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Friday, May 27, 2011


That's me, working my anxieties and frustrations out on the woodpile.

Brief summary of what I am watching:
A) Waiting for Census data, which continues to dribble out. Nothing at the level of detail I need for incomes yet, but homeownership came out at 65.1% for 2010, which is far more credible than the official number, which is why I have been ignoring the official number. I expect homeownership to go below 65%, but that number is bad anyway - it's less than it was in 2000. The CES (Consumer Expenditures Survey) numbers released last year never did balance out for me, so I am waiting for this year's Census 2010 to be able to rebalance all my tables. After that, I can make a stab at some more detailed calculations, but right now I really can't. So no new fried egg graphs for a while. Work faster, Census!!

B) Rail and Truck freight: This week's carloads were better at +2.3% YoY, still hanging in YTD +3.3%. I hope, I hope. Intermodal is just pacing along at exactly the same levels. April ATA Truck Tonnage was down -0.7%, but it had been up 1.9% in March. This is not an awful number, considering what had happened with auto production (strongly linked to the Japanese disaster).

C) Personal Income and Outlays: Today's release has the normal revisions, which have something to do with why GDP was reported lower than expected. Feb-through-April DPI in chained 2005 dollars is now reported as -0.1, 0.0, 0.0. We'll see. DPI is calculated by taking income estimates and subtracting taxes; the resulting number has little to do with how a household experiences its disposable income (after bills and fixed expenses). Also, the tax figure is not as accurate as it could be, because local and state taxes are poorly reported.

D) H.8 Commercial Bank Liabilities and Assets: Consumer lending still down for April; bank lending is reported up, but that was basically in treasuries, because loans and leases are still dropping. April other deposits up strongly at 7% annualized, and that is really because households have increasing concerns about covering basic expenses and so are trying to reserve cash. If you are seeing your utility, fuel and food costs go up rapidly, most middle income households will respond by pulling back on discretionary income and trying to have more cash on hand. Remember, last year's holiday spending was mostly cash. Some households are still paying off winter heating, and those households will want to have cash to cover next year's expected expenses before blinging on anything. Real estate loans were down 12.5% annualized; consumer loans were down 1.8% annualized, revolving was down 0.4% annualized. This is probably from gas purchases; I don't think consumers are running up their cards, but the rolling impact of weekly gas and food price increases should tend to increase outstanding balances each week for a while.

E) Q1 Chargeoffs and delinquencies at commercial banks. This should be the temporary low for many categories of lending, because to put it bluntly, households with moderate incomes should start defaulting on their obligations again. Supermarkets look ugly even in areas that should be good. It would appear that many middle income households can't feed themselves the way they used to; living standards for many moderate income households appear to be plummeting. It looks like we are going to 50s standards of living, which were pretty constrained.

Seasonally adjusted residential mortgage delinquencies increased slightly. Total loans and leases delinquencies barely dropped (6.33% -> 6.16%). C&I delinquencies are way down - their peak was 4.30% in the second half of 2009, and they are currently 2.48%. Chargeoffs are still dropping, but are historically very high. I keep reading complaints or gentle hints from Fed govs about banks needing to loosen up on the lending. Well, do we really need more bankrupt banks? The lending atmosphere is getting a little more difficult on some segments right now, so I don't see that happening!

F) Pending Home Sales for April. I include this for the sake of completeness, but I wouldn't read it if I were you. Some of the sheer grisly horror of it should be related to technical revisions designed to make it more accurate; most has to do with the FHA insurance premium increase that took effect in April, which shifted sales to new homes with immediate sales so that buyers could lock in the lower premiums before the increase. The only reason to read this thing is if you believe that the New Home sales report meant that housing was improving. It isn't. On a non-seasonally adjusted basis, pendings were down over 25% YoY. On an SA basis, pendings were down over 25% YoY. The west is still the best region, but some of that is due to the larger number of new homes out there. Housing will not help the US economy in 2011, and that's all there is to it.

Sometime after we get Census data I will sit down and go through the likely effects of the FHA problem for the future, because that is an important policy issue. But I may need large doses of painkillers to do it, because we have a major, major problem.

Middle class is the nouveau poor now.
Here's more evidence of renewed consumption austerity.

Word Verifcation: filserea

I bet it is a new SUV that runs entirely on popcorn. This might be the ad campaign.

fill serea, serea
ethanol is free, it's free
the future's so bright you see
fill serea, serea
popcorn's free, it's free

I figure Doris Day could sing it. It is so upbeat.
You know MOM, our problems would be solved if you took our *politicians* out to the woodpile ... that would be ever so much more efficient. :)
Who Struck John,

Let's *chuck* the politicians we have and start over. Normally I'm a fan of sticking with a known evil over an unknown one, but how much worse could we possibly do?

Q: How much wood would a woodchuck chuck if a woodchuck could chuck wood?

A: All of them!
Once upon a time, long ago there was near-sucidal Vietnam vet who was saved by a nice Jewish shrink who taught him how to get in touch with and relieve his anger by chopping wood, digging ditches, shoveling snow, or pumping iron.

How fortunate you are to have learned it on your own. Just proves MOM has skills many can only wish for. Best anger management in the world.

No longer have a wood pile, so it's dumbbells for me. However, the old wood pile is very nice. A vision of the axe splitting the cabeza of your tormentor is enormously satisfying and therapeutic. Then after you have exhausted yourself, a sense of peace and love envelopes you. Until the next time.

I'm pumping a lot more iron than is necessary for fitness alone these days.
This is interesting.
"Unless the United States has the most spectacular cognitive awakening since Brunhilda, if not Lazarus, the laws of arithmetic are going to assert themselves in Zeus-like terms.

Meanwhile, the European Union is a water-logged vessel in a tempest, frantically bailing."

Read it all here:
Y'know, I've never really believed that the worst would happen. I figured that one good look into the hyper-inflationary abyss, or even just a few whispers about the dollar losing "reserve status", would be enough to convince a super-majority that things have to change.

Right now, I'm not so sure.

Right now, I'm asking what the Fed will do when commodities and equities collapse as the recession bites down, and the answer is QE3, QE4,...,QEn. It's pretty clear the Republicans are going to get beaten like a rented mule for talking about changes to Medicare, so certainly no Democrat will be stupid enough to meet them halfway. Next year will be another game of "who can make the biggest promise".

Maybe I should go chop wood.
For Mark:

Woody Herman, Woodchopper's Ball
My boyfriend is on SS disability. When I talk to him about that fund running out of money in 2018 and how Medicare can't be saved without making some of the major changes being discussed, he just doesn't believe it. He's run a business before, so it's not like he doesn't understand funding. People simply cannot believe that they will have to make any changes. Somehow, they figure someone will pull it off and life will go on as before.

If you read about people's lives at the onset of the Great Depression, you see the same thing. No one really thought it would get that bad.
from: http://en.wikipedia.org/wiki/Normalcy_bias

"The negative effects can be combated through the four stages of disaster response:
* preparation, including publicly acknowledging the possibility of disaster and forming contingency plans
* warning, including issuing clear, unambiguous, and frequent warnings and helping the public to understand and believe them"

The Fed and many if not most in congress are dead set on extend and pretend, which ensures that when the disaster finally hits it will be about as fast and severe as possible, and that it will catch much of the public as inadequately prepared as possible.

It's a disheartening positive feedback loop: People are too ignorant to want to vote for those that will provide real solutions. Politicians won't tell the public the truth and talk about real solutions because they believe they can't get elected that way. (It's also likely many politicians simply don't know the truth. But most are such congenital liars that it can be difficult to differentiate between those two possibilities.) It doesn't help that the government controls most of the schools and molests kids' minds with misinformation.

If the loop is to be broken, it will have to be based on the truth being spread among private citizens. (Watch out for the government trying to put a stop to that by calling people trying to spread the truth "terrorists" and unconstitutionally cutting off their means for speech. Or just wake up and see that they have already started, e.g. assange/wikileaks.) And part of that truth is that the congress is composed mostly of fools and liars and criminals, the people have gotten the government they (collectively) deserve, and it is up to the people to fix that -- government will never fix itself. That's going to be a hard pill for many to swallow, especially on top of the "no free lunch" pill they don't seem to want to take.

Unfortunately I suspect most people will not wake up until *after* the worst of the disaster has already arrived. Reality can be a cruel but effective teacher, at least for those that manage to survive it.

Our bird (Birdie) reacted to the music you offered.

At first she was making the noises she'd make if she saw a crow. That's definitely a bad thing. Now she's making happy noises and preening to it though. That's definitely a good thing.

Oops. It is back to bad again. She just attacked her toys (displacement aggression).

Never really know what she's thinking. I can say that vacuum cleaner noises make her bathe in her water bowl. Maybe it sounds like rain to her.

My word verification is "chant". Spooky.
Foo - I don't think it is so much a problem of an ignorant populace as of an ignorant political power structure.

When you back off and look at it, concerns among the people have been far more fore-sighted than among the TPTB.

But until the political superstructure can get back into reality territory, the voting options among the population are likely to be quite limited.
Jimmy - I think the wood cure releases endorphins or something like that. The peaceful easy feeling lasts for quite some time!

My parents' advice for worries was to get up and do something, and it's probably still the best advice out there for people who don't have the basic imbalances in brain chemistry that require clinical intervention!
Mark - Have you tried letting Birdie watch Congress on C-span? How does she react?
Teri - it's really scary. I don't think it is that people don't believe - I think it is that people who are dependent on the government are too frightened to deal with it.

Disability will be cut this decade, or money will be taken from SS to pay for it, thus precipitating earlier SS cuts.

And Medicare is much worse - within six years there will be steep cuts to Medicare coverages. This is a load of worry a helpless person cannot address.
"I don't think it is so much a problem of an ignorant populace as of an ignorant political power structure."

(I'm not sure exactly what you mean by "political power structure" or "political superstructure" -- googling mostly seems to come up with lots of stuff on Marxism.)

If the people say they want X and will throw politicians out on their ass if they don't give it, then politicians' self-preservation kicks in and either they will yield to that request or they will attempt to sway (or distract) the public enough that they don't lose their next election. And the latter won't work if the the population realizes what's going on.

"When you back off and look at it, concerns among the people have been far more fore-sighted than among the TPTB."

TPTB don't have the same concerns as the people. Many of TPTB are probably looking forward to the coming crisis, and as they say, they don't plan on wasting it. I suspect that what you see as TPTB catching up to the people is simply TPTB realizing that the old lies won't work any more because too many of the people have caught on to those ones. But that just means it's time for new lies. The public for the most part remains in a perputal state of being duped. The people may have partial accurate knowledge -- as in knowing things are bad for them and not getting better -- but that doesn't mean they know why they are bad, the real reasons they got that way, or what needs to be done to fix it.

"But until the political superstructure can get back into reality territory"

Like I said, government will never fix itself. The people have to force the issue. A crisis won't cause government to fix itself, though it *might* wake up enough of the people that they finally take sensible action.

I suspect we don't have the same idea of what "reality territory" is. We definitely haven't been there for many decades, and arguably for the better part of a century.

"the voting options among the population are likely to be quite limited."

And why are the people not crying out for instant-runoff voting or some other preferential voting system that would take power out of the hands of the oligarchs that run our two-party system which presents us every election cycle with bad choice #1 and bad choice #2, and instead put power into the hands of the people? I believe it's ignorance. Just go ask 10 random people on the street what they think about "instant-runoff voting" and let us know how many "What's that?" responses you get.
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