Daily Digest

Daily Digest - December 28

Monday, December 28, 2009, 10:42 AM
  • Getting Corporate Money Out Of Politics Must Become #1 Priority
  • Do We Need A Value-Added Tax To Solve Our Long-Term Budget Deficits?
  • Record Number British Shoppers Hit Sales Before Tax Increase
  • The Worst Tax Ideas Of 2009
  • With Scant Jobs, Grads Create Their Own
  • Housing Market Oversupplied At 860,000 Units
  • Healthcare Bill Sausage Not Fit For Consumption
  • Phased Retirements Are Growing More Popular
  • Cell Phone Mania Causes Scramble For Airwaves
  • College Aid Ready For The Taking
  • China To Stay The Course On Currency
  • Ukraine Unable To Pay For Gas, May Have Supplies Cut Off
  • On the Edge: Max Keiser with Gail Tverberg from The Oil Drum
  • Investors See Farms As New Way To Grow Detroit
  • Amazon's Best-Selling '09 Books Focus On Sustainable Living
  • China Redirects Trillions Of Gallons Water To Arid North


Getting Corporate Money Out Of Politics Must Become #1 Priority (M.W.)

We have reached a breaking point where a consumer-based economy can no longer be sustained. But this has not led to any loosening of the grip that money has on our political system. If we don't force the political system out of that grip and restore democracy we will not be able to fix our economic system.

Do We Need A Value-Added Tax To Solve Our Long-Term Budget Deficits? (M.W.)

To the extent that tax burdens are to be increased, there are three options. Tax rates could be raised in the existing system, but that would be extremely inefficient. Tax reform might raise revenues more efficiently, but that is excruciatingly difficult politically. That leaves the possibility of a brand new tax and a value-added tax (VAT) is a very likely candidate.

Record Number British Shoppers Hit Sales Before Tax Increase (M.W.)

Stores reported high demand for so-called big ticket items such as televisions and washing machines as shoppers sought to benefit from the last few days of the lower rate of Value Added Tax. The tax was cut from 17.5 per cent to 15 per cent in November last year, but is due to go back to its former level on January 1.

The Worst Tax Ideas Of 2009 (M.W.)

As 2009 draws to an icy conclusion, Tax Vox is pleased to announce its Third Annual Lump of Coal Award for the worst tax ideas of the year. So many choices. So little time.

With Scant Jobs, Grads Create Their Own (M.W.)

Faced with an unemployment rate of 16% for 20- to 24-year-olds, a growing number of recent college and grad-school graduates are launching their own companies. This push toward entrepreneurship among young people is likely to continue as employers plan to hire 7% fewer graduates from the class of 2010 than they hired from the class of 2009, which saw a nearly 22% drop in hiring from the class before.

Housing Market Oversupplied At 860,000 Units (M.W.)

The overhang represents a direct contradiction to recent headlines: “Home Sales Exceed Forecasts” (Bloomberg) and “Sales Rise 7.4%” (WSJ). If you view the chart you see supply exceeds inventory averages by 32%. The cure rate for delinquent mortgages has fallen into the abyss of “rarely or never”, so you would be right to conclude that the government can only stop this hellfire by actually paying the monthly mortgage for homeowners who are behind.

Healthcare Bill Sausage Not Fit For Consumption (M.W.)

The biggest problem is there is not a single thing in the bill guaranteed to lower health care costs. We have to take it on faith that the plan will save money. It won't. However, when your goal is to get something (anything), passed it should be no surprise that the package is as flawed as it is.

Phased Retirements Are Growing More Popular (M.W.)

Amid the economic turmoil, interest in phased retirement is on the rise. These programs offer a way to ease rather than plunge into retirement.

Cell Phone Mania Causes Scramble For Airwaves (M.W.)

Wireless phone companies fear they're in danger of running out of room, leaving congested networks that frustrate users and slow innovation. So the wireless companies want the government to give them bigger slices of airwaves. "Spectrum is the equivalent of our highways. That's how we move our traffic. And the volume of that traffic is increasing so dramatically that we need more lanes. We need more highways."

College Aid Ready For The Taking (M.W.)

More families are struggling to cover the cost of a higher education.. But there is help out there. Families are requesting professional judgment reviews--a process that allows families to have their expected contributions recalculated based on what they're making currently -- as opposed to the prior year's household income, which is typically what aid and awards are based on.

China To Stay The Course On Currency (M.W.)

Prime Minister Wen said that the currency was facing growing pressure to appreciate, but he insisted that China was committed to keeping it stable, having virtually pegged it to the dollar since the global financial crisis worsened in the middle of last year.


On the Edge: Max Keiser with Gail Tverberg from The Oil Drum (Video) (joemanc)

A discussion of Peak Oil, credit, shortages, and Saudi Arabia.

Ukraine Unable To Pay For Gas, May Have Supplies Cut Off (M.W.)

Ukraine has cut back on purchases of gas since mid-December and appears to be facing serious cash problems. Ukraine has until January 11 to pay for gas, according to Russian gas supplier Gazprom, which has cut off supplies over unpaid bills in the past. Ukraine will find it hard to cover its next gas bill after the IMF turned down its request for a new loan tranche of 3.8 billion dollars.


Investors See Farms As New Way To Grow Detroit (M.W.)

The urban agricultural movement has grown nationwide, as recession-fueled worries prompted people to raise fruits and vegetables. Large gardens and small farms have cropped up in thriving cities and struggling Rust Belt communities. In Detroit, hundreds of backyard gardens and scores of community gardens have blossomed and helped feed students in at least 40 schools and hundreds of families. But it is the size and scope of Hantz Farms that makes this project unique.

Amazon's Best-Selling '09 Books Focus On Sustainable Living (M.W.)

Urban farming was a hot topic in books this year. Also popular: tales of people embracing a greener world, whether by building a windmill of spare parts as a 14-year-old boy did in Malawi or living without electricity in New York City.

China Redirects Trillions Of Gallons Water To Arid North (M.W.)

Scheduled to be finished in 2050, the plan to link China's four main rivers and redirect trillions of gallons of water from China's tropical southern mountains to its arid northern plains will have taken 100 years from conception to completion. At £37 billion, the project will cost more than twice as much as the Three Gorges Dam, delivering nearly 12 trillion gallons of water along three networks of tunnels and canals that will branch out into northern, eastern and central China.


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Re: Daily Digest - December 28

"Despite its 2009 rebound, the Dow Jones Industrial Average today stands at just 10520.10, no higher than in 1999. And that is without counting consumer-price inflation. In 1999 dollars, the Dow is only at about 8200 and would have to rise another 28% or so to return to 1999 levels. Using today's dollars and starting at 10520.10, the Dow would have to surpass 13460 to get back to its 1999 level in real, inflation-adjusted terms."

"If Morgan Stanley is right, the best sale of U.S. Treasuries for 2010 may be the short sale.

Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The surge will push interest rates on 30-year fixed mortgages to 7.5 percent to 8 percent, almost the highest in a decade, Greenlaw said.

Investors are demanding higher returns on government debt, boosting rates this month by the most since January, on concern President Barack Obama’s attempt to revive economic growth with record spending will keep the deficit at $1 trillion. Rising borrowing costs risk jeopardizing a recovery from a plunge in the residential mortgage market that led to the worst global recession in six decades. "

"It wasn't long ago that the US government had never even sold $100 billion worth of debt in a single week.

Now, in the final week of the year (and a shortened, holiday one at that), the Treasury is set to auction off a record-tying $118 billion"

"Overall, municipal borrowers sold $374 billion through the week of Dec. 14, 11 percent more than the $338 billion during the entire previous record year of 2007, based on weekly data, excluding variable-rate offerings, compiled by Bloomberg."

"HARRISBURG - Pennsylvania's budget woes resemble a neverending story.

State government enters a new year having major fiscal challenges with shortfalls in monthly revenue forecasts, a drop in federal stimulus aid and the Rainy Day Fund tapped out.

The national recession is taking its toll on Pennsylvanians. About one-half million state residents are jobless while 1.3 million depend on food stamps to tide them over."

"Nonetheless, occupancy has dropped an average of 10 percent, and hotel loans have begun falling into delinquency more rapidly than any other kind of commercial real estate debt.

At the same time, more hotels are opening, leading to an oversupply that is likely to keep room rates low for at least a year.

Five times more hotel loans are behind on payments this year than in 2008, according to mortgage data firm Trepp LLC.

In October, 8.7 percent were distressed, compared with 1.5 percent last year. The rate for commercial property is 4.8 percent, and for stores it is 4.5 percent."

"The New Jersey Transportation Trust Fund Authority has new-money bonding capacity this fiscal year and next, but by July 2011, the start of fiscal 2012, its entire $895 million annual appropriation will be needed to cover principal and interest payments on the TTFA's nearly $11 billion of existing debt."

"The city would then be eligible for a no-interest state loan so its basic services could continue.

When the city begins operating in the black again, the loan would be repaid.

The report indicates the city’s total financial deficit during the next five years will be about $160.5 million, of which $144.8 million is debt service and $15.7 million is general fund operations. "

"A New York speculator convinced ten different banks to give him 20 separate mortgages to buy 10 homes with no money down and he defaulted on every one.

Lloyd Varma stuck ten banks with loans for $6.4 million on houses across southern Queens, according to the New York Daily News. By the end of 2007, eight of the homes were in foreclosure. Today, banks own four of the houses, while the others are in the process of being foreclosed.

“There weren’t any checks on whether mortgages were affordable or viable, so subprime lenders were writing these mortgages because they could sell them to Wall Street,” said Josh Zinner of the nonprofit Neighborhood Economic Development Advocacy Project."

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Re: Daily Digest - December 28

This is about the article related to having a VAT in the United States.  It seems to me that unless some type of control is put in place to prevent an increase in entitlement programs or further government spending, all that would be doing is give politicians more money to waste.  I think it  would be the political equivalent of giving an alcoholic more alcohol.  Am I missing something here?

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Re: Daily Digest - December 28

Today, as I read James Howard Kunstler's weekly blog - special this week, as it is a forecast for next year - I noticed, that Chris was referenced in the review: http://kunstler.com/blog/2009/12/forecast-2010.html


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Re: Daily Digest - December 28

Hey Gaborzol-

   Thanks for the tip about Kunstler's "Forecast 2010" blog/article that references Chris.  It's great to see him getting that kind of recognition!



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Re: Daily Digest - December 28


Officials investigating why 187-ton windmill collapsed in Fenner

NOTE: why do people insiste on calling turbines "windmills"? Mills by definition "grind" (usually grains > flour) - Mike

By John Mariani / The Post-Standard

December 27, 2009, 12:50PM


Two men look at the damage done to a windmill on Buyea Road in Fenner today, after it had toppled in the middle of the night. No one was injured, and nothing other than the windmill itself was damaged.

Fenner, NY -- Marvin DeKing already was up and awake between 3 and 4 a.m. when he heard a loud bang.

"It sounded like thunder and lightning," said DeKing, of 5206 Buyea Road in this rural town five miles northeast of Cazenovia. But it wasn't until daylight that DeKing learned what had caused the noise: The 187 ton windmill across the road from his house had fallen over and lay sprawled in the cornfield in which it had stood.

The 200-foot-plus structure is one of 20 windmills that generate electricity at the Fenner Wind Farm operated by Enel North America.

Officials from Enel's headquarters in Massachusetts began arriving in Fenner around 3 p.m. to begin investigating the incident.

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Re: Daily Digest - December 28

"NEW YORK (Reuters) - Fannie Mae's gross mortgage portfolio shrank sharply in November while the delinquency rate on single-family loans it guarantees leaped in October, the government-controlled U.S. home funding company said on Monday.

The company said its mortgage investments fell at a 26.1 percent annual rate last month to $752.2 billion. Year-to-date, the portfolio has declined by an annual 4.9 percent from $787.3 billion at the end of last December.

Fannie Mae also reported an ongoing jump in the rate of late payments on single-family loans it guarantees, a problem that has eaten into its capital and forced borrowing from the U.S. Treasury.

In October, the most recent figures available, the conventional single-family serious delinquency rate rose 26 basis points to 4.98 percent. A year earlier, the rate was 1.89 percent."

"Spain's budget deficit for the first 11 months of the year has ballooned to 6.79 percent of gross domestic product -- five times last year's figure -- due to dipping tax revenues and the mounting costs of combating the economic crisis, the government said Monday.

The Economy Ministry said in a statement that the central government's deficit grew to euro71.52 billion ($103.02 billion), up from euro13.96 billion posted in November 2008.

The statement said net income had been euro150.75 billion, 13.9 percent less than in 2008, with tax-derived income at euro82.93 billion, 13.7 percent below last year.

Spain has tumbled from being one of Europe's top job-creators to having the region's highest unemployment, at 17.9 percent, in less than two years."


............Different year, same song

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Re: Daily Digest - Lord Monckton

"Difficult to read..." - of course it is ... his head is full of fluff.

If you want something a little more intelectually stimulating than Lord Monckton go and talk to a baboon in the zoo.

He missed his vocation earlier in life - I'm sure he could have won... Upper Class Twit...


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