Daily Digest

Daily Digest - July 12

Sunday, July 12, 2009, 12:14 PM
  • Recession or Depression?: Boston Zoo May Close, Euthanize Animals: Out of Money  
  • Geithner Refuses to Answer Derivatives Bailout Question...(Video)
  • The Fed Under Fire...(Video)
  • Buddy, Can You Spare $5 Trillion?
  • Pete Peterson on Charlie Rose (Videos short and long, repost)
  • 20 Seconds of Air Time (Video)
  • Why some bloggers use pseudonyms
  • Ten eastern European countries now looking to IMF for bailouts
  • Hotels: Starwood faces black hole
  • Gold, the U.S. Dollar, and the Yuan (H/T PineCarr)

Economy

Recession or Depression?: Boston Zoo May Close, Euthanize Animals: Out of Money

(Seen on TheComingDepression .BlogSpot.com)

BOSTON -- The Franklin Park Zoo, the only Boston institution of its kind, may be forced to close and euthanize some of its animals, zoo officials said Friday.

Without more state funding, zoo officials said that they will run out of money within months and have to close both Franklin Park and the Stone Zoo in Stoneham.

AP Photo/Winslow Townson
The zoos would be forced to lay off most of their 165 employees and attempt to find new homes for more than 1,000 animals.
Zoo officials estimated 20 percent of the animals would not find homes and could be euthanized.

Geithner Refuses to Answer Derivatives Bailout Question...(Video)

Representative Brad Sherman poses a simple question to little Timothy Geithner which Timmy refuses to answer. Not a hard question, but it was a question meant to pin him down on whether or not derivatives that are being sold today will receive bailout money in the future.

Obviously, the implication of his refusal is that he will bail them out if need be… or not. You see, it has become the Treasury’s, Fed’s, and central banker’s discretion to take your money and give it to themselves or not. NO RULE OF LAW, simply lawlessness. Hat tip Mr. Glass who is rightfully angry and sick of it. Hey America, when you wake up unemployed, lose your house, and are living on central banker welfare to feed your family, you should know why those things are gone – they left with the rule of law.

The Fed Under Fire...(Video)

Pay attention to the comments of William Greider, author of “The Secrets of the Temple.” He is describing exactly what I was railing about all through the crisis last fall, namely that Jamie Dimon, CEO of JPM, HAD to buy Bear Stearns to save themselves and received $30 billion in guarantees from the Fed while Dimon also sat on the board of the New York Fed of which little Timothy Geithner was the head!

Here’s the real truth. JPM is the center of the derivatives universe and has already imploded. It is only a matter of time before the $90 trillion of derivatives [enphasis min] they hold, and hide, and obscure come crashing down.

Audit the FED? ABSOLUTELY. I fully support that, but I can almost guarantee you it will not happen in any real manner, for if it does, that will lead to the end of the Fed, a very good reason to support the REAL audit of which they are obviously so afraid. (again ht Glass!)

Buddy, Can You Spare $5 Trillion?

I have been writing for months that I don’t think the US can find $2 trillion dollars this year and then come back
to the well for another $1.5 trillion next year without serious disruption in the markets. Where do you find that much money when all the rest of the world also wants to borrow massive amounts? How much are we talking about? The friendly folks at Hayman actually spent the time to add it all up. This is not a comforting graph.

The graph shows the US will need to issue $3 trillion in debt. “Wait,” I asked, “I thought it was only 1.85″ The
answer is that the number has grown to almost $2 trillion (as I wrote it would). Then you need to add in off-budget items like TARP, state and municipal debt, etc. Pretty soon it adds up to another trillion. All told, Hayman estimates that the world will need to find $5.3 trillion in NEW government financing. Never mind the needs of corporations or individuals or commercial mortgages, etc.

I am still trying to get my head around this. Let’s hopefully assume that they made a mistake and it is “only”
$4 trillion. Where do you find that kind of money in a global deleveraging recession?

Pete Peterson on Charlie Rose (Videos short and long, repost)

First video pegs dollar crisis possibility at 75%

20 Seconds of Air Time (Video)

Why some bloggers use pseudonyms

Over the past two years, Doris Dungey has become one of the most respected and influential voices in the industry. We miss her already.

From Calculated Risk:

My dear friend and co-blogger Doris “Tanta” Dungey passed away early this morning. I would like to express my deepest condolences to her family and friends.

Photo: Tanta in 2004 (from her sister Cathy).

From CR to Tanta’s many readers, fans and internet friends: Tanta enjoyed writing for you, chatting with many of you in the comments, and corresponding with you via email. She told me several times over the last few months how much she enjoyed discussing current events with you.

Tanta worked as a mortgage banker for 20 years, and we started chatting in early 2005 about the housing bubble and the changes in lending practices. In 2006, Tanta was diagnosed with late stage cancer, and she took an extended medical leave while undergoing treatment. At that time I approached her about writing for this blog, and she declined for a simple reason – her prognosis was grim and she didn’t expect to live very long. To her surprise, after aggressive treatment, her health started to improve and she accepted my invitation. When she chose an email address, it reflected her surprise: tanta_vive ... Tanta Lives!

Armed with a literary background and extensive knowledge of the mortgage industry, Tanta wrote about current events with deep insight and wit. Here is the introduction to one of her posts in 2006: Let Slip the Dogs of Hell

I still haven’t gotten over the fact that there’s a “capital management” group out there having named itself “Cerberus”. Those of you who were not asleep in Miss Buttkicker’s Intro to Western Civ will recognize Cerberus; the rest of you may have picked up the mythological fix from its reprise as “Fluffy” in the first Harry Potter novel. Wherever you get your culture, Cerberus is the three-headed dog who guards the gates of Hell. It takes three heads to do that of course, because it’s never clear, in theology or finance, whether the idea is to keep the righteous from falling into the pit or the demons from escaping out of it (the third head is busy meeting with the regulators).
Tanta wrote a number of posts detailing the inner workings of the mortgage industry. These posts covered a wide range of topics, from mortgage servicing, to everything you want to know about mortgage backed securities (MBS), to reverse mortgages. She called these posts “The Compleat UberNerd” and in typical fashion she noted:

An “UberNerd” is someone who is compelled to understand how things work in grim detail, even if the things in question are tedious in the extreme …”
Tanta liked to ferret out the details. She was inquisitive and had a passion for getting the story right. Sometimes she wouldn’t post for a few days, not because she wasn’t feeling well, but because she was reading through volumes of court rulings, or industry data, to get the facts correct. She respected her readers, and people noticed.

Felix Salmon at Condé Nast Portfolio.com, wrote on Nov 7, 2007 wrote:

“Tanta is one of the best financial writers in the world, and explains complex ideas with wit and great clarity."
Paul Krugman at the NY Times complemented Tanta several times, recently writing:

“The great thing about this age of blogs is the way people who really know something about a subject can quickly weigh in, without being filtered through Authority.”
Even researchers at the Federal Reserve referenced Tanta’s work: From Adam Ashcraft and Til Schuermann: Understanding the Securitization of Subprime Mortgage Credit, credit on page 13:

Several point raised in this section were first raised in a 20 February 2007 post on the blog http://calculatedrisk.blogspot.com/ entitled “Mortgage Servicing for Ubernerds.”
Tanta was also extremely funny. She introduced the Muddled Metaphor Index (MMI) and Excel Art featuring the Mortgage Pig, and she was the originator of a number of phrases in use today, like “We’re all subprime now!”

This is a very sad day and I know many of you are in shock. Tanta was our teacher. She generously shared her knowledge with all of us. I doubt she knew how many lives she touched; her insights, spirit and passion lives on in her writings – and in all of you.

Tanta Vive!

Here's David Streitfeld's piece in the New York Times:

The blogger Tanta, an influential voice on the mortgage collapse, died Sunday morning in Columbus, Ohio.

Tanta, who wrote for Calculated Risk, a finance and economics blog, was a pseudonym for Doris Dungey, 47, who until recently had lived in Upper Marlboro, Md. The cause of death was ovarian cancer, her sister, Cathy Stickelmaier, said.

Thanks in large part to Tanta’s contributions, Calculated Risk became a crucial source of prescient analysis as the housing market at first faltered, then collapsed and finally spawned a full-blown credit crisis.

Tanta used her extensive knowledge of the loan industry to comment, castigate and above all instruct. Her fans ranged from the Nobel laureate Paul Krugman, an Op-Ed columnist for The New York Times who cited her in his blog, to analysts at the Federal Reserve, who cited her in a paper on “Understanding the Securitization of Subprime Mortgage Credit.”

She wrote under a pseudonym because she hoped some day to go back to work in the mortgage industry, and the increasing renown of Tanta in that world might have precluded that. Tanta was Ms. Dungey’s longtime family nickname, Ms. Stickelmaier said.

Calculated Risk, which gets about 75,000 visitors a day, was started in early 2005 by a retired technology executive named Bill McBride. The housing market was soaring, but Mr. McBride sensed that the industry was about to peak, and he posted articles and data that made his case.

The blog quickly drew a lively and informed group of commentators, few livelier and none more informed than someone who called herself Tanta. She began by correcting some of Mr. McBride’s posts. “She would tell me either I was wrong or the article I was quoting was wrong,” he said Sunday. “It was clear she really knew her stuff. And she was funny about it.”

Tanta soon graduated from merely commenting to being a full-scale partner. Her first post, in December 2006, took issue with an optimistic Citigroup report that maintained that the mortgage industry would “rationalize” in 2007, to the benefit of larger players like, well, Citigroup.

“Bear with me while I ask some stupid questions,” Tanta wrote, and proceeded to assert that the industry was less likely to “rationalize” than fall apart, which it did. Citigroup was bailed out by the government last month.

She loved the intricacies of mortgage financing and would joke about being not just a nerd on the subject but a nerd’s nerd. She eventually wrote, for the Calculated Risk site, “The Compleat ÜberNerd,” 13 lengthy articles on mortgage origination channels, mortgage-backed securities and foreclosures that constituted a definitive word on the subject.

The rest of the time, Tanta liked to chew on the follies of regulators, the idiocies of lenders and — a particular favorite — clueless reporters, which according to her was just about all of them. She did not approve, she once wrote, of “parading one’s ignorance about mortgages in an article full of high-minded tut-tutting over ignorance about mortgages.”

In March 2006, Ms. Dungey was diagnosed with late-stage ovarian cancer.

Ms. Dungey was raised in Bloomington-Normal, Ill., had a graduate degree in English, and worked as a writer and trainer for a variety of lenders, including Champion Federal and AmerUs Mortgage.

One of Tanta’s last posts was written as the $700 billion bailout was first being debated in mid-September, and it seemed that the Treasury Department might buy bad assets directly from troubled banks.

Tanta argued that for every asset that banks unloaded on the government, the chief executives should be required to explain “why they acquired or originated this asset to begin with, what’s really wrong with it in detail, what they have learned from this experience, and what steps they are taking to make sure it never happens again.”

Ten eastern European countries now looking to IMF for bailouts

According to the report, among the countries which have requested assistance at the IMF for the fist time are Bulgaria, Croatia and Macedonia. Ukraine, Serbia, Romania, Belarus and Latvia speculate on receiving a faster payout or increased speculated IMF assistance. Hungary had not yet decided whether it needs more money from the fund. The IMF has recently approved the application of Bosnia, as the Bosnian Minister of Finance announced on Thursday. Bosnia-Herzegovina will receive a credit line of 1.57 billion U.S. dollars (1.13 billion euros) from the IMF.

In regards to emerging markets, this story makes clear how much worse the situation in Eastern Europe is than in Emerging Asia or Latin America.

Hotels: Starwood faces black hole

Hotels are another area of excess where there is going to be a lot of pain.

Clearly, this is the case now with RevPAR (revenue per available room) down 20% across the board at hotel chains. Higher end places are suffering even more. Hence,the downgrade to Starwood.

Gold, the U.S. Dollar, and the Yuan (H/T PineCarr)

Golden Yuan?

China’s increase in gold reserves has another more profound implication that most commentators haven’t realized. It’s clear to me that China has plans to replace the U.S. dollar as a reserve currency with an at least partially gold-backed yuan. I have to give Jim Sinclair credit, as he predicted the Chinese were moving to a gold-backed yuan in 2002 as part of their “long term plan of Economic Ascendancy.” He deduced that the Chinese government allowed the private ownership and sale of gold by their citizens in order to re-monetize gold. China has experienced the folly of paper money many times before and - as Mr. Sinclair puts it - “their memory is culturally infinite.” The Chinese are aware they must step in to facilitate the move back to hard money.


22 Comments

DavidC's picture
DavidC
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Re: Daily Digest - July 12

Apologies, I posted this before I'd read through today's Digest - it's referenced in 'Buddy, Can You Spare $5Trillion' above...

Following the video of Joe (does he prefer Joseph?) Saluzzi on Bloomberg that Davos posted the other day, here is another superb piece on the same subject from him.

If you haven't already done so, do check out Joe Saluzzi on YouTube - he's fantastic, another one of the very few to cut through the cr*p (apologies in advance if that offends anyone).

www.themistrading.com/article_files/0000/0348/Toxic_Equity_Trading_on_Wall_Street_12-17-08.pdf

DavidC

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Re: Daily Digest - July 12

European nations have sold much of their gold since 1990, and the U.S. hasn’t allowed an audit of its alleged 8,136 tons of metal since the 1950s.

Wow the Federal Reserve will find a way to not be audited.  Looks like audits only work one way in the USA & that is against its people. Do as I say not as I do! Sorry to say but the USA is losing more integrety every day.

Who is really behind that big curtain?

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Re: Daily Digest - July 12

Can you imagine what the price of gold, or the USD for that matter, would be after an audit? With Enron's lobbyist working for the Fed I wonder if this bill will ever come to pass.

 

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Re: Daily Digest - July 12

I'd be curious to know Government Sachs - I mean, Goldman Sach's and for that matter JP Morgan's gold options positions as the prospect of the bill passing rises and falls.  I don't know how to get that info however.  

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Re: Daily Digest - July 12

I'd be curious to know Government Sachs - I mean, Goldman Sach's and for that matter JP Morgan's gold options positions as the prospect of the bill passing rises and falls.  I don't know how to get that info however.

That is easy enough just call up Government Sachs & you know you will get an honest answer right???

Something I wonder about. Remember a little while back when Turbo Timmy G. The Secretary of Borrowing was speaking in front of the Chinese students & was openly laughed at when saying don't worry about the dollars strength as an investment....would an American group of students laugh & understand this reality?

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Farmer Brown
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Re: Daily Digest - July 12

 

idoctor wrote:

 Who is really behind that big curtain?

I have a good source in the gov and this is the picture they took of what is behind the curtain.  Keep this on the down-low, and don't be surprised if I mysteriously disappear.

 three.jpg 

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Re: Daily Digest - July 12

 

idoctor wrote:

.would an American group of students laugh & understand this reality?

Those were my thoughts exactly!

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Re: Daily Digest - July 12

Enron went belly up.....why will she make a difference here? Or was she the lobbiest before things went really really really bad, and if that is the case wouldn't that be yet ANOTHER bad person/situation to add to the entire depression and eventually make things worse? 

Am I missing something on the woman?

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Re: Daily Digest - July 12

 The Federal Reserve intends to hire a veteran lobbyist as it seeks to counter skepticism in Congress about the central bank’s growing power over the U.S. financial system, people familiar with the matter said.


Hear no evil, see no evil, facilitor of collapes:

Linda Robertson currently handles government, community and public affairs at Johns Hopkins University in Baltimore, and headed the Washington lobbying office of Enron Corp., the energy trading company that collapsed in 2002 after an accounting scandal. She was also an adviser to all three of the Clinton administration’s Treasury secretaries.

Robertson would help the Fed manage relations with lawmakers seeking greater oversight of a central bank that has used emergency powers to prevent Wall Street’s demise. While she wasn’t tied to Enron’s fraud, her association with the firm may raise questions, analysts said.

“Some members of Congress think there are votes in attacking the Fed” after it “unnecessarily and unwisely entangled monetary policy with fiscal policy,” said former St. Louis Fed President William Poole. “The Fed is going to have a tricky time of unwinding what has been done” and will need to “keep in touch with members of Congress more thoroughly,” said Poole.

Link

idoctor's picture
idoctor
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Re: Daily Digest - July 12

New Water Regulations = Fresno CA Federal Disaster Area & Mendota 41% Unemployment

Freedom Fest 2009 - Our Government No Longer Represents the Values of Freedom

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Re: Daily Digest - July 12

 Hello iDoctor: Good video on CA!!

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Headless
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Re: Orlov makes more sense...

Orlov makes more sense with each passing day:

http://cluborlov.blogspot.com/2009/07/video-of-public-lecture.html

It sure would be nice to remove all the Goldman-like manipulation of media sources (perhaps by EDIT: Removed for advocating violence) so that we could make rational decisions based upon honest input. What Orlov says just screams for attention--in a "makes intuitive sense" sort of way--for anyone paying attention.

The unfortunate fact is that: If he turns out to be accurate in his prognostications, he will never get credit (due to the lack of means of communicaiton; e.g., internet, etc.). We will all be scratching the surface of the planet for things edible, as opposed to "Facebooking" and  pondering, philosophically, "Who the ...

Edit:  the rest removed for advocating violence and use of firewall triggering language.

Headless - please check out the posting guidelines.  Anything that could cause this site to become targeted by the authorities or might trigger a firewall and prevent someone from viewing at work is not permitted.  TIA - A moderator.

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Headless
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Re: Orlov makes more sense...

Moderator says:

"Headless - please check out the posting guidelines.  Anything that could cause this site to become targeted by the authorities or might trigger a firewall and prevent someone from viewing at work is not permitted.  TIA - A moderator."

Unfortunately, your point is valid: saying what real Americans are thinking is unacceptable, as we all have been conditioned--or threatened into--avoiding the truth or anything else that might harm the welfare of the oligarchy. CM's site is just as vulnerable to this self-proscribed slave mentality...

Question is: Are you now required to report such truths to the appropriate slave-masters after deleting them...?

Watching for black helicopters and bullet-proof SUVs...

P.S. Notice man-with-rifle walking up aisle at about 2:35. Think I'm exaggerating about what Americans are thinking...

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Re: Daily Digest - July 12

Goldman Sachs Likely to Post Huge Profits, Analysts Say

http://www.cnbc.com/id/31881295

Surprise....Surprise. This I expected & the favored banks will probably follow this pattern. I hope this is enough for a nice pop in the market to help some get out before fall.

Stimulus Will Kick in Later this Year: President Obama

http://www.cnbc.com/id/31862376

All I can say is I hope someone can send me these green shoots so I can smoke them to see things much clearer.

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Re: Daily Digest - July 12

This made me smile....had to post 

Wells Fargo Sues Wells Fargo, Wells Fargo Denies Allegations

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Re: Daily Digest - July 12

Too funny gregoro!

-pinecarr

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Re: Daily Digest - July 12

Brad Setser: Follow the Money » Blog Archive » Chinese Handcuffs? No, Chinese trade deficit

...

In this case, it led to a huge trade imbalance with China. Credit allowed us to consume beyond our means, and demand spilled out over our borders into China. The Chinese obliged and became huge holders of Treasuries. While it is true that the Chinese exchange rate regime was an amplifier of this story, I think it was more of a passenger than a driver. The driver was credit.

Today the credit bubble is popping (whence my view on inflation and the money multiplier). At the same time the Chinese are trying to prop up aggregate demand by controlling the only thing they can: domestic demand. This to me means the imbalances are in the process of going away. In fact, I have long said (and have made a few bets with friends) that the Chinese trade balance will likely be in deficit by the end of this year. This means that the need for China to buy our treasuries will have largely gone away. I realize this may be too aggressive a contention over this time frame, but I am convinced the basic story is right. And to my mind’s eye there isn’t an exchange rate regime or Renminbi level that can stop this from happening.

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Farmer Brown
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Re: Daily Digest - July 12

I love this one.  Why aren't they looking for sunken ships full of fiat paper bills?

http://www.mirror.co.uk/news/top-stories/2009/07/13/spain-seeks-el-of-a-haul-115875-21515845/

Quote:

Spain seeks sunken treasure

Cash-strapped Spain has ordered its navy to look for huge gold reserves that were lost at sea in the 16th century.

Gold bullion and silver treasure worth an estimated £85billion - the size of the nation's current budget shortfall - lies on the sea bed off the coast of southern Spain.

The Inca and Aztec loot is believed to be in heavilyladen vessels which hit the bottom of the sea in bad weather as they returned to Cadiz from South America.

Naval mine sweepers are to begin radar and sonar surveys to try to locate the wrecks.

Davos's picture
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Re: Daily Digest - July 12

Where Dog's? A new job for every nations Navy???? 

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Headless
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Re: Warning: Legitimate American Ponderings Within...

http://kunstler.com/blog/2009/07/wobble-time.html

" The cat coming out of the bag this week -- a frazzled, flaming, rabid, death-dealing cat -- is the news that Goldman Sachs will announce impressive second-quarter profits, and set aside $18 billion or so for employee bonuses averaging $600,000 per head (though, of course, not evenly distributed among them).  There probably are not fifty-three people in the USA who can explain how this development figures in with last fall's bailout gift from the US treasury, or the $13 billion GS received on the backside of US gift payments to the failed AIG insurance company, plus the reams of necrotic securitized debt paper rotting in the back of the GS vaults. This is a company playing with the fire of world history.
     "It brings back the question, which has loomed dimly at the margins of America's collective consciousness, as to whether we can get through the long emergency ahead without going through a wringer of domestic political convulsion. At this rate, sooner or later, anything identified with wealth could become a target for the wrath of the unemployed and foreclosed. The first rock that flies through an East Hampton window, or the first firebomb tossed into the lobby of Goldman Sachs Manhattan headquarters could ignite a chain of events that shoves all economic policy out of the political arena and quickly divides everyone at the center of power into armies out for blood. "

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Re: Daily Digest - July 12

 

Quote:

Spain seeks sunken treasure

 

That's pretty funny -- like checking under the couch cushions for spare change -- only on a national level.

becky

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Damnthematrix
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Re: Daily Digest - July 12
Quote:

Spain seeks sunken treasure

Scratching the bottom of the barrel sea?

Mike

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