Daily Digest

Daily Digest - December 31

Thursday, December 31, 2009, 11:59 AM
  • Move Your Money
  • Congressional Legislation Introduced By Barney Frank Pre-Approves $4 Trillion For Next Crisis
  • Forward with caution after exposing the Fed
  • PG&E Customer Revolt may threaten rollout of Obama's Smart Grid
  • Bankers get $4 Trillion Gift from Barney Frank
  • A Top A.I.G. Executive Quits Over Pay Limits
  • Chinese Dynamics Mean Exploding Global Inflation
  • Goldman Sachs denies betting against its clients on CDOs
  • What a Sovereign-Debt Crisis Could Mean for You 
  • U.S. Economic Disaster Worse Than Weimar or Zimbabwe
  • A Year on From Financial System Collapse, Something is Not Quite Right
  • How Our American Dream Unraveled
  • The Coming Great Inflation 
  • Predictions For 2010: Oil, Gold, Bonds, China And Stocks
  • Cities And States In The Next Big Crisis
  • Case-Shiller Now Predicts Serious Double-Dip Recession
  • The Return Of The Outsourced Job
  • Bankers Get $4 Trillion Gift From Barney Frank 
  • Top 10 Political Lines Of The Decade
  • Then Vs. Now: Amazing Price Changes Since 1999
  • Five Ways Apple's Tablet May Just Change The World
  • Cardiologists Sue Sebelius Over Medicare Fee Cuts
  • Chinese Bargain Shoppers Swarm Stores In Year-End Gold Rush
  • China resets terms of engagement in Central Asia
  • Iraq Signs Oil Deal With Russia And Norway
  • Can farming save Detroit?

Economy

Move Your Money (M.W.)

Last week, we started discussing what concrete steps individuals could take to help create a better financial system. Before long, the conversation turned practical, and with some help from friends in the world of bank analysis, a video and website were produced devoted to a simple idea: Move Your Money.

Congressional Legislation Introduced By Barney Frank Pre-Approves $4 Trillion For Next Crisis (jkibbe)

Barney Frank introduced H. R. 4173 purportedly "To provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding of insurance issues, to regulate the over-the-counter derivatives markets, and for other purposes."

Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.

Forward with caution after exposing the Fed (hucklejohn)

We suspect in the future we will have an interesting phenomenon and that is a fall in the dollar, pound and the euro, as gold moves higher as the only viable alternative. The world is going to be shocked when the euro collapses. It won’t happen overnight. It will take a year or two, but it has a good chance of happening. The US dollar cannot and will not for some time to come be a safe haven for wealth. That is because the dollar and the US economy have been deliberately destroyed.

PG&E Customer Revolt may threaten rollout of Obama's Smart Grid (joemanc)

Consumer backlash and cost concerns may cause delays in the nationwide rollout of “smart” utility meters at the center of the Obama administration’s $8 billion push to update the U.S. electricity grid.

PG&E Corp., owner of California’s largest utility, halted meter installations in Bakersfield, north of Los Angeles, after hundreds of customers complained that readings weren’t accurate. The meters, part of a so-called smart-grid initiative billed as clearing the way for more renewable-energy use, are designed to help consumers conserve power during periods of peak demand.

Bankers get $4 Trillion Gift from Barney Frank (joemanc)

Hunkering down by the fire, I snuggled up with H.R. 4173, the financial-reform legislation passed earlier this month by the House of Representatives. The Senate has yet to pass its own reform plan. The baby of Financial Services Committee Chairman Barney Frank, the House bill is meant to address everything from too-big-to-fail banks to asleep-at-the-switch credit-ratings companies to the protection of consumers from greedy lenders.

A Top A.I.G. Executive Quits Over Pay Limits (Samuel A.)

Best New Year Resolution Ever!

Chinese Dynamics Mean Exploding Global Inflation (pinecarr)

When China appreciates yuan in response to 2010 Food Crisis, it will do more than damage the US treasury market. More importantly, “cheap Chinese consumer goods” will stop being so cheap anymore. Prices will jump at Walmart and other retailers around the world, leading CPI numbers everywhere into the double digits.”

Goldman Sachs denies betting against its clients on CDOs (pinecarr)

Goldman Sachs has moved to justify spending millions of dollars short-selling some of the financial products it made and sold to clients.

What a Sovereign-Debt Crisis Could Mean for You (Ben Johnson)

Prof. Rogoff and his longtime collaborator Carmen Reinhart, at the University of Maryland, probably know more about the history of financial crises than anyone alive. The pair have just published their broad survey of financial crises, "This Time Is Different: Eight Centuries of Financial Folly" (Princeton University Press). In an era when most "analysts" rely on maybe 30 or 40 years' worth of financial history—and then only that of the U.S.—the authors' knowledge of financial crises and government bond defaults going back to the Spanish empire and before offers a richer perspective.

U.S. Economic Disaster Worse Than Weimar or Zimbabwe (pinecarr)

I'm afraid the U.S. dollar is going to be totally destroyed. The consequences of that are going to make everything that’s going on now pale by comparison. I mean, as bad as the consequences of propping up all these dinosaurs like General Motors and AIG and General Electric and Goldman Sachs, among many others, might be next through direct theft from the U.S. taxpayer are, that’s nothing compared to what will happen when things get really bad, which they haven’t yet.

A Year on From Financial System Collapse, Something is Not Quite Right (pinecarr)

Something's not right here. One year after the great collapse of our financial system, Wall Street is back on top while our politicians dither. As for health care reform, you're about to be forced to buy insurance from companies whose stock is soaring, and that's just dandy with the White House.

How Our American Dream Unraveled (M.W.)

After World War II, we believed that prosperity would create the ultimate good society. We were wrong.

The Coming Great Inflation (M.W.)

Economists and consumers are increasingly uneasy about the prospect of a continuous loss of purchasing power -- the very definition of inflation. "We have the most potentially inflationary policy I have ever observed in a developed country," said Alan Meltzer, a Fed historian and professor of political economy. "There is an unprecedented amount of latent inflation represented by the $2 trillion monetary base," said Michael Pento, senior market strategist. "Unless the Fed can sell those holdings and raise interest rates in a timely manner, intractable inflation will be in our future."

Predictions For 2010: Oil, Gold, Bonds, China And Stocks (M.W.)

We've all been hit with tons of 2010 forecasts over the last few months. While some forecasters aim to continue their winning streaks, others hope to salvage their reputations in 2010. Key prognosticators are paid to take their stand. So here they are:

Cities And States In The Next Big Crisis (M.W.)

It's a lagging indicator's lagging indicator. Many cities and states won't hit financial bottom until as much as three years from now, which will add thousands to unemployment rolls and slow the recovery locally.

Case-Shiller Now Predicts Serious Double-Dip Recession (M.W.)

“I’m worried. Everyone’s worried,” said Karl E. Case, the Wellesley College economist who helped design the housing index that provided fresh cause for alarm on Tuesday. “If prices sink 15% from here, and the 2008 and 2009 loans go bad, then we’re back where we were before — in a nightmare.” Mr. Case, who chided himself for his optimism over the summer, said he now believed “the probability is very high of a serious double dip like 1982.”

The Return Of The Outsourced Job (M.W.)

With the economy growing again—but unemployment stuck at double-digit levels—states and municipalities across the U.S. are scrambling to woo anyone with hiring plans—even if that means going, hat in hand, to the same bunch that have been responsible for hundreds of thousands of jobs going overseas.

Bankers Get $4 Trillion Gift From Barney Frank (M.W.)

To close out 2009, I decided to do something I bet no member of Congress has done -- actually read from cover to cover one of the pieces of sweeping legislation bouncing around Capitol Hill-- all 1,279 pages. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes-- more than twice what the Fed pumped into markets this time around.

Top 10 Political Lines Of The Decade (M.W.)

Today, we take a look at the most memorable political lines/statements/quotes of the decade, which shaped or cemented perceptions, were repeated endlessly, and impacted American politics.

Then Vs. Now: Amazing Price Changes Since 1999 (M.W.)

We've taken a look back to see how the years have affected the price of 50 things we buy, or wish we could buy. Thanks to inflation, it takes around $1.30 to buy what $1 bought in 1999.

Five Ways Apple's Tablet May Just Change The World (M.W.)

The iPad is on the way, and it just might reduce calling costs, cut your commute, and, to the delight of journalists everywhere, pull print media back from the brink Occasionally a new tech gadget comes along that really does shake up society. Apple's planned tablet may just be such a device.

Cardiologists Sue Sebelius Over Medicare Fee Cuts (M.W.)

Heart specialists filed suit against Secretary of Health and Human Services Kathleen Sebelius in an effort to stave off steep Medicare fee cuts for office-based procedures such as echocardiograms. The lawsuit charges that the government's planned cutbacks will force thousands of cardiologists to shutter their offices, sell diagnostic equipment and work for hospitals, which charge more for the same procedures. "What they've done is basically killed the private practice of cardiology."

Chinese Bargain Shoppers Swarm Stores In Year-End Gold Rush (M.W.)

Gold jewelry sales jumped more than 30 percent over the weekend in Beijing, as bargain shoppers swarmed the city's major jewelry stores on year-end promotions.

China resets terms of engagement in Central Asia (pinecarr)

Central Asian countries draw satisfaction that eventually Washington is no more trampling on the region's sensitivities and ethos. The fashion in which Uzbekistan taught an enduring lesson to the European Union and the US regarding mutual respect and equitable relationship was widely noted in the region's capitals.

But that is only part of the story.

Energy

Iraq Signs Oil Deal With Russia And Norway (M.W.)

Companies like Lukoil and Statoil are eager to snap up fields in Iraq to deepen their involvement in a country that appears poised to become a top-tier producer. Iraq has reserves of 115 billion barrels.

Environment

Can farming save Detroit? (Samuel A.)

Yes, a farm. A large-scale, for-profit agricultural enterprise, wholly contained within the city limits of Detroit. Hantz thinks farming could do his city a lot of good: restore big chunks of tax-delinquent, resource-draining urban blight to pastoral productivity; provide decent jobs with benefits; supply local markets and restaurants with fresh produce; attract tourists from all over the world; and -- most important of all -- stimulate development around the edges as the local land market tilts from stultifying abundance to something more like scarcity and investors move in.

15 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - December 31

"BEIJING (Dow Jones)--The U.S. dollar will continue to be a key reserve currency in the near term and the main asset in China's foreign-exchange reserves, but diversifying the country's reserves "appropriately" will help spread out risk, China's forex regulator said Thursday, reiterating Beijing's currency stance as the year closes."

"Leading hedge funds managed by the likes of Hayman Advisors, Greenlight Capital and Perella Weinberg Partners are betting on a collapse of the Japanese government-bond market, according to a report in The Wall Street Journal.

A meltdown of Japanese sovereign-debt market, which is largely dominated by domestic investors, "is going to happen; it's a question of when," said Hayman chief Kyle Bass. "

"WASHINGTON (Dow Jones)--Data released by the International Monetary Fund on Wednesday showed global official foreign exchange reserves rose to $7.52 trillion at the end of the third quarter from $7.18 trillion at the end of the second quarter.

Allocated reserves stood at $4.43 trillion, up from $4.27 trillion in the previous quarter. The amount of allocated reserves held in U.S. dollars stood at $2.73 trillion, an increase from $2.68 trillion in the second quarter but below the $2.81 trillion recorded in the third quarter of 2008.

The data showed U.S. dollar reserves account for 61.65% of allocated reserve holdings, a decline from 62.82% in the previous quarter.

Euro holdings edged up to 27.75% from 27.42%, while sterling holdings rose to 4.34% from 4.30% and yen holdings climbed to 3.23% from 3.12%. "

"The US will impose tough new duties on Chinese steel piping imports, raising tensions with its biggest trading partner and emerging geopolitical rival."

"After months of plunging revenues and weeks of budget battles, New York had a negative balance of $174 million in its general fund on Wednesday, with nearly $1 billion in bills owed by day's end. Every sign pointed to the account still being in the hole when 2010 begins. To fill the gap, New York will be forced to rely on its own version of overdraft protection by raiding its short-term investment pool -- a kind of statewide checking account. But that account itself is dangerously low, with only about $800 million on hand, compared with a balance in more flush years of as much as $16 billion."

"Despite issuing a total of $2.25 billion in short-term notes (in June and August), the state's cash position is weak. Repayment of the notes will contribute to an increase in the accounts payable backlog by $2 billion to $5.9 billion by the end of this fiscal year, equal to 21% of general fund resources. The state continues to manage its budgetary deficit by deferring payments to vendors and others. "

(From page 2)

"Currently, taxpayers contribute about $700 million to keep the retirement system solvent for about 80,000 retirees and 167,000 active employees. The counties and municipalities that participate in the system pay the employer share for the workers under their umbrella.

The unfunded liability of Mississippi's main pension system is about 33 percent, which basically means the state has 67 percent of the assets needed to fund the projected cost of promised benefits over a 30-year period. That gap has been steadily widening."

"New Jersey employers should expect to contribute more to the unemployment-fund tax in July -- which could force businesses to pay between $300 and $1,100 more per employee.

The increase is meant to raise $1 billion for the state unemployment fund.

The program funding the state's laid-off workers is broke. The tax meant to bolster it is not likely to come down for years, according to an online report by The Star Ledger."

"Today’s report showed the number of people who’ve use up their traditional benefits and are now collecting extended payments climbed by about 199,000 to 4.82 million in the week ended Dec. 12. "

"State revenues fell 11% in the third quarter of 2009 versus the same period a year ago with big drops in sales and income taxes, according to a report released by the Census Tuesday. The report shows state and local governments are only now catching the full brunt of the recession."

 

.........Happy New Year! 

Time to turn the computer off for a day (or two?), since I don't expect much in the way of news until Monday. Stay tuned for the 2010 headlines, as they should be even more "interesting" than the ones from 2009.

joemanc's picture
joemanc
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Re: Daily Digest - December 31

Happy New Year and Fasten Your Seatbelts. We have officially arrived at the 20-Teens.

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SagerXX
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Re: Daily Digest - December 31
saxplayer00o1 wrote:

.........Happy New Year! 

Time to turn the computer off for a day (or two?), since I don't expect much in the way of news until Monday. 

Saxplayer, thanks for stepping up and managing the DD on everyone's behalf.  I never miss a day!

Viva -- Sager

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Re:Move Your Money

I really like the "Move Your Money" idea.  It's a way for ordinary people to both express their anger and fix the "too big to fail" problem.  In a normal free market, that would work.  However, in this era of the government picking winners and losers, it would probably just result in more bailouts.

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Johnny Oxygen
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Re: Daily Digest - December 31

This is a great radio interview with Bob Chapman. He gives his views on gold and the collapse of the dollar.

http://www.goud.com/

 

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Brandon
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Re: Daily Digest - December 31

Regarding the "What a Sovereign-Debt Crisis Could Mean for You" link:

There is a section of the article that says this:

Prof. Rogoff's conclusions weren't cheerful:

• First, he sees no way we are going to avoid spiraling U.S. taxes. "We're going to be raising taxes sky high," he said. "The federal tax take probably needs to go up by about 20%." He thinks the top marginal rate, when you include Social Security and Medicare taxes, will hit 50%.

Conclusion for investors: For heaven's sake, take full advantage of tax shelters like your 401(k) and IRA and 529s for your children. You may even want to consider long-forgotten shelters, like variable annuities, that were so unfashionable when tax rates were low.

This is counter-intuitive to me.  If taxes are going to be raised sky high, then why would you want to defer paying them until later (when they are sky high)?  Seems to me that, if I was convinced taxes were going to skyrocket, that i would rather pay taxes now.  What have I missed?

Happy new year all.

-Brandon

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Damnthematrix
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Re: Daily Digest - December 31

Re "can farming save Detroit", bulldozing and trucking all the concrete and bitumen away and digging up all the building foundations, defunct water pipes, sewer pipes, electricity and telephone conduits, would get you back to bare dirt, but it is probably poisoned with lead and other industrial contaminants - old paint, pesticides....... etc etc.

The cost/energy of building a concrete framed building with bulk water usage at every level, is almost certainly more than the profit from growing cabbages for the next thousand years.

And in any case, isn't Detroit very cold with snow for 5 months of the year? Totally insane.

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GrouchoMarxist
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Re:Brandon #6

"If taxes are going to be raised sky high, then why would you want to defer paying them until later (when they are sky high)?  Seems to me that, if I was convinced taxes were going to skyrocket, that i would rather pay taxes now.  What have I missed?"

If taxes are sky-high, then why would you bother paying them at all? Especially when you have no spare money; especially if you have no representation or say in how those taxes are going to be (rather already have been) spent. Why would you be fool enough to pay those taxes in the full knowledge that the taxes are merely used to pay the interest on (non-existant) money that has been given to Wall Street (no strings) and loaned back to you at interest.

Or have I missed something?

Are you going to encourage your children to work hard, get those grades and then .... er... pay those taxes for Wall St.?  Are they going to teach their children the same?  For Wall St.? How many of them are likely to get jobs much better than burger-filling? How many of them are not going to get any job at all?  How many are going to get jobs for life at Ford, Chrysler or GM? (yet more recipients of government cash).

The unemployed and under-employed won't be paying any taxes - numbers rising.

Teetering companies in a collapsing econonomy won't be paying much in extra taxes - at least not without losing jobs to offset the cost.

Bankrupt states will only be laying people off - or like Arnie, handing out IOUs .

Any taxes paid by public employees is simply re-cycled Govt spending and therefore don't count. Seems that pretty much the whole of US manufacturing base has been shipped to the third world over the past 25 years - that base is not ever going to re-establish itself in the US again - at least not unless you can match Indian and Chinese labour rates and work conditions. Just about the only thing you have worth exporting is the financial acumen displayed by the Cnuts [sic] of Wall Street - and you've already done that.

King Cnute of England (d. 1035). Was a smart-ass viking king who ordered the tide to stay back.but the tide failed to stop. Cnut leapt backwards and said "Let all men know how empty and worthless is the power of kings..." 

Hmm - I won't hold my breath and wait for Ben, Hank, Tim and Larry say the same .... although Alan Greencorpse seems to be saying just that these days - maybe he sees his maker beckoning and wants to repent. He should know that the old Testament isn't big on redemption and forgivness - more gnashing of teeth, perpetual fire and eternal damnation.

If you listen to anyone listen to Gerald Celente. And before anyone mentions gold again - just remember that you can't eat it or cook with it.

If you think it's rough and dangerous outside well just settle back and enjoy a little genteel tennis....

GrouchyGroucho

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Re:Move Your Money

I also really like the "Move Your Money" idea. This needs to be a national movement. I think the effect on  the big banks would be like a mini-run, maybe more if there was great enough effort on the part of the general populace. These days, however, what with automatic deposits and debits it requires a lot more footwork to change banks than back in old Bedford Falls where one just emptied their account.        And I also want to thank  saxplayer for all his dedicated work to the daily digest. There is not a day that I miss it.  Happy New Year.

guardia's picture
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Re: Daily Digest - December 31
Damnthematrix wrote:

Re "can farming save Detroit", bulldozing and trucking all the concrete and bitumen away and digging up all the building foundations, defunct water pipes, sewer pipes, electricity and telephone conduits, would get you back to bare dirt, but it is probably poisoned with lead and other industrial contaminants - old paint, pesticides....... etc etc. The cost/energy of building a concrete framed building with bulk water usage at every level, is almost certainly more than the profit from growing cabbages for the next thousand years. And in any case, isn't Detroit very cold with snow for 5 months of the year? Totally insane.

I don't know, but there are already people growing vegetables in some areas in Detroit you know. They talk about this a bit in this video:

Some places seem all right

Samuel

guardia's picture
guardia
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Re: Daily Digest - December 31
Brandon wrote:

This is counter-intuitive to me.  If taxes are going to be raised sky high, then why would you want to defer paying them until later (when they are sky high)?  Seems to me that, if I was convinced taxes were going to skyrocket, that i would rather pay taxes now.  What have I missed?

I think they are referring to education.. For example, teach your children about how to avoid paying those taxes in the future, because the public system will NOT teach them, you can be sure of that!

Samuel

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Re: Daily Digest - December 31

Dire, gloomy forecast for the Dow in 2010 by Harry Dent on thestreet.com podcast 12/30/09

http://www.thestreet.com/podcasts/real-story.html

I like that he says that a big pullback is actually what we need, not a reinflated bubble.

Damnthematrix's picture
Damnthematrix
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Re: Daily Digest - December 31
guardia wrote:
Damnthematrix wrote:

Re "can farming save Detroit", bulldozing and trucking all the concrete and bitumen away and digging up all the building foundations, defunct water pipes, sewer pipes, electricity and telephone conduits, would get you back to bare dirt, but it is probably poisoned with lead and other industrial contaminants - old paint, pesticides....... etc etc. The cost/energy of building a concrete framed building with bulk water usage at every level, is almost certainly more than the profit from growing cabbages for the next thousand years. And in any case, isn't Detroit very cold with snow for 5 months of the year? Totally insane.

I don't know, but there are already people growing vegetables in some areas in Detroit you know. They talk about this a bit in this video:

 

Some places seem all right

Samuel

Yes I know.....  I was commenting on this extravagant piece of daydreaming..

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Will
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Re: Daily Digest - December 31

I moved my money in January 09 from Bank of America to a local credit union.  I thought more people would do the same in disgust over the too big to fail bailouts, but it obviously hasn't happened in any significant numbers so far.  Maybe this will pick up some momentum.  I hope so, as it really is the only way that we the people have any power to say we've had enough of the too big to fail model...

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presentmoment
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Posts: 57
Re:Move Your Money

The idea of moving money is excellent.  I moved some of my money from Wells Fargo to a local credit union last year, but I will move as much as I can except my mortgage.  This can be one of most effective ways to starve "the beasts".  Maybe, this should spread as a civic duty.   Our politicians don't listen to people and the financial industry will not reform themselves.   This seems only option people have.

Thanks Melissa for sharing this!

presentmoment 

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