Daily Digest

Daily Digest - November 17

Tuesday, November 17, 2009, 10:50 AM
  • Stephen King: Gold prices are a dead giveaway
  • Million Hit By 'Plague Worse Than Swine Flu'
  • Gold At $5000 An Ounce?
  • China Slams Fed's Low Interest Rates
  • Amendment To Relax Banks' Accounting Standards
  • France Urges Inquiry Into Financial Sector Competition Abuse
  • America's Newest Land Baron- The FDIC
  • The New Flipping: Short Sales
  • How Government Created Today's Commercial Real Estate Catastrophe
  • Hunger In America At 14 Year High
  • Investors Strategize For Fed's Exit From MBS Market
  • $10 Billion Evaporates
  • Could Pop-Culture Mood Mirror Stock Market Swings?
  • Stimulus Jobs "Created" In Congressional Districts That Don't Exist
  • UK Minister Warns Bankers About New Rules On Bonuses
  • French Bankers Say "Au Revoir" To Guaranteed Bonuses Effective Immediately
  • New Swiss Bonus Rules Target Insurers And Big Banks
  • UK Pension Fund Deficits Underestimated By £268 billion
  • The Year America Didn't Sleep
  • The Great Wallop: An End To Chimerica
  • China Solar Company Opens First US Manufacturing Plant
  • Turning The Wind Power Market On It's Axis
  • Hope Floats On Eco-Celebrity's Recycled Plastic Boat

Economy

Stephen King: Gold prices are a dead giveaway (nncita)

The unfortunate reality is that unconventional policies are unconventional because no one really understands how they work. Whisper it quietly, but these policies may be no more than the ultimate economic placebo. Placebos can, of course, work wonders, but their best work is in the mind. Our central bankers are re-inventing themselves for a "new age" economy. They are no longer economic scientists but, instead, mystics who are hoping to persuade the rest of us of their miraculous powers.

Million Hit By 'Plague Worse Than Swine Flu' (hucklejohn)

A DEADLY plague could sweep across Europe, doctors fear, after an outbreak of a virus in Ukraine plunged the country and its neighbours into a state of panic.

Gold At $5000 An Ounce? (M.W.)

Gold remains in focus and its price can still explode higher, writes Martin Hutchinson.

China Slams Fed's Low Interest Rates (M.W.)

U.S. gripes about China's currency policy are now matched by Chinese complaints that the Fed's low interest rates are inflating new asset bubbles. But as President Obama meets Tuesday with Chinese President Hu Jintao, both nations' crisis-fighting policies are having effects far from their own shores.

Amendment To Relax Banks' Accounting Standards (M.W.)

In the midst of what was supposed to be a Congressional push for increased financial regulation and accountability, a powerful coalition of moneyed interests is increasing pressure on Congress to undermine the independence of accounting standards. Banks are pushing for a system that would relax accounting rules in times of economic distress.

France Urges Inquiry Into Financial Sector Competition Abuse (M.W.)

France has called on global regulators to investigate potential competition abuses in the financial sector following successive government bail-outs and industry consolidation. Christine Lagarde, the French finance minister, voiced concerns that some institutions had become too powerful in a market that has been consolidated by banking failures and industry mergers. VIDEO

America's Newest Land Baron- The FDIC (M.W.)

In the past two years, the FDIC has taken over 150 failed banks. In the process, it has seized more than 5,000 houses, subdivisions, buildings, parcels and other foreclosed assets. The current backlog of property stuck on the agency's books, with an appraised value of $1.8 billion, ranges from an $18,700 clapboard home with stained carpets in Birmingham, Ala., to a $1.7 million mountainside lodge with a heated driveway in Steamboat Springs, Colo.

The New Flipping: Short Sales (M.W.)

There's a new breed of property flipper. Some of the real estate flipping today involves the same kind of insider deals and manipulated sale prices that plagued the housing bubble. The FBI recently added short sale flipping, dubbed "flopping" by some mortgage fraud experts, to its list of recognized real estate fraud.

How Government Created Today's Commercial Real Estate Catastrophe (M.W.)

The recent commercial real estate bubble that is now so painfully deflating is actually the grandchild of an earlier commercial real estate bubble.

Hunger In America At 14 Year High (M.W.)

The number of Americans who lacked consistent access to adequate food soared last year, to 49 million, the highest since the government began tracking what it calls “food insecurity” 14 years ago. The increase, of 13 million Americans, was much larger than even the most pessimistic observers of hunger trends had expected and cast an alarming light on the daily hardships caused by the recession's punishing effect on jobs and wages.

Investors Strategize For Fed's Exit From MBS Market (M.W.)

The $5 trillion market for bonds backed by the housing finance companies Fannie Mae, Freddie Mac and Ginnie Mae is in for a shock when the Fed stops buying at the end of the 2010 first quarter.Fed buying, just over $1 trillion so far, has not only played a key role in bringing down mortgage rates and kick-starting the hard-hit housing market, but also boosted returns at some of the world's largest bond funds.

$10 Billion Evaporates (M.W.)

Eight months after President Obama began prodding the nation's banks to increase their small business lending, the loan numbers continue to drop.The 22 banks that got the most help from the bailout programs cut their small business loan balances by a collective $10.5 billion over the past 6 months. Three of the 22 banks make no small business loans at all. Of the remaining 19 banks, 15 have reduced their small business loan balance since April, when the Treasury department began requiring the biggest banks receiving TARP funding to report monthly on their small business lending.

Could Pop-Culture Mood Mirror Stock Market Swings? (M.W.)

The idea linking culture to stock prices is surprisingly simple: The population essentially goes through mass mood swings that determine not only the types of music we listen to and movies we watch, but also if we want to buy or sell stocks. These emotional booms and busts are followed by corresponding swings on Wall Street, says Matt Lampert, research fellow at the Socionomics Institute, a think tank associated with well-known market researcher Robert Prechter.  

Stimulus Jobs "Created" In Congressional Districts That Don't Exist (M.W.)

There’s Arizona’s 15th Congressional District, where 30 jobs have been saved or created with just $761,420 in federal stimulus spending, according to Recovery.gov. Arizona only has eight House seats. So the $34 million that Recovery.gov tells us was spent in the state’s 86th district is equally incredible. Another gem: More than $36 million in stimulus funds spent between the 69th and 99th districts of the Northern Mariana Islands -- a self-governing US territory that gets only one (non-voting) representative in the House.

UK Minister Warns Bankers About New Rules On Bonuses (M.W.)

Bankers who are not prepared to forgo controversial contracts that flout new rules on bonuses should get out of the mainstream industry, Lord Myners has declared. The City Minister fired a warning shot ahead of the Queen’s Speech tomorrow, which will outline plans to forbid guaranteed bonuses and other pay deals. Lord Myners, in an interview with The Times, said: “People who are not willing to subordinate their own egos to the stability of their companies or the financial system probably shouldn’t carry out activities in deposit-taking banks.”

French Bankers Say "Au Revoir" To Guaranteed Bonuses Effective Immediately (M.W.)

Banks in France, including non-French ones, will no longer be allowed to offer guaranteed bonuses to traders and other staff under new rules. Under the government decree, which takes effect immediately, bonus payouts will be spread over at least three years, and will be clawed back either in part or entirely if the transactions on which the bonus was calculated turn out to be less profitable than thought at the time of the award. For large bonuses, at least 60% of the total must be deferred. And, for all variable bonuses, at least half of the total must be in stock rather than cash.

New Swiss Bonus Rules Target Insurers And Big Banks (M.W.)

Switzerland's largest banks and insurers will have to defer the bulk of managers' bonuses and better match pay to performance under new rules aimed at curbing risky investments. The new rules placed Switzerland in a growing group of countries moving the focus of compensation away from a short-term culture blamed for the financial crisis towards longer-term sustainable profitability. "Remuneration schemes can create false incentives which may lead to inappropriate risks being entered into, threatening the business and profitability of a financial institution and, at the end of the day, its stability."

UK Pension Fund Deficits Underestimated By £268 billion (M.W.)

Lloyds Banking Group and Royal Bank of Scotland, the state-backed lenders, are among a raft of large European companies underestimating the size of their pension deficits by a combined €300bn (£268bn) Other companies include British Airways, Barclays, BT Group, GlaxoSmithKline and HSBC. 31 companies had underestimated their deficits by 40% or more, with UK firms among the worst offenders.

The Year America Didn't Sleep (M.W.)

America didn’t just lose money in the Crash -- America lost a lot of sleep. One in three Americans is experiencing a sleep disorder due to economic concerns. Astonishingly, these findings have been little discussed in the professional academe or in the public sphere. 

The Great Wallop: An End To Chimerica (M.W.)

The Chimerican era is drawing to a close. Yet there is a strong temptation for both halves of Chimerica to keep this lopsided partnership going. Despite much talk of the need to reduce global imbalances, the biggest imbalance of all persists.

Energy

China Solar Company Opens First US Manufacturing Plant (M.W.)

China's Suntech Power Holdings announced its first American manufacturing plant. The facility will begin production by next October. Suntech's move may soften criticism from U.S. lawmakers worried that low-cost factories in China will snare new green manufacturing jobs before they even have a chance to take root in the U.S.

Turning The Wind Power Market On It's Axis (M.W.)

Green Wave Energy and investors are banking on the unconventional design of its microturbines that can generate energy by capturing breezes from any direction. Among its secret weapons: An 11-foot-tall, blazingly white, nearly indestructible prototype generator that produces as much as 11 kilowatts of electricity using gusts of wind. The fiberglass contraption could make homespun, do-it-yourself wind power a reality.

Environment

Hope Floats On Eco-Celebrity's Recycled Plastic Boat (M.W.)

David de Rothschild talks about his most dramatic adventure yet: He's readying a sailing vessel made entirely of recycled plastic for an 11,000-mile journey west into the Pacific. One key stop: a massive, floating plastic junkyard in the middle of the ocean that is the direct result of mankind's polluting ways. For de Rothschild, the Expedition combines adventuring with activism. 

13 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - November 17

"Nov. 17 (Bloomberg) -- Mauritius bought 2 metric tons of gold from the International Monetary Fund, underscoring a drive by central banks to boost holdings as the precious metal trades near a record and the dollar slumps."

"BEIJING: The imperative of greater global currency stability means the world can no longer rely, as it has done since the end of the gold standard, on a currency issued by a single country, the head of the IMF said on Tuesday.

Dominique Strauss-Kahn, the managing director of the International Monetary Fund, restated his view that a new global currency might evolve out of the Special Drawing Right, the Fund's in-house unit of account.

"That probably has to be a basket," Strauss-Kahn said of the eventual replacement for the dollar. "

............2A) No confidence in the U.S. dollar

“We must reform the international monetary system,” Yu Yongding, a former Chinese central bank adviser, said at a forum in Beijing today. “A good monetary system should make us confident. But we don’t have confidence in the U.S. dollar now.”

"To make matters worse, some city departments are going over budget, including shortfalls of $5.1 million in the Fire Department, $4 million in the Sheriff's Department and $3.2 million in Superior Court.

This year's $6.6 billion budget bridged a $438 million gap and included a $25 million cushion for unexpected revenue loss. But that's proving not enough to make up for the missing dollars, meaning San Francisco is now expected to be in the red by an additional $28.1 million over the course of this year.

"I don't even know if I have words to describe how bad this is," said Steve Kawa, Mayor Gavin Newsom's chief of staff."

"Ambac Financial Group Inc.’s bond- insurance unit faces a 99 percent chance of default, credit derivatives show, as financial institutions brace for the second-largest bond insurer to file a capital update with regulators later today."

"U.S. Operations Received $50 Billion in Taxpayer Funds -- And Now May Send Millions of Dollars Overseas"

"In June, Oakland officials sliced $70 million - or about 25 percent - from the city's general fund by cutting salaries 10 percent, eliminating 400 jobs and curtailing dozens of programs and services to balance the budget.

Today, the Oakland City Council will convene a special meeting to discuss emergency options, including selling both of the city's convention centers, issuing bonds on future parking revenue and extending utility taxes to water and garbage service.

"It's very dire," said City Councilwoman Pat Kernighan. "We are faced with choices that are unacceptable to most people. But we can't just postpone these decisions.""

"Time to sharpen the budget knives -- again. City Hall bean-counters have asked city agencies to make deep new cuts for this year and next -- cuts which may include lay-offs."...

"Today's news comes just moments before Albany lawmakers are scheduled to convene to address the state's $3-billion budget deficit."

.....more info

"For the three months ended Sept. 30, 6.25 percent of U.S. mortgage loans were 60 or more days past due, according to credit reporting agency TransUnion. That's up 58 percent from 3.96 percent a year ago."

"Senate Pensions Chairman Dan Foster, D-Kanawha, estimates that of 53 pension plans across the state, 45 cities' plans are seriously under-funded at 40 percent or less.

Under the latest proposed legislation, cities would be given the option of freezing their pension debts by closing their current plans to new hires and directing them into a new plan to be administered by the state's Consolidated Public Retirement Board."

 

..........Give another award to Carrie if that's a GM truck.

Johnny Oxygen's picture
Johnny Oxygen
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How ALL systems can collapse overnight.

Really good read by Martin Armstrong.

How ALL systems can collapse overnight.

Posted July 2009

http://www.scribd.com/doc/17880556/How-ALL-Systems-Can-Collapse-Overnight-709

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pwanex
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Re: Daily Digest - November 17

Wow, what a bargain. 

Silverdome sale price disappoints

Nearly 35 years after taxpayers spent $55.7 million building the Pontiac Silverdome and a year after a $20 million sale fell through, city officials have sold the arena once called the most desirable property in Oakland County.

The price: $583,000.

 

http://detnews.com/article/20091117/METRO/911170327/1409/METRO/Silverdom...

One1776's picture
One1776
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Johnny Oxygen's picture
Johnny Oxygen
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Silverdome sale price disappoints

Wow, what a bargain. 

Nearly 35 years after taxpayers spent $55.7 million building the Pontiac Silverdome and a year after a $20 million sale fell through, city officials have sold the arena once called the most desirable property in Oakland County.

The price: $583,000.

Who is the lender? Fannie or Freddie?

idoctor's picture
idoctor
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Re: Daily Digest - November 17

Davos's picture
Davos
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Re: Daily Digest - November 17

4 G's.

What a sad statement.

The government is "Katrinaing" it big time.

There must be some law that if you put smart people together and sprinkle in greed everything goes to heck in a hand basket.

dcm's picture
dcm
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Re: Daily Digest - November 17

funny thing, it works with dumb people too

 

idoctor's picture
idoctor
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Re: Daily Digest - November 17

I know Beck is wacky at times but some points made here.

 

Spill's picture
Spill
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Re: Daily Digest - November 17

I noticed this conversation between Arnie Arnesen and Peter Schiff.

It's over a week old, so if it's been mentioned here before, my apologie.

This basicly consists of 2 interesting things.

1: Peter Schiff arguing with a socialist (says so herself, she thinks Obama is not a socialist, and she thinks that's a problem.)

2: Glass-steagal gets mentioned...... 

Part 1:

Part 2:

Davos's picture
Davos
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Re: Daily Digest - November 17
dcm wrote:

funny thing, it works with dumb people too

 

Thanks for the chuckle. No doubt it does. It just amazes me to see smart people act dumb.

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - November 17

 

1) Fannie, Freddie Woes Hurt Apartments

" One troubling sign: one-quarter of the $180 billion of apartment-building loans on Fannie’s books were originated near the top of the market in 2007 and those loans account for nearly half of all its commercial-loan delinquencies."

2) Gold to Outperform U.S. Stocks on Stimulus, Marc Faber Says

"The support level for the commodity will now be at $1,000, which was the precious metal’s resistance level previously, Faber said in a Bloomberg Television interview in Singapore today."...

“Will it go $2,000, $200,000 or $2 trillion? I don’t know,” Faber said. “But if you have money printing in the world, then the price will over time rise. It will go up more for things that you just can’t increase the supply, and the supply of precious metals is very limited.”

3) Vegas council to hear about $400 million deficit

"LAS VEGAS—Las Vegas City Council members are beginning to consider ways to deal with a projected budget shortfall of more than $400 million over the next five years.

City officials say city finance chief Mark Vincent will address the council Wednesday about the state of a deficit that has grown since the last projection in May.

At that time, the shortfall was projected at about $240 million over the next five years."

4) Watsonville city services will close next week

"WATSONVILLE - The city will close a long list of services during Thanksgiving week, a cost-cutting measure aimed at balancing the city budget.

Watsonville has been dealing with a $4.5 million general fund deficit and most city employees agreed earlier in the year to take 10 percent pay cuts."

5) State, for 1st time, forced to get a loan (Arizona)

"As lawmakers convened Tuesday to start chipping away at a $2 billion budget deficit, the state is preparing to turn to outside lenders for the first time in Arizona history.

The borrowing is needed to give the state enough cash to carry it through ongoing revenue shortfalls, state Treasurer Dean Martin said.

He estimates the state will need to borrow $700 million to see it through the June 30 end of the fiscal year. As of Tuesday, Martin said, the state had exceeded its threshold of $500 million in IOUs and would need to turn to institutional lenders. To date, the state has been borrowing against internal accounts."

6) Florida lawmakers weigh end of stimulus money

"TALLAHASSEE — As lawmakers grapple with a shortfall for the coming fiscal year that could total as much as $2.7 billion, there’s another financial headache looming on the horizon:

The pending expiration of the federal stimulus money that the state used to patch holes in its $66.5 billion spending plan for the current spending year.

In education alone, that could cost the state more than $1.2 billion in education funding in the 2011-12 spending year, blowing a larger hole in an already stretched education budget.

That’s on top of other areas where a far-from-robust economy is still expected to hamper tax revenues, with the result being a shortfall as high as $5.4 billion."

7) $1 billion short? State may get loan (Minnesota)

"The state of Minnesota's financial picture looks so bleak that top officials are considering a rare move: Borrowing money to make sure the state can pay its bills next year.

Tom Hanson, commissioner of Minnesota Management and Budget, told a legislative subcommittee Thursday that the slow recovery could trigger general fund shortfalls in the spring significant enough to warrant short-term borrowing for the first time in a quarter-century. The state's tax collections are already $223 million lower than officials predicted."

8) Thousands to Protest UC Cuts, Fee Hikes

"UC President Mark Yudof says the 10-campus system needs a $913 million increase in state funding next year. He has argued that the fee hikes are necessary to help reduce a half billion dollar budget deficit made worse by recent cuts by the state.

Meanwhile, California State University Chancellor Charles B. Reed is recommending asking for an increase of $884 million for 2010-11. The board of regents will be meeting at UCLA over the next couple days.

The finance committee is expected to approve the 32-percent hike in fees today with the board of regents following suit and passing the proposal tomorrow. If it goes through, this would be the first time annual UC tuition surpasses the $10,000 mark."

9) Ambac Reports Its Capital Surplus Almost Tripled in Quarter (Look how they did it)

"Ambac Assurance Corp.’s regulatory surplus climbed to $856 million as of Sept. 30 from $305.6 million at the end of June, the company said today"

"Ambac increased its surplus in part by tearing up credit- default swap contracts on $5 billion of collateralized debt obligations in exchange for $520 million in payments to counter- parties, according to the filing today."

10) Fed May Not Increase Rates Until 2012, Bullard Says

"Federal Reserve Bank of St. Louis President James Bullard said policy makers may not start to raise rates until early 2012 while facing a “too low for two long” argument that may “weigh heavily” on the central bank."

11) Stanislaus County retirement system starting to recover from losses

"Because of increased retirement rates and other factors, the employer contribution rates may have to increase from 12 percent of payroll in 2008 to 18 percent in five years. The retirement fund, which was about 85 percent funded in 2008, is on a downward course to be 60 percent funded in 2013.

Local agencies such as the county and city of Ceres are struggling with budget shortfalls, so they are not looking forward to increasing their contributions for the fiscal year that starts July 1."

"Cash-strapped New York City homeowners are being hit with hefty property tax increases. And the reason is hard for homeowners to both understand and swallow.

To city homeowners it gives new meaning to the term fuzzy math. Their property values have plummeted but their taxes are going up.

And they are furious."

 

Cloudfire's picture
Cloudfire
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Re: Daily Digest - November 17

I don't mean to be in-your-face about this, folks, but there has been news that may seriously affect the transmissibility, virulence, and lethality of the H1N1 virus.  It is being discussed in these two threads, as we speak:

Situation Update for Swine Flu in Ukraine

Not Good!

Please take a moment to check these out.  The landscape has changed . . .

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