Daily Digest

Daily Digest 12/25 - States Feel Recession Impact, Hedge Fund Tracks Twitter, Snow Lessons for Supermarkets

Saturday, December 25, 2010, 8:16 AM
  • States Continue to Feel Recession’s Impact
  • Hedge Fund Will Track Twitter to Predict Stock Moves
  • Bernanke Backs Moody's Critic in Debate Over Money Fund Ratings
  • When Will The Recession End? Part 133 Why Russia Doesn't Fit Into BRIC
  • Snow Lessons For Supermarkets
  • Calling For A Run On A Bank To Be Made Illegal, Say Ministers
  • GE to Sell Mortgage Assets to Santander

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Economy

States Continue to Feel Recession’s Impact (woodman)



The worst recession since the 1930s has caused the steepest decline in state tax receipts on record. State tax collections, adjusted for inflation, are now 12 percent below pre-recession levels[1], while the need for state-funded services has not declined. As a result, even after making very deep spending cuts over the last two years, states continue to face large budget gaps. At least 46 states struggled to close shortfalls when adopting budgets for the current fiscal year (FY 2011, which began July 1 in most states).

Hedge Fund Will Track Twitter to Predict Stock Moves (solidswede)



The Derwent Absolute Return Fund Ltd., set to start trading in February with an initial 25 million pounds ($39 million) under management, will follow posts on the social-networking website. A trading model will highlight when the number of times words on Twitter such as “calm” rise above or below average. A paper by the University of Manchester and Indiana University published in October said the number of emotional words on Twitter could be used to predict daily moves in the Dow Jones Industrial Average. A change in emotions expressed online would be followed between two and six days later by a move in the index, the researchers said, and this information let them predict its movements with 87.6 percent accuracy.

Bernanke Backs Moody's Critic in Debate Over Money Fund Ratings (solidswede)



Bernanke, in a Dec. 9 letter to Anthony J. Carfang, partner in Chicago consulting firm Treasury Strategies, said market developments that reinforce speculation whether money funds may be bailed out are a “concern” and sponsor support should be addressed in the context of planned reforms of the industry. Carfang in November criticized a proposal by Moody’s Corp. that its ratings of money funds take into account the likelihood of a parent bailout in the event of losses. Bernanke, in the letter, encouraged Carfang to submit his views of the Moody’s proposal to the Securities and Exchange Commission.

When Will The Recession End? Part 133 Why Russia Doesn't Fit Into BRIC (walter)



The acronym BRIC  which was coined by Goldman Sachs about 6 years ago,  stands for Brazil, Russia, India and China. Many people have taken this term for granted, assuming that these four potentially  prosperous "developing" nations  will equally contribute to and drive economic global growth in the next decade. Unfortunately, some of the assumptions that we took for granted about Russia prior to 2008. no longer hold true.

Snow Lessons For Supermarkets



The supermarket revolution was one of the much-hyped success stories of 20th-century consumer capitalism. We can walk into a store at almost any time of day or night, anywhere in the UK (and most of Europe or North America), and see tens of thousands of food items all vying for our money and attention. This is unimaginable wealth compared to a hundred years ago, and to what most of the world experiences. Supermarkets have come to epitomise progress, western lifestyles and the "right to choose". Retail chief executives regularly receive their peers' admiration and accolades. Politicians are in love with retailing, as the model for NHS reform, "big society", you name it.

Calling For A Run On A Bank To Be Made Illegal, Say Ministers (alan)



The government is to make it a criminal offence to call for a run on a bank and is preparing draft legislation to put out to consultation in January. Justice minister Ivo Opstelten and finance minister Jan Kees de Jager want to stop people making public statements calling for bank clients to pull out their cash, they said in a memo to parliament.

GE to Sell Mortgage Assets to Santander



The sale fits with GE Capital's strategy "to exit non-strategic businesses that lack scale to help reduce GE Capital's balance sheet while investing in core industrial" and other businesses said Mark Begor, president and chief executive of GE Capital's restructuring operations. Santander said the deal will make its Mexican operations "the second leading provider of mortgages" in Mexico, according to Marcos Martinez Gavica, executive vice president of Grupo Financiero Santander. Santander Mexico already has a network of retail branches and the acquisition is aimed to help it grow its mortgage business.





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8 Comments

junkyard71's picture
junkyard71
Status: Member (Offline)
Joined: Sep 6 2009
Posts: 22
Re: Daily Digest 12/25 - States Feel Recession Impact, ...

a question that has me stymied and one i have found no discussion about:

since the global pension system is nearly 100% relient on stock market performance how can the fed "allow" it to correct to some reasonable level of "value"?

can they prop it up forever?  what tools can be used to force the tbtf banks to buy every dip? 

i'm sure not looking to play their risk game, i'm gold and silver coin "investing"  but i wonder if the fed can prop markets up for decades, years, months....?

i believe they do have a plunge protection team in place.  can it be effective longterm?

just imagining what would happen to state pensioms should the market "correct" even 25% and trend flat from there.

where would on look for data that might indiate such fed intevntion?  i know the tbtf trading bots are most of the volume anymore.  is there a doable plan "b" should this plan "a" fail?

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Re: Daily Digest 12/25 - States Feel Recession Impact, ...
junkyard71 wrote:

since the global pension system is nearly 100% relient on stock market performance how can the fed "allow" it to correct to some reasonable level of "value"?

I don't think the Fed is actively trying to keep the markets propped up just for pension funds. That would require decades-long efforts. I think the Fed is much more shortsighted than that, and is just trying to keep the illusion propped up until a hoped-for recovery comes.

However, if it were actually trying to keep the markets propped up for pension funds, it would be unsustainable. The pension funds are all drawing down on their investments to meet the needs of their Baby Boomer retirees. Sadly, with America's manufacturing sector now hollowed out and the process continuing even with some service sectors, there's no hope of the Fed being able to counteract the trade balance deficit of several hundred billion dollars every year, an inexorable march that began (some say) back even in the 1960s.

Also, it is already at least a couple of decades too late for our country as a whole to start making the right kinds of investments and collective sacrifices to have fixed the problem by now. (Which never would have happened anyway, because as soon as some brave President or group of lawmakers were to band together to announce something as awesome as that, either such a brave and honest and far-reaching set of plan would be strangled at birth by Congress before it took its first breath, or lobbyists would start finding ways to subvert it and burden it with so much pork and misallocations of resources, it would suffer an ignonimous defeat that would only exacerbate the problem.)

Once our dollar ceases being the world's reserve currency, our country will fall off the economic cliff.

On a side note, some pension funds are getting smart and not limiting themselves to only investing in stocks and bonds. For example, last year, the Teacher Retirement System of Texas (a state pension fund) joined with other pension funds (like the Danish PKA pension fund), sovereign funds (Abu Dhabi), and insurance companies around the world to pay the city of Chicago money up-front for the rights to the proceeds of parking meters for the next 75 years. (That Chicago has practically used up all of that $1.15 billion it received is its own problem.) Canadian pension funds have purchased partial or majority interests in U.K. and American companies (utilities, health care, etc.).

Poet

idoctor's picture
idoctor
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Posts: 1731
Re: Daily Digest 12/25 - States Feel Recession Impact, ...

britinbe's picture
britinbe
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Joined: Dec 28 2008
Posts: 381
calling for a run on a bank to be illegal

say's it all really............

idoctor's picture
idoctor
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Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest 12/25 - States Feel Recession Impact, ...

msnrochny's picture
msnrochny
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Joined: Nov 4 2010
Posts: 57
The Bears Are Back - Blowing The Whistle on Silver Manipulation
Too funny and too scary...
Part 1
Part 2
guardia's picture
guardia
Status: Platinum Member (Offline)
Joined: Jul 26 2009
Posts: 592
Re: The Bears Are Back - Blowing The Whistle on Silver ...
msnrochny wrote:
Too funny and too scary...
Part 1
Part 2

That's interesting... Anyone has other good info regarding what they're up to during the holidays when no one's looking? thanks

Samuel

DavidC's picture
DavidC
Status: Silver Member (Offline)
Joined: Sep 29 2008
Posts: 243
Re: Daily Digest 12/25 - States Feel Recession Impact, ...

Thanks for those Jim Rogers clips idoctor.

I hope everyone's had/having a good Christmas, and may I wish Chris and everyone in the community here a good 2011, I hope it's a good year for you all.

DavidC

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