Daily Digest

Daily Digest 10/1 - Austerity Protests Across Europe, A 'Multipolar' World, China Likely To Reach Energy Efficiency Goal

Friday, October 1, 2010, 9:54 AM
  • Austerity Protests Across Europe
  • Europe's Austerity Anger Grows
  • Zoellick Embraces 'Multipolar' World
  • An American Dream Made In Brazil
  • A Broke FDIC Expands Checking Account Insurance From $250,000 To Infinity
  • 10% Savings Rate + Consumer Spending At 65% Of GDP = Retail Disaster
  • For U.S. Corporations The Whole of the Law Shall Be ‘Do What Thou Wilt’
  • Banks Could Leave Europe Over Regulation, Warns Goldman Sachs Chief Lloyd Blankfein
  • Ireland's Central Bank Puts Final Price On Anglo Irish Rescue
  • China Likely To Reach Energy Efficiency Goal: Official
  • Ancient Italian Town Has Wind at Its Back

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Economy

Austerity Protests Across Europe (Jeff B.)

People demonstrate against austerity measures on Wednesday, Sept. 29, 2010 in Brussels. Police erected a ring of steel around the EU headquarters as tens of thousands of protestors took to the streets in a worker backlash against painful spending cuts. It was the biggest such march since 2001 when 80,000 people walked in the Belgian capital against an EU plan to fine governments running up deficits.

More (German-language article) photos of the protests here (Regina F.)

Europe's Austerity Anger Grows (pinecarr)

More than 100,000 marchers converged on Brussels from across the EU to protest austerity measures on Wednesday, while Spanish unions took the extraordinary step of breaking ranks with Spain's socialist government by launching a general strike.

Zoellick Embraces 'Multipolar' World (pinecarr)

World Bank president Robert Zoellick, speaking ahead of next week's World Bank and International Monetary Fund annual meetings here, critiqued both development economics generally and the lack of transparency of his own institution.

The speech picked up on some of the themes of the speech he gave in the run-up to the last World Bank/IMF meetings, in April.

An American Dream Made In Brazil (pinecarr)

Batista predicted in an already notorious interview on Charlie Rose that Brazil would be producing 5 to 6 million barrels of oil per day (bpd) by 2020, with OGX itself betting on 730,000 bpd by 2015 and 1.4 million bpd by 2019. Batista could have a net worth of $100 billion by 2020; not accidentally his dream is to become the world's top multibillionaire.

He's also fond of repeating the mantra that "we are today the United States of the 1950s". So foreign investment is more than welcome; "Come! It's the time to make your bets on a country with 200 million consumers and the perfect demographics for the next 10 years. This oil story is a 30-year growth story." And what's good for him is good for Brazil. Inevitably, Batista also predicted that Brazil should become the "fifth power" by 2015-2020, behind Germany, Japan, China and the US.

A Broke FDIC Expands Checking Account Insurance From $250,000 To Infinity (pinecarr)

A few days ago, the FDIC, broke as ever, with a Deposit Insurance Fund that was well south of zero at last check, announced, with delightful irony, that it was expanding its insurance on non-interest bearing checking accounts from the current $250,000 to, well, infinity. As in there is no upper limit on how much the FDIC would insure - the fact that it has no money at the FDIC to begin with being completely irrelevant.

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10% Savings Rate + Consumer Spending At 65% Of GDP = Retail Disaster (JimQ)

American consumers do not want the Age of Mammon to end. They will need to be dragged kicking and screaming into the Age of Austerity. Consumer expenditures peaked at $10.2 trillion in the 3rd Quarter of 2008. They reduced spending for two quarters, but when Big Daddy Government handed them billions and told them to spend it on cars, appliances, and homes, they dutifully obeyed. Today, consumer expenditures stand at an all-time high of $10.3 trillion, still accounting for 70.5% of GDP. There really has been no hint of austerity by Americans. It is a false storyline. The major reductions in consumption still loom in the future.

For U.S. Corporations The Whole of the Law Shall Be ‘Do What Thou Wilt’

So long as they incorporate, businesses will now be free to trade in or exploit slaves, employ mercenary armies to do dirty work for despots, perform genocides or operate torture prisons for a despot’s political opponents, or engage in piracy—all without civil liability to victims.

U.S. Second Circuit Judge Pierre Leval

Banks Could Leave Europe Over Regulation, Warns Goldman Sachs Chief Lloyd Blankfein (pinecarr)

Lloyd Blankfein, the Goldman Sachs chief executive, has warned that banks could relocate some of their operations out of Europe if regulation becomes too onerous.

Ireland's Central Bank Puts Final Price On Anglo Irish Rescue (pinecarr)

The fate of the troubled bank - nationalised in January 2009 and today Ireland's most troubled financial institution - has weighed heavily on international bond markets.

Energy

China Likely To Reach Energy Efficiency Goal: Official (pinecarr)

A senior official of China's top economic planner Wednesday said China will likely reach its goal of improving energy efficiency by 20 percent from 2006 to 2010.

"Due to the unremitting efforts of central and local governments, the target of a 20-percent reduction in energy consumption relative to economic output is within reach," said Xie Zhenhua, Vice Minister of the National Development and Reform Commission, at a press conference.

Ancient Italian Town Has Wind at Its Back (jdargis)

Faced with sky-high electricity rates, small communities across a country known more for garbage than environmental citizenship are finding economic salvation in making renewable energy. More than 800 Italian communities now make more energy than they use because of the recent addition of renewable energy plants, according to a survey this year by the Italian environmental group Legambiente.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

10 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest 10/1 - Austerity Protests Across Europe, A ...

"U.S. courts are clogged with a record number of foreclosures. Next, they may be jammed with suits contesting property rights as procedural mistakes in those cases cloud titles establishing ownership.

“Defective documentation has created millions of blighted titles that will plague the nation for the next decade,” said Richard Kessler, an attorney in Sarasota, Florida, who conducted a study that found errors in about three-fourths of court filings related to home repossessions.

Attorneys general in at least six states are investigating borrowers’ claims that some of the nation’s largest home lenders and loan servicers are making misstatements in foreclosures. JPMorgan Chase & Co. is asking judges to postpone foreclosure rulings, while Ally Financial Inc. said Sept. 21 its GMAC Mortgage unit would halt evictions. The companies said employees may have completed affidavits without confirming their accuracy.

Such mistakes may allow former owners to challenge the repossession of homes long after the properties are resold, according to Kessler. Ownership questions may not arise until a home is under contract and the potential purchaser applies for title insurance or even decades later as one deed researcher catches errors overlooked by another. A so-called defective title means the person who paid for and moved into a house may not be the legal owner.

‘Nightmare Scenario’

“It’s a nightmare scenario,” said John Vogel, a professor at the Tuck School of Business at Dartmouth College in Hanover, New Hampshire. “There are lots of land mines related to title issues that may come to light long after we think we’ve solved the housing problem.” "

...........................1A) JPMorgan Halts Foreclosures, "Robo-Signers" Appear Commonplace

"The city audit, released late Wednesday, showed the value of the city's $3.8 billion pension system is about $2 billion short of covering estimated costs for retirement benefits promised to retirees and employees, which are driven up by early retirement age and annual pension raises. The city also faces a $1.4 billion shortfall for retiree medical and dental care.

The result has been a rapid increase in city costs to cover those obligations, the audit said. San Jose's employee retirement bill has tripled from just 6 percent of the city's operating costs in 2000 to 17 percent this year. In four years, it will consume a quarter of the budget, said the audit, which a city pension-reform task force will discuss Wednesday.

"The current system is unsustainable," Reed said. "The impact of rising pension costs has meant that San Jose can't hire more firefighters, police officers, librarians, gang intervention workers. These out-of-control costs are why we can't keep all of our libraries, community centers and swimming pools open.""

"IRELAND CAN no longer borrow on the international markets because its “sovereign creditworthiness is gone”, Fine Gael finance spokesman Michael Noonan has said. He said that “Anglo Irish Bank was supposed to be too big to fail”, but “it was too big to save. That is the real position.”

Mr Noonan warned that “we have almost reached the point of the rescue of Anglo Irish Bank bringing down this country with the Minister being forced this morning to announce the closure of the bond markets.

“The closure of the bond market means the sovereign State is in deep trouble because it cannot borrow money.”"

"Harrisburg Mayor Linda Thompson is planning to announce that she will seek “distressed city” status for the cash-strapped and debt-ridden state capital at a news conference at noon today, sources said.

The move to seek protection under the state’s Act 47, which would put the city under a form of state oversight, comes nine months after Thompson took office facing the prospect of municipal default on $288 million in accumulated Harrisburg incinerator debt.

In that time, the mayor has been unable to develop a plan on how to attack the city’s fiscal woes and a majority of City Council members have battled incessantly on even basic steps to get a recovery process started.

The city is first guarantor on the debt, most of which the incinerator’s owner, the Harrisburg Authority, cannot pay. The situation threatens to shred the city’s already tenuous finances, potentially resulting in dramatic cuts in services, major tax increases or both."

"New Jersey issued $669 million in general-obligation refunding bonds at a higher yield above top-rated debt than on a comparable sale in December, a week after Moody’s Investors Service lowered its rating outlook.

The increased yield difference also came after bank analyst Meredith Whitney ranked it among the worst state credits. The third most-indebted U.S. state yesterday sold $133 million of bonds maturing in 2020 priced to yield 2.94 percent, 0.3 percentage points above the Municipal Market Advisers AAA rated 10-year index. In December, its 10-year maturities yielded 0.01 percentage point below the 10-year index. "

"Thanks to the City’s folly, combined with negative pension fund returns over the last 3 years, Jacksonville’s 3 public pension plans have a combined $1.467 billion deficit. (Pension liabilities exceed pension assets by that amount.) And, for several reasons, the total unfunded employee related liabilities actually total about $1.8 billion – about $2,000 per City resident (including children). A nasty surprise for taxpayers suffering from declining property values!

The City’s pension deficit (unfunded liability) plus other City liabilities total over $5 billion. The City’s assets are about $4 billion. If Jacksonville were a corporation, it would probably be in bankruptcy.

Thus, the costs of Jacksonville’s public employee pension plans are zooming. "

"“There are no dollars in this budget to support human services,” said King County Council staff member Polly St. John last night, starting off the King County Council’s first public hearing on the budget cuts announced Monday. “The piggy bank is broken.”

Still, the line of people waiting to plead for human services filled up King County Council chambers, where the council’s budget committee met under a sign that read “2011 King County Budget—balancing the budget, sharing the pain.” Representatives of county-funded nonprofits and agencies, like Mary Kay Bowman of Food Lifeline, a King County-funded food bank, pleaded for more money from the budget, which is facing a shortfall of $60 million for 2011.

“Cutting human services cannot be the only answer,” said Bowman. “We’re talking about food; we’re talking about a basic human need."

"WASHINGTON (AP) -- Consumer spending rose by a moderate amount in August while incomes increased by the largest amount in eight months, a gain that was propelled by the resumption of extended unemployment benefits."

"Federal Reserve Bank of New York President William Dudley said the outlook for U.S. job growth and inflation is “unacceptable” and that more monetary easing is probably needed to spur growth and avert deflation.

“We have tools that can provide additional stimulus at costs that do not appear to be prohibitive,” Dudley, who serves as vice chairman of the Fed’s policy-setting Open Market Committee, said today in a speech to business journalists in New York. “Further action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long.” "

............................9A) Spending and inflation data point to more Fed easing

  •  Other news, headlines and opinion:

UK debt hits a trillion: Britain paying as much in interest as for defence

Bernanke: Fed Officials Split As They Face Tough Decisions

Whitney Says US States May Need Federal Bailout

Ireland will pay up to $70B to clean up banking mess ($15,437 per person)

Poll: Ireland wants Prime Minister Cowen to resign over government's handling of debt crisis

Japan PM warns on debt, seeks multiparty tax talks

Japan threatens more yen intervention

Kan Says Will Sell Yen If Needed, Urges BOJ to Fight Deflation

Police uprising pushes Ecuador into a state of emergency

Finland General Government Debt Increases In Q2

California Budget Impasse Enters Fourth Month; IOU Option Looms

Calif. May Stop Paying Some Workers' Comp Benefits

IRS May Probe Forgiven Mortgage Debt

Wisconsin Continues to Pile up Unemployment Reserve Debt (Watchdog.org)

Hungary Revises 2009 Budget Shortfall to 4.4% of GDP From Previous 4.0%

MEDICAID SHORTFALL IN NM: $360M

State Economists Paint Picture of More Cuts and Tax Increases (Nevada)

Wash. details deep cuts to social services

Central bank chief warns recovery still weak (Canada)

Your pension can vanish in an instant (Canada)

Nation's pension system close to bankruptcy (Ukraine)

Greece threatens to jail striking truckers

Slim Redevelopment Agency budget set to alter services in San Jose neighborhoods

Takefuji Bankruptcy Triggered Credit Swaps, ISDA Committee Says

Treasury short $55 billion in TARP paybacks days before expiration

Czech Republic's Nine-Month Budget Deficit Widens 14% on State Spending

Good News! U.S. Deficit 'Only' $1.3 Trillion for Fiscal 2010 (Tech Ticker video)

Tens of thousands lose stimulus-subsidized jobs

ISM U.S. Manufacturing Index Decreased to 54.4 in September

Loan Spreads Climb to Record as Company Issuance Hits a Post-Crisis Peak

Fitch Expert Sees Prices Falling 10 Percent (Home prices)

Special Report: The ties that bind at the Federal Reserve

rkopf's picture
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Re: Daily Digest 10/1 - Austerity Protests Across Europe, A ...

I must add, that the photos linked after the first article dont show protests against austerity measures. The events on the photos are protests, thatshake germany these days, are against a useless overexpensive infrastructure project, government waste of taxpayer money, total governmant arrogance, which ecalated in a shockingly brutal police operation yesterday, which involved tear gas and waterguns agains peoples, even though there where many elderly folks and children there.

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Re: Daily Digest 10/1 - Austerity Protests Across Europe, A ...

 There wasn't much fanfare, and it literally happened in the cover of night, but sometime after midnight Thursday morning, the U.S. Congress passed an extension of the increased Fannie/Freddie/FHA loan limits for high cost housing markets to a maximum $729,750.

Big deal, right? Well, yes.

Fuse | Getty Images

The higher loan limits for high-priced housing markets were instituted back in 2008, when President George W. Bush signed the Housing and Economic Recovery Act.

At the time, the mortgage market had crashed entirely, and the only games left in town were Fannie, Freddie, and FHA.

They each had a loan limit of $417,000, which knocked an awful lot of potential borrowers out of the game. The move was designed to moderate the credit crunch and promote borrowing and buying.

Since the peak of the housing boom in 2006, home prices are down 28 percent (S&P/Case-Shiller). That means many higher-priced markets aren't quite so high-priced anymore. Of course there are still hot spots, many in California, where the median home price is well over $417,000, but the national median home price currently stands at $178,600 (National Association of Realtors).

More important than home prices, however, are the players in the mortgage market today, or, shall I say, the lack of players in the market. Fannie, Freddie and FHA are originating around 90 percent of all new loans today. Higher loan limits therefore afford higher risk to these entities. The Federal Housing Administration (FHA) reports that loans over $400,000 have a higher risk of default.

Government officials continue to claim they want to increase private sector mortgage activity, and they have to. In order for the Obama Administration to expunge Fannie and Freddie from the U.S. mortgage market successfully, they have to ensure there's a market in existence behind them. Right now there isn't. Investors don't want to touch anything that doesn't carry a government guarantee.

Letting the loan limits drop to the previously legislated $625,000 limit, some argue, would have at least been a little boon to the jumbo market, which is struggling for business right now. But would it really juice the private mortgage market?

Some claim the only way the private market will ever recover is to start rolling back the loan limits, at least slightly, because if we continue the government loan limit status, nothing will change and the government will control 90 percent plus of the mortgage market for the foreseeable future.

The trouble with that argument is that at the present time there are no investors for the loans.

There has been exactly one jumbo securitization in the past year, and it wasn't all that big.

Why?

Because potential investors in potential private label mortgage securities need to know what the new structures of these loans will be; they need comfort that their interests are aligned with the interests of all the players that exist between them and the borrowers (servicers, appraisers, etc.).

The Dodd-Frank financial reform bill did not mandate risk retention by any of the intermediaries, at least not yet. Policy makers have a year to define what exactly is a "qualified residential mortgage." So bottom line, without the increase in the loan limits, a fairly sizeable part of the mortgage market would have ground to a halt.

Lawmakers had no choice.

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Re: Daily Digest 10/1 - Austerity Protests Across Europe, A ...
7 major lenders ordered to review foreclosure procedures
A top federal bank regulator said Thursday that he has directed seven of the nation's largest lenders to review their foreclosure processes after learning about the widespread mishandling of homeowner evictions by the industry. John Walsh, acting director of the Office of the Comptroller of the Currency, told lawmakers during a hearing on the financial regulatory overhaul enacted this summer that some lenders "clearly had deficiencies" in their system for foreclosures.  The banks contacted by regulators include J.P. Morgan Chase, which announced Wednesday that it was freezing 56,000 foreclosures after finding errors in its preparation of documents, according to OCC spokesman Kevin Mukri. Other lenders contacted include Bank of America, Citibank, HSBC, PNC Bank, U.S. Bank and Wells Fargo.  "We both want to see that they fix the processing problems but also to look to see whether there is specific harm [that has been caused] in individual cases,"
saxplayer00o1's picture
saxplayer00o1
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Huge one day rise on our National Debt

Link to Treasury Direct

 

The Daily History of the Debt Results

Historical returns from 09/25/2010 through 09/30/2010

The data for the total public debt outstanding is published each business day. If there is no debt value for the date(s) you requested, the value for the preceding business day will be displayed.

( Debt Held by the Public vs. Intragovernmental Holdings )

 

Date Debt Held by the Public Intragovernmental Holdings Total Public Debt Outstanding
09/24/2010 8,962,112,145,545.98 4,504,706,138,177.50 13,466,818,283,723.48
09/27/2010 8,962,045,737,733.70 4,506,128,137,096.38 13,468,173,874,830.08
09/28/2010 8,963,509,129,588.84 4,509,251,954,169.04 13,472,761,083,757.88
09/29/2010 8,963,900,445,439.19 4,502,371,965,926.43 13,466,272,411,365.62
09/30/2010 9,022,808,423,453.08 4,538,814,607,438.71 13,561,623,030,891.79
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Poet
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Banks Leave? Please Do! And Interest On Debt

Re: Banks Could Leave Europe Over Regulation, Warns Goldman Sachs Chief Lloyd Blankfein?

Please Do! The remaining banks would be the small community banks and credit union banks. If finances were regulated, investors could TRUST the markets again.

Oh, and on another note: For Fiscal 2010, the Uncle Sam paid almost $400 billion just on INTEREST on the acknowledged National Debt alone!

Poet

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Re: Daily Digest 10/1 - Austerity Protests Across Europe, A ...

Bank of America Halts Foreclosures in 23 States; Connecticut AG Asks State Courts to Suspend Foreclosures for 60 Days - A bank official acknowledged in a legal proceeding in February that she signed up to 8,000 foreclosure documents a month and typically didn’t read them. The Associated Press obtained the document Friday.

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Re: Daily Digest 10/1 - Austerity Protests Across Europe, A ...

Good News! U.S. Deficit 'Only' $1.3 Trillion for Fiscal 2010 (Tech Ticker video)

 

Huh? Must be that new math they teach in Washington:

http://www.treasurydirect.gov/NP/NPGateway

  Date                Public                                    Intragov                               Total

09/30/2010 9,022,808,423,453.08 4,538,814,607,438.71 13,561,623,030,891.79
10/01/2009 7,505,894,097,177.82 4,414,625,067,141.60 11,920,519,164,319.42

                             $1.517 Trillion                                                               $1.641 Trillion

Niether figure is anywhere neare 1.3 Trillion! Another words Gov't accounting figures are pure BS!

 

     

 

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Re: Daily Digest 10/1 - Austerity Protests Across Europe, A ...

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rjs
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Re: Daily Digest 10/1 - Austerity Protests Across Europe, A ...

$10,000 Gold? - Kenneth Rogoff - Admittedly, getting to a much higher price for gold is not quite the leap of imagination that it seems. After adjusting for inflation, today’s price is nowhere near the all-time high of January 1980. Back then, gold hit $850, or well over $2,000 in today’s dollars. But January 1980 was arguably a “freak peak” during a period of heightened geo-political instability. At $1,300, today’s price is probably more than double very long-term, inflation-adjusted, average gold prices. So what could justify another huge increase in gold prices from here? One answer, of course, is a complete collapse of the US dollar. With soaring deficits, and a rudderless fiscal policy, one does wonder whether a populist administration might recklessly turn to the printing press. And if you are really worried about that, gold might indeed be the most reliable hedge.

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