Daily Digest

Daily Digest - May 26

Tuesday, May 26, 2009, 10:48 AM
  • US Dollar Redesign Project
  • Mythology of Bulls and Bears (Video)
  • Early retirement claims increase dramatically
  • The State Bird - (mechanical Crane) (Video)
  • NY Times: We're All Subprime Now!
  • Geithner Blames Borrowers and more, but not Regulators for Bubble (Video)
  • Don't panic: The psychology of emergency mass evacuation (PPT)
  • The Market is Rigged: Another Analyst (Video)
  • Foreclosures and Mosquito Hunters

Economy

US Dollar Redesign Project

The dollar may be going to hell, but that doesn’t mean it can’t look good doing so. Hence, the Dollar ReDe$ign Project, by Richard Smith.

Mythology of Bulls and Bears (Video)

Early retirement claims increase dramatically

Reporting from Washington -- Instead of seeing older workers staying on the job longer as the economy has worsened, the Social Security system is reporting a major surge in early retirement claims that could have implications for the financial security of millions of baby boomers.

Since the current federal fiscal year began Oct. 1, claims have been running 25% ahead of last year, compared with the 15% increase that had been projected as the post-World War II generation reaches eligibility for early retirement, according to Stephen C. Goss, chief actuary for the Social Security Administration.

Clock ticks louder on Medicare and Social Security

Many of the additional retirements are probably laid-off workers who are claiming Social Security early, despite reduced benefits, because they are under immediate financial pressure, Goss and other analysts believe.

The numbers upend expectations that older Americans who sustained financial losses in the recession would work longer to rebuild their nest eggs. In a December poll sponsored by CareerBuilder, 60% of workers older than 60 said they planned to postpone retirement.

Goss said it remained unclear whether the uptick in retirements would accelerate or abate in the months ahead. But another wave of older workers may opt for early retirement when they exhaust unemployment benefits late this year or early in 2010, he noted.

The ramifications of the trend are profound for the new retirees, their families, the government and other social institutions that may be called upon to help support them.

The State Bird - (mechanical Crane) (Video)

NY Times: We're All Subprime Now!

From Peter Goodman and Jack Healy at the NY Times: Job Losses Push Safer Mortgages to Foreclosure (ht shaun)

In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans ... to the far more numerous prime loans issued to those with decent financial histories...

...From November to February, the number of prime mortgages that were delinquent at least 90 days, were in foreclosure or had deteriorated to the point that the lender took possession of the home increased more than 473,000, exceeding 1.5 million, according to a New York Times analysis of data provided by First American CoreLogic, a real estate research group. Those loans totaled more than $224 billion.

During the same period, subprime mortgages in those three categories increased by fewer than 14,000, reaching 1.65 million. The number of similarly troubled Alt-A loans — those given to people with slightly tainted credit — rose 159,000, to 836,000.

Over all, more than four million loans worth $717 billion were in the three distressed categories in February, a jump of more than 60 percent in dollar terms compared with a year earlier.

Geithner Blames Borrowers and more, but not Regulators for Bubble (Video)

Don't panic: The psychology of emergency mass evacuation (PPT)

Important! The biggest predictor of survival is time taken to recognize the emergency and move!

The "panic model" suggests that the crowd:

  • Is less intelligent than the lone individual
  • Will be driven by simple emotions
  • Responds with irrational behavior
  • Is a source of ‘contagion’

The Market is Rigged: Another Analyst (Video)

Foreclosures and Mosquito Hunters

From Carolyn Said at the SF Chronicle: Aerial hunter sniffs out mosquito-ridden pools

Last year, mosquito districts hired [Aerial Services of Livermore] to fly over almost every county in California. It covered 3,500 square miles - about one-third of the state's urban area - and "harvested" 27,000 algae-ridden pools, providing the districts with photographs, maps, street addresses, latitude/longitude and parcel data, including ownership.

"We find lots of mosquito sources at foreclosed homes," said John Rusmisel, district manager for Alameda County's Mosquito Abatement District. "It's an ongoing and big problem."

This story isn't new - but it is interesting:

[Bob Franklin] bought a Cessna plane with a 30-inch-wide hole in the bottom to mount a downward-facing camera. The hole is a $40,000 option, as it requires rerouting wires and making structural changes. ... He wrote software for flight planning, camera control and specialized image processing.

I find it amusing that he got the idea for the business while towing an advertising banner for Circuit City.

12 Comments

Davos's picture
Davos
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Posts: 3620
Re: Daily Digest - May 26

Pretty slow day in the news, sure Tuesday's collection (these are compiled a day in advance) will be fatter, especially with the geopolitical stresses.

I posted the emergency mass evacuation ppt/pdf because I relate our current market/ira/401ks to the twin towers or so many other evacuations (Katrina etc.) 

SteveS's picture
SteveS
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Posts: 358
Early retirement

I wonder if part of the surge in Social Security claims is due to people thinking they better get their money while they can? If I was at making a decision today about waiting for full retirement or taking an early, reduced rate, I'd have to include the chances that the system may change in the future (and not to my benefit).

BTW, on the state bird video, I noticed virtually all the cranes were not running. Maybe they shot it on a Sunday....

idoctor's picture
idoctor
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Re: Daily Digest - May 26

Positive News Reports - True Green Shoots or Trojan Horses?

http://finance.yahoo.com/news/Positive-News-Reports-True-etfguide-15305313.html?.v=1

Tapani's picture
Tapani
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Posts: 69
Re: Daily Digest - May 26

China warns Federal reserve over printing money:

www.telegraph.co.uk/finance/financetopics/financialcrisis/5379285/China-warns-Federal-Reserve-over-printing-money.html

Pretty much confirms what we already know, the Chinese are worried. The article doesn't really say much more.

 

LogansRun's picture
LogansRun
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Re: Daily Digest - May 26

I loved when Dan Schaffer is about to actually give his conclusion as to what he THINKS is happening that the old dog for tptb changes the subject completely and the point of manipulation by the gov't is never actually disclosed/discussed.  This market is rigged and stinks worse than an uncleaned fish house in 100 degree weather!  Why anyone would think they can trade via fundamentals in this is beyond me.  Why anyone would put their money long term into a system that is not REAL is beyond me. 

Davos's picture
Davos
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Re: Daily Digest - May 26

 

Positive News Reports - True Green Shoots or Trojan Horses?

 

Rally?: You know, this weekend I listened to FSN hour 3a and b and how I didn't run off the road I don't know. Jim Puplava (who I rank up there with Chris) was talking about the economists who are calling for potential for a rally.

And the merits he listed seemed possible, (though I doubt it).

Then I opened up my John Maulden email (another guy I really, really respect) and his friend leads off the articles saying all those "doom and gloomers" expecting to devolve back to scarcity and need guns and freeze dried food will be disappointed.

Disappointed?: Not to have to eat rice and beans or canned food? No. I'd be happy to be wrong, very happy! I'd be happy to put my money back in the China market and watch it go parabolic - Again.

But all this just makes me think of the recent quotes, Soros - the markets are always wrong and Hugh Hendry - only monkeys pick bottoms.

It also made me a firmer believer in trend following, just ride the waves, up and down, paddle into them and get out when they stop.

But, and not to be pessimistic, regardless of what the markets do short term I don't see the fundamentals there for anything sustainable.

Jobs: There are no jobs. Even as insane as the global asylum has gotten I don't think we are going to see a sustainable economy without jobs. Unemployment is 20%. There are over 20 million people without a job or working part time jobsssssss trying to eat.

Spending money (aka credit): There is no more credit. The ATM people had in their Great Rooms is gone.

Home owners: Now being almost out numbered by REO's. Many, many qualified prime borrowers are loosing their homes so overall we have 24 million vacant homes and lacking some creative rent to own gov-a-bank gig - there will never be the amount of mortgage holders that there were before.

That isn't even addressing wave 2 which is going to be another blow like the first blow the market got from sub prime borrowers (and lenders).

Commercial Real Estate: Development there lagged residential usually following new residential subdivisions by 12-24 months, I'd expect to see further deterioration in that arena as the homes that filled now empty and expected traffic tanks.

Residential Builders/Construction: Until assets come down in price and labor mimics it I can't see a builder putting up a home when it will cost him more than what the existing inventory is "moving' for.

Autos: Without the Great Room ATM I don't see people buying cars for 50k, or 30k anymore.

As far as I can tell the only thing selling is consumer staples.

Mega Debt: Super box store sized. With the debt at 80 trillion and a deficit that will, barring some disaster, be funded only by Quantitative Easing, I for see only a devalued dollar which will drive commodity prices north.

WAY NORTH. I see Zimbabwe purchasing power.

Local Governments: For those in trouble or getting into trouble I see cuts, huge cuts (fire, school, rescue, welfare, etc.) Lower revenue will lead to creative taxes and less money for consumers to spend, more hardships will be imposed on the poor and jobs will be slashed. California is leading the movement now.

Stimulus: FSN said it best, this is rob Peter to pay Paul, not a stimulus. They claim that throughing that much money around will stimulate things. I don't know. At 8,900 miles per gallon gallons per mile to do one mile of road I think that alone could spike demand and simmer recovery if/when scarce gas goes to 4 bucks a gallon. I think that was the straw that broke things in 2008.

How long the market will be irrational?: IMHO and in all honesty, I have NO idea.

Nodda!

Current day: We are riding some trend waves in the markets but we wouldn't trust it for 401k/iras, like Chris said in his TSHTF report, it is happening right here, right now and like the last depression it wasn't evident until they looked back. Like CM said, it is a debt crisis, a solvency crisis, an energy crisis and it is global.

He says, something to the effect that in 1929 people lost money, in 1931 smart people lost money and in 1933 really smart people lost money. I don't know if I even have the years right, but that is the gist of it.

We are also using options exclusively, "if" my wave/horse stumbles becuase it tripped over the other 20 - I know how much the bet is going to cost me.

This time: I don't think people will say the same this time around. I mean really, in 1933 there was no benchmark, this is Great Depression II redux, it isn't like we can stand around and say, we didn't have a map, we didn't have a clue. We now know that a depression is just the destruction asserts/debt. We know what it looked like then and now.

Hey, I was here in the seventies and eighties - I don't recall tent cities then. This is a depression, the real numbers can be Enron'd but they can't be conned.

PS short answer, I'm with you, Trajan horses! This is one building I'd evacuate, if it is still standing I can always go back.

SamLinder's picture
SamLinder
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Re: Daily Digest - May 26

Well thought out, Davos. I too am inclined to think this is a suckers rally. The other shoe is still in the process of dropping. Wait until it hits the floor!

Davos's picture
Davos
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Re: Daily Digest - May 26


 

CNBC is reminding me of Scrubs (wow, I might have to get cable and spare the Netflix Wait!)

SteveS's picture
SteveS
Status: Gold Member (Offline)
Joined: Sep 6 2008
Posts: 358
Great Depression II

[quote Davos]

 This time: I don't think people will say the same this time around. I mean really, in 1933 there was no benchmark, this is Great Depression II redux, it isn't like we can stand around and say, we didn't have a map, we didn't have a clue. We now know that a depression is just the destruction asserts/debt. We know what it looked like then and now.

I know comparisons are made frequently back to the Great Depression, but I think we are in even worse shape now. Maybe I''m wrong on some of these but:

- We are no longer a producer nation

- We do not have the virtually limitless (so it seemed then) resources

- Our savings rate is lower

- Our national debt (as % of GDP) is several fold higher

- Personal debt is even worse

etc, et

It's interesting how there is an increasing chorus thats sees things starting to go back to 'normal', but I can't point to anything concrete that tells me this is so. Yes, we may see something from pent up demand (people do need to buy new cars sometime, even in bad times), but energy is getting scarcer, we are producing less as a nation, and our debts are growing. This is depressing, but only if one hopes to go back to the old ways. I'm looking forward to different and, hopefully, better ways.
 

Davos's picture
Davos
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Posts: 3620
Re: Daily Digest - May 26

 Hello SteveS:

Yup, really great point, things are a lot different now!

I think on the + side, debt will be wiped out or greatly reduced.

And, at least what they are doing today will be looked at as a: "Well that didn't work, what were we thinking." So, maybe Stimulus 201 will be solar, geothermal, magnetic trains, local farming and a more sustainable living.

 

Eye's picture
Eye
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Joined: Mar 7 2009
Posts: 88
Re: Daily Digest - May 26

The Macke-goes-nuts- link doesn't work.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - May 26

Hello Eye, should work now, take care

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