Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made this reader's eyes pop.

Too Big To Fail Banks Just Got Bigger

The Wall Street Journal reports those TBTF TARP recipient banks just got bigger:

The top five U.S. commercial and investment banks — Bank of America, J.P. Morgan Chase, Citigroup, Wells Fargo and Goldman Sachs — have emerged from the financial crisis larger than ever. As of the third quarter of 2010, they had a total of $8.6 trillion in assets, according to data provider Capital IQ. That’s 13.3% of all U.S. financial firms’ assets, up from 11.8% three years earlier, when the financial crisis hit.

Oil Shocks & Recessions

As we've talked about, economist James Hamilton has published new research showing a strong correlation between sudden rise in oil prices and recessions.

Every recession (with one exception) was preceded by an increase in oil prices, and every oil market disruption (with one exception) was followed by an economic recession.

He also analyzes price controls and their effect. Hamilton wrote a blog piece, with graphs, which overviews his conclusions.

Understanding The Democratic Party Power Structure

Former Congressional Staffer Matt Stoller has some amazing insights into the power structure of the Democratic party:

Since the 1970s, Democratic elites have focused on breaking public sector unions and financializing the economy. Carter, not Reagan, started the defense build-up. Carter, not Reagan, lifted usury caps. Carter, not Reagan, first cut capital gains taxes. Clinton, not Bush, passed NAFTA. It isn’t the base of the Democratic party that did this, but then, voters in America have never had a lot of power because they are too disorganized. And there wasn’t a substantial grassroots movement to challenge this, either.

Obama continues this trend. It isn’t that he’s not fighting, he fights like hell for what he wants. He whipped incredibly aggressively for TARP, he has passed emergency war funding (breaking a campaign promise) several times, and nearly broke the arms of feckless liberals in the process. I mean, when Bernie Sanders did the filiBernie, Obama flirted with Bernie’s potential 2012 GOP challenger. Obama just wants policies that cement the status of a aristocratic class, with crumbs for everyone else (Republican elites disagree in that they hate anyone but elites getting crumbs). And he will fight for them.

Note how the media, in particular cable noise, claims corporate and special interests agenda is somehow centrist instead of corrupt.

Home Value Declines Exceed The Great Depression

Mandelman Matters latest summary on foreclosure statistics and 2011 projections:

This past week, Zillow.com announced that its index of home values fell for the 53rd consecutive month in November, and that since June 2006, home values have now fallen 26% nationwide.

Zillow’s Katie Curnutte, in a blog post, pointed out…

“That’s more than the 25.9 percent decline in the Depression-era years between 1928 and 1933.”

Additionally, foreclosures projected to increase 20% in 2011 is a follow up must read.

The Chimera of Middle Class Assets

Charles Smith removes another myth on housing, stocks, bonds being middle class assets:

The Fed, Housing and Stocks: The Chimera of Middle Class Assets (January 14, 2011)

On the surface, the Fed's $2 trillion-dollar campaign to prop up housing and equities may look beneficial to (what's left of) the middle class. But that is more perception than reality.

The primary driver of Fed policy is of course rescuing and enriching the too-big-to-fail banks. But the politically viable cover is "saving" what's left of Middle Class assets: housing and stocks. This chart from David Rosenberg's recent column on the Wily E. Coyote economy on Zero Hedge tells an important story: by propping up housing and stocks, the Fed is providing political cover for the status quo by seemingly acting to preserve what's left of the Baby Boom's middle class assets, which are still concentrated in housing and stocks.

Of the 26% of assets in "other," i.e. pensions and life insurance, much of those underlying assets are in bonds and equities--so the middle class wealth is probably roughly 20% in bonds, 33% in equities (stocks, emerging-market mutual funds, etc.) and 26.5% in real estate (those Boomers who still own some equity).

But beneath the surface of these "middle class" assets lurks highly concentrated wealth. As we can see here, the vast majority of "middle class" wealth is concentrated in the top 15% of the "middle class"--the tranch beneath the top 5% which owns the bulk of the nation's financial and real estate assets.

High Frequency Trading

From George Washington, 73% of all stock market trades are flash trading and held for an average of 11 seconds.

Toxic Asset Purchases to Lower Unemployment Hallucinations

Mish does some quick math on the latest Federal Reserve quantitative easing claims that they decreased the unemployment rate.

Modeling The Model

• The Fed created 3.5 million jobs.
• The Fed bloated it's balance sheet by $2.3 trillion to do so.
• It takes $657,142.86 in balance sheet additions to create a single job.
• It takes the same $2.3 trillion to lower the unemployment rate .5%
• The Fed's balance sheet will reach $18.4 trillion by the time the unemployment rate drops to 5.9%
• It will take another 3.5 years to get to a "full employment" situation with an unemployment rate of 5.9%.

Education Will Not Solve the Unemployment Crisis

Finally, the Economic Policy Insitute calls cash on yet another dismissive sound byte. When economists, experts show American is down over 11 million jobs, invariably some idiot tries to imply Americans are lazy, uneducated and stupid as the reason. This is pure bunk plus political spin.

The challenge we face with high and persistent unemployment exceeding 9% is not better education and training for those currently unemployed. Rather, we need more jobs.

Doh!

Happy Saturday!