Daily Digest

Daily Digest - July 17

Friday, July 17, 2009, 10:00 AM
  • Ratigan and Riholtz Discuss Goldman (Video)
  • The Chinese Equity Bubble: Ready to Burst
  • Social Security spends $700,000 on Phoenix conference
  • NYC: 57% Tax for Top Earners
  • California tax officials: Legal pot would rake in $1.4B
  • Foreclosures rise 15 percent in first half of 2009
  • Poor in Colorado may get free phones
  • Cash-poor Connecticut may sell land, buildings
  • Hedge Fund Buys 5 Billion in Gold Bullion
  • What's the Real CPI? (H/T SuziG)

Economy

Ratigan and Riholtz Discuss Goldman (Video)

The Chinese Equity Bubble: Ready to Burst

[Chart on page] Amid the current financial crisis, there has been one equity index beating all others: the Shanghai Composite. Our analysis of this main Chinese equity index shows clear signatures of a bubble build up and we go on to predict its most likely crash date: July 17-27, 2009 (20%/80% quantile confidence interval).

 Social Security spends $700,000 on Phoenix conference

PHOENIX -- A Social Security Administration motivational management conference held at a high-end Valley resort last week cost $700,000, the SSA told the ABC15 Investigators.

Costs for the conference at the Arizona Biltmore Resort & Spa included airfare, hotel entertainment, dancers, motivational speakers, and food, an administration official said.

A spokesperson outside the SSA's Phoenix office declined to comment.

A spokesperson from the SSA's regional office said the conference was essential, that teleconferencing was not an option, and that all 675 managers needed to meet in person.

NYC: 57% Tax for Top Earners

Congressional plans to fund a massive health-care overhaul could have a job-killing effect on New York, creating a tax rate of nearly 60 percent for the state's top earners and possibly pressuring small-business owners to shed workers.

New York's top income bracket could reach as high as 57 percent -- rates not seen in three decades -- to pay for the massive health coverage proposed

California tax officials: Legal pot would rake in $1.4B

SAN FRANCISCO (AP) - California tax officials say a state proposal to tax and regulate marijuana like alcohol would generate nearly $1.4 billion in revenue.
A State Board of Equalization report released Wednesday estimates marijuana retail sales would bring $990 million from a $50-per-ounce fee and $392 million in sales taxes.

The bill introduced by San Francisco Democratic Assemblyman Tom Ammiano in February would allow adults to legally possess, grow and sell marijuana.

Foreclosures rise 15 percent in first half of 2009

The mushrooming foreclosure crisis affected more than 1.5 million homes in the first six months of the year, according to a report released Thursday by foreclosure listing service RealtyTrac Inc.

The data show that, despite the Obama administration's plan to encourage the lending industry to prevent foreclosures by handing out $50 billion in subsidies, the nation's housing woes continue to spread. Experts don't expect foreclosures to peak until the middle of next year.

Foreclosure filings rose more than 33 percent in June compared with the same month last year and were up nearly 5 percent from May, RealtyTrac said.

"Despite all the efforts to date, we clearly haven't got a handle on how to address the situation," said Rick Sharga, RealtyTrac's senior vice president for marketing.

More than 336,000 households received at least one foreclosure-related notice in June, according to the foreclosure listing firm's report. That works out to one in every 380 U.S. homes.

Poor in Colorado may get free phones

Thousands of low-income Coloradans reliant on public assistance could get a free cellphone under a plan before the state Public Utilities Commission.

If approved, the plan by TracFone Wireless in Miami would make Colorado the 17th state it has settled into with free cell service for the indigent, a form of wireless welfare that proponents say taps into one of the last untapped markets for the telecom technology.

 Cash-poor Connecticut may sell land, buildings

NEW YORK (Reuters) - Connecticut, one of a handful of states that missed its budget deadline, on Wednesday began drawing up a list of assets to sell, from buildings to a seaside site, to help close a two-year $8 billion deficit.

Though Republican Governor Jodi Rell and Democratic lawmakers agreed not to disclose their budget talks after she vetoed their proposal, Rell in a statement said "the concept of raising revenue from the sale of state assets has been embraced by all those involved in negotiations."

Hedge Fund Buys 5 Billion in Gold Bullion (Video as seen on www.thecomingdepression.com)

What's the Real CPI? (H/T SuziG, Shadow Stats Chart on page)

 

18 Comments

VeganDB12's picture
VeganDB12
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Re: Daily Digest - July 17-NYC 57 percent tax bracket

This is bad for small business to say the least.  First, take away the tax haven of 401k, Sep/Simple IRA, etc...by making market too dangerous to invest in.  Then tax employer health benefits. Then take away any incentive to increase your profits and business size by adding a VERY aggressive progressive income tax.  Now we have a commuter tax again too so why bother making the drive?

Next thing will be to take the lid off the social security tax limit. That should be the final nail in the coffin for any small business.

With sky high commuting costs, rents, various stupid city taxes and now this,  I have no intention of expanding my practice in the city, it is just too expensive.  I will never make this 57 percent tax bracket as a psychiatrist, but I surely will make more money staying out of NYC at this point.  Especially with the new healthcare reform coming down the pike, keeping overhead low is going to be key. 

Thanks for letting me vent and thanks as always Davos for the information :)

D

idoctor's picture
idoctor
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Re: Daily Digest - July 17

Wow Davos never a new day that doesn't just amaze me with stupidity. That Radigan video was interesting.

 Taxing Healthcare: Income Distribution by Another Name?

http://www.cnbc.com/id/31942364

hucklejohn's picture
hucklejohn
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Re: Daily Digest - July 17

Davos:  Thanks for your consistent everyday efforts.  I don't have the link handy but have you seen the Glenn Beck video with the wiring diagram on Goldman Sachs and its control over the government?  It's very good.

idoctor's picture
idoctor
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Re: Daily Digest - July 17

hucklejohn here is the link.

JAG's picture
JAG
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Dr. Doom Says The Recession Is Over This Year!

 http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9HWkYn5QD3g

What did they say about the Great Depression, in the second year the smart people lost their money?

mainecooncat's picture
mainecooncat
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Re: Dr. Doom Says The Recession Is Over This Year!
JAG wrote:

 http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9HWkYn5QD3g

What did they say about the Great Depression, in the second year the smart people lost their money?

So will his new moniker be Dr. Super Happy?

TechGuy's picture
TechGuy
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Re: Daily Digest - July 17

Davos,

The Headline "Hedge Fund Buys 5 Billion in Gold Bullion" is incorrect. The total size of Dave Einhorn's Hedge fund is 5 Billion. Only a portion of his Portfolio is going into Bullion. David is switching out of gold ETFs and into bullion to save money,

http://news.kontentkonsult.com/2009/07/greenlight-holds-bullion-buys.html

July 14 (Bloomberg) -- Greenlight Capital Inc., the $5 billion hedge-fund firm run by David Einhorn, told investors it switched all of its holdings in a gold exchange-traded fund into bullion during the second quarter.

“At a minimum this will provide some savings as the costs of storing gold are less than the fees” for the SPDR Gold Trust, the New York-based firm said yesterday in a letter to investors.
 

Einhorn, 40, told clients in January he was buying gold for the first time amid the threat of inflation from higher government spending. The firm, started in 1996, held 4.2 million shares of SPDR Gold Trust in the first quarter, making the gold- backed ETF its biggest holding

FWIW: David Einhorn is the guy that exposed Lehman as a fraud just before it collapse.

Ken C's picture
Ken C
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Re: Daily Digest - July 17

 

July 14 (Bloomberg) -- Greenlight Capital Inc., the $5 billion hedge-fund firm run by David Einhorn, told investors it switched all of its holdings in a gold exchange-traded fund into bullion during the second quarter.

“At a minimum this will provide some savings as the costs of storing gold are less than the fees” for the SPDR Gold Trust, the New York-based firm said yesterday in a letter to investors.
 

Einhorn, 40, told clients in January he was buying gold for the first time amid the threat of inflation from higher government spending. The firm, started in 1996, held 4.2 million shares of SPDR Gold Trust in the first quarter, making the gold- backed ETF its biggest holding

 

 

I read this a one more "smart guy" that does not trust paper gold and wants physical possesion of the metal

 

Ken

 

DavidC's picture
DavidC
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Re: Daily Digest - July 17

hucklejohn/idoctor,

Thanks for the Glenn Beck link, great!

Another good piece on Joe Saluzzi's comments about HTF (High Frequency Trading)

A good piece on Jon Stewart's show (linked on ZeroHedge today as well)

http://www.thedailyshow.com/watch/thu-july-16-2009/pyramid-economy

Krugman also had some stuff to say that I agree with!
http://www.nytimes.com/2009/07/17/opinion/17krugman.html?_r=1

Also, a couple of items I saw on Bloomberg TV today:
71% of S&P cos report Q2 profits better than expected
68% of S&P cos say sales same or lower
Michigan now 15% unemplyment.

And the markets finished today virtually unchanged...hmmm!

DavidC

idoctor's picture
idoctor
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Re: Daily Digest - July 17

Jim Rogers - The Third Stimulus? - July 16 2009

joemanc's picture
joemanc
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Re: Daily Digest - July 17

Hard Data -  Study Finds Steep Drop in State Tax Revenues

http://www.nytimes.com/2009/07/18/us/18states.html?_r=1

Quote:

Over all, the report found that state tax collections dropped 11.7 percent in the first three months of 2009, compared with the same period last year. After adjusting for inflation, new changes in tax rates and other anomalies, the report found that tax revenues had declined in 47 of the 50 states in the quarter.

Quote:

As bad as the first quarter was, the second quarter is shaping up to be even worse, the report said. Preliminary data for the first two months of the quarter, April and May, collected from 45 states, indicated that tax revenues declined by 20 percent compared with the same period last year.

Actual Report:

http://www.rockinst.org/pdf/government_finance/state_revenue_report/2009...

Somebody get a hose, the green shoots are wilting!

Mikey1052's picture
Mikey1052
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Re: Daily Digest - July 17

Some Partially related obervations:

 

My wife’s niece who happens to live in Gillette, WY (visiting with us in Arizona last week) told us she had made a personal trip by car last month to Minnesota and had observed what  seemed like an endless convoy of U-Hauls and all other manner moving vehicles carrying people and all their earthly possessions west on I-90 in the 21st century version of the grapes of wrath…

 

She also shared what has been discussed here before that Wyoming is still booming with methane, natural gas and coal still in great demand and although house prices seem to have abated some the demand is still very much alive. She said that they are being swamped with people from Michigan, Ohio, Illinois, Indiana, “the rust belt” … and California.

 

Also, she said it was sad to her to see the locals who were doubling and in some cases tripling the rent on heir properties causing many of the new arrivals to resort to living in motels, cars etc (but no Bush/Obamavilles...so far) although that has now abated some as well.    

 

One other item

 

A casual acquaintance of my wife shared with her yesterday that her daughter who lives in southern California and is a professor in one of the state universities was turned away by her bank when she attempted to cash her pay check this week…

 

idoctor's picture
idoctor
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Re: Daily Digest - July 17

Kudlow & Peter Schiff

PraySam's picture
PraySam
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Re: Daily Digest - July 17

I agree with this modern day Grapes of Wrath comparison but I believe Texas is the substitute for the old California. We have numerous people moving here from out of state (just in time to enjoy our 105 degree days and the worst drought in 60 years) and most come from California, followed by Rust Belters. Interestingly, despite a much lower than national unemployment rate and home values that have not depreciated our sales tax revenues are way down and every county,city,town is having to make big budget cuts. Most Texans believe we are insulated enough from the national distress that we will be OK but these sales tax revenues suggest things may not be as rosy as they look.

tx_floods's picture
tx_floods
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Re: Daily Digest - July 17

[PraySam] said: I agree with this modern day Grapes of Wrath comparison but I believe Texas is the substitute for the old California

This thought occurred to me early in the morning, during a bout of insomnia: 

Unless, CA does, in fact, legalize pot. At that point, stoners from all over the US will migrate to CA to grow their own dope. Maybe they can attract enough people to fill those empty homes. Bubble re-instated; Problem solved! (I'm not sure the tongue-in-cheek sarcasm is coming through the typed word here. But it's there.) 

If that proposal does come to fruition, that will be a major milestone that even those who are currently asleep can say to themselves, "Wow. Things are different than they use to be." 

DavidC's picture
DavidC
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Re: Daily Digest - July 17

idoctor,

Thanks for the Kudlow/Schiff/Morico link.

Errm, what planet is Morico on? Jobless figures going DOWN? I thought the rate of decline has dropped(for the moment?) although absolute numbers are still rising. Bank (lack of) stress tests? Yep, sleight of hand accounting and worst case jobless figure arguably where the US already is! And as for eranings - OK 71% of S%P companies (appreciating all 2nd Q earnings are not in yet) beating estimates but arguably with some estimates set low AND with 68% of companies reporting same or lower sales figures. So, a recovery in action! Hmmm!

Where the West has had, until 2000, efectively 25 years of rising markets, I could see the view that (un)employment is a lagging indicator (and I've heard this from TV pundits almost as often as 'green shoots'!) BUT if we are in a true cyclical bear market I would argue that unemployment could be seen as a LEADING indicator - it's only because most participants have grown up in 'lagging indicator' paradigm that it continues to be touted.

DavidC

Davos's picture
Davos
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Re: Daily Digest - July 17

Detroit is in bad shape, it's government can't even protect the people or their property:

 Budget Cuts: Low-priority crimes like breaking and entering might not be prosecuted 

Low-priority crimes like breaking and entering might not be prosecuted and the conviction rates will continue to decline if the proposed budget for the Wayne County Prosecutor’s Office is approved, Prosecutor Kym Worthy told commissioners this morning.
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“We can’t even cover our courtrooms anymore,” Worthy said in vehemently disagreeing with the $28-million general fund budget proposed for the prosecutor’s office by Wayne County Executive Robert Ficano. “At some point, if the budget continues to be cut, we’re going to have to start making decisions about what crimes we prosecute.” 

 

Low-priority. Pot becomes high-priority and sending a cop to your house is low-priority. Roger that.

idoctor's picture
idoctor
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Re: Daily Digest - July 17

Art Cashin: Traders Don't Trust 'Short Term' Earnings

http://www.cnbc.com/id/15840232?video=1185726710&play=1

Joe asks Art what is coming up on June 22-23rd? Art says : a Solar eclipse..we have to see if this changes the ionization in the upper atmosphere.

that pretty well sums it up!

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