrow apparently, in response to a Senate investigation that showed that it sheltered at least $74 billion in profits from US taxes between 2009 and 2012 by using a "complex web" of offshore mailbox companies. One such Irish subsidiary with no employees and no physical existence made $30 billion in profits and didn't pay a dime to a single government anywhere, not even Ireland. Legal, and proof that the US corporate tax dodge code is a scam that bestows a tax-free environment and other welfare handouts to certain companies, while raking less fortunate and often smaller companies over the coals.

Impact of cheap natural gas in the US: the construction of 97 chemical and plastics plants that use natural gas as feedstock has been announced, with investments over $71 billion, sez the American Chemistry Council (ACC). Among them, in Texas alone: Dow Chemical’s plan to plow $4 billion into ethylene crackers and Exxon Mobil’s plan for an ethylene cracker and two polyethylene plants. Others lining up: Chevron Phillips Chemical, LyondellBasell, and Mitsui & Co. Via OilPrice.com. These companies vigorously oppose the export of liquefied natural gas (LNG) as they fear it would raise prices in the US to the levels natural gas trades for on the world markets. Their pleas fell on deaf ears, a dilemma and opportunity I wrote about.... The Quiet Triumph Of Oil And Gas In Obama’s Policies

Japanese Government Bonds: "Absolutely no guarantee" that Japanese investors will continue to buy them, warned an advisory panel to Finance Minister Taro Aso. Investors who lose confidence in the JGB can easily invest their funds overseas, the report nervously pointed out. Some have already made that shift. Hence the recent spike in yields, despite the Bank of Japan, which is mopping up around 70% of the flood of new bonds that the deficit spending of Abenomics generates. Investors only have to pick up the remaining 30%, but they appear to be reluctant to do so. Why is anyone outside of a government controlled institution still buying this crap?

Finding excuses: Japan supermarket sales dropped 1.9% in April, on a comparable-store basis, from April 2012, with food sales down 0.4% and clothing down 8.8%. Blamed was the "unseasonably cold weather." When sales edged up in February and March, the credit went to Abenomics, not the weather or some other silly thing. A broader media trend: when economic data points are positive, Abenomics gets the credit; when they’re negative, the weather and other reasons are dragged into the scenery, sometimes by their hair.

Mystery pollution in China: unknown foul-smelling goo emerges from cracks in the street, becomes huge, finally gets cleaned up ... and remains unknown.

Monday, May 20, 2013

“Every 10 years or so, banks make some horrible mistake and it usually starts with easy money,” said Mike Pinto, vice-chairman of M&T Bank, a regional US bank. “We are worried about the competitive atmosphere. It creates the temptation to do silly things.” He was talking about the credit bubble. US banks made $1.55 trillion in business loans through April, up 10% from last year; banks are falling all over each other trying to goose their profits by making risky loans. US corporations have also sold a record amount of bonds at record low yields and with historically low protections for investors. So now banks are loading up their balance sheets with business loans that will come to haunt them. But no problem. It will just be part of the next financial crisis that will give the eager Fed another opportunity to hand trillions to TBTF bankers to bail them out.

UK wages propaganda war against Scotland, which will hold an inconvenient independence referendum in September 2014. A new report by the UK Treasury, the third in the series, claims that the Scottish banking sector – composed of two large banks, Bank of Scotland and Royal Bank of Scotland, plus smaller ones – would put an independent Scotland at risk. Its assets would be 1250% of Scottish GDP, while the Cypriot banking sector, which brought down Cyprus, was 700% of GDP, the report said ominously. For the UK overall, banking assets are 492% of GDP, also very high. But the UK has “credibility” in the markets to manage that risk, something Scotland would lack. A "feeble attempt to undermine confidence in Scotland's ability to be a successful independent country," retorted Scotland's Finance Secretary John Swinney. "The Treasury, true to form, will outline what is in its own best interests, not what is in the best economic interests of the people of Scotland." He called these assertions misleading; "In terms of share of GDP, in fact, financial services are actually smaller for Scotland at 8.3% than the UK at 9.6%. So if the argument is about risk, then the risk is with the UK," he said.

Now Germany has a real reason to exit the euro: Goldman Sachs CEO Lloyd Blankfein wants it to stay! A bad sign. In an interview with the Welt, he said Germany had profited from the euro the most – from his point of view, “Germany” is “Germany Inc.” But real wages for working Germans have declined since the introduction of the euro, and workers have had a hard time, while wages in Greece, Spain, and other countries have shot up. Though German workers now have jobs, unlike people in Spain and Greece, they earn less than they used to in real terms. For that privilege, German taxpayers (not Germany Inc.) must pay a price, he said, namely bailing out banks and speculators who hold the crappy debt of periphery countries. He predicted utter economic mayhem for Germany if it left the euro. No, German taxpayers will have to bail out weaker countries, he said. And he raved about the "political project" behind the euro, the ultimately total integration of Europe (and of course, he defended TBTF banks, which were more secure, he said, than smaller ones). My question: is Goldman now seriously long the euro?

Weekend, May 18 - 19, 2013

Sales skid at S&P 500 companies: 458 companies of the 500 in the index have reported their Q1 results so far: earnings were up a measly 3.4% year-over-year, but sales fell 0.2%. Not exactly the foundation for the gigantic undying stock market rally that has plowed through whatever economic and corporate bad news with nary a twitch. When will this separation of reality from stock prices end? Someday, one way or the other! He who can pinpoint that day will make a lot of money.

Central bank success story: The global market for luxury goods grew 38.6% in three years. From $200 billion in 2009, luxury goods sales jumped 13% in 2010, 11% in 2011, and 10% in 2012, to end up at $275 billion. Despite the Eurozone debt crisis and austerity, despite the earthquake and tsunami in Japan in 2011... no matter what happened in those three years, luxury goods boomed, sez the the just released "Worldwide Luxury Markets Monitor," by Bain & Company for Fondazione Altagamma (PDF). “Absolute luxury items (high-end products with no logo, highest quality materials, and exquisite craftsmanship) lead the way,” the report reassured us, but there were some losers, including “watch consumption” which crashed in China. The report confirmed what we’ve seen everywhere: when central banks hand out trillions to their cronies, it doesn’t do much for the real economy as a whole, nor for employment, but it does one heck of a job at the very top of the pyramid.

"Threat of Default": US hits debt limit on Saturday, but by using a slew of shuffle maneuvers, shell games, tricks, and devices, the US won't actually run out of money until "after Labor Day," Treasury Secretary Jacob Lew told Congress in a letter. In his previous statement, the US would be "okay until Labor Day." Today, he was more frantic. He begged Congress to get its act together and do something "sooner rather than later" to “remove the threat of default.” In its infinite wisdom, Congress had suspended the debt limit till May 18, rather than dealing with it. The debt, though still over the limit, declined in April and early May; tax extractions were fattened by asset bubbles. But since May 10, the debt has once again been rising.

Friday, May 17, 2013

US Consumers haven’t felt this good since July 2007, just before all heck broke loose. An "encouraging sign," Reuters sez. For short sellers? The preliminary results of the Thomson Reuters/University of Michigan's consumer sentiment index jumped to 83.7 in May from 76.4 in April. Big part of the reason: households in the upper third of the income bracket felt flush from the ballooning stock market – the wealth effect. The Fed giveth.... They were able to brush off the payroll tax increase, which Wal-Mart shoppers, as we’ve seen, had a harder time brushing off. The Consumer Expectations index rose to 74.8 from 67.8. And the Current Economic Conditions index leaped to 97.5 from 89.9, the highest since October 2007, a month before the stock markets began to swoon. Impeccable timing, the hallmark of consumers.

Car sales in the EU crept up 1.7% in April, from a horrible April last year. The fact that the parade of ever worsening numbers has finally stopped, at least for a moment, was greeted with a huge sigh of relief. The details of the report aren’t that rosy: sales in the UK, now the second largest market after Germany, jumped 14.8%. Without the UK, sales for the rest of the EU actually dropped 0.46%. It wasn't exactly a smooth trend across the member states: Greece finally seems to have hit bottom, and sales increased 20.9%; in Denmark, they jumped 30.7% and in Finland 142.6%; but they crashed 26% in the Netherlands and 51.9% in Cyprus; they rose 3.8% in Germany but dropped 5.3% in France.

Deafening US media hype: Japan Core Machinery Orders jumped 14.2% in March, seasonally adjusted, from February. The eternal money-printing and fiscal-stimulus apologists dragged it out as proof that Abenomics is working massively. Alas, these are highly volatile big-ticket items, though “core” orders exclude container ships, nuclear reactors, etc., which are even more volatile. To iron out the volatility, the Cabinet Office also offers quarterly numbers. Soooo, core orders in the first quarter of 2013 were actually 4.8% lower than in the first quarter of 2012, when Noda was prime minister. Kampai!

The Japanese take care of their college grads: 93.9% of all those who graduated on March 31, the end of the academic year, had jobs by April 1, the beginning of the business year. This was the second year in a row that the percentage increased, so it’s NOT related to Abenomics, please! College recruitment, like so many things in Japan, is a highly structured process with the idea to get pretty much everyone squared away before the end of the academic year. But those who miss this entry into Japan Inc. have the greatest difficulty getting through the door later. The system is unforgiving punitive to those who don’t toe the line.

About that secret inflation in Argentina: famously, no one is allowed to accurately track or discuss inflation, but all the whisper numbers floating around peg it at over 20% annually. Now confirmation has come from official sources: wage negotiations between unions and the government of President Cristina Fernández Kirchner. Unions are her base. In fact, she personally met with the leaders of six unions that represent about 2 million workers, or 40% of all workers covered by wage negotiations, and made a deal, similar to the deals she’d made with Railway and Bus Drivers’ unions. The agreed-upon wage increases this year to keep the purchasing power of her voters intact? The closest estimate to official CPI that Argentina has? 24%!

Thursday, May 16, 2013

Last time French-made cars were sold is the US? 1980? Long time ago. But... French-made models of the Toyota Yaris are coming to the US, Canada, and Mexico, apparently to keep the plant in Onnaing, near Valenciennes, busy. Car sales in Europe have been catastrophic, and plant shutdowns and layoffs are hard to do, especially in France where even thinking about it causes a huge political ruckus. In 2012, 182,841 Yaris were sold in Europe, accounting for 22% of Toyota's total European sales - a highly successful model at the low end of the lineup. North America will get US versions, not EU versions. So no diesels.

Plunging price of gasoline shaves 0.4% from Consumer Price Index in April. Total energy prices dropped 4.3%, with gasoline down 8.1%. We’ll remember those days fondly because that cheap gasoline is now history; prices have been climbing in May! Food prices rose 0.2%. Core CPI, which excludes food and energy, rose 0.1%. For the 12-month period, CPI is up 1.1% and core CPI 1.7%. The Fed might complain that this is below target; but it’s still inflation, and it still whittles down the value of your and my dollars, and everything denominated in them, and it’s still higher than the interest that banks pay on most deposits and CDs, though it’s better than 4.3%, as we had some months in 2011.

Another blow to US manufacturing: Philadelphia Fed's Business Outlook Survey – for manufacturing in eastern Pennsylvania, southern New Jersey, and Delaware – dropped into the negative, to -5.2 in May, from 1.3 in April (below zero = decline). The New York Fed's Empire State Manufacturing survey, reported yesterday (below), had also pointed at a contraction. Ominous: new orders dropped to -7.9, the worst since June last year, from -1 in April; the Workweek Index dropped to -12.4, and the Employment Index dropped to -8.7. Manufacturing is only a small part of the US economy, and this region is a small part of the US, so we’re not going to panic just yet...

US Housing Bubble confirmed: Heard an ad on the radio on how to get rich quick by flipping houses – and we’ll show you how. It conveniently offered an 800-number. Something or other was free.... but keep your credit card handy. These kinds of things usually appear late in a bubble.

Death penalty for financial fraud in China. A court in Wenzhou slapped a local, 39-year-old gal, former general manager of Wenzhou Xinfu Investment Consulting Co., with the maximum penalty available, death, for having illegally raised funds for investments starting in 2007. Everything worked fine until October 2011, when her scheme collapsed and she ended up defaulting on a 428 million yuan loan ($69.6 million). Leaves open the question if they’d slap the same penalty on TBTF bank CEOs every time their banks need a bailout. A bit draconian maybe, but something the US might want to consider as well, after not having prosecuted anyone responsible for the financial crisis and for the Fed’s bailouts that followed, though they did hound, as in China, small-scale crooks like Bernie Madoff.

Bad loans at Chinese commercial banks swelled by 6.8% in the first quarter, to 526.5 billion yuan ($85.6 billion), the sixth consecutive quarter of increases, raising the non-performing loan ratio to 0.96%. And NPLs are expected to rise further. One of the many elements in a boundless debt-fueled scheme that will eventually, like the micro-case above, unravel.

The Japanese Diet rubber-stamped the ¥92.6 trillion ($926 billion) budget for fiscal 2013, which started April 1. A breath-taking ¥43 trillion ($425 billion) will have to be borrowed to make ends meet - that's 46.4% of the total outlays! But no problem. Abenomics will get Japan out of its fiscal quagmire, one way or the other, by printing money. Government spending on public works – welfare spending for Japan Inc. – will rise to ¥5.3 trillion. In a show of rare fiscal discipline, welfare spending for the poor will be cut by ¥67 billion. Priorities of Abenomics are becoming clear.

Japanese GDP growth less than a year ago! The economy grew 0.9% in the first quarter 2013 from Q4 last year, or a 3.5% annual rate. Private demand was up some, with investment in housing being fairly strong, but corporate investment lackluster. Public demand – government spending and investment, including boondoggles – jumped, as promised by Abenomics. Exports rose, and so did imports, but not as much. All seasonally adjusted. Great? Give credit to Abenomics for that 0.9% growth in GDP? Because it was the fastest growth since... oops, well, since the first quarter of 2012, when the economy grew 1.3%. Abenomics can't even keep up with Noda's maligned era.

Wednesday, May 15, 2013

Megabanks "are NOT too big to jail," claimed Attorney General Eric Holder today in a heroic about-face at a House Judiciary hearing, after he'd explained to the Senate Judiciary Committee in early March why exactly they were indeed too big to jail. The Justice Department has not prosecuted any megabanks despite their shenanigans leading up to the Financial Crisis and continuing to this day. A debacle I wrote about.... 'Regulatory Capture' Emasculated The Regulators Of Megabanks.

French purchasing power plunges 1.5% per capita, and 0.9% for all households together in 2012 (difference due to population growth), the worst performance since 1984. Combination of: disposable income creeping up only 0.9%, and prices rising 1.9%. Ah yes, the many benefits of "moderate" or even "below-target" inflation.

Tough day for US manufacturing: industrial production dropped 0.5% in April, after increasing in February and March; year-over-year, it's up only 1.9%. Within it, manufacturing fell 0.4%; fingers point at motor vehicles and parts, down 1.3%. Capacity utilization fell 0.5% to 77.8%, and is 2.4 percentage points below long-term average. Add to that: the New York Fed's Empire State Manufacturing Survey for May dipped into the red (-1.43, from 3.05 in April). Employment sub-indices were mixed, with number of employees up slightly, but hours worked down sharply. Darkest cloud: new orders were negative. Executive optimism for the next six months declined, second month in a row. Not an exemplary picture of a growing economy.

"My question is, who is going to jail?" wondered House Speaker John Boehner about the IRS scandal. So why didn't he and other Republicans ask that question after the financial crisis, the largest scandal in the US ever?

Swooning energy prices, particularly gasoline, pushed down wholesale prices by 0.7% in April, seasonally adjusted. Food prices also dropped, a godsend for those of us who like to eat, with veggies and meat down the most. Without food and energy, which are highly volatile, the core Producer Price Index rose 0.1%. For the 12-month period, the unadjusted PPI is up a scant 0.6%. If they could just keep it that way!

Warning shot: Russian car sales plunged 8% in April. For the year, they are now 2% below the same period last year, a record year during which sales had jumped 11% from 2011. The good times appear to be over. Is the EU malaise heading east?

Europe stuck in recession: the Eurozone economy shrank 0.2% in the first quarter, from Q4, the sixth quarter of recession in a row, another glorious record. The 27-nation EU contracted 0.1%. Year over year, they’re down 1.0% and 0.7% respectively. Germany's economy inched up 0.1% in Q1, after having plunged 0.7% in Q4, thus barely avoiding the red stamp of recession. Both quarters combined, Germany is in the hole. The lousy performance in both quarters surprisingly surprised pundits. France is formally in a recession; its economy contracted 0.2% in Q1, third contraction in four quarters. Italy and Spain both shriveled 0.5%. Unperturbed, German stocks, while down a smidgen for the day so far, are still above their prior all-time intra-day high of July 2007. This will be seen as the greatest accomplishment of the central bank money-printing binge: separating (at least temporarily) stock markets from reality and allowing them to float in a dream world.

China's pile of foreign exchange grew by 294 billion yuan to 27.363 trillion yuan ($4.41 trillion) in April, according to the People's Bank of China, the fifth month in a row of increases. For the first four months of 2013, the monthly influx averaged 400 billion yuan, nine times the average in 2012. Earlier this month, the State Administration of Foreign Exchange, the top forex regulator, had threatened to crack down on foreign money flooding the country. China is where the hot money goes – on the bet that the yuan will continue to rise against the dollar which, through the arduous and heroic efforts of the Fed, will continue to lose value.

Nikkei jumps 2.29%, to 15,096, highest since December 28, 2007. If it keeps going like this, it will be above 40,000 soon. This thing has become a joke – even more so than the US stock markets. Japanese government bonds continue their descent, pushing yields up, with the 10-year JGB hitting 0.90% but then settled down at 0.85%. The yen skidded.

Tuesday, May 14, 2013

Ex-leaders of consumer electronics: Sharp's huge loss is a sign of how Japanese powerhouses have lost the edge to Korean, US, and Chinese rivals. A doozy: ¥545 billion ($5.3 billion) in red ink, a record in its storied century-long history. A top exec reshuffle has been announced, but it won't fix the real issue that is bedeviling Sharp and other Japanese consumer electronics companies, once world leaders, now not even also-rans. Abenomics won't be able to cure that either. This isn't an issue of costs and exchange rates, but of innovation, products, and now increasingly brand (they squandered it).

China's white paper on human rights, helpfully issued in English so that foreigners like me can get their brains washed, starts out promisingly: "Since the arrival of the 21st century, the Chinese people have been making constant efforts in advancing human rights protection along the path of building socialism with Chinese characteristics under the leadership of the Communist Party of China (CPC) and the Chinese government." Further into it, the paper clarifies priorities: "China has a population of over 1.3 billion. For such a populous country, it would be impossible to protect the people's rights and interests without first developing the economy to feed and clothe the people." Money before rights. But it also points out how the government has become much more transparent in many ways, which few people will dispute (text in full).

Inflation hits Japan: wholesale prices rose for 5th month in a row in April, by 0.3% from March, with the index at 101.4 (2010 prices = 100). Electricity, gas, water, lumber, and wood products jumped over 3%. Some of it was due to the weakening yen that made imported fuels and raw materials more expensive. How exactly higher prices would cure Japan’s economic ills remains a mystery, though it will give a stylish haircut to all those owning Japanese Government Bonds....

Japanese Government Bonds skid once again: yields rose, for the 10-year JGB to 0.85%, from 0.79% yesterday, from 0.69% on Friday, and from 0.315% on April 5, the day they went bonkers. While yields are still ultra-low, the rise has been relentless, not at all what the BOJ wants – and now there's also volatility, rare sight in the JGB market. Japanese institutions and individuals are buying foreign bonds with higher yields to diversify out of the yen that has been doomed by Abenomics to decline. If this turns into a massive dumping of yen, if the BOJ cannot keep it under control, the selloff might turn into a rout, and the BOJ and government-controlled institutions will be the only ones left buying. In sympathy, mortgage rates are creeping up, as are bank loans. The opposite of what Abenomics wants to accomplish. Free money is suddenly becoming more expensive.

Click for Older Rumblings....

VIDEOS

Wolf Richter on Max Keiser's "On The Edge"
"The Pauperization of America"

Wolf Richter on the Keiser Report
"Where the Money Goes to Die"

Clarke and Dawe: European Debt Crisis
Two favorite Australian Comedians

Clarke and Dawe: Quantitative Easing
Big industrial-strength printers, all facing the window

The Fastest Drive Ever Through San Francisco
Don't try to do this yourself

humanERROR - by "Frying Dutchman"
Powerful, lyrical appeal to the Japanese. Slams nuke industry, MSM, bureaucrats, and politicians.

Friday

Jan112013

Deaths From All Causes: The Short (But Not Necessarily Happy) Life Of Americans

Friday, January 11, 2013 at 5:31PM

Americans under fifty are paying the price. We don’t know exactly why. Even the panel of experts that authored the massive report, U.S. Health in International Perspective: Shorter Lives, Poorer Health, admits that it can’t entirely pinpoint the reasons. But we do know how Americans under fifty, particularly males, are paying the price: with their lives.

The US health disadvantage, as the report calls it, is more prevalent among “socioeconomically disadvantaged groups.” But even if you’re “white, insured, college-educated, or in upper-income groups” and live a healthy lifestyle, you’re less likely to make it to 50 than your counterparts in the other 16 wealthy “peer” countries of the study—Australia, Austria, Canada, Denmark, Finland, France, Germany, Italy, Japan, Norway, Portugal, Spain, Sweden, Switzerland, the Netherlands, the UK, and the US. And if you do make it to 50, you’re going to get there in worse shape.

The report, based on mortality studies for the years through 2008, carves out three categories, “Deaths from Noncommunicable Diseases,” “Deaths from Communicable, Maternal, Perinatal, Nutritional Conditions,” and “Deaths from Injuries.” The latter, which I discussed in yesterday’s post, distinguished between deaths from “intentional injuries” and “unintentional injuries.” Grisly statistics. [Read.... How Americans Stack Up In Dying From Violence, War, Suicide, And Accidents].

“Deaths from Communicable, Maternal, Perinatal, Nutritional Conditions” is divided into dozens of categories and subcategories, and every country has its own nightmare. In Portugal for example, 7.4 people per 100,000 die of HIV/AIDS, more than double the rate of the country next in line, the US (3.4), and 246 times the rate of Japan (0.03).

Do the Japanese cover up their deaths from that scourge by declaring a different cause of death, such as pneumonia? Or is their reliance on condoms for birth control responsible for that immense success, at least in the hetero community? For example, in love hotels, and they’re everywhere, there is always a condom near the bed. One. If you need more, bring your own. One of thousands of tidbits I discovered in Japan—that all became the backdrop to an awesome story. And then a book. It started in France with a Japanese girl. Check it out on Amazon.... BIG LIKE: CASCADE INTO AN ODYSSEY.

Yet in Japan, 29.7 people per 100,000 die of respiratory infections, three times the rate in the US (9.7) and almost eight times the rate of Finland (3.9). On the other hand, in Japan, with its socialized healthcare system, the infant mortality rate is only 1.3 per 100,000. In the US, it’s 7.1. Over five times the Japanese rate. By far the worst in the group. But is it an endorsement of socialized healthcare? The second and third worst countries in infant mortality, Canada (5.9) and the UK (5.2), also have socialized healthcare. No easy answers.

Another conundrum: in deaths due to nutritional deficiencies, France is in the hot seat with 2.0 deaths per 100,000, twice the US rate (1.0), and way ahead of third place, Finland (0.14).

Overall, Finland has the lowest rate of “Deaths from Communicable, Maternal, Perinatal, Nutritional Conditions,” with 11.1 deaths per 100,000 people. On the other end of the spectrum: the US (33.7), the UK (36.1), Japan (40), and Portugal (45.5). So the chance of dying from these diseases in the US is three times higher than in Finland; but in Portugal, it’s four times higher.

Non-communicable diseases are the biggest killers. And easy answers remain elusive. For example, melanoma and other skin cancers kill 5.8 Australian per 100,000, the worst in the group. So we speculate about the ozone hole, the brutal sun, and people spending time on the beach. In Japan, the death rate is 0.47, by far the lowest in the group. So we speculate about people wearing gloves, hats, and protective garments every time they step outside. But then Norway has the second highest rate of deaths (4.7), followed by other northern countries, Sweden, Denmark, and the Netherlands. The US (2.8) is in the middle of the pack. And sunny Italy (2.0) and Spain (1.8) are outdone only by Japan.

Wedged between “Deaths from Neuropsychiatric Conditions,” such as unipolar depressive disorders, bipolar disorder, schizophrenia, and epilepsy are deaths from “Alcohol Use Disorders.” Danes succumb to it at a rate of 9.9 per 100,000—not including accidents. Next the French (4.0), the Germans (3.9), and the Austrians (3.9). For the latter two, the culprit may be per-capita beer consumption [Beer, A Reflection Of The World Economy?]. The US (1.6) is in the middle of the pack. At the bottom: Spain (0.38), Italy (0.25), and Japan (0.16).

In another conundrum, Alzheimer and other dementias kill Finns at the highest rate (34.9) followed by Americans (24.8)—both countries with relatively low life expectancies. At the bottom, Germans (5.9), Austrians (4.4), and the people who live longer than just about anyone else, the Japanese (2.5).

Cardiovascular diseases are a scourge in all wealthy countries, led by Germany (174.9), Finland (163.6), and the US (155.7). Least affected: Mediterranean countries Spain (115.7) and France (99.2), and finally Japan (97.3).

But there are some areas where Americans are lucky. Stomach cancer, for example, kills 2.76 Americans per 100,000, but six times more Japanese (16.8); and liver cancer kills 3.9 Americans per 100,000, as compared to 11.1 Japanese, almost three times more. Overall, non-communicable diseases kill Danes at a rate of 440 per 100,000, Americans at a rate of 418, and Japanese, the healthiest in that respect, at a rate of 272.

So, life expectancy for Americans is ugly:

“Something fundamental is going wrong,” lamented Dr. Steven Woolf, who chaired the panel. “This is not the product of a particular administration or political party. Something at the core is causing the U.S. to slip behind these other high-income countries. And it’s getting worse.”

The panel tried to nail down the culprits: a health-care system that leaves millions of people uninsured, the highest rate of poverty, education, eating habits, socioeconomic and behavioral differences, cities built for cars not pedestrians.... But it determined that these reasons cannot adequately explain the differences—because even wealthy, educated, insured whites with healthy lifestyles are getting the short end of the stick.

And worse: high infant mortality, traffic accidents, violence, HIV and AIDS, and alcohol-related mortality hit younger age groups the hardest—leaving them with a lower probability of surviving to age 50 than their peers in wealthy countries. And the lucky ones who do reach 50 get there “in poorer health than their counterparts.”

All this despite the costliest of all healthcare systems that eats up 18% of GDP. But now anecdotal evidence is coagulating into numbers that weigh down corporate earnings calls. It appears the wily consumer is having second thoughts about prescription drugs. And is fighting back. A paradigm shift that is causing “unprecedented concerns” in the industry. Read.... The Consumer Revolts Against Prescription Drugs.

Follow @testosteronepit

Print Article |

Email Article

Email Article to Friend

Reader Comments (7)

Perhaps the drugged up lifestyle of Americans is the main reason?
4% of the worlds population using 40% of the world's prescription drugs?
$70+ billion in 'recreational' drugs used annually in the Us, not counting alcohol and tobacco?
The 'bar on every corner and beer at the games' mentality?
The fact that there are almost as many cars as people?
That Americans over-eat and have terrible diets? ( I worked with a young late 20s man a few years ago who was diagnosed with cancer of the stomach and intestines. He used to eat sausage sandwiches at break every day, fast food and other greasy foods all the time, hated veggies and fruits. Died a few years later after many thousands of dollars in treatments and operations.)
That they don't exercise?
That most live in stress all the time?
That most live in big city smog and pollution?
The list of why's is endless in the Us and getting worse. Now they drug school kids to 'calm' them. What next?
That

January 11, 2013 |

Makati1

Some other points:
1. The stats often suck and can often not really be compared. If you really want to compare things you need to have a good look at that.
2. Imho you should divide it into 2. Chance of getting it and success with curing it after you got it.
3. Re the first are simply in general mainly unhealthy lifestyle choices. Eliminate those (the unhealthy lifestyle choices you will end up with other factors: other climate; other race (genetic-stuff). Depending on the illness one time the former will be the most important one time the latter and often it is a mix. But still overall imho mainly unhealthy lifestyle choices.
Which would not really be a problem if people would acept the consequences of their choices. With healthcare however they do generally not. Uninsured but not able to pay for it as the new carloan has to be repaid but when something happens effectively demanding that someone else picks up the bill for treatment. In a way it is more socialised than in Europe this way. When young not wanting to pay high premiums (to pay for the elderly) but when old not able to pay premiums and demand it comes from the general purse.
For the US in general you donot have to be a rocketscientist too see that the general lifestyle is not very healthy compared to most other countries. I donot have problems with that as long as people accept the consequences of their lifestyle-choices. And it is unlikely genetics when I was young and that is not that long ago obesity was not even helf of it from what it is now and genetic material doesnot change that quickly. Compare children with their parents at the same age say 30 year ago.
People in the US however donot accept most of their lifestylechoices. In setting up a system you simply have to take that into consideration other wise it will not work.
4. Curing. A lot can be learned from 'best practices' and isnot done yet. And countries with a for Westeners difficult language like Japan, Korea, S'Pore are often completely ignored, while they will be often the most interesting. Also costwise btw, the US in general has more expensive cures than a lot of other countries (while the cures are not more successful).
5. The way in the US healthcare is organised (or may be better disorganised in this respect), makes a national healthpolicies very difficult.
Problems largely occur at the bottompart of society. That part is simply larger in the US and probably more bottom and these people often ruin the stats.
6. The problem with the high healthcare costs is imho mainly that a large part of it has to come from the public purse. If people want to pay themselves 18% of their income it is not so much of a problem. It starts to get a problem when paying is done partly via taxes (as it is difficult to make the link between the two and often not everybody pays the same). And get even worse further up. Massive numbers hardly contributing anything, the poor using dollarwise more healthcare than the richer (and considerably); uneven contributions; ot the richer paying de facto massive amounts (and using a parallel network for which they have to pay again). This causes al sorts of social and as a consequence thereof economic friction. Basically the more you socialise the bigger the friction will get. especially as the US is now in a stage that simply middle incomes have to be taxed heavily as that is the only way to generate enough revenue to pay for all the stuff. There are not enough really rich and anyway these have their advisors and are not location fixed, like we see everywhere in the world. real high taxes for the rich or for companies and there is a massive exodus.
.

January 12, 2013 |

Rik

Once again, this is an issue boils down to money and class. The haves and have-nots.
This is why I oppose raising the Social Security eligibility age from 65 to 67 or to 70.
Yes, overall life expectancy has risen and overall we should live longer because of advances in medicine and tougher pollution laws. But when you break it down by class, race, socio-economic conditions, those on the lower end of the scale aren't living any longer. They are more prone to having to work longer hours and live with pollution, a poor diet, untreated depression, etc. Sure there are exceptions. Some people do pull themselves out of poverty and make it to an upper class, with a lot of breaks along the way. But those odds are long for most of us.
The wealthier end of the spectrum gets to live in the healthiest places, avoid physically hard work and is able to afford the best health care possible. Consequently, they live longer and pull up the life expectancy rate for everybody.
If we must tamper with the S.S. retirement age, do it progressively -- like the income tax. Start by averaging a person's salary between ages 50 and 57, or from 55 to 62.
Then raise the retirement eligibility age from 65 for those who average between $100,000 and $250,000 to 72 years old. And raise it to 75 for those over $250,000. For those earning $50,000 to $100,000, keep it at 65. For those from $25,000 to $50,000, lower it to 62. Anyone under $25,000 is probably at poverty level, so lower the SS age to 57.
And finally, raise the cap at which SS is withdrawn from pay, from something like $106,000 to $250,000.
It's not punishing the wealthy. It's protecting everyone else from getting unfairly punished again and again.
The life of a person who has lost everything and is lying in the street is worth no less than someone who has everything, including a giant-sized ego of self-worth.
Better yet, leave SS alone and start putting the financial terrorists and complicit politicians in jail.

January 12, 2013 |

kimsarah

Comparing statistics of one country to another is a risky proposition. Cultural and linguistic differences can make comparisons meaningless. Some examples:
1.) Japan counts all newborns who die within 72 hours of birth as being stillborn. This does wonders for their infant mortality figures and greatly increases their average lifespan since all the near zero lifespan infants are just vanished into the stillborn category.
2.) In reference to stomach cancer, in the US Doctors differentiate between cancers of the stomach, esophagus and the duodenum. In some countries all these organs are considered to be part of the stomach. Thus China for instance has much higher rates of stomach cancer and zero rates for the other organs.
3.) Autopsies are rarely performed in many European countries. Since such diseases as coronary artery disease are often only apparent post mortem this means that the rates for those diseases are much higher than the reported numbers.
4.) The cultural bias against reporting some causes of death can be overwhelming. This is particularly true of suicide and alcoholism. The rate of alcohol related diseases is probably much higher in Italy than the reported rates, Doctors are subjected to enormous pressure to not report such diseases especially on death certificates. In Denmark it is considered almost unthinkable to even mention the WORD for cancer. Again Doctors are pressured to list some other cause of death. Many suicide are characterized as firearm accidents or "falls" just to spare the feeling of the survivors in any country.

January 12, 2013 |

Ken

If you look at America's life expectancy over time you will see a slow and steady increase, so it's not as though we have suddenly started declining. The "decline" is only relative to other nations. American life expectancy is better than it has ever been.

January 13, 2013 |

BoJenry

Rick and Ken - I agree: most stats suck, more or less. Including the unemployment rate - and comparisons from country to country are silly. But we do it anyway because stats are the only thing we got. Outcomes are always dubious and leave more questions than they provide answers. Nevertheless, we're stuck with stats. And so there is the hope that we can glean something useful from them.

January 13, 2013 |

Wolf Richter

"Do the Japanese cover up their deaths from that scourge by declaring a different cause of death, such as pneumonia?"

Yes, they do. As a result of the socail stigma attached to AIDS, doctors put a different cause of death down. (The same goes for a heart attack rather than "fukujoshi")

When I taught in Japan and had a doctor for a student we talked about this and he informed me it was a common occurance.

January 14, 2013 |

Lee

Post a New Comment

Enter your information below to add a new comment.

Author:

Author Email (optional):

Author URL (optional):

Post:

↓ | ↑

All HTML will be escaped. Hyperlinks will be created for URLs automatically.