Daily Digest

Daily Digest - May 2

Saturday, May 2, 2009, 12:23 PM
  • Waves and Tides Next Frontier for Energy Exploration (Video, promising)
  • Charlie Rose: Lionel Barber, editor “Financial Times" (Video)
  • Dr. Henry Niman (Video A(H1N1) Google Tracking)
  • Homeland Security: No Orders to Border, Airport Agents Forbidding Surgical Masks
  • DebtSki, the game to get kids aware of debt
  • Filth: Top Senate Democrat: bankers "own" the U.S. Congress (H/T DrKrbyLuv)
  • If You Believe - Banks Are Recovering
  • Treasuries are getting crushed
  • CDS contracts and the implosion of several Eastern European economies
  • Rogers Interview on Swine Flu, Automakers, Commodities (Video, Jim Rogers * * * *)

 

Economy

Waves and Tides Next Frontier for Energy Exploration (Video, promising)

Charlie Rose: Lionel Barber, editor “Financial Times" (Video)

Dr. Henry Niman (Video A(H1N1)

Dr. Henry Niman (Video A(H1N1) Google Tracking)

Homeland Security: No Orders to Border, Airport Agents Forbidding Surgical Masks

The Department of Homeland Security on Thursday refuted reports that it had told agents at U.S. airports and border checkpoints that they could not wear masks to protect from exposure to swine flu.

"The Department of Homeland Security has not issued an order saying our employees cannot wear masks. The health of our employees is of utmost importance to us. And today we are issuing department-wide guidance to our workforce," DHS spokeswoman Sara Kuban told FOX News

 

DebtSki, the game to get kids aware of debt

PGPF President Dave Walker and MTV’s Ross Martin appeared this morning in support of a new fiscal video game on ABC’s “Money Matters.” Martin said that two-thirds of college students are graduating with student loans, and that “today’s graduates are not graduating into a job market that’s embracing them with open arms.” Added Walker, “Young people represent our future. It’s important that they be informed, that they be engaged, that they be empowered.”

DebtSki is the new online flash-video game that spotlights the dangers of excessive debt. Piggy Banks, the game’s main character, maneuvers through increasingly difficult levels and obstacles as he makes the tough fiscal choices that young people face every day. Players have the chance to win money to put toward debt, boost their savings, or use in any other way they see fit. Each week through June 25, 2009, one winner will be chosen to receive $250 by simply playing the game and then entering to win.

 

Filth: Top Senate Democrat: bankers "own" the U.S. Congress (H/T DrKrbyLuv)

The ownership of the federal government by banks and other large corporations is effectuated in literally countless ways, none more effective than the endless and increasingly sleazy overlap between government and corporate officials. Here is just one random item this week announcing a couple of standard personnel moves:

Former Barney Frank staffer now top Goldman Sachs lobbyist

Goldman Sachs' new top lobbyist was recently the top staffer to Rep. Barney Frank, D-Mass., on the House Financial Services Committee chaired by Frank. Michael Paese, a registered lobbyist for the Securities Industries and Financial Markets Association since he left Frank's committee in September, will join Goldman as director of government affairs, a role held last year by former Tom Daschle intimate, Mark Patterson, now the chief of staff at the Treasury Department. This is not Paese's first swing through the Wall Street-Congress revolving door: he previously worked at JP Morgan and Mercantile Bankshares, and in between served as senior minority counsel at the Financial Services Committee.

So: Paese went from Chairman Frank's office to be the top lobbyist at Goldman, and shortly before that, Goldman dispatched Paese's predecessor, close Tom Daschle associate Mark Patterson, to be Chief of Staff to Treasury Secretary Tim Geithner, himself a protege of former Goldman CEO Robert Rubin and a virtually wholly owned subsidiary of the banking industry. That's all part of what Desmond Lachman -- American Enterprise Institute fellow, former chief emerging market strategist at Salomon Smith Barney and top IMF official (no socialist he) -- recently described as "Goldman Sachs's seeming lock on high-level U.S. Treasury jobs."

 

If You Believe - Banks Are Recovering

The conspiracy theorists of the world believe the U.S. government faked the landing of Apollo 11 on the moon. They also believe 9/11 was an inside job, ordered by operatives within the government. The rationale of these acts was to distract the masses from the disastrous Vietnam War and the plummeting stock market, while escalating their control over the American people. I believe I have uncovered the largest conspiracy in history.

The government wants you to believe that banks are recovering, housing has bottomed, stimulus works, borrowing leads to prosperity and war leads to peace. President Obama and his cronies at Treasury and the Federal Reserve are trying to mislead the public regarding the health of our banking system. If you believe their spin on these issues, I have a structurally deficient bridge in Brooklyn I’d like to sell you.

The government has something up its sleeve this time. They are perpetrating the greatest fraud in the history of the world. The conspirators are Barack Obama, Timothy Geithner and the Treasury Department, Ben Bernanke and the Federal Reserve, Sheila Baer and the FDIC, and Barney Frank and the Democratic Congress. They have colluded to commit taxpayer funds to enrich bankers that brought down the financial system, without getting Congressional approval. They have delayed foreclosures and have tried to artificially prop up the housing market. They have poured billions of stimulus pork into the states praying for some of it not to be wasted. They have confiscated billions in taxpayer funds, bestowed them on reckless banks and forced them to lend it to anyone with a pulse, again.

The outrage from the public during the TARP confiscation, made it crystal clear to courageous Congressmen they didn’t want to vote on something requiring fortitude and bravery again. They have outsourced their obligation to safeguard their citizen’s tax dollars to unelected bureaucrats at Treasury and the Federal Reserve. They have already sacrificed their obligation to declare war to the Presidential branch. What is the point of having a Congress?

 

Treasuries are getting crushed

So let me reiterate my sentiments from yesterday here. It’s called inflation.

Nominal GDP. Nominal GDP itself decreased at a 3.5% annualized rate versus Q4. This compares to a 5.8% decrease in Q4 2008 over Q3 2008. Translation: the nominal slowdown was much less in Q1 than Q4 2008. The similarity in Q4 2008 and Q1 2009 real GDP data is explained wholly by changes in the GDP Deflator (there was a huge increase in the price index for non-durable goods in Q1).

So, my question is this. Are treasury yields rising because of:

A reflation play i.e. inflation is coming?
A recovery play i.e. we are seeing green shoots and that’s bearish for Treasurys?
A Fed play i.e. Bernanke is not going to do any more quantitative easing, or at least not enough to stop rates from rising?
A revulsion play i.e. too much debt is being issued?
Irrespective of why yielda are rising, it’s not good for a potential recovery.

 

CDS contracts and the implosion of several Eastern European economies

Let me pull these threads together. If one thinks that a bankruptcy of a systemically important organization in any country can proceed normally without the potential for mischief, one had better read Tett’s account.

What’s more, in the case of Chrysler and GM, the complexity of a Chapter 11 bankruptcy will be very large. The Obama team says “three months and you’re done.” That ain’t gonna happen. United took three years. LTV took five and Delphi, the auto parts maker is still in bankruptcy 4 years later. So, lets get realistic here.

Bringing this full circle, we come back to Europe. And there, we have a problem, - specifically, because what has happened in Ukraine is going to happen in places like Bulgaria, Latvia, Lithuania or Estonia.

In my view, the events in the home of Borat and the possibilities in Eastern Europe or with the U.S. automakers present a good example why Warren Buffett calls derivatives financial weapons of mass destruction.

The credit default swap market needs regulation - and fast.

 

Rogers Interview on Swine Flu, Automakers, Commodities (Video, Jim Rogers * * * *)

 

 

8 Comments

FireJack's picture
FireJack
Status: Silver Member (Offline)
Joined: Feb 8 2009
Posts: 156
Re: Daily Digest - May 2

This is the calm before the storm as far as I'm concerned. This second wave of foreclosures and the commercial property collapse not to mention all these other major problems will have everyone on their knees by this time next year. Every time I see one of those "things are bottoming out" or "were seeing signs of green shoots" comments all I have to do is look at those charts of the housing bubble and the second wave of defaults (the alt-a and option arm) to see how bad things are going to get.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - May 2

 Yup, if wave one was like a wrecking ball that knocked em to their knees, wave 2 will be, without any doubt, much worse. If nothing else it will shut the serial bottom callers up.

VeganDB12's picture
VeganDB12
Status: Platinum Member (Offline)
Joined: Jul 18 2008
Posts: 756
Re: Daily Digest - May 2

I am glad to see Dr. Niman's video here. I have followed his postings for a year or so and he comes across  to me as the most "non-hysterical" intellectual/expert in flublogia. As I understand it he runs Recombinomics (website at www. recombinomics.com) and has been on faculty at Harvard and Scripps Institute.  Among other accomplishments studies flu evolutioin to predict the genotype of the upcoming flu so that the vaccines get it right. It was  a real shock to hear him call this a level 6, even more interesting to see this reporter lose it when he gives his opinion.

ernie's picture
ernie
Status: Bronze Member (Offline)
Joined: Feb 18 2009
Posts: 39
Re: Daily Digest - May 2

If you like wave power, have a look at this:

http://www.ceto.com.au/home.php

- Ernie.

 

pir8don's picture
pir8don
Status: Gold Member (Offline)
Joined: Sep 30 2008
Posts: 456
Re: Daily Digest - May 2

Hi Denise

I too was impressed with the Niman video. He seems to be speaking sense and I am glad you back him up.

I guess this virus and its probable mutant progeny mixed with the continuing economic collapse means we are entering the vortex.

Don

__________________________________________________

So few then with so many ways, so many now with so few ways.

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Interesting take from Running on Empty Oz
Long and complicated article, but explains a lot of background.
My take - as banks and other corporations are suffering from devalued assets, (shares, real estate, mortgage-backed securities, etc) they need to be guaranteed by governments so they aren't rushed into bankruptcy.
But if the governments don't have enough creditworthiness to cover them governments have to turn to the supranational banks.
But where do they get their creditworthiness from ?
By selling bonds, but they are having to pay higher yields on their bonds to get their hands on the money,
and that puts governments under more competitive pressure when selling their own bonds.
 
The potential is there for this to spiral out of control when there is not enough 'real money' to buy all the bonds being issued. Could it be that 'they' really don't know what's going on ?
 
Dave
 
World Bank Bonds Show What Happens in State Rescues (Update1)
2 May 2009

By Gabrielle Coppola

 

May 1 (Bloomberg) -- Federal guarantees by 13 countries on more than $400 billion of financial company bonds are punishing the AAA-rated World Bank Group with record borrowing costs -- an indication of what can go wrong when government gets in the way.

The Washington-based World Bank, founded in 1944 to rebuild economies after World War II, sold $6 billion of three-year notes March 26 priced to yield 30 basis points more than the benchmark for such borrowings. The so-called spread was the widest for a dollar-denominated bond offering by the supranational lender, said George Richardson, the institution’s head of capital markets, in an interview.

Just seven months ago, the World Bank paid a record low 35 basis points less than the midswap rate, a market measure for exchanging fixed- and floating-rate cash flows. The sudden rise in World Bank relative bond yields is an unintended consequence of sales of taxpayer-backed debt by more than 50 companies, including Goldman Sachs Group Inc., Bank of America Corp. and JPMorgan Chase & Co. While these special offerings were designed to bring stability to the credit markets after $1.4 trillion in losses and writedowns in the past 28 months, no one realized the World Bank would be depreciated by such government policies.

“Governments started announcing guarantees for their banks, and then the whole world changed,” said Richardson, a former Goldman Sachs banker.

<MORE>

Mike Pilat's picture
Mike Pilat
Status: Platinum Member (Offline)
Joined: Sep 8 2008
Posts: 929
Re: Daily Digest - May 2

Don't know if anyone saw, but Michael Shedlock (Mish) wrote a blog entry a few days ago in which he postulated that the second wave would not be as bad as anticipated because the majority of the rates will be readjusted in reference to the suppressed interest rates we have right now. On the flip side, he also points out that many people with ARMs don't even make a full interest payment as it is and get in a negative amortization loan. Any thoughts on this entry of his (http://globaleconomicanalysis.blogspot.com/2009/05/arms-reset-crisis-rev...)

Mike

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - May 2

Hello Mike:

That was a tough read, I no longer go to his site ever since he landed with both feet in the deflationist camp. Great guy, just think he missed a sign and wandered down the wrong path. 

$80,000,000,000,000.00 in debt/obligations/wars and stimulus and a fudged GDP IMHO spells out a Zimbabwe dollar and super high prices for it's reduced buying power.

If I have it right, and my memory is a scary thing for I read too much, Alt A's account for 1 trillion and Option Arms for 1/2 trillion. I also recall reading that MOST alt a's have floors.

Having said that I think his article "may have missed" a few things:

Just my 2 cents, take care

 

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