The Mess That Greenspan Made - Part 415

Retail Sales Up 0.1%, Down 0.2% Ex-Autos

The Commerce Department reported(.pdf) that retail sales in the U.S. came in well below expectations last month, rising 0.1 percent in December following an upwardly revised increase of 0.4 percent in November. Excluding automobiles, sales fell 0.2 percent after a gain of 0.3 percent the month prior.

Apparently, American consumers bought nearly all of their iPads, iPhones, and big screen TVs in November as electronics & appliance stores saw sales plunge 3.9 percent in December, the largest decline amongst six of the 13 categories where sales were lower. Gasoline station sales fell 1.6 percent due to a plunging price at the pump and sales at general merchandise stores fell 0.8 percent.

Motor vehicle sales rose 1.7 percent last month and home improvement stores saw a 1.6 percent increase to lead the advancing categories as food and clothing sales both rose 0.7 percent. On a year-over-year basis, overall sales were up 6.5 percent and, for all of 2011, sales rose 7.7 percent, both fairly impressive increases given the slow economic recovery.

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Thursday Morning Links

Strong Italy, Spain bond auctions buoy stocks – AP
ECB holds rates while policy package takes effect – Reuters
Bank Of England Leaves Key Rate, QE Unchanged – Nasdaq
For Europe, Few Options in a Vicious Cycle of Debt – NY Times
China Snubs Geithner on Iran Oil, Japan May Cut – Bloomberg
China’s collapse ‘will bring economic crisis to climax in 2012′ – Guardian
Two versus ‘La Merkel’: Italy and France Team Up against Germany – Spiegel
The US housing bubble: What Greenspan should have done – Baker, Aljazeera
Revolving Door From Top Futures Regulator to Top Futures Lobbyist – Taibblog
Stratfor: ‘We neither know nor understand, but we’re back…’ – FT Alphaville
Jon Corzine – Lives Of The Rich And Famous – DOTE
California Looking Greece-ier – Daily Capitalist

Oil prices rally on Iran, Nigeria concerns – AP
Gold rises as Spanish bond sale lifts euro – Reuters
EIA: 2012 oil price to be $100 per barrel – xinhuanet
Pimco’s Bill Gross Buys Still More Treasurys – WSJ
David Rosenberg Explains What (If Anything) The Bulls Are Seeing – Zero Hedge
Goldman, Morgan Stanley both see much higher gold prices this year – Mineweb
PBOC buying may have boosted November gold imports in China – BullionStreet
China’s Gold Imports From Hong Kong Climb to Record – Bloomberg
Precious Metals Monitor: Gold On Cusp Of Upside Breakout – HAI

Economists Scoff at Obama, Romney Myths – Bloomberg
Obama considers rewarding firms for returning jobs to U.S. – Washington Post
Losing Momentum: Germany Could Face Recession in 2012 – Spiegel
If no trade reversal now, then when? – China Financial Markets
China inflation eases to 15-month low – Globe & Mail
What Germans Really Think About the Greeks – NetNet
Poll: Don’t Tread on My Mortgage-Interest Deduction – WSJ
The fight over Bernanke REO rental plan shows political divide -Housing Wire
Kocherlakota Shines Light on Mechanics of Fed Meetings – WSJ
Fed’s Plosser: may need to raise rates before mid-2013 – Reuters
Fed’s Beige Book more upbeat about economy – MarketWatch
Fed risks inflation with talk of QE3 – MSN Money
Fed officials at odds over policy path – Reuters


It’s Romney By a Mile

This report at Zillow on the value of the homes owned or rented by the remaining GOP candidates for President was just crying out for a graphic and I was happy to oblige.

Of course, there are some caveats related to the numbers above. For example, gazillionaire Mitt Romney owns a few homes in various parts of the country and the $9.6 million one listed above is about to be torn down to make room for a bigger one. Also, Texas Governor Rick Perry has been living in the Governor’s Mansion for years and the figure above is for a rental property he used a few years ago when the state residence was being renovated.

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MF Global and Montana Farmers

Wishful thinkers can hope that the MF Global bankruptcy filing and the dubious actions that followed to protect the biggest interests involved (e.g., Jon Corzine and JP Morgan) might finally lead to the dismantling of the Washington-Wall Street connection that seems to be a key component in the nation’s downward spiral in recent years.

One step in that direction originates in this part of the country where, according to this Bloomberg story, farmers are suing MF Global in an attempt to recover their money.

The lawsuit filed today by three farmers and a cattle- raising operation in Montana seeks to represent a nationwide group of commodities futures customers whose money went missing amid the $41 billion bankruptcy of MF Global, parent of the futures brokerage that is being liquidated. A trustee is looking for $1.2 billion or more in money missing from commodity customers’ accounts.

Corzine, the former governor of New Jersey, and other executives at MF Global made “knowingly false statements” to induce the plaintiffs to enter into contracts with the brokerage, according to the complaint filed in federal court in Missoula, Montana.

The executives failed to disclose to customers that their money was used to finance MF Global’s bad bets on European sovereign debt, the farmers said in the complaint.

What’s really disturbing about the whole idea of farmers suing Wall Street futures trading firms is that, more than 100 years ago,  futures markets were originally set up in the MidWest specifically for farmers and that system worked pretty well until the last decade or two when Wall Street began to really throw its money around.

Futures markets had always been a way for buyers (e.g., food manufacturers) and sellers (e.g., farmers) to lock in prices and add some predictability to their business while a relatively few number of speculators would bet on which way prices would go, adding liquidity to these markets in the process.

Now, you’ve got some well connected, ex-Goldman Sachs head who manages to run a futures trading firm into the ground and a billion dollars – some portion of it belonging to farmers all across the country – goes missing.

What a sad commentary on the direction the nation has been heading.

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Confidence in the U.S. Economy Surges

A new Gallup poll shows that, after steady improvement since the summer debt-ceiling debacle lows, confidence in the U.S. economy has steadily improved and now sits at its highest level since last May, just as gas prices near $4 a gallon were starting to bite.

An improving labor market and lower pump prices are no doubt major factors behind the recent rise that led to a surge in holiday sales as Americans renewed their decades long love affair with credit card debt (temporarily at least) as noted in this item yesterday.

While this is consistent with other measures of consumer confidence, it’s worth noting that, at -27, the latest Gallup poll readings are well below what might be considered “normal” as is the case for other gauges of  consumers’ mood that remain at “recession levels”.

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