Daily Digest - Apr 17
- Treasury Department Issues Emergency Recall Of All US Dollars (Video, Humor, H/T JKibbe)
- Behind the Curtain 4/9/09
- CPI Down; Solely Due to Transportation
- February Monthly TIC Flows Negative Again...
- Bank Stress Tests, Explained (Video)
- Is Recovery Just Around the Corner?
- RPT-FEATURE-Politicians also to blame for crisis, say bankers
- General Growth Files Biggest U.S. Property Bankruptcy
- Stage 3 Tsunami Building up Again. SB 1137 Delay and Toxic Mortgages
- A Good -- er, Bad -- Connection
- Tarp-o-Meter, Keeping track of who's paying back
- The End of Final-Salary Pensions?
- Central Banker Fun & Games...
- Swiss citizens think a large Swiss bank will fail
Treasury Department Issues Emergency Recall Of All US Dollars (Video, Humor, H/T JKibbe)
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in March, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The index has decreased 0.4 percent over the last year, the first 12 month decline since August 1955.
Looking at the chart below, we see the only area that saw price declines year over year was transportation, dropping 12.5% year over year.
The Treasury International Capital flows for February were NEGATIVE $97 billion. This follows a negative $146.8 billion flow in January. Since we run a negative trade deficit, we need this flow to at least equal our deficit in order to create sustainable debt financed trade.
While our trade deficit is falling due to a decrease in overseas trade, the TIC flow is falling much faster and that simply means that foreigners are not purchasing our debts. In the statement below note that net foreign PRIVATE capital flows were negative $106.3 billion, but that net foreign OFFICIAL flow was positive $9.3 billion. So, it is the private capital flow that is negative while foreign official flow is only slightly positive.
We have had negative months during the past year or so, but we have not been stringing negative months together - this two month string is large and it is significant. The overall TIC flow is definitely averaging down and the trend is very clear - we are not financing our trade. Ultimately this lowers demand for our debt and places pressure on Bernanke to perform more QE.
Below is the verbiage of the official release. Follow the link to see the table of flows:
Treasury International Capital (TIC) Data for February
Washington -The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for February 2009. The next release, which will report on data for March 2009, is scheduled for May 15, 2009.
Net foreign purchases of long-term securities were $22.0 billion.
After the 1929 crash, the Hoover administration spied similarly hopeful signs in the U.S. economy. "Recovery is just around the corner", is first attributed to economist, Irving Fisher, but Team Hoover repeated this phrase and variations of it right up until he was crushed by the landslide election of FDR in 1932. It is true the U.S. economy in 2009 has yet to see the massive reversals suffered during the Great Depression, but the root causes of each period - easy monetary policy and an over-reliance on debt - are the same.
"For the politicians on both sides of the Atlantic to say it's 100 percent the fault of the bankers is a bit disingenuous," said Scott Moeller, director of mergers and acquisitions research at Cass Business School in London.
April 16 (Bloomberg) -- General Growth Properties Inc. filed the biggest real estate bankruptcy in U.S. history after amassing $27 billion in debt during an acquisition spree that turned it into the second-largest shopping mall owner.
The owner of Boston's Faneuil Hall and the South Street Seaport in New York City ended a seven-month effort today to refinance its debt. The company listed $29.5 billion in assets and debts of about $27.3 billion in the Chapter 11 filing. General Growth will continue operating its more than 200 properties.
Bottom line, many folks thinking this is the bottom are getting lured into the shark tank once again. They fail to look at the data. Yet they will quickly find out how dangerous it is to play in the California casino.
Yet in a recent Associated Press report, "NYC Mayor: No Link Between Violent Crime, Economy," New York City Mayor Michael Bloomberg said he didn't "believe a bad economy leads to more violent crime." [italics mine]
Notice his use of the word "violent."
To me, that's a good example of the games that politicians play. Instead of speaking about bad behavior in general, which is what most people would probably assume the discussion is -- or should be -- about, he shifts the focus in a way that appears to undermine the original hypothesis.
In truth, as the following Wall Street Journal report, "The Snap Judgment on Crime and Unemployment," indicates, the two go hand-in-hand.
Ever drive by your local church or United Way office and see one of those huge motivational thermometers, showing just how far the community has to go before it meets its big goal? At TBM, that's kind of how we feel about the Troubled Assets Relief Program, or TARP. With all those hundreds of billions of dollars doled out to the poor, deserving banking sector, we, along with patriotic leaders like Goldman Sachs, would like to see every penny restored to the taxpayer, and soon.
The funding deficit of New Jersey's public pension system climbed to $34.4 billion as of June 30, from $28.4 billion in mid-2007.
The pensions were 72.6 percent funded as of June 30. That compares to a funded ratio in June 2007 of 76 percent, according to state Treasury Department officials.
New Jersey's largest pension fund, the Public Employees' Retirement System, had an
unfunded liability of $10.82 billion as of June 30, up from $9.07 billion as of mid-2007. That combines state and local systems. The state PERS had a funded ratio of 65.6 percent, compared with 68.8 percent in June 2007.
The state has less money than it owes for anticipated pension obligations because of
investment losses earlier this decade, a lowering of the retirement eligibility age and a failure by past governors to make annual contributions. The value of the pension system's assets dropped to $56.3 billion as of February, from more than $82 billion as of June 2007, after losses on investments.
Governor Jon Corzine, a first-term Democrat seeking re- election in November, has tried to slow the deficit's growth by making regular pension payments. His administration has contributed about $3 billion into the system since he took office, compared with $3.2 billion contributed in the previous 14 years, according to the treasurer's office.
In the never ending game called The Great American Rip-off, JPMorgan and CEO Jamie Dimon take the prize. Well, maybe a tie with Goldman Sucks, but it's close. The latest ploy, the "Stress-Test," is like a carrot hanging out in time at the end of a long stick. Oh boy, more details and a timeline. That must mean I should buy stocks and the debts of the banks, right?
Who, exactly, is fooled by this game? Not me. The banks themselves are as unhealthy as ever, if not more so. They are hiding trillions of dollars of debt that will never be serviced in addition to trillions more in all types of derivatives. The stress test and the conditions with it are meaningless if the testers agree to overlook the leverage created by the debt and derivatives. Thus, it is a show to attempt to convince unwitting people that everything is okay. Everyone involved simply pretends and looks the other way.
Why would they do that? Because this is where their money to get elected comes from, that's why.
Over 50% of respondents in Geneva surveyed by the HEG School of Management believe that the bankruptcy of a large institution is likely.
The Swiss political world is clearly convinced that it will never let one of the major banks in the country go bankrupt. Despite the rescue of UBS by the Swiss Confederation and the Swiss National Bank (SNB), 53% of the approximately 550 people surveyed by the Haute Ecole de Gestion (HEG) in Geneva in the first quarter 2009 estimate it "likely" that a major bank will declare bankruptcy. This proportion was only 37% last June.
Clearly either the citizens have it wrong or Switzerland is in big trouble. Along those lines, I have another poll for you (click through to the site to vote): Will Citigroup eventually escape this crisis without a drastic reduction in size?