Daily Digest

Daily Digest - Apr 27

Monday, April 27, 2009, 10:05 AM
  • 3 E's How long will Natural Resources Last? (Chart)
  • Ron Paul’s Bill To Audit The Federal Reserve Now Has 91 Co-Sponsors (Video, H/T Michael Höhne)
  • Like Russia: Italy's Mafia thrives in global financial meltdown
  • Beware Insider Selling
  • S&L Bailout (State and Local Governments) (Video)
  • Week #18 for a total of 29 bank failures this year
  •  “What Good Are Economists?”
  • Keep on Rockin in the Free World
  • China calls for reform of global monetary system
  • Sunday Funnies
  • Where are we right here, right now? (Chart) 

Economy

3 E's How long will Natural Resources Last? (Chart)

Ron Paul’s Bill To Audit The Federal Reserve Now Has 91 Co-Sponsors (Video, H/T Michael Höhne)

Like Russia: Italy's Mafia thrives in global financial meltdown 

NAPLES, Italy (AP) - While businesses around the world are hunkering down for survival, the Italian mob is living a golden moment.
Italy's various organized crime syndicates—often lumped together colloquially as Mafia Inc.—are gobbling up gas stations, muscling in on supermarket franchises, making loans to cash-starved businesses, taking over trattorias and acquiring buildings in swank neighborhoods in Rome and Milan, investigators say.

Beware Insider Selling 

According to a study prepared for Bloomberg by Washington Service, a research outfit, directors, officers and the like have sold $353 million worth of stock in this fading month, or 8.3 times the total bought. As a matter of fact, according to the firm, insider purchases of $42.5 million are on track to make April the skimpiest month for such buying since July 1992. (emphasis added)

The pace of selling in the first three weeks of this month, incidentally, was the swiftest since the market peaked and the bear came out of hibernation with a vengeance in October ‘07.”

There’s more than anecdotal information in insider sales. Bob Bronson, who tracks insider buys and sales, notes “We’ve found insider activity to be a very useful market timing indicator – when used in combination with others — over the short term (weeks) to intermediate term (months).”

Bronson shows that Energy, Consumer Durables and Transports look particularly bearish now:

Back to Abelson — he concludes:

“We’re quite aware that insiders are not infallible. But they are, after all, in the front lines of commerce and industry and so presumably have a better fix on the economy and the prospects for recovery than analysts and economists, whether of macro or micro persuasion.

And just as they wouldn’t be laying off people in such extraordinary numbers if they thought their business was about to rebound soon, they’d be loath to liquidate their holdings in such an emphatic way if they espied a turnaround in the offing.”

One could argue that sellers are merely taking advantage of the big rally in the markets — the S&P 500 has jumped 28% in 33 trading days, the sharpest rally since the 1930s. But what does that say regarding the bull-tards cry that the longest recession since World War II will soon end?

This may be a classic case of “watch what they do, not what they say . . . ”

 S&L Bailout (State and Local Governments) (Video)

Week #18 for a total of 30 bank failures this year 

April 24 (Bloomberg) -- Regulators seized banks in Georgia, Michigan, California and Idaho with total assets of $2.3 billion, bringing the tally of failures in the U.S. this year to 29, exceeding the total for all of 2008.

American Southern Bank of Kennesaw, Georgia; Michigan Heritage Bank in Farmington Hills; and First Bank of Beverly Hills in Calabasas, California, were shut by state agencies. First Bank of Idaho in Ketchum was closed by the Office of Thrift Supervision. The Federal Deposit Insurance Corp. was named receiver of all four.

The seizures will cost the FDIC’s insurance fund a total of $698.4 million, with more than half of that tied to the failure of the California bank. While banks in the other three states are being taken over by institutions in their regions, the FDIC couldn’t find a buyer for First Bank of Beverly Hills, forcing the regulator to assume the company’s $1.5 billion in assets.

Bank of North Georgia in Alpharetta, a unit of Synovus Financial Corp., is taking over American Southern’s insured deposits and its single office, which will open April 27. Michigan Heritage’s deposits are being assumed by closely held Level One Bank in Farmington Hills and its three branches will open next week. U.S. Bancorp in Minneapolis, the sixth-largest U.S. bank by deposits, takes control of First Bank of Idaho’s seven branches.

“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said.

Surpassing 2008
The seizures pushed the tally of failed banks past the 25 reached last year. Foreclosure filings for March totaled 341,180, a record high, according to RealtyTrac, the California- based seller of default data. The economy has lost 5.1 million jobs since December 2007, and unemployment rose to 8.5 percent in March, the highest since 1983.

President Barack Obama said last week that his $787 billion economic stimulus package, plans to rescue banks and efforts to reduce home foreclosures are beginning to “generate signs of economic progress.” Still, he said there would be “pitfalls” ahead.

Bank of North Georgia will buy $55.6 million of American Southern’s deposits and $31.3 million of assets. The deal excludes about $48.7 million in brokered deposits. The FDIC will pay off $50 million of Michigan Heritage’s brokered deposits. Level One is acquiring $101.7 million in deposits and purchasing $46.1 million in assets.

FDIC Makes Payments
For First Bank of Beverly Hills’s insured deposits placed with the bank, the FDIC will mail customers checks next week. Brokered deposits will be paid directly to the brokers after the FDIC receives the necessary documents. Of the bank’s $1 billion in deposits, about $179,000 are uninsured.

U.S. Bancorp, which last year bought assets and deposits of failed California thrift Downey Financial Corp., is assuming First Bank of Idaho’s deposits, excluding $112.8 million in brokered deposits. U.S. Bank agreed to buy $17.8 million of the failed bank’s assets, or less than 4 percent.

The toll of failed banks last year was the most since 1993, including Washington Mutual Inc., the biggest U.S. bank failure in history. The closings drained money from the FDIC deposit insurance fund, which tumbled 45 percent in the fourth quarter to $18.9 billion. The agency has estimated future bank failures may cost the deposit insurance fund $65 billion through 2013.

“We are past the crisis stage; I think we’re in the cleanup stage now,” FDIC Chairman Sheila Bair said yesterday at a conference in Washington. “It’s going to take some time and everybody needs to be patient, and it is not going to be pretty.”

“What Good Are Economists?” 

Another classic “Read it here 1st” at TBP:

What Good Are Economists Anyway? (Business Week)
Why they failed to predict the global economic crisis—and why their help is still crucial to a recovery

Economists mostly failed to predict the worst economic crisis since the 1930s. Now they can’t agree how to solve it. People are starting to wonder: What good are economists anyway? A commenter on a housing blog wrote recently that economists did a worse job of forecasting the housing market than either his father, who has no formal education, or his mother, who got up to second grade. “If you are an economist and did not see this coming, you should seriously reconsider the value of your education and maybe do something with a tangible value to society, like picking vegetables,” he wrote on patrick.net.

Take that, you pointy-headed failures! Go jump off a supply curve!”

Interesting take — looks kinda familiar. Now where else have I seen that sentiment expressed?

Hmmmm . . . Perhaps I spilled a few pixels on the same subject previously. Let’s do a quick search — hey, whattataknow:

You can read it in the MSM, or you can read it here first — in some cases, 4 years ago!

Keep on Rockin in the Free World

 

The American Republic is 226 years old. The Roman Empire lasted 13 centuries before collapsing. The Roman emperors attempted to stave off the collapse by providing bread and circuses to the masses. Feeding Christians to lions worked only for so long. I picture Caligula “Mad Money” Cramer exhorting the masses that the worst was over and not to worry about the Vandals and the Huns. Nero “Mustard Seed” Kudlow probably saw a recovery on the horizon as Barbarians were at the gates of the city. Cleopatra “Money Honey” Bartiromo was proclaiming that the stupid masses didn’t know what was best for the system. Caesar “Glimmers of Hope” Obama was sure that if they just distributed more bread and added a few more circuses, things would improve by the Ides of March.

 

 

The false prosperity we have been experiencing for the last thirty years has come to an abrupt conclusion in the last 18 months. The amount of wealth destroyed is beyond comprehension. Household net worth has declined by $12 trillion in a matter of months. It will take years for average Americans to restore their wealth to 2007 levels. If your investment portfolio has declined by 50%, it will need to increase by 100% to break even.

 

China calls for reform of global monetary system

 

Li did not name the dollar but in late March the People's Bank of China Governor Zhou Xiaochuan said he wanted to replace the US unit which has served as the world's reserve currency since World War II.

Sunday Funnies

Where are we right here, right now? (Chart)

 

 

 

8 Comments

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - Apr 27

Today's theme in the news? Perception, hidden streams and waterfalls.

I find the insider trading and the mob article comical. When I was much younger I was with a friend, one of his clients went off on him and said something I will never forget, "I'm a GD crook, but at least I'm honest about it." 

Personally I think the S&L video with the hidden streams is more of a crime than "encourraging" some audtiting company to film a lottery drawing a little earlier than normal. 

 

MikeMiller69's picture
MikeMiller69
Status: Member (Offline)
Joined: Sep 29 2008
Posts: 6
Re: Daily Digest - Apr 27

Ron Paul's HR1207 actually up to 92 co-sponsors, according to the Campaign for Liberty:  http://www.campaignforliberty.com/blog.php?view=16769

 

 

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Daily Digest - Apr 27

GM axes 21,000 jobs, scraps Pontiac

http://www.abc.net.au/news/stories/2009/04/28/2554181.htm?section=justin

American carmaker General Motors is to cut a further 21,000 US jobs this year and phase out its Pontiac brand, as it aims to meet a June 1 deadline to revamp its business.

GM has to complete its restructuring by that date to gain the extra multi-billion dollar government loans it needs to avoid bankruptcy protection.

The firm also said it hoped to halve its debts by persuading bondholders to swap almost $40 billion worth of bonds for shares.

GM also wants the government to swap half its current loans for a 50 per cent stake.

The US Government has so far given GM $21 billion in loans.

- BBC

FireJack's picture
FireJack
Status: Silver Member (Offline)
Joined: Feb 8 2009
Posts: 156
Re: Daily Digest - Apr 27

I wonder about that mafia bit, all their actions assume a near recovery. If all those businesses fail and properties don't sell their not going to be very happy. You can loan a buy a bunch of money but you won't get it back if he doesn't have any, even if you break his legs.

 

Everyone is waiting to see where this swine flu will go. It's spreading but so far the only deaths have been in Mexico. Even if it doesn't kill many people it could have some sever economic consequences when the world just cannot afford it.

 

Of course going through my regular websites (LATOC, calculated risk, Nathans econ edge, oil drum) reveals the usual bad news.

maveri's picture
maveri
Status: Silver Member (Offline)
Joined: Nov 20 2008
Posts: 159
Re: Daily Digest - Apr 27

The 3 E's chart is really interesting (as is the site it came from - newscientist).

The one that looms on my radar is Antimony and any other metal used in medicine - 13/30 years is not a long time left for Antimony!

http://www.mimn.chem.usyd.edu.au/scope.html

This link gives a very quick brief about the sorts of areas in medicine that metals are used for.

Uranium as an alternate source for electricity looks like it may see out my generation but others coming after may have to look to another source?

The Crash Course deals with what's happening now and into the future but distant generations may have to make changes even greater than what we fathom as needs changing if that chart is even fairly accurate.

Metals eventually being depleted and while they are not destroyed as such, require energy to change their composition.

Energy energy energy.

Extrapolating very long term and it seems that solar is the only source guaranteed for very long term. Wind relies on climate a lot and that can change and even water cycles can change over long periods too.

Thanks for that chart Davos - that's got my old grey matter ticking over double time.

:-)

ccpetersmd's picture
ccpetersmd
Status: Martenson Brigade Member (Offline)
Joined: Oct 12 2008
Posts: 799
Re: Daily Digest - Apr 27
maveri wrote:

The 3 E's chart is really interesting (as is the site it came from - newscientist).

The one that looms on my radar is Antimony and any other metal used in medicine - 13/30 years is not a long time left for Antimony!

http://www.mimn.chem.usyd.edu.au/scope.html

This link gives a very quick brief about the sorts of areas in medicine that metals are used for.

Uranium as an alternate source for electricity looks like it may see out my generation but others coming after may have to look to another source?

The Crash Course deals with what's happening now and into the future but distant generations may have to make changes even greater than what we fathom as needs changing if that chart is even fairly accurate.

Metals eventually being depleted and while they are not destroyed as such, require energy to change their composition.

Energy energy energy.

Extrapolating very long term and it seems that solar is the only source guaranteed for very long term. Wind relies on climate a lot and that can change and even water cycles can change over long periods too.

Thanks for that chart Davos - that's got my old grey matter ticking over double time.

:-)

Davos, I loved the chart, too, so thanks for sharing.

Maveri, I have never seen a breakdown of metals in medicine like in the link you provided, so thanks go to you for that, also.

pipcork's picture
pipcork
Status: Member (Offline)
Joined: Sep 22 2008
Posts: 1
Re: Daily Digest - Apr 27

Great Ron Paul video, thanks for posting. Glad to see more people becoming aware.

Michael Höhne's picture
Michael Höhne
Status: Silver Member (Offline)
Joined: Nov 16 2008
Posts: 119
Re: Daily Digest - Apr 27

H.R. 1207 now has 109 co-sponsors. Seems that mostly republicans are supporting it, while democrats are the minority. I don't understand this discrepancy, because this bill is not related to any party. Hope to see it changing soon.

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