Daily Digest

Daily Digest - August 12

Wednesday, August 12, 2009, 9:46 AM
  • Casey Research Mentions Chris Martenson (H/T CapeSurvivor)
  • Deja vu? (Chart)
  • Watchdog Says Bad Assets Still Threaten Banks
  • Path to Freedom – Two Beers With Steve Podcast
  • Unemployment Benefits – More Math That Just Doesn’t Work/ More Data Hiding?
  • “Broke” Reviewed by Glenn Erickson
  • Employment/Population Rate x Number of Hours Worked/Week (Chart)
  • Wholesale Inventories: Marijuana Plants
  • Zillow: Underwater Mortgages May Reach 30%
  • Housing Mess in Not Over Yet - Bloomberg (Video on page)


Casey Research Mentions Chris Martenson (H/T CapeSurvivor)

Dan Ferris, editor of the Extreme Value letter, pointing me to an excellent bit of investigative research done by Chris Martenson, a blogger I have quoted here before.

What Chris discovered was that as soon as the primary dealers had snapped up the 7-year paper, they turned around and sold half of it to the Fed. This bit of monetary trickery, which was clearly planned in advance, accomplished two things. First, it created the impression that there was abundant demand even for longer-term Treasuries. And second, it obfuscated the fact that the Fed was being forced to step in to monetize the debt.

Deja Vu? (Chart)

Watchdog Says Bad Assets Still Threaten Banks

Congressional Oversight Panel warns that banks still hold many risky loans of uncertain value. If unemployment rises sharply or the commercial real estate market collapses - as many economists fear - the banking system could again lose its footing,

Episiode 16 - Path to Freedom, Two Beers With Steve Podcast

In Episode 16 we talk with Jules Dervaes of the Path to Freedom website, http://www.pathtofreedom.com/. Our discussion ranged from how Monsanto has gained control of Mother Nature's seeds and have exploited them for profit, to discussions on self-sustainability and what Jules is doing in his own life to be self-dependent.

 Unemployment Benefits – More Math that Just Doesn’t Work/ More Data Hiding?

This article was meant to be a short follow up to Employment Situation in Chart Form – Damn, I knew I should have moved to New York and found a job on Wall Street! Didn’t quite turn out to be so short or simple ;-) Let’s see if I can, in one million words or less, describe what’s happening with the money behind the very simple (eyeroll) government unemployment system.

At least the concept is simple. Create a social safety net by charging taxes on employers and paying out benefits to those who lose their jobs. Hey, every now and then we all need a little human touch:

“Broke” Reviewed by Glenn Erickson

An astute video essay on the state of financial security these days in the good ol’ United States of Uncertainty, Broke: The New American Dream is a quality show made by Michael Covel, of TurtleTrader.com. The picture begins with Covel lecturing the camera from an empty office space high above the city streets, and proceeds through 85 minutes of somewhat meandering observations about the Shape of Things We Fear in the world of finance. Broke does a good job explaining the kinds of problems that brought on the crash of the economy in 2008, visiting Wall Street, various real estate experts and stock traders, hedge fund managers, reporters, magazine editors and Congressman Richard Baker. 

Employment/Population Rate x Number of Hours Worked/Week (Chart)

 Wholesale Inventories: Marijuana Plants

The green shoots are in fact marijuana plants and the media has been smoking them.

Month/over/month inventories down 1.7%, annual y/o/y down 10.8%.

Durables down 1.5%, annual down 10.4%.

I am especially interested in the internals of this report, particularly, paper goods as these are a good indicator of packaging demand, along with metals (industrial demand.)

Those numbers are just plain nasty: Paper was down 2.7% m/o/m while metals were down 6.2% m/o/m.

The sales numbers weren't any better:

Sales. The U.S. Census Bureau announced today that June 2009 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $313.1 billion, up 0.4 percent (0.7%)* from the revised May level, but were down 21.0 percent (1.4%) from the June 2008 level.


Zillow: Underwater Mortgages May Reach 30%

More than 18.7 million homes, including foreclosures, residences for sale and vacation homes, stood vacant in the U.S. during the second quarter. That compared with 18.6 million a year earlier, the U.S. Census Bureau said July 24.”

If you prefer your housing  in bullet point format, this is lifted directly from the Zillow news release:

• U.S. Home values fell 12.1 percent year-over-year, marking the 10th consecutive quarter of declines

• Q2 was the first quarter where national declines are not growing.

• Total home sales fell 23.7 percent in June versus a year earlier. In the short term, total home sales rose 3.8 percent in June versus May.

• Negative equity: More than one-fifth (23 percent) of all owners of single family homes with mortgages owe more on a mortgage than their home is currently worth.

• Foreclosure re-sales made up 22 percent of all home sales in June.
Homes sold for loss: 29.2 percent of sellers sold homes in June for less than the previous purchase price.

Of course, you can believe the usual NAR releases/MSM articles that ignore seasonality if you want to put a happy face on it . .

Housing Mess in Not Over Yet - Bloomberg (Video on page)


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Summary of FOMC release

From Briefing.com

ECONX Summary of FOMC statement

Fed says information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time. In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 bln of agency debt by the end of the year. In addition, the Federal Reserve is in the process of buying $300 bln of Treasury securities. To promote a smooth transition in markets as these purchases of Treasury securities are completed, the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

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Unprecedented piracy off the coast of Britain...



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LONDON, England (CNN) -- An international search operation was underway Wednesday for a cargo ship which vanished after being involved in what is feared to be an unprecedented incident of piracy in European waters.

The last known contact with the Arctic Sea was on July 31.

The last known contact with the Arctic Sea was on July 31.

The Russian-crewed Arctic Sea, carrying a 6,500-ton cargo of timber from Finland to Algeria, was last heard of nearly two weeks ago when it passed through the English Channel, one of the world's busiest shipping lanes.

Russia said naval vessels authorized to use force were now hunting the vessel backed by "space-based" detection systems.

The Maltese-flagged Arctic Sea is claimed to have been briefly hijacked off Sweden when raiders posing as drug enforcement officers tied up, gagged and blindfolded the crew, causing several injuries, and searched the vessel.

It then apparently vanished after a last known contact on July 31, failing to make its scheduled arrival in north Africa on August 4.

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A Recovery In The UK???

... just a little something to entertain those across the pond ...




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Bull Market in the USD?

From Mish, featuring an interview with Bob Pretcher:

 Social Safety Nets Mask Deflationary Depression

"The Dollar Sentiment Index for the Dollar Index reports just 3% bulls among traders, an extreme level only five times in the past 20 years, usually near an important low," Prechter wrote on Aug. 5. "The last time we saw readings like this was March-July 2008, just before the dollar soared." In other words, the "short the dollar" trade is overly crowded. 

(edit: added quote)

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Re: Daily Digest - August 12

Peter SChiff on fast money......seems to me they really do not enjoy him LOL. Reality always seems to hurt.



Boone Pickens talking to Dennis the Menes


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Re: Daily Digest - August 12


This is a short & and sweet article on our national bankruptcy.

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Re: Daily Digest - August 12

The Twobeerswithsteve podcast was worth the listen.  Amazing family.  Inspiring.

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Re: Daily Digest - August 12

I like the way she says it

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Jeff Borsuk
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Re: Daily Digest - August 12

Yes, Davos, Elizabeth Warren has class..



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