Daily Digest

Daily Digest - Apr 22

Wednesday, April 22, 2009, 9:50 AM
  • Senator Feinstein's husband cashes in on crisis
  • Inspector General Barofksy on TARP
  • Leading Economic Indicators (March, Chart)
  • Current Events Form Future Trends (Video)
  • Geithner Testifies
  • IMF: Global Losses may hit $4.1 Trillion
  • SIGTARP, Quarterly (PDF)
  • Can Banks Pass Fed Stress Tests? Video
  • Pirates (Cartoon)
  • Housing Starts 1959 to Present (Chart, Oh boy!)
  • The Branded Herd (Covel's Movie)
  • Stress Test Leaks

Economy

Senator Feinstein's husband cashes in on crisis

On the day the new Congress convened this year, Sen. Dianne Feinstein introduced legislation to route $25 billion in taxpayer money to a government agency that had just awarded her husband's real estate firm a lucrative contract to sell foreclosed properties at compensation rates higher than the industry norms.

Mrs. Feinstein's intervention on behalf of the Federal Deposit Insurance Corp. was unusual: the California Democrat isn't a member of the Senate Committee on Banking, Housing and Urban Affairs with jurisdiction over FDIC; and the agency is supposed to operate from money it raises from bank-paid insurance payments - not direct federal dollars.

Documents reviewed by The Washington Times show Mrs. Feinstein first offered Oct. 30 to help the FDIC secure money for its effort to stem the rise of home foreclosures. Her letter was sent just days before the agency determined that CB Richard Ellis Group (CBRE) - the commercial real estate firm that her husband Richard Blum heads as board chairman - had won the competitive bidding for a contract to sell foreclosed properties that FDIC had inherited from failed banks.

About the same time of the contract award, Mr. Blum's private investment firm reported to the Securities and Exchange Commission that it and related affiliates had purchased more than 10 million new shares in CBRE. The shares were purchased for the going price of $3.77; CBRE's stock closed Monday at $5.14.

Inspector General Barofksy on TARP

From the WSJ: TARP Watchdog Urges Better Oversight

A report by the TARP watchdog said the Treasury should take steps to better manage its financial-rescue effort so that taxpayer dollars are safeguarded and programs are more fraud-resistant, accountable and transparent.

And on the potential for gaming the PPIP:

"The significant Government-financed leverage presents a great incentive for collusion between the buyer and seller of the asset, or the buyer and other buyers, whereby, once again, the taxpayer takes a significant loss while others profit," [the report said]

This is the second quarterly report to Congress on the $700 billion TARP.

From the LA Times: Inspector general cites potential flaws in bank bailout, urges Treasury to adopt safeguards. An excerpt on the PPIP:

"The sheer size of the program ... is so large and the leverage being provided to the private equity participants so beneficial, that the taxpayer risk is many times that of the private parties, thereby potentially skewing the economic incentives," the report states.

This is harsh criticism of the PPIP (well deserved in my view). And a pretty critical report of the overall handling of the TARP.

Leading Economic Indicators (March, Chart)

Current Events Form Future Trends (Video)

Geithner Testifies

From the WaPo: Geithner Faces Oversight Grilling

Treasury Secretary Tim Geithner is testifying before a congressional oversight committee headed by Elizabeth Warren, the overseer of the bailout, underway right now.

Warren is setting the tone of the hearing, telling Geithner that Americans are "angry" at how the bailout has been administered so far, by both Geithner and his predecessor, Hank Paulson.

"People want to see action in terms that make sense to them," Warren said, is Geithner nodded solemnly.

Here is the text of the letter describing the bailout.

IMF: Global Losses may hit $4.1 Trillion

From Bloomberg: IMF Says Global Losses From Credit Crisis May Hit $4.1

Worldwide losses tied to rotten loans and securitized assets may reach $4.1 trillion by the end of 2010 as the recession and credit crisis exact a higher toll on financial institutions, the International Monetary Fund said.

Banks will shoulder about 61 percent of the writedowns, with insurers, pension funds and other nonbanks assuming the rest ... The fund projected losses of $2.7 trillion at U.S. financial institutions, an increase from its estimates of $2.2 trillion in January and $1.4 trillion in October.

The $4.1 trillion estimate is the first by the IMF to include loans and securities originating in Europe and Japan. ...

The report said U.S. bank losses at the end last year totaled $510 billion. Additional writedowns of $550 billion are expected through 2010. The projections exclude government-sponsored enterprises.

SIGTARP, Quarterly (PDF)

Can Banks Pass Fed Stress Tests? Video

Pirates (Cartoon)

Housing Starts 1959 to Present (Chart, Oh boy!)

The Branded Herd (Covel's Movie **** Stars on his latest book "Trend Following")

Stress Test Leaks

The government's "stress tests" of 19 large U.S. banks take a harsher view of loans than of other troubled assets, according to a Federal Reserve document.

18 Comments

fujisan's picture
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Re: Daily Digest - Apr 22

 Economists Seek Breakup of Big Banks - WSJ.com

Quote:

WASHINGTON -- Instead of funneling taxpayer money into big financial firms, the government should take the radical step of breaking them up into smaller, more transparent companies, top economists told lawmakers Tuesday.

"We have little to lose, and much to gain, by breaking up these behemoths, which are not just too big to fail, but also too big to save and too big to manage," said 2001 Nobel Prize recipient and Columbia University Prof. Joseph Stiglitz, one of the witnesses testifying before the Joint Economic Committee of Congress Tuesday morning. He argued that big institutions are more likely to take excessive risks that backfire and distort markets.

Mr. Stiglitz also criticized the Treasury Department's $700 billion financial-rescue program for propping up large firms with subsidies, while allowing community-based banks to collapse. He voiced skepticism that the Troubled Asset Relief Program would be successful, because it paves the way for big banks to continue dominating the U.S. financial system.

Massachusetts Institute of Technology Prof. Simon Johnson argued that policy makers need to overhaul antitrust laws to prevent the development of financial firms that are too large. Banks should be sold to new private-equity owners and broken up, Mr. Johnson said, adding that banks could be divided regionally or by type of business to avoid a concentration of power.

"This may seem like a crude and arbitrary step, but it is the most direct way to limit the power of individual institutions, especially in a sector that, the last year has taught us, is even more critical to the economy as a whole than anyone had imagined," Mr. Johnson said.

Also on the panel was Federal Reserve Bank of Kansas City President Thomas Hoenig, who criticized the government's response to the financial crisis, saying the measures have focused too heavily on propping up big companies such as American International Group Inc.

"Our actions so far risk prolonging the crisis, while increasing the cost and raising serious questions about how we eventually unwind these programs without creating another financial crisis as bad or worse than the one we currently face," Mr. Hoenig said.

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Warren vs. Gaithner

Elizabeth Warren was on the DailyShow last week:

http://www.thedailyshow.com/video/index.jhtml?videoId=224261&title=Eliza...

http://www.thedailyshow.com/video/index.jhtml?videoId=224262&title=eliza...

At fisrt I thought she was a member of Congress and I was surprised as she seemed awfully competent, reasonable, and open. Of course, she's not a member of Congress - that explains it.

I hope she can get real answers to her questions.

 

Davos's picture
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Re: Warren vs. Gaithner

 Jon Stewart Takes Over for CNBC and Cramer Becomes the Joke... SteveS thanks for the post, it was funny in a pathetic way.....I'll put it on the blog of tomorrow, and PEPIP should stand for Pi$$ Poor Puplic Investments by Paulson et al morons at large.

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Re: Warren vs. Gaithner

Thanks for bringing this up. What really gets me is the helpless look on her face when he asks this woman, in charge of monitoring hundreds of billions of dollars, what legal powers she has (ie. supeona powers). She has none, and for a reason. The fact is that this whole oversight effort is a farce. That it is exposed as such by a comedian is surreal.

Well, I got to get back to planting. At least when the bankersters try to steal my tomatoes I can chase them off myself.

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Re: Daily Digest - Apr 22

Charles Hugh Smith speculates today that Obama is not really a tool of the banking industry, but, instead, is actually going to defeat them by giving them more than enough rope to hang themselves. 

Of Two Minds blog

rowmat's picture
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Re: Warren vs. Gaithner
jhelge wrote:

Well, I got to get back to planting. At least when the bankersters try to steal my tomatoes I can chase them off myself.

Not after they pass HR875...

Davos's picture
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Re: Daily Digest - Apr 22

 Absolute insane asylum. BTW that Monsantos clip was good.

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Re: Daily Digest - Apr 22

Wow - stress was too much? Seeing the future too bleak?

Quote:

Executive at Freddie Mac Is Found Dead

Published: April 22, 2009

The acting chief financial officer of the troubled mortgage giant Freddie Macwas found dead Wednesday morning at his home in Northern Virginia, the police said.

The executive, David B. Kellerman, who had been with the firm for 16 years, apparently committed suicide by hanging himself, according to people with knowledge of the investigation.

A spokeswoman for the Fairfax County police said there were no signs of foul play. A police spokesman said that they would not comment on whether a note was found, but did say that no files or anything except the body have been removed from the house.

“We are not speculating as to the manner and cause of death. We’re going to wait for the medical examiner to give that information,” a spokesman for Fairfax County Police, Eddy Azcarate, told Reuters. “The body has been taken to the medical examiner’s office. We do not suspect foul play.”

http://www.nytimes.com/2009/04/23/business/23freddie.html?_r=1&hp

 

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Re: Daily Digest - Apr 22

More GM news today... and guess what? It's still bad!

Sources: GM to shut most US plants up to 9 weeks

http://news.yahoo.com/s/ap/us_gm_factories

If this is in fact true, I wonder if this will be the final straw that brings down the current bear rally...

- Nickbert

 

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Re: Daily Digest - Apr 22

Did you see this yet? Its very good:

Salbuchi - Global Financial Collapse - Part 1

Davos's picture
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Re: Daily Digest - Apr 22

 This was one of the best documentaries I have seen.

Petrochemical era :30 minutes

Monsa|o :36 Minutes

Our Resources :42 Minutes

Corpachracy 2:16

World Bank/Bech|tell Water 2:00

What needs to be fixed: 2:34

Monsa|o: 2:46

Media pressure 1:45

flavian's picture
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Re: Daily Digest - Apr 22

Cold Fusion Is Hot Again (April 19, 2009) With video of the 12 min report - after the 30 sec ad.

Cold Fusion Is Hot Again

60 Minutes: Once Considered Junk Science, Cold Fusion Gets A Second Look By Researchers

Cold Fusion Is A Reality (April 20, 2009)

For those of you who know how critical I have been of the "mainstream media" down through the years, my commendation of 60-minutes (for their excellent and courageous show on COLD FUSION) may come as a shock. 60-Minute's report is a welcome breath of fresh air and gives me hope that the mainstream media, at least some of it, may be waking up to its greater responsibility to the public. Apparently COLD FUSION is real. The show, which just aired tonight at 7PM EST on NBC, gave a great overview of the COLD FUSION debate along with a rare interview of Dr. Fleishmann in Europe (...)

Fleishmann said the technology could be deployed quite quickly. The technology would in essence provide a new type of battery that would never need to be discarded or recharged in many cases. Your laptop computer would just run for its lifetime. Your car would just run on electric motors powered by cold fusion power cells. Your house would have all the electricity it needed with NO connection to the grid -- just a large cold fusion cell sitting outside next to the heat-pump. Commercial power stations would simply replace palladium rods periodically.

Every gallon of sea water will provide the energy content of 10 gallons of gasoline.

Coal, oil, natural gas, solar, wind, thermal and fission will eventually become obsolete technologies. This IS going to change the world. The Oil Establishment WILL fight back however, so expect a back lash. Even right after the 60-Minutes show concluded, Big Oil had a TV commercial talking about "increasing production for oil." What gall.

And another more detailed video here:

Heavy Watergate

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Re: Daily Digest - Apr 22

Cold Fusion:

Unfortunately hydrogen fusion, either cold or hot, has always been just 20 years in the future.  It was that way back in the 60's, it remains that way today.  While I'm sure that one day we will master this beast I'm glad I didn't hold my breath on each new "just around the corner" announcement.  On this one I'm going to have to be from Missouri, the "Show me" state, that is, I'll believe it when I see it.

fujisan's picture
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Re: Daily Digest - Apr 22

 Razing the American City?-Minyanville

Quote:

Many have joked about grass growing in the streets of declining industrial cities.

Flint, Michigan -- once a motor city second only to Detroit -- proposes to take a quantum leap: Bulldoze entire city blocks -- and perhaps entire neighborhoods -- and let the forest return.

The proposal has echoes of government social engineering gone nuts: There are sure to be some long-time residents in now-dilapidated houses filled with family memories who don’t want to leave, government be damned.

But Flint’s population has dwindled to about 110,000 from the mid-60s, when it was home to about 200,000 people and was expected to grow to 350,000, the New York Times reports.

With the shuttering of most of the General Motors (GM) factories which were once the lifeblood of the town (the company's local workforce has been cut by more than 90%), Flint’s plan to shrink might make sense. The city faces a $15 million budget deficit, and police and firefighters are being laid off. Young families with children are fleeing, and several public schools are expected to be closed.

The city now has about 75 neighborhoods and covers about 34 square miles. Concentrating the population in a smaller area would cut the cost of routine services such as garbage collection, street lighting and sidewalk maintenance.

On some blocks, a garbage truck stops once a week to pick up a single bag of trash. Eliminating single pickups could save the city about $100,000 a year.

State law now places foreclosed or abandoned properties into a land bank, making it easier for local government to act. Previously, such properties fell into legal limbo and routinely deteriorated, spreading blight throughout the city.

Other cities, including Indianapolis and Little Rock, Arkansas, have set up similar land banks.

maveri's picture
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Re: Daily Digest - Apr 22
Davos wrote:

 This was one of the best documentaries I have seen.

Petrochemical era :30 minutes

Monsa|o :36 Minutes

Our Resources :42 Minutes

Corpachracy 2:16

World Bank/Bech|tell Water 2:00

What needs to be fixed: 2:34

Monsa|o: 2:46

Media pressure 1:45

+100

Totally Agree

Is this is the same one as the one done back in 2003? ( http://www.thecorporation.com/index.cfm?page_id=2 )

DOH - I should have watched a few more mins. It is!!!

I believe it's corporatism and it's nature that's the greedy entity and not capitalism that some people wish to blame.

It's an eye opener how the corporations can have the same privileges as a citizen but are soulless entities - it's little wonder they treat people as throw-away items.

In a discussion at work, one person whom I have been discussing these sorts of things with at length kept saying that companies need more regulation to control them. I disagreed, and through the brilliance of this film was able to show that more regulations will not change anything - it's in a corporations dna and makeup is why they are flawed. You have to change their very basis for existence if you really want to stop them exploiting and fleecing the people, the environment and everything else for a buck.

I would also say that Naomi Klein's work, "The Shock Doctrine - the rise of disaster capitalism" is very well done also. It brings out how governments/power brokers use disasters/major upheavals to ram through major social changes/laws when people are in shell shock. It steps back from going the whole hog and stating that governments/power brokers deliberately create these situations however, so as far as conspiracy theories, that's left up to the reader/listener to go down this path if they want. The title alludes to capitalism but in her work she focuses more on 'corporatism' as the guilty party. I listened to the audio version and whilst it makes for a long set of work, I believe it was really well done indeed.

Michael Parenti and Naom Chomsky also have some interesting works to add to the mix. I particularly like Chomsky's work but find his delivery a little dry.

The Corporation I think is certainly recommended (compulsory even) viewing.

:-)

Davos's picture
Davos
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Re: Daily Digest - Apr 22

Hello Maveri: I especially liked how they diagnose the corporation as psychotic. I hope they do a sequal on Geithner and government.

Take care

maveri's picture
maveri
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Re: Daily Digest - Apr 22
Davos wrote:

Hello Maveri: I especially liked how they diagnose the corporation as psychotic. I hope they do a sequal on Geithner and government.

Take care

Yes - I forgot about that.

That was quite clever actually - they listed the symptoms of psychosis and then proceeded to go through them one by one to show that if the corporation was an actual person (since it claims the legal standing of the same), they'd be certified stark raving mad! (no dissrespect intended to mental suffers - in fact, I've had dealings with people in that sad plight - it isn't a laughing matter at all).

Yep - your spot on with that comment and in fact, it was more of a major point than what I had listed earlier.

:-)

Full Moon's picture
Full Moon
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Re: Warren vs. Gaithner
rowmat wrote:
jhelge wrote:

Well, I got to get back to planting. At least when the bankersters try to steal my tomatoes I can chase them off myself.

Not after they pass HR875...

  Following is an  e-mail I got today ....  Monsanto's  is going at us a different way .  Is there ever any end to this ?

Community Leaders ,   

Last May, we let you know about program sponsored and funded by Monsanto called America's Farmers Grow Communities Project.  This project provides grants to local non- profit organizations.  The grants are worth $2,500 and there will be an award made in each county.  Only farmers can nominate a local organization.

A few weeks ago, we learned that Work-To-Win 4-H Club will be the recipient of the America's Farmers Grow Communities Project grant.  So, congratulations to Work-To-Win.

We received information that from Monsanto that they are doing this program again and Monsanto will donate $1 for each farmer that applies to the program to be donated to local United Way, help local food banks, food pantries, Meals On Wheels and other charitable organizations that are helping to fight hunger in that farmer's county.
 
The Monsanto Fund will award grants to local non-profit organizations such as 4-H Clubs. So far, this fund has awarded $205,000 to local 4-H Clubs

The grants are worth $2,500--just think of the good that your 4-H Club could do with $2,500.  Maybe your club could use that money to something for your community, for the County Fair, the 4-H and Youth Fund, or 4-H Council.

Your 4-H Club will need to have farmers nominate your 4-H Club.  The farmers who nominate (vote) for your 4-H Club will need to be over the age of 21 and meet acreage criteria and complete a  very simple on-line form at http://www.monsantofund.org/growcommunities/apply/  or they can call at 1.877.267.3332.  I could not believe how simple the nomination form was on-line.  The due date is December 31, 2010  

Winners will be drawn from a pool of nominated local organizations.  The more votes the better the chances of being drawn as a winner. 

Below are some details:

Who's an eligible farmer?  Farmers, age 21 and over, who are actively involved in producing a minimum of 250 acres of corn, soybeans and/or cotton, 40 acres of open field vegetables or at least 10 acres of vegetables grown in protected culture, are eligible.  The application period runs August 1 through December  31, 2010.  There is no purchase requirement.

Additional information can be found at www.growcommunities.com , including an introductory video, state flyer, promotional poster, frequently asked questions and the official rules.  I encourage you to visit the website to obtain more information or perhaps find answers to your questions.  Serving as the Monsanto Coordinator for the project is Gayla Daugherty and she can be contacted at:  [email protected]  or 314-694-6229.   

So what does this mean for your 4-H program?
* The more votes for a 4-H club, the greater the chances of being drawn as the winner of $2,500!

* Share this information with 4-H club leaders and members, encouraging them to take a copy of the flyer and make contact with the eligible farmers, encouraging them to vote for a 4-H club (here's a superb opportunity for the 4-H member to let key individuals in their community know about their 4-H club!). 

*  Share this information through your networks and partnerships in the ag community, encouraging them to be involved and to vote for their favorite non-profit organization.

 - - - - -  - - County is one of 105 counties eligible to participate and there will be a winner from -------- County again.   So, why not your 4-H Club?  

I would love to have every 4-H Club have local farmers nominate their 4-H Club.

We will put flyers about America's Farmers Grow Communities Project in each 4-H Club's mailbox.

Please let me know if you have any questions.

 

 

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