More on the Train-Wreck-in-the-Making

In "Just in Time for Halloween," I highlighted three charts (along with accompanying commentary) that paint a frightening picture of where things stand in today's America. But those aren't the only examples. In fact, hardly a day goes by when I don't stumble across yet another data point or statistical series that adds to the notion that our economy -- and our country -- is a train-wreck-in-the-making. Here are three I picked up from today's journey through my usual run of blogs and mainstream media outlets:

An overwhelming majority of small businesses are pessimistic about the economic outlook

"Small Business Outlook Survey - October 2011" (U.S. Chamber of Commerce)

The small business outlook on the U.S. economy continues to decline.

Among executives from small businesses, during the last three months there has been little improvement, and some decline, in overall attitudes about the economy. Nine out of ten small business owners now believe the U.S. economy is on the wrong track.

~~~

The gap between the very rich and everybody else continues to widen

"Signs of Dissent: Do You Feel the Wealth Trickle Down?" (The Atlantic)

Since the Reagan tax cuts of 1981, after-tax income of the top 1 percent has increased more than 11 times more than the middle fifth of households, according to the Center on Budget and Policy Priorities.

~~~

More and more Americans are being forced to go without critical necessities

"You Know Things Are Bad When Doctor Visits Plunge 8% Year-Over Year" (Business Insider)

A lot fewer people are going to the doctor this year, and no, that's not a good thing.

Here's JP Morgan's John Rex:

Sept ’11 office visit volumes down 8% y/y, while the sequential throughput measure increases 6% from August.... Primary care trends still running weaker... Med utilization still trending lower....

People are cutting back on health care due to financial concerns.

Comments

[Tom]

Yeah, ordinary people are being pushed beyond survivability with all the forced austerity in everything from energy (apparently gas went up by 30 cents overnight around here in PA & who knows where heating oil will be this fall), to food (2 quick examples: look for price rises in peanut butter next month due to poor crop yields this year from drought; meat to go higher next year due to grain shortages for cattle, so herds are dwindling), and the knock-on effects are that we have to scrimp where we can - can't fix the leaky roof or go to the dentist, and maybe mow the lawn once a month (if at all). Many with jobs have been reduced to the working poor.

[On the take builds a nice stake]

Austerity?..not for everyone...only the honest!

Florida AG Takes Orders, Money from Fraudclosure Firm

Of course, we know those denials are nonsense, and these
investigators were tossed because they were actually doing their jobs,
rather than looking the other way. AG Bondi has been criticized by
Florida lawyers for accepting campaign contributions from companies the
AG’s office is investigating.

Conflict of interest, anyone?

Thus: Congress has been bought and paid for, the Florida AG’s office is
also up for sale. Is everyone in public office merely a whore selling
their services to the highest bidder? The level of corruption is beyond
comprehension — it is unconscionable.

If I lived in Florida, I would begin a recall immediately to get this
pathetic trollop thrown out of office and then I would spend the next
10 years lobbying for her eventual disbarment.

My disgust is hard to put into words.

http://www.ritholtz.com/blog/2011/10/florida-ag-taking-orders-dirty-money-from-fraudclosure-firm/

[Seems good or bad the wealth trickles up]

Something I Learned Today

Last year, Bloomberg spoke to Oppenheimer analyst Chris Kotowski who called the DVA an "abomination." He explains, "Just because Morgan’s credit spreads widened out this quarter doesn’t mean that their ultimate interest and principal payments changed one iota."

-----

Apparently this rule was passed by FASB in 2007. I wonder who lobbyied for it? More importantly what sort of accounting standard do you have when lobbying is part of it. What a joke.

....a U.S. accounting rule known as Statement 159, adopted by the Financial Accounting Standards Board in 2007, which allows banks to book profits when the value of their bonds falls from par.

http://www.fundmymutualfund.com/2011/10/something-i-learned-today.html

JPMorgan Uses Surge In Its Default Risk As A $1.9 Billion "Source" Of Revenue And Net Income

So what does JPM do? Why it pulls the "Fair Value Option" card, discussed recently in the context of Morgan Stanley when we speculated whether the bank's biggest asset was their debt. Turns out we had the concept right, but the bank wrong, because $0.29 of EPS Net Income, or $1.9 billion pretax, was a "benefit from debit valuation adjustment (“DVA”) gains in the Investment Bank, resulting from widening of the Firm’s credit spreads." That's right: the fact that JPM spreads blew out in the quarter, and its default risk soared, for one reason or another actually served to "generate" not only net income but also revenue! And now you see why American banks can never lose - in a good quarter, they release reserves; in a bad quarter they take FVO benefits in the form of Debit Valuation Adjustments, or in this case both! Winner, winner, always a chicken dinner for Jamie Dimon. Expect every other bank to do the same accounting BS this quarter to pad their numbers.
http://www.zerohedge.com/news/jpmorgan-uses-surge-its-default-risk-19-billion-source-revenue-and-net-income?

[You need goals]

Goal Number One - For Anyone Protesting Without Direction (OWS and others)

http://www.youtube.com/watch?v=uprhYOYRusA&feature=youtube_gdata

[roger]

Train-Wreck-in-the-Making is putting it mildly.
Big drop in port traffic and railway traffic,
Harrisburg is seeking bankruptcy,millions of
unemployed to loose benefits,home prices in
decline in September, family incomes in drastic
reduction, severe rise in poverty in the UK,
Russia and China seeking the end of the dollars
dominance,Greece going belly up,etc..etc...
if you have a notion of dialectics the future
is easy to see.

[Ralph Crown]

It's starting to look like our class warfare is getting more and more like the old-fashioned kind. Making health care so expensive you can't afford it is slower than a bullet in the gut, but you still wind up dead.

[roger]

@Ralph Crown.
Class warfare never ended,it was temporarily
sweetened with by an abundance of goods made
available by cheap credit and now that phony
money is no longer available it is coming
back with a murderous vengeance. The wealthy
Elite will do all it takes to stay in the saddle.
The lessons of history where forgotten by the masses, or
ignored "censured" by the corporate news media