High Variation In Multi-family Permits, Nothing Else Though

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

The estimates for home construction in May were pretty much as expected except for one single data point. The calculation for new permits in the multi-family segment jumped by 53.5% year-over-year, completely out of character with everything else. Given that fact, it seems far more likely that the permits estimate is an outlier or artifact of even expected variation. That interpretation is strengthened by the other direction taken by housing starts overall, but especially in the same multi-family area.

ABOOK June 2015 Housing Constr SAAR AvgsABOOK June 2015 Housing Constr NSA Overall

The single-family sector is the same slow, plodding pace absent any excitement whatsoever.

ABOOK June 2015 Housing Constr Single FamilyABOOK June 2015 Housing Constr Single Family NSA

The surge in apartment permits stands out as unique in recent months. It was not that unusual to see such gains during the mini-bubble period a few years back; in fact, 53% would have been at the lower end of that period. Since the middle of 2013, coincidentally, apartment construction has tapered along with QE. Not only have permits fallen back to almost a standstill (before May), actual starts and construction have fallen even worse of late. Maybe the jump in permits is a one-time adjustment to bring construction back up in-line with at least the population, but even that seems dubious. Continue reading

What’s Next in the Greek Farce and Why

Submitted by Pater Tenebrarum  –  The Acting Man Blog

The Man They Hate with a Passion

Euro area politicians and IMF bureaucrats really hate Yanis Varoufakis’ guts with a passion. The media are full with denunciations of the man as “unprofessional”, negotiators of the euro-group let it be known (anonymously, natch) that “it got to the point where eyes roll”, that they were “sick and tired of being lectured about austerity and the effects of the crisis”, in short, it was “impossible to do business with him”.

Why do they hate him so much? Allegedly ,“any sympathy for Greece was eroded by his failure to draft concrete proposals.” Typical Mediterranean lazy bum is the message, in other words. Big on vacuous emoting, but doesn’t want to waste time on doing his homework (plus, he wears no tie…you have to be clad in the technocratic uniform if you want to be taken seriously).

varoubikeThe eurocrats really hate this one. They’re probably all trying to channel Tony G when they meet Varoufakis.

Photo credit: Alkis Konstantinidis / Reuters

Forgive us if our BS meter starts twitching when they are quoting unnamed officials with such pronouncements all over the mainstream press and are hammering the message home with unwavering regularity on Europe’s state-controlled TV stations. The reality is probably this: they hate him because he isn’t one of them.

Varoufakis is no politician, and apparently has no intentions of becoming one. His economic views may be a bit blue-eyed given his alliance with a bunch of lefties, but where and when has he said anything about the Greek situation that was not substantially correct?

As far as we recall, his main points always were: 1. the debtberg is unpayable (check…everybody knows this), 2. European/IMF style “austerity” has worsened an already catastrophic situation in Greece after the bust (check, but see our qualifications below). 3. There has been and continues to be a lot of suffering, and that needs to change (check)

neinStill not good enough…

Cartoon by Ilias Makris

On the second point, we have added “European/IMF style” to the term austerity on purpose. Contrary to Varoufakis we don’t believe that cuts in government spending are the problem, least of all when the government and bureaucracy is as wasteful as Greece’s. The problem is that EU style “austerity” programs are mainly relying on tax hikes, under the erroneous assumption that a shrinking of the State must be forestalled, and hence the bloodless turnip called the private sector must be squeezed ever more. They tried this nonsense in Italy and France as well, predictably to little avail (in France the tax-hike and regulation-happy socialists continue to preside over an economic black hole that threatens to swallow the country whole; unemployment just hit another record high). Continue reading

Redefining Anomaly Through Inventory

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

While the latest business inventory estimates are not yet updated for May, only through April, there is still a great deal of consistency provided by the top to bottom shifts in the economic supply chain. It usually takes an inventory build of tremendous disproportion to trigger the kinds of cutbacks and downstream negative pressures that amount to a recession. The estimates for inventory building provided from the GDP statistics certainly qualify, as do the Census Bureau’s own data.

ABOOK June 2015 Inventory Total Busn Ratio

In this case, Total Business inventory sums all three subchannels: retail, wholesale and manufacturing. Where the GDP estimates show an inventory accumulation that hasn’t been seriously challenged for about a year and a half, that trend may have at least been supported by even lackluster sales growth (especially since the 2012 slowdown) but only until October or November 2014. Since then, inventory is still gaining if at a slowing pace while sales have fallen, and in many cases precipitously. Since inventory amounts to an economic plugline, minor variations in sales do not and probably should not alter inventory and thus production. However, the longer the accumulated downtrend in sales, the more businesses throughout the supply have to hold unsold items, the greater the chance of reaching beyond saturation.

The “cycle” view on business inventory shown above seems to hold that premise all too well. However, if you take a broader view of inventory overall going back more than two decades, this most recent buildup is so out of character it violates not just cyclical sense recently but actually challenges convention about inventory in the economic structure.

ABOOK June 2015 Inventory Total Business Ratio Trend

For decades, predating the Census Bureau’s inventory data series, technology and information processing and communication capability have reduced the overall hold of inventory. Just-in-time and more rapid and responsible logistics made the financial burden of inventory the primary factor in accumulation. That all seems to have changed around 2012.

Since that time, as you can see immediately above, suddenly American businesses in the aggregate have started holding greater levels of inventory without any apparent reason for doing so. This flies directly in the face of convention, which, I think, makes this latest inventory build all that more potentially dangerous and depressive. If businesses, particularly at the top end retail, were growing more and more optimistic about the sales outlook and were actually experiencing at least something close to that in terms of rapid turnover, then the past few years of inventory trends might signal that the supply chain were responding to the best case scenario. Continue reading

The Automatic Earth Moves To Athens

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

Dmitri Kessel Protest against Britain’s murders of partisans, Athens 1944

Next week, on June 25, I will come to Athens (I wish Nicole could join me, but she moved to New Zealand and will be there for now). There is no large fixed agenda set, but through contacts with readers of the Automatic Earth -they’re absolutely everywhere- it’s already clear that there will be a lot to do. Obviously, I will continue to publish everyday on the Automatic Earth site as well, so we may be in for some busy days. Nothing new there.

Still need to secure a place to stay, but I’m sure something will come up. And there are of course never enough readers and friends to get in touch with, so please drop a line at “contact •at• theautomaticearth •dot• com”. I would love to meet as many of you as possible, get you in touch with each other, practice our ouzo toast, dance a zirtaki and have a ball.

Where I’m coming from is talking with people on the street is something that interests me far more than talking to politicians, though I’ll be certain to drop Varoufakis a line, and less visible members of Syriza would undoubtedly make for good conversations as well. What I want to find out, and write about, is how people have experienced the past five years, how they see the next five, and how they hold together.

That last bit is especially poignant since the structure of Greek society is very different from that of America or western Europe. In a good way, if you ask me. Not only is the economy much more ‘self-contained’ -for lack of a better word-, which by the way would make a switch to an -domestic- alternate currency much less painful then it would be in richer, export-dependent nations, but Greek families stick together way more than those elsewhere too.

Ironically, that’s why they can at times -try to- make do with a single pension to feed an entire family, something that would be unthinkable in Holland, Germany, Canada, US. And it’s those very pensions that the troika insists must be further reduced than the 40%+ they’ve already been cut. What goes for families stretches beyond them to a larger circle of friends too.

Meanwhile, my planning could be either way off or right on the nose, depending on one’s view. I see talk of a Lehman moment as early as this weekend, but it looks more likely the whole thing will go down to the wire, which is June 30. Continue reading


Submitted by J.C. Collins  –  philosophyofmetrics

1200x-1Nary a mention in the western media. One has to ask the question why China is so keen on having this happen, along with adopting the IMF data reporting standards.  Could it be that the POM thesis was correct all along?  It’s looking that way.


US senators promoting propaganda against this happening. China calling out the debt ridden G7. Russia is still played as the uber bad guy.  The sovereign debt crisis is deepening.

Seems like the much discussed Hegelian Dialectic is moving along as expected.  Giving the US plausible deny ability on the multilateral transition.  -JC

Also reference this article for further confirmation on integration between BRICS Bank and other global institutions, such as the World Bank. Definitely not the overthrow of the western banking system that some are predicting.


Money is stored labor. Labor is part of human life. To devalue money is to debase life Itself!

By Bruno de Landevoisin

oie_jpg (9)



STEALTHFLATION:  An intractable economic condition that inevitably arises as excessively issued fiat currency compulsively pursues non-productive wealth assets in a grossly over-leveraged economy, which has been artificially reflated by Central Banking authorities, in a misguided attempt to synthetically engineer economic growth via extreme monetization.  (ie: Counterfeit Quantitative Easing & Interest Rate Suppression)

This ill-advised monetary regime effectively prevents the real economy on the ground from realizing the healthy normalization of free market forces crucial to genuine capital formation, authentically derived from bona fide industrious productivity generating actually earned savings, the very life blood essential to inducing legitimate and sustainable growth.

Under the imposition of StealthFlation, asset prices are deliberately inflated in an irrational attempt to elicit a vapid wealth effect, while the generative velocity of money is extinguished.  Contrived Equity Markets are pointlessly driven higher by the perverse implementation of impotent stock buybacks.  Worse still, the seeds of hyperinflation are sown, as the compromised overtly financialized economy becomes increasingly dependent upon the interminable entirely destructive monetization.

It’s not about new Stock Market highs, nor the Dollar and U.S. Treasury safe haven bid.  It’s about tomorrow’s confidence in our monetary system……

Are you confident in the malignant malfunctioning monetization?




Starvation Is The Price Greeks Will Pay For Remaining In The EU

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

Syriza, the new Greek government that intended to rescue Greece from austerity, has come a cropper. The government relied on the good will of its EU “partners,” only to find that its “partners” had no good will. The Greek government did not understand that the only concern was the bottom line, or profits, of those who held the Greek debt.

The Greek people are as out to lunch as their government. The majority of Greeks want to remain in the EU even though it means that their pensions, their wages, their social services, and their employment opportunities will be reduced. Apparently for Greeks, being a part of Europe is worth being driven into the ground.

The alleged “Greek crisis” makes no sense whatsoever. It is obvious that Greece cannot with its devastated economy repay the debts that Goldman Sachs hid and then capitalized on the inside information, helping to cause the crisis. If the solvency of the holders of the Greek debt, apparently the NY hedge funds and German and Dutch banks, depends on being repaid, the European Central Bank could just follow the example of the Federal Reserve and print the money to secure the Greek debt. The ECB is already printing 60 billion euros a month to save the European financial system, so why not include Greece?

A conservative might say that such a course of action would cause inflation, but it hasn’t. The Fed has been creating money hands over fists for seven years, and according to the government there is no inflation. We even have negative interest rates attesting to the absence of inflation. Why will creating money for Greece create inflation but not for Goldman Sachs, Citibank, and JPMorganChase?

Obviously, the Western world doesn’t want to help Greece. The West wants to loot Greece. The deal is that Greece gets new loans with which to repay existing loans in exchange for selling municipal water companies to private investors (water rates will go up on the Greek people), for selling the state lottery to private investors (Greek government revenues drop, thus making debt repayment more difficult), and for other such “privatizations” such as selling the protected Greek islands to real estate developers. Continue reading

Gold Bullion Worth $1 Billion To Be “Repatriated” From NY Fed To New Texas Bullion Depository

Submitted by Mark O’Byrne  –  GoldCore

– Texas creates state gold depository – bringing gold home from New York Fed
– Move to remove gold from Federal Reserve highlights distrust
– Follows repatriation moves by Germany, Netherlands, Austria and others
– Legislation will prevent Federal government from confiscating gold
– Includes provisions that may lead to return to using gold as currency in the U.S.
– New gold electronic payments system protect fromnational financial or currency crisis
– European, UK and Irish governments could learn from prudent monetary move

The state of Texas has just passed legislation to build its own gold bullion depository, to repatriate $1 billion dollars worth of gold currently stored by the Federal Reserve in New York and to create a new gold electronic payments system to protect from “national financial or currency crisis”.

New York Federal Reserve Employees Auditing Gold?

The move is being widely perceived as a vote of no confidence in the privately owned, bank owned central bank and the federal government.

Governor Abbott said that establishing this Depository means Texas will be, “increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for fees to store gold in facilities outside our state.” (see Governor Abbott Signs Legislation To Establish State Bullion Depository )

The law will go into effect immediately and the new Texas Bullion Depository – soon to be  built- will cater to businesses, state agencies and citizens.

Representative Giovanni Capriglione who introduced the bill was reported by the Star-Telegram as saying:

“People have this image of Texas as big and powerful … so for a lot of people, this is exactly where they would want to go with their gold,” leading some commentators to puzzle over whether New York was not “big and powerful”.

Heretofore, it has been Venezuela and European countries that have beenrepatriating gold – Germany, the Netherlands and Austria have sought to bring their sovereign gold home from New York amid fears that the Fed – whose gold stocks have not been publicly audited since 1953 – may not be in possession of the gold it claims to hold.

It is highly significant therefore that a powerful state from within the U.S., such as Texas, should display such apparent distrust of the Federal Reserve. Continue reading

Time To Redefine ‘Easing’ Too

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

At his last news conference on June 3, ECB chief Mario Draghi issued his list of successes so far with QE in Europe. The program was only announced four and a half months ago, being operational only for two, but he was positive that it was already having its intended effects.

“Our monetary policy measures have contributed to a broad-based easing in financial conditions, a recovery in inflation expectations and more favourable borrowing conditions for firms and households,” he insisted.
“The effects of these measures are working their way through to the economy and are contributing to economic growth, a reduction in economic slack, and money and credit expansion,” Draghi said.

Whenever a central banker appeals to “easing in financial conditions” you know straight away that there is little concrete that he/she can point to and take direct credit for (more favorable borrowing “conditions”). “Easing” is a word in this context that has lost all meaning, particularly as some kind of standard as if in a world awash with major QE’s and total ZIRP that we should be grateful there is not an in-progress panic at this moment. That point is made all the more plain by the fact the “easing” phrase accompanies every single monetary program rollout. If easing were the object of monetary policy, there would be so much success by now there wouldn’t be any room to put it all.

ABOOK June 2015 IP ECBQE EoniaABOOK June 2015 IP ECBQE Eonia MRO

European financialism has “progressed” now to the point where it may actually be more fruitful to ask if there has been too much. Judging by everything from Eonia to German bunds, there is a very good case to be made that the ECB is just easing for the sake of easing. Clearly, central bankers expect that trend to turn into something useful, but there is no suggestion of that anywhere in all this financial negativity (nominal rates and all). Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

Starvation Is The Price Greeks Will Pay For Remaining In The EU (PC Roberts)
Not Just Greece, Everyone Should Leave The Euro -There’s No Point (Worstall)
Why Greece Should Choose Eurozone Exit Rather Than Dependence (Irish Times)
Contagion From Greek Crisis Engulfs Eurozone Bonds (Reuters)
Defiant Tsipras Accuses Creditors Of ‘Pillaging’ Greece (FT)
Why Can’t Greece Just Declare Bankruptcy? (Stiglitz/Guzman)
Greece Isn’t Any Old Troubled Debtor (BBC)
Ex-IMF Official Says ‘Errors’ By Lenders Worsened Greek Crisis (Kathimerini)
What Is Reform? The Strange Case Of Greece And Europe (James Galbraith)
3% of the World’s Top Scientists are Greek (Greek Reporter)
Sunday Times ‘Reporter’ ‘Defends’ Snowden ‘Article’ (CNN)
IMF: Inequality Hurts Economic Growth (Guardian)
1% Of Households In 2014 Made Up 42% Of Total Private Global Wealth (Forbes)
Foreign Investors Pose Threat To US Residential Real Estate (MarketWatch)
$112 Billion Fund Manager Worries Bond-Market Fire Doors Are Locked (Bloomberg)
Fast Track Hands the Money Monopoly to Private Banks, Permanently (Ellen Brown)
CIA Torture Has Broken Spy Agency Rule On Human Experimentation (Guardian)
How Pension Funds Face Huge Risk From Climate Change (Guardian)
Pope Warns Of Destruction Of World’s Ecosystem In Leaked Encyclical (Guardian)

Much more here: Debt Rattle June 15 2015 – TheAutomaticEarth.com