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Daily Digest - Feb 16

Sunday, February 15, 2009, 4:42 PM
  • The Stimulus Plan: A Detailed List of Spending
  • New Zimbabwe minister blames bank
  • Irish government faces growing fears of debt default
  • Will Eastern Europe Trigger a Financial Meltdown?
  • Diluted to Oblivion, Dead Banks
  • London Bankers - So Sorry (Video)
  • Obama to Work on Executive-Pay Limits Amid Complaints
  • Can Wall St. Dodge Government Pay Limits?
  • More...
  • Bill Moyers & Simon Johnson on Pay Limits part at9:00+/- Minute Point (Repost)
  • Miami banker gives $60 million of his own to employees
  • Economic Collapse, Celente (Commercial Real Estate, Revolution, Change?, Authority, WWIII)
  • With Calif. lawmakers locked in, budget fix stalls
  • Charlotte in same predicament as Wall Street
  • Today's work "Package" (Humor)
  • Bank Failures, P/Year Chart
  • Bank Failure, Assets Chart
  • ABC Video, Nationalization (Pre-Privatization, Govt. Receivership)
  • Debt to Equity Ratio Calculator
  • Assets vs Derivatives

Economy 

The Stimulus Plan: A Detailed List of Spending

  • Accountability $323,500,000
  • Department of Agriculture - Office of Inspector General $22,500,000
  • Department of Commerce - Office of Inspector General $10,000,000
  • National Oceanic and Atmospheric Administration - Office of Inspector General $6,000,000
  • Department of Justice - Office of Inspector General $2,000,000
  • NASA - Office of Inspector General $2,000,000
  • More...(much, much more!)

Irish government faces growing fears of debt default

xxxFears are growing that Ireland could default on its national debt after the cost to insure against possible losses on loans to the country rose to record highs at the end of last week.zzzz

New Zimbabwe minister blames bank 

Zimbabwe's central bank is at the heart of the nation's economic decay, new Finance Minister Tendai Biti says, pledging to reform the institution. 

With its economy in free fall, Zimbabwe would need South African help to recover, the Movement for Democratic Change politician told Reuters.

Zimbabwe has the world's highest inflation rate, a virtually worthless currency, and 90% unemployment.
Meanwhile, MDC politician Roy Bennett is due to appear in court on Monday.

Mr Bennett, the MDC's treasurer, was arrested on Friday shortly before President Robert Mugabe swore in Mr Biti along with other new ministers of the country's unity government.

He is charged with conspiring to acquire arms with a view to disrupting essential services and remains in custody, his party said. 

Will Eastern Europe Trigger a Financial Meltdown? 

We've commented from time to time that a possible financial flashpoint is countries that got themselves in the same fix as Iceland , of having a banking sector engaged in the generally risky practices that were standard form recently, and was outsized relative to the economy (Willem Buiter also points out that that precarious situation is made worse by having your own teeny currency). 

While Ireland is in that position, a more immediate trigger for trouble is Eastern Europe. We've mentioned in particular the precarious position of Austria, which was a big lender to the region. As Ambrose Evans-Pritchard remarks in the Telegraph:
Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.

"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.

Mr Pröll tried to drum up support for his rescue package from EU finance ministers in Brussels last week. The idea was scotched by Germany's Peer Steinbrück. Not our problem, he said..... 

Diluted to Oblivion, Dead Banks 

The USCongressional display of big bankers this week was a pathetic spectacle. They admitted fault. They should have genuflected and thanked the USGovt and legal authorities for not being directed to prison quarters with orange jumpsuits. The spectacle was reminiscent of the ‘Godfather' movies when the Corleone family had the spotlight shined on them for involvement in organized crime. Even the London bankers had their more pathetic public apology session. Their failure was marred by ineptitude and purchase of fraudulent Wall Street bonds, more than criminal activity. See the video clip for a truly pathetic glimpse (CLICK HERE). The tragic reality is that both New York City and London are in the process of morphing into financial rust belts (not my original line). The Wall Street syndicates are not yet recognized as such criminal entities, but they are far more dangerous and deadly. Most syndicates do not kill their hosts. They killed the USEconomy. Heck, even the United Nations drug watchdog group has let the cat out of the bag, announcing that Western banks have been dependent upon narcotics trafficking money, but did not mention Afghanistan or New York City. 

*** Please Note: Market Cap Chart -The size comparison of bubbles, not their areas is what is being pointed out.

London Bankers - So Sorry (Video)

Obama to Work on Executive-Pay Limits Amid Complaints 

Feb. 15 (Bloomberg) -- The Obama administration pledged to work with Congress on implementing tough executive-pay limitations at banks that get federal bailout money as critics said the new restrictions in economic-stimulus legislation will prompt talented managers to leave. 

Can Wall St. Dodge Government Pay Limits? 

Now that the government has set a number of caps on Wall
St. pay packages, the question is whether the financial firms can get
around some of the rules. Certainly not. Congress has too much invested
in showing the public that it can bring down the people who tend to get
the most blame for the collapse of the of the credit system. 

Pay Limits 9:00+/- Minute Point

http://www.youtube.com/watch?v=YEvwhqoUjMI&eurl=player_embedded 

Miami banker gives $60 million of his own to employees 

Lots of bosses say they value their employees. Some even mean it. 

And then there's Leonard Abess Jr.

After selling a majority stake in Miami-based City National Bancshares last November, all he did was take $60 million of the proceeds -- $60 million out of his own pocket -- and hand it to his tellers, bookkeepers, clerks, everyone on the payroll. All 399 workers on the staff received bonuses, and he even tracked down 72 former employees so they could share in the windfall.  

Economic Collapse, Celente (Video)

With Calif. lawmakers locked in, budget fix stalls 

SACRAMENTO (AP) - One vote shy of a budget deal, California Gov. Arnold Schwarzenegger on Sunday pressured reluctant Republicans in the state Legislature to pass a complex plan to close the state's $42 billion deficit.
The head of the state Assembly locked the chamber down, forcing members to remain as the measure stalled in the Senate. 

Many California Republicans are unwilling to raise taxes to deal with the state's historic deficit, but at least three GOP voters were needed in each house for the two-thirds majority required to pass the budget.

"My guess is everybody's arm is getting twisted," said Sen. Dave Cox, a Republican who had been the among Democrats' best hopes for a deal. "My answer is no, and I'm not looking for additional information. I've made my decision." 

Charlotte in same predicament as Wall Street  

CHARLOTTE, N.C. (AP) - The financial collapse has hit the city known as Wall Street South.
For years, Bank of America Corp. (BAC) (BAC) and Wachovia Corp. (WB) helped turn Charlotte into a financial powerhouse. Now, the big banks have thrust it into the same predicament as the real Wall Street - the city is losing thousands of jobs and an unquantifiable amount of prestige. Residents who invested heavily in the banks have seen their wealth dissipate and lifestyles change radically. 

"It's kind of sad, disheartening because the banks have been the backbone of Charlotte for so long," said Carl Clayton, a 55-year-old retired school teacher.

The loss of so many bank jobs is causing upheaval in other industries. Consumers who have been laid off or fear being out of work are curtailing their spending, forcing restaurants and retailers to close - among them Morton's, a high-end steakhouse, and a 15-month-old Home Depot Design Center. Even some of the Charlotte's lively night clubs have shuttered their doors.

Charlotte in same predicament as Wall Street 

Bank Failures, P/Year Chart

Bank Failure, Assets Chart

ABC Video, Nationalization (Pre-Privatization, Govt. Receivership)

Debt to Equity Ratio Calculator  (Some Assets to Derivatives, not debt to equity) JPM 49, Citi 29 

Assets vs Derivatives

 

 

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20 Comments

Davos's picture
Davos
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Re: Daily Digest - Feb 16

15-feb-v1.jpg

RussB's picture
RussB
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Re: Daily Digest - Feb 16
"Signing statement" on exec pay ahead?
I am getting seriously sick of this stock market throwing a tantrum every time it doesn't get exactly what it's crying for, and these bankers, who as far as I'm concerned are lucky they're still physically at large, throwing their own tantrums about bonuses, parties, and now pay in general, and thinking they can just make threats.
It SICKENS me.
The whole gang is looking more and more like terrorists with every passing week, and yet everyone still wants to coddle them.
How much longer is it going to take before people start taking a more vigorous attitude toward all this?
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Ruhh
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Re: Daily Digest - Feb 16

[EDIT: Transcript of above video, I missed it originally]

Here's an interesting (Feb 11, 2009) but grim interview with Gerald Celente by Russia Today.

Speaks on 2009 depression, tax revolt, violence, Obama, and geopolitics and how to possibly get out of this mess.

http://www.russiatoday.com/guests/detail/2114

my favorite quote kinda reminds me of Chris's mindset

Quote:

RT: You have been trend casting since 1980, more than two decades. How
do you compile your information and why do you believe you’ve been so
spot-on most of the time?

G.C.: Current events form future
trends. You can see what’s going on. A great scholar said, “In today
already walks tomorrow.” So we say current events form future trends.
But when people look at the trends, they colour them or shade them with
their own ideology, their own beliefs. It’s what they want, what they
hope for, what they wish for.

I’m a political atheist.  I look at
things for the way they are, not the way I want them to be. I don’t
colour them or try to change them because of an ideology. The other
major factor that we do differently at Trends Research Institute than
anywhere else is we look at over 300 different categories on a global
basis. So we’re looking at economics, we’re looking at politics, we’re
looking at changes in the family, we’re looking at geopolitics. We’re
making connections between different fields continually.  

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It's official, Japan in DEPRESSION...

http://www.theage.com.au/national/japan-plunges-into-depression-20090216-899i.html?page=-1

Japan plunges into depression
Peter Martin
February 17, 2009
AUSTRALIA'S biggest and most reliable customer, Japan, has plunged
into depression, with federal Treasurer Wayne Swan now warning of the
worst global downturn "in our lifetimes".

Japan's economy shrank an annualised 12.7 per cent over the December
quarter, its worst result since the 1974 oil shock.

Japan is by far Australia's biggest export customer, accounting for
one in every five container ships that leave Australia's shores.

The new figures put it among the worst-hit casualties of the global
crisis.

The annualised contraction of 12.7 per cent, or 3.3 per cent in
quarterly terms, dwarfs those of the United States and Europe and is
much worse than anything that happened to Japan during its so-
called "lost decade" of recession in the 1990s.

The collapse in growth fits the profile of a depression — a deep
recession in which annual GDP falls by 10 per cent or more.

Australia's other big customer, China, has had its growth rate almost
halved from 13 to 6.8 per cent.

"These figures reveal just how serious the global recession is
becoming," Mr Swan said. "They follow on the heels of the worst
contraction in the euro area since records began in 1980.

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Re: Daily Digest - Feb 16

Silulus Humor

Sometime this year, taxpayers will receive an Economic Stimulus Payment. This is a very exciting new program that I will explain using the Q and A format: 


Q. What is an Economic Stimulus Payment? 
A. It is money that the federal government will send to taxpayers. 

Q. Where will the government get this money? 
A. From taxpayers. 

Q. So the government is giving me back my own money? 
A. No, they are borrowing it from China. Your children are expected to repay the Chinese. 

Q. What is the purpose of this payment? 
A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy. 

Q. But isn’t that stimulating the economy of China ? 
A. Shut up. 

Below is some helpful advice on how to best help the US economy by spending your stimulus check wisely: 

If you spend that money at Wal-Mart, all the money will go to China. 
If you spend it on gasoline it will go to Hugo Chavez, the Arabs and Al Queda 
If you purchase a computer it will go to Taiwan. 
If you purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala (unless you buy organic). 
If you buy a car it will go to Japan and Korea. 
If you purchase prescription drugs it will go to India 
If you purchase heroin it will go to the Taliban in Afghanistan 
If you give it to a charitable cause, it will go to Nigeria. 

And none of it will help the American economy. We need to keep that money here in America. You can keep the money in America by spending it at yard sales, going to a baseball game, or spend it on prostitutes, beer (domestic only), or tattoos, since those are the only businesses still in the US. 

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Damnthematrix
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navigating the collapse

Russia's rich list culled by financial crisis

By Moscow correspondent Scott Bevan

http://www.abc.net.au/news/stories/2009/02/17/2493183.htm?section=justin

The number of billionaires in Russia has more than
halved in the past year, according to a rich list collated by a
financial magazine.

Finans magazine prepares an annual Russian rich list, which says
even the country's richest man for the year has lost an estimated $US6
billion.

The magazine's chief editor Oleg Anisimov says the economic crisis has shaken the top of the money tree.

"Last year, we calculated there were 101 US-dollar billionaires, and
in this rating Russia was second only to the United States. Now there
are only 49 left," he said.

Finans estimates that last year's richest man, Oleg Derepaska has had more than $US30 billion wiped off his fortune.

He is number eight on the latest survey with just under $US5 billion.

This year's number one is Mikhail Prokhorov, with just over $US14 billion. Last year he was estimated to be worth $US20 billion.

Financial analysts say a lot of empires were built by borrowing and
now their creators are facing enormous debts while the value of their
assets is shrinking.

The Government has responded to the cries of help from some of Russia's richest businesspeople, by throwing out financial lifelines worth tens of billions of dollars.

That help may well come at a price, with analysts saying the state
could take back more and more pieces of the tycoons' corporate pies and
power as repayment.

But Andrei Yakovlev, from Moscow's State University's Higher School
of Economics, says the Government's support has not been aimed at just
a few wealthy individuals.

"In my opinion, the initial idea of the Government in this case was
not support for these concrete people, but to support these big
enterprises, because bankruptcy could lead to social problems," he said.

"Under such conditions, the Government prefer to pay money."

With forecasts suggesting up to 7 million Russians may be out of
work by the end of this year, Professor Yakovlev says not too many will
be thinking about the plight of those on the rich list.

"Ordinary Russian citizens are thinking about other things," he said.

"Their own salaries, their future, but not about Russian billionaires."

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Re: Daily Digest - Feb 16

DAVOS DEBT & DENIAL

In an age of illusion, the guise of truth is often heresy

Darryl Robert Schoon

"Bucky’s word “Grunch” is an acronym for gross (GR) universal (UN) cash heist (CH)

and the word Giant is a reference to modern corporations and those who control them. On

page 18, Bucky recounts a conversation with one of the “giants”, a friend of his who was

a scion of the JP Morgan family.

He said to me, “Bucky, I am very fond of you, so I am sorry to have to tell you that you

will never be a success. You go around explaining in simple terms that which people have

not been comprehending, when the first law of success is, “never make things simple

when you can make them complicated”

http://www.drschoon.com/articles/DavosDebtAndDenial.pdf

DRS's Website

http://www.drschoon.com/

Greg

 

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Re: Daily Digest - Feb 16

Re: The Stimulus Plan: A Detailed List of Spending

Fossil energy research and development            $3,400,000,000

Perhaps I don't understand the big picture, but that seems like it should be a private sector investment..............like exxon mobil and chevron, et al, IIRC, they are not cash strapped, unless it's all gone out in bonuses..

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Re: Daily Digest - Feb 16: bill moyers/simon johnson

 I watched the Bill Moyers/Simon Johnson clip again and noted a web site shown at the end:

http://baselinescenario.com

Some interesting stuff there, in particular:

http://baselinescenario.com/2009/02/08/baseline-scenario-2909/

Probably not too many surprises to readers of this site, but well done with a lot of references. 

 

 

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Re: Daily Digest - Feb 16

interesting how it takes Russia Today to give Celente air time...our MSM is utterly destructive in it's misguided focus on entertainment. Sometimes, people really need to hear it like it is. I love hearing Celente because he is not afraid to level with everyone about just how bad things are.

Great to hear Celente flat out say that "to use 1930's models to get us out of this is stupid"

Also, very entertaining to hear him mock our politicians. I think it's time that we take a real look at our politicians and we actually judge both parties by the same standards. It's time we were honest with ourselves the way Celente is direct with us.

Great videos. Thank you, Davos

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Bad News From America’s Top Spy
Bad News From America’s Top Spy

By Chris Hedges

February 16, 2009 "Truthdig" -- - We
have a remarkable ability to create our own monsters. A few decades of
meddling in the Middle East with our Israeli doppelgänger and we get
Hezbollah, Hamas, al-Qaida, the Iraqi resistance movement and a
resurgent Taliban. Now we trash the world economy and destroy the
ecosystem and sit back to watch our handiwork. Hints of our brave new
world seeped out Thursday when Washington’s new director of national
intelligence, retired Adm. Dennis Blair, testified before the Senate
Intelligence Committee. He warned that the deepening economic crisis
posed perhaps our gravest threat to stability and national security. It
could trigger, he said, a return to the “violent extremism” of the
1920s and 1930s.

It turns out that Wall Street,
rather than Islamic jihad, has produced our most dangerous terrorists.
You wouldn’t know this from the Obama administration, which seems
hellbent on draining the blood out of the body politic and transfusing
it into the corpse of our financial system. But by the time Barack
Obama is done all we will be left with is a corpse—a corpse and no
blood. And then what? We will see accelerated plant and retail
closures, inflation, an epidemic of bankruptcies, new rounds of
foreclosures, bread lines, unemployment surpassing the levels of the
Great Depression and, as Blair fears, social upheaval.

The United Nations’
International Labor Organization estimates that some 50 million workers
will lose their jobs worldwide this year. The collapse has already seen
3.6 million lost jobs in the United States. The International Monetary
Fund’s
prediction
for global economic growth in 2009 is 0.5 percent—the worst since World
War II. There are 2.3 million properties in the United States that
received a default notice or were repossessed last year. And this
number is set to rise in 2009, especially as vacant commercial real
estate begins to be foreclosed. About 20,000 major global banks
collapsed, were sold or were nationalized in 2008. There are an
estimated 62,000 U.S. companies expected to shut down this year.
Unemployment, when you add people no longer looking for jobs and
part-time workers who cannot find full-time employment, is close to 14
percent.

And we have few tools left to
dig our way out. The manufacturing sector in the United States has been
destroyed by globalization. Consumers, thanks to credit card companies
and easy lines of credit, are $14 trillion in debt. The government has
pledged trillions toward the crisis, most of it borrowed or printed in
the form of new money. It is borrowing trillions more to fund our wars
in Afghanistan and Iraq. And no one states the obvious: We will never
be able to pay these loans back. We are supposed to somehow spend our
way out of the crisis and maintain our imperial project on credit. Let
our kids worry about it. There is no coherent and realistic plan, one
built around our severe limitations, to stanch the bleeding or
ameliorate the mounting deprivations we will suffer as citizens.
Contrast this with the national security state’s strategies to crush
potential civil unrest and you get a glimpse of the future. It doesn’t
look good.

“The primary near-term
security concern of the United States is the global economic crisis and
its geopolitical implications,” Blair told the Senate. “The crisis has
been ongoing for over a year, and economists are divided over whether
and when we could hit bottom. Some even fear that the recession could
further deepen and reach the level of the Great Depression. Of course,
all of us recall the dramatic political consequences wrought by the
economic turmoil of the 1920s and 1930s in Europe, the instability, and
high levels of violent extremism.”

The specter of social unrest was raised at the U.S. Army War College in November in a monograph [click on Policypointers’ pdf link to see the report] titled “Known Unknowns: Unconventional ‘Strategic Shocks’ in Defense Strategy Development.” The
military must be prepared, the document warned, for a “violent,
strategic dislocation inside the United States,” which could be
provoked by “unforeseen economic collapse,” “purposeful domestic
resistance,” “pervasive public health emergencies” or “loss of
functioning political and legal order.” The “widespread civil
violence,” the document said, “would force the defense establishment to
reorient priorities in extremis to defend basic domestic order and
human security.”

“An American government and
defense establishment lulled into complacency by a long-secure domestic
order would be forced to rapidly divest some or most external security
commitments in order to address rapidly expanding human insecurity at
home,” it went on.

“Under the most extreme
circumstances, this might include use of military force against hostile
groups inside the United States. Further, DoD [the Department of
Defense] would be, by necessity, an essential enabling hub for the
continuity of political authority in a multi-state or nationwide civil
conflict or disturbance,” the document read.

In plain English, something
bureaucrats and the military seem incapable of employing, this
translates into the imposition of martial law and a de facto government
being run out of the Department of Defense. They are considering it. So
should you.

Adm. Blair warned the Senate
that “roughly a quarter of the countries in the world have already
experienced low-level instability such as government changes because of
the current slowdown.” He noted that the “bulk of anti-state
demonstrations” internationally have been seen in Europe and
the former Soviet Union, but this did not mean they could not spread to
the United States. He told the senators that the collapse of the global
financial system is “likely to produce a wave of economic crises in
emerging market nations over the next year.” He added that “much of
Latin America, former Soviet Union states and sub-Saharan Africa lack
sufficient cash reserves, access to international aid or credit, or
other coping mechanism.”

“When those growth rates go
down, my gut tells me that there are going to be problems coming out of
that, and we’re looking for that,” he said. He referred to “statistical
modeling” showing that “economic crises increase the risk of
regime-threatening instability if they persist over a one to two year period.”

Blair articulated the newest
narrative of fear. As the economic unraveling accelerates we will be
told it is not the bearded Islamic extremists, although those in power
will drag them out of the Halloween closet when they need to give us an
exotic shock, but instead the domestic riffraff, environmentalists,
anarchists, unions and enraged members of our dispossessed working
class who threaten us. Crime, as it always does in times of turmoil,
will grow. Those who oppose the iron fist of the state security
apparatus will be lumped together in slick, corporate news reports with
the growing criminal underclass.

The committee’s Republican
vice chairman, Sen. Christopher Bond of Missouri, not quite knowing
what to make of Blair’s testimony, said he was concerned that Blair was
making the “conditions in the country” and the global economic crisis
“the primary focus of the intelligence community.”

The economic collapse has
exposed the stupidity of our collective faith in a free market and the
absurdity of an economy based on the goals of endless growth,
consumption, borrowing and expansion. The ideology of unlimited growth
failed to take into account the massive depletion of the world’s
resources, from fossil fuels to clean water to fish stocks to erosion,
as well as overpopulation, global warming and climate change. The
huge international flows of unregulated capital have wrecked the global
financial system. An overvalued dollar (which will soon deflate), wild
tech, stock and housing financial bubbles, unchecked greed, the
decimation of our manufacturing sector, the empowerment of an
oligarchic class, the corruption of our political elite, the
impoverishment of workers, a bloated military and defense budget and
unrestrained credit binges have conspired to bring us down. The
financial crisis will soon become a currency crisis. This second shock
will threaten our financial viability. We let the market rule. Now we
are paying for it.

The corporate thieves, those
who insisted they be paid tens of millions of dollars because they were
the best and the brightest, have been exposed as con artists. Our
elected officials, along with the press, have been exposed as corrupt
and spineless corporate lackeys. Our business schools and intellectual
elite have been exposed as frauds. The age of the West has ended. Look
to China. Laissez-faire capitalism has destroyed itself. It is time to
dust off your copies of Marx.

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Re: Daily Digest - Feb 16

Loved the "Package" video.   It took me a second to realize Obama was being depicted as a phallus between the House of Rep. and the Senate ( I can be a little slow sometimes).  Very accurate!

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News From the Norththe North

News From the
North

The Daily Reckoning Australia

Los
Perros de San Jose, Nicaragua - Melbourne,
Australia

Tuesday, 17 February 2009

 

From Dan Denning at the Old Hat Factory:

The two biggest stories affecting Australia this morning come from neighbours
in the North, Japan and China. In Japan, GDP contracted at an annualised pace
of 12.7% in the fourth quarter. It's the worst quarterly performance for the
Japanese economy since the oil shock of 1974.

The oil shock caused a contraction in trade by putting up the global price of
energy. Today, energy is comparatively cheap. But the whole financial system
that developed following the oil shock is now falling apart. Trade is
contracting. Interdependencies between national economies are being exposed,
strained, and sometimes broken.

How many States will fail in the coming years? Mexico? Pakistan? China?
America?

The Japanese import a lot of Australian thermal coal and iron ore. They use
that energy and that steel making materiel to export finished goods to China
and America. An-export based economy probably isn't going to fare all that well
in a world depression.

Keep in mind, Japan's public debt-to-GDP ratio is 180%. Ever since its own
bubble in stocks and real estate popped in 1989, the government has tried to
step in and restore consumer confidence, spending what household's won't.

It hasn't worked, of course. And the whole structure of the Japanese economy is
oriented to exports and competitive currency devaluation. The local population,
where more people die than are born, is shrinking. What can the government
possibly do to reverse a demographic trend like that?

Japan's slow-motion, demographic, and Keynesian decline is a problem for
Australia. But there is a more urgent issue to deal with in the pursuit of
Australian resource assets by the Chinese. Is it good? Is it bad? Is it
inevitable?

Distressed Oz Minerals has accepted a $2.6 billion takeover bid by Chinese
state-backed metals trader Minmetals. Oz has been
unable to strike a deal with its bankers, who are otherwise preoccupied with
their own survival. As a result, part-ownership of the world's largest zinc
mine in Queensland and the promising gold and copper mine at Prominent Hill in
South Australia will be shared with Australia's strategic partners in China.

Nobody wants to own or operate zinc or nickel mines at the moment, apparently.
That is probably the single best time to be a buyer. You get a good price.

But wait! We interrupt your regularly scheduled daily dose of scepticism and
humour with a complaint. It's one we often get.

"It's easy to criticize everyone else. But what's your plan!"

First off here's an important point: the Obama/Geithner
plan is a plan that prevents plans. It doesn't cut government spending. It just
spread the wealth around on things that don't fundamentally change America's
position in the world (which is not good).

Second, the Obama/Geithner plan actually prevents
anyone else from making plans! Because it doesn't address the insolvency of
America's (and the world's) banks, it means no other entrepreneurs can make
plans themselves, because they can't get money from banks...who aren't lending
because they don't want to sell their bad assets at a discount when they think
they can get the government to pay full price later!

It's a plan that perpetuates the miserable status quo. But then, that's what
stability is, isn't it! You freeze things just as they are, believing that a
lack of movement is actually progress. It's nuts.

What we need is more instability. The world can't move to a new production
possibilities frontier until we move away from the old, failed, field of our
last boom. The Western world needs a giant intervention, where it admits to
itself that the thirty-year flirtation with financial capitalism produced a
boom on Wall Street and a fictitious housing boom that didn't leave households
or national economies any wealthier.

It was a giant misallocation of resources based on the vague idea that you can
spend your way to prosperity and enjoy life on credit. That's not the world we
live in. So the sooner we get past trying to "stabilise it" the
better.

In that spirit, we present our plan to save the world. The plan is in no
particular order. And all of its premised on one big important action to take
at all costs: abolish the Federal Reserve and let there be a free market for
money and a natural rate of interest. After that, the following steps should be
taken:

1. Reduce the wages of all elected officials to the national median income. If
they mismanage the nation's finances, laws, and future, they certainly
shouldn't be compensated for exemplary performance. Public service shouldn't be
a lucrative career. Throw them in prison for a year if they can't balance the
budget.

2. No more raising the statutory debt level. You can keep rewriting the law to
allow yourself to spend more money you don't have.

3. Declare a one-year moratorium on payroll taxes. The most important stimulus
check anyone gets is from his employer. Let people keep their money and they'll
spend it in the way they want. Get government out of your pocket.

4. In the spirit of "bold experimentation," allow cities and states
to establish real "free enterprise zones" where small and large
businesses enjoy a five-year tax moratorium on new investment and profits. Do
you want to see high-wage manufacturing jobs return to Western shores that are
accompanied by high rates of capital investment and employment and income
growth? Then let Detroit be more like Hong Kong. Turn Baltimore into Taiwan.

5. Allow R&D tax credits for green technology. The private sector will be
far more willing to fund green investment than the government, if the
incentives are there. So change them.

6. Let businesses expense capital expenditures rather than depreciate them over
time. This is what FedEx founder Fred Smith advocates. He reckons it will
increase long-term business investment and get us away from a culture of
chronic short-term financial and earnings management, which has proven a
disaster for shareholders.

7. For America, bring home American troops from Japan, Germany, Okinawa, South
Korea and the dozens of other countries they're in. It's not popular in those
countries. America can't afford it. And if the world doesn't want it, then
America shouldn't be trying to export security or a set of political beliefs.
Let people take responsibility for defending themselves and stop intervening in
their lives. Enough is enough.

8. The government must stop making promises it can't keep and naive taxpayers
should grow up and realise these promises can't be met except through theft and
redistribution, both of which make an economy poorer. Let's admit that that
State-sponsored retirement benefits will have to be means tested and the
retirement age will have to be raised. Is it fair to change the rules on people
who've invested their whole life believing they'd be able to retire? No. But
life is not fair. The world has changed. We can either admit it and try to
adjust in a humane way so that the social safety net that's there doesn't
collapse altogether. Or we can stubbornly cling to the notion that it'll all be
right. It won't. It isn't. And we had better be realistic about it soon, or we
are doomed.

9. Let's finally adopt a balanced budget amendment and make it illegal for
Congress or national governments to run deficits. Economists will say it is
unrealistic and that the government needs the flexibility to borrow and spend
money when the private sector and households can't. But all this has ever
gotten us is more wars and the long-term expansion of government programs which
we now know we can't pay for and generally don't work very well.

10. End the costly, ineffective, and militarising drug wars that put local
police at war with ordinary people. The drug war fills the legal system with petty
offenders and turns civilized society into a police state. Give up on trying to
coerce people into a drug-free life. Persuade, don't legislate. Punish
behaviour, not lifestyle. If you de-criminalise drug possession (not abuse i.e.
driving) the price will come down and the incentive to commit violent crime to
get a piece of the drug trade will be gone.

There are other issues like education, healthcare, and Steven Segal films. But
those are beyond the scope of this plan. If you have your own plan, send it
along to [email protected]ng.com.au
.

Also, we recommend reinstituting a poll tax and or an IQ requirement for
voting. Either that, or you must actually pay taxes (rather than being a net
recipient of government benefits) in order to vote. Otherwise, the population
is going to keep voting itself money it doesn't have.

See? How easy is that?

 

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
People's Republic of Oz

Commentary

7:45 AM, 17 Feb 2009

 Alan
Kohler http://www.businessspectator.com.au/bs.nsf/Article/Peoples-Republic-of-Oz-$pd20090217-PBRWY?OpenDocument&src=ei

People's
Republic of Oz

The
idea of Federal Treasurer Wayne Swan refusing permission for China Minmetals to buy Oz Minerals is quite laughable.

China is the
buyer of first and last resort for the world’s growing band of bankrupt
mining companies. The alternative for Oz Minerals is receivership – and
quite soon, apparently.

As with Rio
Tinto, the only alternative buyer is BHP Billiton, which is close to being the
only other entity in the world with a solvent balance sheet. But BHP’s
balance sheet is a little less solvent than China’s and its ambitions
therefore a little more tempered.

Australia,
though, is in no position to refuse China’s cash: a steady flow of
foreign investment was necessary even in the best of times because of
Australia’s persistent current account deficit; in the worst of times it
is even more necessary.

But the idea of
a communist government prowling the world picking up distressed capitalist
businesses is pretty amusing in itself, let’s face it.

China has the
world’s largest foreign exchange reserves because for a decade or more it
has been holding down the value of its currency to improve the competitiveness
of its exports.

US Treasury
Secretary Timothy Geithner mentioned this the other
day, but at the G7 finance ministers’ meeting on the weekend he thought
better of it, and along with everyone else at the G7 “softened” his
views on this most sensitive issue.

In any case,
China is now on the acquisition trail. For example Minmetals
chief Zhou Zhongshu said last week that his company
would be pursuing overseas mergers and acquisitions to “shore up
growth”. Two weeks ago he bought a copper and gold mine in Peru; this week
it’s the Prominent Hill mine in Australia via the takeover of Oz
Minerals.

Exactly how
this next phase of this strange country’s development plays out is hard
to imagine.

How will
reporting lines work? Is there any such thing as corporate governance? Is Zhou Zhongshu in charge, and to whom does he report? How does
his incentive scheme work – on return on equity or something else
entirely?

Zhou’s
message on the company website says China Minmetals
is: “...under the care of the Central Committee of the Communist Party of
China and the State Council as well as the correct leadership of the
State-owned Assets Supervision and Administration Commission of the State
Council".

Does this mean
Oz Minerals will also be under the care of the Central Committee of the
Communist Party of China, and if so – what on earth does that mean?

Japan’s
Zaibatsu system was hard enough to get one’s mind around in the 60s and
70s when they were on the acquisition trail for Australian resources, but
takeover by communism? It’s too much.

Obviously Zhou Zhongshu and his counterpart at Chinalco,
Xiao Yaqing, are rather different kids
of communists to, say, Mao Tse Tung – they are
ambitious and entrepreneurial capitalists, or something.

But all of the
money for their acquisitions comes from the China Development Bank which,
according to its website, is under the “direct leadership” of the
State Council.

How the money
finds its way to China Minmetals and Chinalco is, of course, completely unknown. Presumably it
is simply new equity from the sole shareholder, although Minmetals
is apparently listed in both Hong Kong and Shanghai.

Anyway, come on
down Zhou Zhongshu and Xiao Yaqing
– we need your yuan, and we don’t care
where it comes from.

Saying
“yes” will be one of the easiest decisions Wayne Swan will make
this year.

Goal Digger's picture
Goal Digger
Status: Bronze Member (Offline)
Joined: Nov 17 2008
Posts: 39
Civil Unrest on the Horizon

For those of us wondering when it would begin:  http://michellemalkin.com/2009/02/16/from-the-boston-tea-party-to-your-neighborhood-pork-protest/

 While hardly "unrest" like some expect, it is at least a sign that the masses are awakening.  It only took an $800,000,000 "stimulus" bill rammed through Congress (so Nancy Pelosi could get on a plane for Italy) for the awakening to begin.  Hopefully there will be a nice a turnout in Denver today when BHO signs the bill into law and the spending spree begins anew.

Mike Pilat's picture
Mike Pilat
Status: Platinum Member (Offline)
Joined: Sep 8 2008
Posts: 929
Re: Daily Digest - Feb 16

Goal Digger: Great article! It's good to see that some Americans really care about this.

Also, not to push political agendas, but Ron Paul has been doing Tea Party fundraisers for a few years now. See the old news here: http://www.boston.com/news/nation/articles/2007/12/17/ron_paul_backers_s...

I remember very distincly one such call I made to my senator's office last fall. I left a message with the kid on the other end and flat out told him that the bailout Plunder Packages going on in our nation now are similar to the taxation without representation that fueled the American Revolution. No one wants violent results, but it is high time that Washington took notice of what the people actually want rather than telling us that they know better and are taking care of us. The passage of the initial bailout last fall was a complete failure of democracy as 90%+ of the population opposed it vehemently.

In light of Tea Parties, I hope everyone can ponder that thought: How in the world can we have a bailout passed when such an overwhelming majority opposes it? Is this a democratic republic or a despotic oligarchy?

If politics is "too srewed up to care about" then we have already relinquished our influence over the system and have committed ourselves to a future at others' hands. As I've stated before, I don't plan on shackling myself to the Titanic, but here and now I plan on doing what I can to eliminate ignorance and complacence as the dominant m.o. of our people. My 'hope' for the future rests in an educated and moral public.

 Mike

 

CB's picture
CB
Status: Gold Member (Offline)
Joined: Mar 18 2008
Posts: 365
Re: Daily Digest - Feb 16

As the stimulus package seems to be merely a way for the US gov to be seen to be doing something - but fails to address the underlying structural problems - it just buys a little time - what do you suppose Is the plan? Much of the conversation here focuses on the US problem of an insolvent banking system - but the problem seems to me to be fundamentally international in nature. The international financial system is in the process of collapsing - what is Japan, the worlds 2nd largest economy, going to do? It's finance minister was accused of being pubically drunk and has resigned... was this just indiscression? or a response to too much knowledge? I don't see a way out of the mess short of fundamental restructuring of the international banking system, radical change, but the chances of achieving concensus among the the principles - given their self-interested positions - seems remote. But I think there must be a plan - this situation must have been foreseen, although perhaps the exact timing was not.

 There have been warnings of another, more devastating terrorist attack...

 Domestically Kansas and California are just the first states to have the severity of the situation begin to bite. What will the next phase look like I wonder...

Mike Pilat's picture
Mike Pilat
Status: Platinum Member (Offline)
Joined: Sep 8 2008
Posts: 929
Re: Daily Digest - Feb 16

All I can say is that there is more than money at stake. This is certainly the largest scale period of financial and economic upheaval the world has ever seen. For many it is painful, but for a few, this is a period of great opportunity to seize power and control. So our education on this issue is paramount to avoiding more tyranny and absolutism around the world.

If countries lack understanding and public support for difficult, but prudent actions, state sanctioned violence will be the only recourse they feel they have. 

gregroberts's picture
gregroberts
Status: Diamond Member (Offline)
Joined: Oct 6 2008
Posts: 1024
Re: Daily Digest - Feb 16

California to begin layoffs proceedings today

http://www.google.com/hostednews/ap/article/ALeqM5gVKofKbtJ2gCh_9py0AYsipjglpAD96DAUJO0

"One member," Steinberg said. "One more member to put the interest of the state ahead of ideology and ahead of any parochial concern."

If you don't have an idea (ideology) of what caused the problem and then how to reverse it,how can you put the interest of the state ahead of anything?

"Steinberg, the Senate president pro tem, acknowledged that tax increases were difficult for all lawmakers to swallow but said the Legislature had no choice."

I'll just them an IOU, that's what they're doing with the tax refunds,

Greg

CB's picture
CB
Status: Gold Member (Offline)
Joined: Mar 18 2008
Posts: 365
Re: Daily Digest - Feb 16

WWII allowed the incorporation of Japan and Germany into the western economic system - Russia and China at the time had very underdeveloped economies, in addition to huge, difficult to manage land areas. War allows the rules and borders to be changed, countries and economies to be radically restructured... I feel there is a plan, and time is short.

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