Daily Digest

Daily Digest - July 19

Monday, July 19, 2010, 9:50 AM
  • After Tumult, Debt Worries Ease in Europe
  • Australian Sharemarket Falls After Wall Street Correction
  • Russian Firm’s Buy-In Stalls Major Nairobi Road Project
  • After Training, Still Scrambling for Employment
  • The Volcker Rule
  • Homeowners Use Airbnb Room-Renting Site to Pay Mortgage, Dodge Foreclosure
  • Bye-Bye Batteries: Radio Waves as a Low-Power Source
  • BP Signs Major Offshore Gas Deal With Egypt

Economy

After Tumult, Debt Worries Ease in Europe (jdargis)

“Europe has had a pretty good crisis,” said Jacob Funk Kirkegaard, a fellow at the Peterson Institute for International Economics in Washington.

“In the short term, it made a number of very constructive decisions that had the effect of calming down the markets or shifting market attention elsewhere.”

Australian Sharemarket Falls After Wall Street Correction (pinecarr)

The sharemarket closed sharply lower today, losing nearly 1.5 per cent after a steep fall in the US last Friday.

Russian Firm’s Buy-In Stalls Major Nairobi Road Project (pinecarr)

The toll road project is already a year behind schedule and senior Kenya government officials are said to be getting impatient with the World Bank’s grand-standing over the Russian firm, arguing that a 20 percent stake does not even give the company a controlling stake in the project.

After Training, Still Scrambling for Employment (jdargis)

For six weeks, Mr. Valle, 49, absorbed instruction in spreadsheets and word processing. He tinkered with his résumé. But the interviews his caseworker eventually arranged were for low-wage jobs, and they were mobbed by desperate applicants. More than a year later, Mr. Valle remains among the record 6.8 million Americans who have been officially jobless for six months or longer. He recently applied for welfare benefits.

“Training was fruitless,” he said. “I’m not seeing the benefits. Training for what? No one’s hiring.”

The Volcker Rule (jdargis)

Volcker believes that commercial banks, such as Citigroup and Wells Fargo, are worthy of receiving government assistance—and even, in extremis, taxpayer bailouts—because firms and consumers depend upon them for credit. In return for these enterprises being sheltered, they should refrain from risky activities such as proprietary trading and sponsoring hedge funds. “If you are going to be a commercial bank, with all the protections that implies, you shouldn’t be doing this stuff,” Volcker said to me. “If you are doing this stuff, you shouldn’t be a commercial bank.”

Homeowners Use Airbnb Room-Renting Site to Pay Mortgage, Dodge Foreclosure (jdargis)

With bills mounting and foreclosure looming, Morant converted the space into a bed and breakfast. Using the San Francisco-based rental site Airbnb.com to take reservations, she was soon raking in $4,500 a month, enough to cover her mortgage.

“This has been our stimulus package,” said Morant, a pastry chef, who lives with her family on the ground floor of the home. “We were going to lose our house.”

Energy

Bye-Bye Batteries: Radio Waves as a Low-Power Source (jdargis)

The waves come from wireless network transmitters on backhoes and bulldozers, installed to keep track of their locations. The microprocessor monitors the strength and direction of the radio signal from the construction equipment to determine if the hat’s wearer is too close.

BP signs major offshore gas deal with Egypt (jdargis)

BP said the agreement "amends the commercial terms for the two concessions located in the West Nile Delta, enabling BP and its partner RWE Dea to proceed with development."

The petroleum ministry statement quoted minister Sameh Fahmy as saying the amendments "included conditions that guaranteed Egypt great advantages."

Please send article submissions to: [email protected]

26 Comments

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Re: Daily Digest - July 19
1) Moody's Downgrades Ireland On Fiscal Concerns, Weak Growth Outlook

"International ratings agency Moody's downgraded the Republic of Ireland's sovereign debt rating, citing worsening public finance situation and weak growth prospects.

The agency cut the rating by one notch to Aa2 From Aa1. The downgrade comes a day before the Irish government is holding an auction of 6-year and 10-year bonds. However, Moody's raised its outlook on the ratings of Ireland's debt to stable from negative as it sees upside and downside risks to be broadly balanced.

"Today's downgrade is primarily driven by the Irish government's gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability," said Dietmar Hornung, Moody's lead analyst for Ireland. The general government debt to GDP ratio was at 64% at the end of 2009, up from the pre-crisis level of 25%, and is continuing to rise. "

"The suspension of talks between the government and the International Monetary Fund and European Union could cause the forint to weaken and raise the premium Hungary pays on its debt, analysts told MTI on Sunday.

The IMF and EU missions said late on Saturday that they had suspended the talks to give the government more time to consider open issues.

The suspension of talks is bad news for markets because it shows investors the Hungarian government's cooperation with international organisations is not going smoothly, said Takarekbank chief analyst Zoltan Adam. A series of communication slip-ups a few weeks ago caused Hungary's credit default swap (CDS) spreads -- which show the cost of insuring the country's sovereign debt -- to widen from about the same level as Russia and Turkey to that of Romania, Croatia and Bulgaria, whose debt is considered riskier, he added."

........................2A) Hungary Debt Risk Soars, Forint Tumbles as IMF, EU Halt Talks

........................2B) Hungary Refuses Further Austerity Steps, Matolcsy Says

"Oil company BP says that the cost of dealing with the Gulf of Mexico spill has now reached nearly $4 billion.

The company, which last week managed to place a temporary cap on the leak, said Monday it has made payments totaling $207 million to settle individual claims for damages from the spill along the southern coast of the United States.

To date, almost 116,000 claims have been submitted and more than 67,500 payments have been made, totaling $207 million.

Including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, payment of claims and U.S. government costs, BP says it has now spent $3.95 billion. "

"The European Central Bank has said the euro zone's balance of payments slipped further in May to a deficit of €5.8 billion, as member countries struggled with deficits and debt.

The balance of payments, which includes payments for imports and exports of trade in goods and services, is a closely tracked indicator of a country's or area's ability to pay its way in the world.

In April, the euro zone measure had recorded a deficit of €5.6 billion, revised data from the ECB showed, demonstrating a lack of competitiveness by the zone as a whole."

"July 19 (Bloomberg) -- Italian doctors today begin a strike against Prime Minister Silvio Berlusconi’s planned budget cuts in a protest that will lead to 40,000 surgeries being postponed.

Physicians belonging to CGIL, Italy’s biggest union, won’t show up for work in public hospitals and doctors will only guarantee services for emergencies, according to a statement on CGIL’s website. About 30,000 doctors retiring over the next four years won’t be replaced because of a hiring freeze, while about 12,000 health-care employees won’t have their temporary contracts renewed, daily la Repubblica reported.

Berlusconi, whose popularity is at its lowest since coming to power, is seeking parliamentary approval for 25 billion euros ($31.5 billion) in deficit cuts for the next two years as part of an effort to shore up confidence in the euro region after Greece’s near-default. The measures include a wage freeze for civil servants, a reduction in payments to regional governments and delaying the retirement of workers."

"IF YOU think Oakland city finances are bad now, you haven't seen anything yet. Although city officials laid off more than 10 percent of their police force last week to wipe out much of a $31 million budget deficit this fiscal year, they face a much bigger problem that has barely been mentioned.

Simply put, the city faces a financial time bomb, fueled by at least $2 billion of unfunded liabilities for employee pensions and retiree health care costs.

That's an amount equal to about five times the annual general fund budget. It's the result of unrealistically generous benefit promises to workers, the city's failure to adequately fund the benefits, and the financial downturn's erosion of money that was set aside."

"It seemed like a good idea at the time. Pay Sacramento County retirees to offset their medical and dental insurance costs, the county decided in 1980.

It was straightforward, reaching $244 per retiree by 2004. But that was before $100 million-plus shortfalls savaged the county budget.

Now the county faces another cost that, until recently, wasn't even calculated: the long-term unfunded liability for retirees' health benefits, which stands at $245.6 million for about 3,900 annuitants.

Other local governments are facing a similar problem. Future liability in jurisdictions from Yuba City to El Dorado County is $1.4 billion, a Bee survey shows."

"The ruling threatens to derail Iceland’s efforts to rebuild relations with international investors almost two years after the island’s financial system collapsed. Iceland, the fifth- richest nation per capita as recently as 2007, faces litigation from creditors in the island’s banks, who sought to limit their losses last year by becoming shareholders, according to Arni Tomasson, the head of Glitnir Bank hf’s winding up committee.

Fitch rates Iceland’s government debt one level below investment grade at BB+ with a negative outlook.

“Doubts are likely to persist over the restoration of Iceland’s access to international capital markets and the liberalization of capital controls,” Rawkins said."

"KALAMAZOO — As an urban economist, Hannah McKinney predicts tax breaks, today’s economic-development staple for U.S. cities and states, won’t survive another 10 years.

As Kalamazoo’s vice mayor, McKinney said she continues to vote for local tax abatements.

“If we don’t, that would be the best gift we could give to Grand Rapids right now,” said McKinney, a Kalamazoo College economics professor. “Kalamazoo is a wonderful place. But so is Grand Rapids. If a company just wants to be in West Michigan, they’re going

where they get the tax break.”

But in her long-range view of public finance, McKinney predicts burgeoning, unfunded public employee pension liabilities, combined with declining or static property values and personal incomes, will make traditional tax breaks passé in less than a decade. "

 

taxes

  • Other news and headlines:

BP Oil Disaster - Water Sample Exploded (News Video...corexit?)

Oil in Long Beach, MS Harbor - Looks Like Creole Coffee (Video)

Seepage detected in Gulf (News video)

China seals oil port after spill

China reduces US Treasury holdings by 3.6%

China Should Reduce Dollar-Reserve Assets, Yu Writes (former adviser to the central bank)

Bundesbank Says Deficit Countries Are Source of Danger for Monetary Union

Europe CFOs Pick Dollar for Bonds as Faith in Euro Wavers: Credit Markets

Seoul City in bad shape financially and Seoul city's debt up 75 pct last year

IMF aims to boost lending resources by $250 billion: report

Congress should take up $90 billion bank tax, Frank says

Russia may raise gas extraction tax by 15 pct-paper

Clinton unveils major aid package to Pakistan

Fannie Mae gets tough on 'strategic' mortgage defaults

China Needs Credit Swaps to Manage Bank Risk, Bond Insurer Says

Food-Commodity Speculation by Banks Caused Hunger, Group Says

'On the edge of a cliff': Eureka City Council to consider adopting lean budget Tuesday

Soros Says US Shouldn't Cut Stimulus as Inflation Contained

Falling Home Prices Ignite Boom in Foreign Buyers

Obama to call for extension of jobless benefits

Homebuilder Confidence in U.S. Falls to Lowest Level in a Year

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Re: Daily Digest - July 19

BP Oil Disaster - Water Sample Exploded (News Video...corexit?)

It would be really nice if these journalists would do a good job.  Their chemist didn't know what was normal but guessed at maybe 5ppm.  How about taking some samples in other places that have not been impacted by the spill to see what is "normal".   The gulf, even without the spills, has always had some oil naturally seeping.  There is also a fair amount of run-off from streets in the oceans as well. This piece was fear mongering without real data.

 

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Re: Daily Digest - July 19


"China reduces US Treasury holdings by 3.6%"

 

Sold ( who would be fool enough to buy them )....... or shredded ?

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Re: Daily Digest - July 19

5) Italian Doctors Strike Against Cuts; 40000 Surgeries Delayed

Here's a perfect example of the Hypocratic Oath in action.  The heck with the patients, the doctors want their money because they need gas for their $50,000 Mercedes, or want to add a new pool to that $500,000 second home they have in the country.  People want to know why the world is going to hell in a handbasket.  This is one reason.  There is no ethics, morality, or concern for anybody anymore by doctors, lawyers, corporations, or governments.  What ever happened to collective bargaining so operations and needed medical services can still be obtained, but then again, that only comes into play with us peons, not the upper elite.  They play by their own rules.

This story may have been about Italy, but it is exactly the same here in the US.  No money, no help, or even worse, help that is so bad or incompetent it is far worse than if you got none at all.   Take the quacks in Florida, for example, who  amputated a man's right leg, when it was his left one that was critically infected.

I'm just glad I'm 62 now, as I won't have to watch this great unwinding of human society much longer, but I feel so sorry for everyone's children, and grandchildren, including my own.  What the hell have we left them as a legacy? Nothing but greed, graft, and corruption on a monumental scale.

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Re: Daily Digest - July 19
portals wrote:

Here's a perfect example of the Hypocratic Oath in action.  The heck with the patients, the doctors want their money because they need gas for their $50,000 Mercedes, or want to add a new pool to that $500,000 second home they have in the country.  People want to know why the world is going to hell in a handbasket.  This is one reason.

I would just look at this type of statement as the reason we have fallen down in ethics and morality.  You vilify those that expect to make a living and expect them to give more.  How about you?   Are you cutting the fees for whatever you do to make the world better? 

I know several doctors and I'm amazed we have any willing to work.  After going to school for 12-15 years, massive educational bills, and then they have to put up with continuous lawsuits, billing and regulatory crap, and on top of that get chastised for wanting to make money.  They sacrificed a huge amount of their young lives to get that degree, don't you think they deserve the rewards?

So please, before vilifying a profession, give some thought about why we have gotten into this mess?  Is it perhaps because we government has led people to believe that you can have health care, food, housing, and anything else you need for free?  No understanding that in order for something to be provided by the government it has to be taken from someone else first?

portals wrote:

No money, no help, or even worse, help that is so bad or incompetent it is far worse than if you got none at all

Well, then this should be good for you since it means you won't be getting any of that incompetent care since we won't have many doctors left practicing. 

For all you that want to vilify some profession and believe you have a right to take what they earned through the government, here is a link to my favorite article: Button, Button.

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Re: Daily Digest - July 19

As for

Obama to call for extension of jobless benefits

My suggestion is to tax only the salaries of government employees to pay for them.  Government employees are never laid off, and their increasing wages are in large part responsible for the increase in the number of jobless.

Or we could go with an across the board cut in the salaries of all government employees.  Where does Obama think that the money will come from?  Fruiting banyan trees?

 

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Re: Daily Digest - July 19

Fitch rates Iceland’s government debt one level below investment grade at BB+ with a negative outlook.

“Doubts are likely to persist over the restoration of Iceland’s access to international capital markets and the liberalization of capital controls,” Rawkins said."

 

Hang on a tick........  Isn't it a fact that the Icelandic Government had nothing to do with this collapse, it was all criminal activity on the part of the bankers and investors..?

Mike

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Re: Daily Digest - July 19

On

“Doubts are likely to persist over the restoration of Iceland’s access to international capital markets and the liberalization of capital controls,” Rawkins said."

I am wondering why any country should need access to international capital markets.  Internally generated capital would seem to be less frought with currency risk and loss of sovereignty.  No country should need to speculate on curriencies for capital development, which is inherent in seeking outside capital.  International capitalists seem to be intent on controlling the behavior and activities of the world.

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Re: Daily Digest - July 19
printfaster wrote:

I am wondering why any country should need access to international capital markets.  Internally generated capital would seem to be less frought with currency risk and loss of sovereignty.  No country should need to speculate on curriencies for capital development, which is inherent in seeking outside capital.  International capitalists seem to be intent on controlling the behavior and activities of the world.

If there is not enough internal supply of capital - i.e. not enough domestic investors willing to invest in government debt - then there IS a need for international capital. The U.S. government is a case in point. There's not enough internal supply of willing savers and investors who want to buy T-bills. Now the Fed could print money to buy Treasury bonds, which helps, but getting foreigners to buy means less printing. Greece can't print money to buy their own bonds. Ireland also uses the Euro and can't print, either.

I wouldn't say that "international capitalists seem intent on controlling behavior and activities" - so much as any prudent person who wants to invest his or her money wants to make sure they aren't incurring too much risk with their money. So if a government refuses be fiscally responsible, it pays with higher cost to borrow and eventually maybe no one will want to lend to them because they fear losing their money. Governments that lived it up and were fiscally irresponsible will definitely have to curb their runaway spending if they want to attract investors.

Investors want a higher return for the higher risk and often have to pay counter-parties more to insure their investments. It's the same as with people with low credit scores and previous repos who want to buy a car. The "international capitalists" you speak of are often just bond fund managers who invest the pooled retirement savings of thousands of hard-working middle-class folks.

So if a government doesn't want to change its behavior, it doesn't have to. Then again, investors don't have to invest either.

If you want to see a situation where domestic investors are FORCED to invest in government debt so government doesn't have to look to international capital (as much), you have no further to look than Social Security. All Social Security withholdings not immediately paid out to previous "investors" (i.e. retirees) is REQUIRED to buy special U.S. government Treasury bills at a low percentage of interest (like 2% to 3%). What has the government done  with that money? Spent it already.

If the Social Security Administration were a TRULY separate and independent administration charged with investing workers' hard-earned income like a pension fund would, you can be sure they would only buy Treasury bonds if it were prudent - and the U.S. government would probably do more to show its fiscal responsibility in order to attract that money. (Although SSA would still eventually run out in the end or start breaking its promises, as all Ponzi schemes dependent upon an ever larger and growing population of suckers - young folks - to support the elderly would.)

Poet

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Re: Daily Digest - July 19
printfaster wrote:

As for

Obama to call for extension of jobless benefits

My suggestion is to tax only the salaries of government employees to pay for them.  Government employees are never laid off, and their increasing wages are in large part responsible for the increase in the number of jobless.

Or we could go with an across the board cut in the salaries of all government employees.  Where does Obama think that the money will come from?  Fruiting banyan trees?

Or we could get the money from DOD, or their subsidiary NASA. Or get rid of tax breaks and subsidies for big corporations. Or tax the financial institutions that caused this economic mess, leading to high unemployment. Government employees were (are) overpaid and made unrealistic promises, but they are just one relatively uninfluential group vying for a share of the pie, and they are getting axed by the dozens every other week - just read the headlines.

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Re: Daily Digest - July 19
ashvinp wrote:

Government employees were (are) overpaid and made unrealistic promises, but they are just one relatively uninfluential group vying for a share of the pie, and they are getting axed by the dozens every other week - just read the headlines.

Let's see, since government produces nothing and only consumes and acts as a drag on the economy, I say let's get rid of a few more.  Besides they are being axed by the dozens, while the private sector is cutting by thousands.  Hmm, I think I could stand for a bit less government, oh wait, we aren't really cutting government but growing it!

Source: http://www.cato-at-liberty.org/2010/06/29/growth-in-government-employment/

You also hear about them in the news a lot more.  Cut 100 people from a restaurant chain and it won't make the news.  Cut a few teachers or cops and it's the end of the world....

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Re: Daily Digest - July 19

rhare - My point is that many people seem to focus on teachers, firemen, police forces, etc. as overpaid drags on the economy while conveniently ignoring the MAJOR drags on the economy such as overpaid executive employees of banks, defense comapnies, energy companies, etc.

As of May 2009, people working in corporate management or business/financial operations made up 37% of all workers making over $57/hour; meanwhile people working in "education, training or library" make up 2.5% of that wage group - http://bls.gov/oes/current/distribution_table.htm

Of course, banks are now hiring at the fastest pace since 2008 and promising guaranteed payouts to lure potential employees - http://www.bloomberg.com/news/2010-06-27/wall-street-hiring-increases-most-since-2008-as-guaranteed-bonuses-return.html

In Q2 of 2009, there was a 23% increase of private security contractors in Iraq and a 29% increase in Afghanistan and these private contractors make up about 50% of our total security forces over there - http://rebelreports.com/post/116277092/obama-has-250-000-contractors-in-iraq-and-afghan

And guess who's paying the salaries and bonuses for a lot of these people, who not only produce NOTHING of value but actually DESTROY value and create systemic economic, political and societal risks? YOU, the taxpayer.

For example, how about the fact that Blackwater (or XE) gets 90% of its revenues from the US government and its former president was making $1.5 million a year, which is actually small compared to the salaries/bonuses of bank executives paid out of direct and indirect taxpayer bailouts. http://rebelreports.com/post/541336924/ex-blackwater-prez-made-1-5-mil-a-year-90-from-us

Between all that and the various tax breaks/loopholes and subsidies given to big, destructive corporations, I think we can find some $30 odd billion to extend jobless benefits for those permanently unemployed without adding thousands of teachers and firemen to their ranks.

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Re: Daily Digest - July 19

Regarding the Italian Doctor Story.

I suspect they were trained to be doctors on the public's expense, not that that is a commitment to bondage.  Here in America most Doc's finance there own way through school.  Now they are graduating into a public health system.  Doctors in this country are increasingly being forced to see patients they do not want to see.  Plan 1 requires participation with plan 2.  Plan 2 requires participation with plan 3 etc. etc. States are now considering forcing doctors to see patients in the states managed care plans as a condition of licensure.  If you participate in Mcare or Mcaid then you have to abide with Stark regulations WHICH DICTATE HOW PROFITS, READ THE PHYSICIANS PERSONAL INCOME, CAN BE DISTRIBUTED.  AS THE NEED TO CONTROL HEALTHCARE COSTS MANIFESTS ITSELF THROUGH THE SYSTEM A HUGE BOLUS OF MATURE, EXPERIENCED, AMERICAN TRAINED AND ENGLISH AS FIRST LANGUAGE PHYSICIANS ARE GOING TO DISAPPEAR.  The red button in the box you read about is going to take out a generation of them. THIS IS GOING TO HAPPEN AT THE SAME TIME AS THE OBESE DIABETIC HYPERTENSIVE BABY BOOMER GENERATION PUTS UNHERALDED DEMANDS ON THE SYSTEM PER PATIENT.   Physicians are quickly recognizing the binary choices they are facing, put up with all the regs and intrusions and entitlements to their labor and expertise or quit. 

BTW, I stopped doing public screenings for the 'underprivaledged' kids in my community when they all showed up in cars that were newer than mine.

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Re: Daily Digest - July 19

The investment bank Goldman Sachs is reportedly trying to stop Australian legal action against it being heard in the United States.

The Australian fund manager Basis Capital is suing Goldman for about $1 billion in damages and losses for selling it an investment which it says caused the failure of one of its hedge funds.

Basis Capital's US-based lawyer, Eric Lewis, says Goldman appears to be arguing that because Basis is Australian and the litigation is a foreign securities claim, the legal action should not be brought under US federal securities laws.

"We think that's entirely wrong, because they were dealing with New York, the securities were issued by New York and, to the extent JB Were or any other Goldman entity was out there selling these securities, they were doing it as an agent of Goldman Sachs New York," he told ABC News.

Mr Lewis has also called for the Australian corporate regulator to investigate the investment bank over the way it marketed its products in Australia.

The US market regulator, the Securities and Exchange Commission, recently fined Goldman Sachs $US550 million dollars for misleading investors over the quality of another investment product .

Eric Lewis says the Australian Securities and Investments Commission should look into Goldman's behaviour.

"Particularly if Goldman is going to say well, if we sell a security to an Australian that doesn't concern the United States," he said.

"I think there is an important role for the Australians, if Goldman wants to do business in Australia they're going to have to meet those requirements."

A spokeswoman for Goldman Sachs JBWere has declined to comment.

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Re: Daily Digest - July 19

We have a long history of making decisions case by case without any reference between cases.  M.D. Doctors work hard and in the mid-west a few years ago my former CPA's son began his career at a $525,000 pay scale as a urealogist.

Yes, his dad pushed him hard and he worked hard to obtain his educational acheivement.  

Now, what is the beginning salary for all other Phd Degrees and an objective measure of the effort required to earn this level of achievement?  Does this reveal a tiny bit of unfairness in pay distribution?

In a small University City in the midwest with two hospitals that have between 4,000 and 5,000 employees between them, and that has a couple hundred doctors. it is no surprise that all the doctors licensed to do surgery belong to the same clinic and each an every one post exactly the same price for each procedure.  No price fixing in that - huh!

No surprise that when you combine the contributions to lobbyist from Doctors, hospitals, and the big Pharma companies you find the largest donors to our political system..  Look around your principal city and see who is expanding during this depression.  Pick 10 MD's at random and drive by their homes to see how they live.

You are also looking at the next big economic disaster.  The doctors and the hospitals are dependent on the U.S. Government.

 

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Re: Daily Digest - July 19

If you think the government is not the number 1 source of income for the hospitals and doctors than just look at the outcome when you cut the government out of the payment scheme.  Left to you and me the doctors and hospitals will be left facing a whole new world.

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Re: Daily Digest - July 19

If you think the government is not the number 1 source of income for the hospitals and doctors than just look at the outcome when you cut the government out of the payment scheme.  Left to you and me the doctors and hospitals will be left facing a whole new world.

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Re: Daily Digest - July 19
ashvinp wrote:

My point is that many people seem to focus on teachers, firemen, police forces, etc. as overpaid drags on the economy while conveniently ignoring the MAJOR drags on the economy such as overpaid executive employees of banks, defense comapnies, energy companies, etc.

And guess who's paying the salaries and bonuses for a lot of these people, who not only produce NOTHING of value but actually DESTROY value and create systemic economic, political and societal risks? YOU, the taxpayer.

Hmm, last time I checked most energy companies, and banks were not taxpayer funded.  Although the way the current administration seems to want to socialize everything,they probably will be soon.   We already have massive interferences in those markets as well with the Fed, DOE, local PRCs, ...

LionelHastings wrote:

You are also looking at the next big economic disaster.  The doctors and the hospitals are dependent on the U.S. Government.

I agree. Government causes the problems either thru regulation, socializing, and removing market forces that act to keep prices and wages in check.  With the new mandate and further government involvement in healthcare what little market forces we have will be gone and prices are going up and quality down.  Now we have the goverment admitting that the obamacare mandate is just another tax!

With the push to HMOs and managed care there is no market force.  No one, not even doctors asks how much something costs.  Then we have government enforcing all kinds of new regulations and now forcing people to buy a private product.

I really encourage people to watch the John Stossel documentary: Sick in America.

 

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Re: Daily Digest - July 19

Let's check out some numbers.

Or we could get the money from DOD, or their subsidiary NASA. Or get rid of tax breaks and subsidies for big corporations. Or tax the financial institutions that caused this economic mess, leading to high unemployment. Government employees were (are) overpaid and made unrealistic promises, but they are just one relatively uninfluential group vying for a share of the pie, and they are getting axed by the dozens every other week - just read the headlines.

Let's for purposes of argument say there are about 1000 or so defense contractor bigshots.  The rest of the defense contractor employees all make less than federal employees, so they don't count.  Let's say the big shots make about $400,000 or so on average, probably not too far off.  That is a total of about $400,000,000.  About 1/2 a billion.  Their total salary would fund unemployment for about one day.

Let's look at firefighters.  There are 1,148,850 in the US.  In California they make on average about $150,000/year.  Where the big shock is on retirement.  A typical endowed retirement for a firefighter at age 55 is about $5,000,000.  Let's say the US average is half of that.  If firemen were all like California (there are not enough women firefighters to matter), that would be a total of $5 trillion dollars in retirement  bennies.  If the national average were 1/2 that still is a few trillion dollars.  That could fund unemployment for a few eons.  Annually in salary we are looking at  75 billion plus bennies and retirement.  Taken at a 30 year rate of retirement,  the retirement amortization alone is 100 billionj/year.  This does not include the fire chiefs in CA, some of whom are retired at over $300,000/year, and pull down another $300,000/year chiefing somewhere else.  Of course there are a lot of chiefs.  Every firehouse has a chief.

And that is just firemen, not the wide bodied bureaucrats that comandeer desks.

Yeah, let's go after a few, marginal DoD contractor execs, the ones that pull out there hair at all the regulations they have to follow, and the all the restrictions on profit and pay.  But we need to leave the overpaid, 8% annual raise, government employees alone, since they need to be protected.

 

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rhare
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Re: Daily Digest - July 19
printfaster wrote:

Yeah, let's go after a few, marginal DoD contractor execs, the ones that pull out there hair at all the regulations they have to follow, and the all the restrictions on profit and pay.  But we need to leave the overpaid, 8% annual raise, government employees alone, since they need to be protected.

Well said.  I like your analysis and it goes to show how out of whack things are.....  It's going to be ugly when the unions get told no or the people are told, sorry no food for you so that we can pay these rediculous retirement benefits.  It's probably less expensive for the population to just let the house burn down.

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Re: Daily Digest - July 19
Quote:

In a second clip from the same event posted online, Sherrod appeared to urge black job seekers to find work at the Department of Agriculture because the federal government won't lay people off. 

"There are jobs at USDA and many times there are no people of color to fill those jobs because we shy away from agriculture. We hear the word agriculture and think, why are we working in the fields?" she said. "You've heard of a lot of layoffs. Have you heard of anybody in the federal government losing their job? That's all I need to say."

Source

Just came across this article talking about the whole racist issue with the NAACP and within the USDA, but the last comments are rather revealing as well and seem to fit with some of the recent discussions on growing government.  Thre rest of the article showing blatent discrimination (reverse) is quite aggravating as well.

Gee, I really hope I have the opportunity to deal with some government bureaucrat like this someday.  Unfortunately with the growth of government in all aspects of our lives, I'm sure many of us will.

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Re: Daily Digest - July 19

 

Will transfer this to July 20 when comments are enabled:

 

"WASHINGTON – With a new face and a 60th vote for breaking a Republican filibuster, Senate Democrats are preparing to restore jobless checks for 2.5 million people whose benefits ran out during a congressional standoff over deficit spending. President Barack Obama says, "It's time to do what's right.""

"Democrats note that the GOP is far more concerned about the $33 billion impact of the jobless benefits on the deficit than the far larger cost of extending Bush-era tax cuts. "

"July 16 (Bloomberg) -- The bursting of the U.S. housing bubble has left homeowners buried under about $4 trillion of excess mortgage debt, according to Dhaval Joshi, the chief strategist at RAB Capital.

The CHART OF THE DAY compares the total amount of home loans outstanding with the value of residential real estate, as compiled by the Federal Reserve, for the past two decades. The latter is adjusted to reflect the average 40 percent debt-to- value ratio that prevailed from 1990 to 2005.

Mortgage balances were $3.64 trillion higher than the adjusted figure as of March 31, as shown in the top panel. The actual ratio, which stood at 62 percent at the end of the first quarter, appears in the bottom panel.

To eliminate the excess and bring down the ratio to its historical norm, either house prices would have to surge or home-loan repayments and defaults would have to accelerate, Joshi said today in an interview.

“In either scenario, it would be a disaster,” the strategist said, adding that prices are unlikely to recover any time soon. The U.S. has 4 million more homes than it needs, by his count. Interest rates will have to stay relatively low for “a prolonged period” to revive the housing market, he said. "

"WASHINGTON - THE broadest shake-up in US financial services law since the Great Depression will likely require the Securities and Exchange Commission to beef up its staff with 800 new positions, the SEC's chief said in prepared remarks on Monday.

Carrying out these new responsibilities will be 'logistically challenging and extremely labour intensive,' SEC Chairman Mary Schapiro said in testimony prepared for a House of Representatives subcommittee hearing to be held on Tuesday. "

"CHINA has passed the US to become the world's biggest energy consumer, according to new data from the International Energy Agency.

The milestone reflects both China's decades-long burst of economic growth and its rapidly expanding clout as an industrial giant.

China's ascent marks “a new age in the history of energy”, IEA chief economist Fatih Birol said. The country's surging appetite has transformed global energy markets and propped up prices of oil and coal in recent years, and its continued growth stands to have long-term implications for US energy security."

.........................4A) China Passes US as World's Biggest Energy Consumer

"NEW YORK (CNNMoney.com) -- Just how much will BP pay in fines to the U.S. government? In a worst case scenario, they could top $18 billion.

BP (BP) has already announced a $20 billion fund to compensate disaster victims. But it will also owe a huge amount in fines for violating the Clean Water Act: Up to $4,300 per barrel of oil released if it's found the company was negligent in causing the disaster, according to a Justice Department spokesman.

No one has a precise number for how much oil has spewed into the Gulf. The Coast Guard originally said it was just 1,000 barrels a day. That figure has since been revised up to between 35,000 and 60,000 barrels a day.

Taking the high end of that estimate - over 4.3 million barrels of oil released since the spill began - the fines could total over $18 billion, and that's accounting for the 800,000 or so barrels BP had said it has captured."

"With dozens of California cities and counties seeking to reform soaring employee retirement costs, San Jose Councilman Pierluigi Oliverio on Monday called for voters to decide whether they want to continue paying millions into the city's pension system.

Oliverio wants to change the city charter — which requires a public vote — to remove language that spells out at what age employees can retire and how much the city must pay into their pensions. Instead, he wants the council to have the flexibility to determine those numbers.

While union officials assailed the proposal, Oliverio called the city's pension costs "out of control." Even as it lays off workers, the cash-strapped city will pay nearly $200 million this year to cover its pension obligations; next year, that's projected to swell as high as $250 million.

"If you're a resident and if you've ever said, 'Why is my street not paved? Why is my library not open? Why aren't there enough police officers?', it's because the pension system has grown to such a large proportion," said Oliverio.

Under the current charter, for every $3 an employee contributes to his or her pension, San Jose contributes $8. "You can't do a 250 percent match anymore when the private sector is only getting a 3 percent match," Oliverio argued."

"Commercial enrollment continued to tumble in a tough economy. Commercial membership fell by 440,000 from a year ago. That represents a decline of less than 2 percent, and UnitedHealth said the result was better than expected. In the first quarter, commercial enrollment fell 4 percent."

"Revenue for the Ovations Medicare and Medicare supplement business rose 13 percent to $9 billion. Revenue for the AmeriChoice Medicaid business increased 21 percent to $2.5 billion."

"July 19 (Bloomberg) -- BP Plc’s oil spill may cost the U.S. Gulf Coast region 17,000 jobs and about $1.2 billion in lost economic growth by year-end even if the flow is stanched permanently next month, Moody’s Analytics said.

Under a more pessimistic scenario in which the oil spill continues through December and President Barack Obama’s six- month moratorium on deepwater drilling is extended, economic losses may reach $7.4 billion, and more than 100,000 jobs would be lost, Moody’s said today in a report written by Marisa Di Natale, a director based in West Chester, Pennsylvania. "

"Mortgage insurer PMI has cut its growth projections for 2010 home sales by more than half. The company’s analysts now expect sales of existing homes to rise a modest

2.9 percent for the year to 5.31 million units. That’s a sharp downgrade from a mere month ago, when they were predicting we’d see a 6.1 percent annual gain.

The forecast for new home sales, too, has been slashed. Last month, PMI was forecasting a 19.9 percent jump for the year. But now, they’ve dropped it to 9.4 percent, representing total annual sales of 409,000 units for new homes.

PMI says the falloff in sales numbers now that the tax credit is gone suggests homebuying activity has already reached its high-water mark for the year. Even record low mortgage rates and attractive pricing – both factors that should entice buyers to come off the sidelines – aren’t doing enough to elevate demand in today’s market."

  • Other news and headlines:

Memphis foreclosure rate threatens city's health, Mayor Wharton says

ECB's Noyer: Eurozone Members Must Cut Deficits, Debt Quickly

ECB funding to Greek banks at 93.8 bln eur end-June

Russia's Central Bank says 209 banks need to recapitalize by 2012

NJ faces $10.5B budget deficit heading into next year

Hungary Borrowing Costs Jump as Debt Auction Misses Target; Forint Slips

Pound slips on wider-than-expected UK Budget deficit and UK public deficit higher than expected in June

1 million Ontario workers face wage freeze

Tuition to increase by 10 percent for fall semester (LSU)

Senate lining up more than $100 billion in spending initiatives this week (Blog)

Rendell says 700 layoffs possible (Pennsylvania)

Violent Weekend Plagues Oakland Following Layoffs

NY State General Fund Shows $87.1Mln 1Q Loss -Comptroller

San Bernardino police furloughs OK'd

New Jersey Towns May Be Strained by Cap, Moody's Says

Thousands fear eviction from public housing in San Francisco

Home construction falls 5 percent in June to lowest level since October; building permits rise

FDIC Sells Pool of AmTrust Nonperformers for 37 Cents on the Dollar

ashvinp's picture
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Re: Daily Digest - July 19
rhare wrote:
ashvinp wrote:

My point is that many people seem to focus on teachers, firemen, police forces, etc. as overpaid drags on the economy while conveniently ignoring the MAJOR drags on the economy such as overpaid executive employees of banks, defense comapnies, energy companies, etc.

And guess who's paying the salaries and bonuses for a lot of these people, who not only produce NOTHING of value but actually DESTROY value and create systemic economic, political and societal risks? YOU, the taxpayer.

Hmm, last time I checked most energy companies, and banks were not taxpayer funded.  Although the way the current administration seems to want to socialize everything,they probably will be soon.   We already have massive interferences in those markets as well with the Fed, DOE, local PRCs, ...

You do realize that most of the money from TARP, QE, ZIRP, homebuyer tax credits, loan refinancing programs, etc. go to banks directly or indirectly? All of that and accounting fraud are the only things keeping these huge banks solvent, and keeping top level executives receiving their salaries and bonuses. And I shouldn't have to explain where defense contractors get their salaries from. Energy companies (and other big corporations) have historically been subsidized in various ways by the government and use their lawyers to find clever ways of avoiding taxes - cut those out and we get more revenue.

Taking money from taxpayers and giving it to privately-run corporations is NOT SOCIALISM (don't believe everything Glenn Beck tells you). In fact it is quite the opposite of socialism - corrupt capitalism.

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Re: Daily Digest - July 19
ashvinp wrote:

Taking money from taxpayers and giving it to privately-run corporations is NOT SOCIALISM (don't believe everything Glenn Beck tells you). In fact it is quite the opposite of socialism - corrupt capitalism.

So how about we stop having the government steal from the citizens and giving it to anyone. SmileAnd actually much of the TARP, QE, ... may go to the banks, but it's keeps flowing from there, much goes to unsustainable pension and retirement funds (through pumping up the stock of those banks), purchase of government bonds, and more subsidized housing.  So while you may vilify the banks, it's just because your not looking at all the juggling.  One of these days, the juggler will drop the balls.

So how about we go with no theft from the government and lets stop the juggler instead of continuing the stupid bickering about what color balls he should juggle.

On another note, do you actually watch Glenn Beck or are you just regurgitating?

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ashvinp
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Re: Daily Digest - July 19
printfaster wrote:

Let's check out some numbers.

Or we could get the money from DOD, or their subsidiary NASA. Or get rid of tax breaks and subsidies for big corporations. Or tax the financial institutions that caused this economic mess, leading to high unemployment. Government employees were (are) overpaid and made unrealistic promises, but they are just one relatively uninfluential group vying for a share of the pie, and they are getting axed by the dozens every other week - just read the headlines.

Let's for purposes of argument say there are about 1000 or so defense contractor bigshots.  The rest of the defense contractor employees all make less than federal employees, so they don't count.  Let's say the big shots make about $400,000 or so on average, probably not too far off.  That is a total of about $400,000,000.  About 1/2 a billion.  Their total salary would fund unemployment for about one day.

There are many things wrong with your back of the envelope calculation, including the fact that there are 200,000+ private security contractors in Iraq and Afghanistan, and a signficant percentage of them (maybe all) make more than at least $100,000 a year, which is more than many federal or state employees. If we cut that force in half, that's easily $10B which would go a long way towards funding long-term unemployment compensation. Not to mention the large amount of fraud going on over there, where contracting companies just "lose" billions of dollars without doing any work for it.

Quote:

Let's look at firefighters. There are 1,148,850 in the US.  In California they make on average about $150,000/year.  Where the big shock is on retirement.  A typical endowed retirement for a firefighter at age 55 is about $5,000,000.  Let's say the US average is half of that.  If firemen were all like California (there are not enough women firefighters to matter), that would be a total of $5 trillion dollars in retirement  bennies.  If the national average were 1/2 that still is a few trillion dollars.  That could fund unemployment for a few eons.  Annually in salary we are looking at  75 billion plus bennies and retirement.  Taken at a 30 year rate of retirement,  the retirement amortization alone is 100 billionj/year.  This does not include the fire chiefs in CA, some of whom are retired at over $300,000/year, and pull down another $300,000/year chiefing somewhere else.  Of course there are a lot of chiefs.  Every firehouse has a chief.

And that is just firemen, not the wide bodied bureaucrats that comandeer desks.

Even if I accept your numbers here (which I'm somewhat skeptical of - any sources?), this is really an irrelevant comparison. Obviously the combined salaries and pension benefits of all firefighters in all states will be significantly more than those of private security contractors who have been working for a few years in the Middle East. The former saves lives when buildings are on fire and saves property by putting the fire out, while the latter kills innocent civilians in the Middle East and engenders hate against our country. Also, comparing endowed retirment benefits for firefighters to annual salaries of security contractors is very unfair.

Quote:

Yeah, let's go after a few, marginal DoD contractor execs, the ones that pull out there hair at all the regulations they have to follow, and the all the restrictions on profit and pay.  But we need to leave the overpaid, 8% annual raise, government employees alone, since they need to be protected.

 

You're really missing the point here. It's not about going after a "marginal" contractor execs, it's about going after a systemic black hole of wasted money that funds our "wars on terrorism", or should I say "wars for resources". If we weren't fighting these useless wars, we wouldn't have to award our most recent $20B contract to Xe for security operations over there. And that's just a drop in the bucket of how much money we have awarded to all of these companies over the last 10 years. I guarantee you have gotten a hell of a lot more bang for your buck from the work of government employees than you have from the operations of security contractors, unless you count all the random explosions they have caused.

But don't worry, TPTB will listen to you before they ever listen to me. Government employees will continue to be axed, while bankers and "defense" contractors will continue to operate with impunity. I guess that's just the world we live in.

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ashvinp
Status: Gold Member (Offline)
Joined: Jan 20 2010
Posts: 412
Re: Daily Digest - July 19
rhare wrote:
ashvinp wrote:

Taking money from taxpayers and giving it to privately-run corporations is NOT SOCIALISM (don't believe everything Glenn Beck tells you). In fact it is quite the opposite of socialism - corrupt capitalism.

So how about we stop having the government steal from the citizens and giving it to anyone. SmileAnd actually much of the TARP, QE, ... may go to the banks, but it's keeps flowing from there, much goes to unsustainable pension and retirement funds (through pumping up the stock of those banks), purchase of government bonds, and more subsidized housing.  So while you may vilify the banks, it's just because your not looking at all the juggling.  One of these days, the juggler will drop the balls.

So how about we go with no theft from the government and lets stop the juggler instead of continuing the stupid bickering about what color balls he should juggle.

On another note, do you actually watch Glenn Beck or are you just regurgitating?

I guess I have a more cynical view of the banking ponzi scheme than you. Yes they have used bailout money to pump stocks and bonds, but do you really think that is for the benefit of anyone other than themselves? Those pension funds will be wiped out when the market crashes, and it will, but will those bank executives be wiped out? I doubt it.

I agree that, up until recently, our society acted as what Charles Hugh Smith would call a "Savior State" with many protected fiefdoms, including the FIRE sector but also unions and retirees. However, what I see happening now is most of these other groups (fiefdoms) being marginalized as multiple claims on a single piece of productive pie are being extinguished. But how about the financial fiefdom? No, they are doing quite well and gaining even more control over the levers of power. I'm all for cutting out theft from the government by all parties, but I'm also well aware that public employees are gradually losing their jobs and promised benefits, while major banks are just going about business as usual, and actually increasing their share of the pie.

As for GB - I rarely watch ANY msm "news" shows anymore, but I do catch clips of them from time to time. And I know that GB repeatedly claims our country is becoming socialist under Obama's administration, and this is simply not true. Corrupt? Yes, our government has always been corrupt and continued to be under Obama. Socialist? No, that's a complete misunderstanding of the concept of socialism. When Obama really starts telling comapnies like Goldman Sachs and BP how to conduct their businesses for the benefit of the treasury (taxpayers), then we can call him socialist, and frankly I would prefer that happen much more than the situation we have now.

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