Tuesday, July 29, 2014 - How Do you Feel?

How Do You Feel?
by Sinclair Noe

DOW – 70 = 16,912
SPX – 8 = 1969
NAS – 2 = 4442
10 YR YLD  - .03 = 2.46%
OIL - .63 = 101.04
GOLD – 4.70 = 1299.80
SILV un = 20.66

How are you feeling? Are you confident? Apparently more people are. The Conference Board’s consumer confidence index increase to 90.9 in July, up from 86.4 in June; it’s the highest level in almost 7 years; it marks a significant rebound from the February 2009 low of 25.3. The people who compile the index say: “Strong job growth helped boost consumers’ assessment of current conditions, while brighter short-term outlooks for the economy and jobs, and to a lesser extent personal income, drove the gain in expectations,” and the improved confidence “suggests the recent strengthening in growth is likely to continue into the second half of this year.”

Home prices dropped in May compared to April. The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.3% in May on a seasonally adjusted basis, its first decline since January 2012. Prices in the 20 cities rose 9.3% year over year, the slowest year-over-year gain since February 2013. The Phoenix area posted a 0.4% increase from April to May, non-seasonally adjusted.

In a separate report form the Commerce Department, home ownership rates dropped to 64.8% in the second quarter from 65% in the first quarter.

A fairly startling report was published today by the Urban Institute and TransUnion, the credit reporting firm, showing more than one-third (35%) of Americans with credit files had debt in collections in 2013. Non-mortgage delinquent debt totals $11.23 trillion. Which sounds like a lot, and it is, but it’s down from $12.68 trillion in delinquent debt in 2009; this includes debts such as credit cards, auto loans, student loans, utility bills, or even a phone bill or gym membership.  The study looked at debts that had been reported to a credit bureau as delinquent, and turned over to collection; that means the debt is at least 180 days old, but it also means the debt can stay on the credit report for up to 7 years, maybe longer. The share of people with debt 30 days past due is about 5.3%. What this means is that when a debt becomes past due, it lingers on a credit report.

The report on delinquent debt may tell us more about debt collection methods than about deadbeat American consumers. It is very easy for a company to turn over a debt to a credit rating bureau or a debt collection company; it is very hard for a consumer to get a debt removed from a credit report, even if the debt is disputed, or in many instances, even when the debt is paid. Consumers filed 204,000 complaints with the Federal Trade Commission last year, up nearly 3% from 2012, even though the amount of delinquent debt dropped. The most common complaint concerned debt collectors that lied about the amounts a consumer owed and the nature of the delinquency.

The European Union has imposed new sanctions on Russia for its involvement in supporting separatists in Ukraine. The US also toughened its sanctions further. The latest American actions took aim at more Russian banks and a large defense firm, but they also went further than past moves by blocking future technology sales to Russia’s oil industry in an effort to inhibit its ability to develop future resources. The Euro Union agreed to restrictions on trade of equipment for the oil and defense sectors, and "dual use" technology with both defense and civilian purposes. Russia's state run banks would be barred from raising funds in European capital markets. The measures would be reviewed in three months. Previously Europe had imposed sanctions only on individuals and organizations accused of direct involvement in threatening Ukraine, and had shied away from wider "sectoral sanctions."

The orchestrated actions on both sides of the Atlantic were designed to demonstrate solidarity in the face of what American and European officials say has been a stark escalation by Russia in the insurgency in eastern Ukraine. Until now, European leaders have resisted the broader sorts of actions they agreed to today.

Though Europe’s commerce with Russia will probably slump because of the sanctions, the measures are expected to hit Russia more severely, especially the restrictions on Russian banks’ ability to raise money in Europe and the United States. European companies have been warning for some time that their earnings could suffer because of sanctions against Russia. Today, the oil company BP warned that sanctions could hurt earnings. BP owns a 19.75% stake in the Russian oil company Rosneft.

We are about halfway through second quarter earnings season. Here are a few of today’s reports:

The pharmaceutical company, Pfizer posted earnings that beat estimates, while revenue dropped; they also said they expect earnings to drop in the third quarter. Merck had a similar story, beating earnings estimates while revenue slipped. United Parcel Service missed profit forecasts, even as profits and revenue were higher than a year ago. Herbalife, the multi-level marketed nutritional supplement company posted weak earnings after the close yesterday; shares were clobbered today. Corning, the glass making company reported a sharp drop in earnings due to acquisition costs; also clobbered.

Twitter reported a net loss of $145 million, or 24 cents a share, compared to a loss of $42 million a year ago. More people used the Twitterverse during the World Cup; revenue was up 124%, but then the users fade away; globally, usage was down 7% from a year ago. Twitter shares have jumped about 30% in after-hours trading. Go figure.

The Federal Reserve FOMC started its two-day meeting today. They will issue a statement tomorrow. The Fed is in the midst of reducing the amount of money it is pumping into the financial system by way of large purchases of mortgage backed securities and Treasuries, a process of tapering the Quantitative Easing. So far, the Fed has reduced purchases from $85 billion a month to $35 billion a month, and tomorrow they are expected to drop that down to $25 billion a month. QE is scheduled to end in October.

Then the Fed will shift their focus to raising its target for short-term interest rates, which have been near zero for more than 5 years. The Fed has already said they will take their time in raising rates. That exit from an accommodative policy is considered dangerous, and today the International Monetary Fund, the IMF, said it could reduce output in the United States by as much as 2% through 2016.

Volatility in the US could ripple through to emerging markets and likewise depress growth, but even worse; cutting growth by as much as 9% in more vulnerable developing countries due to higher interest rates and tighter financial conditions; and then it gets worse, with larger declines coming in time due to lower productivity, weaker trade, and falling commodity prices.

In addition to when the Fed will raise rates, it is also important to consider how high they will raise rates, and if they will wait long enough for liftoff to occur first. Liftoff is when the US economy has regained its strength and momentum and is able to cope with higher rates because of its economic strength. Fear of inflation could prompt the Fed to raise rates before liftoff; there is an even greater chance the Fed will raise rates before emerging markets could bear the burden of higher rates. If the Fed gets it wrong, we could end up stuck in sluggish or permanently lower growth.

Swiss bank UBS and German bank Deutsche Bank have disclosed that they are facing inquiries from the New York attorney general’s office. The UBS inquiry deals with dark pools, or alternative trading platforms, generally used by larger institutional clients such as pension funds and hedge funds, trying to hide orders from public observation. At its core, the dark pools are a form of price manipulation. Deutsche Bank is facing inquiry into high frequency trading and dark pools.

The Financial Times reports: “The Federal Reserve Bank of New York is stepping up pressure on the biggest banks to improve their ethics and culture, after investigations into the alleged rigging of benchmark rates led officials to conclude bankers had not learnt lessons from the financial crisis…

“Fed officials were surprised that some of that reported behavior occurred after the 2008 crisis, leading them to believe bankers had not curbed their poor conduct. To make sure the biggest banks are paying enough attention to ethics and culture, NY Fed bank evaluations have begun incorporating new questions emphasizing such issues. Topics include whether the right performance structure is in place to punish bad behavior, especially when it comes to compensation.”

Well, that is just great, the NY Fed suggests banks pay smaller bonuses when they encounter unethical behavior by the banksters. We’ll file that one under “Cruel and Unusual Draconian Punishment”.

But if you’re really looking for a funny story about banksters, check out the New York Times Dealbook. It seems the banksters are cashing in on advising companies how to do inversion deals to evade taxes. Inversions are behind the recent rash of merger deals in which major US corporations have renounced their citizenship in search of a lower tax bill offshore. It is important to understand that inversion does not in any meaningful sense involve American business moving overseas; all they’re doing is dodging taxes on those profits.

Investment banks are estimated to have collected, or will soon collect, nearly $1 billion in fees over the last three years advising and persuading American companies to move the address of their headquarters abroad (without actually moving).

The leaders in this growing field include Goldman Sachs, JPMorgan, Morgan Stanley, and Citigroup; they’ve made hundreds of millions aggressively promoting these transactions to major corporations, arguing that such deals need to be completed quickly before Washington tries to block them. These same banks received hundreds of billions from US taxpayers in the form of bailouts. The Joint Committee on Taxation estimates these inversion deals are expected to cost taxpayers nearly $20 billion over the next decade.

Tuesday, March 26, 2013 - Miles to Go

Miles to Go

by Sinclair Noe

DOW + 111 = 14,559
SPX + 12 = 1563
NAS + 17 = 3252

10 YR YLD - .01 = 1.91
OIL + 1.40 = 96.21
GOLD – 5.90 = 1600.50
SILV - .09 = 28.86

The Dow Industrial hit a record hit close today, taking out the March 14 closing high. The S&P 500 came within a couple of points of the high close; it is having a hard time breaking through the ceiling; you just have to content yourself with the idea that the index has more than doubled from the lows of March 2009.

The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines, fell 7.1 percent to 12.77. The gauge has tumbled 29 percent for the year. It is a reflection of complacency.

We have many things to cover today.

Home prices were up in January and the year over year improvement in prices was the fastest in 6 years. The S&P Case Shiller Index of existing home sales was up 0.1% in January, and the year over year gains were 8.1%. On a year-over-year basis, all 20 cities measured by the Case-Shiller index improved, led by a 23.2% surge in Phoenix, with New York bringing up the rear with a 0.6% advance.

Sales of new U.S. homes fell 4.6% in February to mark the biggest drop in two years, though poor weather likely played a big role. Sales slowed to an annual rate of 411,000, down from a revised 431,000.

The consumer confidence index dropped to 59.7 in March, down from 68.0 in February. Most of the drop came from a decline in the expectations index, which slumped to 60.9 from 72.4, though the present situation index also fell, to 57.9 from 61.4. Consumer fears about the sequester are believed to have hurt the confidence numbers. We have nothing to fear but fear itself. It still holds true.

Orders for long-lasting goods surged in February largely because of gains in the volatile aircraft and defense segments, but demand was mixed for other manufacturers. Durable-goods orders climbed 5.7% last month to a seasonally adjusted $232.1 billion after a revised 3.8% drop in January. Orders outside of transportation fell 0.5% to mark the first decline in six months.

There has been a great deal of attention focused on the Dow Industrial Average back to new record highs; less attention on the Dow Transportation Average. The Transports include railroad companies. Shale-energy production exceeds pipeline capacity, and this will continue to be the case for many years ahead. Eventually, new pipelines will be built, but it takes time, and the production of shale oil is just getting started, and it's unlikely that the new pipelines will be enough. Railroad systems are already in place. Energy companies have invested over $1 billion dollars in new rail terminals near the shale operations. They have also put 20,000 new tank cars in service, which is an investment in the billions of dollars

There had been plans to reopen the banks in Cyprus today. Not gonna happen. Maybe Thursday. And when the banks open, there will be capital controls in place, meaning there will be restrictions on withdrawals. Larger depositors could see 40% confiscations. And that is just to raise the money for Cyprus to earn the dubious right to a bailout; the terms of which will likely drive the economy into a depression. Yes, there are protests in the streets of Nicosia.

A state-appointed emergency manager has taken control of the Detroit city government and started a drastic restructuring of its finances and operations. The first order of business was to extend an olive branch to the city government. The manager, Kevin Orr made clear that he alone would be responsible for decisions on how to stem the city’s mounting cash shortfall and reduce an estimated $14 billion in long-term liabilities.

“The statute spells out some pretty clear powers,” he said, referring to the state emergency-manager law that allows him to sell city assets, renegotiate labor contracts and possibly recommend a bankruptcy filing.

There were protests in Detroit, just a few dozen.

Another day, another mind-blowing fact about the staggering difference between the haves and the have-nots. Incomes for the bottom 90 percent of Americans only grew by $59 on average between 1966 and 2011 (when you adjust those incomes for inflation), according to an analysis by Pulitzer Prize-winning journalist David Cay Johnston for Tax Analysts. During the same period, the average income for the top 10 percent of Americans rose by $116,071.

The Federal Reserve has cited Citigroup for failure to comply with federal law requiring banks to establish protections against money-laundering. They did not impose a fine. The Fed's action follows up on a similar order issued against Citigroup last year by two other bank regulators, the Office of the Comptroller of the Currency and the FDIC, which cited it for "deficiencies" in its compliance with the Bank Secrecy Act. The Fed said that Citigroup lacked effective systems of governance with respect to its Bank Secrecy Act and anti-money-laundering compliance programs. Citigroup has 60 days to submit a plan explaining steps the bank has taken to boost its compliance efforts. Some day, some day.

As it did before the financial crisis, Wall Street is bankrolling academics to bolster its case against regulation. Back then, the research gave warm tongue-baths to the virtues of derivatives. This time, the beneficiary is high-speed trading.

A highly publicized research paper from Columbia University claiming that high-frequency trading benefits society and shouldn't be regulated too much was paid for by -- surprise -- a high-speed trading firm.

Unlike most academic papers, this one, by Columbia Business School economics professor, was announced to the world last week and turned into an op-ed headlined "The Reality Of High Frequency Trading."

The argument is that high-speed trading bolsters that magical market stuff known as "liquidity," pushing stock prices higher and making companies richer and more willing to spend money, making us all wealthier. None of that has actually happened yet, of course, with markets and the economy flat since the advent of high-speed trading a decade or so ago. Never mind all that, though: Regulate high-speed trading too much and the liquidity could go away; so says the new research paid for by high speed traders. And bad things happen when the liquidity goes away.

A derivative is a financial product derived from another financial product” (for example, a futures contract tied to a stock index) — in practice, the term applies to a whole world of financial products that are written on a one-off basis between two entities called “counterparties,” as opposed to products that are traded on a broad, well-regulated market. Futures contracts are gambling — I can bet on the Dow to go down or up, for example — but trading in futures contracts is regulated gambling, in which winners are protected from losers, and in many cases, losers protected from themselves.

Not so, derivatives, in the usual meaning of the word. Derivatives in that sense are contracts between parties who want to trade risks, but they aren’t market-traded. They aren’t standardized. And counterparties aren’t vetted by any controlling institution.

It is now estimated that derivatives market has been growing. One of the biggest risks to the world’s financial health is the $1.2 quadrillion derivatives market. It’s complex, it’s unregulated, and it ought to be of concern to world leaders that its notional value is 20 times the size of the world economy. But traders rule the roost — and as much as risk managers and regulators might want to limit that risk, they lack the power or knowledge to do so. A quadrillion is a big number: 1,000 times a trillion.

That refers to the notional value. For example, if I bet on a basketball game, say $24 on the Lakers and $26 on the Clippers, I don't really have $50 of risk, just $2 dollars at risk, or $2 notional value. But the derivatives market is so big that the notional value is now $12 trillion, give or take; a much smaller number, but almost the size of the US GDP, and about 20% of the world economy.

Those numbers about the size of the derivatives markets are just guesses, because the market is unregulated, zero controls. Nobody knows the true size or the true dangers.

Tuesday, September 25, 2012 - Fed Good at Growing Inequality

Fed Good at Growing Inequality

by Sinclair Noe

DOW – 101 = 13,457
SPX – 15 = 1441
NAS – 43 = 3117
10 YR YLD -.04 = 1.68%
OIL - .51 = 90.86
GOLD – 3.90 = 1761.60
SILV - .23 = 33.84
PLAT + 8.00 = 1634.00

Let’s start with a few economic reports. Case Shiller’s Index of existing home sales posted a 1.6% increase in July; all 20 cities in the index saw housing prices rise; it’s the fourth month of price increases, and the past 12 months are now showing increases. This is very positive news for housing. Pricesin Phoenix gained 2.2% to take the year-on-year increase to 16.6%, by far the strongest advance of any major metropolitan area. Los Angeles saw a 1.3% gain, and the year-over-year comparison has now turned positive by 0.4%.

The consumer-confidence index increased to 70.3 in September, the highest level since February. Generally when the economy is growing at a good clip, confidence readings reach at least 90. September expectations increased for employment and business conditions, while consumers’ views on the present situation also rose. One of the big factors affecting the optimistic outlook is the turn in the housing market.  In August, the dividend-reinvested S&P 500 was up some 18% year-on-year. The combination of positive returns on stocks and real estate hasn’t been this good since 2006. Any economic gains are still fragile but you take whatever positives you can find. Both consumer-confidence measures, the one conducted by the University of Michigan and the one done by the Conference Board, showed big pops in September.

Optimism is a marvelous thing but every party has a pooper, and today, the party on Wall Street fizzled when  Federal Reserve Bank of Philadelphia President Charles Plosser said the central bank's latest round of monetary easing was unlikely to help growth. Earlier this month, the Fed announced it would continue with Operation Twist, and they added a plan to buy $40 billion a month in mortgage backed securities; the plan was open-ended; the Fed would just keep buying until the employment situation improved.  But Plosser doesn’t think it will work; he says: “We are unlikely to see much benefit to growth or to employment from further asset purchases." 

Plosser’s comments weren’t a big surprise; he is considered hawkish among the Fed Presidents. Other Fed leaders have announced their support for QE to infinity and beyond. Still, Plosser drew some of the blame for the stock market’s sour mood this afternoon.

Central banks in the US, Europe and Japan may have come forward with stimulus measures in recent weeks to try to stimulate the global economy but not every country is cranking up the printing press. South Korea is buying gold; they added about 70 metric tons of gold to their reserves. Russia also added to reserves, but not as much as the Koreans. So the trend of central banks beefing up their gold reserves is alive and well.

Inflation is the most talked about risk of all this central bank money printing but there is still a lot of deleveraging in the US economy.  Bernanke is probably right to discount inflation as a short term danger. Meanwhile, we’ve heard nothing from the Federal Reserve or its assorted hawk and dove presidents about the impact of the Fed’s sustained easy-money policy on economic inequality. The Organization for Economic Cooperation and Development, the OECD says income inequality has been increasing in the US, to the point where the top 10 percent of our population earns 14 times more than the bottom decile; the OECD average ratio is 9 to 1.

You can’t blame the Fed. Well, you can blame them but not for everything. The world has changed, and you have to consider globablization, technological change, education, demographic patterns, and fiscal policy has been horrific in this country for at least the past 30 years, maybe forty.  Maybe the Fed cranking up the printing press will help create a few jobs, which might help the inequality problem. Workers pulling in a wage are doing better than workers pulling in an unemployment check or nothing at all.  The crazy part is how the Fed’s plan may or may not work. Bernanke’s plan is to push down interest rates across the board which should increase the value of assets such as stocks and real estate; then the people that own stocks and real estate will feel wealthier and they will be more likely to go out and spend money or borrow money to spend; rising demand will force businesses to hire new workers. We know that people are feeling more confident but that might not equate to feeling wealthier, much less result in actual spending 

Individual participation in equities has been on the decline for 10 years; institutional investors and high frequency traders dominate the stock markets. Families in the lowest 20 percent of the income distribution scale spend more than a third of their income on food. Households in the bottom fifth spend 10% of their annual income on gas, vs. 2.2% for the top quintile. Yesterday, Goldman Sachs predicted commodity prices will rise 18.2%, in large part because of QE. Ironic, isn’t it?

The Dallas Federal Reserve is a strange branch location; they’ve issued papers about splitting up the too big to fail banks. Now they’ve issued a research paper that examines the central banks role in increasing inequality. The paper says the Fed’s accommodative policy and bailouts have supported the financial sector and the result is the rich got richer and the poor got poorer, and the result is the US has more inequality than any other developed nation. Bernanke says he wants to help people get jobs, but the tools he has used over the years and continues to use today have only resulted in a lopsided economy.

Part of the blame has to fall at the feet of Congress. Bernanke is giving Congress at least a little cover for continuing to do nothing. In pop psychology that's known as being an enabler. Has he even considered the merits of holding Congress's feet to the fire by declining to perpetuate his policy of centrally-planned subsidized money and the accompanying systematic understating of risk?

What else is going on in the world? The Greek government is resisting a push by yhe IMF to impose additional austerity measures. The Greek people are increasingly angry over the prospect that public salaries and pensions will be cut again in a last-ditch bid to secure a new loan installment of $40 billion from Greece’s creditors.

Meanwhile, the Portuguese people have put up with one draconian package after another – with longer working hours, pay cuts, tax rises, an erosion of pensions, and the result is that the economy has contracted by a little over 10%.They have protested peacefully, but they finally said enough is enough and they have killed a plan to raise social security taxes. Portugal cannot recover under the policies in place. The government is destroying the Portuguese economy for no useful purpose. It is pain without gain.

As Spain tries desperately to meet its budget targets, it has been forced to embark on the same path as Greece, introducing one austerity measure after another, cutting jobs, salaries, pensions and benefits, even as the economy continues to shrink.  Once again, Spanish protestors took to the streets and encircled the main parliament building. Parliament took on the appearance of a heavily guarded fortress as about 1,400 police officers ringed the building to keep back demonstrators. The organizers of the latest protest said in a statement that they had no plans to try to occupy Parliament, but instead wanted to surround the building to show that “democracy has been kidnapped” and needs to be saved from the hands of inept Spanish politicians. Spain must still decide whether they want to accept the IMF bailout and its attendant demands, which can never be met.

The Bank for International Settlements says  German lenders have the highest exposure in Europe to Spain, at $139.9 billion, of which $45.9 billion alone is exposure to banks.

March, Tuesday 27, 2012

DOW – 43 = 13, 197
SPX – 3 = 1412
NAS – 2 = 3120
10 YR YLD -.06 = 2.19%
OIL - .52 = 106.81
GOLD – 9.30 = 1681.60
SILV -.25 = 32.69

PLAT + 6.00 = 1656.00

A flat trading day on Wall Street; weakness in financials compared to a little strength in tech; the weakness carried the day.

The Standard & Poor's/Case-Shiller index of 20 American cities fell 0.8% from December to January and 3.8% from January 2011. Sixteen cities tracked by the index posted declines. Eight cities saw average home prices hit new lows. Home values fell for the fifth-straight month and prices dropped to their lowest levels since 2003. In January, Washington, Miami and Phoenix were the only metro areas that posted monthly gains. Robert Shiller, a professor of economics at Yale University and co-creator of the Standard & Poor's/Case-Shiller Index, says the market has "a chance" of rebounding even though the downward momentum in the real estate market has accelerated in the past five years. Shiller says the problems facing mortgage giants Fannie Mae and Freddie Mac must be resolved before housing can bottom. There is speculation that Fannie and Freddie could sell bundles of foreclosed homes to hedge funds; both Fannie and Freddie are reportedly leaning toward principal mortgage write-downs and loan forgiveness, but don't hold your breath on that.

Of course you don't make your home buying decisions based on national averages. All real estate is local. There have been several calls of a housing bottom in the past few weeks. Maybe, maybe not; part of that is local. There is a better chance of a bottom in Phoenix than in Atlanta. A market bottoming out never feels like a buying opportunity, not unless you like the feeling of having your stomach twisted in knows, and certainly not with 28% of all mortgaged homes underwater, and certainly not with the prospect of rising foreclosures. Still, everybody has to live somewhere.

The nationwide average for a gallon of gas is $3.99, lots more in some places, like the gas station where you just filled up. And when you watch the numbers spinning at the pump, how does it make you feel? The Conference Board's monthly consumer confidence index slipped to 70.2 from 71.6 in February, mainly because of the rising gas prices. With more of their money spilling into their gas tanks, consumers may be less likely to spend.

The head of the Organization for Economic Cooperation and Development says the Euro-zone is not out of the woods despite signs of steadiness in the financial markets, and keeping the Euro-zone financially stable will require a bailout fund of at least $1.3 trillion -- "the mother of all firewalls". At least it will be the mother of all firewalls until the flames lap over the top. OECD Secretary-General Angel Gurria says the  current $664-billion commitments to the buffer funds won’t do the trick. Debt levels in Europe remain high, banks are vulnerable, austerity programs are difficult to implement and are likely to reduce economic output, add in high unemployment and weak consumer and investor confidence. Some nations' risk spreads are at unsustainable levels and "have showed signs of creeping up in the last few days." Gurria says a bigger bailout fund would give governments the breathing room to focus on jump-starting growth and competitiveness. So far, the proposals from the World Bank, the IMF, and the OECD haven't been so great at jump-starting anything.

Spain will present a new budget on Friday; the prime minister promises it will be very very austere. Spain is facing soaring unemployment and rising borrowing costs, and the prospect of a lost decade of growth. Spain has public debt at almost 70 percent of gross domestic product and one of the highest levels of private debt in the euro zone. The economy is more than twice the size of Ireland Greece and Portugal combined, and is seen as too large for the euro zone to let it fail. Spanish government borrowing costs have fallen from 14-year highs reached last year but with economic fears resurfacing the risk premium over German bonds has started to rise again.

Meanwhile, the Spanish private sector is deleveraging at the same time the government is pushing austerity. If someone thinks Spain is going to grow its way out of the economic problems, I'm not seeing how that can happen. There is a risk that eventually Spain will need to seek a bailout to borrow at reasonable rates of interest. And so, the mother of all firewalls might not be enough.

The Federal Trade Commission is calling for a new law that would allow people to review the vast amounts of information being collected about them as the Internet, smartphones and other technology make it easier to create digital dossiers of just about anyone's life.

The proposal comes a month after the Obama administration issued a proposed "Consumer Privacy Bill of Rights" and urged technology companies, consumer groups and others to work together on developing more safeguards.

The FTC said Congress needs to impose more controls over "data brokers" that profit from the collection and sale of files containing sensitive information that can affect people's ability to get a job or find a place to live. These data brokers range from publicly traded companies to a hodgepodge of small, regional services that may only have two or three employees.

An investigation by The Associated Press last year found that data brokers often store incorrect or outdated information, including criminal records. In some cases, people are denied jobs because data brokers incorrectly report them as convicted felons. Widespread complaints about inaccurate records triggered a class-action lawsuit that culminated in one database company, HireRight Solutions, to settle the case for $28.4 million last year.

The FTC is pushing for a law that would let consumers see their files and dispute personal data held by information brokers. It would be similar to current federal laws that guarantee consumers free access to their credit reports once a year.