Freedomshift

If you were interested in learning about the conditions that conspired to create the great American housing bubble which burst in spectacular fashion in 2008 and brought the entire global financial system to its knees, you might start by reading the history of Fannie and Freddie, or you might take a hard look at Blythe Masters and the wizards who created the credit default swap, or, if you wanted to save yourself quite a bit of time and effort, you could just look at the current market for subprime auto loans. You see, the much maligned "originate to sell" model - which was instrumental in making the American homeownership dream a reality for underqualified borrowers in the lead up to the crisis - is alive and well and is 'in the driver’s seat' so to speak when it comes to auto sales in America. Read more: here

- U.S. state budgets rely on “faulty practices” – Volcker - Shoddy budget practices push costs to future generations - Faulty budget practices lead to poor policy making - “Problems hidden by lack of truth and integrity” – Volcker - No common definition of balanced budget allows for gimmicks The highly regarded former chairman of the Federal Reserve, Paul Volcker, has severely criticized the State Governments in the U.S. over “faulty practices” used to devise budgets which mask the true financial position of those states. Read more: here

To be sure, the good folks at Santander Consumer and American Credit Acceptance (among others) are doing everything they can possibly do to get underqualified borrowers into used cars even if it means extending terms that will land some of these proud new owners in vehicles they absolutely cannot afford given their financial circumstances. This is all made possible of course by the Wall Street securitization machine which has churned out some $5 billion in subprime auto-backed issuance YTD, with a recent deal from Santander Consumer (DRIVE 2015-A) marking the lender’s return to the frightening world of “ deep ” subprime. As a reminder, here are two recent ABS deals which epitomize what’s wrong with this industry: From American Credit Acceptance… Read more: here

It's Christmas again, time to celebrate the transformation of Ebenezer Scrooge. You know the ritual: boo the curmudgeon initially encountered in Charles Dickens's A Christmas Carol , then cheer the sweetie pie he becomes in the end. It's too bad no one notices that the curmudgeon had a point—quite a few points, in fact. To appreciate them, it is necessary first to distinguish Scrooge's outlook on life from his disagreeable persona. He is said to have a pointed nose and a harsh voice, but not all hardheaded businessmen are so lamentably endowed, nor are their feckless nephews (remember Fred?) alwavs "ruddy and handsome," and possessed of pretty wives. These touches of the storyteller's art only bias the issue. So let's look without preconceptions at Scrooge's allegedly underpaid clerk, Bob Cratchit. The fact is, if Cratchit's skills were worth more to anyone than the fifteen shillings Scrooge pays him weekly, there would be someon...

While by now everyone should know the answer, for those curious why the US unemployment rate just slid once more to a meager 5.9%, the lowest print since the summer of 2008, the answer is the same one we have shown every month since 2010: the collapse in the labor force participation rate, which in September slid from an already three decade low 62.8% to 62.7% - the lowest in over 36 years, matching the February 1978 lows. And while according to the Household Survey, 232,000 people found jobs, what is more disturbing is that the people not in the labor force, rose to a new record high, increasing by 315,000 to 92.6 million! And that's how you get a fresh cycle low in the unemployment rate. Read more: here

The "robots are taking over the world" concept has been a staple of science fiction for generations. However, the reality of automated production lines and self-propelled disc vacuums has thus far proved much less intimidating. But the next generation of robots will likely be much more significant. And while we feel that financial markets remain highly distorted by excess liquidity, and that growth stocks always involve higher risk, it is undeniable that transformative innovations can present opportunities. Recent moves by Google ( GOOGL ) and Amazon ( AMZN ) highlight the wave in robotics. In 2013, Google purchased eight startups focused on robots, and this year it unveiled dramatic improvements to the driver-less car concept that it first introduced in 2012. Recently, Amazon made a big stir on "60 Minutes" by introducing an internet-controlled air drone delivery system. Although some dismissed it as a stunt, Amazon founder Jeff Bezos insisted that th...

Prosperity Requires Privacy Privacy is a prerequisite for a prosperous economy.    Even the White House admits : People must have confidence that data will travel to its destination without disruption. Assuring the free flow of information, the security and privacy of data, and the integrity of the interconnected networks themselves are all essential to American and global economic prosperity , security, and the promotion of universal rights. Here are four ways mass surveillance hurts our economy ... Read more: here

"Loan forgiveness creates incentives for students to borrow too much to attend college, potentially contributing to rising college prices for everyone," is a study's warning over government plans that allow students to rack up big debts and then forgive the unpaid balance after a set period. As WSJ reports , enrollment in student debt forgiveness plans have surged nearly 40% in just six months, to include at least 1.3 million Americans owing around $72 billion . The administration is looking to cap debt eligible for forgiveness, as President Obama's revamped Pay As You Earn scheme has seen applications soar and is estimated to cost taxpayers $14bn a year. The 'popularity' of the student loan bailout plan surged after Obama promoted it in 2012, and now the administration must back-track as costs have massively outpaced government predictions. More: here

As if there was any surprise that Yellen was fundamentally an uber dove, she just confirmed it. Here are the key highlights from her speech from Bloomberg. YELLEN SEES `CONSIDERABLE SLACK' IN ECONOMY, LABOR MARKET YELLEN SAYS QE TAPER DOESN'T MEAN REDUCED STIMULUS COMMITMENT YELLEN SAYS ECONOMY, JOB MARKET ` ARE NOT BACK TO NORMAL HEALTH ' YELLEN SAYS FED SHORT OF REACHING EMPLOYMENT, INFLATION GOALS YELLEN SAYS POST-CRISIS LABOR MARKET STRENGTHENED CONSIDERABLY YELLEN SAYS FED TAKES ITS 2% INFLATION GOAL `VERY SERIOUSLY' YELLEN SAYS DECLINE IN JOBLESS `GRADUAL BUT REMARKABLY STEADY' YELLEN SAYS ECONOMY NEEDS EXTRAORDINARY SUPPORT FOR `SOME TIME' Read more: here

While the FT promptly retracted an article on precisely the topic of gold manipulation from earlier this week ( recorded for posterity here ), Bloomberg appears to not have had the same "editorial" concerns and pressures, and today released an article once again slamming the final conspiracy theory that while every other asset class is manipulated, gold is in a pristine class of its own, untouched by close-banging, price fixing traders or central bankers, and reports that "the London gold fix, the benchmark used by miners, jewelers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say. " Read more: here

"The bank is looking for opportunities to stem its revenue decline as overall mortgage lending volume plunges. It believes it has worked through enough of its crisis-era mortgage problems, particularly with U.S. home loan agencies, to be comfortable extending credit to some borrowers with higher credit risks. The small steps from Wells Fargo could amount to a big change for the mortgage market. After the subprime mortgage bust brought the banking system to the brink of collapse in the financial crisis, banks have shied away from making home loans to anyone but the safest of consumers. Any loosening of credit standards could boost housing demand from borrowers who have been forced to sit out the recovery in home prices in the past couple of years, but could also stoke fears that U.S. lenders will make the same mistakes that had triggered the crisis." and ........ "So far few other big banks seem poised to follow Wells Fargo's lead, but some smaller...

Blackstone Group appears to be trying to oligopolize the business of renting single-family homes in the U.S.. As Bloomberg reports , after the housing crash left more than 7 million foreclosed homes in its wake, the investment firm has spent more than $7.8 billion purchasing about 41,000 single-family homes for rental conversion. The world's largest private equity firm has quickly become the largest landlord (of rental homes) in the U.S. and in October, Blackstone offered the first-ever "rental-home-backed" security on Wall Street. Read more: here

China just dropped an absolute bombshell, but it was almost entirely ignored by the mainstream media in the United States.  The central bank of China has decided that it is "no longer in China’s favor to accumulate foreign-exchange reserves".  During the third quarter of 2013, China's foreign-exchange reserves were valued at approximately $3.66 trillion .  And of course the biggest chunk of that was made up of U.S. dollars.  For years, China has been accumulating dollars and working hard to keep the value of the dollar up and the value of the yuan down.  One of the goals has been to make Chinese products less expensive in the international marketplace.  But now China has announced that the time has come for it to stop stockpiling U.S. dollars.  And if that does indeed turn out to be the case, than many U.S. analysts are suggesting that China could also soon stop buying any more U.S. debt.  Needless to say, all of this would be very b...

There is a reason why US consumer revolving (credit card) credit growth is getting lower and lower and lower and at last check posted a mere 0.2% annual increase . That reason is that as the NY Fed disclosed moments ago , federal student loans officially crossed the $1 trillion level for the first time ever. Notably: the quarterly student loan balance has increased every quarter without fail for the past 10 years ! More here

The government shutdown isn’t slowing down the warmongers.  For example: The CIA is ramping up covert training program for Syrian rebels President Obama has waived a ban on aiding regimes that use child soldiers The Department of Defense awarded 94 new contracts  worth a combined total of more than $5 billion dollars the day right before the government shutdown DoD will continue to award contracts during the shutdown … but will stop publicly announcing them The giant $2 billion dollar NSA spying center in Utah is still opening (the NSA is part of the Department of Defense , which carries out assassination and cyber-warfare campaigns, as well as destroying the privacy of American citizens) As Ron Paul notes , military spending will increase 18% even after the sequestration “cuts”: Read more: here

Edward Snowden said yesterday: The success of economies in developed nations relies increasingly on their creative output, and if that success is to continue we must remember that creativity is the product of curiosity, which in turn is the product of privacy . He’s right. Anonymity and privacy increase innovation. Anyone who has ever played a musical instrument knows that you need time to experiment and try new things in the privacy of your home – or your band’s garage – in order to improve. If every practice was at Carnegie Hall in front of a big crowd, you would be too self-conscious to experiment and try something new. Same with every other field. Think of an artist painting in the middle of a major museum. Or a beginning programmer (think of a young Bill Gates or Steve Jobs) whose code is being livecast all over the Internet. Or a brilliant inventor (such as a leaner Elon Musk) whose first rough sketch is being dissected in real time. Read more: here