Daily Digest

Daily Digest - July 9

Thursday, July 9, 2009, 11:00 AM
  • Wall Street Journal Article Quotes Dr. Chris Martenson
  • Joe Saluzzi (Video, 3:40 Fictitious Trading, Program Trades, 8:20 the M word, possible repost, H/T DavidC)
  • a.) Inflation b.) Deflation c.) Both (Whitepaper, I wouldn't miss pages 7 on)
  • Barrons Editor 'It's a depression' (Video)
  • Samuelson on Greenspan
  • GOLD AND ECONOMIC FREEDOM (Repost)
  • Job Losses. Measuring the Velocity of Job Cuts in the Current Recession
  • DJIA Chart from Biiwii.com
  • Demand for Treasury securities is still high (Video)
  • Obama Adviser Says U.S. Should Mull Second Stimulus
  • The Booming Repo Business
  • Sergio Posts Bond As Toxic Code Percolates In Cyberspace And Allows "Market Manipulation"
  • Montreal has Bixi and a Great Bike Lane System
  • Bloomberg - Joe Saluzzi, (H/T DavidC, Video)
  • 33.8 Million
  • Madoff California Style
  • Madoff Goldman Style
  • Stimulus Our Tax Dollars Bacame a Band Aid for a Gaping Wound
  • Art Cashin Trader Talk, Stimulus misused, like an empty fire extinguisher (Video)
  • Gold investors treading water? (Video, David Morgan on the Street!)

Economy

Wall Street Journal Article Quotes Dr. Chris Martenson

“Owning bullion,” says gold investor Chris Martenson, 46, a scientist from Montague, Mass., “is buying insurance against the unknown.”

...
 

The truest gold buffs, though, want nothing to do with ETFs or mining stocks. Mr. Martenson, who runs an investing Web site, dismisses them as creatures beholden to untrustworthy managements and financiers. “I’ve lost faith in how Wall Street does business,” says Mr. Martenson, who keeps more than half his portfolio in bullion.

Joe Saluzzi (Video, 3:40 Fictitious Trading, Program Trades, 8:20 the M-word, possible repost, H/T DavidC)

a.) Inflation b.) Deflation c.) Both the Above (Whitepaper, I wouldn't miss pages 7 on)

Barrons Editor 'It's a depression' (Video)

Samuelson on Greenspan

“But the trouble is that he had been an Ayn Rander. You can take the boy out of the cult but you can’t take the cult out of the boy. “

GOLD AND ECONOMIC FREEDOM (Repost)

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline-argued economic interventionists-why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely-it was claimed-there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks ("paper reserves") could serve as legal tender to pay depositors.

Job Losses. Measuring the Velocity of Job Cuts in the Current Recession

With 26,000,000 Americans unemployed or underemployed, it is important to understand how the job market data is calculated.

DJIA Chart from Biiwii.com

Demand for Treasury securities is still high (Video)

'Inflate or Die': Obama Adviser Says U.S. Should Mull Second Stimulus

“The concern is that the U.S. will have to inflate away its debt. I do not think that is a valid concern,” she said.

 The Booming Repo Business

... As the U.S. foreclosure crisis grinds on, the detailed work of processing, repairing and selling thousands of homes repossessed by banks is real estate's new gold. In the past year, repo-related business has rapidly grown to national scale, fueling job growth in Colorado, Texas, Ohio and elsewhere to service the meltdown in markets like Sacramento and the Central Valley along with Phoenix, Las Vegas and Florida.

... [Austin-based Field Asset Services], which repairs, cleans and maintains repos right down to mowing the lawns weekly, has almost tripled its hiring in the past 18 months. Austin business publications gush over the firm's "hiring spree," its 550 employees and third expansion into larger offices in a year.

Clearly, the housing distress that has overwhelmed states like California has become big business.

 Sergio Posts Bond As Toxic Code Percolates In Cyberspace And Allows "Market Manipulation"

“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said.

Montreal has Bixi and a Great Bike Lane System

Montreal has its own public bike-sharing programme, Bixi, which is proving to be a great success with 3,000 bicycles in 30 different locations.

Bloomberg - Joe Saluzzi, (H/T DavidC, Video)

33.8 Million

33.8 million participated in the Agriculture Department's Supplemental Nutrition Assistance Program

Madoff California Style

California is literally stealing tax refunds - that is, over-payments, and issuing "IOUs", never mind that those funds are not theirs

Madoff Goldman Style

through access to the system as a result of their special gov't perks, was/is able to read the data on trades before it's committed, and place their own buys or sells accordingly in that brief moment, thus allowing them to essentially steal buttloads of money every day from the rest of the punters world.

Two things come out of this:

1. If true, [enphasis mine]

Stimulus Our Tax Dollars Bacame a Band Aid for a Gaping Wound

states are using their stimulus dollars to satisfy immediate needs rather than undertake longer-term reforms

Art Cashin Trader Talk, Stimulus misused, like an empty fire extinguisher (Video)

Gold investors treading water? (Video, David Morgan on the Street!)

 

19 Comments

SteveS's picture
SteveS
Status: Gold Member (Offline)
Joined: Sep 6 2008
Posts: 358
Montreal Bixi

I just came back from Montreal and saw the bike rental stands everywhere. Great idea. Not real cheap by the hour, but you can get long term passes. Extra points for using solar panels to run the control station where you pay via credit card. Alas, my wife and daughter tried to use one and it wasn't working. The bike are pretty high tech.

The rings on the parking meters to lock bikes is an elegant idea.

 

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2252
Re: Daily Digest - July 9

 I love the idear that Goldman Sach's peeps are worried somebody's using their code to "manipulate the market unfairly" -- isn't that what *they* created it for?  Eesh.  Pot...meet the kettle.

Viva -- Sager

Ruhh's picture
Ruhh
Status: Gold Member (Offline)
Joined: Nov 12 2008
Posts: 259
Re: Montreal Bixi
SteveS wrote:

I just came back from Montreal and saw the bike rental stands everywhere. Great idea.

We've got those here in Ottawa/Gatineau as well. I just noticed them a week or two ago. It's nice to know that when I've got company it's easy for them to keep up with me now.

accelbell's picture
accelbell
Status: Member (Offline)
Joined: Jun 1 2009
Posts: 6
Re: Samuelson on Greenspan

I fail see the connection between Rand, the "cult", and the actions of Greenspan in the Fed. The Fed is pretty much the most Rand-opposite institution there is; and it still confuses me why Greenspan, a fervent gold standard and Rand supporter, would join the "enemy".

l like to entertain the idea that he was trying to destroy the corrupt system from within.

Or am I missing something?

coolpajim's picture
coolpajim
Status: Member (Offline)
Joined: Apr 20 2009
Posts: 3
Re: Daily Digest - July 9

I enjoy the instruction from CM as well as the comments of others. It is obvious the technical evaluation and the application of Austrian economic theory is very valuable in determining how we got here and the probable direction we are heading. There is another component to be considered, i.e., the disintegration of any moral compass in our national and global culture. This is flagrantly exhibited by the actions of all the participants, from the government to consumers, and everyone in between. Here is a more specific viewpoint to be considered.

gty.org/Resources/Videos/T8280-314

 

Davos's picture
Davos
Status: Diamond Member (Offline)
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Posts: 3620
Re: Daily Digest - July 9

Hello Accelbell:

I will finish the letter to him which asks that question.

Not that it will matter, I'm sure his answer will be as ambigues in meaning as his:

A democratic society requires a stable and effectively functioning economy. I trust that we and our successors at the Federal Reserve will be important contributors to that end. ~ Alan Greenspan

Personally I consider that statement, based on his what he believes in and what he did (the opposite), missleading and I honestly don't know to which end he is or was referring to.

I do know which end will cease functioning, and I do know the cause of this mess that started in 1913 and I do know the motehr of all bubble blowers and it isn't GS, or should I say they and everyone else couldn't have contributed to this without a facilitator like AG.

I know I have read that the Keynesian rant is 'who care when it implodes, I'll be gone by then'.

I suppose they didn't have kids.

Take care

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2259
Re: Daily Digest - July 9

Hi Davos!

It's nice that Chris got mentioned in the WSJ article.  I wish that they had given him credit as "Dr." Martenson vs "Mr.", tho'!  But nit-pick aside, it is good to see Chris get mentioned in the MSM, and I'm glad the author did so.

pinecarr

green_achers's picture
green_achers
Status: Silver Member (Offline)
Joined: Jan 3 2009
Posts: 205
Re: Daily Digest - July 9
Davos wrote:

I know I have read that the Keynesian rant is 'who care when it implodes, I'll be gone by then'.

I suppose they didn't have kids.

Take care

That reminds me of the Reagan admin official or apologist (don't recall who) I saw on the nightly news back in the day.  Asked about the effects of the admin's energy policies "in the long run," the answer was "in the long run, we'll all be dead."

Guess it worked for the Gipper.

Davos's picture
Davos
Status: Diamond Member (Offline)
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Posts: 3620
Re: Daily Digest - July 9

Hello PineCarr: Good to see that he was mentioned!!! Hope your garden is doing well, take care 

Davos's picture
Davos
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Posts: 3620
Re: Daily Digest - July 9

I'm working on the 10 and 11th blogs. Treasury is working on a 'Plan C'. Apparently the commercial real estate has a 3.5 trillion dollar bomb written all over it.

Just to recap.

  • Wave 1 Subprime was about 1.5 trillion
  • Wave 2 Alt a's and Option arms is about 1.5 trillion and just arriving
  • And in 150 days or so we are going to have the CRE 3.5 trillion dollar wave

Dumbest question I can ask? If 1.5 trillion did this what will another 5 trillion do? IMHO this train wreck spells major carnage.

Take care, Your Eternal Realist @ Large

 

Farmer Brown's picture
Farmer Brown
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Posts: 1503
Re: Daily Digest - July 9
accelbell wrote:

I fail see the connection between Rand, the "cult", and the actions of Greenspan in the Fed. The Fed is pretty much the most Rand-opposite institution there is; and it still confuses me why Greenspan, a fervent gold standard and Rand supporter, would join the "enemy".

l like to entertain the idea that he was trying to destroy the corrupt system from within.

Or am I missing something?

__________________
 
I have no idea what Samuelson is ranting about.  Hard to tell from just that one quote except to interpret it as you have - that Greenspan destroyed everything to achieve a greater purpose.  Somehow I doubt it.  Occam's Razor says Greenspan is an idiot and Samuelson gives him way too much credit.
green_achers's picture
green_achers
Status: Silver Member (Offline)
Joined: Jan 3 2009
Posts: 205
Re: Daily Digest - July 9

http://money.cnn.com/galleries/2009/fortune/0907/gallery.economy_stimulu...

Fortune Magazine asked a panel of "leading economic thinkers" if it's time for a second round of stimulus.  Responses range from "no, unless" to "no, the laswt one did a good job" to "no, not yet" to "yes" to "hell yes."  You'd think they could have found at least one that would have said, "no, it's a bad idea in the first place."

Davos's picture
Davos
Status: Diamond Member (Offline)
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Posts: 3620
Re: Daily Digest - July 9

Hello Green_Achers.

Totally agree. Right now it is the only thing "holding" the economy together, so much so that in many instances it isn't being used for what it was appropriated for.

.08 cents on every dollar actually would have done a tiny bit of simulating, now that is being blown on the band-aid to hold the gaping hole together.

Again, with job losses each month averaging 3/4's of a million pople and with states issueing IOU's I really am not advocating that this is a good economy, but the banks (save for the 52 this year) are open.

Today.

The administration has hired help to do a second stimulus. I think we are seeing a lot of floaters in the press. Amazing because it will be to late and the press they should be floating are those in the BRICs.

Take care

joemanc's picture
joemanc
Status: Martenson Brigade Member (Offline)
Joined: Aug 16 2008
Posts: 834
Re: Montreal Bixi
SteveS wrote:

The rings on the parking meters to lock bikes is an elegant idea.

 

The rings could have come in handy today...I went to unlock my bike from the rack at the train station today, and there's a fellow commuter next to me, whose bike was locked by a genius who used his bike chain to lock his bike and this poor other guy's bike. Unbelievable.

joemanc's picture
joemanc
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Joined: Aug 16 2008
Posts: 834
Re: Daily Digest - July 9

Australia town bans bottled water.

http://www.telegraph.co.uk/news/worldnews/australiaandthepacific/austral...

yoshhash's picture
yoshhash
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Joined: Sep 20 2008
Posts: 271
Re: Montreal Bixi

hey Ruhh,

I didn't know you were a fellow Canuck, this is great, I was starting to feel a little lonely.  Great to hear about the bike thing in Ottawa/Gatineau as well, can you please tell me a bit more- where to find them, what it's called, etc?  I have family there, go frequently enough that I could use this service for sure.

 

fujisan's picture
fujisan
Status: Gold Member (Offline)
Joined: Nov 5 2008
Posts: 296
Re: Daily Digest - July 9

The unemployment timebomb is quietly ticking - Telegraph

One dog has yet to bark in this long winding crisis. Beyond riots in Athens and a Baltic bust-up, we have not seen evidence of bitter political protest as the slump eats away at the legitimacy of governing elites in North America, Europe, and Japan. It may just be a matter of time.

By Ambrose Evans-Pritchard

One of my odd experiences covering the US in the early 1990s was visiting militia groups that sprang up in Texas, Idaho, and Ohio in the aftermath of recession. These were mostly blue-collar workers, – early victims of global "labour arbitrage" – angry enough with Washington to spend weekends in fatigues with M16 rifles. Most backed protest candidate Ross Perot, who won 19pc of the presidential vote in 1992 with talk of shutting trade with Mexico.

The inchoate protest dissipated once recovery fed through to jobs, although one fringe group blew up the Oklahoma City Federal Building in 1995. Unfortunately, there will be no such jobs this time. Capacity use has fallen to record-low levels (68pc in the US, 71 in the eurozone). A deep purge of labour is yet to come.

...

Some 342,000 homes were foreclosed in April, pushing a small army of children into a network of charity shelters. This compares to 273,000 homes lost in the entire year of 1932. Sheriffs in Michigan and Illinois are quietly refusing to toss families on to the streets, like the non-compliance of Catholic police in the Slump.

Europe is a year or so behind, but catching up fast. Unemployment has reached 18.7pc in Spain (37pc for youths), and 16.3pc in Latvia. Germany has delayed the cliff-edge effect by paying companies to keep furloughed workers through "Kurzarbeit". Germany's "Wise Men" fear that the jobless rate will jump from 3.7m to 5.1m by next year. The OECD expects unemployment to reach 57m in the rich countries by the end of next year.

This is the deadly lag effect. What is so disturbing is that governments have not even begun the spending squeeze that must come to stop their countries spiralling into a debt compound trap.

French president Nicolas Sarkozy, with a good nose for popular moods, says: "We must overhaul everything. We cannot have a system of rentiers and social dumping under globalisation. Either we have justice or we will have violence. It is a chimera to think that this crisis is just a footnote and that we can carry on as before."

The message has not reached Wall Street or the City. If bankers know what is good for them, they will take a teacher's salary for a few years until the storm passes. If they proceed with the bonuses now on the table, even as taxpayers pay for the errors of their caste, they must expect a ferocious backlash.

We are fortunate that the US has a new president enjoying a great reservoir of sympathy, and a clean-broom Congress. Other nations must limp on with carcass governments: Germany's paralysed Left-Right coalition, the burned-out relics of Japan's LDP, and Labour's death march in Britain. Some are taking precautions: Silvio Berlusconi is trying to emasculate Italy's parliament (with little protest) while the Kremlin has activated "anti-crisis" units to nip protest in the bud.

We are moving into Phase II of the Great Unwinding. It may be time to put away our texts of Keynes, Friedman, and Fisher, so useful for Phase 1, and start studying what happened to society when global unemployment went haywire in 1932.

(Emphasis mine)

TheRemnant's picture
TheRemnant
Status: Silver Member (Offline)
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Posts: 141
Re: Montreal Bixi
yoshhash wrote:

hey Ruhh,

I didn't know you were a fellow Canuck, this is great, I was starting to feel a little lonely.  Great to hear about the bike thing in Ottawa/Gatineau as well, can you please tell me a bit more- where to find them, what it's called, etc?  I have family there, go frequently enough that I could use this service for sure.

 

3rd resident of the political State of Canada here!

Ruhh's picture
Ruhh
Status: Gold Member (Offline)
Joined: Nov 12 2008
Posts: 259
Re: Montreal Bixi
yoshhash wrote:

hey Ruhh,

I didn't know you were a fellow Canuck, this is great, I was starting to feel a little lonely.  Great to hear about the bike thing in Ottawa/Gatineau as well, can you please tell me a bit more- where to find them, what it's called, etc?  I have family there, go frequently enough that I could use this service for sure.

It's also called BIXI here and here's the link (http://ottawa-gatineau.bixi.com/home). Looks like they've got 50 bikes in 4 stations. I've seen the one in Vieux Hull, the one on Elgin and one in the Market but I haven't actually seen the one near the museum of Civilization.

Canucks Unite! There are a few of us kickin' around here.
cheers
r.

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