Daily Digest

Daily Digest - December 1

Tuesday, December 1, 2009, 11:46 AM
  • Potential For Fed To Hyperinflate 
  • An Empire at Risk
  • Why a run on the U.S. dollar will start soon 
  • Bank Of Japan To Inject $116 Billion Liquidity
  • Dubai Says Not Responsible For Dubai World Debt
  • Wondering Where The Next Debt Bombs Lurk 
  • AIG Has $11.9 Billion Shortfall
  • Awaiting Bonuses, Bankers Cherry-Pick Luxury Homes
  • Housing Meltdown, Ground Zero
  • Harvard Officials, Larry Summers, Ignored Warnings About Investments
  • Ban On Fund Raids May Be Put To NJ Voters
  • Treasury Sets Guidelines For Loan Modification Alternatives
  • Reckless Myopia
  • America Is Spiraling Out Of Control To Bankruptcy 
  • An Empire At Risk
  • Business Journalism And The Global Economy
  • The Lesson Of Dubai: Crisis Is Far From Over
  • Race Against Time To Tackle Global Mountains Of Debt 
  • Morgan Stanley Fears UK Sovereign Debt Crisis In 2010 
  • The Leaks That Prove How Worried The UK Treasury Is
  • France's Wild Economic Plans 
  • Germany Alarmed, Rushing Through Emergency Measures
  • Is Greece The Next Iceland?
  • Bank Of Japan To Inject $116 Billion Liquidity
  • Australia Raises Interest Rates For Third Time 
  • The Fall Of Mexico
  • The Copenhagen Diagnosis 
  • Blue Gold: World Water Wars (Movie)

Economy

Potential For Fed To Hyperinflate (hucklejohn)

We have been told that the FDIC not only is $8.2 billion in the hole, but they have secretly borrowed an additional $80 billion from the Treasury. We have also been told that the FDIC is lying about the banks in trouble. The number in eminent danger are not 552, but a massive 2,035. The cost of bailing these banks out would be $800 billion to $1 trillion. That means 2,500 could be closed in 2010.

An Empire at Risk (nncita)

So here's another scenario—which in many ways is worse than the inflation scenario. What happens is that we get a rise in the real interest rate, which is the actual interest rate minus inflation.

Why a run on the U.S. dollar will start soon (Davos)

It's one of those numbers that's so unbelievable you have to actually think about it for a while.

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion.

Bank Of Japan To Inject $116 Billion Liquidity (M.W.)

Japan's central bank took additional steps Tuesday to inject liquidity into Japan's soft economy following an unscheduled meeting. The Bank of Japan said Tuesday it would provide a new 10 trillion yen ($116 billion) lending facility and would take Japanese government bonds, corporate bonds and commercial paper as collateral.

Dubai Says Not Responsible For Dubai World Debt (M.W.)

The Dubai government said on Monday it is not responsible for the debts of Dubai World, the government-controlled holding company at the heart of the storm.

Wondering Where The Next Debt Bombs Lurk (M.W.)

For the moment, global investors seem to be taking Dubai’s sinking fortunes in their stride. Across the globe, the bills for an unprecedented borrowing binge are starting to fall due. A mountain of debt must be refinanced as short-term i.o.u.’s come due. Even in rich nations like the US and Japan, mounting budget deficits are raising concern about governments’ ability to shoulder their debts, especially once interest rates start to rise again.

AIG Has $11.9 Billion Shortfall (M.W.)

In a report distributed to clients on Monday, investment research firm Sanford C. Bernstein pointed to a big shortfall in A.I.G.’s property and casualty insurance business — which has been renamed Chartis and will be the future core of the company’s operations. The federal government has acknowledged that the company might have difficulty repaying all the money it owed taxpayers, currently about $120 billion.

Awaiting Bonuses, Bankers Cherry-Pick Luxury Homes (M.W.)

Luxury-home prices in central London rose on an annual basis for the first time in 17 months as bank and hedge-fund executives bought houses and apartments in anticipation of bonuses, according to the property adviser Knight Frank.

Housing Meltdown, Ground Zero (M.W.)

I spent a Saturday evening with about 100 people camped out in a northern California parking lot. A passerby, stealing a quick glance, might have taken the crowd for avid concertgoers staked out for tickets. There was, however, no concert here -- just weary, huddled souls, slouched in vinyl folding chairs, covered by blankets, windbreakers, and knit hats against a late autumn chill.

Harvard Officials, Larry Summers, Ignored Warnings About Investments (M.W.)

Larry Summers and other Harvard officials were repeatedly warned that the school was being too aggressive with billions of dollars in cash, investing it with a risky mix of stocks, bonds, hedge funds, and private equity. The warnings fell on deaf ears, under Summers’s regime and beyond. And when the market crashed in the fall of 2008, Harvard would pay dearly, as $1.8 billion in cash simply vanished.

Ban On Fund Raids May Be Put To NJ Voters (M.W.)

Taxes paid by New Jersey businesses to fund unemployment, disability and family leave would no longer be diverted to other programs if voters approve a prohibition on such raids.Voters could be asked as soon as next November to approve a constitutional amendment banning future raids.

Treasury Sets Guidelines For Loan Modification Alternatives (M.W.)

Treasury has set long-awaited guidance on a plan for mortgage companies to speed "short sales" of homes to stem a rising tide of foreclosures. The program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed.

Reckless Myopia (M.W.)

We face two possible states of the world. One in which our economic problems are solved, profits are on the mend, and things will soon be back to normal. The other is a world that has enjoyed a brief intermission prior to a terrific second act in which the range of policy choices will be more restricted because we've already issued more government liabilities than a banana republic.

America Is Spiraling Out Of Control To Bankruptcy (M.W.)

The debt problem is intractable. This conclusion is not economic, but mathematical. It literally is mathematically impossible to get out from under the level of existing debt.

An Empire At Risk (M.W.)

History strongly supports the proposition that major financial crises are followed by major fiscal crises. On average, government debt rises by 86% during the 3 yrs following a banking crisis. In the wake of these debt explosions, one of two things can happen: either a default, or a bout of high inflation. The history of all European empires is replete with such episodes. Indeed, serial default and high inflation have tended to be the surest symptoms of imperial decline.

Business Journalism And The Global Economy (M.W.)

For Niall Ferguson, the Scottish-born Harvard historian who discovered the subject of finance while investigating the causes of Hitler’s rise in Germany, writing about bank balance sheets is almost a holy mission.

The Lesson Of Dubai: Crisis Is Far From Over (M.W.)

Lying ahead are a slew of unresolved problems, policy challenges and, no doubt, further surprises. There is a lot of uncertainty in the air.

Race Against Time To Tackle Global Mountains Of Debt (M.W.)

There is no easy way out and the Dubai payments crisis underlines the fault lines in the global economy. Worldwide, governments and central banks are running uphill against a mountain of debt. In many ways, it's a race against time.

Morgan Stanley Fears UK Sovereign Debt Crisis In 2010 (M.W.)

Britain risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full-blown debt crisis over coming months, according to a client note by Morgan Stanley.

The Leaks That Prove How Worried The UK Treasury Is (M.W.)

The nature of the leaks this time around ought to be examined because they tell us something very important about the atmosphere at the Treasury. They tell us that the Treasury is nervous – very nervous indeed.

France's Wild Economic Plans (M.W.)

Once obscured by the crisis, Sarkozy's financial follies are growing ever plainer.

Germany Alarmed, Rushing Through Emergency Measures (M.W.)

"We are in a very critical situation," said Chancellor Angela Merkel in her weekly radio address. "We are going to discuss with leaders of the financial institutions what can be done to head off a credit crunch." Leaders of the new coalition are to meet industrialists and bankers tomorrow to thrash out an emergency plan.

Is Greece The Next Iceland? (M.W.)

The likelihood of Greece becoming the next Iceland and plunging into bankruptcy looms over a meeting of EU finance ministers in Brussels today as the Greeks prepare to take another pasting from their colleagues.

Bank Of Japan To Inject $116 Billion Liquidity (M.W.)

Japan's central bank took additional steps Tuesday to inject liquidity into Japan's soft economy following an unscheduled meeting. The Bank of Japan said Tuesday it would provide a new 10 trillion yen ($116 billion) lending facility and would take Japanese government bonds, corporate bonds and commercial paper as collateral.

Australia Raises Interest Rates For Third Time (M.W.)

The move marked the first time that the Reserve Bank of Australia had raised the cost of borrowing three times in a row, and it appeared to indicate that the bank’s decision makers were undeterred by the global jitters set off by Dubai’s decision last week to defer repayment of some debt. The increase Tuesday, took the key cash rate to 3.75%.

The Fall Of Mexico (M.W.)

In the 3 years since the President launched a war on drug cartels, border towns in Mexico have turned into halls of mirrors where no one knows who is on which side or what chance remark could get you murdered. Some 14,000 people have been killed in that time, and part of the country is under martial law. Is this evidence of a creeping coup by the military? The stakes for the U.S. are high, as the prospect of a failed state to our South is all too real.

Environment

The Copenhagen Diagnosis (M.W.)

Hundreds of papers have been published on a suite of topics related to climate change. This report serves as an interim evaluation of the evolving science, and covers a range of topics including some of the common misconceptions surrounding climate change science. The science contained in the report is based on the most credible and significant peer-reviewed literature available by previous IPCC lead authors familiar with the rigor and completeness required for a scientific assessment of this nature.

Blue Gold: World Water Wars (Movie) (Davos)

Narrated by Malcolm McDowell, this award-winning documentary from director Sam Bozzo posits that we're moving closer to a world in which water -- a seemingly plentiful natural resource -- could actually incite war. As water becomes an increasingly precious commodity, corrupt governments, corporations and even private investors are scrambling to control it, which leaves everyday citizens fighting for a substance they need to survive.

20 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - December 1

"BEIJING (Dow Jones)--The head of China's pension fund said Tuesday reform of the world financial system ought to focus on reducing the system's reliance on one nation's currency as the reserve currency, state-run Xinhua News Agency reported.

"The core of the reform should be to change the monopoly one nation's currency has in terms of reserve currencies," the report cited National Social Security Fund Chairman Dai Xianglong as saying at a conference.

Dai, who was once a central bank governor, also said China should improve the composition of its foreign-exchange reserves and increase the investment returns on those reserves.

He said the country should also improve its external payments situation, according to the report."

"Analysts said that the forex agency's global hiring campaign was part of its drive to diversify China's currency reserves, a long-standing official goal.

"With our foreign exchange reserves growing, the team of staff that manages the reserve assets should also be strengthened," said Ding Zhijie, a professor with the University of International Business and Economics.

The composition of the reserves is a state secret, but analysts estimate that at least two-thirds are invested in dollar-denominated securities, which means China stands to lose a lot from any decline in the dollar's value."

"Do you think investing 20% of my cash assets into gold is an intelligent amount and can gold become a bubble and need to deflate at some point?

There is no such thing as owning too much gold. We are at a point where you shouldn't be holding any dollar denominated assets at all. If you must own cash, let it be a foreign currency like the Yen.

Yes, gold can become a bubble and have to deflate at some point. At this time, the average American thinks gold is expensive and they are selling their old gold jewelry in order to get dollars. Therefore, we are nowhere close to having a gold bubble, we still have a dollar bubble."

"Contracts betting the franc will rise against the dollar totaled 25,333 on Nov. 10, more than 10 times the number betting on a drop by the franc, according to the Commodity Futures Trading Commission."

"Yale finance professor Jeffrey Garten sees the dollar dropping more than just against the franc. Thanks to the U.S. debt burden and Asian economic strength, he wrote in the Financial Times, “a permanently and greatly weakened dollar” is coming."

"“Gold has made all-time highs versus major currencies like the euro, Swiss franc and pound,” said Mario Innecco, a broker at MF Global Ltd. in London. “People want to get rid of paper and buy a currency that can’t be deflated. That’s gold.”"

"“With interest rates so low and a climbing deficit, there’s real fear that inflation will be a salient problem,” said Michael Pento, chief economist at Delta Global Advisors. In January, when gold dipped below $850, Pento predicted gold would reach $1,200 by year-end. “It’s hard to make a bearish case for gold right now,” he said Nov. 25."

"In an unusual foray into political comment, investing guru Jim Rogers says Treasury Secretary Timothy Geithner is about to join the ranks of the unemployed – as well he should.

"Geithner should never have been appointed to anything," Rogers told Business Week. "He's been wrong about just about everything for 15 years."

"As Mr. Obama realizes that Geithner doesn't know what he's doing, he's going to look for somebody else because he doesn't want to take the heat himself."

"So he's going to look to blame somebody, and the obvious person is Geithner."

Rogers, a commodity bull, attributes gold’s recent price surge to budget deficits.

“Deficits are going berserk nearly everywhere,” Rogers notes. “Throughout history, printing money has led to weaker currencies and higher prices for real assets.”"

"NEW YORK (CNNMoney.com) -- AIG announced Tuesday that it completed a deal wiping out $25 billion of its debt to taxpayers by selling stakes in two subsidiaries to the Federal Reserve Bank of New York.

The troubled insurer gave the New York Fed preferred shares of two of its international life insurance companies, including $16 billion of American International Assurance Co. and $9 billion of American Life Insurance Co."

.......7A) AIG gives Fed equity stakes for $25 bln in debt

"RALEIGH, N.C. (AP) — North Carolina owes nearly $1.5 billion to the federal government to pay unemployment claims and that number continues to rise.

The News & Observer of Raleigh reported Tuesday that the state has borrowed money for the claims since February, sometimes as much as $20 million a day.

David Clegg with the North Carolina Employment Security Commission says the debt will rise to at least $2 billion by the end of the year.

During the last recession, the state borrowed just $270 million for its unemployment insurance trust fund.

The debt is interest-free through the end of next year, thanks to the federal stimulus package. The interest gets tacked on beginning in 2011."

"LONDON, Dec 1 (Reuters) - Ratings agency Moody's said on Tuesday it estimates the Dubai government and its related entities have debt of $100 billion -- higher than the market estimate of around $80 billion. Moody's also said ports operator DP World (DPW.DI) and Jebel Ali Free Zone have approximately $10 billion in debt.

"Dubai's corporate landscape is now effectively a high-yield market," said Philip Lotter, senior vice president of EMEA corporate finance group at Moody's."

"Dec. 1 (Bloomberg) -- The commercial mortgage default rate on loans held by U.S. banks more than doubled to 3.4 percent in the third quarter as vacancies rose and rents declined, Real Estate Econometrics LLC said.

Defaults climbed from 1.37 percent a year earlier and from 2.88 percent in the second quarter, the New York-based property research firm said today in a report."

"WASHINGTON, Nov 30 (Reuters) - U.S. banks continue to face significant challenges, particularly from rising delinquencies in commercial real estate and commercial loans, a Federal Reserve official said on Monday.

"Credit losses at banking organizations continue to rise, and banks face risks of sizable additional credit losses given the outlook for production and employment," said Jon Greenlee, associate director of the division of bank supervision and regulation."

"Because of the recession, health plans are treading a fine line between trying to keep membership numbers healthy and ensuring that the members they keep continue to generate a profit.

Most insurers have seen substantial membership losses due to recession-driven layoffs, and much of the decline has been in the more profitable commercial sector, while Medicaid and Medicare membership has grown."

"The state is facing a possible budget gap of at least $3.6 billion over the last six months of the current fiscal year and the following two years, Kaine said in an interview Monday in Martinsville.

That will be the gap if he takes the entire 2010 budget, which includes $6 billion he already has cut, and does not increase any spending except what is required for rising Medicaid enrollments, debt payments and other necessities, or account for inflation, he said."

"Contagion effects for Abu Dhabi from the restructuring of Dubai World debt will be "unavoidable", ratings agency Moody's said on Monday, and the restructuring could lead to downgrades for United Arab Emirates bank ratings.

"The contagion effect for Abu Dhabi will be unavoidable, as doubts will be raised as to how Dubai is going to finance its growth," Moody's analysts said in a weekly note."

"NEW YORK, Dec. 1 (UPI) -- It has become increasingly hard to find a country without a debt crisis looming, economists said.

In the wake of Dubai's $59 billion debt crisis announcement Wednesday, Harvard economics Professor Kenneth Rogoff said he expects a new flurry of defaults to occur in about two years, The New York Times reported Tuesday.

Pierre Cailleteau, managing director of sovereign risk at Moody's said, "I see very good reasons to be worried … because governments realize they can't afford to guarantee the debts" of companies that are now enjoying the largess of government protection."

"Amy Schiffman has had a Fifth Third Bancorp credit card for eight years to guard against unexpected overdrafts on her checking account. Now the bank wants to charge her $19 for not using it.

“If you’re not thinking about the card, you might forget to pay the fee, and then you’ll be facing another late fee on top of it,” said Schiffman, 26, a Web designer in Lansing, Michigan.

Credit card issuers, facing the highest level of delinquencies since April, according to Moody’s Investors Service, are reviving inactivity charges and reworking other fees in an effort to stem declining revenue."

"More than 40 years ago, David Allen's parents bought an 800-square-foot log cabin on a piney slope overlooking the Little Colorado River in Arizona's Apache-Sitgreaves National Forests.

Under a U.S. Forest Service permit program, the Allens paid about $130 per year to have their small summer retreat on public land. As decades passed, that price didn't go up much. By the 1990s, they were still paying just $300 annually for a half-acre of real estate. As recently as 2008, he says, the fee was $1,677.

Now, because a new Forest Service appraisal values Allen's half-acre lot at $200,000 — cabin owners pay annual fees set at 5% of each lot's appraised value — he faces a yearly charge of $10,000 for a place that can't be used much of the year."

"Montgomery County officials are estimating that their budget deficit for the next fiscal year is $608.3 million, nearly $240 million more than officials had projected in September."

"ALBANY _ Gov. David Paterson said Monday night his office will delay payments to local governments, hospitals and schools -- and ultimately seek to cut the money entirely -- because the Legislature refuses to make enough spending reductions to state programs.

The move came after a day of negotiations with legislative leaders, who met Paterson at the governor's mansion and sought to reach a deal that eliminated school cuts.

Paterson said he is done negotiating and said legislators have been unable to recognize the need to cut spending."

"Dan Walters today argues that California has over $500 billion in debt, a sum that might further the comparisons to Dubai - until we look at the details:

Lockyer's warning pertained to the state's "general obligation debt," which currently stands at $59 billion, and there are an additional $50-plus billion in general obligation bonds that have not yet been sold. The biggest chunks of debt, however, are the unfunded obligations for pensions and health care of retired public employees...state and local pension funds have lost at least $150 billion on investments, so a reasonable estimate of today's unfunded liability is $200-plus billion. A state commission, meanwhile, says the state-local liability for retiree health care is about $100 billion.

No one keeps complete data on local government general obligation debt, but it appears to be roughly the same as the state's, perhaps $50 billion, plus several billion dollars in debt incurred by local redevelopment agencies."

"This longstanding deficit of rental homes that are affordable for the poorest households is getting worse because the number of extremely low income households is increasing, while the number of rental homes they can afford dwindles."

"Highway-construction companies around the country, having completed the mostly small projects paid for by the federal economic-stimulus package, are starting to see their business run aground, an ominous sign for the nation's weak employment picture.

Tim Word, vice president of Dean Word Co., a heavy-construction company in New Braunfels, Texas, said his income is now coming mostly from projects that are winding up. He said that in normal times he has about $100 million of signed contracts in hand. But that number has fallen to $30 million, and the pipeline is empty. In the past two years, his work force has shrunk nearly 40% to 260 from 420.

"Having something to bid on is the lifeblood of the industry, and it's running out," said Mr. Word. He isn't sure what will happen next year without new projects. "There's no pavement fairy that's going to help.""

"PITTSBURGH -- Facing big unfunded pension liabilities for city workers, Pittsburgh is proposing what appears to be a one-of-a-kind 1% tuition tax on local university and college students, who claim the tax is illegal and unfair.

More than 100 students filled Pittsburgh City Council chambers Monday morning, many bearing signs like "No Taxation Without Representation" to protest the tax, which, if passed this week, could become effective next year.

"This is going to be a double taxation of students in the city," said Daniel Jimenez, 27 years old, a Ph.D. student in neuroscience at the University of Pittsburgh, who pays property taxes on a home he bought in 2004.

The tuition tax, which would raise an estimated $16 million, threatens to drive a wedge between the city and its universities, which have been credited with fueling much of Pittsburgh's economic transformation from an industrial city to an education and medical-services center.

The cash-strapped city, which has 85,000 students at its 10 universities and colleges, including top-ranked engineering school Carnegie Mellon University, says it needs the tax to help cover a $600 million pension-fund shortfall and keep several branches of the Carnegie Library system open."

"NORTH HAMPTON — Towns and cities all across New Hampshire are getting some bad news from the state concerning the already stressed public employees retirement system.

The amounts communities are going to have to pay into the system are going up again for Fiscal Year 2012.

"The New Hampshire Retirement System has released their proposed rate increases for FY 2012, and it is not good," North Hampton Town Administrator Steve Fournier told members of the Select Board recently. "Overall, they are proposing an increase of 22.68 percent."

That represents an increase of approximately $106,700 between the 2010 and 2012. It means North Hampton taxpayers will be paying over half a million dollars just in retirement costs for town employees, and Fire and Police department members in 2012.

Of those three units, the highest rate increase will be for Police Department employees. Their rate will be going up by more than 31 percent, or more than $44,500 a year"

"AUGUSTA, Maine — Maine employers will see a $54 million increase in the taxes they pay to fund the unemployment insurance system starting in January. It’s an increase business groups say could cost jobs.

“The rate increase is the result of the greater usage of the fund we have seen in this recession,” said Labor Commissioner Laura Fortman in an interview. “The rates are adjusted every year and this is the first increase in several years.”

By the end of 2009, the unemployment insurance trust fund will have paid out nearly $254 million in benefits, she said, while the tax that fuels the trust fund will have brought in just $83 million."

Shopping season, Marc Faber video, AIG and the Federal Reserve.

"LA-SEYNE-SUR-MER, France, Dec 1 (Reuters) - European industry cannot continue with a euro at such weak levels to the dollar, pointing to the need for changes to the global monetary system, French President Nicolas Sarkozy said on Tuesday.

In a speech on the French economy, Sarkozy called for a system which would diminish the dominant role of the dollar on world markets and said France would seek progress on the issue when it presides over the Group of 20 major developed and developing nations in 2011.

"I see myself as a friend of the Americans but we cannot continue like this, with a euro which has risen by 50 percent of its value in relation to the dollar," he said.

"How do you want us to continue to produce in the euro zone and sell in the dollar zone with a 50 percent deficit in productivity based on the simple value of money? How will our industries be able to cope? This requires a new international monetary system," said Sarkozy."

"Gold has finally surpassed the $1200/oz mark.

But it may be going much higher. China is going to increase its holdings signficantly, according to Breakfast With Dave, Gluskin Sheff's analyst newsletter with David Rosenberg."

"Many critics argue that the pace of modifications under the federal Making Home Affordable (MHA) program isn’t keeping stride with the nation’s raging foreclosure problem, so the Obama administration announced Monday that it is taking a new approach to pressure servicers into converting more trial modifications to “permanent” status.

The government says that from now on, servicers failing to meet performance obligations under the federal program will face punishment, “subject to consequences which could include monetary penalties and sanctions.”"

........All this going on and the Dow Jones is up 140 points? Something just isn't right.

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Predictions of War, Financial Bust, and More Gloom

Predictions of War, Financial Bust, and More Gloom - by Mish Shelock with Mark Faber

http://www.minyanville.com/articles/faber-gloom-boom-doom-economy-collapse-world-fiat-central-bank-capitalism-war-minyanville/index/a/25626

A possible repost...

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Re: Daily Digest - December 1

I just want to comment: I myself would have put Blue Gold under the environment category, but one thing that made it a "must watch" in my book was the fact that like CM's super work, it tied the three E's together. In other words, water also makes energy. More interesting though was the fact that the World Bank and the IMF use this resource in ways that are, well my words could not do it justice.

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The Final Bear Raid

This video is very weird, but very entertaining. Part Matrix, part reality, part crazy Japanese. Watch it, you'll love it.

This is what it is like to be the last bear on earth.

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Alex Szczech
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More on the environment

The Story of Cap & Trade: http://storyofstuff.com/capandtrade/

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spinone
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Re: The Final Bear Raid

Thats the craziest thing I've ever seen.

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DavidC
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Re: Daily Digest - December 1

Still, the stock market is back near this year's highs so everything is OK...

DavidC

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DavidC
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Re: Daily Digest - December 1

If this is true then it says something about how guilty/worried Goldman Sachs staff feel about their bonuses!

http://www.bloomberg.com/apps/news?pid=20601110&sid=ahD2WoDAL9h0

DavidC

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Re: Daily Digest - December 1

Ron Paul on CNBC regarding auditing the Fed. See the video here.

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rickets
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Re: Daily Digest - December 1

That video is hysterical.  Thanks JAG....needed the humor!  I seriously feel like the guys getting chased by the albino hoard

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saxplayer00o1
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Re: Daily Digest - December 1

Mishkin Calls Ron Paul Fed-Audit Bill ‘Dangerous’

"Dec. 1 (Bloomberg) -- U.S. Representative Ron Paul’s proposal to allow audits of the Federal Reserve’s monetary policy is “incredibly dangerous” and could stoke inflation, said Frederic Mishkin, a former Fed governor.

“The Ron Paul bill is incredibly dangerous,” said Mishkin, who is now a Columbia University professor, in a Bloomberg Radio interview. “It is remarkable the kind of attacks that are occurring on Fed independence.”"

.......Hey Mishkin......Auditing the Fed could stoke inflation? Did auditing the Fed do this?

Once agan these guys are playing their part perfectly!

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Re: Blue Gold - Water crisis

See it for free on YouTube in 9 parts:

Blue Gold - Water crisis

Thirsty Groucho

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Re: The Final Bear Raid

JAG, that video's WAY not right!  Other than that, I think it may have taken weird all the way to art.  Good laughs too!

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Re: Daily Digest - December 1

Mortgage stress may return as [Australian]  bank rates surge

By business editor Peter Ryan for AM

http://www.abc.net.au/news/stories/2009/12/02/2759372.htm?section=justin

Westpac increased rates by 0.45 per cent, and many analysts expect other banks to also raise by more than 25 basis points (ABC News: Michael Janda, file photo)

For the past year, the term 'mortgage stress' has been used less frequently as the official interest rate plunged to a 50 year low.

But now it is set to make a comeback after yesterday's decision by Westpac to raise its home loan rates by almost double the Reserve Bank's official movement of a quarter of a percentage point.

Westpac says the cost of sourcing money on global markets is higher because of the global financial crisis and, despite signs of recovery, the credit crunch remains.

Banks are also competing to attract deposits from customers. Westpac raised its one-year term deposit rate yesterday to 6.8 per cent and other banks have been advertising special deals to meet tougher liquidity requirements.

So in the end, someone has to make up the difference, and that means anyone with a mortgage.

If history is a guide, then the rest of the big four will now follow in a similar fashion though, perhaps, with a slightly lower margin given that Westpac is taking the public relations pain this time around.

Rate rise cynicism

But there is a fair degree of cynicism about the timing of Westpac's shock move given the domination of the Liberal leadership battle in the media yesterday.

And Christopher Zinn from the consumer group Choice says it makes a mockery of previous arguments for rate hikes beyond official movements.

"While the rates were going down the banks dragged the chain in terms of passing on the reductions and then didn't go the whole hog because they said the cash rate was only part of that funding mix," he said.

"Now, funnily enough, on the way out they pass on the increases not only far faster, but with an added margin as well, and at triple fast speed."

One possible benefit to consumers from Westpac's move is that it will lower the urgency of the Reserve Bank to make further official rate increases.

The RBA still has some way to go before it gets the cash rate back to its normalised level of around 4.5 per cent, but in the expectation that other banks follow Westpac's move, there is a view that the Reserve Bank might hold fire when it holds its next meeting in February.

However, this will hang on some key economic data about the strength of the economy.

We are yet to see September quarter GDP which is out later this month, and there is also the all important official inflation reading in late January which will really set the tone for the rates outlook for 2010 and how borrowers will manage their mortgages.

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Damnthematrix
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Posts: 3998
Re: Daily Digest - December 1
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Headless
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Posts: 363
Re: Daily Digest - December 1

Alex,

Thanks?...for posting the Cap-n-Trade video. Of course I knew this; of course I'd seen her other video, The Story of Stuff; of course she puts it in terms that a second-grader could understand; thus, why am I more pissed off than ever--every day I seem to manage a new level of rage--even though I thought I knew everything that was presented?

It tells me a little about my perception of the "departments" of my comprehension; that is to say, it  reminds me that all is not hopeless in the face of Goldman Sachs-like irreverence for human dignity; it renews my belief that there is a story out there  that can be told that will eventually kill Wall Street...and revive the America my grandparents had me believing existed; an America that I learned about some fifty years ago when I sat and listened to my grandfather cry over the Japanese Men that he had personally killed, and how his life didn't really matter, as long as the world benefited... He punished himself with underachievement until the day he died.

Someone needs to tell the right story soon, before we are all reduced to thinking that killing is an acceptable means of saving one's country... There are plenty of Men who are up to the task.

Headless

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Eye
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Posts: 88
Re: Daily Digest - December 1

"Emphatically, the trillions of dollars spent over the past year were not in the interest of protecting bank depositors or the general public. They went to protect bank bondholders. Instead of taking appropriate losses on those bonds (which financed reckless mortgage lending), those bonds are happily priced near their face value, for the benefit of private individuals, thanks to an equivalent issuance of U.S. Treasury debt. But that's not enough. Outside of a very narrow set of institutions that are subject to compensation limits, just watch how much of the public's money – which benefitted several major investment banks following a very direct route – gets allocated to Wall Street bonuses in the next few weeks."

John P. Hussman, Ph.D.

Quoted from J.F. Mauldin's "Outside The Box" newsletter.

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guardia
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Re: The Final Bear Raid

JAG wrote:

This video is very weird, but very entertaining. Part Matrix, part reality, part crazy Japanese. Watch it, you'll love it.

Just for the record (again), the English subtitles have NOTHING to do with the original script in Japanese... Otherwise, very funny :)

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Mikey1052
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Posts: 38
AmTrust Financial Files for Bankruptcy in Cleveland

Dec. 1 (Bloomberg) -- Am Trust Financial Corp., owner of the Cleveland-based AmTrust Bank that expanded rapidly into Florida and Arizona, filed for bankruptcy, blaming investments in home loans that lost value in the recession.

5th largest...so far.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a3vPOaTMacTo

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JAG
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Posts: 2489
Re: The Final Bear Raid

guardia wrote:

Just for the record (again), the English subtitles have NOTHING to do with the original script in Japanese... Otherwise, very funny :)

That was obvious to me because I know where the video came from http://slopeofhope.com/ . My apologies if anyone was confused on this point.

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