Jobless America Can’t Survive The Pressures Of $90 Oil: "Oil is at 90 dollars a barrel. The governments of Europe, Japan, and the United States are saturated with debt. House prices in the US are falling again, and there’s no job growth in America. Put it all together, and for some reason, many are still imagining that we’re in an economic recovery. Today’s horrid jobs report contained some shock value in the sense that it missed expectations. But the novelty of a 39K print misses the larger point that, for a large population like the US, even a print of 100K or 125K would still be very bad news. The US needs to create at least 150K jobs per month just to soak up population growth. Meanwhile, we now have a tranche of 15 million out of work people. As you can see in the chart below, total employment falling back below 139 million to 138.88 million does nothing but maintain levels last seen in the early part of the previous decade. This is a huge hole. And now, three years after the start of the economic crisis, we can say resolutely that America has a structural unemployment problem. As other countries have discovered, that’s a hard problem to solve."
Spanish Skies Shut Down After 90% Of Air Traffic Controllers "Call In Sick" In Protest Over Austerity – From Sky News. If you are reading this from an airplane, we can only hope your final destination is not Spain. Sky News has just broken that virtually all Spanish air traffic is shut down after 90% of air traffic controllers have decided not to work due to ‘illness’ but mostly in protest of austerity. Those with a memory that stretches beyond the last Dancing with the Stars episode will recall that this is what happened in Greece just days before the people died in riots and Waddell and Reed experimented with the whole sell concept. "Update from the AP: Spain orders its air traffic controllers to resume work or military will take over control of airspace. That’s some serious flu going around.
Delaying Tax Vote Could Crash Stock Market – Failure by Congress to extend the Bush tax cuts, especially locking in the 15 percent capital gains tax rate, will spark a stock market sell off starting December 15 as move to lock in gains at a lower rate than the 20 percent it would jump to next year, warn analysts. [See who gets the most money from the financial industry.] While it is unclear how bad the sell off could be, it could wipe out the year’s gains, they warn. "Capital gains tax rate will increase from 15 to 20 percent if the tax cuts are not extended. The last time the capital gains tax rate increased–on Jan. 1, 1987 from 20 to 28 percent–investors realized their gains at the lower tax rate," said Daniel Clifton at a Washington partner at Strategas Research Partners. "We would expect a similar effect this time around as investors see the tax rate going up and choose to realize their gains and incur the 15 percent tax."
New Threat to Global Food Security as Phosphate Supplies Become Increasingly Scarce – A new report from the Soil Association reveals that supplies of phosphate rock are running out faster than previously thought and that declining supplies and higher prices of phosphate are a new threat to global food security. ‘A rock and a hard place: Peak phosphorus and the threat to our food security’ [pdf 1.1mb] highlights the urgent need for farming to become less reliant on phosphate rock-based fertiliser.  Intensive agriculture is totally dependent on phosphate for the fertility needed to grow crops and grass. Worldwide 158 million tonnes of phosphate rock is mined every year, but the supply is finite. Recent analysis suggests that we may hit ‘peak’ phosphate as early as 2033, after which supplies will become increasingly scarce and more expensive. This critical issue is missing from the global policy agenda – we are completely unprepared to deal with the shortages in phosphorus inputs, the drop in production and the hike in food prices that will follow. Without fertilisation from phosphorus it has been estimated that wheat yields could more then halve in coming decades, falling from nine tonnes a hectare to four tonnes a hectare.
Europe’s Debt Woes Not a Top Concern for U.S. Banks – The largest U.S. banks aren’t immune to Europe’s credit woes, but analysts view the overall exposure as low on the list of concerns for the industry. Investor fears of contagion have subsided—at least temporarily—in the wake of indications from the European Central Bank that it would support any country in need. But if concern mounts again, the risk is "modest" and "manageable," said Jonathan Glionna, senior U.S. banking analyst for Barclays Capital. The U.S. banking industry’s total exposure to Greece, Ireland, Portugal and Spain dropped to $146 billion in the second quarter of 2010, compared with $176 billion in the third quarter of 2009, according to figures compiled by Barclays Capital. The information, taken from reports made by banks to federal regulators, includes loans, debt, equity, foreign exchange and repurchase agreements. The top 10 U.S. banks held 96% of that risk, or $140 billion in the second quarter of 2010. The $140 billion represented 20% of total Tier 1 capital held by these institutions
Angela Merkel Warned that Germany could Abandon the Euro – The German chancellor, Angela Merkel, has warned for the first time that her country could abandon the euro if she fails in her contested campaign to establish a new regime for the single currency, the Guardian has learned. At an EU summit in Brussels at the end of October that was dominated by the euro crisis and wrangling over whether to bail out Ireland, Merkel became embroiled in a row with the Greek prime minister, George Papandreou, according to participants at the event’s Thursday dinner. Merkel’s central aim, which she achieved, was to win agreement on re-opening the Lisbon treaty so a permanent system of bailout funding and investor losses could be established to deal with debt crises that have laid Greece and Ireland low and are threatening Portugal and Spain. The Germans also called for bailed-out countries to lose voting rights in EU councils.
Oil Is Near A 25-Month High – I have warned that oil was about to break $90/barrel in the past, but it didn’t happen. Will it happen this time? God only knows. Given the troubles in Europe, the dollar may rally against the Euro. The problem with today’s markets is that it seems that anything can happen. The markets were already distorted, but QE2, the debt crisis in Europe and other factors have made a mockery of apparent trends. Economist James Hamilton weighed in on commodity prices on November 10. He cites new evidence that commodity prices move together, which is certainly not a surprise. Hamilton concludes— In terms of concrete advice, I would worry about the potential for the policy to do more harm than good if it results in the price of oil moving above $90 a barrel. And we’re uncomfortably close to that point already. Yes, uncomfortably close. I dont’ think the Fed gives a damn about rising commodity prices and their effects on ordinary Americans. At the very least, there’s no evidence I’m aware of that the Fed pays any attention to commodity prices. And Goldman Sachs makes money, so it’s all good, right?
Second Phase Housing Crash Hidden From Public – A hidden catastrophe is unfolding in the US housing market. Mainstream media outlets are not telling the story because they are focused on misleading data like the just released Case Shiller Index which showed only a small decline in September. In reality, real time market data indicates that the housing market is undergoing a renewed crash, bringing activity and sales prices to their lowest levels yet. Inventory to sales ratios are exploding, with the supply demand imbalance likely to lead to even steeper price declines in the months ahead. That will in turn lead to yet another wave of mortgage defaults and foreclosures, which will dramatically increase the stress on the financial system. This will lead to another systemic shock similar to that which occurred in 2008. The Fed will be under pressure to extend QE2 indefinitely, with undoubtedly horrific unintended consequences.