Daily Digest

Daily Digest - February 20

Saturday, February 20, 2010, 10:44 AM
  • Basicland
  • Wall Street's Bailout Hustle
  • Buyers Fail To Materialise For IMF Gold 
  • Volcker Discusses The Housing Market, GSEs, Raising The Retirement Age, And, Of Course, The Volcker Rule
  • Should Wall Street Follow Tiger Woods And Apologize?

Economy

Basicland (Davos)

In the early 1700s, Europeans discovered in the Pacific Ocean a large, unpopulated island with a temperate climate, rich in all nature's bounty except coal, oil, and natural gas. Reflecting its lack of civilization, they named this island "Basicland."

Wall Street's Bailout Hustle (mhoop)

The nation's six largest banks — all committed to this balls-out, I drink your milkshake! strategy of flagrantly gorging themselves as America goes hungry — set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007. In a gesture of self-sacrifice, Blankfein himself took a humiliatingly low bonus of $9 million, less than the 2009 pay of elephantine New York Knicks washout Eddy Curry.

Buyers Fail To Materialise For IMF Gold (Nickert)

But rather than being uninterested, some potential buyers, particularly in Asia, could have been deterred by the publicity surrounding any IMF transaction, he says. Mr Klapwijk’s view is echoed by others in the gold market and was reflected in the price of bullion, which on Thursday traded 0.2 per cent firmer at $1,117 an ounce, not far from the record $1,226.10 level set in December.

Volcker Discusses The Housing Market, GSEs, Raising The Retirement Age, And, Of Course, The Volcker Rule (Davos)

Not too surprisingly, now that the old man is loose, he just refuses to keep his mouth shut about the true state of the economy. Also, unlike his interview with Maria Bartiromo, this time he doesn't just walk off the set. Some of the soundbites: "The mortgage market in the US is in trouble. It's totally dependent, heavily dependent on the government participation. It shouldn't be that way. That's going to have to be reconstructed."

Should Wall Street Follow Tiger Woods And Apologize For Its Immorality? (Doug S.)

There is something to be learned about Wall Street from the Wood’s debacle. Too many people are becoming fans again. Some seek gains in an easy money stock price run-up triggered by the Fed’s decision to convert corporate banking risks into sovereign risk. As people return their investment dollars to Wall Street they boost stock prices and make it possible for Wall Street elites to recover the paper losses that triggered the bailout. What’s to like about that?

Please send article submissions to: [email protected]

13 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - February 20

 The "real time" national debt clock is showing $12.39 trillion, while treasurydirect shows over $12.4 trillion. 

"LONDON -- Europe's more indebted countries have US$2.85 trillion of maturing bonds and syndicated loans to refinance in the next three years, according to Thomson Reuters data.

Worries about high levels of sovereign debt in Portugal, Italy, Ireland, Greece and Spain have hit the bond and loan markets, potentially raising the rates that governments and companies will have to pay to refinance their debt."

"The Federal Deposit Insurance Corp. estimated the four failures Friday cost its deposit insurance fund more than $1 billion. "

"NEW YORK (CNNMoney.com) -- More than 1 million people could lose their jobless benefits and health insurance subsidy in March if Congress doesn't act fast.

When it returns from the President's Day recess on Monday, the Senate will have one week to extend the deadlines to apply for federal unemployment benefits and the COBRA health insurance subsidy. Currently, the jobless have until Feb. 28 to sign up. "

"State and local government employees in California are retiring in record numbers. Experts suggest an aging workforce, cutbacks in positions and pay, and the economic downturn are all factors. [Calpensions]

Since last July, retirement applications at CalPERS are up 21 percent. There were 16,558 applications, compared to 13,774 during the same period in 2009. A spokesperson for CalPERS says that the current numbers are on track to “far exceed” 2009 by next July 1.

At the same time, more public employees are considering retirement. CalPERS has already received nearly 60,000 requests for retirement estimates since July 1."

"NEW YORK (Reuters) - Sovereign debt concerns in Europe have eased for a time but they could still weigh on U.S. debt capital markets and put a chill on merger activity if worries persist about global growth.

Since concern about sovereign risk in Greece, Spain and Portugal swept through the markets last month, U.S. corporate bond issuance has slowed to a trickle, borrowing costs have risen and at least half a dozen bond sales have been put on hold.

"In some sense Greece is...an example of a dynamic that's going on not just in Europe but in the United States and all the developed world," said Jay Mueller, senior portfolio manager with Wells Capital Management in Milwaukee, Wisconsin.

"If Greece were to crash on the rocks...the question becomes, Is this a bellwether for the rest of us?""

  • 7) Headlines

Boeing sends more than 1,000 layoff notices

Frustrated Owner Bulldozes Home Ahead Of Foreclosure

Rising Interest Rates Won't Stop Inflation, Says NIA

FISCAL YEAR 2009: Nevada's biggest casinos lose $6.8 billion

Sears to close 8 stores

Up to 25 billion euros in aid mulled for Greece: report

Four Schools To Close in Dekalb (GA)

Lawmakers want to tax Amazon sales in California

State legally allowed to dip into snowmobile fund (NY)

 

............................I've been saying exactly the same thing, and I'm not even a French fortune teller (just listen to the first part).

Be back on Monday.

cmartenson's picture
cmartenson
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Re: Daily Digest - February 20

Thank you Saxplayer for your excellent contributions - I always read them and appreciate your efforts.

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pinecarr
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Re: Daily Digest - February 20

Love the Matt Taibbi article, "Wall Street's Bailout Hustle", mhoop!  I love how Taibbi comes right out and shows how so much of what's gone on can be equated to well-known con-games (super-sized).  I wish the general public would read it, to get their eyes opened to what's going on!

Saxplayer, that article about Boeing laying off 1,000 workers gave me the shivers.  That's big!  That's a lot of families being directly impacted, and a lot of other businesses (and their families) that will be indirectly affected.

VeganDB12's picture
VeganDB12
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Re: Daily Digest - February 20

I agree with above.

Saxplayer your links are super.

D

Stephen Lark's picture
Stephen Lark
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Re: Daily Digest - February 20

I too appreciate your efforts saxplayer.

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Davos
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Re: Daily Digest - February 20
cmartenson wrote:

Thank you Saxplayer for your excellent contributions - I always read them and appreciate your efforts.

+1 Sax's and everyone else's.

Damnthematrix's picture
Damnthematrix
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Re: Daily Digest - February 20

re the Matt Taibbi article: "according to the terms of the bailout deal struck when AIG was taken over by the state in September 2008, Goldman was paid 100 cents on the dollar on an additional $12.9 billion it was owed by AIG — again, money it almost certainly would not have seen a fraction of had AIG proceeded to a normal bankruptcy. Along with the collateral it pocketed, that's $19 billion in pure cash that Goldman would not have "earned" without massive state intervention. How's that $13.4 billion in 2009 profits looking now?"

Does this mean Gold in Sacks actually LOST 5.6 billion, but made it out to be a 19 billion profit...?

Mike

Xanthis's picture
Xanthis
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Re: Daily Digest - February 20

Absolutely.  The Daily Digest and Sax's "Sax Supplement" are the best collections of economic and financial news!

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Robinson
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Re: Daily Digest - February 20

Yes, Great Work                   SaxPlayer  rule!!!!!

Damnthematrix's picture
Damnthematrix
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Aussie Housing affordability plunges again.....

Housing affordability plunges on rising prices, rates

By Online business reporter Michael Janda

http://www.abc.net.au/news/stories/2010/02/22/2826435.htm?section=justin

A leading industry group says housing affordability has slumped more than 20 per cent in the last year, due to rising interest rates and house prices.

The Housing Industry Association - Commonwealth Bank first home buyer affordability index dropped 18.4 per cent in the December quarter, to be 22.3 per cent down on levels seen a year ago.

The HIA says first home buyers had a small window of better affordability when house prices eased, interest rates dropped and the Federal Government boosted the First Home Owners Grant during the peak of the global financial crisis.

However, the HIA's senior economist, Ben Phillips, says all those trends have reversed and not enough new houses are being built.

"Australia's fast growing population is pushing new dwelling requirements to record high levels. Without the required new home building to keep up with underlying requirements house prices and rents are expected to continue pushing upwards through 2010," he noted in the report.

"With housing affordability heading backwards, housing policy must be front and centre of the policy debate as Australia heads towards a federal election later in the year."

The HIA is predicting around 152,000 new dwellings to be commenced in 2010, but says that is well short of the 190,000 it estimates is required to keep up with a growing population.

The association says affordability deteriorated in all capital cities and regional areas during the last three months of 2009, but the worst falls were in Sydney, Brisbane, Hobart and Canberra.

Eye's picture
Eye
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Re: Daily Digest - February 20

Everyone on this site should study this graph.

http://www.ft.com/cms/s/0/046b52f6-3a41-11de-8a2d-00144feabdc0.html

Davos's picture
Davos
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Re: Daily Digest - February 20
Eye wrote:

Everyone on this site should study this graph.

http://www.ft.com/cms/s/0/046b52f6-3a41-11de-8a2d-00144feabdc0.html

Neat chart. I don't agree with all their reasons on what moved it. It also does not take into account today's insolvency. Concern and as broke as Enron are not the same. 

Basically, it is over.

Eye's picture
Eye
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Posts: 88
Re: Daily Digest - February 20

Davos,

the interesting take home for me on that chart was that the price of gold rises with instability of the currency and falls with the arrival of asset backed currency.  This highlights that ownership of gold beyond a small hedge position is still a trade and at some point you have to recognize when that trade comes off.  We are all on the buy side now, some with very large percentages of our portfolios.  To make that trade work you have to make the right call to get out too.

 

Mark

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