Daily Digest

Daily Digest - November 4

Wednesday, November 4, 2009, 10:46 AM
  • U.S. Cuts Borrowing Need 43% for October to December
  • More walk away from homes, mortgages
  • 33 percent of LA employers in poll will lay off workers in 2010
  • Small-Business Bankruptcy Filings Up 44% Year-over-year, Equifax Data Show
  • More Muni woes on the horizon (San Francisco)
  • Vallejo Voters To Consider Tax On Text Messages
  • UC's retirement plan (costs)
  • G20 Drive to Rebalance World Economy (a few quotes)
  • Default Swaps Contracts Over $3B Triggered By CIT Bankruptcy
  • October Personal Bankruptcies Highest Since 2005 Law Changes
  • Treasury invites bloggers (Posted by Davos)
  • Melt value of old and new coins

Economy



U.S. Cuts Borrowing Need 43% for October to December

The U.S. Treasury Department cut its estimate for government borrowing in the current quarter by 43 percent largely because of reductions in a program for helping the Federal Reserve manage its balance sheet. Borrowing will total a net $276 billion from October through December, compared with a previous estimate of $486 billion, and it projects borrowing of $478 billion in the three months to March 31, the department said in a statement today in Washington."

More walk away from homes, mortgages

The mortgage unit of Citigroup says one in five borrowers who defaults does so willingly, even though they're able to pay the mortgage. "It's a very large number, and it's a very, very significant risk to the housing recovery," says Sanjiv Das, CEO of CitiMortgage, adding that new government programs to curb strategic defaults may be needed

33 percent of LA employers in poll will lay off workers in 2010

Despite Los Angeles County's already record high unemployment, the job outlook is likely to get worse as the number of businesses planning layoffs has more than doubled since last year, according to a new poll to be released today. A survey by the Los Angeles County Business Federation says 33 percent of respondents said they would lay off workers in 2010, up from 14 percent who were asked last year

Small-Business Bankruptcy Filings Up 44% Year-over-year, Equifax Data Shows

Commercial bankruptcies among the nation's more than 25 million small businesses increased by 44% from the third quarter of 2008 to the third quarter of 2009, according to Equifax Inc. (NYSE: EFX), which analyzes its comprehensive small business database for the on-going study,

More Muni woes on the horizon (San Francisco)

The cutbacks and fare increases in the Municipal Transportation Agency's budget may have hurt but the pain didn't produce enough gain, as the MTA board will hear this afternoon. The MTA is on track to produce a $45.1 million deficit with revenues lower than expected and expenses higher. So the agency is recommending a plan to eliminate 250 positions, alter drivers' schedules, reduce overtime, and transfer some federal stimulus money from equipment and projects to operations. But that only saves $25.5 million, leaving the MTA with the challenge of figuring out how to come up with the other $19.6 million

Vallejo Voters To Consider Tax On Text Messages

Vallejo may be in bankruptcy, but there is no deficit when it comes to residents who are texting. That may explain one of the more unusual measures on Tuesday's ballot, which would tax text messages

UC's retirement plan (costs)

The financial picture is grim. Though UC's retirement plan is currently 95 percent funded and employee contributions will be reinstated in April 2010, funding for the pension plan is predicted to decline to 61 percent by 2013. Costs for retiree health insurance are also expected to rise. Out of its operating revenue, UC currently pays approximately $225 million each to year to provide health insurance for retired employees. Costs are projected to rise to $373 million a year by 2013, and to $610 million by 2018

G20 Drive to Rebalance World Economy (a few quotes)

"Instead, finance ministers and central bankers of the Group of 20 nations, meeting in St. Andrews, Scotland on November 6-7, will try to flesh out a commitment to subject national policies to international scrutiny and peer pressure in years ahead."

Default Swaps Contracts Over $3B Triggered By CIT Bankruptcy

A committee of derivatives experts confirmed Tuesday that default protection contracts have been triggered by the bankruptcy filing of CIT Group (CITGQ).

October Personal Bankruptcies Highest Since 2005 Law Changes

The number of individuals filing bankruptcy rose 25 percent to about 131,200 from a year earlier, according to data compiled from court records by Oklahoma City-based Jupiter ESources LLC. The 1.2 million bankruptcies filed through October have already surpassed last year’s total of 1.1 million.

Treasury invites bloggers (Posted by Davos)

Last Thursday, for example, Bloomberg reported that Treasury Secretary Geithner spoke to the Economic Club of Chicago and said: “You can say now with confidence that the financial system is stable, the economy is stabilized....You can see the first signs of growth here and around the world.” Yesterday, however, a number of those present clearly acknowledged that things could (still) go wrong and said such fears kept them awake at night. While that is not unusual in and of itself, at the very least it adds to doubts I and others have expressed about the true state of the financial system and the economy.

Melt value of old and new coins

Scroll to the bottom of the page. 1964 dimes worth $1.24,1964 quarters worth $3.11..lots more.

16 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4064
Re: Daily Digest - November 4

"A monthly report from the Department of Administrative Services shows the state took in $204 million in taxes and other revenues last month, $12 million short of the month's budget target.

Through the first four months of this fiscal year, the state has taken in $585 million, instead of the $623 million the budget was built to have at this point."

"I think we're looking at trillion-dollar deficits for the next 10 years, perhaps. With that outlook, borrowing needs are going to be very high and there is a massive amount of debt that needs to be sold just to roll over what's maturing," Rupert said. "It's pretty precarious actually."

"In fiscal year 2009, tax revenue fell more than 15 percent compared with 2008; receipts are lagging further this year, prompting Otter's budget managers to predict a $151 million budget shortfall come next July, if agencies don't make further cuts.

Idaho state government is also holding 700 jobs vacant; employees have taken more than 150,000 hours of unpaid furloughs, to ward off further job cuts."

"Nov. 4 (Bloomberg) -- The U.S. plans to sell a record $81 billion in its quarterly auctions of long-term debt next week and replaced its inflation-protected 20-year bond with a reintroduced 30-year security.

The Treasury Department said it will auction $40 billion in three-year notes on Nov. 9, $25 billion in 10-year notes Nov. 10 and $16 billion in 30-year bonds Nov. 12."

"City officials project an $11 million general fund deficit in the 2011 fiscal year, followed by a $21.7 million deficit in the 2012 fiscal year. Those deficits will continue to challenge the city's ability to deliver services and could cause further rifts between city management and employees when it comes time to pay those deferred salary hikes."

"Birmingham has discovered a $20 million budget shortfall after the resignation of its finance chief."

"LANSING, Mich. — Michigan's governor warned Tuesday of a possible 20 percent cut in state spending next year, a draconian step after billions in cuts since 2003 have already dented police and fire services, pushed schools toward insolvency and reduced oversight of prison inmates."

"CDR Financial was a big proponent of the swaps that Jefferson County was involved in, which flopped after interest rates went in the opposite direction of what CDR predicted. It added more than $700 million to county's overall sewer debt."

"U.S. stocks declined for the first  time in eight months, driving down the funding status of the typical U.S. corporate pension plan by 0.4 percentage points in October, according to monthly figures published by BNY Mellon Asset Management. The funded statusof the typical plan declined to 79.9 percent at the end of October, down from 80.3 percent at the end of September, according to the BNY Mellon statistics."

"The dollar is on a downward trend, currently resting at about 76 points, but “the dollar so far didn’t manage to come out of this downtrend,” Zwermann said, adding that the dollar doesn’t have the strength to turn around at the moment, pushing the index target as low as 66 points."

"Partly because of spiking and partly because of the stock market fall, the city and the unions are confronted with the reality that the pension fund is underfunded by hundreds of millions of dollars."

"Yesterday, Local 234 President Willie Brown said that the wage package was acceptable but that he was worried about the underfunded pension fund, funded only 52 percent. He said he believed that SEPTA had not contributed to it for 10 to 12 years."

"Ravenstahl will begin his first full term at the helm of a city that, despite successes such as the Group of 20 summit this summer, remains in state receivership and suffers from declining population, a looming budget deficit and a pension underfunded by hundreds of millions of dollars."

"The deep problems with MWD initially became apparent two months ago, when details of a proposed new contract covering all 2,000 MWD workers leaked out. Even with government agencies up and down the state winning big concessions, and even with MWD in the middle of a two-year, 31 percent increase in water rates, the labor deal included raises of up to 23 percent over the next five years, contingent on the economy, and a permanent, retroactive 25 percent pension increase. The latter would have added $60 million-plus in new unfunded liabilities to MWD’s existing $400 million."

"BOSTON — More than $543 million in “safety-critical” projects at the MBTA are going unfunded this fiscal year, roughly 92 percent of the state’s most pressing sites, according to an independent review of the T"

"Notices of default (NODs) were virtually flat for the second month in a row while there was a 12 percent increase in trustee deeds filed throughout San Diego County from September to October.

Trustee deeds mark the last step in the foreclosure process.

While October’s total 1,356 trustee deeds is high from a historical standpoint, there were 41 percent fewer filed than in July 2008 -- when the foreclosure crisis reached its apex.

Despite moratoriums and banks trying to work out loans with customers, some local real estate analysts believe another wave of foreclosures could be on the way."

"NEW YORK (CNNMoney.com) -- Gold rose to an all-time high Wednesday amid a weaker dollar and speculation that foreign central banks would increase their purchases of the precious metal."......

"Analysts say many monetary policy makers are looking for ways to reduce their exposure to the U.S. dollar, which is the traditional reserve currency of choice for many foreign central banks.

The dollar, which is down 6% this year, has been pressured by concerns about the growing U.S. budget deficit and rock bottom interest rates.

Traders say gold could emerge as the "new dollar" when it comes to reserve currencies."

""A weaker dollar could diminish the value of India's foreign exchange reserves and hence this could lead to further accumulation of gold by the RBI. This move will help India's central bank to hedge its downside risk on the foreign exchange reserves front," Angel Commodities Broking analyst Amar Singh said."

18a) India's move has been interpreted as very positive for gold prices as it has stoked speculation that other developing countries may ramp up their purchases of gold as they diversify away from the dollar.

 

 ..........Dollar reaction to the news.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - November 4

That treasury bit really got me.

First I can't stand Yves, I think she is a self righteous fill in the blank that thinks she is superior to everyone else.

Second they needed more people there with "bad house manners", someone like Barry Ritholtz would have told them how it is, frankly I don't think that is bad manners, I think that is just telling it like it is. In all honesty, sticking it to our great grand kids and jacking up the economy to help your friends is bad manners. Leave a stinking mess in everyones house and expect them to come to your house and not do the same: What type of logic is that?

I'm also certain someone like CM or Nate could have done it in a refined tone. 

Like everything else, they seemed to invite just enough to soften the tone.

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
freeeeeman's picture
freeeeeman
Status: Bronze Member (Offline)
Joined: Aug 11 2009
Posts: 25
Re: Daily Digest - November 4

that was a good read, but i'm not on board with the comment that protectionism doesn't work. (i'll go on record as saying LABELism doesn't work.) but when we allow our companies to use (and exploit) cheap labor from other countries. our suppy of jobs decreases which means lower wages and/or higher unemployment.... sure i can get a flash light for 39 cents, but i'd rather pay 60 cents for it and keep industries more domestic.

 

DavidC's picture
DavidC
Status: Silver Member (Offline)
Joined: Sep 29 2008
Posts: 243
Re: Daily Digest - November 4

Once again, Goldman Sachs has managed to redefine probability, this time with ONE losing trading day in the latest quarter (64 trading days), a 98.44% success rate.

http://www.zerohedge.com/article/absolute-perfection-goldman-loses-money-just-one-trading-day-q3

How the SEC is not investigating this just defeats me. It's just not possible in a normally operating market. I'm fuming.

DavidC

dcm's picture
dcm
Status: Silver Member (Offline)
Joined: Apr 14 2009
Posts: 205
Re: Daily Digest - November 4

I was gonna post the Goldman article too. Glad to see someone beat me to it. This is Madoff-like performance. Big difference between Madoff and these boys. They ARE the government. One of the many reasons the SEC is not investigating this is because a Goldman boy (only 29 I think) was just named into a big position there. Keep up the good work DavidC. Spread the word. The more people understand how corrupt things have become, the more likely they will rise up and do something.      

yoshhash's picture
yoshhash
Status: Martenson Brigade Member (Offline)
Joined: Sep 20 2008
Posts: 271
Re: Daily Digest - November 4

I'm glad you posted the bit about the melt value of coins.  I have been hoarding pennies for about a year now, because I *heard* somewhere that they were worth double its face value.  Too lazy to confirm the rumour, I figured it couldn't hurt to save them- but I did feel a little foolish, until now. 

I've long contended pennies should be abolished because they are not worth the trouble, but until they wake up to this fact, shrewd collectors may as well cash in on this oversight.  (I do realize that post 1982 pennies are a different story.)

alcatwize's picture
alcatwize
Status: Bronze Member (Offline)
Joined: Dec 24 2008
Posts: 78
What are banks most afraid of?????

... a run!  What is a "run"?   A run is where everyone thinks their money is no longer safe in the bank and rushes out to withdrawal it (this is why the FDIC was created in the 1930).  Why should banks be fear full of a run???? Well, if you read the following on Mish's blog you will understand.

A quick look shows that nearly $800 billion dollars that should be in checking accounts is missing in action. Money, supposedly available on demand, is just not there.


Given there are no reserves on savings accounts, as much as $4.5 trillion people think is in their savings accounts is not there either. Moreover, the duration mismatch on savings accounts, sweeps, and likely even CDs is massive.

If even 20% of the people tried to get their money out the system would freeze up.

The banking system is clearly insolvent. Such is the folly of fractional reserve lending.

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1323
Re: Daily Digest - November 4

A quick note on collecting pennies.  I found an article that talked about an easy way to identity copper pennies (pre 1982).  I used it and it works and it much easier to do than trying to read the dates, particularly if your eyesight ain't what it used to be. SmileGet a hard surface (something like a counter top with formica), drop a penny on it, the copper pennies have a ringing quality to them, the non-copper pennies sound flat.  I was able to quickly seperate the pennies this way.  Once you drop a couple of old and new and compare it becomes quite easy to do.

Also, I notice that a nickels melt value is also getting close, something like 93% of melt value in metal now.  Might be worth holding on to them as well.  All the rest, change it in an buy silver or gold.....

-- Rob

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Re: What are banks most afraid of?????

I've been wondering the same thing.

Since the FDIC announced that they are broke why in the heck are people keeping their money in the bank? I guess if you believe in green shoots then I understand but if you happen to be awake then what gives? I don't see this talked about very much.

Montana Native's picture
Montana Native
Status: Silver Member (Offline)
Joined: Mar 17 2009
Posts: 162
Re: Daily Digest - November 4

FHA defaults rise.

http://www.npr.org/templates/story/story.php?storyId=120070569

 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: What are banks most afraid of?????
Johnny Oxygen wrote:

I've been wondering the same thing.

Since the FDIC announced that they are broke why in the heck are people keeping their money in the bank? I guess if you believe in green shoots then I understand but if you happen to be awake then what gives? I don't see this talked about very much.

+1 Double jeopardy since the dollar is tanking. 

dcm's picture
dcm
Status: Silver Member (Offline)
Joined: Apr 14 2009
Posts: 205
Re: Daily Digest - November 4

the only shoots I see are gangrene

Nice golden thoughts on FOFOA

Spill's picture
Spill
Status: Member (Offline)
Joined: Oct 30 2009
Posts: 10
Re: Daily Digest - November 4

Noticed Schiff was back on FOX

Also, slight sarcasm intended, the following made me want to wish there was a function that allowed me to reach into my screen and slap someone.......

freeeeeman wrote:

that was a good read, but i'm not on board with the comment that protectionism doesn't work. (i'll go on record as saying LABELism doesn't work.) but when we allow our companies to use (and exploit) cheap labor from other countries. our suppy of jobs decreases which means lower wages and/or higher unemployment.... sure i can get a flash light for 39 cents, but i'd rather pay 60 cents for it and keep industries more domestic.

 

....since it made me feel like vomiting out of every bodily opening.

Protectionism is bad BECAUSE of that price-increase. Surely on the first level it will mean more "economy" at the local level, but it comes with three heavy prices.
First of all, the price-increase means that buying this asset, whatever the asset, will be more expensive. If, say, a plumber, needs a flash-light, they will now have a +50% price-tag on it, because of protectionism, and since protectionism rarely stays in 1 asset, this is bound to be pretty much on all assets said plumber needs. The bill for this will, ultimately, be passed on to the customers who would otherwise need the plumber.

Second of all, protectionism always, ALWAYS, runs both ways. Block someone, and they'll block back. Hence it will mean less exports along with the less imports.

Third of all, it works like a sales-tax that only hits the poorest in society. If food-stuffs, following your example, suddenly costs over 50% more, I think it's obvious that the amount of people who'll be going to bed hungry or starving will be going up, especially considering the circumstances the US economy looks to be in.
Rich people are, as proclaimed, rich, so they can afford the price-hike. Poor people cant.

I cant seem to find the original article where I read about this, but I'm pretty sure the writer was someone named Ron Paul.........

freeeeeman's picture
freeeeeman
Status: Bronze Member (Offline)
Joined: Aug 11 2009
Posts: 25
Re: Daily Digest - November 4

thanks for the response spill... hope the vomitting has subsided... i urge you to drop the emotion and apply some critical thought. when someone disagrees, you should see if they know something you don't.

everything depends on how much more the item you are purchasing and how much more you yourself have. the poorest among us will have to pay more for taco bell (employees cost more) and plumbers (more expensive flash lights) and that does indeed hurt them. i agree. but their wages will also be higher (b/c of supply/demand for labor). if prices rise a little, corporate profits trimmed and the lower class has more (or at least some) disposable income. i think that's a good thing.

consider what we have today. tons of workers losing their jobs to indians & chinese b/c the labor is cheaper. we get cheaper products and that part is nice. however, when millions of people are out of work, that does more harm to this society than do cheaper products. there is a high societal cost for cheap crap.

also consider that prices do not necessarily go down when production costs go down. are nike tennis shoes cheaper now that it costs them $2.50 to make instead of $15 when they made them in mexico? not even close. prices are set to maximize profit, not just above cost.

oh, and there's that whole trade deficit thing. seems like a bad thing having everyone else own us. but that's probably a different discussion...

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Daily Digest - November 4
Citigroup, Bank Of America Among Companies Hoarding Cash

2 Nov 2009

The Wall Street Journal reports this morning that, in response to the financial crisis, U.S. companies are hoarding more cash than they have in the last 40 years.

Among these corporate cash-savers are banks like Citigroup and JPMorgan Chase, two institutions are holding onto funds "as if another financial crisis were on the way," reports Bloomberg. Citigroup has almost doubled its cash reserves since Lehman's fall last year, a move which seems to be very popular move among Wall Street's mega-banks:

"The four largest U.S. banks by assets -- Bank of America Corp., JPMorgan, Citigroup and Wells Fargo & Co. -- have increased their combined liquidity by 67 percent to $1.53 trillion as of Sept. 30 from $914.2 billion in June 2008, before Lehman's collapse, according to the companies' third-quarter reports. The amount equals 21 percent of the banks' total assets, up from 15 percent."

In fact, as Bloomberg points out, Citigroup's massive cash holdings are more than five times great than those held by Warren Buffett's Berkshire Hathaway. Here's one particularly striking quote from Bloomberg:

"In my 44 years in the business, I have never seen a company with remotely as much cash as this," said Richard X. Bove, an analyst at Rochdale Securities in Lutz, Florida.

For its part, JPMorgan is maintaining what has been called "a fortress balance sheet," with $456 billion in liquidity. JPMorgan's cash holdings have shot up to 22 percent of its total assets, up from 9.5 percent before the financial crisis took hold.

The WSJ points out that the trend isn't just happening on Wall Street:

"In the second quarter, the 500 largest nonfinancial U.S. firms, by total assets, held about $994 billion in cash and short-term investments, or 9.8% of their assets, according a Wall Street Journal analysis of corporate filings. That is up from $846 billion, or 7.9% of assets, a year earlier.

The trend appears to have continued in the third quarter, despite an improving economy. Of those 500 companies, 248 have reported third-quarter results. Their cash increased to 11.1% of assets, from 10.1% in the second quarter. Companies as diverse as Alcoa Inc., Google Inc., PepsiCo Inc. and Texas Instruments Inc. all reported big third-quarter increases in cash holdings."

Interestingly, one of the most well-funded companies mentioned in the WSJ's piece is Google, which has short-term investments and cash equal to 58 percent of its total assets. That's a whopping $22 billion in cash, if you're scoring at home.

Perhaps Google should start a lending business...

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