Daily Digest

Daily Digest 9/20 - Recession is over, Profits down, Gold up.

Monday, September 20, 2010, 10:56 AM
  • Beware Of Greeks Bearing Bonds
  • Defaults Account for Most of Pared Down Debt
  • Bill Buckler on Gold (the only true money)
  • China Suspends Ministerial-Level Talks With Japan Over Boat Clash
  • Wall Street’s Profit Engines Slow Down
  • Iran now self-sufficient, stops importing petrol
  • It's Official, The Recession is Over

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Beware Of Greeks Bearing Bonds (jdargis)

In addition to its roughly $400 billion (and growing) of outstanding government debt, the Greek number crunchers had just figured out that their government owed another $800 billion or more in pensions. Add it all up and you got about $1.2 trillion, or more than a quarter-million dollars for every working Greek. Against $1.2 trillion in debts, a $145 billion bailout was clearly more of a gesture than a solution. And those were just the official numbers; the truth is surely worse.

“Our people went in and couldn’t believe what they found,” a senior I.M.F. official told me, not long after he’d returned from the I.M.F.’s first Greek mission. “The way they were keeping track of their finances—they knew how much they had agreed to spend, but no one was keeping track of what he had actually spent. It wasn’t even what you would call an emerging economy. It was a Third World country.”

Defaults Account for Most of Pared Down Debt

The sharp decline in U.S. household debt over the past couple years has conjured up images of people across the country tightening their belts in order to pay down their mortgages and credit-card balances. A closer look, though, suggests a different picture: Some are defaulting, while the rest aren’t making much of a dent in their debts at all.

Bill Buckler on Gold (the only true money)

The paper money “price” of Gold will last as long as the attempt to make paper money “work” lasts. In the end, Gold will no longer have a “price” because it has reverted to its role as MONEY. Whenever and wherever that happens, that nation can return to the production of wealth - rather than “money”.

China Suspends Ministerial-Level Talks With Japan Over Boat Clash

iplomatic ties between the world’s second- and third-biggest economies soured as China escalated a dispute over Japan’s extended detention of a fishing boat captain for a collision in disputed waters.

China yesterday severed senior-level government contacts with Japan, halting aviation talks and suspending a meeting on coal because of the incident. Foreign Ministry spokesman Ma Zhaoxu pledged “strong countermeasures” if Japan failed to release the captain. Japan’s government hasn’t been informed of the measures, a spokesman said today.

Wall Street’s Profit Engines Slow Down

Inside the great investment houses on Wall Street, business has taken a surprising turn — downward.

Even after taxpayer bailouts restored bankers’ profits and pay, the great Wall Street money machine is decelerating. Big financial institutions, including commercial banks, are still making a lot of money. But given unease in the financial markets and the economy, brokerages and investment banks are not making nearly as much as their executives, employees and investors had hoped.

Iran now self-sufficient, stops importing petrol

TEHRAN: Oil Minister Masoud Mirkazemi said yesterday that Iran had now stopped importing petrol, a commodity targeted by world powers in new sanctions against Tehran's controversial nuclear drive. "No purchase has been made of petrol since last month," Mirkazemi was quoted by Mehr news agency as saying. It reported him as saying Iran's daily petrol production had reached 66.5 million litres per day, more than the national requirement of 64 million litres.

On September 7, Mirkazemi said that Iran had now reached "self-sufficiency" in petrol production, adding that previously it produced 44 million litres a day and imported 20 million litres in order to meet domestic need.

It's Official, The Recession is Over

CAMBRIDGE September 20, 2010 - The Business Cycle Dating Committee of the National Bureau of Economic Research met yesterday by conference call. At its meeting, the committee determined that a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion. The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months.

In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month.

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
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4148
Re: Daily Digest 9/20 - Recession is over, Profits down, ...

 

"Describing Medicaid as a “massive program” whose growth threatens the state’s finances, Lt. Gov. Richard Ravitch is calling for significant changes in New York’s health care benefits for the poor and disabled, lobbing a volatile issue in the midst of the campaign for a new governor. "

"New York State has wrestled for years with the growth of Medicaid, which now costs more than $50 billion a year, more than double the spending in 1995. With stimulus spending, the federal government covers about $30 billion, more than the 50 percent share it has historically covered in New York.

But when that extra money runs out in June, New York and other states will “fall off a cliff,” Mr. Ravitch said, just as they are trying to claw out of deficits and recession. "

 

NY Medicaid

 

  • Other news, headlines and opinion:

Fed to Cut Growth Forecast, Europe Rescue Faltering, Pimco's El-Erian Says

Fed seen treading water, weighing easing and Fed Expected to Weigh More Stimulus

More Americans Tapping Into Entitlement Programs Swells Budget Deficit

Going broke: Canada's debt continues to mount

US woes are not our fault, Chinese economists say

Fed's Flow of Funds Report Shows US Corporate Plan Assets Shrank 6.8% in Second Quarter

US Government 'hiding true amount of debt'

Pension Gaps Loom Larger "Funds Stick to 'Unrealistic' Return Assumptions, Threatening Bigger Shortfalls"

Cameron Vexed by Bailout's $5 Billion Interest on $103 Billion (UK)

9800 people could be laid off as agencies seek ways to trim billions (Texas)

Buying $1 Billion a Day Swells `Fiscal Cost' for Meirelles: Brazil Credit

Europe's hangover could become a blackout (By Nouriel Roubini)

Honohan Says Ireland Must Cut Budget Deficit at Faster Pace as Yields Rise

$675 million requested for state health costs (Wisconsin)

Dubai Financial Center Office Vacancies Could Reach 40% On Oversupply

Loss of HSBC tenants would leave huge void (Buffalo)

States playing fast and loose with teachers' jobs money

Fitch, Moody's, S&P Assign EFSF Triple-A Ratings

Suburbs slashing critical services (Detroit)

America: Love it or (if you're rich enough) leave it? (Blog)

Saudi Public Pension Authority under Shoura fire

FDA to consider approval of genetically engineered salmon

Our Voice: Flint has options in its fiscal crisis, but lacks the courage to pursue them (Editorial)

Drugmakers protest new Greek prices

Some in China ready to drop its U.S. holdings and pour money into nation

Fed buys $5.19 bln in bonds; Treasurys turn down

Retirement program rate hikes will hit schools hard (Oregon)

Ally's GMAC Mortgage Halts Home Foreclosures in 23 States

mainecooncat's picture
mainecooncat
Status: Gold Member (Offline)
Joined: Sep 7 2008
Posts: 488
Re: Daily Digest 9/20 - Recession is over, Profits down, ...

I'd like to offer an alternative headline to "The recession is over."

"Ministry of Propaganda draws perilously close to proclaiming 2+2=5."

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2244
Re: Daily Digest 9/20 - Recession is over, Profits down, ...

First good chuckle of the day, mainecooncat!

Saxplayer, I enjoyed reading the article you posted: Some in China ready to drop its U.S. holdings and pour money into nation.  It's very interesting to get a chance to see the issue of the US's debt to China through the eyes of young adults in China. It's good to get insight into their perspective as well.

crash_watcher's picture
crash_watcher
Status: Silver Member (Offline)
Joined: Aug 12 2008
Posts: 146
Re: Daily Digest 9/20 - Recession is over, Profits down, ...

Your future-earning points as a good human... http://maxkeiser.com/2010/09/20/your-future-earning-points-as-a-good-hum...

If this is even close to a future based on the existing growth paradigm, then peak oil and economic collapse can't get here soon enough!  Jesse Schell's full talk is here:

mainecooncat's picture
mainecooncat
Status: Gold Member (Offline)
Joined: Sep 7 2008
Posts: 488
Re: Daily Digest 9/20 - Recession is over, Profits down, ...

Regarding the article concerning GMAC Mortgage’s 23 state moratorium on foreclosures.

It’s interesting that the article makes no mention of a “why” -- I thought that was a standard journalistic question. The only possible “why” present is an implication contained in a quote from the memo sent out to agents and brokers by GMAC Mortgage concerning the new policy, which obliquely talks about a need to take “corrective action.”

Other points of interest are the immediacy of the action: the moratorium is effective the minute you read the memo, not in a week or a month.

But here’s the real kicker.

The new policy doesn’t just involve homes about to go into or already in foreclosure. They are also stopping the sale of properties that have already been foreclosed on, even to the point of allowing buyers to back-out of purchases that are currently in the pipeline. Meaning that they’d rather keep the house on their books at some mystery valuation than actually sell it, thereby creating a data point, which the industry refers to as “comps.”

Also, no timeline is indicated as to the duration of the moratorium or, at least, this article makes no mention of it.

At this point I’ll offer a “why.”

If all of the properties that could legally be foreclosed on were actually foreclosed on in a timely manner and then placed on the market, housing prices would quite literally collapse and many of these big players would find themselves holding a big ol’ bag a nothin'.

I don’t want to be too alarmist, but actions like this just scream at the top of their lungs, “We (the mortgage industry/housing market) are in deep, deep doo-doo.”

imagesbytjm's picture
imagesbytjm
Status: Member (Offline)
Joined: Feb 28 2009
Posts: 7
Re: Daily Digest 9/20 - Recession is over, Profits down, ...

The reason for the policy is they don't have legal title to the properties. 

See here:

www.market-ticker.org/akcs-www?singlepost=2177252

 

And yes, they are in deep doo-doo.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest 9/20 - Recession is over, Profits down, ...
mainecooncat wrote:

Regarding the article concerning GMAC Mortgage’s 23 state moratorium on foreclosures.

It’s interesting that the article makes no mention of a “why” -- I thought that was a standard journalistic question. The only possible “why” present is an implication contained in a quote from the memo sent out to agents and brokers by GMAC Mortgage concerning the new policy, which obliquely talks about a need to take “corrective action.”

Other points of interest are the immediacy of the action: the moratorium is effective the minute you read the memo, not in a week or a month.

But here’s the real kicker.

The new policy doesn’t just involve homes about to go into or already in foreclosure. They are also stopping the sale of properties that have already been foreclosed on, even to the point of allowing buyers to back-out of purchases that are currently in the pipeline. Meaning that they’d rather keep the house on their books at some mystery valuation than actually sell it, thereby creating a data point, which the industry refers to as “comps.”

Also, no timeline is indicated as to the duration of the moratorium or, at least, this article makes no mention of it.

At this point I’ll offer a “why.”

If all of the properties that could legally be foreclosed on were actually foreclosed on in a timely manner and then placed on the market, housing prices would quite literally collapse and many of these big players would find themselves holding a big ol’ bag a nothin'.

I don’t want to be too alarmist, but actions like this just scream at the top of their lungs, “We (the mortgage industry/housing market) are in deep, deep doo-doo.”

 

Timeline: Until the lobbyrats can pay the whores in Congress to turn a trick to take care of the why: (from 0Hedge)

As we pointed out last week, a certain judge in Florida set quite a precedent when he found that JPM, as servicer for a Fannie mortgage, had committed court fraud by foreclosing while not in possession of the actual mortgage.

DRHolden's picture
DRHolden
Status: Silver Member (Offline)
Joined: Oct 18 2009
Posts: 131
Re: Daily Digest 9/20 - Recession is over, Profits down, ...
crash_watcher wrote:

If this is even close to a future based on the existing growth paradigm, then peak oil and economic collapse can't get here soon enough! 

This is a great book my kids were reading in high school, so I read it too...

http://en.wikipedia.org/wiki/Feed_%28novel%29

crash_watcher's picture
crash_watcher
Status: Silver Member (Offline)
Joined: Aug 12 2008
Posts: 146
Re: Daily Digest 9/20 - Recession is over, Profits down, ...

deanrholden

Feed (2002) is a dystopian novel of the cyberpunk genre by M. T. (Matthew Tobin) Anderson. The story mostly revolves around a teenaged boy and his relationship with a girl. They live within a futuristic world where technology has merged electronics and telecommunications with the human mind, something which plays a major role in the novel. The book is a dark satire about corporate power, consumerism, information technology, and data mining in society. http://en.wikipedia.org/wiki/Feed_%28novel%29

I guess "futuristic world" these days means about 10 years from now.  This story plot line reminded me of a short story by Ian Stewart which was published in Nature in 2006, called "Play it again, Psam"

 

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest 9/20 - Recession is over, Profits down, ...

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