Daily Digest

Daily Digest - April 16

Friday, April 16, 2010, 10:53 AM
  • Recession Arbiters, Wary of Certifying an Upturn
  • A.M. Kitco Metals Roundup: Gold Higher as U.S. Dollar Index Weakens, Crude Oil Rallies
  • Debt Worries Shift to Portugal, Spurred by Rising Bond Rates
  • Senate Restores Jobless Benefits
  • A Solar Victory

Economy

Recession Arbiters, Wary of Certifying an Upturn (jdargis)

Despite a recent uptick in employment and income, the decision of the committee at a meeting on Thursday reflects a lingering worry that the economy could turn downward again in a so-called double-dip recession.

A.M. Kitco Metals Roundup: Gold Higher as U.S. Dollar Index Weakens, Crude Oil Rallies (mhoop)

A weaker U.S. dollar index and higher crude oil prices are supporting fresh buying interest in Comex gold futures Wednesday morning. June gold was last traded up $5.70 an ounce at $1,159.10. Traders viewed Tuesday's price setback as a buying opportunity as the overall technical picture for gold remains fully bullish.

Debt Worries Shift to Portugal, Spurred by Rising Bond Rates (jdargis)

Just as investors are turning their attention to the next vulnerable country, Greece moved a step closer on Thursday to activating a $61 billion rescue package, as Prime Minister George A. Papandreou asked the European Union and the International Monetary Fund to meet in Athens next week.

Senate Restores Jobless Benefits (jdargis)

The bill cleared both houses of Congress on Thursday night. The House passed the bill 289-112 just two hours after it emerged from the Senate on a 59-38 vote that capped an unusually partisan debate.

Energy

A Solar Victory (jdargis)

Going into this project, I assumed that technology would be the salvation. But I was wrong. Behavior matters much more. Programmable thermostats don't program themselves. The low-hanging fruit of energy efficiency is in consciousness raising. Simply going through the audits and becoming more aware of how energy is used in the house pushed me to be more efficient—without making any investments.

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18 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
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Posts: 4167
Re: Daily Digest - April 16

"European Central Bank board member Juergen Stark warned that the global economy may be on the verge of another crisis, saying: "We may already have entered into the next phase of the crisis: a sovereign debt crisis." "

"April 16 (Bloomberg) -- Germany might consider exiting Europe’s current monetary union to create a smaller bloc as the Greek crisis threatens to turn the euro area into a region of “fiscal profligacy,” Morgan Stanley said.

Greek rescue measures “set a bad precedent for other euro- area member states and make it more likely that the euro area degenerates into a zone of fiscal profligacy, currency weakness and higher inflationary pressures over time,” said Joachim Fels, co-chief global economist at Morgan Stanley in London, in an April 14 note. “If so, countries with a high preference for price stability, such as Germany, might conclude that they would be better off with a harder but smaller currency union.” "

"The US Federal Reserve's balance sheet rose to a record high in the latest week, Fed data released on Thursday showed, as the last of the US central bank's mortgage support efforts came to a conclusion.

The Fed's balance sheet—a broad gauge of its lending to the financial system—increased to USD 2.322 trillion in the week ended April 14 from USD 2.290 trillion in the week ended April 7.

The Fed's program of buying mortgage securities came to a conclusion on March 31, though the figures suggest it was still taking delivery of some of those purchases."

"UAE. Dubai World offered creditors a 1% interest rate on two new tranches of debt as part of its restructuring plan, but they rejected it as too low, reported Reuters, citing two sources close to the discussions.

A spokesman for Dubai World declined to comment.

Dubai put the restructuring plan to creditors last month, having asked for a delay in repayment of the state-owned conglomerate's debt in November, and said the deal was conditional upon agreement with the creditors.

The proposal would give bank creditors new debt covering the US$14.2 billion they are owed over five to eight years, and repay in full property unit Nakheel's 2010 and 2011 bonds.

The sources told Reuters that Dubai World's 1% rate offer on the new debt was rejected by creditors, who countered the offer with one at market rate, which they estimated to be around 5%."

"April 16 (Bloomberg) -- Hungary, the first European Union member to obtain a bailout in the 2008 credit crisis, faces the risk of a sell-off in its currency as the Greek fiscal crisis spreads, Lombard Street Research said.

Hungary is vulnerable because of its reliance on foreign- currency loans, the level of government debt and an expected increase in the budget-deficit figure as the next government plans to consolidate losses at state-owned companies, Lombard economist Maya Bhandari said in a note to clients."

"TRENTON -- New Jersey will sell up to $2billion in bonds for school construction, in part to avoid making scheduled bond payments for the current fiscal year and the next, and in part to fund $500 million in already-planned school construction.

The board of the state's Economic Development Authority approved the deal this morning at a special board meeting.

The size of the eventual bond sale, however, will likely be somewhere around $1.6 billion, said Steve Petrecca of the state Treasurer's office.

It depends on the rates available when the bonds are sold within the next month and whether the state can save money over the long run, he said.

The deal includes $459 million that was due this year and $205 million due next year. The bonds allow New Jersey to push payments into the future, but does not extend the term — or the end-date — of the state's overall debt plan"

"#1 Another Bombshell...Is your really stored in a Vault?"

"More tax filers are procrastinating this year -- or perhaps planning to skip out on Uncle Sam altogether -- as they deal with unemployment, shrinking incomes and other fallout from the recession.

The number of returns filed by April 3, the latest date for which figures have been compiled by the IRS, is down 2.5% from last year. And at least one expert says she expects more people to hide from the IRS because they can't afford to pay what they owe."

"April 16 (Bloomberg) -- Confidence among U.S. consumers unexpectedly fell in April to the lowest level in five months, indicating Americans are discouraged about the labor market.

The Reuters/University of Michigan preliminary index of consumer sentiment dropped to 69.5 from a reading of 73.6 in March. The gauge was projected to rise to 75, according to the median forecast in a Bloomberg News survey of 69 economists.

Lagging confidence threatens to restrain household spending, which accounts for about 70 percent of the economy. While recent figures showed retail sales picked up in March, a 9.7 percent unemployment rate and mounting home foreclosures are risks for the recovery."

  • Other headlines and news stories:

Ash Cloud Over Europe May Cost Airlines $1 Billion

Goldman Real Estate Fund Lost 98 Cents on the Dollar

San Diego at Risk For Bankruptcy? (Video)

Pensions crisis 'threatens UK economy'

County Budget Picture Worsens (San Bernadino....unfunded liabilities)

After Bulgaria, Romania Delays Euro Adoption

Rise in catastrophic auto insurance costs unsettling to some (Michigan)

Huge rise in EI premiums forecast (Canada)

San Jose State University Announces 'Devastating' Layoffs

Baca bill would boost Social Security `death payment'

Tax Protests

Pension costs swell Grand Rapids city budget deficit

Ukraine to rely on IMF loans through 2012

Nigeria: State Govts May Go Broke in June

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
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Posts: 1503
SEC finally recognizes tip of the iceberg

Is this the beginning of a slew of charges against GS and others, or is this just window dressing to show the sheeple their interest are being protected?

http://www.zerohedge.com/article/breaking-sec-charges-goldman-sachs-frau...

Excerpts:

The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

 

The SEC alleges that one of the world's largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.

 

The SEC's complaint alleges that after participating in the portfolio selection, Paulson & Co. effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure. Given that financial short interest, Paulson & Co. had an economic incentive to select RMBS that it expected to experience credit events in the near future. Goldman Sachs did not disclose Paulson & Co.'s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors.

Mike Pilat's picture
Mike Pilat
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Posts: 929
Re: Daily Digest - April 16

I'm sure everyone has seen it now, but GS has been charged with fraud by the SEC. I am surprised that they might actually be doing their job here. Either that, or the SEC does not look fondly upon "God's Work." http://www.cnbc.com/id/36597289

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
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Posts: 2606
Re: Daily Digest - April 16
Mike Pilat wrote:

I'm sure everyone has seen it now, but GS has been charged with fraud by the SEC. I am surprised that they might actually be doing their job here. Either that, or the SEC does not look fondly upon "God's Work." http://www.cnbc.com/id/36597289

Hey Mike -

It will be interesting to see if this gets any traction.  I'd love to see what gets uncovered during discovery.

On a side note, tell me you were in Puts.................or at least practiced this one?

Would have been hard to see this one coming though.

Mike Pilat's picture
Mike Pilat
Status: Platinum Member (Offline)
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Posts: 929
Re: Daily Digest - April 16

I think the markets are overdue for a correction, and this is certainly bad enough news to provide an excuse. But yes, I think the FED, the Treasury, and GS will do everything they can to fear monger and keep the status quo. Right now I doubt much is going to come out of this long term. But we will see. Perhaps there will be one other single criminal that can be jailed in addition to Bernie Madoff. Imagine that.

I had puts on SPY, but was not in long enough to capture the GS move :( I know you guys watch GS closely, hopefully you did well!

idoctor's picture
idoctor
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Re: Daily Digest - April 16

freeeeeman's picture
freeeeeman
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Posts: 25
Re: Daily Digest - April 16

wow peter. your over simplification of why income taxes are bad pretty much gaurantees me not supporting your campaign...

compinthegroove's picture
compinthegroove
Status: Silver Member (Offline)
Joined: Nov 8 2009
Posts: 113
Re: SEC finally recognizes tip of the iceberg
Farmer Brown wrote:

Is this the beginning of a slew of charges against GS and others, or is this just window dressing to show the sheeple their interest are being protected?

http://www.zerohedge.com/article/breaking-sec-charges-goldman-sachs-frau...

Excerpts:

The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

 

The SEC alleges that one of the world's largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.

 

The SEC's complaint alleges that after participating in the portfolio selection, Paulson & Co. effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure. Given that financial short interest, Paulson & Co. had an economic incentive to select RMBS that it expected to experience credit events in the near future. Goldman Sachs did not disclose Paulson & Co.'s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors.

Nothing significant will be done.  Goldman will get slapped with a meaningless fine and it'll be business as usual. 

middleclassamerican's picture
middleclassamerican
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Re: Daily Digest - April 16

We need this guy in the Senate!

 

Please listen to his interview with Eric King at www.kingworldnews.com.  It is not a pretty picture, but at some point in time our politicians have to face reality.  Every day that goes by that reality gets worse!!

middleclassamerican's picture
middleclassamerican
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Re: Daily Digest - April 16

In Response to Goldman Sachs Charges...

 

Wake up, this is a smoke screen GS is the largest dealer of Government bonds.  Why would the government bite the hand that feeds them?   Maybe to submarine Gold below the 1150 calls, it dropped $25 dollars in 1 hour...It worked because interest dropped well below the 4% Greenspan called the canary in the coal mine!  

 

If the 10 year notes go to 5% the game is over, Gold must not rise or it is certain!  

joemanc's picture
joemanc
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Larry Summers is clueless

You can't make this stuff up...

Bold is mine

Quote:

Providing tax cuts and refundable tax credits to American families puts more money in people's pockets and encourages them to spend. In an economy facing a substantial shortfall in aggregate demand, increased consumer spending can go a long way toward spurring growth, creating jobs, and promoting a sustainable recovery.

Because that worked out so well the last time we tried spending our way to prosperity!

But wait, there's more!

Quote:

In building a new foundation for economic growth, President Obama also recognizes that, for too long, irresponsible fiscal policies have placed our country in a serious fiscal situation. For this reason, he put forward a budget that brings back common sense, fiscally responsible principles.

Ah yes, you forget to mention that not one budget in the next 10 years will be balanced, and neither will any budget have a deficit less than the highest one that Bush ran up.

Larry - May I advise a trip to your doctor to have your head examined?

http://www.huffingtonpost.com/lawrence-h-summers/relief-for-middle-class...

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Larry Summers is clueless
joemanc wrote:

You can't make this stuff up...

Bold is mine

Quote:

Providing tax cuts and refundable tax credits to American families puts more money in people's pockets and encourages them to spend. In an economy facing a substantial shortfall in aggregate demand, increased consumer spending can go a long way toward spurring growth, creating jobs, and promoting a sustainable recovery.

Because that worked out so well the last time we tried spending our way to prosperity!

But wait, there's more!

Quote:

In building a new foundation for economic growth, President Obama also recognizes that, for too long, irresponsible fiscal policies have placed our country in a serious fiscal situation. For this reason, he put forward a budget that brings back common sense, fiscally responsible principles.

Ah yes, you forget to mention that not one budget in the next 10 years will be balanced, and neither will any budget have a deficit less than the highest one that Bush ran up.

Larry - May I advise a trip to your doctor to have your head examined?

http://www.huffingtonpost.com/lawrence-h-summers/relief-for-middle-class...

_ _ _ _ _ _ _ moron. Does he even have a head. I know he has the gall to sleep through economic meeting while the economy imploded and people form tent cities. Maybe economics bored him in school and in addition to learning Keynesian baloney he slept too. 

compinthegroove's picture
compinthegroove
Status: Silver Member (Offline)
Joined: Nov 8 2009
Posts: 113
Re: Daily Digest - April 16
middleclassamerican wrote:

In Response to Goldman Sachs Charges...

 

Wake up, this is a smoke screen GS is the largest dealer of Government bonds.  Why would the government bite the hand that feeds them?   Maybe to submarine Gold below the 1150 calls, it dropped $25 dollars in 1 hour...It worked because interest dropped well below the 4% Greenspan called the canary in the coal mine!  

 

If the 10 year notes go to 5% the game is over, Gold must not rise or it is certain!  

Yeah, a quick look at today's gold chart screams of manipulation.  Ignore the MSM garbage about investors fleeing to the safety of the dollar; the dollar is overpriced toilet paper.  Personally, I don't care much that the PM prices keep getting stomped, it just gives me more chances to clean out the local coin shops on the cheap.

strabes's picture
strabes
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Posts: 1032
Re: Daily Digest - April 16

joe/davos, I think you'll be less frustrated when you accept the fact that these people are narcissistic criminals, not just clueless oafs.  at least then you'll stop pulling your hair out wondering how they can say what they're saying.

Celente is right...it's criminal behavior.  all the bloggers and finance sites that portray this stuff day after day after day after day as just stupid incompetence are dead wrong.

Davos's picture
Davos
Status: Diamond Member (Offline)
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Posts: 3620
Re: Daily Digest - April 16
strabes wrote:

joe/davos, I think you'll be less frustrated when you accept the fact that these people are narcissistic criminals, not just clueless oafs.  at least then you'll stop pulling your hair out wondering how they can say what they're saying.

Celente is right...it's criminal behavior.  all the bloggers and finance sites that portray this stuff day after day after day after day as just stupid incompetence are dead wrong.

Strabes, I appreciate your point, but to me it is akin to a pilot being told I'll make you a billionaire if you crash this flight. Microwaving your mother is one thing. Microwaving yourself and your kids and your mother for money - is nothing but moronic.

These "people" are flipping morons.

guardia's picture
guardia
Status: Platinum Member (Offline)
Joined: Jul 26 2009
Posts: 592
Re: Daily Digest - April 16
strabes wrote:

joe/davos, I think you'll be less frustrated when you accept the fact that these people are narcissistic criminals, not just clueless oafs.  at least then you'll stop pulling your hair out wondering how they can say what they're saying.

Celente is right...it's criminal behavior.  all the bloggers and finance sites that portray this stuff day after day after day after day as just stupid incompetence are dead wrong.

Personally, I don't feel frustrated about it... Dealing on a daily basis with normal people, even with ones that are considered exceptionally smart, I can't help but feel how stupid all of them truly are... I came to realize recently that we're not in any way outside of natural evolution. You either "feel" it in your guts that things are wrong and try to find out why, or you don't feel it and perish. Even if someone is really really smart about how to manage (or steal) money or how to build a rocket, it doesn't change the fact that that particular person's instincts are not inline with survival in the real world...That's how it is IMO

So, let them screw themselves and the rest of the world. I'm leaving it to nature to clean the mess up :) I certainly don't "feel" that we have a sufficient number of smart people to fix the world by force or otherwise. It will have to be rebuilt differently

Samuel

strabes's picture
strabes
Status: Diamond Member (Offline)
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Posts: 1032
Re: Daily Digest - April 16
Quote:

Microwaving your mother is one thing. Microwaving yourself and your kids and your mother for money - is nothing but moronic

true.  I just think it helps to understand there's a plan here.  it's not just a random journey of mistakes made by nimrods.

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2606
Re: Larry Summers is clueless
joemanc wrote:

You can't make this stuff up...

Bold is mine

Quote:

Providing tax cuts and refundable tax credits to American families puts more money in people's pockets and encourages them to spend. In an economy facing a substantial shortfall in aggregate demand, increased consumer spending can go a long way toward spurring growth, creating jobs, and promoting a sustainable recovery.

Because that worked out so well the last time we tried spending our way to prosperity!

But wait, there's more!

Quote:

In building a new foundation for economic growth, President Obama also recognizes that, for too long, irresponsible fiscal policies have placed our country in a serious fiscal situation. For this reason, he put forward a budget that brings back common sense, fiscally responsible principles.

Ah yes, you forget to mention that not one budget in the next 10 years will be balanced, and neither will any budget have a deficit less than the highest one that Bush ran up.

Larry - May I advise a trip to your doctor to have your head examined?

http://www.huffingtonpost.com/lawrence-h-summers/relief-for-middle-class...

Only after a trip to the proctologist so he can make his head accessible....

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