Daily Digest

Daily Digest - January 28

Thursday, January 28, 2010, 10:43 AM
  • Fed Lays Ground for End to Stimulus With Recovery Declaration
  • Ford to Begin Hiring at New Lower Wages
  • Verizon to Cut 13,000 Jobs as Businesses Reduce Lines
  • FDIC Friday Lotto: Another Reason Why Banks Are Not Lending
  • Darrell Issa's Special Report On AIG Could Be The End Of Geithner
  • Wall Street’s Liquidity Problem
  • Overseas investments and the Dollar
  • California: America’s First Failed State
  • The Missing Volume
  • Suspending Money Market Redemptions Is Now Legal; SEC Approves New Money Market Regulation In 4-1 Vote
  • AIG Doc SEC Dubbed “Confidential” Until 2018
  • Emerging Markets, Copper Tumble at Quantitative Tightening
  • Davos 2010: Chinese Central Banker Zhu Min Warns Of New Asian Crisis
  • Head of TARP Oversight: “Either we fix this problem going forward or the game really is over"
  • A New Approach To Regulating Wall Street Could Be More Than Wishful Thinking
  • OLS - Market Manipulation 2010
  • Solar Shingles See the Light of Day
  • IBM, Researchers Get 24M DOE Supercomputer Hours To Develop Controversial Lithium Air Battery
  • The Food System and Resilience

Economy

Fed Lays Ground for End to Stimulus With Recovery Declaration (Ben Johnson)

The Federal Reserve panel in charge of interest rates declared for the first time the U.S. economy is in “recovery” and took several steps to prepare investors for the removal of aggressive monetary stimulus. The Federal Open Market Committee yesterday upgraded its economic outlook, reaffirmed it will end liquidity backstops and a $1.25 trillion program to buy mortgage-backed securities and expressed less confidence inflation will remain “subdued.”

Ford to Begin Hiring at New Lower Wages (Ben Johnson)

Ford Motor Co. will announce Tuesday it is adding a second shift at its Chicago assembly plant, creating 1,200 jobs and enabling the company for the first time to hire some new union workers at significantly reduced wages. The contracts that Ford, General Motors Co. and Chrysler Group LLC signed in 2007 allow the auto makers to fill jobs vacated by older workers who leave or retire with new hires earning a little more than $14 an hour on average—about half what current workers received when they started. Newer workers also get reduced benefits.

Verizon to Cut 13,000 Jobs as Businesses Reduce Lines (Nickbert)

Verizon Communications Inc., coping with subscriber losses at its fixed-line phone business, plans to cut about 13,000 jobs at the division this year after posting fourth-quarter revenue that missed analysts’ estimates.

FDIC Friday Lotto: Another Reason Why Banks Are Not Lending (Nickbert)

Here's how the process works: On "bank failure Friday", the FDIC matches banks with sufficient capital to failing banks, taking into consideration size, location, and assets. By spreading out the number of bank failures over many months, the FDIC gives that small percentage of well capitalized banks a further reason not to lend for as long as the weekly lotto continues. Remember, the reason these banks are not in trouble in the first place is because they had prudent lending standards.

Darrell Issa's Special Report On AIG Could Be The End Of Geithner (pinecarr)

The Federal Reserve’s payment of par to AIG’s counterparties and the subsequent cover-up of information about these payments raise concerns about the accountability of the unelected bureaucrats within the Federal Reserve System. The fact that a quasi-government agency, unaccountable to the American people, likely wasted billions of taxpayer dollars and went to great lengths to prevent Congress and the American people from learning about these actions demonstrates the threat that the Federal Reserve poses to basic principles of American democracy.

Wall Street’s Liquidity Problem (pinecarr)

A financial system with no spare cash is extremely vulnerable to economic shocks (which create liquidity crises). Market manipulation by authorities is necessarily to keep anything extreme from happening, preventing the insolvent financial system from a liquidity-induced collapse. This is the reason behind the activities of the “plunge protection team.

Overseas investments and the Dollar (pinecarr)

The theme for the past few years has been to diversify into overseas markets. This theme has been taken too far. Money has flowed into these markets at stunning rates (especially China) and if the dollar should surprise everyone by mounting a strong rally, the biggest markets to get hit will be the developing markets.

California: America’s First Failed State (Samuel A.)

Sometime last summer—around the time California's budget crisis led it to begin paying state workers in scrip—a meme took off in the media, that of California as a "failed state."

The Missing Volume (ilene)

Are retail investors and non-professional stock market traders still actively involved with investing and trading their accounts? Phil sent me an article on the subject, “Where Has All the Volume Gone?” by Nicolas Santiago at his Rant and Rave blog, and I called Nicolas up to talk with him about it.

Suspending Money Market Redemptions Is Now Legal; SEC Approves New Money Market Regulation In 4-1 Vote (hucklejohn)

Well, in a nearly unanimous vote, Money Market Funds now have the ability to suspend redemptions, courtesy of the SEC's just passed 4-1 vote. This explains the negative rate on bills: at this point, should there be another meltdown, money market investors will not, repeat not, be able to withdraw their money purely on the whim of Mary Schapiro.

AIG Doc SEC Dubbed “Confidential” Until 2018 (Ben Johnson)

This is the document the Congressman was talking about during his opening remarks in today’s committee interviews — It was dubbed confidential by the SEC at the NYFRB’s request until 2018, and subsequently uncovered via committee subpoena.

Emerging Markets, Copper Tumble at Quantitative Tightening (pinecarr)

A trend in motion, will stay in motion, until some outside force, knocks it off its course.” So far in January, a whirlwind of events have suddenly knocked the global commodity and stock markets off their 10-month upward trajectory. Beijing is clamping down on Chinese bank loans and its M2 money supply, and central banks in Australia and India are expected to tighten their money policies soon. Adding to the jittery tone, US President Barack Obama’s has shocked investors, by moving to sever the White House’s clandestine partnership with the Oligarchic banks on Wall Street, thus removing a key prop for the US-stock market.

Davos 2010: Chinese Central Banker Zhu Min Warns Of New Asian Crisis (pinecarr)

China's deputy central bank chief Zhu Min warned that tighter US monetary policy could spark a sudden outflow of capital from emerging markets, evoking the 1990s Asian financial crisis.

Head of TARP Oversight: “Either we fix this problem going forward or the game really is over (Video, The Daily Show) (hucklejohn)

Mrs. Warren, who appeared in the documentary Maxed Out and is currently the Chair of the Congressional Oversight Panel for TARP, discusses the seriousness of the current economic crisis, the steps that need to be taken to put America on the right track, and the arrogance and dislocation of the financial industry from mainstream America.

A New Approach To Regulating Wall Street Could Be More Than Wishful Thinking (hucklejohn)

Goldman Sachs, Citigroup and others in their greed have lost touch with economic and financial reality and they looted the system. Not that JP Morgan chase was blameless, they did their looting and damage to the system as well, but not in the high handed arrogant way the others did. The recall of Volcker is an attempt to reverse the damage as much as possible. That means the influence of Geithner, Summers, Rubin, et al will be put on the back shelf at least for now, as will be the Goldman influence.

OLS - Market Manipulation 2010 (Video) (hucklejohn)

Find the truth and connect the dots. I have compiled a short series of clips to help ask what kind of manipulation is happening in our markets. Who is doing it and how are they doing it?

Energy

Solar Shingles See the Light of Day (Ben Johnson)

"Dow Chemical is moving full speed ahead to develop roof shingles embedded with photovoltaic cells. To facilitate the move, the U.S. Department of Energy has backed Dow's efforts with a $17.8 million tax credit that will help the company launch an initial market test of the product later this year.

IBM, Researchers Get 24M DOE Supercomputer Hours To Develop Controversial Lithium Air Battery (Samuel A.)

The Department of Energy and IBM are serious about developing lithium air batteries capable of powering a car for 500 miles on a single charge - a five-fold increase over current plug-in batteries that have a range of about 40 to 100 miles, the DOE said.

IBM is a big proponent of the oft-controversial lithium-air battery. The controversy surrounds the fact that they tend to be expensive and use an energy-dense, highly flammable metal, to react with the readily available oxygen in the air.

Environment

The Food System and Resilience (pinecarr)

For something as critical as food, it is common sense that society should design for resilience. Reliability in food production in the face of change requires a system capable of rapid evolution. Resilience is therefore a core principle of sustainability. Unfortunately, our daily bread relies on a food system that is not resilient.

Please send article submissions to: [email protected]

19 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - January 28

"The California State Teachers Retirement System, the second biggest U.S. public pension, will need to ask taxpayers for more money after investment losses left it underfunded by $42.6 billion.

The pension’s unfunded liability, the difference between assets and anticipated future costs, almost doubled from $22.5 billion in June 2008, according to a report Chief Executive Officer Jack Ehnes will deliver to the board Feb. 5. The fund will ask lawmakers next year for an increase of as much as 14 percent to what the state and school districts already pay toward employee retirement benefits, said the report, which was posted on the fund’s Web site today."

"Gross spending on the Medicare program is expected to total $528 billion in 2010, $735 billion in 2015, and $1,038 billion in 2020, according to the Congressional Budget Office. The CBO also expects for Medicare spending to rise (as a percentage of gross domestic product (GDP) from 3.5 percent in 2009 to 4.6 percent in 2020.

CBO estimates Social Security, Medicare and Medicaid will account for about 70 percent of mandatory spending (excluding offsetting receipts) in 2010. However, by 2020, this percentage is expected to climb to 80 percent of mandatory spending under current law. Under current law, the CBO also reports that Medicare and Medicaid spending (combined) is expected to grow faster than the economy, reaching 6.6 percent of GDP by 2020 and potentially reaching 10 percent by 2035."

..................2A) Medicare/Medicaid spending a national 'threat,' says CBO

"The Congressional Budget Office (CBO) cites federal healthcare spending as "the single greatest threat" to the United States' budget stability in its new report, The Budget and Economic Outlook: Fiscal Years 2010 to 2020. Under current law, Medicare spending will reach $1,038 billion in 2020, with Medicaid spending coming in at $458 billion.

In 2009, higher unemployment drove up Medicaid spending by 9 percent ($18 billion). For the previous 10 years, the program's average annual growth rate had held at 7 percent. Medicare outlays also rose faster than average, jumping by 10 percent ($39 billion).

Medicare and Medicaid spending, exclusive of stimulus spending, should continue to grow at a combined average rate of about 7 percent a year between 2011 and 2020."

"Massey Knakal Realty Services released this week their year-end Property Sales Report for 2009 that shows the total volume of commercial real estate sales in the New York City marketplace was $6.3 billion, which was down 75% from the $25.3 billion in 2008 and 90% below the 2007's record of $62.2 billion."

"If the economy performs worse than expected, banks could be hit with another wave of significant write-downs, "resulting in a potentially serious threat to weaker banks' capital positions," the rating agency said.

The falling value of assets ranging from prime mortgages to commercial real estate loans "could, once again, test confidence in the banking system," S&P said.

Banks are already facing weakening credit performance of first-lien mortgage loans and home equity lines of credit and may have to write down more residential mortgage-backed securities, S&P said.

Commercial real estate credit quality also continues to deteriorate, the rating agency said."

"Here are some numbers from the SDCERS board meeting Jan. 22, 2010: As of mid-2009, the funded ratio was a meager 66.5% and unfunded actuarial liability $2.11 billion."

"New York Mayor Michael Bloomberg plans to present a preliminary budget tomorrow that will cut 4,286 employees from city payrolls for the 2011 fiscal year beginning July 1, administration officials said."

"Investor concern about the ability of Greece and Portugal to lower their budget deficits is starting to hurt the debt of national utility companies and banks.

The cost to insure Greek sovereign debt against default surged to a record today, spurring a rise in credit-default swaps on Hellenic Telecommunications Organization SA and National Bank of Greece SA. Swaps on Portugal Telecom SA and Energias de Portugal SA jumped as the perceived risk of holding their government debt rose.

“If you fear a Greek crisis then you should not only avoid government bonds but corporates as well,” said Philip Gisdakis, head of credit strategy at UniCredit SpA in Munich. “And if you fear Greece you should also fear Portugal and Spain.” "

News links under "more info"

Johnny Oxygen's picture
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The Coming Obama Retirement Trap Has Started!

The Coming Obama Retirement Trap Has Started!

http://www.lewrockwell.com/holland/holland12.1.html

Reports out of Washington indicate that new retirement annuities may be promoted by Obama aides. This is just the beginning! The question every successful American with substantial retirement assets must ask is "what will you do if our retirement funds are forced to become the buyer of last resort for US treasury obligations?" Unless you believe Congress and Washington bureaucrats will do a fair job of allocating and distributing your personal retirement assets between yourself and others, you must begin now to protect your assets.

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Re: The Coming Obama Retirement Trap Has Started!

Good post, Johnny!

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capesurvivor
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Re: The Coming Obama Retirement Trap Has Started!

I guess we have to worry if "promote" becomes "require" a la Argentina.

 

SG

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Re: Daily Digest - January 28

Between the retirement stuff and the money market scam the government is really showing its intent and will to strong arm the public.

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Re: Daily Digest - January 28

I highly recommend the Daily Show interview with Elizabeth Warren as posted above. She's starting to just get downright mad at what's going on.

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Re: Daily Digest - January 28
SteveS wrote:

I highly recommend the Daily Show interview with Elizabeth Warren as posted above. She's starting to just get downright mad at what's going on.

GOOD!

I'm sick and tired of the political correctness. Which, that term by the way is an absolute oxymoron. 

People need to start calling these morons - morons and standing up and saying we are mad as h*ll about this - or not a darn thing is going to change.

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Johnny Oxygen
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Re: Daily Digest - January 28
SteveS wrote:

I highly recommend the Daily Show interview with Elizabeth Warren as posted above. She's starting to just get downright mad at what's going on.

Not directed @ Steve.

You know I keep seeing this feigned outrage by those in charge and can't help but notice its an act. I think they know its the thing to say because so many people are angry but I suspect they also know there isn't a damn thing they or anyone else can do about it because of the depth of the corruption.

In regards to Elizabeth Warren. Anyone else ever notice her 'cultivated' personality? She acts like the spacey intellectual that doesn't know how to tie her shoes but apparently is an economic genius.

 

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Re: Daily Digest - January 28
Johnny Oxygen wrote:
SteveS wrote:

I highly recommend the Daily Show interview with Elizabeth Warren as posted above. She's starting to just get downright mad at what's going on.

Not directed @ Steve.

You know I keep seeing this feigned outrage by those in charge and can't help but notice its an act. I think they know its the thing to say because so many people are angry but I suspect they also know there isn't a damn thing they or anyone else can do about it because of the depth of the corruption.

In regards to Elizabeth Warren. Anyone else ever notice her 'cultivated' personality? She acts like the spacey intellectual that doesn't know how to tie her shoes but apparently is an economic genius.

 

Good point - we need to be on the lookout for real vs feigned. I think she's the real thing. For one, she's not really in charge. She has no real power and I think she's realized her only power to effect change is to get the word out to the public and invoke their outrage.Another point is her outrage isn't benefiting those in charge. I bet they wish she'd be quiet. Now when Obama expresses outrage at the banks; I think that is a bit condescending - he's reflecting our outrage, but in his case he does have power to do something about it.

I think her personality is the same as many geniuses - a bit quirky. It was funny to see how off guard she was caught by Stewart's parting comment about wanting to make out with her (or words to that effect).

 

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"The US is Broke: Here's Why" p.11a USA Today, Wed, Jan 27, 2010

http://blogs.usatoday.com/oped/2010/01/column-the-us-is-broke-heres-why-...

America needs to know this - it should be printed on the front page of every major newspaper in the country.

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Davos
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Re: Daily Digest - January 28
Johnny Oxygen wrote:

Anyone else ever notice her 'cultivated' personality? She acts like the spacey intellectual that doesn't know how to tie her shoes but apparently is an economic genius.

 

One smart lady I would not bother debating. Not that I disagree with anything she has ever said. Also, email her school and you will get a reply answering any question - and well I'd add - from her and her assistant within minutes.

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Re: Daily Digest - January 28

I have a question regarding the possible forced conversion of IRA and 401K funds into Government Bonds.

Would this also apply to the regular, old fashioned pensions, or would those be left alone?

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Re: Daily Digest - January 28

Elizabeth Warren is the one person in Washington that has POed both the Dems and Repubs, for that alone she has my vote of confidence.  She is one smart lady that has told it like it is. 

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Re: Daily Digest - January 28
songbird wrote:

I have a question regarding the possible forced conversion of IRA and 401K funds into Government Bonds.

Would this also apply to the regular, old fashioned pensions, or would those be left alone?

I don't know. I know I don't recall reading anything that said anything other than 401ks and IRAs. I wouldn't be surprised if they did go after pensions. Desperate people do desperate things. Also, a lot of pensions were sold worthless derivatives, they are underfunded. The desperadoes are claiming that the should invest peoples 401k's because if they don't they won't have enough to retire on.

Social Security was founded in 1935, 74 some years later it is a 12 trillion dollar black hole.

Calpers is in bad shape.

Who to trust: Someone who had a hand in a 12 trillion dollar black hole, some professional money investor who was to lazy to wrap his/her mind around a derivative or oneself. 

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Johnny Oxygen's picture
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Re: Daily Digest - January 28

Forces are already at work to position a new Carbon Currency as the ultimate solution to global calls for poverty reduction, population control, environmental control, global warming, energy allocation and blanket distribution of economic wealth. 

He never says what 'forces'. He talks about 'techocracy' but it all sounds like an idea not based in fact.

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Dollar breakthroguh?

Looks like the dollar has poked through it's 200-day moving average.  If this holds, watch out, and welcome to Deflation.

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Re: Dollar breakthroguh?
Farmer Brown wrote:

Looks like the dollar has poked through it's 200-day moving average.  If this holds, watch out, and welcome to Deflation.

The funny thing is, the yen is still on top! Well, at least it should keep the government here from printing more money... As long as the yen doesn't get any stronger versus the dollar they will be happy ;)

Samuel

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Re: Elizabeth Warren

I finally got a chance to watch the clip of Elizabeth Warren appearing on the Daily Show with Jon Stewart earlier this week.  My impression is also that she is a smart lady, one who now "gets" what is going on, and she is sincerely P.O'd.  She didn't pull any punches on the outcome not being good if things aren't changed soon...she sees where things are headed.  I liked her!

-pinecarr

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