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Daily Digest - March 4

Wednesday, March 4, 2009, 11:28 AM
  • Europe on the Ropes
  • We need shock and awe policies to halt depression
  • ‘Tidal wave' of homeless students hits schools (Video on Page)
  • Laid-off professionals turn to "survival jobs"
  • The L Curve 1 in 3 Chance, Nouriel Roubini
  • Fleckenstein: Protect yourself from Financial Armageddon with gold
  • Country Vulnerability Scorecard
  • Switzerland threatened with bankruptcy
  • Vehicle Sales
  • Preview: Pending Home Sales Likely Resume Downward Trend
  • Construction Spending Continues to Fall
  • ISM Manufacturing (Jan vs. Feb)
  • Black Hole, $7,757 per second
  • Bernanke: "May" Need More Than Approved $700,000,000,000 to Fix Banks...
  • The Two Sides of AIG
  • 'Bad Bank' Funding Plan Starts to Get Fleshed Out
  • Citi Loses A Big Customer In Asia
  • Cramer on Manipulation (Hat Tip KemoSavvy)
  • Citi to Allow Jobless to Pay Less on Loans
  • S&P 500 Irrational Exuberance
  • No Clue 
  • GM urges EU states to come to its aid

Economy

Europe on the Ropes 

The following is not pretty reading. I have rarely, if ever, felt this apprehensive about the outlook. So, if the crisis has made you depressed already, don't read any further. What is about to come, will make your heart sink. 

Here's what jensen means.

On the 11th February the Daily Telegraph's Brussels correspondent Bruno Waterfield wrote an article under the header: "European banks may need £16.3 trillion bail out, EC document warns." In the article, the reporter revealed that he has seen a secret document produced by the EU Commission which briefed the union's finance ministers on the true extent of the banking crisis. Less than 24 hours later, the article's header was changed to "European bank bail-out could push EU into crisis" and two paragraphs had mysteriously disappeared. Here they are:

"European Commission officials have estimated that "impaired assets" may amount to 44pc of EU bank balance sheets. The Commission estimates that so-called financial instruments in the ‘trading book' total £12.3 trillion (13.7 trillion euros), equivalent to about 33pc of EU bank balance sheets.

In addition, so-called ‘available for sale instruments' worth £4trillion (4.5 trillion euros), or 11pc of balance sheets, are also added by the Commission to arrive at the headline figure of £16.3 trillion."

Do yourself a favour - read those two paragraphs again. Newspaper editors do not change content light-heartedly. Did the Telegraph editor receive a call from Downing Street? Or Brussels? Did he have second thoughts about the avalanche that he could possibly instigate? I don't know and I probably never will. But one thing is certain. If the EU Commission's estimate of £16.3 trillion of impaired assets is correct, then the crisis is far worse than any of us could ever imagine. Not only would we have to get used to the prospects of a systemic meltdown of our banking system, but entire nations may go down as well.

As jensen notes, even if losses realized are just a fraction of this, the crisis will be very severe. this is what is meant when it is suggested that major banks have likely lost whole number multiples of their capital. 

We need shock and awe policies to halt depression 

Factory output is collapsing at the fastest pace everywhere. The figures for the most recent month available are, year-on-year: Taiwan (-43pc), Ukraine (-34pc), Japan (-30pc), Singapore (-29pc), Hungary (-23pc), Sweden (-20pc), Korea (-19pc), Turkey (-18pc), Russia (-16pc), Spain (-15pc), Poland (-15pc), Brazil (-15pc), Italy (-14pc), Germany (-12pc), France (-11pc), US (-10pc) and Britain (-9pc). Norway sails blissfully on (+4pc). What do they drink up there? 

This terrifying fall has been concentrated in the last five months. The job slaughter has barely begun. Social mayhem comes with a 12-month lag. By comparison, industrial output in core-Europe fell 2.8pc in 1930, 5.1pc in 1931 and 3.9pc in 1932, according to RBS. 

Tidal wave' of homeless students hits schools (Video on Page)

Laid-off professionals turn to "survival jobs" 

TEMPE, Ariz. - Mark Cooper started his workday recently cleaning the door handles of an office building with a rag, vigorously shaking out a rug at a back entrance and pushing a dust mop down a long hallway. 

Nine months ago he lost his job as the security manager for the Western United States for a Fortune 500 company, overseeing a budget of $1.2 million and earning about $70,000 a year. Now he is grateful for the $12 an hour he makes in what is known in unemployment circles as a "survival job" at a friend's janitorial-services company. But that does not make the work any easier.

"You're fighting despair, discouragement, depression every day," he said.

Cooper is not counted in traditional unemployment statistics since he works five days a week, 9 a.m. to 6 p.m. But his tumble down the economic ladder is among the more disquieting and often hidden aspects of the downturn.

It is not clear how many professionals such as Cooper have taken on these types of lower-paying jobs, which are themselves in short supply. Many professionals are doing their best to hold out as long as possible on unemployment benefits and savings while looking for work in their fields.

The L Curve 1 in 3 Chance, Nouriel Roubini

And things could get worse. We now face a 1 in 3 chance that, if appropriate policies are not put in place, this ugly U-shaped recession may turn into a more virulent L-shaped near-depression or stag-deflation (a deadly combination of economic stagnation and price deflation) like the one Japan experienced in the 1990s after its real estate and equity bubbles burst. 

Fleckenstein: Protect yourself from Financial Armageddon with gold 

Thus, the recent decline in the price of gold has been precipitated by some combination of short-selling in the gold ETF (where the short interest has been rising quite aggressively) and/or the short-selling and liquidation of gold futures. 

Those of us who believe gold belongs in one's portfolio need to remember that the folks who don't like it really don't like it. After all, gold is easy to hate. It's just a price, and it appears to many that today's price is too high. 

Tidal wave' of homeless students hits schools (Video on Page)

Country Vulnerability Scorecard

Switzerland threatened with bankruptcy

Swiss banks have given billions of credit to eastern europe - now the customers cannot pay back the money. switzerland is threatened with the fate of iceland, says economist Arthur P. Schmidt.

In countries such as Poland, Hungary and Croatia, the Swiss franc has become an important currency. Thousands of households and small firms took out loans in Swiss francs, and not in the national currency zloty, forint, or kuna because of lower interest rates. In Hungary, 31 percent of all loans are in Swiss currency. Amongst household loans, they are almost 60 percent. 

Vehicle Sales

Preview: Pending Home Sales Resume Downward Trend

The latest pending home sales report showed continued weakness in the U.S. housing sector, with sales down much more than expected.

The National Association of Realtors revealed Tuesday morning that pending home sales fell 7.7% in January, after unexpectedly rebounding in December.

Economists were expecting a 3.5% decline in the month. December's gain was also revised down to 4.8% from an initially reported 6.3% increase.

Pending home sales are real estate contracts that have been signed but not finalized, and are used to predict existing home sales.

Existing home sales in January fell 5.3%, against expectations for a 1.1% increase.

Other housing data released recently showed new home sales fell to an annualized pace of 309k in January, a 10.2% decline from December. Economists were expecting a 2.1% fall. 

Construction Spending Continues to Fall 

Construction spending in the United States continued to decline in January, falling by 2.2% month-over-month, according to the U.S. Department of Commerce. 

The consensus had forecast a 1.5% decline. The total construction figure for December was revised downward to -2.2% from -1.4%.

Residential construction fell by 2.8%, a further drop from December's 4.4% decline, while non-residential construction fell 3.5%, down from the 1.5% decline the prior month.

The report also noted a 3.7% decline in private construction and a 2.6% decrease in public construction, which came in at -2.3% and -1.8% in December respectively. 

ISM Manufacturing (Jan vs. Feb)

Black Hole, $7,757 per second

Bernanke: "May" Need More Than Approved $700,000,000,000 to Fix Banks... 

March 3 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said policy makers may need to expand aid to the banking system beyond the $700 billion already approved and take other aggressive measures even at the cost of soaring fiscal deficits. 

"Without a reasonable degree of financial stability, a sustainable recovery will not occur," the Fed chairman said today in testimony prepared for the Senate Budget Committee. "Although progress has been made on the financial front since last fall, more needs to be done." 

The Two Sides of AIG 

In this corner, as previously mentioned, Yves Smith goes for the slam dunk: 

Let's see, the credit default swaps market, due to some netting, is now somewhere north of $30 trillion (as opposed to its earlier "north of $60 trillion" level). Investment banks were believed to have hedged most of their exposure via offsetting contracts, but AIG wrote naked protection. And as jAIG itself is at risk of getting downgraded again, the collateral posting requirements keep rising.

Some analysts (including Chris Whalen of Institutional Risk Analytics) have offered theories as to how the government could void a lot of CDS (some have argued for getting rid of them altogether, others argue for eliminating them in cases where the protection buyer does not hold the underlying bond/exposure). Before you say, "they can't do that", recall the effective confiscation of gold in the Great Depression. rationing, wage and price controls, the suspension of habeus corpus. There is a good deal that the Feds could do if they chose to, trust me. But it's easier to bill the poor chump taxpayer than take on the financiers, even after they done so much damage. 

'Bad Bank' Funding Plan Starts to Get Fleshed Out 

WASHINGTON -- The Obama administration, filling in some of the blanks in its bank bailout, is considering creating multiple investment funds to purchase the bad loans and other distressed assets that lie at the heart of the financial crisis, according to people familiar with the matter. 

The Obama team announced its intention to partner with the private sector to buy $500 billion to $1 trillion of distressed assets as part of its revamping of the $700 billion bank bailout last month. It's central to the administration's efforts to unglue credit markets, alongside a Federal Reserve program aimed at spurring consumer lending in areas such as credit cards and home loans that will be officially launched Tuesday.

No decision has been made on the final structure of what the administration is calling a private-public financing partnership, but one leading idea is to establish separate funds to be run by private investment managers. The managers would have to put up a certain amount of capital. Additional financing would come from the government, which would share in any profit or loss. 

Citi Loses A Big Customer In Asia 

There's been a lot of speculation about whether or not Citi will lose business around the world if customers decide to turn to banks less dependent on the US government for survival. So far Citi's retail customers are not withdrawing deposits. But some large international customers are turning away. 

We're told by a person familiar with the matter that yesterday Citi lost custody of fund worth hundreds of millions owned by the government pension plan for the Philippines. The plan's managers said it decided to pull the funds from Citi after the US government took a larger stake.

Citi had won the business over competition from JP Morgan and State Street in 2007. Now the funds are being moved to JP Morgan.

There are rumors about other funds, particularly sovereign wealth funds, considering leaving Citi. But so far these are just rumors. 

Cramer on Manipulation (Hat Tip KemoSavvy)

Citi to Allow Jobless to Pay Less on Loans 

Under the program, Citigroup will temporarily lower mortgage payments to an average of $500 a month for certain borrowers who have recently lost their jobs and are at least 60 days behind on their mortgage payments. Borrowers will be allowed to make the lower payments for three months. Citigroup will waive interest and penalties during this period. 

S&P 500 Irrational Exuberance

No Clue

"Buying stocks is a good deal if you have a long term perspective." 

GM urges EU states to come to its aid

"General Motors said on Tuesday that its European arm could run out of money by as early as next month, putting up to 300,000 jobs on the continent at risk.

Fritz Henderson, the struggling Detroit carmaker's chief operating officer, said that GM would face a liquidity crunch "early in the second quarter" if emergency funds from European countries did not materialise." 

Related content

37 Comments

Davos's picture
Davos
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Re: Daily Digest - March 4

Here's Timmmmmy

 Intraday 021009S&P Intraday 030309

Davos's picture
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Re: Daily Digest - March 4
Automaker Feb. 2009 Feb. 2008 Pct. chng. 2 month 2009 2 month 2008 Pct. chng.
TOTAL 511,918 918,261 -44.3% 1,023,618 1,732,698 -40.9%
BMW Group* 15,841 24,227 -34.6% 30,170 41,184 -26.7%
Chrysler LLC** - - -% - - -%
Daimler AG*** - - -% - - -%
Ford Motor Co.**** 99,050 196,060 -49.5% 192,091 355,336 -45.9%
General Motors***** 126,170 268,737 -53.1% 254,368 519,663 -51.1%
Honda (American)† 71,575 115,397 -38.0% 142,606 213,908 -33.3%
Hyundai Group†† - - -% - - -%
Isuzu - - -% - - -%
Jaguar Land Rover‡ - - -% - - -%
Maserati 65 227 -71.4% 167 355 -53.0%
Mazda - - -% - - -%
Mitsubishi - - -% - - -%
Nissan††† 54,249 86,219 -37.1% 108,133 162,824 -33.6%
Porsche - - -% - - -%
Subaru 13,089 12,907 1.4% 25,283 24,196 4.5%
Suzuki 3,495 8,800 -60.3% 7,150 15,920 -55.1%
Toyota‡ 109,582 182,169 -39.8% 226,869 354,018 -35.9%
VW‡‡‡ 18,382 22,939 -19.9% 35,941 44,136 -18.6%
Other (estimate) 420 579 -27.5% 840 1,158 -27.5%
DrKrbyLuv's picture
DrKrbyLuv
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Re: Daily Digest - March 4

Davos - Nice work as usual in bringing us the news we need.

I was hoping that you or someone else might comment on a question I have regarding the article on Switzerland; "Switzerland threatened with bankruptcy."

I hold some allocated gold in Switzerland and it is insured by Lloyds.  It seemed like a good idea at the time, get some money out of the country just in case.  Now I am beginning to worry about what is occurring in Switzerland and with Lloyd's.  

If things really break down in Switzerland, could the gold be seized?  Any comments will be much appreciated.

Larry

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coolhandluke
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Re: Daily Digest - March 4

DrKrbyLuv,

Ive been wondering the same thing.  Scared to stockpile too much precious metals here in the states for fear of confiscation. So I started looking outside the states.  Is there really a true safe haven?  Multiple locations has potential benefits and problems.  Not really sure if there is a perfect storage solution.

vinnya's picture
vinnya
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Re: Daily Digest - March 4

I have never posted on here before, but I do read everything on Chris's website.  I read every blog and ever comment that you all write on here.  This link I have posted on here is long, but I feel very important.  We need to start organizing and educating people immediately.  I hope you watch all 16 parts of this video.  I look forward to your comments.

Change is coming and the good of humanity will prevail!

CB's picture
CB
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Re: Daily Digest - March 4

Why is UBS being targeted by the IRS - inter-bank warfare?

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ceci1ia
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Re: Daily Digest - March 4

Here is a creepy website about the games hedge funds play, specifically with naked short selling:

www.deepcapture.com

The site was started by the CEO of overstock.com when his stock was manipulated by media commentators working with hedge funds.

Davos's picture
Davos
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Re: Daily Digest - March 4

Hello Larry:

This is why I hate that gold becomes the defacto safe haven. First it does no benifit to a company/the economy, second it poses all these nagging problems:

 

  1.  Put it in a bank and the bank could go on holiday
  2. Though I doubt it, the govt could re-seieze it again
  3. Leave it home when you can't buy ammo becuase everyone is stocking up? Might as well paint a target on yourself
  4. Another country? What would stop them form confiscating it as well?
There are sound commercial storage solutions with amazing security and vaults and more. And you can get to know a reputable  goldsmith - they won't take jewelry if there is a confiscation (at least I don't think they will).
 
That is my 2 cents, I'm sure there may be better ideas here. 
 
Take care 

 

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Re: Daily Digest - March 4

 Hi Davos, are you referring to personal products?  If so can you provide some product names/models you have seen.  I am interested in storage solutions for the home.

 Thank you

 

Davos's picture
Davos
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Re: Daily Digest - March 4

Hello dmittakarin8:

No. I do not advocate keeping anything of value in ones home. There are commercial security companies that have secure storage (vaults, passwords, electronic key-cards, cameras, guards etc...)

My thoughts are even if you don't have a lot of it the price of it could become so absurd as the dollar crumbles that it would be wise to do this,. 

Hope that helps, take care

PS Some jewelers (we have a few as clients) have had family owned businesses that are sound, and you can lease space from them perhaps if you know one. 

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Re: Daily Digest - March 4

I think that it's a good thing that gold is becoming a safe haven. The current monetary system has to go if we're ever going to dream about a prosperous world economy. People should adjust to the mentality that seizing gold is the equivalent of seizing property or seizing your life savings. You don't let the government do the latter why should gold be any different? This point is directly linked to the problem of storage, which is supposed to be the reason banks were created in the first place. The problem isn't gold, but government. America will suffer because of ignorance and cowardice, but in the long run history will repeat itself.

dickey45's picture
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Re: Daily Digest - March 4

Davos, your link to Vehicle Sales takes me to Country Vulnerability Scorecard

Davos's picture
Davos
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Re: Daily Digest - March 4

Hello Dickey45, All fixed, I apprecaite the heads up, take care

http://econompicdata.blogspot.com/2009/03/auto-sales-and-boom-goes-dynamite.html 

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Re: Daily Digest - March 4

This (oldie but goodie) commercial pretty much sums the average American!

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Re: Daily Digest - March 4

 

UK downturn should be put in perspective

http://www.gulfnews.com/business/Economy/10291206.html

 http://www.youtube.com/watch?v=BblO-PnddZs&feature=subscription

Davos's picture
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Re: Daily Digest - March 4

JoeManC:

Well,  Stanley Johnson's call for help has been answered Obama's mortgage relief and housing plan

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Re: Daily Digest - March 4

Davos-

 I was just "listening" to the traffic to this site at feedjit.  It's remarkable how many people visit.  It's encouraging that so many people now recognize that there is a problem with our financial system.  However...

 Where are we all going?  What are we going to do?  Are there any new ideas out there that will enable us to transition to a society that is healthy and contracting? We can't all go off to acreage and become Jeffersonian individualists.  There are too many of us.

I posted an idea here several months ago.  The idea was to get capital to farms that needed it.  Although no interest would be charged, those who provided the capital would draw down their accounts as they accessed the products of the farms at the lesser of cost or market.  An inflation hedge.  Someone -- it may have been you -- responded favorably, but questioned the logistics.  It is an idea that may be worth pursuing. (Maybe the logistics can be addressed by introducing a transportation component.)  Jim Rogers is correct in identifying agriculture as the place to invest.

 Maybe this site can be utilized as a tool to get local groups together to discuss innovative ways of deploying capital that recognizes that infinite growth is not possible on a finite planet.  It seems a shame not to harness the energy of those who pass through this site.  I noticed that someone from my part of the world -- the Pacific Northwest -- was interested in meeting others from this part of the world.  Is there a way to organically bring together -- online and face-to-face -- those who come by this site and want to actually get together?  Would it make sense to license the use of the Crash Course for local showings around the world?  As I probably mentioned in the earlier post, we must come up with a vision that improves our well-being without stockpiling gold and ammo.  

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Re: Daily Digest - March 4

vinnyandreula wrote:

I have never posted on here before, but I do read everything on Chris's website.  I read every blog and ever comment that you all write on here.  This link I have posted on here is long, but I feel very important.  We need to start organizing and educating people immediately.  I hope you watch all 16 parts of this video.  I look forward to your comments.

Change is coming and the good of humanity will prevail!

Entertaining to say the least.  I encourage anyone watching this or any New World Order piece to research the history of "New World Order".  Its roots go back at least to the 1700s.  Hasn't happened yet. Of course there are many threads of truth sprinkled throughout, thus giving it legitimacy. The world has become complicated and technical enough to make it all the more plausible, at least in a Hollywood sense.  

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Re: Daily Digest - March 4

Hello Matt Holbert:

Your question: "Where are we all going? 

A= I have absolutly no idea. 

I have always read about 3 hours a day, of late it has been 99% centered on the economy. Pasting it here is, and has been a pleasure. My only intent is, and was, to help others see the wave that is approaching.

I don't know if there is a fix.

Personally, I feel that we (country) are broke, the banks are broke and like FSN says, we have reached the peak of a debt super cycle. Too much debt to be paid back. I persoanlly feel that a depression is a natural cycle of fiat money, of which our Constitution forbids. 

Take care 

 

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Re: Daily Digest - March 4

Jim Rogers: Let AIG Go Bankrupt, Not America
 
3 March 2009
 
American International Group
should be allowed to go bankrupt because keeping it and other sick
financials alive on government support risks ruining the US economy,
legendary investor Jim Rogers told CNBC Tuesday.
 

AIG, whose $61.66 billion
fourth-quarter loss was the largest ever for a US company, received $30
billion more in government funds Monday. The insurer's financial health
hasn't improved despite getting as much as $150 billion from the
government last year.

"Suppose
AIG goes bankrupt, it is better that AIG goes bankrupt and we have a
horrible two or three years than that the whole US goes bankrupt,"
Rogers said. "AIG has trillions of dollars of obligations, let them
fail, let the courts sort it out and start over. Otherwise we'll never
start over."

On Monday, CEO Edward Liddy told CNBC
that the insurer is far more stable and secure than it was last fall
but acknowledged that it was "difficult to say" if AIG will need even
more money from the government in the future.

Bailing
out the banks is going to increase the debt spiral and finally cause
the destruction of the world's biggest economy, Rogers said.

"I think it's
astonishing, they're ruining the US economy, they're ruining the US
government, they're ruining the US central bank and they're ruining the
US dollar," he said.

"You
are watching something in front of our eyes, very historically, which
is basically the destruction of New York as a financial center and the
destruction of America as the world's most powerful country."

Japan's
economic "lost decade" was caused by trying to bail out the banks, and
the West risks running out of money if it doesn't let the bad banks
fail now, Rogers warned.

Systemic risk is going to be the same in 10 months, 5 years of 10 years if the fundamental problem is not solved, he added.

"The idea that you
have too much debt, too much borrowing and too much consumption and
you're going to solve that problem with more debt, more consumption and
more borrowing? These people are nuts."

Wall
Street and the City of London are going to be "disastrous" for years,
like in the 1950s and 1960s, and in 30 years, finance will "dry up and
wither away" as we are entering a "long period of hard times," he said.

"Power
is shifting now from the money shifters, the guys who trade paper and
money, to people who produce real goods. What you should do is become a
farmer, or start a farming network," Rogers said.

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Re: Daily Digest - March 4

Matt,

excellent observations and comments!

All of my recent energy has been devoted to providing exactly the services you are seeking.

First, we are deploying lots of resources to install a "groups" functionality on this site.   I feel a very strong pressure to get this done and I have authorized a "whatever it takes" approach to get this done.  This is priority #1 from a technical standpoint.

Second, I am working very hard to articulate and define the structure that I used to create a local group of interested parties who are dedicated to serious action.  We've accomplished much and it is a real source of stability and calmness to me to have this group.

I want to share this approach so that other might pick it up and use it for themselves, if appropriate.  The primary mission of this site always has been, and continues to be, centered around the idea of helping people navigate the intellectual, preparedness, and emotional waters faster than I did.  I know I can help.

But I also know that people do not change, or take action, on the basis of information.  There has to be a vision.  All I can offer here is my resolute conviction that my town, and my region, will make it through whatever comes next with flying colors.  We're going to live lives of purpose and fun along the way.  I know this, and have no doubt about it.  If that doesn't happen, then I will be the most surprised of any.  This reveals something of my internal belief structure.

So the crash course articulates that where we are is not where we want to be.  It reveals the necessity of changing our approach(es) and our lifestyles.  I personally use the crash course as a tool to identify those people in my community who are ready for the next stage of actually taking action. I recommend others consider doing the same.

After you've found a few, or many, like-minded individuals, then you are ready to form a group and get busy.  There is so much to be done.

But I can also offer this.  There is solace and comfort in initiating actions and completing them, especially in a group setting.

More to come on this matter and hopefully soon.   The VA seminar will be the likely 'launch' of this next stage.

In the meantime, I strongly recommend getting the new DVD and showing it in your lcoal area....

Best,
Chris 

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Re: Daily Digest - March 4

Chris,

Thanks for responding to Matt questions. It's good to see your view points on group functions for this webite.

With reference to groups there are many tools that cost little that can be used to get the message out there and add in communication. For example I have seen a mention in one of the forums of using Skype. Great free tool to get a small group together over the internet. There is also another tool called Stickam that is a free web tool that could be used to broadcast live events. If you like to see a good example of this use go to http://live.twit.tv/.

I am looking forward to this Sundays lecture.

Peter

 

 

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Re: Daily Digest - March 4

Hello Chris:

Good to see!

Would have been a good TALP stimulus appropriation Cool something that helps....Take care 

 

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Re: Daily Digest - March 4

Matt, Chris, Peter, Everybody,

For the past two sundays I have hosted the 'Two Beers with Steve' Skype Forum where I have invited members of this site to join me for one hour and two beers (sometimes four). I have to admit that this forum is in it's infancy and we are trying new things to see what works and what doesn't, but I have to say that so far it has been an absolute success. A few people in this thread are some of my guests (Cecelia, Joemanc). We will be doing it again this Sunday at 9:00 EST, if you could please skype your info to stephen9134 I will add you to the conference call on Sunday if you're available.

What I'm starting to see happen, and it is accelerating, is that people from this site are starting to seek out others; the Northwest Chapter of the Martenson Angels, the Appalachia Crash Coursers, etc.. Do not feel hopeless, this is a grass roots movements, The seed has been sown. The nurturing phase is almost complete and the sprouts are starting to spring. So come on and drink the juice.... err, I mean beer with us!

Steve

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Re: Daily Digest - March 4

Matt,

Interesting idea regarding the Agricultural Bank.

Just wanted to let you know that via this website we have formed a small group in Southern California. In fact, nine of us will be meeting again tomorrow evening to discuss the Rowe Conference which one of our locals attended. It was pretty easy for us to find each other, it was just a matter of talking about Crash Course principles with those we already knew and a few posts on this site which led to emails which led to phone calls and here we are. It's just a matter of reaching out I think.

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Re: Daily Digest - March 4

Davos

excellent work once again!  That U-tube vid with Cramer, was it real?  It almost looked like he wanted to crack up laughing a couple of times?  If it is, this really sickens me to the core and it makes me wish for a complete melt down so we can press the reset button.

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Re: Daily Digest - March 4

Post apocalyptic feel to R.I Mall

I heard that businesses were closing down but to see it in a picture really hits home.

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Re: Daily Digest - March 4
Bair Says Insurance Fund Could Be Insolvent This Year (Update1)

By Alison Vekshin

March 4 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman
Sheila Bair said the fund it uses to protect customer deposits at U.S.
banks could dry up amid a surge in bank failures, as she responded to
an industry outcry against new fees approved by the agency.

“Without these assessments, the deposit insurance fund could become
insolvent this year,” Bair wrote in a March 2 letter to the industry.
U.S. community banks plan to flood the FDIC with about 5,000 letters in
protest of the fees, according to a trade group.

“A large number” of bank failures may occur through 2010 because of
“rapidly deteriorating economic conditions,” Bair said in the letter.
“Without substantial amounts of additional assessment revenue in the
near future, current projections indicate that the fund balance will
approach zero or even become negative.”

The FDIC last week approved a one-time “emergency” fee and other
assessment increases on the industry to rebuild a fund to repay
customers for deposits of as much as $250,000 when a bank fails. The
fees, opposed by the industry, may generate $27 billion this year after
the fund fell to $18.9 billion in the fourth quarter from $34.6 billion
in the previous period, the FDIC said.

The fund, which lost $33.5 billion in 2008, was drained by 25 bank
failures last year. Sixteen banks have failed so far this year, further
straining the fund.

Angry Bankers

Smaller banks are outraged over the one-time fee, which could wipe
out 50 percent to 100 percent of a bank’s 2009 earnings, Camden Fine,
president of the Independent Community Bankers of America, said
yesterday in a telephone interview.

“I’ve never seen emotions like this,” said Fine, adding that he’s
received more than 1,000 e-mails and telephone messages from angry
bankers.

“The FDIC realizes that these assessments are a significant expense,
particularly during a financial crisis and recession when bank earnings
are under pressure,” Bair wrote. “We did not want to impose large
assessments when the industry and economy are struggling. We searched
for alternatives but found none better.”

The agency, which has released the change for 30 days of public
comment, could modify the assessment to shift the burden to the large
banks “that caused this train wreck,” Fine said. “Community bankers are
feeling like they are paying for the incompetence and greed of Wall
Street,” he said.

Legal Constraints

Bair dismissed that suggestion.

“For risk-based assessments, our statute restricts us from discriminating against an institution because of size,” Bair wrote.

The deposit insurance fund won’t dry up because the government can get funds from the industry and congressional appropriations,
and borrow from the Treasury, Chip MacDonald, a partner specializing in
financial services at law firm Jones Day, said today in a telephone
interview.

“As a depositor, I am not worried in the least,” MacDonald said. “No one is going to let the FDIC go without any money.”

Consumers should watch this issue closely, said Edmund Mierzwinski,
consumer program director at U.S. PIRG, a Boston- based consumer-watchdog group.

“I wouldn’t take their money out of the bank yet,” Mierzwinski said.
“If the FDIC is saying that there is this serious problem, then we
should all be concerned. I think there is a chance the FDIC is going to
have to ask taxpayers for money in the future.”

No Taxpayer Funds

Bair rejected arguments that the agency should use government aid to
rebuild the fund. The FDIC has authority to tap a $30 billion line of
credit at the Treasury Department and legislation pending in Congress
would boost the amount to $100 billion.

“Banks, not taxpayers, are expected to fund the system,” Bair said.
Asking for taxpayer support “could paint all banks with the ‘bailout’
brush.”

The FDIC “will revise the interim rule, if appropriate, in light of
the comments received,” the agency said in a Federal Register notice.

To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net .

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Re: Daily Digest - March 4

DrKrbyLuv,

 I can not remember where I read it but I recall that in Switzerland there are only two banks that are backed by gold and can converted back into gold.  One is ZKB.  it is a regional bank and does not operate outside Switzerland and am certain that it is not leveraged.  I would imagine if you contacted the bank they would acept your deposit as long as it was worth $100K.

 

A closer option might have been Canada.  There is an ETF that holds gold and is stored in CIBC's toronto bank vault.  This is not a trust, it hold physical gold and from what I understand you can redeem in physical gold as well.  The ticker on the TSX exchange is CEF.A  .

 

Good luck

 

E

 

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Re: Daily Digest - March 4

I am encouraged to read of the grass roots approach and the need to form local and regional "cooperatives."  I truly believe the "Perfect Storm" is quickly approaching and we all have precious little time to form these cooperative bonds.  I am located in Colorado and I hope we can organize like-minded people here soon!

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Re: Daily Digest - March 4

Thanks for your posting, Steve!  I will try to access your "Beer Forum" this Sunday.  Looking forward to it!   Jim

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Re: Daily Digest - March 4

I'm currently half way through reading this long article in Vanity Fair about Iceland and it is a cracker:
Wall Street on the Tundra - Vanity Fair

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Re: Daily Digest - March 4

Thanks for the post Stephen that was a cracker. I think Vanity Fair publishes some of the best articles out there.  Great read.... and confirms what I always thought - if women were running Wall Street and the banks, none of this would be happening.  Wink I thought, just for kicks, I'd look up the experts' analyses of the Icelandic economy circa 2007. What I found was a kicker - OECD Economic survey of Iceland 2008:

 http://www.oecd.org/document/15/0,3343,en_2649_34569_40158159_1_1_1_1,00.html 

Believe it (or not) folks, the OECD published this only 6 or so months before Iceland hit the wall. I recommend you all take a look because it will all look very familiar right down to the bank stress tests.

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Re: Daily Digest - March 4

Matt Holbert wrote:

<snip>

I noticed that someone from my part of the world -- the Pacific Northwest -- was interested in meeting others from this part of the world.  Is there a way to organically bring together -- online and face-to-face -- those who come by this site and want to actually get together?

<snip>

Matt,

We have a Pacific Northwest group that has two subgroups. One is Oregon/SW Washington, the other should center around Seattle. The Oregon/SW Washington group is getting together for a meet-and-greet lunch this coming Sunday (March 8). Please contact me via my email link for further info.

Thanks,

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Re: Daily Digest - March 4

Hello eb_riesling:

It was an amazing watch, looked legit to me, but I don't have cable, dish so I'd barely recognise the guy if I tripped over him, take care 

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Re: Daily Digest - March 4

"If the Euro appears under serious threat, there could be a massive
financial panic and a stampede into U.S. dollars, driving it to
unexpected highs. This is likely to add temporarily to a recessionary
fall in the dollar price of gold. In light of this unfolding evidence,
it is becoming increasingly risky to sell short the U.S. dollar. In the
long-term however, President Obama appears to have set the seal on a
dollar collapse."

http://www.europac.net/externalframeset.asp?from=home&id=15609

Greg

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Re: Daily Digest - March 4

Greetings friends. 

I am working on getting a group together in the north Olympic Penninsula area in Washington State.  I am hosting a Crash Course Forum at our public library here in Port Angeles this Monday evening (March 9) from 7-9.  I am sure I've told over a hundred people about the course and passed out 50 of the dvds, but have no idea if the seed is taking root.  I would love to begin to see some groups here in our area develop. Thanks y'all for all of  your excellent posts.  I find them both quite enjoyable, and very helpful.

Brent

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