Preliminary Q4 GDP Declines To 3.2% As Expected; Final 2013 GDP 1.9%, Down From 2.8% In 2012

After the blistering final Q3 GDP print of 4.1% (to be revised far lower eventually), the preliminary Q4 GDP number had only one way to go, down – and sure enough it dropped to the expected 3.2% (well below Joe LaVorgna’s 4.0% forecast), capping 2013 GDPat 1.9%, down solidly from the 2.8% growth recorded in 2012. “Assume a recovery…”

The good news: the composition of the preliminary Q4 GDP number was better, with inventories only accounting for 0.42% of the final 3.22% print, compared to 1.67% previously. In fact, for the first time since Q1, Personal Consumption was responsible for more than half of GDP growth, generating 2.26% of the annualized growth compared to 1.36% in Q3.Still on a quarterly basis, Personal Consumption of 3.3% missed expectations of a 3.7% growth, up from 2.0% – did the consumption surge already roll over before the quarter ended? Why yes, if one looks at abysmal holiday retail sales numbers.

The key contributors to consumption growth were Services, and specifically a jump in spending on housing and utilities (from -0.31% to 0.14%), as well as Food Services and Accommodations which rose from 0.02% to 0.43% annualized. Which was to be expected as inventory is being absorbed by consumption. The question is how much longer can consumers keep this behavior up with collapsing purchasing power.

The bad news, and here all “CapEx is growing” fans please look away, Fixed Investment tumbled from 0.89% to just 0.14% annualized, as investment across the board dipped but mostly in non-residential structures (down -0.03% from 0.35%) and a collapse in residential fixed investment from 0.31% to -0.32%.

Finally, net trade contributed a whopping 1.33% in GDP, the most since the 2.39% increase in Q2 2009. How much longer can the US continue boosting its GDP on the back of the shale boom, and declining imports, remains to be seen. However, just like the inventory build up now has to be soaked up, so the net trade boost is about to become a drag on growth, precisely in time for the consumer to also pull back. In other words, enjoy the Q4 GDP surge – it won’t last into 2014.

Source: BEA


    



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Americans Not Thrilled About Obama Bypassing Congress

President ObamaIn his
State of the Union address
on Tuesday, President Obama repeated
his shop-worn mantra about being prepared to bypass
Congress
“wherever and whenever I can take steps without
legislation.” Whatever slack Americans may still be willing to cut
the president at this late date doesn’t extend to unilateral
action, however—fewer than a third of us are on-board with that
idea.

A
CNN/ORC poll
taken after the speech askied people, “In general,
would you rather see Barack Obama attempt to reach a bipartisan
compromise with Congress on major issues, or would you rather see
Obama take unilateral action without Congress to make changes in
government policy that are not supported by Republicans?”

Only 30 percent said they wanted Obama to take action without
Congress, while 67 percent held out for bipartisan compromise.

Overall, the poll found the weakest response to the State of the
Union addresses given by the current president since he took
office. The “very positive” column has drifted downward from 68
percent at the first speech, to 53 percent last year, to 44 percent
this time (though the meh “somewhat positive” numbers are
up a bit).

Americans seem a bit jaded about the guy in the White House, and
letting him go it alone isn’t in the cards.

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A.M. Links: Obama Shilling for Higher Wages at Costco, One Out of Two Doctors Consults Wikipedia, Scarlet Johansson Steps Down as Oxfam Director

sodalicious

  • President Obama was at Costco
    shilling
    for a higher minimum wage, a policy that would give
    the store an advantage over its much smaller competitors.
  • A top Senate Republican, Jeff Sessions of Alabama,
    sent
    a package to all 232 Republican members of the House
    rebutting possible arguments against the immigration reform effort
    in Congress.
  • 50 percent of doctors and patients consult Wikipedia,
    according
    to a new report from a healthcare institute.
  • A Brooklyn school
    discontinued
    its gifted program over concerns about lack of
    “diversity.”
  • Scarlet Johansson has stepped
    down
    as an ambassador for Oxfam after an outcry from some over
    her relationship with an Israeli soda company that operates a
    factory in the West Bank.
  • The United Kingdom and France are teaming up to
    develop
    a new generation of killer drones.

Follow Reason and Reason 24/7 on
Twitter, and like us on Facebook.
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can also get the top stories mailed to
you—
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up here.
 

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Video: President of National School Choice Week Andrew Campanella Talks Progress in the Movement

“President of National School Choice Week Andrew Campanella
Talks Progress in the Movement” is the latest offering from
Reason TV. Watch above or click on the link below for video, full
text, supporting links, downloadable versions, and more Reason TV
clips.

View this article.

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Jacob Sullum on the Prohibitionist Backlash Against Obama's Marijuana Comments

Pot prohibitionists reacted with dismay to
President Obama’s observation that marijuana is safer than
alcohol—not because it was false, says Jacob Sullum, but because it
was true. As measured by acute toxicity, accident risk, and the
long-term health effects of heavy consumption, marijuana is
clearly safer than alcohol. That does not mean smoking pot
poses no risks, or that drinking is so dangerous no one should ever
do it. It simply means that the risks posed by alcohol are, on the
whole, bigger than the risks posed by marijuana. So if our drug
laws are supposed to be based on a clear-eyed evaluation of
relative risks, Sullum writes, some adjustment would seem to be in
order.

View this article.

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Jacob Sullum on the Prohibitionist Backlash Against Obama’s Marijuana Comments

Pot prohibitionists reacted with dismay to
President Obama’s observation that marijuana is safer than
alcohol—not because it was false, says Jacob Sullum, but because it
was true. As measured by acute toxicity, accident risk, and the
long-term health effects of heavy consumption, marijuana is
clearly safer than alcohol. That does not mean smoking pot
poses no risks, or that drinking is so dangerous no one should ever
do it. It simply means that the risks posed by alcohol are, on the
whole, bigger than the risks posed by marijuana. So if our drug
laws are supposed to be based on a clear-eyed evaluation of
relative risks, Sullum writes, some adjustment would seem to be in
order.

View this article.

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Initial Jobless Claims Miss; Back To Levels First Seen 6 Months Ago

The trend that was so many momentum-chasing bulls friend for so long has ended. The steady downward drift in jobless claims – all noise, debt-ceiling, winter storm, and software glitches aside – has ended. Initial claims rose 19k this week, missed expectations by the most in 6 weeks, and jumped to the same levels seen 6 months ago. The Labor Department says “nothing unusual” about this week’s data but noted one state ‘estimated’ claims last week. Total benefit rolls dropped by 16k this week (back under 3 million) as emergency claimants remains “0”.

 

 

Charts: Bloomberg


    



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Socialists Furious As Denmark Lets Goldman Have The Dong

Yesterday we reported that Goldman’s attempt to buy an 18% stake in Dong Energy, the world’s biggest operator of offshore wind farms, while largely preapproved by Danish politicians, had met with solid resistance by the broader population, which had started a petition to block the sale, signed by nearly 200,000 as of yesterday. Alas, despite the valiant effort by the population to keep the energy company – with 68% of the population polled as being against the deal – the country’s politicians, certainly with no palms greased by the world’s biggest depositor-insured hedge fund – just let Goldman have the DONG.  As Bloomberg reports, “a majority in Denmark’s parliament will let Goldman Sachs Group Inc. proceed with its purchase of a stake in state-owned utility Dong Energy A/S, according to a senior lawmaker in the ruling Social Democrat Party.”

The socialists were not happy, and as a result left the ruling coalition:

The coalition, which the Socialist People’s Party quit today amid resistance to the Goldman deal, will be able to count on votes from the opposition Liberal and Conservative Parties to muster a majority in parliament, Benny Engelbrecht, a spokesman and lawmaker for the Social Democrats of Prime Minister Helle Thorning-Schmidt, said in an interview. “The votes are there,” he said.

As a reminder, here is what the Dong fiasco is all about:

Parliament’s finance committee is due to vote after a meeting at 1 p.m. in Copenhagen today on the Wall Street bank’s bid to pay 8 billion kroner ($1.5 billion) for an 18 percent stake in Dong. A Megafon poll conducted by TV2 showed 68 percent of Danes are against Goldman holding the stake and thousands of protesters gathered outside the parliament last night to voice their anger over the deal.

 

The Dong share sale is putting more nails in the government’s coffin,” said Christoffer Green-Pedersen, a political science professor at the University of Aarhus. “They won’t survive the next election unless they find a way to highlight their successes.”

 

Finance Minister Bjarne Corydon, a member of the premier’s Social Democrat party, has fought off growing opposition to the deal from unions, lawmakers and voters while maintaining backing from opposition parties. Poul Nyrup Rasmussen, a former Social Democrat premier, publicly urged Corydon to scrap the deal, calling Goldman a “shady partner.”

Goldman, of course, was unruffled, and said no terms would change as it was about to swallow 18% of the Danish Dong:

“This case emerged out of nowhere; there are so many things that seem off about this, and this was the time to come out,” said Solveig Weiss, a retired Social Liberal voter who was among the protesters. “I’m very disappointed a red government can push this kind of sale. It’s completely right-wing policies and certainly doesn’t help that they’re selling shares to a somewhat dodgy enterprise.”

 

Goldman says the political and popular backlash won’t prompt the fifth-biggest U.S. bank by assets to reassess its bid. The bank won’t — “as a matter of principle” — comment on the political situation in Denmark, Sophie Ramsay, a London-based spokeswoman at Goldman Sachs, said earlier this week.

 

“The government already has low support in polls and this case won’t help in any way,” Jens Hoff, a professor of political science at the University of Copenhagen, said by phone. “Core voters are running away because Social Democrats and Socialists consider the whole thing a very bad idea.”

Oh well: another government brought to its knees by Dong and Goldman. Won’t be the first time this has happened…


    



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My SEC Warning Regarding RBS Prescient As Biggest Loss Since Crisis on Mortgages Provision

Bloomberg reports Royal Bank of Scotland Group Plc, Britain’s biggest government-owned lender, is on track for its largest pretax loss since 2008 after setting aside 3.1 billion pounds more ($5.1 billion) for legal and compensation claims. We will delve into this report in detail, but first a little background so we’re all viewing 20/20.

I’ve been spending a lot of time rebuilding the banking system as software over a cryptocurrency framework. Basically, I’m building a more efficient, more “Trustworthy” financial system. Many are doubtful of these endeavors. I say, don’t underestimate the effort. For one, a more efficient, more trustworthy system is sorely needed. Here we are, 7 years after the start of the great financial trainwreck that I’m known for predicting, and I’m still at it doing the same thing to the same industry. This is only possible when there’s a structural problem in the industry. A problem that rapid advancements in technology are ripe to solve.

On Thursday, 11 April 2013 I penned, I Illustrate How The Irish Banking Cancer Spreads To The UK Taxpayer And Metastasizes Through US Markets! wherein I clearly illustrated that RBS is materially understating its liabilities AND even went so far as to include links to the SEC and the UK banking regulator so that US/UK taxpayers and investors can notify our erstwhile regulator(s) to the potential of financial shenanigans. The root of the problem is that RBS has materially under-reported its liabilities (in my oh so humble opinion.) Those that stress tested RBS (the same erstwhile professionals that allowed the Irish banks to pass their stress tests 3 months before they started collapsing) apparently overlooked humongous swaths of liabilities. 

The amount of evidence that I produced to back my claims was prodigous…

What happened behind closed doors?

Ulster Bank gave a first floating charge in favor of the Central Bank of Ireland (an arm of the European Central Bank) and the Financial Services Authority of Ireland. U.S. investors would have had to rely on the contents of The Royal Bank of Scotland’s 2008 Annual Accounts which apparently (in my opinion) concealed the existence of the CRO registered charges to the Bank of Ireland.

Ulster Bank RBS charge doc 2 Page 1 >Ulster Bank RBS charge doc 2 Page 1

Now, back to the Bloomberg article

The provision includes 1.9 billion pounds for lawsuits and fines tied mostly to the sale of $91 billion of mortgage-backed securities from 2005 to 2007, the lender said yesterday. It follows agreements Deutsche Bank AG, JPMorgan Chase & Co. and UBS AG (UBSN) struck with U.S. regulators to settle claims they didn’t provide adequate disclosure about mortgage-backed debt sold in the housing bubble that preceded the 2008 financial crisis.

Are they referring to claims similar to the ones I made that RBS  bought Ulster Bank full of unrecognized mortgage crap, levered up off it and hid the debt? I strongly suggest my readers brush up on how The Irish Banking Cancer Spreads to the UK.

More than five years after giving RBS the biggest bank bailout in history, the government still hasn’t been able to cut its 80 percent stake.

… “When the crisis broke, the bank was involved in a number of different businesses in multiple countries that have subsequently faced heavy scrutiny by customers and regulators,” McEwan, 56, said in yesterday’s statement. “The scale of the bad decisions during that period means that some problems are still just emerging.”

… The charges led the bank to cut its forecast for its core Tier 1 capital ratio, a measure of financial strength. RBS expects the ratio will be about 11 percent at the end of 2013, or as much as 8.5 percent under the latest rules set by the Basel Committee on Banking Supervision. That’s down from the company’s estimate of 11.6 percent and 9.1 percent in November.

“Fronting up to our past mistakes is very expensive, but RBS is a much stronger bank that can deal with these costs on its own while running a good capital position,” McEwan said on the call. “Dealing with these litigation and conduct issues is essential if we are to move the bank forward.”

Well, I still haven’t noticed them come clean on the Ulster Bank charge issue. If they really are going to “Front[ing] up… past mistakes” then they really need to address this, no? If the Ulster Bank charges are included in the Basel capitalization guidelines, then RBS needs a bailout, and needs one Now! It doesn’t end their though. On Monday, 20 May 2013 I queried Who is RBS? Royal BS… or the Royal Bank of Scotland, to wit:

“An independent Scotland would have an exceptionally large banking sector compared to the size of its economy – with banking assets of more than 1250 percent of Scottish [gross domestic product] – making it more vulnerable to financial shocks and the volatility of the sector,” the Treasury report said on Monday.

The report pointed out Scotland’s banking exposure would dwarf that of Iceland and Cyprus, two countries that faced severe banking collapses in recent years. Iceland’s banks, for example, had assets equivalent to 880 per cent of GDP, while Cyprus, which faced a banking crisis in March, had total banking assets of around 700 per cent of GDP.

The report as cited by the article then goes on to make more direct comparisons to Cyprus, not unlike I did two months ago, but with Ireland (see As Forewarned, The Irish Savers Have Just Been “Cyprus’d”, And There’s MUCH MORE “Cyprusing” To Come). 

“At the end of September 2012, the two largest banks – the Cyprus Popular Bank and Bank of Cyprus – had assets in the region of 210 per cent and 175 per cent of Cyprus’s GDP respectively.”

“It is worth noting that, if Scotland became independent, its banking sector would be similarly concentrated (with two large players, Bank of Scotland and Royal Bank of Scotland and a number of smaller firms), and that an independent Scotland’s domestic banking sector would be likely to be significantly larger than that of Cyprus (assuming no change to firms’ domicile arrangements).”

I penned, I Illustrate How The Irish Banking Cancer Spreads To The UK Taxpayer And Metastasizes Through US Markets! wherein I clearly illustrated that RBS is materially understating its liabilities AND even went so far as to include links to the SEC and the UK banking regulator so that US/UK taxpayers and investors can notify our erstwhile regulator(s) to the potential of financial shenanigans. The root of the problem is that RBS has materially under-reported its liabilities (in my oh so humble opinion.) Those that stress tested RBS (the same erstwhile professionals that allowed the Irish banks to pass their stress tests 3 months before they started collapsing) apparently overlooked humongous swaths of liabilities. The charge documents referred to in the aforelinked article are definitively not apparent in the recent bank stress testing’ conducted by the European Banking Authority, at least not in the summary results that the EBA have made available. For those who are still skeptical, I beg thee reference the RBS Stress Test download.

To think, there are actually many who query as to why I seek to make a more efficient financial system…

With the latest advances in technology, I can literally replace large swaths of bank functions with software. Software that doesn’t lie, cheat, steal, or screw you for a bonus! Zero Trust software…

page-0page-0page-1page-1page-2page-2page-3;”>page-3page-4page-4page-5page-5

If the RBS/Ulster Bank mortgage-backed secutities would have been traded through UltraCoin, rehyppthecation, double-spending, over-leverage, and thrice pledged assets would have been a thing of the past. These contracts are overollateralized (200%) and use no leverage, yet still hold the promise of significant return, not to mention a mere fraction of the cost of the big bank stuff. Will the dawn of this technology herald the end of fractional reserve banking as we know it?

Let it be known, Wall Street banks’ profit margin IS my business model!!!


    



via Zero Hedge http://ift.tt/MkNxnQ Reggie Middleton

Baltic Dry Index Collapses 50% From December Highs To 5-Month Lows

We are sure it’s just a storm in a teacup; just a brief interlude before the IMF’s ever-changing forecast for global trade growth picks right back up again and demand to ship dry goods surges back to the inventory stuffed levels of Q4. But, for now, the Baltic Dry Index (admired when it’s rising, ignored when it drops) has collapsed by over 50% from its December highs and is back to August lows.

 

 

 

Charts: Bloomberg


    



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