Daily Digest

Daily Digest - July 5

Monday, July 5, 2010, 9:51 AM
  • Small Business Sidelined In Slow Recovery From Recession
  • Home Closings Mired In Crude
  • Fed Made Taxpayers Unwitting Junk-Bond Buyers
  • It’s No Secret: Greece Is Restructuring Debt
  • Mauldin: The Dismal Science Really Is
  • U.K. Pound Falls, Gilts Rise on Outlook for Government Austerity Measures
  • Labour without force: Unemployment In America
  • Why Is the Gulf Cleanup So Slow?
  • Unstoppable Oil Dispirits Gulf Coast
  • BP: Oil Spill Costs Reach $3.1 Billion
  • Six-Foot Waves May Force BP to Delay Oil-Collection Effort in Mexican Gulf
  • China Fears Consumer Impact on Global Warming

Economy

Small Business Sidelined In Slow Recovery From Recession (cmartenson)

Small firms are on the sidelines, and it's not just because of tight credit from the financial meltdown, as the Obama administration and others have been saying.

Home Closings Mired In Crude (cmartenson)

Coldwell Banker Residential Real Estate says that six of its 22 sales that failed to close in late May and early June were on waterfront homes and the direct result of buyer qualms about the spill.

Fed Made Taxpayers Unwitting Junk-Bond Buyers (cmartenson)

The so-called assets included collateralized debt obligations and mortgage-backed bonds with names like HG-Coll Ltd. 2007-1A that were so distressed, more than $40 million already had been reduced to less than investment-grade by the time the central bankers testified. The government also became the owner of $16 billion of credit-default swaps, and taxpayers wound up guaranteeing high-yield, high-risk junk bonds.

It’s No Secret: Greece Is Restructuring Debt (Anton M.)

Get that? That 19 per cent haircut is based on the Greek state’s own calculation of the present value of these obligations of its hospital system. Others would probably use a higher discount rate. This kind of reduction in principal value, which paid for a critical import, is not, I believe, incorporated in the much touted “stress test” for European banks. The bank regulators and the European Central Bank seem to think any more than a small haircut in euro area state debt would be just too politically sensitive to consider. Yet here is the Greek state telling you their old paper isn’t worth what it was when they incurred the obligation."

Mauldin: The Dismal Science Really Is (JRB)

There's a reason economics is called the dismal science, and weeks like this just give it further meaning. In economics, there is what you see and what you don't. This week we are going to examine the headline data we all see and then take a look for what most observers do not see. Then we'll try to think about what it all really means.

U.K. Pound Falls, Gilts Rise on Outlook for Government Austerity Measures (jdargis)

“The budget consolidation in the U.K. is going to have significant consequences for growth,” said Steve Barrow, head of Group-of-10 foreign-exchange research at Standard Bank Plc in London. “In sterling terms there could be a cost, while it plays into the hands of gilts to some extent.”

Labour Without Force: Unemployment In America (jdargis)

Finally, while the unemployment rate did drop, to 9.5%, an 11-month low from 9.7%, it dropped for the wrong reason: a lot of people stopped looking for work. This might be because a Senate impasse led to the expiration of extended unemployment insurance benefits early in June. The number of recipients has been falling by about 200,000 per week since. Some of these people may have stopped looking for work (a requirement to qualify for benefits), and thus are no longer counted as unemployed. Census layoffs may have also played a part.

Environment

Why Is the Gulf Cleanup So Slow? (cmartenson)

Various skimmers and tankers (some of them very large) are available that could eliminate most of the oil from seawater, discharging the mostly clean water while storing the oil onboard. While this would clean vast amounts of water efficiently, the EPA is unwilling to grant a temporary waiver of its regulations.

Unstoppable Oil Dispirits Gulf Coast (jdargis)

A tour of affected beaches gives the impression that the full resources of the state and nation are not being mobilized. The politics of oil-drilling aside, the Legislature should meet in special session to hear creative ideas of how to rally all assets, including volunteers, to fight back against what is becoming a disaster of historic magnitude.

BP: Oil Spill Costs Reach $3.1 Billion (jdargis)

Rough seas are slowing down efforts to deploy oil skimming and containment vessels as weather forecasters predict waves of one to 2.5 meters high through Thursday.

Six-Foot Waves May Force BP to Delay Oil-Collection Effort in Mexican Gulf (jdargis)

The Helix Producer I, a floating platform that can gather 25,000 barrels of crude a day, can’t hook into subsurface equipment connected to the well on the sea floor until wave heights decline to 3 feet or less, said Bryan Ferguson, a spokesman for London-based BP. High waves kicked up by Hurricane Alex last week, followed by a 6-foot chop during the weekend, made it impossible to make the link, he said.

China Fears Consumer Impact on Global Warming (SolidSwede)

Chinese and Western energy experts worry that China’s energy challenge could become the world’s problem — possibly dooming any international efforts to place meaningful limits on global warming.

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8 Comments

Sam's picture
Sam
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Posts: 51
Kunstler's Tea Party

Anyone else read JHK today? James sounds a lot like those of us who started the Tea Parties (read: Ron Paul supporters) before the evangelical warmongers took over.

http://kunstler.com/blog/2010/07/my-tea-party.html

V's picture
V
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Posts: 849
Re: Kunstler's Tea Party

This was one of if not the best articles he has written. I am ready for the tea he is serving

V

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Damnthematrix
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Re: Daily Digest - July 5

The U.S. economy is in shambles and Americans will continue to see high unemployment and lower living standards in the years to come, Howard Davidowitz tells Henry and Aaron in the accompanying clip. 

Davidowitz lays much of the blame for the economy's woes at the feet of the Obama administration, which he calls "the worst of my lifetime."

Obama "Mr. Mass Destruction"

Davidowitz says that the key to Obama's success is his ability to sell his policies to the public. He can confidently read from a teleprompter and appear competent and in control, when in reality, "it's one big bag of empty words," Davidowitz says of Obama's messages.

Davidowitz contends that the President's spending, including the health-care bill, is creating massive deficits that will take the U.S. years to dig itself out of.  "He is Mr. Mass Destruction," Davidowitz says of Obama. "I mean he is a human destroyer. This guy has spent his way into oblivion and we don't have a budget. He is surrounded by a bunch of complete incompetents, led by himself. "

Housing Gloom

As far as the actual economy goes, Davidowitz's chief concern is the strained state of the housing market, from which the bad news continues to pour in. According to Davidowitz, Americans are facing an $8 trillion negative wealth effect from the bursting of the housing bubble.

"We're talking about some serious money here," Davidowitz exclaims. "I mean this is a complete disaster and that's why we are going to have a double dip. We're guaranteed a double dip in housing."

Small Businesses and Unemployment

Davidowitz says that the job market is also in ruins, noting for every new job there are six applicants. As a result of the intense competition for positions, employers can offer lower wages. Young people entering the work force today can expect to make less money in their lifetime than previous generations.   

Considering the majority of new jobs are created by small businesses, Davidowitz argues that new regulations governing loans to small businesses are only making matters worse -- both for the entrepreneurs and the millions of people out of work.

"We have this insane new regulation," Davidowitz says. "Community banks will not even be able to fill out the forms. They'll pack up and quit. They're already underwater. Commercial real estate is still terrible."  

The Future a Massive Struggle

Asked whether he thought the U.S. would experience another Great Depression, Davidowitz said the coming years will look more like Japan today vs. the U.S. in the 1930s.

People will be making and spending less money and the nation as a whole will be dealing with the consequences of the deficit, he says. "We are in a struggle, day by day it's ugly. At the core, when we look at our debt, we are going to have to deal with it."

A few months ago, while other analysts claimed that the economy would continue to follow a V-shaped recovery path, Davidowitz seemed out of step by insisting the nation's problems were still dire. Regardless of what you think of his message or style, Davidowitz's doom and gloom outlook now appears much more credible.

Doug's picture
Doug
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Re: Daily Digest - July 5

I don't know who Davidowitz is, but he goes a long way toward destroying his own credibility with his ridiculous anti-Obama rant.  I'm not a big fan of Obama, particularly economically, but laying this mammoth mess at his feet is preposterous.  He inherited an economic nightmare and has added somewhere around $2-3 trillion to the debt so far because he is listening to his economic gurus, many of whom have been advising presidents since Reagan. While Obama's immediate predecessor added $5 trillion, Clinton added something over $1 trillion in two terms, Bush I added $1trillion in his term and Reagan added $2 trillion; which, btw, tripled the debt from when he was elected.  This has been a long time in the making and it will take a long time to unwind it.  Obama is clearly in one camp, the stimulators, but so have been all his predecessors since Reagan at least.

These ridiculous political rants are a waste of time and blog space.

Doug

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targetbuster
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Re: Daily Digest - July 5

Doug,

I don't digest "ramblings" like Davidowitz puts on as politically motivated, he just hasn't thought through it enough to realize what you stated, they (politicians) are all at fault. Obama just has the pulpit at present. And any one of the presidents you mentioned would probably have done the same thing Obama did.

Politics is a side show, designed to keep the masses at each others throats while the financiers covertly run us in to ruin.

It's interesting that some of the heavy weights in the world of finance haven't figured that out yet.

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green_achers
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Posts: 205
Re: Daily Digest - July 5
Doug wrote:

I don't know who Davidowitz is, but he goes a long way toward destroying his own credibility with his ridiculous anti-Obama rant.  I'm not a big fan of Obama, particularly economically, but laying this mammoth mess at his feet is preposterous.  He inherited an economic nightmare and has added somewhere around $2-3 trillion to the debt so far because he is listening to his economic gurus, many of whom have been advising presidents since Reagan. While Obama's immediate predecessor added $5 trillion, Clinton added something over $1 trillion in two terms, Bush I added $1trillion in his term and Reagan added $2 trillion; which, btw, tripled the debt from when he was elected.  This has been a long time in the making and it will take a long time to unwind it.  Obama is clearly in one camp, the stimulators, but so have been all his predecessors since Reagan at least.

These ridiculous political rants are a waste of time and blog space.

Doug

Ditto for the Rubin article.  These partisan screeds don't add anything to our understanding of the issues.  I've lost a lot of patience with the Obama admin all by myself... at least until I read stuff like that.

Edited to clarify who I've lost patience with.

bc0203's picture
bc0203
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Re: Daily Digest - July 5

I think any discussion of what's going on in Arizona without a clear understanding of what the drug and human trafficking cartels have done from the border all the way up to Phoenix results in an incomplete view of the topic:

Mexican Drug Cartels Control Parts of Arizona

The United States is ceding parts of Arizona to the Mexican drug cartels. So says Pinal County (Ariz.) Sheriff Paul Babeu.

In a press conference ignored by the American national media, the sheriff described how his deputies were outmanned and outgunned by the cartel smugglers who increasingly operate using military tactics and weapons. The result, said Sheriff Babeu, was that a wide corridor of Arizona from the border North to the outskirts of Phoenix is effectively controlled by the cartels. "We do not have control of this area," the sheriff said.

At the same time as the sheriff's ignored press conference, the national media did cover assurances from the Obama Administration that crime was down at the border; that the border had never been safer. This ludicrous propaganda was based on selected crime stats from San Diego, Phoenix, Austin and San Antonio. The new reign of terror on the border in Arizona was airbrushed out of the picture.

Here's the real picture Obama does not want you to see. Warning signs were posted this past month by the federal government 80 miles North of the border on the South side of I-8 between Casa Grande and Gila Bend urging U.S. citizens not to camp or hike in the "Active Drug and Human Smuggling Area" because "Visitors May Encounter Armed Criminals." Here is a picture of one of those signs:

 

Think about it. A part of America is off limits to U.S. citizens because it is now controlled by an army of foreigners.

U.S. Fish and Wildlife staffers report that the 3,500 acre Buenos Aires National Wildlife Refuge in this area is closed to U.S. citizens as well and is "adversely affected" by cartel operations. Where's the Sierra Club?

The border between the U.S. and Mexico is almost 2,000 miles long. According to DEA sources, nearly half of all the cocaine and illegal aliens are smuggled into the U.S. over the 365 mile long Arizona border with Mexico. There's a war going on in Arizona which puts into perspective that state's new immigration law and makes clear that the "boycott Arizona" effort is cartel propaganda. "Boycott" cities like Los Angeles and San Francisco are siding with the cartels.

As with other recent wars, the American taxpayer seems to be funding both sides of this one. The "War on Drugs," "Homeland Security," the FBI, the Justice Department—all spend billions every year. On the other side, Los Zetas and other elements of the various drug gangs in Mexico are composed of former Mexican Army troops who were originally trained in military tactics and weapons at your expense, some right here in the U.S.

The only reason the cartels have not taken over all of Mexico is that they frequently fight each other in bloody largely unreported battles for control of valuable drug trafficking routes. Beheading of rival gang members and Mexican police are now routine. The latest barbarity was the grisly discovery of the skinned face of a murdered gang rival stretched over a soccer ball found in a youth soccer field.

Frequent cross border incursions into the U.S. by cartel soldiers in Mexican Army uniforms driving American-made Humvees and toting automatic weapons support an increasingly sophisticated web of smuggling routes. Patrolling sheriff deputies or lone Border Patrol officers are no match for this firepower and are ordered to fall back when confronted with the cartels' military might.

Aerial photographs taken by American civilian pilots show cartel bulldozers improving dirt roads across the undefended border after a seasonal rain to facilitate the nightly drug runs.

Obamanites attempt to blame you for this horrific state of affairs. If it weren't for your drug demand, all this would not be happening.

It's like saying bank robbery is the bank's fault for keeping so much tempting money in one place.

The border is a national security issue. Homeland Security has sent an official warning to border law enforcement agencies to watch for Somali terrorists suspected of taking advantage of the smuggling expertise of the cartels to sneak into the U.S. "The border has never been safer"?

The Obama response to growing public awareness of the realities of border violence was to loudly announce deployment of 1,200 National Guard troops to the border. At the same time, Obama officials quietly assured the Mexican government that the troops would be used only in support and clerical positions and would not be used to interdict smuggling operations.

Against this horrifying real news, the American national media continues to play the pawn to cartel propaganda. For two weeks, border news has been dominated by the shooting of a 15-year-old Mexican by a Border Patrol officer. In no "news" report of this incident is it mentioned that the "child" was a known smuggler or that the rocks thrown at the officers is a tactic used to distract officers away from an area where a smuggling operation is going down.

Sophomoric political appeals for "comprehensive immigration reform" are either ignorant of these facts of life along the border or a deliberate attempt to surrender to the cartels.

Wake up and smell the carnage, America. This ain't about strawberry pickers rights anymore.


Roger Hedgecock is a nationally-syndicated radio talk host. Visit rogerhedgecock.com. The Roger Hedgecock Show is syndicated on the Radio America network.

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Damnthematrix
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Posts: 3998
Re: Daily Digest - July 5

Steelworkers Form Collaboration with MONDRAGON, the World’s Largest Worker-Owned Cooperative
Jul 4, 2010 — KZeese http://www.prosperityagenda.us/node/4372

US Steel Workers

PITTSBURGH - The United Steelworkers (USW) and MONDRAGON Internacional, S.A. today announced a framework agreement for collaboration in establishing MONDRAGON cooperatives in the manufacturing sector within the United States and Canada. The USW and MONDRAGON will work to establish manufacturing cooperatives that adapt collective bargaining principles to the MONDRAGON worker ownership model of “one worker, one vote.”

“We see today’s agreement as a historic first step towards making union co-ops a viable business model that can create good jobs, empower workers, and support communities in the United States and Canada,” said USW International President Leo W. Gerard. “Too often we have seen Wall Street hollow out companies by draining their cash and assets and hollowing out communities by shedding jobs and shuttering plants. We need a new business model that invests in workers and invests in communities.”

Josu Ugarte, President of MONDGRAGON Internacional added: “What we are announcing today represents a historic first – combining the world’s largest industrial worker cooperative with one of the world’s most progressive and forward-thinking manufacturing unions to work together so that our combined know-how and complimentary visions can transform manufacturing practices in North America.”

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