Daily Digest

Daily Digest - November 27

Friday, November 27, 2009, 10:41 AM
  • U.S. dollar collapse could devastate economy: Book
  • Bundesbank fears relapse as German banks face €90bn fresh losses 
  • Dubai debt fears rattle global markets
  • Dubai's Grim Warning To Unwary Investors
  • Emirate Has A Lot Of Explaining To Do
  • The Dark Side Of Dubai
  • China, Gold, And The Civilization Shift
  • Few Mortgages Have Been Permanently Modified
  • Commercials From The Fed Coming To A Theater Near You
  • AIG Forcing Poor To Choose Between Running Water And Food
  • How Big Is Too Big?
  • Land Rush In Africa
  • China And South Korea In Sub-Saharan Land Grab
  • James Hansen Talks About The Climate Change Controversy


U.S. dollar collapse could devastate economy: Book (pinecarr)

A dollar plunge could ravage the U.S. economy as soon as 2012, when foreign investors are likely to exit en masse from U.S. assets, according to a new book by two analysts who forecast the recent credit crisis.

Bundesbank fears relapse as German banks face €90bn fresh losses (pinecarr)

The Bundesbank has told German banks to take advantage of renewed confidence while they can to prepare for likely losses of €90bn (£81bn) over the next year, warning that the delayed shock waves of the economic crisis still pose a major threat to global recovery and bank finance.

Dubai debt fears rattle global markets (pinecarr)

Stock markets in Europe were rattled as the attempt by Dubai to delay payments on its debt risked precipitating the largest sovereign default in almost a decade.

Dubai's Grim Warning To Unwary Investors (M.W.)

The property bubble was a global phenomenon. Prices rose to ridiculous levels almost everywhere, from Britain to Latvia to the US. But few places saw a bubble quite as insane as Dubai's.

Emirate Has A Lot Of Explaining To Do (M.W.)

For months, all indications were that Dubai would meet the obligations of the companies in which it has stakes. Only a few weeks ago, bankers in the region were so upbeat some had suggested that Dubai might not even need to raise more funds to pay debts due this year.

The Dark Side Of Dubai (M.W.)

If you get into debt and you can't pay, you go to prison. If you quit your job in Dubai, your employer has to inform your bank. If you have any outstanding debts that aren't covered by your savings, then all your accounts are frozen, and you are forbidden to leave the country. All over the city, there are maxed-out expats sleeping secretly in the sand-dunes.

China, Gold, And The Civilization Shift (M.W.)

Stephen Jen from the hedge fund Blue Gold Capital, an expert on sovereign wealth funds, has a warning for those who think that gold has risen far too high, is necessarily in a speculative bubble, and must soon come clattering back down.

Few Mortgages Have Been Permanently Modified (M.W.)

Lenders have temporarily restructured hundreds of thousands of loans, but long-term changes have proved elusive, raising the specter of a new wave of foreclosures that could cause a fresh decline in home prices only months after they appeared to hit bottom.

Commercials From The Fed Coming To A Theater Near You (M.W.)

Timed for the upcoming kickoff of the holiday shopping season, the Fed said Wednesday it will run ads in movie theaters through Dec. 3.

AIG Forcing Poor To Choose Between Running Water And Food (M.W.)

Taxpayers in the poorest parts of the county are getting plundered by the same institutions they bailed out. One example is AIG's underhanded fleecing of residents of rural Kentucky.

How Big Is Too Big? (M.W.)

As legislation on restructuring the banking industry moves forward, attention on Capitol Hill is increasingly drawn to the issue of bank size. Should our biggest banks be made smaller?


Land Rush In Africa (M.W.)

Goldman and Morgan Stanley are each raising hundreds of millions of dollars for agriculture funds aimed at Africa and Latin America. Agribusinesses in the U.S. are leasing vast tracts of African land from which they expect to export crops and glean healthy returns. Arab oil countries are vying for fertile acreage for fear their homelands are running out of water.

China And South Korea In Sub-Saharan Land Grab (M.W.)

Aggressive moves by China, S Korea, and Gulf states to buy vast tracts of agricultural land in sub-Saharan Africa could soon be limited by a new global international protocol. A scramble for African farmland has in recent years seen the equivalent of Italy's entire arable land hoovered up by businesses from emerging economies.

James Hansen Talks About The Climate Change Controversy (M.W.)

James Hansen, director of NASA's Goddard Institute for Space Studies in New York, is one of the world's most famous climatologists


saxplayer00o1's picture
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4279
Re: Daily Digest - November 27

1) Democrats work on multibillion-dollar jobs package (LA Times)

"Troubled by the rising jobless rate, President Obama and the Democratic majority in Congress are assembling a new jobs package that would devote billions of dollars to projects meant to put people back on payrolls in 2010 and keep them working.

Discussions over the scale of the bill are fluid, but lawmakers said the intent was to move swiftly and get a bill to Obama's desk as early as January.

The renewed push to create jobs is driven by a recognition that the $787-billion stimulus program enacted in February is not a sufficient remedy for an unemployment rate that stands at 10.2%."

"John Ing, the president of Maison Placements Canada Inc., said mounting U.S. debt is at the heart of gold’s current run.

“Despite big profits, Wall Street remains over-leveraged and undercapitalized,” he said in a note to clients. “To us it looks like another downturn is in the offing that will test the previous lows, cause the dollar to fall even further which will push gold beyond $2,000 an ounce in a made in America hyperinflation.”"

"LONDON (Reuters) - The United Arab Emirate (UAE) has total debt amounting to $184 billion at the end of 2009, according to estimates by Bank of America-Merrill Lynch, which said the region faces a heavy redemption schedule until 2013. Dubai's shock announcement this week that it is seeking to suspend payments on debt of its state-owned conglomerate Dubai World and property subsidiary Nakheel has roiled global markets, raising fears that the emirate which funded a spectacular building boom on a mountain of debt could default."

"ANN ARBOR - Every November, University of Michigan economists hold a two-day seminar and issue predictions for the state's economy over the next year.

Last week, they unveiled their newest forecast. Possibly the best short way to sum it up would be something like this:

However bad you thought things were, they are worse. Michigan's automotive, manufacturing-based economy is history, at least as a mass employer of millions. The old days are never coming back, and the state will continue to lose jobs for years to come."

"Springtime didn't put a spring in local shoppers' steps this year.

Sales tax receipts across the region took a dive during the second quarter, with Modesto weathering a 22 percent drop compared with the same period last year, according to revenue analysis firm MuniServices LLC.

Modesto's double-digit slide was the worst quarterly performance the city has seen in the past year. Most area cities saw similar declines. Riverbank was the sole bright spot: Its sales tax receipts declined a mere 7 percent."

"Phoenix number crunchers already are projecting up to a $95 million shortfall in the current fiscal year, and that's not even factoring in the deficit expected for the new fiscal year that begins July 1.

The city's balance sheet is so out of whack because Phoenix's sales-tax revenue remains about 20 percent lower than two years ago, with no signs of a recovery. State-shared income-tax revenue is forecast to be about 35 percent less than two years ago because of layoffs, pay cuts and furloughs. And the cash-starved Arizona Legislature is poised to take a big chunk of Phoenix's $378 million-a-year state-shared-revenue fund to solve its own fiscal problems."

"Wednesday's revelation that sagging tax revenue and higher expenses widened the budget gap to five times larger than expected is the latest hurdle in an ongoing fiscal battle that has dogged Corzine.

Pulling out the red pen to make cuts has become a familiar exercise for Corzine, who lost his re-election bid to Chris Christie earlier this month.

"We'll have meetings, just like we would normally. We'll come up with answers," the governor said. "Certainly before Christmas."

The governor may freeze up to $400 million in payments to schools, higher education, hospitals, pension funds and municipalities, according to information tucked into a bond disclosure sent to Wall Street investors."

"The world’s container ports industry is facing a sharp reversal in its fortunes as the sector’s first ever year-on-year fall in volumes forces an abrupt change from breakneck expansion to retrenchment."

"London-based Drewry Shipping Consultants forecasts a year-on-year fall of 10.3 per cent in containers moved this year, compared with 4.6 per cent growth in 1982, the previous worst year since 1956, when container shipping started."

"Pension obligations are another weight on the sector. Moody's Investors Service estimated that the industry faced as much as $40 billion in underfunded pension obligations at the end of 2008.

Moody's warned in a recent report that rate increases stemming from increased utility spending could result in consumer pushback, as electric utility costs rise from the 3.5% of disposable household income they represent today to 5% to 10% of disposable income. Moody's said it is waiting for "the theoretical inflection point beyond which consumers will no longer tolerate annual rate increases without protest.""

"The state will have to boost employer contributions to the pension fund for its retirees from the 3.57 percent of payroll level it has been in recent years to 6.71 percent in the fiscal year beginning in July, the state treasurer's office said last month."

(Here's where he's getting his info)

"In 2008, states alone reported about $1 trillion in unfunded pension liabilities. However, the authors point out that their discount rate is totally bogus. Using more appropriate discount rates, they find that the lower bound for the UPL is $1.3 trillion while the upper bound is $3.2 trillion. The $3.2 trillion is, as they argue and I would agree, closer to reality.

But wait, there’s more. That was only the state pensions. Local pensions add up to another $1 trillion in UPL, bringing the grand total to $4.2 trillion.

But wait, there’s more. This only includes pensions and says nothing about state retiree health benefits. Their stated unfunded liabilities are around $0.3 trillion. Grossing it up three times in-line with their pension estimates and you get another $1 trillion in unfunded state retiree health benefits.

Now we have a grand-total of $5.2 trillion in unfunded state and local pension and retiree health care benefits. That’s about 5 times more than all currently-issued state general obligation bond debt (about $1 trillion). So if folks are worried about the scope of state GO debt, then they should be sh**** on themselves about the $5.2 trillion.

Throw in the current deficit, Medicare, Medicaid, Social Security and, heaven forbid, Obamacare . . . and the country is positively, absolutely, without a doubt BROKE! There is no way we can pay for one of these items, much less all of them.

Maybe we should stock up on gold. If gold is already booming because of what the feds are doing, wait till folks get a better understanding of these liabilities . . . gold has only begun its bull run."

"Halfway To Concord has learned that…For every dollar Contra Costa County spends today to support already unsustainable employee retiree pensions costs, over at least the next six years, taxpayers will be on the hook for 77 cents more, a shattering increase that harbors dire consequences for county government."


............After seeing all of the boneheaded responses to the financial crisis, can we just name this little guy Ben?

rjs's picture
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
Re: Daily Digest - November 27

this is a brief synopsis of an article from last week...

America Is An Over Indebted Profligate Spoiled Nation In Decline: The U.S. and other developed countries have lost the discipline they once had and are now trying to borrow and spend their way out from under the mountains of debt they accumulated in recent years. In the process, they're prolonging the agony and moving closer to defaulting. The U.S., at least, won't actually default, but as our situation worsens, the value of credit default swaps (insurance against default) should rise. So Ortel continues to recommend CDSs to his clients. 5-year credit default swaps on U.S. soverign debt currently trade for about 25 basis points (which means it costs $25K per $10M of notional value). How does that compare to other countries or states? Japan = 72 bps; United Kingdom = 56 bps; Germany = 21 bps; California = 177 bps; New York = 85 bps

would someone please explain to me what those CDSs would be paid off in if the Treasury should default within those next five years, and what would it be worth in todays dollars, if anything....ive kicked this around a few places without an answer...

jpitre's picture
Status: Gold Member (Offline)
Joined: Mar 3 2009
Posts: 366
Re: Dark Side of Dubai - Daily Digest - November 27

Dubai is presenting an example of the unfettered capitalist system in operation. The idea that we should support or participate in such oppressive tactics towards our fellow man leaves me without words to adequately express my disgust. Apparently JP Morgan/Chase as well as Citi & others are active in that market (using taxpayer money that they may well lose) as well as many of our larger commercial companies including GM, HP, GE, Boeing, Microsoft, Starbucks and many more. It just goes to show that we will sell our souls for the sake of a buck.

Whatever happened to the concept of having a moral conscience ? We know about war crimes against humanity and stand by -- what about economic crimes against humanity that we not only stand by, but actively and knowingly participate in ? Whenever we (an American company) participate in  such  oppressive   business we are condoning  what is being done. I think it is time we quit doing and/or supporting activities that are not in concert with our moral compass



nickbert's picture
Status: Diamond Member (Offline)
Joined: Jan 14 2009
Posts: 1208
Re: Dark Side of Dubai - Daily Digest - November 27
jpitre wrote:

Dubai is presenting an example of the unfettered capitalist system in operation.

Actually, the Dubai entity in question, Dubai World, is mostly or completely state-owned I believe.  So describing this specific example as unfettered capitalism doesn't really fit..... kind of like calling a cow a fish because it happens to be in a river.

I would say this is a good example of unfettered greed in operation though.  Capitalism didn't create greed (though it probably does have close to a majority share Laughing), and you'll see greed at varying levels no matter what system you're in.  And I agree with you on moral conscience; no matter what the social or economic system, some sort of moral or ethical conscience needs to play a part in people's thinking and actions to have any long-term stability in society.  The morals and ethics involved don't even have to be that complicated... "do unto others as you would have them do unto you" by itself would probably be sufficient.  But as always there's a select group of jokers who shorten that up to simply "do unto others", and by operating out of complete selfishness they create disasters for everyone around them.  As to what to do to fix this, well, I haven't a clue.  Legislating morality is almost always a disaster, and something I often find repugnant.  I guess as with most things it has to begin from the bottom (local) level and work itself upward through society.

- Nickbert

jpitre's picture
Status: Gold Member (Offline)
Joined: Mar 3 2009
Posts: 366
Re: Dark Side of Dubai - Daily Digest - November 27



Seems to me that we are more or less in agreement -- my point being that without the "fetters" or regulation by the people via their democratic government, greed will rule the day (Wall Street is a good example) --  capitalism is a wonderful system to support that greed if not checked.

That our western corporations see no wrong in supporting a system like the one in Dubai speaks to our level of corporate greed as well.



ldf8's picture
Status: Member (Offline)
Joined: Nov 27 2009
Posts: 1
Re: Daily Digest - November 27

Good Question RJ....look forward to reading the answer(s) you receive!Wink

Headless's picture
Status: Gold Member (Offline)
Joined: Oct 28 2008
Posts: 363
Re: Daily Digest - November 27

jpitre and Nickbert,

Our exposure to Dubai is just an accidental view of the long-present Federal Reserve-designed policy  of world enslavement ; this particular view has only been afforded us due to the extraordinary distance that oil wealth/cannibal capitalism has allowed the "elite" benefiiciaries to find themselves located at with respect to reality: they've truly come to believe they are superior beings and they deserve what they've stolen--in lives and resources; they've now been exposed. What are we going to do about it?...

Noam Chomsky, Howard Zinn, Chalmers Johnson, and so many admirable others have been trying to communicate the existence of such exploitation (FOR DECADES), but, unfortunately,  they've been trying to inform the artificial middle class of America (see below), a group of unknowingly pampered ignoramuses (myself included) that didn't even possess a passport. For the majority of us, it was a case of "out of sight, out of imagination..."

Below: As bad as Government Sachs/The Fed is and has been--in all its corporo-governmental forms over the years since 1913--we've (Americans) all been the beneficiaries of its "Stealing Earth" policies; that is to say, our standard of living has been--and continues to be, for a while--artificially elevated by the exploitation of innocent peoples around the world. That is all coming to an end--because of the internet!  I have, for decades, referred to this eventuality (the exposure and, thus, adjustment) as IW3E (inevitable worldwide wage equilibrium).

Looks like Noam Chomsky and the names of people who went out into the world, learned the truth, and tried to communicate it to a bought-off audience will soon be recognized broadly across America, just as the name Peter Schiff is coming to be known for his attempts to warn of the same criminal organization.

For an hour well spent:

 (part 1)

 (part 2)


UselessEater's picture
Status: Bronze Member (Offline)
Joined: Aug 23 2009
Posts: 42
Re: Daily Digest - November 27

[Ed. note: Removed for content violation]

jpitre's picture
Status: Gold Member (Offline)
Joined: Mar 3 2009
Posts: 366
Re: Daily Digest - November 27


You tell it about right. And we have turned a blind eye to the activities of our "jackals" not wishing to dirty our own hands or even share in the discomfort of really knowing what has provided us with a standard of living beyond what we have justly earned. Years of travelling in South America has illustrated for me how we have scammed the system for our own benefit. John Perkins book, "Confessions of an Economic Hitman" does an excellent job of bringing it all into focus

It's time to go back to digging dirt and producing by our own sweat what we take from earth's bounty.


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments