Daily Digest

Daily Digest - December 10

Thursday, December 10, 2009, 11:48 AM
  • Ex-Fed Chief Paul Volcker's 'Telling' Words On Derivatives Industry
  • Buck Stops Here: Local Currency In DC
  • Government out of Bullets; Consumers in Trouble: Whitney
  • Bernanke Prescribing ‘Poison' to U.S. Economy
  • Defend The Dollar By Defending The Constitution
  • Army Of Bank And Wall St Lobbyists Trying To Block And Delay Reform Bill 
  • Bank-Friendly Dems Shut Down House, Threaten To Kill Wall St Reform
  • Wall Street Snaps Its Fingers
  • In 'Honesty And Ethics Of Professions' Poll, Congress Comes In Dead Last
  • Hillary Clinton's '08 Pollster Gets $6 Million From Stimulus Funds
  • 20,000 British Bankers To Be Snared By 50% Tax
  • China Executes Securities Trader Who Hid Millions
  • Recession Elsewhere, But Business Is Booming In China
  • Frequent Flier Miles For You Compliments Of The US Mint 
  • Obama To GOP: "Stop Trying To Frighten The American People"
  • Who Should Get Obama's Nobel Prize Money?
  • Somebody Has To Stop The Spending
  • "AARP Is One Big Lie"
  • Top 10 Countries Most Likely To Default
  • Top 10 Looming Geopolitical Disasters
  • A Big Buying Opportunity In Gold Coming Soon
  • Why Right-Brainers Will Rule The Future Job Market
  • What Must Be Addressed: Rising Abject Poverty
  • For Elderly In Rural Areas, Hard Times Get Harder
  • Green Acres Is The Place To Be For New 'Ruralpolitans'

Economy

Ex-Fed Chief Paul Volcker's 'Telling' Words On Derivatives Industry (Pinecarr, SteveS, SolidSwede)

Echoing FSA chairman Lord Turner's comments that banks are "socially useless", Mr Volcker told delegates who had been discussing how to rebuild the financial system to "wake up". He said credit default swaps and collateralised debt obligations had taken the economy "right to the brink of disaster" and added that the economy had grown at "greater rates of speed" during the 1960s without such products.

When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed "nothing at all", he replied: "You can innovate as much as you like, but do it within a structure that doesn't put the whole economy at risk."

Buck Stops Here: Local Currency in DC (Video) (Joemanc)

As Americans become frustrated with the US economy, more and more people are getting creative with their money, like Larry Chang and Nick Williams, who make their own currency.

Government Out Of Bullets; Consumers in Trouble: Whitney (Video) (Joemanc)

The government is running out of ways to help the economy as the US faces major issues regarding credit and employment ahead, banking analyst Meredith Whitney told CNBC.

"I think they're out of bullets," Whitney said in an interview during which she reinforced remarks she made last month indicating she is strongly pessimistic about the prospects for recovery.

Bernanke Prescribing ‘Poison' to U.S. Economy (Re-Post) (kelvinator)

"There is a Chinese saying that one could quench the thirst by drinking poison,” said Xie, who predicted in September 2006 that the U.S. economy would fall into a recession in 2008. “Bernanke seems to be prescribing exactly this to the U.S. economy"..."The policy consensus to prop up the global economy with stimulus will continue until inflation takes off or governments are broke,” Xie said. “This strategy is too expensive to last.”

Defend The Dollar By Defending The Constitution (Claire H.)

The We The People Congress is a nationwide, non-partisan, not-for-profit membership organization of constitutional activists committed to "institutionalizing" citizen vigilance through civic education, monitoring of governments, and organizing grassroots programs of civic resistance to confront and repel tyranny.

Army Of Bank And Wall St Lobbyists Trying To Block And Delay Reform Bill (M.W.)

The administration and most Democrats support the proposed Consumer Financial Protection Agency (CFPA) but it is bitterly opposed by banks and other business interests. The U.S. Chamber of Commerce, the nation's largest business lobbying group, is spending heavily to block the CFPA. One amendment being pushed by Dem Rep Walt Minnick would scrap the CFPA. More than 200 amendments have been filed by lawmakers from both parties.

Bank-Friendly Dems Shut Down House, Threaten To Kill Wall St Reform (M.W.)

Barney Frank accused the New Democrat Coalition of blocking the bill because its members are being prodded by big banks to abolish the Consumer Financial Protection Agency and to allow major financial institutions to avoid state laws tougher than federal regulations. "It's a state-consumer battle with the banks. They want to offer an amendment that makes it easier for big banks to preempt state consumer laws."

Wall Street Snaps Its Fingers (M.W.)

For months, Congress has been stumbling through financial regulatory reform, purportedly dedicated to bringing law enforcement to the Wall St Casino. The House Rules Committee has posted what is likely to be the new derivatives section of the House financial reform bill. It appears the forces of darkness never rest.

In 'Honesty And Ethics Of Professions' Poll, Congress Comes In Dead Last (M.W.)

For the first time since Gallup began conducting its annual “Honesty and Ethics of Professions” poll, a majority (55%) of Americans responded that they believe the honesty and ethical standards of “members of Congress” are “low” or “very low." Members of Congress finished dead last of all professions surveyed, clearing “car salespeople” by 4 percentage points.

Hillary Clinton's '08 Pollster Gets $6 Million From Stimulus Funds (M.W.)

A contract worth nearly $6 million in stimulus funds was awarded by the Obama adminstration to two firms run by Mark Penn, Hillary Clinton's pollster in 2008. Federal records show that a contract worth $5.97 million, part of the $787 billion stimulus Congress passed this year, helped preserve three jobs at Burson-Marsteller, the global public-relations and communications firm headed by Penn.

20,000 British Bankers To Be Snared By 50% Tax (M.W.)

The Chancellor said he expects to raise £550m in revenue from the new 50pc tax, which will be levied on all bonus payments over £25,000. The tax will be paid by the bank rather than the employee and the banker will then be subject to the usual income tax. The tax comes into force from today until April 5 to catch the coming bonus season.

China Executes Securities Trader Who Hid Millions (M.W.)

Some wanted Yang Yanming kept alive so he would explain where the 65 million yuan ($9.5 million) went, news reports said. Yang refused to tell. China has also executed government officials in its long-running fight against corruption, which is a major source of anger among the country's citizens.

Recession Elsewhere, But Business Is Booming In China (M.W.)

For the first time, Chinese will buy more cars this year than Americans. Demand is so high that drivers put their names on long waiting lists for the most popular models. And it's not just cars. China is surpassing the US as the world’s biggest market, from cars to appliances, even desktop computers. "The Chinese market is on full tilt — booming is an understatement these days.”

Frequent Flier Miles For You Compliments Of The US Mint (M.W.)

At least several hundred mile-junkies discovered that a free shipping offer on presidential and Native American $1 coins, sold at face value by the U.S. Mint, amounted to printing free frequent-flier miles. Coin buyers charged the purchases, sold in boxes of 250 coins, to a credit card that offers frequent-flier mile awards, then took the shipments straight to the bank.

Obama To GOP: "Stop Trying To Frighten The American People" (M.W.)

Senate Majority Leader Harry Reid told reporters that Obama made the admonition during a bipartisan meeting at the White House on Wednesday, producing a chart to show Republicans that "things are a lot better."

Who Should Get Obama's Nobel Prize Money? (M.W.)

President Obama will accept the Nobel Peace Prize In Oslo Thursday – an award that comes with roughly $1.4 million.

Somebody Has To Stop The Spending (Video) (M.W.)

Martin Gross, Social Scientist and NY Times best-selling author, calls Obama, Congress, and mainstream media "masters of deceit" with no restraints and no conscience. "There is no responsible group in America taking care of the middle class." Gross reports what he was told when, on several occasions, he personally called the Bureau of Public Debt to question Obama's fuzzy accounting regarding the deficit.

"AARP Is One Big Lie" (M.W.)

I used to assume the American Association of Retired Persons was looking out for the interests of... well... retired people. They are supporting cuts in Medicare to the tune of $460 billion. Why? Because they collect royalties on the so-called “gap” insurance-the private insurance that Medicare doesn’t cover. The less Medicare, the more private insurance, and thus the more AARP makes.

Top 10 Countries Most Likely To Default (M.W.)

Lebanon, one of the most heavily indebted states in the world, completed a debt swap in March for around $2.3 billion of foreign currency paper maturing this year.

Top 10 Looming Geopolitical Disasters (M.W.)

#10. Israel attacks Iran. Trouble in Iran means an interrupted oil supply. If Israel attacks, Iran would likely counter by interrupting traffic in the Persian gulf. This would have some pretty disastrous consequences in the short and medium term on oil supplies and prices.

A Big Buying Opportunity In Gold Coming Soon (M.W.)

Economist David Rosenberg says we're in a secular bull market for gold. He says central bank purchases, led by China, will eventually push gold to $2,600. Like Jim Rogers, Rosenberg thinks the short dollar/long gold trade is crowded. He expects a short-term correction in gold of as much as 20%. That would bring gold near its 200-day moving average of $970 without violating the trendline.

Why Right-Brainers Will Rule The Future Job Market (M.W.)

Left-brain abilities that used to guarantee jobs have become easy to automate, while right-brain abilities are harder to find — "design, seeing the big picture, connecting the dots." He cites cognitive skills and self-direction as the types of things companies look for in job candidates. "People have to be able to do stuff that's hard to outsource. It used to be for blue collar; it's now for white collar too."

What Must Be Addressed: Rising Abject Poverty (M.W.)

Yesterday I parked my car near a late 90's Camry loaded to the roof with bags and suitcases. There was a woman in her fifties sitting in the car. I realized she was homeless. I remembered all the stories I've read over the last 2 yrs about middle class people losing their jobs and then their homes and living in their cars. People who have never known homelessness or financial fear are now shell-shocked by forces they don't understand.

For Elderly In Rural Areas, Hard Times Get Harder (M.W.)

Growing old has never been easy. But in isolated, rural spots, it is harder still, especially as the battering ram of recession and budget cuts to programs for the elderly sweep through many local and state governments.

Green Acres Is The Place To Be For New 'Ruralpolitans' (M.W.)

S.Dawley and his wife bought an old farm in Wisc. to adopt a more self-reliant lifestyle amid the troubled economy. He's been working on nearby farms learning new skills and his family is raising chickens while learning to garden and hunt. "Our generation has never seen anything like this," says Dawley of the economic downturn. Dubbed "ruralpolitans," these former city dwellers are looking at land as their new safe investment, one they hope could prove more stable than their jobs and 401(k)s.

22 Comments

saxplayer00o1's picture
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Re: Daily Digest - December 10

"Dec. 10 (Bloomberg) -- Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said.

This year’s filings will surpass 2008’s total of 3.2 million as record unemployment and price erosion batter the housing market, the Irvine, California-based company said.

“We are a long way from a recovery,” John Quigley, economics professor at the University of California, Berkeley, said in an interview. “You can’t start to see improvement in the housing market until after unemployment peaks.” "

"WASHINGTON -(Dow Jones)- Congress must increase the U.S. debt limit by around $1.5 trillion to ensure the federal government's borrowing needs are met through 2010, the chairman of the Senate Budget Committee said Wednesday.

Sen. Kent Conrad (D., N.D.) said in order to ensure that the debt ceiling wouldn't be breached in the next 12 months, the limit on how much the federal government can borrow would need to be increased to around $13.6 trillion."

"In an interview with The Age, Senator Joyce said he did not want to alarm the public, but there needed to be a debate about Australia's ''contingency plan'' for a sovereign debt default by the US or even by an Australian state government.

''A default by the US means complete economic collapse around the world and the question we have got to ask ourselves is where are we in that?'' he said."

"''The worse scenario is where the United States doesn't repay their debt - the $US2 trillion in debt they owe to the Chinese, the $US1 trillion in debt they have to the Japanese and the $US1 trillion in debt to others - and then we are really nailed.'' That would result in a shift from the US dollar to the yuan, ''and China becomes an immensely powerful player overnight''."

"SAN BERNARDINO – The city’s budget deficit for the rest of the fiscal year has nearly doubled and is growing.

A report presented Wednesday to a Ways and Means Committee put the shortfall at $4.9 million or $2.2 million above an initial estimate last month. Property tax valuations are down and there have been increased losses in sales tax and business registration. City Finance Director Barbara Pachon says the city “is under financial duress”."

"COLUMBUS - A dark cloud hangs over Ohio's 613 school districts as a Statehouse showdown over how to plug an $851 million hole in education funding drags on.

"We're in our ninth year as an excellent district with distinction. We've done what we thought the Department of Education and Ohio wanted, but that's slowly being dismantled because of funding issues," Perrysburg School District Treasurer Matt Feasel said.

Gov. Ted Strickland's administration has estimated that a worst-case scenario could result in cuts of 10 percent this school year and 15 percent in the next."

"BOSTON -- The city of Lawrence is facing a financial crisis that could bankrupt it by early next year. Angry city workers fear massive layoffs and the superintendent could be fired soon from the city's troubled school district."

"DANVILLE – Later this month, Vermilion County Board members will decide whether to close the county health department or drastically scale back its services and personnel and cover its monthly deficit until the state comes through with the money it owes the department.

County board members had many questions at Tuesday night's meeting about the health department's current fiscal crisis, created by the state's failure to pay $800,000 it owes the health department, which in turn, does not have enough cash to make this month's two payrolls totaling more than $180,000.

State Rep. Bill Black attended the meeting and told the board that the state owes billions of dollars to thousands of entities and is on the verge of bankruptcy. "

"Wineholt said he believes the state’s Unemployment Insurance Trust Fund, which had a balance of more than $800 million in November 2008 and about $220 million in November 2009, will be bankrupt by March. The rate hike will help the state replenish the fund with about $300 million in new money, Wineholt said, but “of course, it couldn’t come at a worse time.”"

"OLYMPIA — Gov. Chris Gregoire on Wednesday proposed a state budget she said she’d never sign and talked about something she’s said she wouldn’t do — raise taxes.

The plan put forth by the second-term Democrat erases much of a $2.6 billion deficit by ending major programs serving the state’s poorest and most vulnerable residents and slashing funds for public schools and college students.

It eliminates the Basic Health Plan, a state subsidized health insurance program for 65,000 low-income individuals, and the General Assistance-Unemployable program which provides cash grants and medical care for some of the state’s most destitute."

"The latest action, announced earlier this month, is that Paterson will withhold and delay payments to local governments and schools this month, stashing enough cash to keep the state solvent.

"I'll probably be sued for this, but I will not let New York state run out of money," Paterson said.

The state is on track to have a $1.4 billion deficit in its primary bank account at month’s end, if it makes all its payments on-time. It would be the first time in history the state would end a month with a negative balance in its main operating account.

Meanwhile, the projected deficit for the state’s next fiscal year is at least $9 billion, and climbing, said Lt. Gov. Richard Ravitch. That is more than $2 billion above previous estimates.

Paterson, Ravitch and state budget director Robert Megna rattled off a series of statistics showing how much the recession has depleted state resources. For instance:

• collections of personal income taxes, the largest tax in New York, were down 17 percent from April to November this year, compared with the same time a year ago. That’s a difference of $4 billion

• real estate taxes, including assessments on transfers of land, are down $430 million from a year ago—a drop of more than 50 percent

• an income tax hike to raise revenue in this year’s state budget has fallen 15 percent short of its intended target

“New York is now at a breaking point,” Paterson said. “We are hanging on by a thread. We are about to cross the financial Rubicon into fiscal disaster.”"

..............10A) Citing $1B shortfall, Gov. warns schools

"New York state's main operating fund will have a negative balance of $1 billion by the end of this month, even if the state exhausts its reserves, officials announced Wednesday.

State Budget Director Robert Megna revealed the shortfall as he introduced Gov. David Paterson, who delivered a speech renewing his call for the Legislature to make additional spending cuts. Mr. Megna said even if the state empties its $1.5 billion rainy day fund and delays a $1 billion payment to the state pension fund, its general fund would still end the month $1 billion short."

...............10B) In 'Quagmire,' NY Delays Debt Payments

"From nursing home operators to the mentally ill, more than 300 people spoke at the state Capitol complex on a snowy Wednesday to protest Republican Gov. M. Jodi Rell's proposed budget cuts to a wide variety of services.

The crowd was so large that the budget-writing appropriations committee took the rare step of dividing the hearing into two separate rooms in order to hear testimony simultaneously. The diverse crowd ranged from those represented by high-powered lobbyists to unemployed citizens who were afraid that cuts could lead to the loss of their medication."

"In addition, state budget analysts are closely watching the Christmas shopping season, as the state relies heavily on the sales tax to generate about $3.2 billion per year. Last year's Christmas season was the worst in decades, and some economists say that this year should be the second-worst.

The budget deficit is currently projected by the state comptroller at nearly $550 million, but that number can change through the year with the ups and downs of Wall Street and changes in the unemployment rate."

"He said revenue projections are below original expectations and he would advise Riley to declare proration as soon as possible. Knight, D-Montgomery, said he did not want to project revenues but that they will likely be below $1.7 billion.

"This is the toughest I have ever seen," he said.

The governor decides when to declare proration, which forces across-the-board cuts at agencies and departments funded through that budget."

"PHOENIX — State and university employees could wind up with IOUs in their pay envelopes instead of checks in February if the planned sale of state buildings hits a snag, state Treasurer Dean Martin warned Monday.

 And that could leave worker with a piece of paper that won’t help them buy food for their families, pay the mortgage or heat their homes.

Martin told legislators that by the end of January the state will have borrowed about $1.1 billion to pay its bills. The total amount Martin has available, both internally and from Bank of America, is $1.2 billion.

But the state is obligated to make a payment of about $325 million to public schools on Feb. 1."

"“There is a significant likelihood we will not be repaid from our investments in AIG, GM and Chrysler,” Geithner said.

The Government Accountability Office yesterday said that U.S. taxpayers will lose $30.4 billion from the auto-industry bailout, down from a prior estimate of $43.7 billion. The GAO report predicted a similar loss of $30.4 billion in AIG, down from a previous estimate of $31.5 billion."

""Even in an era where pension plans have performed poorly and under-funding by state governments is commonplace, Puerto Rico's $12 billion funding gap is exceptional," said Kip McDaniel, editor-in-chief of ai5000. As of 2007, he noted, Puerto Rico had $2.9 billion in assets against $14.6 billion in liabilities - a gap that the commonwealth is intently attempting to bridge."

"Director sounding alarm on state's school pensions

Thursday, December 10, 2009

By Eleanor Chute, Pittsburgh Post-Gazette

Jeff Clay has been criss-crossing the state this year with a message.

A big problem is looming in the state pension system that is going to hit taxpayers hard, and officials can't keep pushing it off, said Mr. Clay, executive director of the Pennsylvania School Employees' Retirement System.

The day of reckoning is coming.

Tomorrow the PSERS board will vote to increase the 2010-11 employer contribution rate by as much as 75 percent.

The worst is yet to come, as the rate may grow by as much as 700 percent over today's rate during the next five years.

The state pays about 55 percent of the employer contribution and school districts pay the rest.

Currently, the employer contribution rate is 4.78 percent, including 0.78 percent for retiree health care, and the rest for pension.

The newest estimates will be released at tomorrow's meeting, but they are not expected to be far different from the most recently available estimates.

Those estimates show a dramatic spike from the current rate of 4.78 percent to:

• 8.4 percent in 2010-11

• 10.7 percent in 2011-12

• 29.55 percent in 2012-13

• 32.45 percent in 2013-14

• 33.95 percent in 2014-15

"There is no silver bullet to solve this," Mr. Clay said."

"A state task force on Wednesday recommended higher payroll taxes for employers and lower unemployment compensation payouts starting in 2012 to shore up the state’s insolvent unemployment trust fund."

"Since January Kentucky has borrowed $537 million from the federal government to pay unemployment benefits, and it is expected to continue borrowing until the employment situation improves."

"And I hope that everyone is paying attention to what is going on at Citi Bank. They took your money and lent $8 Billion of it to Dubai. Strange, but the U.A.E. was one of the largest investors in Citi and bought a large stake in Citi which they are now selling. Two entities that need the cash, both want it. And at the same time Citi is being pressured to pay back the TARP. Could there be more to these events? How about the fact that the speculation is all of a sudden is coming out of oil. Are messages being sent? I don’t know the game, but I am paying attention.

The media is touting that foreclosures are slowing because there was an 8% month over month decline in foreclosure filings, the 4th monthly drop in a row. Ahhh, hello, McFly? Foreclosures are UP 20% over this time last year, and we are dead in the middle of the trough with massive Option-Arm resets coming up."

19) Black Friday Hype Quickly Dies

"NEW YORK (TheStreet) -- The excitement of Black Friday quickly died out, it was revealed today, as sales for the week after the Thanksgiving holiday fell 1.3%. "

"As November same-store sales disappointed, decreasing 0.3% overall, well below the 3% to 4% gain the ICSC forecast, investors are holding their breath for last-minute shoppers. "

"Rather than foreclosing on defaulted mortgages in neighborhoods devastated by the economy, lenders are abandoning them because the cost of proceeding with foreclosure is greater than their value, Federal Reserve Governor Elizabeth A. Duke said yesterday.

Anecdotal evidence suggests that these “toxic titles” have placed significant numbers of properties in a difficult state of legal limbo, she said.

The increased rates of foreclosures and the related economic downturn have hastened a cycle of decreasing property values. Declines in state and local property and sales tax revenues result in even more vacant homes and deteriorating neighborhoods.

“Many community organizations and homeowners have been frustrated by the difficulties of working with mortgage lenders and servicers, and these problems are even more exaggerated in weaker market cities. In the most devastated neighborhoods, some lenders do not even complete the foreclosure process or record the outcome of foreclosure sales because the cost of foreclosing exceeds the value of the property,” she said."

"In a financial report on the program that accompanied a watchdog agency audit on Wednesday, the Treasury had said the program had estimated losses related to loans, equity investments and asset guarantees of $41.4 billion in its first year of operation.

"As additional funds are disbursed, particularly for the housing initiative, the total cost of TARP is likely to rise," the Treasury said in a statement on Thursday. The administration has estimated the program, which it has extended to October of next year, will ultimately lose $141 billion."

 

.....................“The economy is now growing and growth seems to be gradually strengthening,” Treasury Secretary Timothy Geithner said in a Bloomberg Television interview last week.

Timothy Geithner

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Re: Daily Digest - December 10

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Re: Daily Digest - December 10

Regarding "20,000 British Bankers To Be Snared By 50% Tax".

It won't happen. It's a one year only event and the bankers will find a way to defer it.

Darling showed he has no grasp of what is happening, or what to do

DavidC.

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Re: Daily Digest - December 10

I am a Pennsylvanian.  That last article by Saxplayer is stimulating, to say the least.  The director of the retirement system, "There's no way to stop huge tax increases [to cover pension costs]." 

Like most other politicians and government-types, he's a jellyfish.  How about, "We must undo the 50% increase the state made to pensions back in '01 or '02 and look at additional cuts.  That increase was a pipe-dream, corrupt payoff that never had a chance to be paid for without huge tax increases."

As cuts are made to services for the poor and tax-hikes promoted, are we ever going to talk about the fact that we might have to cut $2 million dollar pensions for government-school teachers and administrators who worked 3/4s of the year for 30 or so years in a job with no real accountability for performance?

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Re: Daily Digest - December 10

LOL, Jkibbe

thanks for the laugh

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Re: Daily Digest - December 10

Fed Governor Says Lenders Flee Foreclosures in Devastated Neighborhoods

"Rather than foreclosing on defaulted mortgages in neighborhoods devastated by the economy, lenders are abandoning them because the cost of proceeding with foreclosure is greater than their value, Federal Reserve Governor Elizabeth A. Duke said yesterday.

 

Debt cancelation by any other name.....?

Mike

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Re: Daily Digest - December 10
Damnthematrix wrote:

Fed Governor Says Lenders Flee Foreclosures in Devastated Neighborhoods

"Rather than foreclosing on defaulted mortgages in neighborhoods devastated by the economy, lenders are abandoning them because the cost of proceeding with foreclosure is greater than their value, Federal Reserve Governor Elizabeth A. Duke said yesterday.

 

Debt cancelation by any other name.....?

Mike

 

I think the banks are forclosing but not officially taking posession leaving the home owner with the tax burden.  I've seen those stories as well.  The county officials show up, change the locks, etc. but the bank still hasn't taken possesion.  Crazy!

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Re: Daily Digest - December 10

http://www.smh.com.au/national/joyce-warns-of-us-armageddon-20091210-kmby.html

Joyce warns of US 'Armageddon'
MARK DAVIS AND PHILLIP COOREY
December 11, 2009
THE OPPOSITION finance spokesman, Barnaby Joyce, believes the United States
government could default on its debt, triggering an ''economic Armageddon''
which will make the recent global financial crisis pale into insignificance.

Senator Joyce told the Herald yesterday he did not mean to alarm the public but
there needed to be a debate about Australia's ''contingency plan'' for a
sovereign debt default by the US or even by a local state government.

''A default by the US means complete economic collapse around the world and the
question we have got to ask ourselves is where are we in that,'' Senator Joyce
said.

.....

Senator Joyce said the chances of a US debt default were distant but real and
politicians were not doing the electorate a favour by refusing to acknowledge
the risk.

He said the Federal Government's debt would push up interest rates and predicted
that some state Labor governments would not be able to repay their borrowings.

''The Federal Government has $115.7 billion in debt, Australian government
securities, notes and bonds on issue, and the states have another $170 billion
in debt.

''We have to ask whether the states have the capacity to repay that. I would say
in some instances they do not, particularly Queensland.''

Senator Joyce said that if the US recovered, global funds would flow back into
North America. ''There will be only one way Australia will be able to keep funds
here and that is by putting up interest rates, which will therefore bring real
costs back to households,'' he said.

''That is the first scenario, which is extremely bad for Australia. The worse
scenario is where the US doesn't repay its debt - the $2 trillion in debt it
owes to the Chinese, the $1 trillion in debt it has to the Japanese and the $US1
trillion in debt to others - and then we are really nailed.

''The outcome is a shift away from the US dollar as the international trading
currency and a shift to the Chinese yuan, and China becomes an immensely
powerful player overnight.

''It's the real financial crisis, and the real financial crisis will mean this
preamble we have just had pales into insignificance.''

Asked what sort of contingency plan he would advocate, Senator Joyce said it was
like trying to prepare for a tidal wave but the local economy should have more
self-reliance.

''Things you look for in that economic Armageddon are the capacity to feed
ourselves, the capacity to provide the fundamentals in medicines and basic
fundamental requirements for our nation.''

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Re: Daily Digest - December 10

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Re: Daily Digest - December 10

Revision of  $4.5 TRILLION

"Net worth for households and non-profit groups rose to $53.4 trillion from $50.8 trillion the prior quarter, a second consecutive gain, according to the Federal Reserve’s Flow of Funds report today in Washington. Revisions put the loss of wealth between the third quarter of 2007 and the first three months of this year at a record $17.5 trillion, compared with a previous estimate of $13 trillion."

 

.......I guess we always have to wait for the revisions, since on the first reports the Federal Reserve never can

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Re: Daily Digest - December 10

This is a good site for daily economic update videos.

http://www.goud.com/

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Re: Daily Digest - December 10

Recession Elsewhere, But Business Is Booming In China (M.W.)

For the first time, Chinese will buy more cars this year than Americans. Demand is so high that drivers put their names on long waiting lists for the most popular models. And it's not just cars. China is surpassing the US as the world’s biggest market, from cars to appliances, even desktop computers. "The Chinese market is on full tilt — booming is an understatement these days.”

Time to invest in oil perhaps?

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idoctor
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Re: Daily Digest - December 10

Jim Rogers has called most of this well IMHO.

http://www.cnbc.com/id/15840232?video=1355548632&play=1

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Re: Daily Digest - December 10

Great job, Saxplayer!  I feel like I get a more accurate picture of what's going on in the economy when I scan your posts than I would watching hours of "news" on tv.  Thanks!

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Re: Daily Digest - December 10
idoctor wrote:

Jim Rogers has called most of this well IMHO.

http://www.cnbc.com/id/15840232?video=1355548632&play=1

thx iDoctor, a super watch indeed. I wouldn't bet against Rogers - he is smart and has a ton of common sense - but I am amazed at how he is betting that this will play out in years. After reading up on the 1930s depression I am still of the impression that something is going to snap and break this think like a toothpick. Take care

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Re: Daily Digest - December 10
Quote:

I wouldn't bet against Rogers - he is smart and has a ton of common sense - but I am amazed at how he is betting that this will play out in years. After reading up on the 1930s depression I am still of the impression that something is going to snap and break this think like a toothpick.

I agree, more like months than years. We live in an exponential world. Things happen faster now than they did during the depression.

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Headless
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Re: Daily Digest - December 10

joemanc said:

 "I agree, more like months than years. We live in an exponential world. Things happen faster now than they did during the depression."

How about December 15th? Give or take a few days...?

We're at the damned if you grow, damned if you don't inflection point with regards to oil (the next time oil goes down, it will only be caused by global financial collapse). Oil down = The End; Oil up = The End.

And as the world financial system is now sufficiently and fatally composed of traders, we can expect enhanced chaos and sudden collapse as it is more generally  recognized that there are no winning  positions--long or short...

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Re: Daily Digest - December 10
idoctor wrote:

Jim Rogers has called most of this well IMHO.

http://www.cnbc.com/id/15840232?video=1355548632&play=1

"What are they going to do? Quadruple the debt? Print more money? We don't have any trees left! We're running out of trees!"  LOL :)

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idoctor
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Re: Daily Digest - December 10

"What are they going to do? Quadruple the debt? Print more money? We don't have any trees left! We're running out of trees!"  LOL :)

Can you say Easter Island LOL.....really we are in unchartered waters.....never have we seen so many different opinions from so many smart people that are 180 degrees apart. The whole world printing to out print each other??? Just can't be a good thing one would think. Gold must be headed to far reaching highs in the future.

I need a strong $ rally to drive the markets & PMs down (good for my shorts) then will add to these & the DBA.

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Johnny Oxygen
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Re: Daily Digest - December 10

Davos

I just finished reading The Great Crash of 1929 by Galbraith.

It's alarming to see that things never change its just the same lies and the same motivations. "The economy is fundamentally sound." was chanted then as now over and over again.

What I found most sobering and sad was at the end of Galbraiths book were felt that with the new institutions such as the FDIC, social security, unemployment benefits, etc, that this would mitigate any future disasters on the scale of the Great Depression from ever happening again. He goes on to say that he feels that Wallstreet knows they have a moral obligation and that the public won't tolerate reckless behavior from them in the future. All of this written in 1955. I think he would be shocked and saddened to see things now. But unfortunately I'm not.

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Re: Daily Digest - December 10
Johnny Oxygen wrote:

Davos

I just finished reading The Great Crash of 1929 by Galbraith.

It's alarming to see that things never change its just the same lies and the same motivations. "The economy is fundamentally sound." was chanted then as now over and over again.

What I found most sobering and sad was at the end of Galbraiths book were felt that with the new institutions such as the FDIC, social security, unemployment benefits, etc, that this would mitigate any future disasters on the scale of the Great Depression from ever happening again. He goes on to say that he feels that Wallstreet knows they have a moral obligation and that the public won't tolerate reckless behavior from them in the future. All of this written in 1955. I think he would be shocked and saddened to see things now. But unfortunately I'm not.

That was a good read! Totally agree.

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