Daily Digest

Daily Digest - April 21

Wednesday, April 21, 2010, 9:34 AM
  • Foreclosure Firm's Revenues Jump To $260 Million
  • Hotels in Bangkok Sending Tourists Packing
  • More Than 1,300 San Jose Employees Receive Layoff Notices
  • Layoff Notices Sent To 2,000 Detroit Teachers
  • U.S. Public Schools Face Threat Of Tens Of Thousands Of Layoffs
  • How To Eat Well On A Food Stamp Budget
  • Tax-Weary New Jersey Voters May Reject School Budgets
  • Lawsuits Over Illinois Budget Mess Could Be Coming
  • INDIANA: School Board Wades Into Budget Details
  • China and Saudi Arabia Form Stronger Trade Ties
  • German Bank Man: Greece May Need 80 billion Euros
  • SEC Is Looking Into Accounting At 19 Biggest Banks
  • Ukraine Has $1.4 Billion in Domestic Debt Payments
  • China's Rare-Earth Policies Spark Apprehension For Automakers
  • Rare Earth Material Shortage Could Hit Mobile Phones


Foreclosure Firm's Revenues Jump To $260 Million

The housing crisis has been very good for Florida's biggest processor of foreclosure lawsuits.

According to DJSP Enterprises' recent annual financial report, the back-office operation had profits of about $44.6 million in 2009 on revenues of $260.3 million. That means the company's revenues have multiplied by a factor of six as the foreclosure crisis got worse.

In 2006, for example, the company reported profits of $8.6 million on revenues of $40.4 million, the company's report says.

Hotels in Bangkok Sending Tourists Packing

Thailand's bloody political crisis has been scaring away tourists for weeks but took a new turn Tuesday when some of the capital's finest hotels sent guests packing for fear of violence at their doorsteps. The Grand Hyatt and InterContinental hotels in Bangkok told guests they would have to leave, while The Four Seasons remained open but closed all four of its restaurants and saw its cavernous lobby empty except for a few wilted orchids.

The conflict has been characterized by some as class warfare, pitting the country's vast rural poor against an elite that has traditionally held power.

More Than 1,300 San Jose Employees Receive Layoff Notices

The notices affect 1,123 full-time employees — more than a sixth of the full-time workforce — across all city departments, from police to parks to libraries, said Mark Danaj, the city's human resources director. The city manager's proposed budget, which will be released May 3, is expected to eliminate 644 filled positions.

Because of civil service rules and union seniority rights, an employee whose position has been cut may take the job of another worker who has worked fewer years for the city, setting off a cascade of "bumping" that can take weeks to sort out.

Layoff Notices Sent To 2,000 Detroit Teachers

About 2,000 Detroit Public Schools teachers have received layoff notices as the district's financial manager continues to pare down a $219 million budget deficit. Steve Wasko, a spokesman for Robert Bobb, confirms Tuesday that notices have been mailed but says many teachers likely will be returned to work.

U.S. Public Schools Face Threat Of Tens Of Thousands Of Layoffs

Prince George's County schools plan to cut 800 positions, many through layoffs, in the third straight difficult budget for a school system that is battling to improve uneven academic performance. That will mean an average of 29 students per class, up from 27, in the coming school year. p>

How To Eat Well On A Food Stamp Budget

At the end of last year, roughly 1 in 8 Americans received food stamps, the highest rate ever. Though not everyone succeeded in staying within budget, the lessons learned were universal. All three said planning and careful shopping were key, as was a willingness to recast leftovers. They also championed chicken as an inexpensive and versatile protein.

Tax-Weary New Jersey Voters May Reject School Budgets

Christie, a Republican who took office Jan. 19, said voters should nix budgets in districts where unionized employees refuse to take pay freezes to help solve the funding crisis. Residents should be outraged that teachers get average raises of 4 percent to 5 percent and free or low-cost health care, he has said.

“The unions have pushed us to the breaking point,” said Bob Bailey, 60, a corporate administrator from Millstone Township who said his annual property-tax bill is $13,000.

Lawsuits Over Illinois Budget Mess Could Be Coming

Thousands of state vendors could face the prospect of having to go to court to collect money they are owed by the state.

In a memo to legislative leaders Tuesday, Gov. Pat Quinn acknowledged the possibility that the state’s budget mess could force angry vendors to file lawsuits with the Illinois Court of Claims this fall.... As of Tuesday, the state owed $4.5 billion to individuals and companies that sell products and services to the state.

INDIANA: School Board Wades Into Budget Details (Indiana County)

This is the year retirement fund contributions will increase from 4.78 percent of employee salaries to 8.22 percent. The rate jumps to 10.59 percent for 2011-12, then to 29.22 percent in 2012-13.

Translated to dollars for the school district: The 2009-10 contribution is $1.1 million, which increases to $1.9 million in 2010-11, then to $2.6 million and $7.5 million the next two years.

China and Saudi Arabia Form Stronger Trade Ties

The partnership between Saudi Arabia and China is part of a broader strategy by the Saudis to supply Asian markets and extend their global influence. It also helps Saudi Arabia reduce reliance on the United States, which since World War II has protected Saudi security in return for stable oil supplies, said Ben Simpfendorfer, chief China economist in Hong Kong for Royal Bank of Scotland. “China’s rise has provided Saudi Arabia with an excuse to knock on Washington’s door and to say, ‘You are not our only partner,”’ he said.

German Bank Man: Greece May Need 80 billion Euros

German central bank governor Axel Weber has said Greece may need up to 80 billion euros (108 billion dollars) in financial aid to avoid default, the Wall Street Journal reported on Tuesday.

Weber made the remarks to a small group of German lawmakers at a closed-door meeting, the report quoted a person familiar with the matter as saying. The central bank chief told the meeting that Greece's situation was worsening and that "the numbers are changing all the time," the source said.

SEC Is Looking Into Accounting At 19 Biggest Banks

The Securities and Exchange Commission is examining whether any of the 19 largest U.S. banks are using an accounting trick that a bankruptcy examiner has said led to the collapse of Lehman Brothers, SEC Chairman Mary Schapiro said Tuesday.

Schapiro testified at a congressional hearing that the SEC is scrutinizing Lehman's use of the accounting move, known as Repo 105, that allowed it to mask its weakness before it failed.

Ukraine Has $1.4 Billion in Domestic Debt Payments

The government has to repay 6 billion hryvnia this month and 5 billion hryvnia next month, Prime Minister Mykola Azarov said at a meeting with the confederation of industrial companies in the capital Kiev today. The government also needs to cover about 4 billion hryvnia in pension costs, Azarov said, without elaborating.

“This is a bomb under our financial stability,” he said.


China's Rare-Earth Policies Spark Apprehension For Automakers

China supplies 95% of the world's rare-earth elements. Its government has put a strict quota on exploration and exports of these metals, just as global demand is rising. China is worried that it will run out of the metals for its own use.

With China lowering supply, prices are rising. "Cheap rare-earth minerals no longer exist," said Arden Dai, an analyst in the China division of research firm Frost & Sullivan. "I firmly believe the prices will be prohibitively high."

Rare Earth Material Shortage Could Hit Mobile Phones

While the military needs the rare earth materials for many of its defense systems--including missiles, satellites and radar systems--commercial use includes hybrid electric motors and batteries, wind power turbines, computer hard drives, mobile phones, cameras, energy-efficiency light bulbs and fiber optics.

Please send article submissions to: [email protected]


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Re: Daily Digest - April 21

"CHICAGO, April 20 (Reuters) - U.S. states will borrow more to bolster their budgets, which face a projected collective shortfall exceeding $100 billion in fiscal 2011, Standard & Poor's Ratings Services said on Tuesday."

"S&P said that since the current recession began in December 2007, states have issued more than $15 billion of bonds to plug deficits, restructure outstanding debt, securitize assets and raise money for pension payments. While the $135 billion flowing to states from the federal stimulus act has tempered this borrowing, that will change as the federal money ends, according to the rating agency.

The expiration of the American Recovery and Reinvestment Act will also likely lead to structural budget problems for states in 2012 and beyond.

Many states are hoping for or planning on extended federal assistance for their fiscal 2011 budgets as various measures work their way through the U.S. Congress, according to S&P."

"In just two months, the projected shortfall in Sacramento County's general fund budget for the coming fiscal year has ballooned by 40 percent – from $119.1 million to $166.5 million.

Nearly 750 county workers lost their jobs last year to the budget ax; hundreds more – as much as 10 percent of the remaining work force – are on the chopping block this year. For workers facing layoffs and scores of county residents, a basic question resounds: Why do things look so much worse now than they did in February?

County budget officials cite several factors. Chief among them: the increasing burden of employee pension costs; the hidden expense of laying off workers; and the lingering effects of accounting gimmicks used to paper over this year's deficit. "

"April 21 (Bloomberg) -- The euro dropped against the dollar for a fifth day in the longest stretch of decreases since January on concern discussions of a $61 billion aid package for Greece may fail to contain the nation’s debt crisis.

The yen erased its decline versus the euro as U.S. stock- index futures reversed their gain, discouraging demand for higher-yielding assets. The yield premium investors demand to hold Greek 10-year bonds instead of benchmark German bunds climbed to 5.01 percentage points, the highest level since at least March 1998.

“The Greece story won’t go away,” said Alan Ruskin, head of currency strategy at Royal Bank of Scotland Group Plc in Stamford, Connecticut. “The package hasn’t assuaged the longer- term fears of default. People are looking at alternatives to the euro.”

The euro decreased 0.4 percent to $1.3377 at 8:02 a.m. in New York, from $1.3435 yesterday, after falling to $1.3359, the lowest level since April 9. The yen appreciated 0.5 percent to 124.57 per euro, from 125.24, after earlier declining 0.2 percent. The dollar traded at 93.14 yen, compared with 93.22.

Representatives from Greece, the euro region, the International Monetary Fund and the European Central Bank met to discuss deficit-reduction measures Greece will have to accept before tapping 30 billion euros ($41 billion) in aid from the European Union and as much as 15 billion euros from the IMF.

Greece’s deficit of 12.9 percent of gross domestic product is four times the EU limit. Budget shortfalls across the euro region have surged as governments bailed out banks and spent billions on economic stimulus."

......................3A) Greek Bonds Yielding 8% Are ‘Too Cheap,’ Wien Says: Tom Keene

"April 21 (Bloomberg) -- Greek bonds are “too cheap” even with 10-year yields at 8 percent given the skepticism about the country’s ability to close its budget deficit, according to Blackstone Group LP senior managing director Byron Wien.

“You have the PIIGS -- Portugal, Ireland, Italy, Greece and Spain -- in very difficult shape, enormous spread between revenues and expenses, not much prospect of improving that any time soon, so isn’t that similar to what would be a junk bond in the U.S.?” Wien said in a Bloomberg Radio interview with Tom Keene. “An 8 percent yield on Greek paper seems to me to be too cheap.” "

........................3B) Greece faces tight timeline before May debt crunch

"As this week's earnings show, banks are once again printing money, lots of it; and most economists believe the recession is a thing of the past, even if jobs are still hard to come by.

Unfortunately, Jim Bianco President of Bianco Research in Chicago thinks this might be the eye of the storm rather than the dawn of a new day. "My fear is, history shows, we might have a second leg to the financial crisis in [the form of] a sovereign debt crisis."

The crisis is of course already visible in Greece where yields on their 10-year government bonds just hit a record high as Europe works out a bailout package for the heavily indebted nation. Meanwhile, in Portugal - another one of Europe's so-called PIIGS - bond yields are also spiking, fueling suspicion the debt crisis may spread.

With huge federal deficits, this something the U.S. also needs to worry about. "I'm not suggesting the U.S. is on the verge of defaulting," Bianco says, but the market is already signaling it's hesitation to lend to the government. "

"SACRAMENTO, CA (KGO) -- State lawmakers are pitching a new idea to help close the state budget deficit. They want to make prisoners pay for every day they spend in jail.

California taxpayers spend roughly $43,000 a year per inmate.

State Senator Tom Harman, R-Huntington Beach, who is running for Attorney General, thinks it's time to start charging them room and board, up to $25 a day. "

"The county retirement system has been underestimating the cost of future pension benefits thanks to a “computer anomoly.”

That means the system’s $3.1 billion unfunded liability — or the amount it has promised to pay retirees but doesn’t have — is bigger than they thought. $228 MILLION bigger."

""Public policy is delaying the pig in the python," Zelman told an auditorium full of real estate types. "The pig has lipstick." Zelman is referring to the shadow inventory of foreclosures (the pig) that is making its way through the nation's financial system.

The average number of days from when a borrower stops paying on his/her mortgage to when the bank sends out the first foreclosure notice is 417, Zelman notes, and the final foreclosure can take up to a year more.

The government's Home Affordable Modification Program, which today the Inspector General for the TARP wrote, "has made little progress in stemming the onslaught" (tell me something I don't know), is simply delaying the inevitable and in some cases kicking the can and the cost down the road for borrowers who will inevitably redefault and for taxpayers who will foot the bill.

Zelman did a simple exercise of adding shadow inventory to the seemingly improving inventory numbers. In DC for example, she cites a 5.1 month supply of homes for sale, well below the nation's 8 month supply. But add the shadow inventory of foreclosures, and you get a 13.2 month supply. She claims builders "underwriting ground are unaware of these headwinds." Just after she said that, a guy sitting behind me whispered an expletive under his breath."

Secretary of Education Arne Duncan estimated that state budget cuts imperiled 100,000 to 300,000 public school jobs. In an interview on Monday, he said the nation was flirting with “education catastrophe,” and urged Congress to approve additional stimulus funds to save school jobs.

................8A) The link above was posted by Mish Shedlock

Other info that he has posted today:

"Geithner and the NY Fed Accused of Willfully Ignoring Fraud and Covering Up Lehman's Bad Assets by Senior Regulator During the S&L Crisis"


  • Other news stories and headlines:

LA Mayor Proposes Deepest City Cuts In Decades

LA group launches recall drive against Mayor Villaraigosa

Euro May Near Lows as Austerity Slows Growth, State Street Says

Senate to ask Moody's chief why bad bonds got good ratings

Fitch: CMBS Defaults to Top 11% This Year

Thousands march in New Delhi over food prices

Unemployment hits 16-year high at 2.5m in new blow for Brown (UK)

2 reports show 80%-plus funded ratio (Pensions)

N.J. Voters Defeat Ridgewood, Teaneck School Budgets

The Creation & Destruction of Value. An Interview with Harold James (McAlvany audio)

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Re: Daily Digest - April 21

Bond market calls Fed's bluff as global economy falls apart

The yield on 10-year US Treasury bonds – the world's benchmark cost of capital – has jumped from 2pc to 3pc since Christmas despite efforts to talk the rate down.

This level will asphyxiate the US economy if allowed to persist, as Fed chair Ben Bernanke must know. The US is already in deflation. Core prices – stripping out energy – fell at an annual rate of 2pc in the fourth quarter. Wages are following. IBM, Chrysler, General Motors, and YRC, have all begun to cut pay.


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Re: Daily Digest - April 21

"April 21 (Bloomberg) -- The U.S. Treasury may sell an unprecedented $128 billion in notes next week as expectations increase that the amount of securities auctioned by the government is peaking with the economy strengthening.

The U.S. will sell $44 billion in two-year notes, $42 billion in five-year securities, $32 billion in debt maturing in seven years and $10 billion in five-year Treasury Inflation Protected Securities, according to the average estimate of nine primary dealers in a Bloomberg News survey. The $118 billion in nominal debt matches a record. The U.S. will announce the amounts tomorrow for the auctions conducted over four days beginning April 26."

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Re: Sacramento Distressed Sales Chart - Holy Crap!

Looks lIke a full blown recovery to me FB. Red gold and blue but I don't see any green shoots. Is there another chart somewhere?


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Re: Daily Digest - April 21

The story from the telegraph  ("Bond market calls Feds bluff as world falls apart") is from February 2009.  Old news.

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Chinese rare earths

At current demand levels, Chinese resources should last almost 30 years,

So with demand quite likely running at ~14% growth (doubling time = five years), they're unlikely to last 'til the end of THIS decade!


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Something is cracking

I think I hear a pencil about to snap...


The yield on Portugal’s 10-year bond jumped 11 basis points to 4.80 percent ... That left the difference in yield, or spread, with bunds 11 basis points wider at 166 basis points, after earlier reaching 172 basis points, the most since March 10, 2009.

Greek 10-year bonds dropped ... sending the yield up 20 basis points to 8.17 percent. The yield premium over bunds jumped 25 basis points to 503 basis points after climbing to more than 522 basis points, the most since at least March 1998, when Bloomberg began compiling the generic prices.


It will not be long before Greece is accepting aid from the IMF as credit default swaps on Greek debt surged to record levels, pushing up Greek borrowing costs. Please consider a pair of Bloomberg articles highlighting the problem


Greek government bond yields are at their highest levels since the country joined the eurozone 12 years ago, with the yield on 10-year bonds climbing 42 basis points to 8.28 per cent as concerns mount over a bail-out package from the International Monetary Fund and whether a debt restructuring can be avoided.

Portugal continued to suffer in the shadow of Greece. Its 10-year government bond yields hit highs of 4.82 per cent, a climb of 21bp. Portugal’s 10-year government bonds previously peaked at 4.77 per cent in February.

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Re: Daily Digest - April 21

My poor Greece Cry

Just a decade ago it was a very different picture. People were wealthy, in the sense that they ate fresh good food, had time to go to the beach with their families, and lived lives with much less stress than most americans, britains, and other high first worlders did. Ever since GR switched to the euro currency things started to go to hell. At first there was lots of infrastructure projects financed by EUR loans. New bridges, tunnels, airports, olympic centers, subways, trains. But the debt load grew and prices spiraled out of control. Coupled with the horrible corruption in the government, things were bound to fall apart. Many in GR murmured amongst themselves that the current situation would not last long. A bottle of water went from 100 drachmas to 1 euro= 400 drachmas. People simply rounded up as they were not used to cents, such as .57, or .73. A coffw went from 300 drachmas to 3 euro in many places.

Now the country is falling apart. Bankruptcy is on the horizon. I wish for the greeks to file a nasty BK on their creditors, go back to the drachma, experience the horrible inflation and then move on. Its not as if the german tanks will be rolling in again any time soon. Instead, the crony government will opt for the IMF/EU loans, further enslave the people to the banksters, and take away what little freedom the greeks have. For example, the economic data does not take into account the huuggeee black market in GR. There is a big cash only system in GR, one that does not exist in many "sophisticated" economies. The gov knows this and has finally found a way to tap into this resource. With this crisis, the gov will now be able to implement the policies and measures to tax the greek people into debt slavery.

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Re: Daily Digest - April 21

GM clears bailout loans

By Washington correspondent Craig McMurtrie


American car industry giant General Motors has paid back billions of dollars to the US and Canadian governments after being saved from collapse last year

GM chief executive officer Ed Whitacre used a visit to a Kansas car plant to announce that the carmaker has paid off the last of $US6.7 billion ($7.2b) of US government loans, and $US1.4b ($1.5b) to Canada.

"We are able to repay the taxpayers ahead of schedule because we are designing, building and selling the best cars and trucks GM has produced ever," he said.

The loans cover only part of the carmaker's bailout package - the US Treasury department is still left holding a 61 per cent equity stake in GM.

But GM says the repayment shows its recovery plan is working and the US Treasury has revised down its forecast losses from bailing out car makers.

Treasury secretary Tim Geithner says he is encouraged that GM has repaid its debt ahead of schedule.

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Re: Daily Digest - April 21

Sovereign Debt Crisis Likely to Spread: Roubini  http://www.cnbc.com/id/36681836/

The sovereign debt crisis facing Europe, which started in Greece, is spreading to many other large economies in the Organization for Economic Cooperation and Development (OECD), according to New York University professor of economics Nouriel Roubini.

Nouriel Roubini
Photo: Oliver Quillia for CNBC
Nouriel Roubini

"Public debt sustainability has exploded as a serious issue in advanced economies, most notably in the euro zone's 'PIIGS' —Portugal, Italy, Ireland, Greece and Spain—but also in many larger OECD economies, including the United States," Roubini said in a note posted on his Roubini Global Economics Web site.

As the Greek government meets with International Monetary Fund (IMF) officials in Athens, the man who called the financial crisis warns that Greece's problems will not be solved by any rescue package.

"These issues within the euro zone stem primarily from a loss of competiveness, high wage growth and labor costs which outstripped productivity, undisciplined fiscal policies and, crucially, the appreciation of the euro between 2002 and 2008," he wrote.

Mirroring comments from other bears like George Soros Roubini believes the bailout will not work because it does not address those problems.

"Current EU/IMF plans to rescue the worst-placed of these countries—Greece—have drawn well-placed skepticism from markets as they fail to deal with core issues of debt sustainability," he also wrote.

Roubini expects the euro zone to underperform the rest of the world in 2010. He predicts the euro zone will grow by just 0.9 percent versus 2.8 percent in the US.

Asia, excluding Japan, is likely to soar ahead this year with growth of 8.2 percent, while Latin American growth will top 4 percent over the course of the year, he predicts.

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Re: Daily Digest - April 21

US Treasury: New 100 dollar bill needs 3D tech

On Wednesday, the US Treasury introduced a new 100 dollar bill, which is slated to go into circulation early in 2011. The new 100 dollar bill includes a "3D Security Ribbon" and a color-changing inkwell.

It's still all about the Benjamins. On Wednesday, the US Treasury unveiled a new 100 dollar bill. Laced with 3D technology, the new bill will go into circulation in February 2011.

US Treasury



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Re: Daily Digest - April 21
idoctor wrote:

I think they forgot about 6 zeros....Maybe when the guy Doing God's works gets 2 years of community service (read: Geithner's job) he'll correct that. 

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Re: Daily Digest - April 21
Davos wrote:
idoctor wrote:

I think they forgot about 6 zeros....Maybe when the guy Doing God's works gets 2 years of community service (read: Geithner's job) he'll correct that. 

You forgot about the cardboard tube they'll be wrapped around. 

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Re: Daily Digest - April 21

LOL Davos....more zeros are in the works I am sure....wonder if they will leave that Specimen on there for security sake?

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Re: Daily Digest - April 21

Once-Hidden EU Report Reveals Damage From Biodiesel


Date:* /22-Apr-10/*
Country:* BELGIUM*
Author:* Pete Harrison

Biofuels such as biodiesel from soy beans can create up to four times
more climate-warming emissions than standard diesel or petrol, according
to an EU document released under freedom of information laws.

The European Union has set itself a goal of obtaining 10 percent of its
road fuels from renewable sources, mostly biofuels, by the end of this
decade, but it is now worrying about the unintended environmental impacts.

Four major studies are under way.

Chief among those fears is that biofuel production soaks up grain from
global commodity markets, forcing up food prices and encouraging farmers
to clear tropical forests in the quest for new land.

Burning forests releases vast quantities of carbon dioxide and often
cancels out many of the climate benefits sought from biofuels.

Biodiesel from North American soybeans has an indirect carbon footprint
of 339.9 kilograms of CO2 per gigajoule -- four times higher than
standard diesel -- said the EU document, an annex that was
controversially stripped from a report published in December.

Editing the report caused one of the consultancies, Fraunhofer of
Germany, to disown it partly in a disclaimer.

But it has now been made public after Reuters used freedom of
information laws to gain a copy.

The EU's executive European Commission said it had not doctored the
report to hide the evidence, but only to allow deeper analysis before

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Re: Daily Digest - April 21

Governments Will 'Bankrupt Us': Marc Faber http://www.cnbc.com/id/36704832

Current economic policies are not sustainable and the world faces doom because "the governments are taking over", said Marc Faber, editor & publisher of The Gloom, Boom & Doom Report.

"They will all bankrupt us and expropriate us, but it may not happen tomorrow. They'll give us something to play with, until the whole system breaks down...they'll just print money and print more money," he said on CNBC Thursday.

"What I object to the current government intervention in so-called 'solving the crisis', (is that) they haven't solved anything. They've just postponed it."

Faber warned that the "ultimate armageddon" would be much worse the next time around, as "governments will go bust", which would lead them to print more money.

He also warned that China's growth was "completely unsustainable in the long run," highlighting the red-hot property sector.

Goldman Sachs an 'Honest Firm'

Faber said the SEC's charges against Goldman Sachs

[GS  158.93  ---  UNCH  (0)   ]

were merely an excuse to print more money.

"I think Goldman Sachs is a very honest firm. They have a very strict compliance department compared to the others — they're like an angel. But they targeted Goldman as it stands as a symbol of Wall Street," Faber said.

With U.S. President Obama's ratings sliding due to the health care reforms, the government was going after the investment bank to distract the attention of the people, he claimed.

"Maybe the intention is not to hurt Goldman Sachs, but just to gain popularity with the middle class and the lower class of America, so they will perceive Mr. Obama to have done something against the evil of Wall Street."

Cash Will be 'A Disaster', Accumulate Gold

In light of the current economic environment, investors should not own cash as it is going to be 'a disaster', said Faber.

"If you print money like in Zimbabwe... the purchasing power of money goes down, and the standards of living go down, and eventually, you have a civil war," he added.

Faber warned that the mood has turned very very negative among certain groups of society.

Instead of holding cash, Faber, commonly referred to as 'Dr Gloom', advised investors to "gradually accumulate physical gold and silver" while those who want exposure to shares of gold exploration companies should buy them from time-to-time when they become cheap.

"Some of them still have reasonably good value at the present time. This is a long-term strategy because in an environment where governments will print money — and I'm convinced they're gong to bailout Greece, which means you transfer essentially bad assets on to the balance sheet on the government," he said.

When that happens, Faber warned the purchasing power of paper money will go down, rather than an appreciation of precious metal prices.

"Paper money (will go) down relative to precious metals. So in that environment, I think you...should all accumulate some gold."


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