Daily Digest

Daily Digest - May 20

Wednesday, May 20, 2009, 10:14 AM
  • The business logic of sustainability: Ray Anderson on TED.com (Video)
  • David Miliband: China ready to join US as world power
  • 60 Minutes - AIG, We Own It..(Video)
  • Uncle Jay Explains the News...(Video Deficits)
  • Canadians going Bankrupt in record numbers
  • Normalizing Earnings During Profit Freefalls (Charts on page)
  • Delinquency Rates at Commercial Banks (Chart)
  • Report: Smaller U.S. Banks need $24 Billion in Capital
  • Blue collar U.S. males lose more ground
  • Military Officers Tie Energy To National Security(Audio, H/T Christopher Peters)
  • Hotel crime rises in recession, but hotels say they're still safe
  • America's Future Job Market (Video, humor)
  • U.S. health officials troubled by new flu pattern
  •  A few A(H1N1) Links Dr. Henry Niman's Map 6,863 U.S. Cases as of this wrtitng, A(H1N1) Current Timeline, CDC Cases 
  • May 18 | Japan (JP) | 163 cases confirmed, 4043 schools closed 

Economy

The business logic of sustainability: Ray Anderson on TED.com (Video)

David Miliband: China ready to join US as world power 

The view from the gallery of the Shanghai World Financial tower, a symbol of China's growing economic influence. Photograph: Dan Chung/Guardian 

David Miliband today described China as the 21st century's "indispensable power" with a decisive say on the future of the global economy, climate change and world trade.

The foreign secretary predicted that over the next few decades China would become one of the two "powers that count", along with the US, and Europe could emerge as a third only if it learned to speak with one voice.

The remarks, in a Guardian interview, represented the most direct acknowledgement to date from a senior minister, or arguably from any western leader, of China's ascendant position in the global pecking order.

Miliband said a pivotal moment in China's rise came at the G20 summit last month in London. Hu Jintao, China's president, arrived as the head of the only major power still enjoying strong growth (expected to be 8% this year), backed by substantial financial reserves.

"The G20 was a very significant coming of economic age in an international forum for China. If you looked around the 20 people sitting at the table … what was striking was that when China spoke everybody listened," Miliband said.

"China's indispensability in part comes from size, but a second part is that it wants to play a role."

Hu helped bolster Gordon Brown's position against protectionism, and ­China's economic stimulus package (equivalent to 16% of its GDP over two years) is widely seen as among the world's best hopes for a recovery.

(More)

 60 Minutes - AIG, We Own It..(Video)

Uncle Jay Explains the News...(Video Deficits)

Canadians going Bankrupt in record numbers 

Declaring bankruptcy, once regarded as a shameful practice, is now a more viable option for the financially overwhelmed. But going broke can have significant repercussions.

By Gordon Powers - May 16, 2009

Although it has lost much of its stigma, declaring personal bankruptcy is still considered a last resort for many people sinking under the weight of unmanageable debt. Nonetheless, roughly 116,000 Canadians did just that in 2008, reports the Toronto-Dominion Bank.

And that number will continue to climb over the next two years, perhaps as high as 160,000, as rising unemployment takes its toll on heavily indebted households, TD estimates. But bankruptcy is not an easy - or pleasant - fix for financial problems. It comes with substantial side effects and shouldn't be taken lightly.

How do you know when it's time to finally pull the plug? Well, if you're always behind in your payments and juggling cash advances or payday loans, you're likely a good candidate. And if your marriage is crumbling over money, then bankruptcy may help clear the deck as you split.

It's all a question of solvency. Generally speaking, you're insolvent if the money you owe outweighs your assets and you have no reasonable chance of getting out from under. But that doesn't mean you have to declare bankruptcy from the outset.

 Normalizing Earnings During Profit Freefalls (Charts on page) 

I am becoming terribly enamored of the charts Ron Griess highlights each week form The Chart Store. Now that earnings season is all but over, Ron looks at a few charts that are revealing of the extent of the damage done to corporate profitability. It is, in a word, breathtaking:

 Report: Smaller U.S. Banks need $24 Billion in Capital 

From the Financial Times: Smaller US banks need additional $24bn 

Small and medium-sized US banks must raise some $24bn to meet the capital standards set by the government in its stress tests of large institutions, research for the Financial Times shows.

News of the potential capital shortfall could increase pressure on many of the 7,900 US banks that form the backbone of the US financial system.

As many as 500 more banks could close, according to investment bank Sandler O’Neill ... The government’s stress-case would result in capital shortfalls for 38 per cent of the 200 banks below the 19 largest financial institutions ...
Unlike the large banks, it appears these banks will be forced to merge or allowed to fail (and taken over by the FDIC).

 Blue collar U.S. males lose more ground 

DALLAS, May 19 (Reuters) - Rodney Ringler is an unemployed blue collar male without a college degree. He's hardly alone. Men like him have been the main victims of the current recession in the United States.

"I haven't worked since December of 2007, around the time this recession started," Ringler, a 49-year-old computer technician, said as he walked his dog in a Dallas suburb.

He sees little light at the end of the tunnel.

"I've been looking to get into law enforcement because it's a growth area," he said, but had no immediate prospects.

One statistic that stands out in America's recession-stung economy is the unemployment rate for adult men: in April for the second month in a row it surged ahead of the national average to 9.4 percent versus 8.9 percent for all workers. The jobless rate for adult women was 7.1 percent.

The reasons are clear: male-heavy sectors such as construction and manufacturing have been hard hit. But the implications may be dire for the broader economy and hamper the recovery as families that once had male breadwinners struggle.

"In the 2001 recession, 51 percent of all job losses were for men. It was evenly split. But in this recession 80 percent of the jobs that have been lost have been men's," said Andrew Sum, a labor economics professor at Northeastern University who has studied this issue in detail.

Men also incurred about 80 percent of the job losses in the 1990-91 recession, but Sum said by his calculations the numbers this time were dramatically different. In the 1990-91 recession, men lost 1.037 million jobs. They have lost 4.5 million to date in this one.

"This time around it is amazingly different in terms of the magnitude," Sum said.

It's difficult to compare to earlier recessions because women entered the workforce in big numbers from the 1970s, and industries that continue to grow such as health services favor women.

The male jobless rate is pumped up by white collar banking jobs lost during the global financial crisis. A few of these may have been sent overseas but job growth in this sector should come back in time, analysts said.

 Military Officers Tie Energy To National Security(Audio, H/T Christopher Peters) 

All Things Considered, May 18, 2009 · The drive to reduce U.S. dependence on foreign oil is getting support from the country's largest single user of oil — the Pentagon. Defense officials say they're determined to cut back on the 300,000 barrels that the U.S. military burns every day. 

That promise comes just as a group of retired generals and admirals is pointing out that the way the United States uses energy is jeopardizing national security.

Ashton Carter, the new undersecretary of defense for acquisition, technology and logistics, says he has been told to find more fuel-efficient vehicles for the military. Partly, it's for budget reasons: the expense of trucking fuel into Afghanistan means gassing up a Humvee in Kabul costs about $13 a gallon. But there are also geopolitical considerations.

"As you look out over the scenarios and the sources of conflict and the sources of threat to the United States, you see one after another that is driven by energy or in which energy is an important consideration," Carter says.

With energy supplies limited, rising demand brings conflict over access to those supplies: Oil-rich dictators get new power; high oil prices feed unrest.

Carter was speaking Monday at a forum featuring retired three- and four-star generals and admirals who have produced a critical new report on U.S. energy consumption. Vice Adm. Dennis McGinn, a former commander of the Navy's 3rd Fleet, says the United States — and the Department of Defense in particular — have no choice but to figure out how to live on less.

"It's not a question of if, it's a question of when [the Defense Department], and in fact the entire country, have to change our energy posture. And if you wait for it to be later, it's pretty painful," McGinn said.

The retired officers were brought together by the Center for Naval Analyses, a nonprofit, military-oriented think tank. Their report says the overall U.S. energy posture "constitutes a serious and urgent threat to national security — militarily, diplomatically and economically." One vulnerability: the nation's electrical grid.

"We all have had experience during the summertime with how fragile that grid is," said retired Adm. John Nathman, a former vice chief of naval operations, "of it not being nationally connected, the fact that in some cases it's aged and in some cases it's electronically controlled, which has a certain amount of weakness in terms of cyberattack."

Meaning terrorists or a hostile government could penetrate the grid and disrupt the electrical network.

The group is challenging the U.S. government and all Americans to reduce energy consumption and look for alternative energy sources.

 Delinquency Rates at Commercial Banks (Chart)

Hotel crime rises in recession, but hotels say they're still safe 

Mary Catherine Tubbs was an experienced hotel manager, but that didn't save her from becoming a crime victim at a hotel 10 years ago.

Like two women tied up last month in New England hotel rooms by an assailant dubbed the "Craigslist killer," Tubbs was tied up by a man who followed her into a hotel room in Northbrook, Ill. 

He threw her to the floor, tied her hands behind her back with a bathrobe sash, put a pillowcase over her head and choked her.

"I resisted vigorously, and he left," says Tubbs, a hospitality consultant in Nashville, who managed hotels from 1990 to 1998.

 America's Future Job Market (Video, humor)

http://www.youtube.com/watch?v=-OVpafuJIYI 

U.S. health officials troubled by new flu pattern 

WASHINGTON (Reuters) - The new influenza strain circulating around most of the United States is putting a worrying number of young adults and children into the hospital and hitting more schools than usual, U.S. health officials said on Monday. 

The H1N1 swine flu virus killed a vice principal at a New York City school over the weekend and has spread to 48 states. While it appears to be mild, it is affecting a disproportionate number of children, teenagers and young adults.

This includes people needing hospitalization -- now up to 200, said Dr. Anne Schuchat of the U.S. Centers for Disease Control and Prevention.

"That's very unusual, to have so many people under 20 to require hospitalization, and some of them in (intensive care units)," Schuchat told reporters in a telephone briefing.

"We are now experiencing levels of influenza-like illness that are higher than usual for this time of year," Schuchat added. "We are also seeing outbreaks in schools, which is extremely unusual for this time of year."

New York City Health Commissioner Dr. Thomas Frieden agreed with Schuchat.

"We're seeing increasing numbers of people going to emergency departments saying they have fever and flu, particularly young people in the 5 to 17 age group, " Frieden, who has been named by U.S. President Barack Obama as the new CDC director, told a news conference.

About half of all cases of influenza are being diagnosed as the new H1N1 strain, while the rest are influenza B, or the seasonal H1N1 and H3N2 strains. Flu season in the United States is usually almost over by May.

CDC officials say around 100,000 people are likely infected with the new flu strain in the United States and Schuchat said the 5,123 confirmed and probable cases and six deaths in the United States were "the tip of the iceberg."

(More)

  A few A(H1N1) Links Dr. Henry Niman's Map 6863 U.S. Cases as of this wrtitng, A(H1N1) Current TimelineCDC Cases 

 May 18 | Japan (JP) | 163 cases confirmed, 4043 schools closed

A total of 4,043 schools and kindergartens were closed in and around both cities at the request of government authorities, up from some 2,000 on Monday, an education ministry official said. Japan's number of confirmed cases has risen to 163 - the fourth largest national figure on the world infection table - in the central Honshu island region since the first confirmed domestic infection was reported on Saturday.

4 Comments

dickey45's picture
dickey45
Status: Bronze Member (Offline)
Joined: Oct 12 2008
Posts: 77
Re: Daily Digest - May 20

"Military Officers Tie Energy To National Security" - good read.

fujisan's picture
fujisan
Status: Gold Member (Offline)
Joined: Nov 5 2008
Posts: 296
Re: Daily Digest - May 20

 Zero Hedge: Guest Post: One Thought Could Change Your Life

Quote:

Guest Post: One Thought Could Change Your Life
Posted by Tyler Durden at 4:41 PM
Submitted by Michal Matovcik of Absolutideas

One thought could change your life, your wealth, your trading day, your happiness. Mostly they come and go, but few stay. This is something that you can find usefull, it’s not only about trading, but it could change your feeling of the market and make you become more resistant to “green shoots”, government stupidity, manipulation and many other things. There is no need to comply with these thoughts, the purpose is to start thinking.

Economy

• In order to pay down debt you must PRODUCE MORE THAN YOU CONSUME.
• Recent studies indicate one green energy job kills two jobs in the regular economy. Please call Al Gore.
• The collapse of the global economy is the result of historic levels of defaulting debt that cannot be reversed by more credit. While hope is understandable in such dire circumstances, it will not prevent what is happening. A global economic collapse is now inevitable; after which real economic change will then be possible. Darryl_R_Schoon

...

Government

• It has been described as socialism, fascism or communism. In various contexts, all are true, but let’s refine it. From loans to the automakers to the bailouts for the banks, the taxation, spending and control, the primary philosophy that’s powering the country now is collectivism“ Ty Andros
• Albert Einstein once said: “The problems we face today cannot be solved by the minds that created them.”
• The Founding Father’s view of government was that its scope was limited and clearly defined. What we have today? Do anyone know what is their role? Running business? Do Obama know what kind of damage is he doing for future generation?
• In response to Geithner’s statement that “We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system,” Ritholtz exploded: “No! Defending these idiots was your old gig. In the new job, you no longer work for the cretins responsible for bringing down the global economy. Please stop rationalizing their behavior, and preserving the status quo!”
• Franklin Roosevelt observed seventy years ago, “our enemies of today are the forces of privilege and greed within our own borders”

...

Monetary System

• Monetary system: I argue for monetary freedom, and that includes the freedom of all those Americans who want to continue to use the FED’s money to do so. I would not take that freedom from them by ending the FED. If they do not feel that they are cheated or that the system is unethical, they are welcome to live with it. By the same token, if they have that freedom, then so should others of us have the freedom to use banks and money of our own choice.
• High wages do not cause prosperity, they are rather an indication of prosperity. Ultimately, it doesn’t matter how many green pieces of paper employers hand out to workers. Unless workers first physically produced the goods (and services), there will be nothing on the store shelves for them to buy when they attempt to spend their big fat paychecks. Robert P. Muprhy
• “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” Ludwig Von Mises
• If you investigate individually the manias that the market has so dubbed over the years, in every case, it was expansive monetary policy that generated the boom in an asset. The particular asset varied from one boom to another. But the basic underlying propagator was too-easy monetary policy and too-low interest rates that induced ordinary people to say, well, it’s so cheap to acquire whatever is the object of desire in an asset boom, and go ahead and acquire that object. And then of course if monetary policy tightens, the boom collapses. Anna Schwartz
• Dow Jones index: how about [adding] the U.S. government? They make cars, money, insure, provide mortgages, invest in securities, provide rail transportation, health insurance. You know, a real all-around company. Tom Petruno

FED

• Fed actions have distorted what used to be the prior “risk based” message of LIBOR. And that cuts right to the conceptual heart of government intervention. Just how the heck can the private sector assess risk and allocate capital correctly and efficiently when the Fed/Treasury/Administration is acting to help “misprice” assets and risk measures? There will be no true recovery in the economy and capital markets until risk is being priced appropriately and all risks are known (the issue of transparency). Make no mistake about it; the decline in LIBOR is not a result of credit market healing and the lessening of risk perceptions. It’s a result of the Fed TAF. And so once again, how do they step away from this intervention? Brian Pretti
• FED exit strategy: in searching for one, I thought of Richard Nixon, who in 1972 wanted to bring unemployment down to the 3.5% levels which prevailed at the end of the 1960’s. He found a co-conspirator in Fed Chairman Arthur Burns[1], who resisted FOMC calls for a higher discount rate, supported wage and price controls, and oversaw an 11% expansion in the money supply (the fastest since WWII, until today’s episode which is 10x larger). It ended in higher unemployment, inflation and a decade of 0% real returns on both stocks and bonds. I don’t doubt that the Fed has a more coherent exit strategy for this monetary expansion; but it will need to be 10x better, and not collide with the needs of a massive fiscal deficit.
• The FOMC’s policy response, led by Bernanke who was a key player in the Greenspan 1% fed funds policy, to deal with the aftermath is to revert to another period of easy money. Ben and Greenspan were the mad scientists whose experiment went wrong after the recession in ‘01-’02 and the world looks to a ‘new’ Bernanke now as Chairman, to clean it up with another grand experiment. Peter Boockvar

Market Sentiment

• Consumer confidence: Increases in consumer confidence during the past two months are indicative of desensitization. Consumers are becoming acclimated to weak economic conditions, poor stock market returns, and the continued accumulation of job losses. This desensitization has been emphasized by the mainstream media; particularly in the past few months. The take-home message of articles and news reports has shifted to ‘be happy things aren’t getting worse’ and people are doing just that. Bargain hunters have been lured into many areas including housing, stocks, and even retail products. Meanwhile, important fundamentals like GDP, unemployment, foreclosures, and household net worth go largely unmentioned and underanalyzed. Andy Sutton
• There are 2 types of investors today, those who want a pullback so they can get in, and those who are already in. That dynamic makes short selling a tough game. Jason Schwarz
• Optimism is one explanation. But the idiocy of autopilot is the one that I prefer.
• Never underestimate the power of greed and fear over memory and prudence.

...

Psycho's picture
Psycho
Status: Member (Offline)
Joined: Mar 17 2009
Posts: 4
Re: Daily Digest - May 20

Interesting read about a possible replace of the dollar by Yuan and Real in trade between Brasil and China,

with the help of google to translate the article:

http://translate.google.com/translate?js=n&prev=_t&hl=en&ie=UTF-8&u=http://www.americaeconomia.com.br/271101-Substituicao-do-dolar-domina-visita-de-Lula-a-China.note.aspx&sl=pt&tl=en&history_state0=

Dayanara's picture
Dayanara
Status: Member (Offline)
Joined: May 23 2009
Posts: 1
Re: Daily Digest - May 20

Almost every one of us is affected with the economy that we have today. That’s why lots of us may rely to financial aids like credit cards. Unfortunately, there are some lending companies that are taking advantage of the situation. One may think tat credit cards could help you when it comes on your financial needs but there are some lending companies that are involved in predatory lending. At last, the CRL takes a stance with what resembles a common sense approach; a call to action regarding something to do with the problem.  (Now we have to deal with the horsemen, the rain of fire, and the end of days.) The CRL, or Center for Responsible Lending, has taken aim at credit cards by sponsoring HR 627, or the Credit Card Accountability Responsibility and Disclosure Act of 2009.  The Credit CARD Act, as it's called, could ensure more fairness in how card companies deal with customers, and limit things like hidden fees and retroactive interest rate increases.  President Obama is on board.  The CRL not going after installment loans and targeting an actual predatory lender – it's about time.

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