Daily Digest

Daily Digest - April 3

Saturday, April 3, 2010, 9:44 AM
  • Jim Grant Presents A Prospectus For The United States, Discusses The Death Penalty For US Coinage Debasers
  • FSA Sees Whistleblowing Activity Surge
  • From Lithuania, a View of Austerity’s Costs
  • A Race to Reap Energy From the Ocean Breezes


Jim Grant Presents A Prospectus For The United States, Discusses The Death Penalty For US Coinage Debasers (Davos)

Jim Grant joins Morgan Stanley (and contrary to Rosenberg's expectations) in anticipating US rates to rise promptly, primarily due to the world's negative "reappraisal of the US Treasury." This is not so much a debate on inflation or deflation, as it is a call on the (un)trustworthiness of the US as a lender. To that end, Grant has put together a Treasury prospectus (which we will post as soon as we procure it) which as Jim puts it "is a compendium of the salient facts about the Treasury as if it were an issuer that did not have a printing press... All you need to know about the credit risk of the US."

FSA Sees Whistleblowing Activity Surge (SolidSwede)

The FSA has followed the lead of other agencies, such as the Office of Fair Trading, to find ways to make better use of whistleblowers to trap wrong-doers. Use of whistleblowers is in tandem with the FSA’s introduction of US-style plea bargains as part of an aggressive campaign by the regulator against market abuse.

From Lithuania, a View of Austerity’s Costs (jdargis)

Pensioners, their benefits cut, swamped soup kitchens. Unemployment jumped to a high of 14 percent, from single digits — and an already wobbly economy shrank 15 percent last year.


A Race to Reap Energy From the Ocean Breezes (jdargis)

As New Englanders await a decision in Massachusetts on a bitterly contested proposal to build the nation’s first offshore wind farm, the State of Rhode Island is forging ahead with its own project in the hope of outpacing — and upstaging — its neighbor.

Please send article submissions to: [email protected]


saxplayer00o1's picture
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Re: Daily Digest - April 3

"That deficit still stands at almost $483 million and it's projected to balloon to $787 million two years later, according to an annual joint report by budget analysts for the mayor, Board of Supervisors and City Controller.

City jobs will be cut, and local economic growth is expected to putter along, officials said.

"The recovery," Controller Ben Rosenfield said, "is going to be very slow."

The projections include city plans to use half of the $24.6 million rainy day fund - the maximum allowed - to help cover next year's budget, plus $6.1 million more from the fund for schools. That will leave just $6.2 million in reserve, said Greg Wagner, the mayor's budget director. "

"With 20 million Americans collecting jobless benefits, unemployment insurance systems around the nation are rapidly drying up. Can cash-strapped states handle the demand? "

"OLGA PIERCE: My overall assessment is that it's not good. So far, 32 states plus the Virgin Islands have insolvent funds. They are essentially borrowing from the federal government to keep paying checks. So, far they have borrowed $37 billion."

"Have states changed rules in reaction?

OLGA PIERCE: Already for this year, 36 states have raised their unemployment insurance taxes, which has a very direct effect on business owners. In some cases, the increase was several fold. And that also has an indirect effect on workers. If it costs more to hire you, they might not hire.

We also see states making moves to reduce benefits or restrict eligibility. In Pennsylvania, everyone in the first 26 weeks of benefits got a 2.3 percent benefit cut. If the average benefit is $300 a week, it's not a huge cut, but it's a utility bill or a few more groceries.

Virginia cut unemployment insurance for seniors who also collect Social Security, based on an obscure clause in state law [that kicked in] when the trust fund ran in to trouble. One man I spoke to was getting $800 a month and it was cut to $100 a month.

Indiana has started a system where if you turn down a job, even if it pays a lot less than what you were making, they start cutting your benefits. And they will cut it up to a 43 percent if you turn down multiple jobs.

So, taxes have already gone up. There is a limit to how much you want to increase taxes, because that can exacerbate unemployment. I think there will be more pressure on states to look at the benefit side of the equation. I don't see a state not mailing out benefit checks, but there will be way to wheedle things out, either benefits or who gets benefits."

"Birth/Death Model Revisions

The BLS Birth/Death Model methodology is so screwed and there have been so many revisions and up it is pointless to further comment other than to repeat a few general statements.

Please note that one cannot subtract or add birth death revisions to the reported totals and get a meaningful answer. One set of numbers is seasonally adjusted the other is not. In the black box the BLS combines the two coming out with a total. The Birth Death numbers influence the overall totals but the math is not as simple as it appears and the effect is nowhere near as big as it might logically appear at first glance.

The BLS added massive numbers of jobs every month to its model, all through the recession. Those jobs never existed. Last month the BLS made these revision to job totals to reflect errors in its Birth/Death model."


"With this disclosure, everyone should now be able to clearly see what many of us knew all along: The Fed was not seeking to protect weak banks as it alleged, but rather to protect itself from having to disclose billions of dollars of pure garbage on its balance sheet.

Clearly the first Maiden Lane operation was such a rousing success the Fed needed to do repeat performance, only bigger. Thornburg, Countrywide, Hilton, MBIA, and Ambac are all in the mix.

Now, after nearly two years of delays, the New York Fed has the gall to issue the statement "“The Federal Reserve recognizes the importance of transparency..."

If Bernanke and Geithner were Pinocchio, their noses would be a mile long."

"Effective immediately, HUD is classifying any property that is at least 60 days behind on the mortgage or the property owner is 90 days or more delinquent on tax payments as a “foreclosed” home.

In addition, HUD is expanding the definition of an “abandoned” property to include homes where no mortgage or tax payments have been made by the property owner for at least 90 days or a code enforcement inspection has determined that the property is not habitable and the owner has taken no corrective actions within 90 days of notification of the deficiencies."

"In March, the US government issued a massive amount of debt: $332.8 billion - the biggest amount ever since the all time record of $545 billion raised (most of it purchased by the Fed) during the apex of the financial crisis in October 2008. The US Treasury had $12.717 trillion in debt subject to limit at the end of March, compared to just $12.384 trillion in the beginning of the month. The private-to-public debt transfer is going as planned, still in the full absence of the shadow economy."




...................Happy Easter! Back to the news on Monday.

printfaster's picture
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Re: Daily Digest - April 3

On the offshore windfarms.

Everytime I think of offshore windfarms, I think of what the salt does to any metal.  I really wonder how long these installations will last.  More to the point will they outlast any tax rebate offered to the builders?  They frankly do seem folly in the long run with maintenance costs that would seem to be staggering.

Then again they do have their advantages:  killing lots of seagulls and warming the ocean underneath them to help with global warming.  At least they are being built offshore where no one except the rich in their yachts can see them, instead of what Germany did to destroy its historic countryside scenery to mount 90 meter high monsters on every ridge.



idoctor's picture
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Re: Daily Digest - April 3

Good to know we can have some happier pilots to fly with these days......wow progress is an amazing adventure LOL.

Ban lifted: Pilots can take antidepressants on job

Pilots can take antidepressants while on duty; FAA lifts 70-year-old ban that many ignored http://finance.yahoo.com/news/Ban-lifted-Pilots-can-take-apf-1511255760.html?x=0&sec=topStories&pos=main&asset=&ccode=

idoctor's picture
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joemanc's picture
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Re: Daily Digest - April 3

The article on Lithuania is sobering, but really, it was the right thing to do by the government. Now, if policies were in place to encourage people to save money(I think Singapore forces it's citizens to put 20% of each paycheck into savings), when the recession comes and government has to cut back, then people can rely on their savings, and not on the insolvent government to provide relief. I hope this most recent crisis is a lesson learned for citizens and governments around the world.

wmarsden's picture
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Criminal Manipulation: naked short selling of gold & silver


Mark Beck's picture
Mark Beck
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Re: Daily Digest - April 3

To engineer the off shore windfarm properly, both the material costs (special for salt water) and at sea maintenance have to be factored into the project up front. Maintenance cost can be contained if enough planning is done in advance. The overall tower design must include servicing and maintenance at sea, which is more expensive than on land, and more dangerous to the crews. 

The towers do pose a hazard to shipping and should be well lit at night. 

The amount of ocean heat capacity surrounding the towers, in anything greater than 60 feet of water, is for all practical purposes infinite. The water due to wave action (mixing) and conduction will not have any large temperature gradients. In other words the ocean will not even know the towers are there.

Mark Beck

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