March 2012

Unemployment 8.3%, 227,000 Jobs for February 2012

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The February 2012 monthly unemployment figures show the official unemployment rate remained the same, 8.3%, and the total jobs gained were 227,000. While this report is good news, we've got a long, long way to go before returning to a healthy labor market. Total private jobs came in at 233,000. Government jobs dropped, -6,000. Most of the jobs were in the service sector, 209,000.

ADP Employment Report - 216,000 Private Sector Jobs for February 2012

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ADP, released their proprietary private payrolls jobs report. This month ADP is reporting a gain of 216,000 private sector jobs in February. January 2012 was revised up from 170,000 to 173,000. In contrast, the BLS reported 257,000 private sector jobs for January 2012. Graphed below are the reported private sector jobs from ADP.

Greece on the Edge

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greece ruinsGreece is on the edge. Part of their bail out, the voluntary losses Greek bond holders were supposed to accept, is falling short.

Private holders of €206bn in Greek bonds have until Thursday evening to decide whether to take part in a swap where they would trade bonds for a package of bonds and cash that would knock about €100bn off Athens’ debts.

Greece must get 75 per cent of holders to participate to avoid forcing the deal on holdouts through so-called “collective action clauses” which were inserted retroactively into Greek bonds by the government last week. If less than 66 per cent participate, even the CACs would become invalid, scuppering the entire deal.

The ECB is already saying voluntary participation will be too low and now there is talk of forcing the holders of Greek debt to take their haircut:

Greece expects bondholders to accept a one-time offer to write off about 100 billion euros ($140 billion) of Greek debt and is ready to force them to participate if necessary, Finance Minister Evangelos Venizelos said.

Mortgage Settlement Is Corruption Poster Child

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housemazeIt's simply a failure of law. Barry Ritholtz wrote a admonishment of the Obama administration and state attorney generals for buying into the 50 state mortgage settlement pig in a poke:

We never want to see an innocent party “accidentally” evicted from a home. The legal system has evolved so this has become a “legal impossibility.” Imagine returning home from work or vacation to find the front door padlocked, the belongings strewn all over the block, a big orange sticker screaming “FORECLOSED” on the garage door, with an auction sign in the front lawn. Now imagine that this occurred even though you are not in default or even delinquent on payments. Thanks to the robosigning banks, this legal impossibility has happened repeatedly, even to homeowners who paid cash for their houses and had no mortgages. Imagine that — foreclosed with no mortgage.

Pretty incredible huh? It used to be no one could simply just take your home. Such a violation of personal and property rights was unheard of. Now the stories are so routine, the press barely covers them.

Bloomberg Law interviewed an on fire Ritholtz, who explains, in simple English, why this settlement is such a big deal. Literally the settlement throws out 1000 years of individual property rights, law and is a loss of personal freedom you really need to pay attention to.

Just One Last Bubble, Please!

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bubblesThe time-honored advice brokers have always given their investment clients is to "diversify, diversify, diversify!” It’s the basic law of investment – Investment 101 you might say – never put all your eggs in one basket. Which is why it is so odd to see the CEO of one of the largest investment funds in the world –BlackRock – insist that his customers ignore this basic rule and invest everything they have in equities.

CEO Laurence D. Fink says that we are living in a “New World” where it is impossible to earn a decent return on traditional bonds or other conservative investments. He’s right about that; Fed Chairman Ben Bernanke has made it clear he intends to keep interest rates at zero percent through at least the end of 2014. Maybe this New World is a welcome relief for borrowers, many of whom are desperate to reduce their debts, or at least the interest cost on their debts if they can refinance at lower rates.

This is a dreadful world for savers, however. Many people who live off the interest on their savings, like retirees, have watched their income collapse to zero, and are being forced to liquidate their nest egg in order to afford food and medicine, the prices of which (along with energy) have been increasing at annual rates near 10%.

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