Financial Armageddon

So Much for the Facts

In "Obama Says Economy Will 'Come Back Stronger,'" the Associated Press reports that our President remains optimistic despite today's "unexpected" bad news:

President Barack Obama says the May jobs report shows that the economy is not creating jobs "as fast as we want" but vows that the economy will improve.

Obama says, "we will come back stronger. We do have better days ahead."

Not sure what he's basing that on, since the people who probably know best -- those who operate on the economy's front lines -- are not seeing any evidence of it, as Reuters reports in "Economic Worry Tightens U.S. CEOs' Grip on Spending":

CEOs will hold their wallets a little bit tighter heading into the summer after the long-awaited recovery in U.S. employment stumbled in May.

The United States had been a relative bright spot this year in a troubled world economy coping with Europe's debt crisis and a cooling Chinese economy. But a weaker-than-expected May jobs report on Friday gave corporate America fresh worries.

AT&T Inc was one company that was not surprised by the disappointing jobs numbers as it has seen a lack of hiring at both big and small corporate clients. Fewer employees at these companies means fewer phone lines, which hurts AT&T's growth prospects.

"We are not seeing any hiring in the upper end of business in the U.S.," said Randall Stephenson, chief executive of the biggest U.S. phone company by revenue, told an investor conference in New York on Friday. "People aren't hiring a lot in the U.S," he said.

At smaller companies, Stephenson said, the situation was worse. "As you go down-market, it's getting tighter and tighter, and you're seeing the wallet for investment being less open."

Then again, facts don't really matter when you're running for office, right?

Not Exactly Good News

The Atlantic notes that 10-year Treasury bond yields have hit a 220-year low:

One of these days, the bond vigilantes will show up. Today was not that day though. Tomorrow's not looking good either.

The chart below from Bloomberg shows the nominal yield on 10-year Treasury bonds the past five years. Thursday's midday yield was the lowest it's been over that period. It was also the lowest it's been the past 50 years. Actually, 100 years. No, 220 years.

Yes, Thursday's brief sub-1.54 percent yield was the lowest ever.

I suppose most Wall Street "strategists" would say this means stocks are very cheap, since the S&P 500 index has an earnings yield -- earnings divided by price, or the reciprocal of the P/E ratio -- that is more than four times higher and a dividend yield that is 33 percent greater.

Then again, maybe the soaring bond market is telling us something more along the lines of what one successful investor has to say about our future prospects, as Zero Hedge reports in "'The End Game: 2012 And 2013 Will Usher In The End" - The Scariest Presentation Ever?":

If Raoul Pal was some doomsday spouting windbag, writing in all caps, arbitrarily pasting together disparate charts to create 200 page slideshows, it would be easy to ignore him. He isn't. The founder of Global Macro Investor "previously co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul came to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe... Raoul Pal retired from managing client money in 2004 at the age of 36 and now lives on the Valencian coast of Spain, from where he writes." It is his writing we are concerned about, and specifically his latest presentation, which is, for lack of a better word, the most disturbing and scary forecast of the future of the world we have ever seen....

And we see a lot of those.

Consider this:

• We are here...
  
• We don’t know exactly what is to come, but we can all join the very few dots from where we are now, to the collapse of the first major bank…
• With very limited room for government bailouts, we can very easily join the next dots from the first bank closure to the collapse of the whole European banking system, and then to the bankruptcy of the governments themselves.
• There are almost no brakes in the system to stop this, and almost no one realises the seriousness of the situation.
• The problem is not Government debt per se. The real problem is that the $70 trillion in G10 debt is the collateral for $700 trillion in derivatives…
• Yes, that equates to 1200% of Global GDP and it rests on very, very weak foundations
• From an EU crisis, we only have to join one dot for a UK crisis of equal magnitude.
• And then do you think Japan and China would not be next?
• And then do you think the US would survive unscathed?
• That is the end of the fractional reserve banking system and of fiat money.
  
  
• It is the big RESET.

It continues:

• Bonds will be stuck at 1% in the US, Germany, UK and Japan (for this phase).
• The whole bond market will be dead.
• Short selling on bonds - banned
• Short selling stocks – banned
• CDS – banned
• Short futures – banned
• Put options – banned
• All that is left is the Dollar and Gold

It only gets better. We use the term loosely:

• We have around 6 months left of trading in Western markets to protect ourselves or make enough money to offset future losses.
• Spend your time looking at the risks of custody, safekeeping, counterparty etc. Assume that no one and nothing is safe.
• After that…we put on our tin helmets and hide until the new system emerges

And the punchline

• From a timing perspective, I think 2012 and 2013 will usher in the end.

Wow. That's pretty scary, even to me.

Now I've Got It

In "What We Talk About When We Talk About Recession," Bloomberg reports on yet another survey where the majority of respondents view things differently than the so-called experts on Wall Street.

Do feelings trump facts for small business owners? Three years after the Great Recession ended, 71 percent of small business owners indicated they “believe the United States economy is still in a recession,” according to a survey (PDF) of just over 1,000 of them released today by U.S. Bank (USB).

According to Bloomberg, the disparity between what most people are seeing and what is "really" going on is a definitional problem, resulting from the fact that the average Joe doesn't really understand the economic lingo.

To economists, a recession is “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales,” according to the National Bureau of Economic Research, which officially designates when a recession begins and ends.

That wonky definition doesn’t necessarily match how people perceive the economy, says Richard DeKaser, deputy chief economist at The Parthenon Group consulting firm. “It’s not uncommon to see these kinds of dramatic disconnects between experiences and perceptions,” he says. “Even though an economy may technically be expanding, as it has now for three years, most people feel the economy is in a recession if it’s operating below full employment” or its full potential.

The report also suggests that popular perceptions -- or rather, misperceptions -- about the state of the economy stem from a superficial and simplistic assessment of reality, made worse by sound-bite journalism.

Business owners’ view of the economy may also be colored by headlines about stock prices and unemployment that get more attention than the rather obscure calculations of turns in the business cycle, says Brian Headd, economist at the Small Business Administration’s Office of Advocacy. “What we see all the time are stock market levels and job levels,” he says. Neither the unemployment rate nor the S&P 500 have returned to their pre-crash levels, and Headd says many people think “my 401(k) isn’t back where it was yet, so it must be a recession.”

In sum, it appears, the reason why most business owners -- and most Americans -- believe the economy remains in trouble is because they don't have the same knowledge and skill set as the individuals who, as a group, failed to anticipate the worst financial crisis and most severe economic downturn since the Great Depression.

Now I've got it.

'The American Dream For the Average Man Doesn't Exist Any More'

Although your average Wall Street "expert" thinks it's only a matter of time before things return to normal (whatever that is), anybody with half a brain who has been paying even the slightest bit of attention can see that the game has changed.

In fact, all you have to do is sample a few of the conversations and ruminations swirling around us in today's post-financial-crisis world to know that the good old days aren't coming back anytime soon -- if ever.

In "American Dream Faces Harsh New Reality, " KUNC (Community Radio of Northern Colorado) we get a sense of just how much perspectives have changed -- and are changing -- in a country that has long been seen as the land of opportunity and the leader of the free world.

The American Dream is a crucial thread in this country's tapestry, woven through politics, music and culture.

Though the phrase has different meanings to different people, it suggests an underlying belief that hard work pays off and that the next generation will have a better life than the previous generation.

But three years after the worst recession in almost a century, the American Dream now feels in jeopardy to many.

The town of Lorain, Ohio, used to embody this dream. It was a place where you could get a good job, raise a family and comfortably retire.

"Now you can see what it is. Nothing," says John Beribak. "The shipyards are gone, the Ford plant is gone, the steel plant is gone." His voice cracks as he describes the town he's lived in his whole life.

"I mean, I grew up across the street from the steel plant when there was 15,000 people working there," he says. "My dad worked there. I worked there when I got out of the Air Force. It's just sad."

Uniquely American

The American Dream is an implicit contract that says if you play by the rules, you'll move ahead. It's a faith that is almost unique to this country, says Michael Dimock of the Pew Research Center.

"When Germans or French are asked the same questions about whether it's within all of our power to get ahead, or whether our success is really determined by forces outside our control, most German and French respondents say, 'No, success is really beyond our control,' " Dimock says.

In the wake of the recession, that sentiment is now growing in this country.

"I think the American Dream for the average man doesn't exist any more," retiree Linden Strandberg says on a recent visit to the Smithsonian American History museum in Washington, D.C.

To listen to the associated broadcast report, click on the play button below:

To read the rest of the story, click here.

Americans Are Hooked...

...on public assistance.

49.1%: Percent of the population that lives in a household where at least one member received some type of government benefit in the first quarter of 2011.

...

[That figure] is up from 30% in the early 1980s and 44.4% as recently as the third quarter of 2008.

(From "Number of the Week: Half of U.S. Lives in Household Getting Benefits," Real Time Economics)

~~

About 65 percent of federal expenditures over the last ten years have gone towards entitlements. By comparison, about 15 percent has gone towards national defense, excluding the wars in Iraq and Afghanistan. Iraq has cost three percent, and only about one percent has gone towards the war in Afghanistan (including the cost of ongoing military operations and all reconstruction and stabilization assistance combined), according to [blog post author Paul Miller's] analysis of figures from OMB.

(From "Obama's Legacy on Afghanistan," Foreign Policy's Shadow Government blog)

Wandering the Streets

In "Millions Homeless in US: Report," China Daily details an interesting take on economic conditions in our country:

BEIJING - Millions of homeless people wander around streets in the United States, according to a Chinese report on the US human rights record released on Friday.

The Human Rights Record of the United States in 2011, released by the State Council Information Office of the People's Republic of China, said that about 2.3 million to 3.5 million Americans did not have a place that they called home to sleep in the night, and the number of homeless families grew by 20 percent between 2007 and 2010.

Over the past five years, the percentage of singles arriving at shelters after living with family or elsewhere in the community has jumped from 39 percent to 66 percent, the report said.

There is a simple explanation for this, according to China's largest English language newspaper:

The problems concerning human rights were the reflection of the US ideology and political system that ignored people's economic, social and culture rights, and the financial crisis was far from being the sole reason, the report said.

Of course, we know this is not true.

Right?

Almost Laughable

In "‘The Death of Equities’… Again?" FT Alphaville ponders whether sentiment has reached the kinds of extremes that have historically marked major -- secular -- turning points:

Thursday’s FT declares “the end of a six-decade passion for equities”. Quite a claim.

Institutional investors, from pension funds to mutual funds sold directly to the public, have slashed holdings in the past decade. Stocks have not been so far out of favour for half a century. Many declare the “cult of the equity” dead.

The story may evoke a feeling of déjà vu for some. Especially those who read the August 13, 1979 edition of BusinessWeek, which famously also announced ‘the death of equities’.

Admittedly, it took another couple of years for the bear market to end, but what followed was one of the biggest bull markets in history.

As a long-time market-watcher, I am acutely aware of the fact that "the crowd" tends to get overly pessimistic at market bottoms (in fact, for those who accuse me of being a permabear, I would have them note my well-publicized calls for a trading rally in March 2009).

Still, the notion that share prices are at a turning point akin to what we saw in the early-1980s is almost  laughable given that:

1. Interest rates back then were at record highs, while they are near all-time lows now;
2. Price-earnings ratios three decades ago were testing all-time lows and were half of what they are currently;
3. Dividend yields were nearly three times as high thirty-odd years ago as they are today;
4. Mutual fund cash levels in recent years are a fraction of what they were in the early-1980s;
5. Share prices had essentially tread water for a decade-and-a-half prior to the stock market's early-1980s lift-off, while the current malaise has not lasted nearly as long;
6. Hardly anybody was calling for a major bull market just over three decades ago, while these days generational bottom-callers seem to be a dime a dozen.

As always, I could be wrong, but I really don't think, to paraphrase a market cliche, this time is different.

Universal Truth

Everybody's against protectionism --

"China Slams US Over 'Protectionist' Solar Cell Duties" (Agence France-Presse)

BEIJING — Beijing on Friday blasted a "protectionist" US decision to slap hefty anti-dumping duties on Chinese solar cell makers, the latest barb in a series of trade rows between the global economic powers.

The US Commerce Department on Thursday imposed levies of between 31 and 250 percent on Chinese producers and exporters after saying it had found they sold solar cells in the United States at artificially low prices, known as dumping.

But commerce ministry spokesman Shen Danyang said: "Such practices... do not fit with the fact that Chinese enterprises are market economy participants, and highlight the United States' tendency towards trade protectionism.

"The US ruling is unfair and China is extremely dissatisfied."

Chinese solar cell companies on Thursday criticised the US move. --

except when they are doing it --

"Gov't Departments Told to 'Buy Chinese'" (China.org.cn)

China's central government departments have been told to buy made-in-China products when making government procurements, Xinhua reported.

China's Ministry of Finance (MOF) said in a statement Tuesday that central government departments should also procure energy-saving and environmentally-friendly products as well as authentic software.

The statement reiterated the strict regulations which exist governing the purchase of imported products. The statement also suggested that it should be made illegal to purchase imported items which are produced by fully developed domestic industries.

As the global economy continues to deteriorate, expect to see a lot more of this from the Chinese -- and everybody else.

A Different Light

One unspoken but key assumption of those who foresee a return to economic normalcy -- which many seem to believe is already underway -- is that the behavioral patterns that emerged in the wake of the worst financial crisis this century would invariably be shed in favor of old (bad) habits.

But as has often been the case since things first began to unravel, what the so-called experts have said will (or won't) happen has proved to be little more than wishful thinking. In reality, more and more people continue to look at spending, borrowing, saving, and investing decisions in a much different light than they would have five years ago.

In "Deloitte: As Economy Rebounds, Energy Users Stick to Diet," for example, we find that greater energy efficiency has become a growing focus -- perhaps even a mantra -- for individuals and businesses alike.

A new era of energy frugality is taking hold in the United States - even as the economy slowly recovers - according to a survey from the Deloitte Center for Energy Solutions.

Businesses are forging the way by targeting average reductions in energy consumption of nearly 25 percent over a three- to four-year period. Consumers are also doubling down on efficiency - 83 percent report that they took extra steps to reduce their electric bill over the past year and 93 percent say they will use the same amount of electricity or less in the future.

"The recession is profoundly changing energy habits for both businesses and consumers," said Greg Aliff, one of the survey's authors and a vice chairman in the energy & resources sector at Deloitte LLP. "Using less may be the new normal, from boardroom tables to the kitchen tables."

Losing the Buzz

Despite the sharp sell-off in share prices we've seen over the past five weeks (notwithstanding today's bout of irrational exuberance), the divergence between equity and credit markets remains remarkably wide.

But my guess is, just as we saw back in 2011 -- and, in fact, many, many times before that -- we should see the gap continue to narrow as the hopium buzz wears off and equity traders finally become cognizant of the reality their fixed-income counterparts have already cottoned on to.

Not Necessarily True

Many people would argue that more government intervention -- along with more public sector spending and borrowing -- is the only answer to our current woes because the private sector is neither willing nor able to help out. But two recent reports suggest that isn't necessarily true:

"Paying Companies to Hire the Unemployed" (CNNMoney)

Would you donate $6,000 to subsidize someone else's job?

The WorkPlace, a Connecticut non-profit agency, believes the best way to get the long-term unemployed back into the workforce is by paying companies to hire them.

But instead of turning to the government for the money, the agency is trying something different: asking private companies and citizens to support subsidized jobs.

"In order to get long-term unemployed people a chance to demonstrate they can do the job as well as anybody else, you have to use unusual tools and that's one of them," said Joseph Carbone, the agency's chief executive.

More than three dozen companies, non-profits, foundations and individuals have donated more than $580,000 to fund The WorkPlace's initiative, called Platform to Employment. The AARP Foundation kicked in another $200,000 to assist the jobless over age 50.

The program is one of the latest efforts aimed at tackling the thorny problem of long-term unemployment. Millions of people have been jobless for months or years in the wake of the Great Recession, and it's much tougher for them to work their way back into the labor force, particularly if they are older.

"Law Firm's Free Help for Startups Strikes a Chord" (New Hampshire Business Review)

Who says there's no such thing as a free launch?

That's the working tagline for Devine Millimet's Business Launch Initiative, a unique program started by the Manchester-based law firm at the depths of the recession that helps new businesses incorporate, and offers other advice, at no charge.

Already close to 100 companies have launched through the initiative since it began in 2010, including accounting businesses, two breweries, bakeries, a winery, consulting firms and a farm.

The new business owners walking through the law firm's doors are "not just the young people -- it's middle-aged people, it's people who have been outsourced, it's people who have been retired who want to go into business," said Steve Cohen, chair of the mergers and acquisitions team at Devine and a co-founder of the initiative. "The stereotypical new business owner -- there's no such thing."

It's an historical fact that recessions drive entrepreneurship, and the Great Recession was no different. A 2010 study by the Kauffman Index of Entrepreneurial Activity found that in 2009, entrepreneurial activity in the United States grew to its highest level in 14 years, with 558,000 new businesses created each month on average.

As a lawyer, Cohen has seen firsthand the effect that recessions have on entrepreneurship, having incorporated many businesses during the early 1990s recession and after the dot-com bust.

But, he realized, the Great Recession was different from previous recessions. This time around, people had little or no equity in their homes, had little to borrow against in dried-up 401(k)s, and banks weren't lending.

"For setting up businesses, whether they be corporations or LLCs, we looked at, what's the impediment? It's cash," said Cohen. "And who wants to spend the money to incorporate as opposed to buying inventory or putting a deposit down on a lease or actually getting into business?"

Any others worth mentioning?

A Matter of (Mis)Perception?

In "Declinism Resurgent," The Economist notes that Americans are quite pessimistic right now:

Six months from polling day, America’s election campaign has opened with a blizzard of tendentious commercials, contrived razzamatazz and mind-numbing trivia. Was the stadium in Ohio at which Barack Obama launched his campaign on May 5th really “half empty”, as a conservative website reported? (Probably not: there were perhaps 14,000 Obama supporters in a stadium that can accommodate some 20,000 people.) Had the vice-president, Joe Biden, embarrassed his boss by expressing support for gay marriage when Mr Obama’s own thoughts were supposedly still “evolving”? (Not for long: within days Mr Obama announced that he now supported it too.) On May 8th Mr Obama popped up to Albany, New York, with a new gimmick. He unveiled a five-point job-creating “to do” list, which he knows the Republicans in a gridlocked Congress will not enact.

Some people love elections. But data compiled by the redoubtable Bill Galston of the Brookings Institution show that this one is unfolding against a deep gloom. Four recent surveys have found that on average only 28% of Americans are satisfied with the condition of the country, while 70% are dissatisfied. Three recent surveys have found that between 69% and 83% of Americans believe that the country is still in recession (it isn’t), and only half believe that a recovery is under way.

If voters conclude that Mr Obama has failed them on the economy, they will fire him and hire Mitt Romney in November. That is normal. Less normal is how many Americans have come to think that the country is not just passing through a rough patch but is in long-term decline. A survey of 12 swing states found 55% agreeing that the jobs being created in the recovery are of lower quality than those jobs lost during the recession. By a margin of nearly two to one, Americans expect their children’s jobs, salaries and benefits to be worse than their own. Some 35% go so far as to say that America’s best days are behind it.

According to the magazine, this glass-half-full sentiment owes much to the fact that we are in election season, where sharply critical rhetoric coming from both sides of the aisle is serving to accentuate the negative.

In other words, the fact that people feel things are in bad shape -- and getting worse -- is a matter of (mis)perception.

One problem with this view, of course, is that Americans have been feeling that things have been moving in the wrong direction for several years -- that is, before and after the presidential election clown show -- and the so-called economic recovery -- began.

But I guess that's a minor detail.

The 100-Percenters

Looks like the one percent is joining the 99 percent...and shunning stocks:

"For the Rich, Diamonds are the New Stocks" (CNBC)

New studies show that the wealthy are pulling back from stocks and stashing more of their money into real estate, art and even diamonds.

A recent survey from Harrison Group and American Express Publishing found that the wealthy have cut back their allocations to stocks dramatically since the economic crisis. In 2007, the top one-percenters (by income) invested 76 percent of their savings into stocks and financial investments. Now, it’s closer to 46 percent.

That may not sound like an important drop. But the wealthiest one percent own more than half of the individually held stocks in the U.S. When they stop buying, it matters.

All that cash on the sidelines may continue to grow. Harrison Group’s Jim Taylor predicts that total savings stashed away by the affluent could grow to $12 trillion by 2014, about double today’s levels.

A second study from Spectrem Group finds that millionaires are also pessimistic about stocks. The survey found that investor confidence among those with $1 million or more in investible assets  dropped in April for the first time since last summer, when the U.S. debt crisis and Euro crisis started weighing on markets.

The main concerns for millionaire investors were (in order) the prolonged economic downturn, the political environment and national debt.

...

So what are the wealthy doing with their money?

Increasingly, they’re looking for hard assets, collectibles and real-estate.

Under the circumstances, it kind of makes you wonder why share prices are still as high as they are.

Scary Stuff

If every picture tells a story, here's one from a post, "serfchart," at Michael Krieger's A Lightning War for Liberty, that might even give Freddy Krueger the willies:

As Krieger puts it, "this is what you get when a society allows financial oligarchs to take over the economy and rape and pillage at will with zero repercussions."

Indeed.

Double-Quote Reality

If these three reports are any guide, it looks like the "recovery" is still "on track" -- that is, the same dismal, downward spiral it's been ever since the "experts" told us that the recession was "over," the housing market had "bottomed," and the jobs market was getting "better."

"Recession Added Debt, Drained Families' Savings" (USA Today)

The economy may be improving but many American families are still weighed down by debt and without a safety net.

One out of five families owes more on credit cards, medical bills, student loans and other unsecured debt than they have in savings, according to a new University of Michigan report. And the number of families surveyed at the end of 2011 that have no savings at all increased to 23.4%, compared with 18.5% in 2009.

"The people who were down and out, without much money, in the recession have ended up staying there or even worse," says Frank Stafford, professor of economics at University of Michigan Institute for Social Research and co-author of the report.

And the mortgage crisis is not over. Among homeowners, 1.7% said that they expect to fall behind on their mortgage payments in the near future. At least that is slightly less than in 2009, when 1.9% expected to run into mortgage problems.

At a time many Americans are trying to claw their way out of debt, they have no emergency fund and little or no retirement savings. Sixty percent of workers say that the value of their savings and investments is less than $25,000, according to EBRI's 2012 Retirement Confidence Survey. And retirement confidence is at historically low levels.

"Consumers Intensify Their Vow to 'Save More, Spend Less'" (Boston Consulting Group)

The vast majority of U.S. and European consumers say they are feeling insecure, anxious, and strapped for cash. Their concerns in many markets are higher than a year ago and the highest they've been in a decade, according to a new global survey by The Boston Consulting Group (BCG).

Among the key findings from BCG's eleventh annual Consumer Sentiment Survey, conducted in April and covering more than 15,000 consumers in 16 countries:

• Consumers blame the government for the crisis
• Feelings of financial insecurity are high and getting higher in most markets
• Pessimism about the speed of economic recovery is rampant
• One in four people, on average, in the U.S. and Europe is worried about losing his or her job
• Few believe their children will live a better life—except in China
• Values such as saving money and staying healthy have skyrocketed over the past two years, while the willingness to splurge for luxury has plunged
• China is a relative bright spot, with consumers feeling more optimistic about the future than their Western counterparts

“If you take the world from the perspective of the middle-class citizen in the U.S. and Western Europe, we are still lurching from crisis to crisis," said Michael J. Silverstein, a BCG senior partner and the author of influential books on consumer behavior, including  Trading Up, Treasure Hunt, and Women Want More."Americans, in particular, are anxious about their future, their jobs, and their lack of savings.”

"Great Recession Reflux Amounts to More Hunger Among Seniors" (University of Illinois College of Agricultural, Consumer and Environmental Sciences)

URBANA – A new study that looked at the hunger trends over a 10-year period found that 14.85 percent of seniors in the United States, more than one in seven, face the threat of hunger. This translates into 8.3 million seniors.

"In 2005, we reported that one in nine seniors faced the threat of hunger," said Craig Gundersen, University of Illinois associate professor of agricultural and consumer economics and executive director of the National Soybean Research Laboratory who led the data analysis on the study. "So, unlike the population as a whole, food insecurity among those 60 and older actually increased between 2009 and 2010."

According to the study, from 2001 to 2010, the number of seniors experiencing the threat of hunger has increased by 78 percent. Since the onset of the recession in 2007 to 2010, the number of seniors experiencing the threat of hunger has increased by 34 percent.

Gundersen said that the fact that seniors in our country are going without enough food due to economic constraints is a serious problem that will have greater implications for senior health.

"Compounding the problem is that food insecurity is also associated with a host of poor health outcomes for seniors such as reduced nutrient intakes and limitations in activities of daily living," Gundersen said. "Consequently, this recent increase in senior hunger will likely lead to additional nutritional and health challenges for our nation."

It's all "good," right?

A Bottom in Housing?

Despite the fact that home prices are more affordable than ever --

the percentage of people looking to buy a new one remains near multi-decade lows --

Doesn't quite sound like "recovery" to me (but then again, what do I know?)

(Charts: "US Housing Outlook: Housing Recovery Stalling?" Torsten Stock, Chief International Economist, Deutsche Bank)

Long...and Wrong?

While Wall Street is telling people that it's onward and upward from here, the Hemline Index, a theory which states that the length of women's skirts and dresses tends to rise and fall with stock prices, looks to be saying otherwise.

As BuzzFeed notes in "Spring Fashion Trends Find An Unlikely Customer: Orthodox Women," conservativism and modesty, including skirts and dresses that stretch to the floor, are the new black:

Jewish Orthodox women follow three core rules of modesty, or tznius: a garment’s neckline should extend to the collarbone; shirt sleeves should cover the elbows; and skirts must cover the knees. Pants are strictly forbidden, and married women must also cover their heads with a wig, scarf or hat.

While many Orthodox women shop in specialty stores that cater specifically to these guidelines, over the past couple of seasons, they’ve found it much easier to shop for appropriately conservative looks in mainstream chains like Zara and H&M. That’s because tznius is now hip — and Jewish Orthodox women are becoming more fashionable than ever.

"It's amazing how much fashion is shifting,” says Adi Heyman, an Orthodox stylist living in Manhattan, who is starting a blog about conservative fashion. "These days it's easy to dress modestly and be on-trend." Button-up blouses, long-sleeved denim shirts, flowy vintage dresses and pleated maxi skirts are among the items you’ll find in any Zara or Forever 21 right now that Orthodox women are stocking up on this season, she says.

The Fed Does Comedy

It's a joke, right?

"Fed’s Kocherlakota: Economy Closer to Max Employment Than Data Suggest" (Real Time Economics)

A top Federal Reserve official said Thursday he is paying close attention to inflation and that recent elevated readings signal that the economy is closer to maximum employment than labor-market reports alone might suggest.

Speaking before the Economic Club of Minnesota about the central bank’s latest transparency initiatives, Federal Reserve Bank of Minneapolis president Narayana Kocherlakota said the term “maximum employment” is particularly difficult to gauge right now as the economy has evolved since the financial crisis. But using the behavior in inflation as a signal, the “distinctly higher” rise in prices in the past two years suggests perhaps the unemployment rate doesn’t have too much more room to fall.

“I see these changes as a signal that our country’s current labor market performance is much closer to ‘maximum employment’ than the post-World War II U.S. data alone would suggest,” Kocherlakota said. “As I’ve argued in the past, appropriate policy should be responsive to such signals.”

Actually, he's the joke, along with many of his colleagues at the Federal Reserve, who still haven't quite figured out that two wrongs -- bad analyses and failed policies -- don't make a right.

P.S. Here, by the way, is the unfunny version of economic reality:

(Chart: Gallup)

The Simplest Explanation

I'm sure there are many rational individuals who, like me, have wondered why the stock market has in recent days remained fairly resilient despite mounting evidence that the European debt crisis is spiraling out of control and economies in Europe, China, the U.S. and elsewhere are hitting the skids.

In fact, the buying that has appeared when the market has been under pressure, seemingly like magic, has a frantic, almost panicky quality to it, as though those who are scooping up shares are much less concerned about getting the lowest prices than they are about making sure the market stops falling.

At first, I chalked it up to the fact that equity traders have shown, time and again, that they are very a little slow on the uptake when it comes to interpreting macroeconomic developments (the events of 2007 immediately come to mind), and have put their faith in "decoupling" and other bogus Wall Street theories.

Alternatively, I figured it might have something to do with investors' maniacal faith, bordering on psychotic delirium, in never-ending rounds of quantative easing, even though a growing number of monetary policymakers have indicated that they are not in favor of further accommodation.

Then I saw this report at Business Insider:

"CHART: Obama Really Needs The Stock Market To Hold Up"

Here is a chart we've seen before.  It's Obama's re-election odds against the S&P 500.  The two have been greatly correlated and continue to be so as the election nears.

At that point it hit me. Call me a cynic (and maybe even a conspiracy theorist), but as Occam's Razor suggests, maybe the simplest explanation is the one that's best.

The Real Reason

In "U.S. Economy Has a ' Royal Straight Flush' - Jamie Dimon," CNNMoney reports that

when asked why, at a time of record profits, Corporate America isn't hiring more, [JP Morgan CEO Jamie] Dimon said American businesses had added 4 million jobs in the past two years."

What he failed to mention, however, was that Corporate America had shed 8 million jobs in the two years before that, based on data on total private payrolls from the U.S. Bureau of Labor Statistics (i.e., Series CES0500000001).

So, in reality, Corporate America has actually eliminated 4 million jobs over the past 48 months.

Could that be the real reason why Mr. Dimon is "overwhelmingly optimistic"?