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Daily Digest - Dec 18

Thursday, December 18, 2008, 8:04 AM

Four scenarios, Peak coal?, Chrysler shuts down for a month, mortgage aid a failure,  federal deficit soars, "helicopter Ben", dollar 'safe haven' status questioned, Citibank computers down, and a list a landlord doesn't want to be on.

Economy

Four really, really bad scenarios

Rickards calls it the “A to Z” problem: What are the threats that could make the U.S. economy look less like America and more like Zimbabwe? He sees them everywhere – in the Chinese ownership of vast amounts of American debt, in Russia’s increased centralization of its economy, in Al Qaeda’s long-established fascination with damaging the U.S. economy.

Peak Coal?

The new model, created by Dave Rutledge, chair of Caltech's engineering and applied sciences division, suggests that humans will only pull up a total - including all past mining - of 662 billion tons of coal out of the Earth. The best previous estimate, from the World Energy Council, says that the world has almost 850 billion tons of coal still left to be mined.

Chrysler says to shut down all production for month

DETROIT (Reuters) - Citing a credit crisis and dwindling sales, Chrysler LLC on Wednesday said it would shut down all of its manufacturing operations from the end of this week for at least a month.

HUD Chief Calls Aid on Mortgages A Failure

The three-year program was supposed to help 400,000 borrowers avoid foreclosure. But it has attracted only 312 applications since its October launch because it is too expensive and onerous for lenders and borrowers alike, Preston said in an interview.    "What most people don't understand is that this program was designed to the detail by Congress," Preston said. "Congress dotted the i's and crossed the t's for us, and unfortunately it has made this program tough to use."

Federal spending soars 25% before bailout

The government's spending commitments exploded by 25 percent in 2008, putting taxpayers more than $1 trillion in the hole even before the astronomical costs of the economic bailout were taken into account, according to an annual report released Monday by the White House.    A joint report by the White House budget office and Treasury Department said that much of the increase in obligations came from an unexpected jump in veterans benefits liabilities, while revenues remained mostly flat because of the recession that began a year ago.

‘Helicopter Ben'

Countries without a credible currency may reach this point early. As soon as a central bank hints at "quantitative easing", flight from the currency may ensue. This is particularly likely when countries remain burdened under a huge overhang of domestic and foreign debt. Creditors know that a burst of inflation would solve many problems in the US and the UK. The US may manage the danger of resurgent inflationary expectations.   The UK is likely to find it more difficult. Avoiding deflation is easy; achieving stability thereafter will be far harder.  Ironically, we are where we are partly because the Fed was so terrified of deflation six years ago. Now, a credit bubble later, Mr Bernanke has to cope with what he then feared, largely because of the Fed's heroic attempts at prevention. Similar dangers now arise with the drastic measures that look ever more likely. This time, I suspect, the result will ultimately not be deflation but unexpectedly high inflation, though probably many years hence.

Dollar No Longer Haven After Fed Moves Rate Near Zero

Dec. 17 (Bloomberg) -- The world's biggest currency-trading firms say the dollar's appeal as a haven amid the financial crisis all but evaporated.    The U.S. currency slid to a 13-year low against the yen today and had its biggest one-day decline versus the euro after the Federal Reserve reduced its target interest rate yesterday to a range of zero to 0.25 percent, the lowest among the world's biggest economies.     CMC Markets said today the currency's prospects appear "ominous." State Street Global markets said the dollar's outlook has been "undermined.""The dollar has been under heavy downward pressure," said Robert Minikin, a senior currency strategist in London at Standard Chartered Bank Plc. "This move is very well-justified and has a long way to run." Standard Chartered is preparing to cut its dollar forecasts, Minikin said. 

Citibank's computers down, blocking account info

NEW YORK - Customers of New York City-based Citibank have lost access to much of their account information because of a computer outage.    Many of the troubled bank's clients haven't been able to retrieve account details online or by telephone since Tuesday afternoon. Others can access only parts of their account profiles.    Citibank telephone representatives say they don't know what caused the outage but technicians are working to fix it. They've been telling customers to call back after Wednesday morning.

4 Bears (Chart --- Update, Remember S&P now and Dow Then)

A List a Landlord Doesn't Want to Be On 

For many months now, the commercial real estate industry has been grim about its future, but it has been hard to quantify just how bad things are. The default rate for loans packaged into securities and sold on Wall Street has remained well under 1 percent, yet today that low figure is considered highly misleading.    The owners of the building at 450 West 33rd Street in Manhattan, whose tenants include The Daily News, have to repay $1.2 billion in debt by spring.   

The building at 660 Madison Avenue is listed as potentially troubled in the Real Capital Analytics report.   Now a New York research company, Real Capital Analytics, has compiled data showing that at least $107 billion worth of income-producing property - including hotels, offices, apartment complexes and warehouses - is already in distress or is headed in that direction.    The distress is occurring all across the country, but New York tops the list because of the number of costly high-profile transactions that occurred during the boom years. Real Capital Analytics' list includes a total of 268 properties in the New York area, with a value of $12 billion, as already or potentially in trouble.

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13 Comments

miranda's picture
miranda
Status: Bronze Member (Offline)
Joined: Apr 29 2008
Posts: 28
Citibank's computers down, blocking account info

the link to the story is incorrect - thanks

cmartenson's picture
cmartenson
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Posts: 5733
Re: Citibank's computers down, blocking account info

Fixed.


Thx.

barrt's picture
barrt
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Posts: 171
Re: Citibank's computers down, blocking account info

it works for me; http://news.yahoo.com/s/ap/20081217/ap_on_bi_ge/citibank_outage_2

But this is serious i think, more likely to be connected to the trouble citi is in rather than an I.T problem, they would have serious backup systems with double and triple redundancy. They even protect these sytems against Sun Spot blasts and nuclear bombs, magnetic pulse bombs and employee sabotage, they even have their own power backups.

Telephone baking down too and not just the online accounts? for 2 and a half days? oh ohh....

KayakDude's picture
KayakDude
Status: Member (Offline)
Joined: Jun 9 2008
Posts: 2
Re: Citibank's computers down, blocking account info

Funny, I can access my credit card account just fine.

Is this outage for deposit accounts only?

 

Davos's picture
Davos
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Posts: 3620
Re: Daily Digest - Dec 18

FUNNY 

Caasi's picture
Caasi
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Posts: 23
Re: Daily Digest - Dec 18

The link to the first topic, Four really, really bad scenarios, seems to be wrong. I think the following is what was intended:

 

http://www.masslive.com/us-politics/index.ssf/2008/12/adviser_describes_worst_case_s.html

 

- Caasi

Davos's picture
Davos
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Posts: 3620
Re: Daily Digest - Dec 18

Caasi:

I thought I was gloom and doom, this guy has me cooked on one and two, though I think he is not out there in terms of the gloom and doom meter on points 2 and 3...good article. 

Davos's picture
Davos
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Posts: 3620
Re: Daily Digest - Dec 18

Ughhhh I meant to post this below Letterman's top 10 Bush video:

The Bush administration is looking at "orderly" bankruptcy as a way to deal with the desperately ailing U.S. auto industry, the White House said Thursday as carmakers readied more plant closings and a half million Americans filed new jobless claims

There, just like mission accomplished. 

DUCK! This is worse than Dick with a loaded gun. Orderly to these people SCREAMS chaos to me.

mizbear's picture
mizbear
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Posts: 3
Re: Daily Digest - Dec 18

I have a reputation as a Worst Case Scenarioist.  That's ok cos I am usually waaaay off the mark.  But reading article 1 has me completely freaked out.  The US seems to be poised on a knife edge and it wouldn't take much right now to send everything into complete chaos.  I'm sitting here (in Australia) watching oil prices tumble, our currency gaining ground over the USD and gold slowly but steadily rising and getting more worried all the time.

EndGamePlayer's picture
EndGamePlayer
Status: Platinum Member (Offline)
Joined: Sep 2 2008
Posts: 546
Re: Daily Digest - Dec 18

Ha - I can beat that - I bought the Martenson dvd and my husband says I'll be passing it out with a "Merry Christmas - here's a dooms day dvd". So I upped it to adding Crude Impact to the dvd handouts. That'll make it an all merry christmas. Hubby says Zeigeist would be over the top to add to the merry christmas hand out.

Other stuff- been thinking the market will continue the steady hold till everyone gets their IRA and retirement money in - around April 15th. Then more tumbling down . . my guess 5,000 or bust.

Anyone else see the yearly "high" the markets go through this time of year? . . this is the best they've been in months and also the best time to quietly sell off stocks to move into munis. . . or stock up on my coffee, flour and tp in case it all goes hyper-inflation. 

And, has anyone started a donation fund to buy that guy some new shoes? I would donate money for him to get some big boots.

EGP

Davos's picture
Davos
Status: Diamond Member (Offline)
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Posts: 3620
Re: Daily Digest - Dec 18

EGP: 

Just stand behind W you will get all the boots you could ask for. 

Hammerhead's picture
Hammerhead
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Joined: Nov 9 2008
Posts: 8
Re: Daily Digest - Dec 18

There have been alot of incorrect links to stories in the past few days.

 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - Dec 18

HammerHead:

I, for the last few days, had been using older posts as a template, apperently the links were not breaking when asked, I am back to the manual way of doing it. My apologies to all for the inconvience.

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