Daily Digest - Dec 3

Wednesday, December 3, 2008, 7:17 AM

Mortgage delinquency set to double, feds to expand rescue, Chicago cuts back on snow plowing to save money, Governors may seek $100 billion, Monetizing debt, Manhattan awash in office space, and an alternative wind turbine design.  


Delinquent Mortgages Set to Nearly Double in 2009 

"There are a lot more loans that will be resetting throughout 2009 through 2011," says Ezra Becker, principal consultant in TransUnion's financial-services group, who notes that rising unemployment and depreciating home values are other contributing factors. "There may be an ongoing flow of consumers who may now be able to pay their mortgage but may not be able to a year from now."  

Paulson: Feds to expand rescue 

"We expect banks to increase their lending as a result of these efforts and it is important that they do so," Paulson said. "This lending won't materialize as fast as any of us would like, but it will happen much, much faster as confidence is restored."  

Nixonland (Click Here to see Hank Paulson Photo) 

John Daniel Ehrlichman (March 20, 1925 - February 14, 1999) was counsel and Assistant to the President for Domestic Affairs under President Richard Nixon. He was a key figure in events leading to the Watergate first break-in and the ensuing Watergate scandal, for which he was convicted of conspiracy, obstruction of justice and perjury.

City To Cut Back On Plowing Snow On Side Streets 

CHICAGO (CBS) - Mayor Richard M. Daley said Tuesday that city crews will cut back on plowing side streets this winter in an effort to save money. The mayor said the city will only plow side streets during weekday union business hours this winter, rather than during overtime hours 

But as CBS 2's Derrick Blakley reports if there's one city service Chicagoans demand, it's outstanding snow removal.

"I expect for the streets to be cleaned for my tax money," said Chicago resident Sarah Lockhart.

"That's the kind of spending we need to maintain," said Chicago resident Madeline Norris. 

Governors May Seek $100 Billion in U.S. Social Aid 

Dec. 2 (Bloomberg) -- U.S. governors will ask that any federal stimulus plan for the states include as much as $100 billion in aid to help cover the swelling costs of social services, Illinois Governor Rod Blagojevich said. 

Forty-eight governors met with President-elect Barack Obama today to press their case for a federal package to help them weather the U.S. recession that began in December 2007. 

FDIC Chairman Sheila Bair says government's financial rescue plan needs 'exit strategy'

"We really need to think through the exit strategy because (government guarantees) could become a crutch," she said. Weaker financial institutions "need to be allowed to fail," Bair added. 

The government needs to decide which banks and other institutions receive the financial support, and eventually, "How do we get out?" she said.

Treasury Department spokeswoman Jennifer Zuccarelli declined to comment on Bair's remarks.

The potential cost for the government's efforts to contain the financial crisis now approaches $7 trillion and is climbing. That figure includes large commitments of funds by the government to guarantee certain debts, although those funds may never actually be spent. But still, the overall figure reflects the huge liabilities the government is taking on in response to the meltdown. 

Total Bailout Costs

Downloadable: us-government-rescue-programs.xls

Monetizing the Debt 

How does the Fed get its money? It doesn't need to borrow it; it merely creates an entry into its balance sheet. All the Fed requires to "print" money is a keyboard connected to a computer. The difference between the Fed and the Treasury issuing money is that the Treasury needs to get permission from Congress before selling bonds. In this context, it shall be mentioned that physical cash (coins, bank notes) are entered as liabilities on the Fed's balance sheets; they are rather unique liabilities, however, as you can never redeem your cash: if you went to a bank, the best you can hope for in return for your dollar bill is a piece of paper that states that the bank owes you one dollar. While it is possible for central banks to remove cash in circulation, they are not obliged to do so. 

Until recently, the Fed would only temporarily park non-government securities on its balance sheet: a bank would typically receive a temporary, often overnight, loan for depositing top rated securities with the Fed; these "swap agreements" were traditionally intended for very short-term loans, but the crisis has led the Fed and other central banks around the world to engage in 60, 90 day or even longer agreements. Since late September, the idea of swap agreements has been supplemented by outright purchases.,

When the Fed issues cash for debt securities it acquires, we talk about "monetizing the debt". 

Manhattan Awash in Open Office Space 

Last year, when the New York real estate market was still frothy, large blocks of office space were hard to come by. Not anymore. 

Almost 16 million square feet is currently listed as available in large blocks in 68 office buildings in Manhattan, according to Colliers ABR, a commercial brokerage firm. That is nearly double the space available a year ago, both in terms of the number of large office blocks - which in New York usually means 100,000 square feet or more - and in terms of total square feet. 


Wind Turbine (Alternate Design)










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Davos's picture
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Re: Daily Digest - Dec 3


Davos's picture
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - Dec 3


Mike Pilat's picture
Mike Pilat
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Re: Daily Digest - Dec 3

I find it interesting that Bair mentions an "exit strategy." If there's one thing our government is terrible about, it's ending things that it starts.

 I, for one, largely subscribe to the Austrian school of economics. I truly believe that we need to embrace the recession, not try to avoid it. The recession occurs when it becomes obvious that businesses and industries were engaged in activity that is not or is no longer truly productive.

Our economy needs to restructure and the recession is the mechanism for that. Eventually, we will see more people devoting their lives to finding and exploiting energy, procuring food, etc. Industries that build consumer entertainment products are unlikely to continue to grow and will contract over the long term. The banking industry, based on fiat money, provides nothing useful to society. It needs to be downsized. The process can be painful, but it will put us on a more sustainable path for the future.

cnbbaldwin's picture
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Re: Daily Digest - Dec 3

I wonder if it is just coincidence that when one follows the link to see Hank Paulson's Nixon era photo and clicks on the link "John Erhlichman's assistant" one sees (in light grey on black background) "the requested page could not be found".

crymoney's picture
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Re: Daily Digest - Dec 3

Thanks for including the links to all the stuff you round up Davos.

And thanks for the Energy (in this case a new wind option) mention. Energy is key but most fail to connect energy to their comfort and survival. Energy does not originate at the wall socket and food does not originate at the grosery store. Waiting to find that out the hard way will be hard.


Davos's picture
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Re: Daily Digest - Dec 3

Hello CryMoney:

It's a pleasure, I read a lot and a lot of well informed folks send links this way :)

I'm hopeful they come up with some neat ideas that are clean, non-violent to obtain, and non resource intensive before we run out of capitol or anything else. 

daleasberry's picture
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Re: Daily Digest - Dec 3
Davos wrote:

Hello CryMoney:

It's a pleasure, I read a lot and a lot of well informed folks send links this way :)

I'm hopeful they come up with some neat ideas that are clean, non-violent to obtain, and non resource intensive before we run out of capitol or anything else. 

High efficiency mass heater Rocket stove

Replacing corn with perennial grasses improves carbon footprint of biofuels

Diversity, Habitat Mimicry Key to Permaculture

Wood gas



Rainwater harvesting

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