Daily Digest

Daily Digest - November 23

Monday, November 23, 2009, 10:31 AM
  • Wall Street finds profits by reducing mortgages
  • 'See No Evil' Bank Accounting
  • Commercial Properties Seek Tax Relief
  • Health Care Fight Swells Lobbying
  • Goldman's Non Apology
  • What's Inside Pimco?
  • New Legal Defense Against Foreclosure: "Quiet Title"
  • Worse Than You Think
  • Trying To Save The Airline Industry. Again.
  • Obamanomics 101
  • Wall Street Squeezing American Cities For Every Last Dime
  • How Gambling Brought Deadwood, South Dakota, Back To Life
  • Hunting For Gold In Chile
  • 10 Costly Job Interview Blunders To Avoid
  • Brunch Is Back
  • Marc Dreier's Crime Of Destiny
  • Architects Brenda and Robert Vale believe sustainability begins at home
  • M&M's Go Green


Wall Street finds profits by reducing mortgages (Joemanc)

As millions of Americans struggle to hold on to their homes, Wall Street has found a way to make money from the mortgage mess. Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.

'See No Evil' Bank Accounting (M.W.)

Losses on commercial real estate have been the proverbial "other shoe" waiting to drop on bank balance sheets for months now. So far, though, loan losses on office buildings, shopping malls and real estate developments have been subdued. What's the holdup? A troubling report from one analyst contains some clues.

Commercial Properties Seek Tax Relief (M.W.)

More than 1,000 commercial properties in San Francisco are asking to have their property taxes slashed. Collectively, these buildings have an assessed value of $21.25 billion - but their owners say they're worth about half that amount. If those claims stand, that could wipe $115.78 million off the property taxes the city collects. Residential appeals could erase another $13.47 million in property tax revenue.

Health Care Fight Swells Lobbying (M.W.)

Companies hiring lobbying firms on health issues nearly doubled this year as special interests rushed to shape the massive revamp of the nation's health care system now in its final stretch before Congress. About 1,000 organizations have hired lobbyists, compared with 505 in 2008. Health care lobbying has exceeded $422 million during the first 9 months of the year. The author takes a look at how each group has fared so far and what's to come.

Goldman's Non Apology (M.W.)

Wall St, with Goldman as a leader, helped to inflate and profited from a credit bubble that burst and cost tens of millions of Americans their jobs, incomes, savings and home equity. American taxpayers continue to stand behind the bailouts and other government interventions that have stabilized the financial system. Goldman says it never really needed government aid to survive the financial crisis.

What's Inside Pimco? (M.W.)

Pimco Total Return Fund's nearly $193 billion in total assets rival the gross domestic product of a small country. It is the largest mutual fund ever, dwarfing its closest competitor. Despite manager Bill Gross' high-profile media presence and sage counsel on macroeconomic trends, the inner workings of his biggest fund remain largely a mystery. What's in there?

New Legal Defense Against Foreclosure: "Quiet Title" (M.W.)

J McCampbell took out a mortgage from WaMu which foreclosed on his home in 2004 after he lost his job. But when the lender was unable to produce the deed to prove it had a right to foreclose, he beat the foreclosure and remains there today. Now McCampbell is poised to make history in foreclosure defense with an experimental legal approach that would wipe out his mortgage debt and hand him a clean deed.

Worse Than You Think (M.W.)

A look at how much of the $2.5 trillion the U.S. spends on health care goes down the drain.

Trying To Save The Airline Industry. Again. (M.W.)

For the third time in 16 years the federal government is forming a blue-ribbon panel to try to save the USA's troubled airline industry, which has racked up $58.5 billion in losses and shed 158,000 jobs this decade.

Obamanomics 101 (M.W.)

Obama has his own theory of our current economic situation.

Wall Street Squeezing American Cities For Every Last Dime (M.W.)

Taxpayers are taking another hit as strapped local governments fork over billions in fees on investments gone bad Wall Street is squeezing America's weakest cities for every penny it can.

How Gambling Brought Deadwood, South Dakota, Back To Life (M.W.)

This month the historic town celebrates not just 20 years of legalized gambling, but also the economic rejuvenation that has come along with it.

Hunting For Gold In Chile (M.W.)

Chile is prime hunting ground for large, undiscovered deposits of all sorts of minerals — copper, gold, silver and more. And last week, I visited this country on the trail of one of the world’s great undeveloped gold deposits. “Chile is a toothpick of a country filled with a thousand geologic faults,” a mining engineer told me, “and every time one of those faults bends, minerals bubble to the surface.”

10 Costly Job Interview Blunders To Avoid (M.W.)

The U.S. Bureau of Labor Statistics calculates that there are 6.3 job hunters for every available job. That's three times the average that prevails in a healthy economy. The competition is tough enough without giving potential employers reasons not to hire you. Here are the most common errors career coaches see -- and how to fix them.

Brunch Is Back (M.W.)

So why at a time when the number of dinners that Americans are eating out is at an all-time low, and the economy has more and more people turning to their kitchens to (gasp!) cook for themselves, is this niche meal on the rise?

Marc Dreier's Crime Of Destiny (M.W.)

Berrnie Madoff may be the con man of his age, but it was Park Avenue litigator Marc Dreier whose brazen scam spun most surreally out of control. Dreier's Ponzi scheme—involving audacious impersonations and $380 million stolen from 13 hedge funds— unraveled just days before the Madoff scandal broke. What led Dreier down the Ponzi path to a 20-year prison sentence? The author gets Dreier’s blow-by-blow account of what it’s like to turn bad.


Architects Brenda and Robert Vale believe sustainability begins at home (Iain M)

Authors of a controversial new book Time to Eat the Dog? argue that much thinking on sustainable living puts too much emphasis on technology while ignoring the true impact of particular lifestyle decisions.

M&M's Go Green (M.W.)

Candy giant Mars has turned on a huge new solar array at it's headquartes in NJ. The solar garden contains over 28,000 solar panels, providing about 2 MW of power (about 20% of the headquarter’s electricity needs) on approximately 18 acres — enough power for about 1,800 homes if it were used for that purpose.


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Re: Daily Digest - November 23

Gold above 1170

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Re: Daily Digest - November 23

""Many nations in the West are already bankrupt (the US, the UK, Spain, Iceland and Ireland). For example, America's total debt is over $60 trillion (and rising) and there is no way the US can ever hope of repaying it in today's money," says Puru Saxena, CEO of Hong Kong-based Puru Saxena Wealth Management.

The way out for countries with massive debts is "to print money to repay", says George Cooper, author of The Origin of Financial Crises: Central banks, credit bubbles and the efficient market fallacy. "As that process continues, the value of paper money will deteriorate, a reason why people are holding gold."

"Nobody wants to hold the US$ because of the fiscal and monetary policies of the US administration and structural problems. But nobody wants to hold the Euro or the yen either. So they hold gold as a bet against currencies. It is the default choice," explains Das."

"Nov. 23 (Bloomberg) -- Federal Reserve Bank of St. Louis President James Bullard said the central bank should retain the flexibility to respond to any weakening in the economy by extending beyond March its authority to buy mortgage-backed securities and agency bonds."

.......2A) Dollar suffers on rate view after Fed comments

"The yuan should become an international reserve currency in five to 10 years to prevent the country from paying for the mistakes of US economic policies, a London-based private equity (PE) manager said in an interview Sunday in Beijing."

"Too much debt

The U.S government in hock -- that's the second main reason gold is likely to keep rising, some gold advocates say. They point to a long list of countries where high deficits led to inflation and currency depreciation. Germany between the two world wars, and a slew of emerging markets, from Argentina to Zimbabwe, are the most extreme examples.

"Historically, the countries that suffer the highest inflation rates and steepest declines in currencies are countries whose governments were in fiscal difficulties amounting to insolvency," said David Ranson, president of H.C. Wainwright Economics, a forecasting firm.

"We're in the very early stages in the U.S.," he said. "It's simply that the government has spent and is planning to spend vastly more than it can actually raise in the form of taxes."

"TEHRAN // Iran has gained $5 billion through its policy of shifting away from the US currency in favour of the euro, state television reported on Monday, citing Central Bank Governor Mahmoud Bahmani.

Since 2007, Iran has received 85 percent of its oil income in currencies other than the US dollar, Iran’s English-language Press TV reported on its web site.

“Iran has considerably reduced the total of U.S. dollars in its currency basket,” Mr Bahmani said."

"Sales of American Eagle gold coins by the U.S. Mint almost doubled in the year’s first 10 months to 1.07 million ounces, data on its Web site showed. The mint has sold 99,500 ounces of the coins so far this month. The U.K.’s Royal Mint last week said it quadrupled output of gold coins in the third quarter."

"Governments have failed to fix the sources of the economic crisis and will need radical new mechanisms for international co-ordination to solve them, participants at the World Economic Forum’s (WEF) meeting in Dubai said yesterday.

The WEF’s three-day Summit on the Global Agenda ended yesterday with a series of recommendations. Among them were: expanding alternatives to the dollar as the world’s reserve currency; strengthening international oversight of the financial industry; and creating global agencies to monitor financial risks and other threats including weapons of mass destruction, climate change and pandemics."

"FORT LEE, N.J., Nov. 23 /PRNewswire/ -- The National Inflation Association's new 30 minute documentary, 'The Dollar Bubble,' is almost complete and expected to be released this holiday week. The Dollar Bubble is the sequel to NIA's critically acclaimed 'Hyperinflation Nation,' which has now received over 310,000 views since June 28th.

The Dollar Bubble is the most informative and comprehensive documentary ever produced on the Federal Reserve's destructive monetary policies and the upcoming collapse of the U.S. dollar. This Thanksgiving, the best way to give thanks to those you care about is to have them watch The Dollar Bubble. It will help them survive and prosper during the real economic collapse we are rapidly approaching."

"On Friday Reuters reported that Sovereign wealth funds are investing more in property and commodities to hedge against currency devaluation following the massive bail-outs and residual debt level of Western governments.

"There is quite a lot of interest in real estate and other long-term hedges against inflation," said David Smart of Franklin Templeton in a Reuter's interview on Friday."

"Gold has long been favored by a fringe of the investment world, but this year some of the world's leading hedge-fund managers have loaded up on the precious metal amid concern government efforts to avoid another Great Depression that could undermine major currencies and fuel rampant inflation.

"I have never been a gold bug," Paul Tudor Jones, chairman of hedge-fund giant Tudor Investment Corp., wrote in an Oct. 15 letter to investors. "It is just an asset that, like everything else in life, has its time and place. And now is that time.""

"But could this flight to the "safety" of government bonds in itself be creating subtle new dangers? Government debt, after all, has soared to levels not seen in peacetime for centuries, if ever, in many countries, not least the US and UK. Fiscal deficits are swelling across the western world. And the level of political commitment to curbing those deficits remains uncertain - not least because with yields currently so low there is less pressure on politicians to push through reform.

That does not necessarily mean an outright default looms any time soon; indeed, default seems highly unlikely. However, it is easy to imagine that some countries will end up eroding the value of their bonds by debasing their currencies in the coming years, printing money and stoking inflation."

"Nov. 23 (Bloomberg) -- The most accurate dollar forecasters predict the world’s reserve currency will continue sliding even when the Federal Reserve begins to raise interest rates, which policy makers say is an “extended period” away."

"Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher."

....13A) NYT: The Government Will Get Creamed When It Has To Refi Its Debt

"Trading volumes have spiked for credit default swaps that insure against default by developed nations such as the U.S., U.K., and Japan according to The Financial Times."

"SACRAMENTO — Already grappling with one multibillion-dollar budget deficit, cash-strapped California now is facing a crisis in its unemployment insurance fund — source of the tens of millions paid each week to jobless residents.

Amid record unemployment, the fund will likely finish the year $7.4 billion in the red, according to the latest projections from the state's Employment Development Department. Just to keep checks coming, California has had to reach into Uncle Sam's pockets for some $4.7 billion to date.

The state must return what it borrows by 2011 — or face hundreds of millions in interest payments that would come at the expense of funding for schools, parks and social services.

But with unemployment expected to remain high as the economy slowly turns around, officials fret they won't be able to pony up on time. And to prevent the fund's shortfall from ballooning even further in the next two years, Gov. Arnold Schwarzenegger and the Legislature face a nettlesome dilemma: Cut back on benefits, raise taxes on employers or do both."

"Tax revenue dropped by 11% in 44 states in the third quarter according to the Rockefeller Institute."

"Dominique Strauss-Kahn told the CBI annual conference of business leaders that another huge call on public finances by the financial services sector would not be tolerated by the “man in the street” and could even threaten democracy.

"Most advanced economies will not accept any more [bailouts]...The political reaction will be very strong, putting some democracies at risk," he told delegates."

"Investment flows into commodity markets have come in at levels never seen before, with Barclays Capital estimating that some $55 billion has entered the asset class year-to-date. This exceeds the previous record of $51 billion achieved in 2006.

"The wall of money floating around in the financial system continues to benefit commodities as a way of diversifying portfolios and in order to shield investments from a non-negligible risk of a U.S. debt and currency crisis," said Ole Hansen, Manager for Futures and Fixed Income at Saxo Bank."

"A newly paved road winds its way to the plastic-shrouded shell of the Mohegans' new tribal office and community center. Construction equipment is scattered about, but work on the facility stopped months ago.

It's a stark and unmistakable symbol of the financial crisis within Connecticut's multibillion-dollar Indian gaming empire.

After making and spending billions over the last decade, the Mohegans and their nearby neighbors, the Mashantucket Pequot Indians, are teetering on the brink of a financial meltdown."

"Michigan's welfare system is gorged with new clients who often wait hours in crowded state offices to get food stamps and medical care."

"The last 12 months have been tough on Michigan: Food-benefit and Medicaid cases increased by nearly half a million from a year ago; many people receive both. Individual caseworkers sometimes juggle as many as 900 cases and face threats from angry, frustrated clients. Some blame a new computer system for delays.

"You can only do so many cases in a day," said Doug Williams, director of Oakland County DHS."

"CalPERS is delaying a contribution rate hike for local governments and schools a year, pushing back the impact of huge investment losses in the stock market crash last year.

The change puts even more distance between the historic crash and the higher annual payments from employers needed to make up for the losses, which will not fully kick in until five or six years later.

If the critics are right and the current level of retirement benefits are “unsustainable” for future employees, the financial crunch may not be a sudden rate shock but instead a kind of slow-motion train wreck over a number of years."


...........How's that U.S. dollar doing today?

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Re: Daily Digest - November 23-healthcare costs

I am impressed by the ability of the white house and their favorite msm outlets to get citizens outraged and demand less medical treatment. The problem is, as outlined on 60 Minutes last evening, when people are actually sick and dying they see it differently much of the time. The fed gov is choosing to place the blame placed on the only people in the system even provoding a service which many feel has a real value (not always and not for all of course). The profits of the insurance and big pharma companies are pretty high. Why is the gov protecting these entities? Just my 2 cents. And since I am in healthcare I suppose people will worry I am biased.I am hurt that my years of personal sacrifice and training are so easily dismissed by the msm and gov.

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Re: Daily Digest - November 23-healthcare costs
VeganD wrote:

I am impressed by the ability of the white house and their favorite msm outlets to get citizens outraged and demand less medical treatment. The problem is, as outlined on 60 Minutes last evening, when people are actually sick and dying they see it differently much of the time. The fed gov is choosing to place the blame placed on the only people in the system even provoding a service which many feel has a real value (not always and not for all of course). The profits of the insurance and big pharma companies are pretty high. Why is the gov protecting these entities? Just my 2 cents. And since I am in healthcare I suppose people will worry I am biased.I am hurt that my years of personal sacrifice and training are so easily dismissed by the msm and gov.

That's because the insurance and drug companies have BIG pockets and an infinite amount of influence.


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Re: Daily Digest - November 23

Ron Paul audit the fed on cnbc today.


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Re: Daily Digest - November 23

"NEW YORK — Mortgage finance company Freddie Mac on Monday put its initial loss estimate related to the bankruptcy of Taylor, Bean & Whitaker Mortgage Corp. at $500 million, and noted the figure could be much higher."

"Home resales surged 10.1% in October--hitting the highest pace since February 2007--fueled by buyers rushing to tap the federal tax credit. It helped that home prices and mortgage rates remain low, possibly making the monthly mortgage payment more affordable than renting in some areas.

That has eaten into the number of homes available for sale. At the end of October, total inventory fell 3.7% to 3.57 million homes, representing a seven-month supply for the first time in more than two years, the National Association of Realtors reports today. That makes unsold inventory--nearly 15% below a year ago--just a tick above the six-month mark that typically represents a healthy market."


"There's also the so-called shadow inventory of foreclosed homes sitting on the sidelines. That has Credit Suisse analyst Dan Oppenheim cautious: "We believe the data fail to capture significant levels of foreclosures not currently listed for sale by banks." One estimate puts it at seven million, a number only expected to rise as the foreclosure crisis plays out."

"Following a 54 basis point (bp) increase in Fitch's U.S. CMBS Loan Delinquency Index to 3.86, the balance of specially serviced loans in Fitch rated transactions increased to $35 billion in September (from $32.6 billion in August)."

"Values of commercial real estate will continue to fall before a slight rebound and a gradual recovery, according to a new report from Moody’s Investor Service.

Commercial property values fell 42.9% from their peak in October 2007 and will remain stunted far longer than cash flows, according to the report. Analysts further predict that values will decline 45% to 55% from that peak in months ahead."

"In fact, fully 93 percent say they'll spend less or about the same as last year, according to an Associated Press-GfK poll."

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The One Armed Bandit on life support

Re: Tribes teeter on the financial brink

I'm going to be keeping a close eye on the 2 casinos in CT since I live here and 25% of the slots come back to the state in revenue. But also, with what the banks and bondholders can do as far as handling a bankrupt Indian casino in a sovereign nation. It's one thing to deal with Trump and his on again, off again bankrupt Atlantic City casinos, but Indian tribes on sovereign land? I can't wait to see how this will play out.

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Re: Daily Digest - November 23

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Re: Daily Digest - November 23

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Re: Daily Digest - November 23

I was waiting for the new edition I just wish they would be faster coming out.  Here's some unbelievable sarc news!


Most global banks are still unsafe, warns S&P


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Re: Daily Digest - November 23

More shocks to come, warns IMF

By finance reporter Sue Lannin


The International Monetary Fund (IMF) says the fallout from the global financial crisis may not be over yet.

It has warned that the global economy is improving but it is still highly vulnerable to shocks such as more loan losses from banks.

IMF managing director Dominique Strauss-Kahn has told a conference in London that stimulus spending by governments should be maintained until a global recovery is entrenched.

"Exit too soon and you kill the recovery. Exit too late and you sow the seeds for the next crisis," he said.

"This kind of support will have to last some time more until we will be sure that the recovery is firmly established, which in our view will happen."

Mr Strauss-Kahn says high unemployment, large budget deficits and weak household finances make the global economy vulnerable.

"We don't see a high probability for a double dip but it doesn't mean it's a done deal and one of the biggest risks would be to withdraw [stimulus] too early," he said.

Westpac senior international economist Huw McKay thinks a double dip recession in the US is still a possibility.

"It is still very much is in the frame. We're still in a situation where fiscal stimulus is helping activity," he said.

"The challenge for 2010 in the United States is that household balance sheets are very weak," he said.

Mr McKay says the US banking system is also weak and that is not helping the economy to grow.

"We also have the fact that the US banking system is not actually extending credit in a way that is going to be a great help to financing economic recovery," he said.

More losses

Mr Strauss-Kahn says the global financial system is still in trouble.

Bad debts continue to rise as companies go under because of the global recession.

He believes more bank losses are to come.

"We're still in the situation where alot of losses haven't been disclosed," he said.

"A little more has been disclosed in the US and a little less in Europe. But it's almost half and half. So we still have a long way to go."

Mr Strauss-Kahn says taxpayers are fed up of bailing out banks and are unlikely to do so again if another financial crisis emerges.

He says regulatory uncertainty may be creating a "Mardi Gras" style culture, where investment banks take risks in the expectation of greater regulation in the future.

"We see signs of old habits coming back. Risk taking is on the rise and is manifesting in emerging markets," he said.

"There is no magic bullet, but one possible answer is to reduce regulatory uncertainty. Lay out the future requirements and time scale for implementation."

The University of New South Wales' professor of finance, Fariborz Moshirian, says the biggest challenge will be getting tougher regulations.

"The head of the IMF is frustrated simply because a number of international agreements have not been incorporated into national laws," Professor Moshirian said.

He says investment banks will continue to take more risks because of lax global supervision.

"Unless we see a universal application of national agreements for better supervision of multinational banks, we are going to see what is referred to as regulatory arbitrage," he said.

Professor Moshirian has also warned of looming trade imbalances because the rising euro and higher Asian currencies make Chinese goods cheaper to import.

"We are facing basically another challenge of trade imbalances between China and the rest of the world," he said.

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Re: Daily Digest - November 23

In the post about the IEA whistleblower disclosures on Peak Oil -

Dr M mentioned that the key question for him is not when peak oil is going to occur but when it enters the mainstream consciousness.

Here is another step along that road

Australian Senate: Peak Oil motion defeated 31:6

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Re: Daily Digest - November 23

HSBC is tired of all these gold fans, using their safety deposit boxes to store a few gold coins, and they've given them the heave-ho.....




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Collectivists vs Individualists


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Re: Daily Digest - November 23

SAfrica adds drugs, prostitution to GDP data

South Africa has included figures for drugs and prostitution in its economic growth calculation for the first time, but analysts said the estimated $505 million for illegal activities last year was too low.

Statistics South Africa (SSA) said illegal and underground activities make up only 0.2 per cent of the economy in the country, which has one of the world's highest rates of violent crime.

Analysts immediately cast doubt on the estimate of 3.5 billion rand for 2008.

"I think it is a bit conservative," said Freddie Mitchell, economist at research group Efficient.

"The international community sees South Africa as a haven for drugs, so I think 3.5 (billion rand) is a bit of an underestimation."

The statistics agency released previously "non-observed" activities in its gross domestic product calculations for the first time, in line with international standards.

The new category includes many activities like prostitution, abalone poaching and the growing and selling of drugs.

Carjacking is common in South Africa and drug use is rife in some areas and among young people. Marijuana is seen as a cash crop in many rural areas.

SSA said in the release of third-quarter data, which also revised and rebased previous figures, that Africa's biggest economy measured 2.284 trillion rand ($335 billion), of which illegal activities make up 0.2 per cent.

It stressed the figure was an estimate and could not give a breakdown of specific activities, including prostitution.

"It's difficult enough to estimate normal GDP before delving into the dark world of organised crime and illicit activities," said Russell Lamberti, an economist at market analysts ETM.

"We appreciate what they are trying to do, but we need to treat the figures with caution."

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