Daily Digest

Daily Digest - July 26

Sunday, July 26, 2009, 10:45 AM
  • Sprott's David Franklin On The Depression
  • Frontline: Madoff (Video)
  • Is it 'Cash for Clunkers' for Chumps?
  • S & P Earnings, Inflation Adjusted (Chart, H/T DammTheMatrix)
  • Companies That Donate Find Themselves in Earmarks
  • California Budget: Misery Loves Company
  • SEC Begins Investigation Into Goldman Sachs
  • UK GDP (Chart on page)
  • GlaxoSmithKline Predicts Swine Flu Gold Rush
  • 85 Billion Reasons (Video, H/T Cat233)
  • 1 Week: $235,000,0000,000.00

Economy

Sprott's David Franklin On The Depression (Link to video on page, little hard to see)

Frontline: Madoff (Video)

Is it 'Cash for Clunkers' for Chumps?

Here's how it works: If you own a 1984 or newer vehicle that has been insured and registered to you for the past year and gets a "combined" 18 miles to the gallon or less, you can qualify. The car must also be drivable.

If you trade it in for a car that gets an additional four more miles per gallon or more, your reward is a $3,500 voucher, which can be used toward purchasing a new car.

S & P Earnings, Inflation Adjustd (Chart, H/T DammTheMatrix)

Companies That Donate Find Themselves in Earmarks (Video on page)

California Budget: Misery Loves Company

"We may have to declare bankruptcy – that's how serious this is," said City Administrator Troy Butzlaff. "This is something the system can't endure. We just avoided bankruptcy by doing all the right things; by cutting back, by getting concessions from staff, by cutting $4.5 million over last year's budget."
...
Butzlaff said earlier this week the state legislators' budget proposals could take roughly $900,000 from gas tax money, $800,000 from property tax money, and $400,000 from the Redevelopment Agency.
...
"Some of my cities are in good shape, some are teetering on the edge," [State Sen. Bob Huff, R- Diamond Bar] said. "It's not fair for the state to outsource its miseries to the local level."

SEC Begins Investigation Into Goldman Sachs

We are taking your complaint regarding Goldman Sachs and its proprietary software that may be used to manipulate the markets very seriously, and have referred it to the appropriate people within the SEC.

UK GDP (Chart on page)

GlaxoSmithKline Predicts Swine Flu Gold Rush

GlaxoSmithKline is preparing to sell billions worth of swine flu drugs this year. Their swine flu vaccine will be available by September, and international governments are already stockpiling large supplies of GSK's anti-viral treatment Relenza.

Worldwide sales from the two drugs are expected to be enormous, but the company rejected claims it was exploiting the pandemic.

85 Billion Reasons (Video, H/T Cat233)

1 Week: $235,000,0000,000.00

There’s bad and then there’s horrific… the amount of bond offerings next week can be called nothing short of horrific. The total? For one week? $235 BILLION!!! That’s nearly a quarter trillion in just one week of DEBT issuance. Annualized, that’s over $12 trillion, which of course is completely not doable. Heck, I don’t believe $235 billion in one week is truly doable.

10 Comments

fujisan's picture
fujisan
Status: Gold Member (Offline)
Joined: Nov 5 2008
Posts: 296
Re: Daily Digest - July 26

 Don’t Worry – Be Happy

All across the United States, billboards are appearing with messages telling people to stop worrying about the recession. Such messages as “Recession 101- interesting fact about recessions, they end” and “Stop obsessing about the economy, you’re scaring the children”. These billboards, now 1,000 of them spread across America, including New York’s Times Square apparently have been funded by an anonymous East Coast donor.

I don’t know about you but these billboards give me the creeps. Everywhere we go it seems as if we are being told how we should think and feel. The government constantly tells us that we should not be concerned about the economy. Back in 2007, then President Bush assured the nation that the fundamentals of the economy were strong and solid. This was at the same time I was writing about how things were not good with the economy, in direct contradiction to what the government was telling you.
...

America… start thinking for yourselves, form your own ideas and beliefs, not those that which are pounded into you by the mainstream financial media and the government talking heads.

The financial balance sheet of the United States is in the worst condition in history, and it will be you and I who are going to be stuck with the tab for their mistakes. And as the hard-working Americans who are struggling every day to make ends meet, losing their homes, and losing their jobs are being told to stop worrying about the economy it is those who created the mess to begin with who will reap great rewards at the expense of the taxpayers and those losing their jobs and income.

My fellow Americans, you are being brainwashed and perhaps not even know it.

 

Jeff Borsuk's picture
Jeff Borsuk
Status: Silver Member (Offline)
Joined: Jul 25 2008
Posts: 150
Re: Daily Digest - July 26

Let's keep a close eye on the $235 B in bonds this coming week...I suspect the Fed may be stepping in.

Jeff

 

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2236
Re: Daily Digest - July 26

 And this from July 22 over at Jesse's Crossroads Cafe blog:

http://jessescrossroadscafe.blogspot.com/2009/07/sp-futures-hourly-chart...

He's talking about indicators that...uh...indicate the S&P ought to be turning down anytime now (in the next 5 weeks or so)...

Just one more opinion...

Viva -- Sager

mainecooncat's picture
mainecooncat
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Joined: Sep 7 2008
Posts: 488
Re: Daily Digest - July 26

If those billboards aren't the very essence of Orwellian, I don't know what is.

They might as well read: "Attention mostly-tubs-of-lard, proceed to the nearest milky teat of debt and ignorance immediately."

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2236
Re: Daily Digest - July 26
mainecooncat wrote:

If those billboards aren't the very essence of Orwellian, I don't know what is.

They might as well read: "Attention mostly-tubs-of-lard, proceed to the nearest milky teat of debt and ignorance immediately."

I see this story as supporting my "the next 10 years will see the middle class ground down to a nub" theory.  Those with assets left after each downleg in the economy (last year being one, and methinks this Fall will see 'nother) will be encouraged -- once Things Have Officially Stabilized -- to get back out there and spend/leverage themselves, only to get creamed by the next downleg.  Lather, rinse, repeat until we're living firmly in the 3d world.

Just one man's opinion...

Viva -- Sager

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Hugh Hendry

This is a couple months old, but still a great perspective.

"When I think of QE I think about the quantitative theory of insanity. This is an idea from the British writer Will Self who says there is a fixed portion of sanity in the world at any one time. So as one group becomes more sane, another group becomes more insane. In our case, as the Fed and the BOE have become more sane by printing money the so called gurus like Soros and Buffett suffer a deficit of sanity. They are saying the actions of these central banks will lead to inflation. I contest that.

The central banks are replacing the dollars and pounds destroyed in unprecedented amounts by the recession. I am a friend of the central banks – they understand the history of the 1930s and are trying to prevent us returning there. This destruction of dollars and pounds is creating a scarcity of money. We are losing dollars and pounds from the system. 

Perhaps the real question is whether the central banks should be even more aggressive. The Fed is creating $2 trillion, but maybe they should be creating $10 trillion. I don’t think 2 is the right number. Based on the Taylor rule on employment and inflation, the Fed's own forecasters think interest rates should be at minus 5. That would imply a level of money creation at $10 trillion.

The private sector has got it wrong. The private sector is refusing to spend and that is going to have the effect of making money even more scarce. That will push us closer to depression. That is why I say the central banks are our friends; they are trying to help the economy recover while the likes of Buffett are arguing against these actions. I think he is wrong."

Link

Bernanke's greatest fear is that the politicians are going to prevent him from a pulling off a second bailout. There still is $500 trillion in derivatives out there waiting to be marked to market, Suddenly, the 23 trillion in Fed backstopping and bailouts doesn't look so outrageous.

fujisan's picture
fujisan
Status: Gold Member (Offline)
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Posts: 296
Re: Daily Digest - July 26

 Nathan's Economic Edge: Dr. Marc Faber – “This is not the final crisis…”

Beginning at about 6:50 into this video, Dr. Faber sums up the current situation well, “Nothing has been cleared - it has gotten worse & worse & worse & worse. There is this entanglement between Wall Street and corrupt politicians and the Treasury and Federal Reserve… The doors are open between the three and Goldman Sachs…”

No kidding! Now we’re talking about the roots of the problem as I’ve been describing and is exactly why I say that corporations and their money need to be separated from government.

Dr. Faber goes on to say, “This is not the final crisis. The final crisis is the one where the whole system will collapse and the whole system will be cleaned of corrupt politicians and incompetent policy makers!”

BRAVO! It is unfortunate that we are heading in that direction, but that’s exactly the way I see it. Keep in mind that Dr. Faber has a terrific track record of calling the crisis and he was correctly calling for an extended rally from the March lows…

fujisan's picture
fujisan
Status: Gold Member (Offline)
Joined: Nov 5 2008
Posts: 296
Re: Daily Digest - July 26

naked capitalism: Iceland Proves That in a Financial Crisis, Breaking Glass and Trashing Currency is a Good Remedy

The headline exaggerates, but not by much. Back in April, a Vanity Fair story about Iceland's remarkable financial blow up was grist for a Vanity Fair story by Michael Lewis, "Wall Street on the Tundra". The quick version is that Icelandic men were not merely reckless, that is such a common male pathology as to barely warrant mention, but were possessed of a particular fondness for physical aggression and bullheadedness that helped made Iceland ground zero for the most spectacular banking industry boom and bust in the history of man. Iceland managed to go on a debt party that saw its obligations soar to 850% of GDP, leaving America at a mere 350% firmly in the dust.

So how is Iceland faring now? One would assume still broke and chastened. One would be dead wrong.
...

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
COULD YOU SURVIVE WITHOUT MONEY?
COULD YOU SURVIVE WITHOUT MONEY?
http://men.style.com/details/features/landing?id=content_9817

"THERE ISN'T ENOUGH SPACE IN SUELO'S cave for two, so I sleep in the open, at the edge of a hundred-foot cliff. "

COULD YOU SURVIVE WITHOUT MONEY? MEET THE GUY WHO DOES
In Utah, a modern-day caveman has lived for the better part of a decade on zero dollars a day. People used to think he was crazy By Christopher Ketcham; Photograph by Mark Heithoff

DANIEL SUELO LIVES IN A CAVE. UNLIKE THE average American—wallowing in credit-card debt, clinging to a mortgage, terrified of the next downsizing at the office—he isn't worried about the economic crisis. That's because he figured out that the best way to stay solvent is to never be solvent in the first place. Nine years ago, in the autumn of 2000, Suelo decided to stop using money. He just quit it, like a bad drug habit.

His dwelling, hidden high in a canyon lined with waterfalls, is an hour by foot from the desert town of Moab, Utah, where people who know him are of two minds: He's either a latter-day prophet or an irredeemable hobo. Suelo's blog, which he maintains free at the Moab Public Library, suggests that he's both. "When I
lived with money, I was always lacking," he writes. "Money represents lack. Money represents things in the past (debt) and things in the future (credit), but money never represents what is present."

On a warm day in early spring, I clamber along a set of red-rock cliffs to the mouth of his cave, where I find a note signed with a smiley face: CHRIS, FEEL FREE TO USE ANYTHING, EAT ANYTHING (NOTHING HERE IS MINE). From the outside, the place looks like a hollowed teardrop, about the size of an Amtrak bathroom, with enough space for a few pots that hang from the ceiling, a stove under a stone eave, big buckets full of beans and rice, a bed of blankets in the dirt, and not much else. Suelo's been here for three years, and it smells like it.

 
Of greater interest than the no money bit:

"[...] he joined the Peace Corps and was posted to an Ecuadoran village high in the Andes. He was charged with monitoring the health of tribespeople in the area, teaching first aid and nutrition, and handing out medicine where needed; his proudest achievement was delivering three babies. The tribe had been getting richer for a decade, and during the two years he was there he watched as the villagers began to adopt the economics of modernity. They sold the food from their fields -- quinoa, potatoes, corn, lentils -- for cash, which they used to purchase things they didn't need, as Suelo describes it. They bought soda and white flour and refined sugar and noodles and big bags of MSG to flavor the starchy meals. They bought TVs. The more they spent, says Suelo, the more their health declined. He could measure the deterioration on his charts. "It looked," he says, "like money was impoverishing them. [...]"

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
COULD YOU SURVIVE WITHOUT MONEY?
COULD YOU SURVIVE WITHOUT MONEY?
http://men.style.com/details/features/landing?id=content_9817

"THERE ISN'T ENOUGH SPACE IN SUELO'S cave for two, so I sleep in the open, at the edge of a hundred-foot cliff. "

COULD YOU SURVIVE WITHOUT MONEY? MEET THE GUY WHO DOES
In Utah, a modern-day caveman has lived for the better part of a decade on zero dollars a day. People used to think he was crazy By Christopher Ketcham; Photograph by Mark Heithoff

DANIEL SUELO LIVES IN A CAVE. UNLIKE THE average American—wallowing in credit-card debt, clinging to a mortgage, terrified of the next downsizing at the office—he isn't worried about the economic crisis. That's because he figured out that the best way to stay solvent is to never be solvent in the first place. Nine years ago, in the autumn of 2000, Suelo decided to stop using money. He just quit it, like a bad drug habit.

His dwelling, hidden high in a canyon lined with waterfalls, is an hour by foot from the desert town of Moab, Utah, where people who know him are of two minds: He's either a latter-day prophet or an irredeemable hobo. Suelo's blog, which he maintains free at the Moab Public Library, suggests that he's both. "When I
lived with money, I was always lacking," he writes. "Money represents lack. Money represents things in the past (debt) and things in the future (credit), but money never represents what is present."

On a warm day in early spring, I clamber along a set of red-rock cliffs to the mouth of his cave, where I find a note signed with a smiley face: CHRIS, FEEL FREE TO USE ANYTHING, EAT ANYTHING (NOTHING HERE IS MINE). From the outside, the place looks like a hollowed teardrop, about the size of an Amtrak bathroom, with enough space for a few pots that hang from the ceiling, a stove under a stone eave, big buckets full of beans and rice, a bed of blankets in the dirt, and not much else. Suelo's been here for three years, and it smells like it.

 
Of greater interest than the no money bit:

"[...] he joined the Peace Corps and was posted to an Ecuadoran village high in the Andes. He was charged with monitoring the health of tribespeople in the area, teaching first aid and nutrition, and handing out medicine where needed; his proudest achievement was delivering three babies. The tribe had been getting richer for a decade, and during the two years he was there he watched as the villagers began to adopt the economics of modernity. They sold the food from their fields -- quinoa, potatoes, corn, lentils -- for cash, which they used to purchase things they didn't need, as Suelo describes it. They bought soda and white flour and refined sugar and noodles and big bags of MSG to flavor the starchy meals. They bought TVs. The more they spent, says Suelo, the more their health declined. He could measure the deterioration on his charts. "It looked," he says, "like money was impoverishing them. [...]"

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