Daily Digest

Daily Digest - October 12

Monday, October 12, 2009, 9:45 AM
  • Foreclosures mark pace of enduring U.S. housing crisis
  • Conversations With History: The Politics of Food 
  • It Will Be Years Before Lost Jobs Return -- and Many Never Will 
  • Dollar Reaches Breaking Point as Banks Shift Reserves (Update 2)
  • US Facing Massive Economic ‘Power Shift’ With Dollar’s Downward Spiral

Economy



Foreclosures mark pace of enduring U.S. housing crisis (MW)

The recent crisis in the housing sector... is at the center of our financial crisis and economic downturn... A September report by a foreclosure task force appointed by Florida's Supreme Court pointed to a shift in the root cause of foreclosures: "People are no longer defaulting simply because of a change in the payment structure of their loan. They are defaulting because of lost jobs or reduced hours or pay." Florida had the nation's highest rate of homes -- 23 percent -- that were either in foreclosure or delinquent on mortgage payments in the second quarter, and the report said "the latest news for Florida is horrifying."

Conversations With History: The Politics of Food (David M.)

Harry Kreisler welcomes writer Michael Pollan for a discussion of the agricultural industrial complex that dominates consumer choices about what to eat. He explores the origins, evolution and consequences of this system for the nation's health and environment.

It Will Be Years Before Lost Jobs Return -- and Many Never Will (David M.)

The U.S. has shed 7.2 million jobs since the recession began in December 2007. How long will it take for the economy to replace them? And where will the jobs come from? The questions haunt people from the unemployed in San Francisco to officials in Washington. Glenn Atias lost his job as a $100,000-a-year statistician at a market-research firm in the Bay Area last summer when the work was outsourced to India.

Dollar Reaches Breaking Point as Banks Shift Reserves (Update 2) (Vinny A.)

Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades. Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

US facing massive economic ‘power shift’ with dollar’s downward spiral (Vinny A.)

The dollar's position as the world's leading reserve currency faces increased pressure as the financial crisis allows emerging economies greater influence on the world stage, analysts said. A report last week in The Independent claiming that China, Russia and Gulf States are among nations prepared to ditch the dollar for oil trades has heightened the uncertainty surrounding the US currency's future.

25 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - October 12

1) (Houston's  pension funds)

"The unfunded liability — promised benefits that the city has not set aside enough funds to pay in the future — for all three pensions is equal to $1.7 billion, according to the city."

2) Big trouble awaiting the next Pa. governor

"Consider the combined unfunded pension liabilities of the state's two largest pension systems, for public school and state employees, which by some measures in 2012 could be in the $20 billion to $40 billion range. A good portion of these costs will be reflected in higher statewide and local property taxes.

Separately, the state's unfunded retiree medical liability stands at about $10 billion, against which the state is contributing only about $746 million. Since the annual assumed interest rate is 8.5 percent, the state is not even covering the annual interest cost of $850 million on this growing debt.

All this is in addition to significant unfunded pension and health-care liabilities that also exist at the local levels of government."

3)" Asian central bank intervention

to support the dollar suddenly made headlines last week, with one report going so far as to call the intervention a dollar rescue."

4) Steep Losses Pose Crisis for Pensions

"Two Bad Choices for Funds: Cut Benefits Or Take Greater Risks to Rebuild Assets"

4A)  Mish comments on the above info.

5) California Debt Unnerves Investors as Taxes Plunge $2 Billion 

 6) Another mention of a possible Jefferson County bankruptcy.

7) (Video) Jim Rogers "Quite Sure" Gold Will Hit $2000, Dollar Will Lose Reserve Status

8) Melt value of nickels

9) (From Time.com) Why Investors Should Bet Against the Dollar

10) Once again today the dollar is lower, while gold is higher.

     The U.S. dollar and this guy. Getting more and more easy to predict. Both get same result.

      

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Mish & Nates Reply to Dr. M's Post

One Hand Clapping Theory Analyzed by Mish

Also, Nate's Reply to this Post:

Chris Martenson: The Sound of One Hand Clapping

A great conversation has begun.

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Re: Daily Digest - October 12

Good piece from Karl Denninger today.

http://market-ticker.org/archives/1507-Is-The-Dollar-Doomed.html

DavidC

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Re: Daily Digest - October 12

Mish says when speaking about financially strapped governments:   "The correct response would be to kill all unnecessary services, fire all the government workers and privatize everything remaining"

Mish is correct about killing all unnecessary services, however it is nonsense to insist that privatization solves everything. Our current economic mess is mainly due to the greed of the so-called private sector corrupting everyone in sight so as to be able to steal from the public at large.

I am a great supporter of private enterprise and the entrepreneurial spirit - I haven't held a job working for anyone else in over 50 years (stayed on with a company I sold for a year once). Clearly there are great benefits in terms of innovation, productivity and efficiency, however there is also endless opportunities for corruption and greed to enter such a system, especially in the monopolistic venue within which most government activities operate.

Would be a good start to hire a few thousand prosecutors and begin weeding out the bad actors, beginning with Wall Street and working down the food chain. Confiscate their ill gotten gains and put the funds back into the pension plans they stole from in the first place.

Jim

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Re: Daily Digest - October 12
saxplayer00o1 wrote:

1) (Houston's  pension funds)

"The unfunded liability — promised benefits that the city has not set aside enough funds to pay in the future — for all three pensions is equal to $1.7 billion, according to the city."

I read this and became nauseated.  It makes me want to run as fast as I can, I just don't know where.

We really are Wile E. Coyote, running in mid-air before the descent begins.

Where do the people come from, at all levels of government, that can operate things in such fashion and still sleep at night?

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Re: Daily Digest - October 12

I get the feeling it's going to be a long, cold Winter.  No matter if one lives in Orlando, or San Diego...

Viva (anyway) -- Sager

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Re: Daily Digest - October 12
jpitre wrote:

Mish says when speaking about financially strapped governments:   "The correct response would be to kill all unnecessary services, fire all the government workers and privatize everything remaining"

Mish is correct about killing all unnecessary services, however it is nonsense to insist that privatization solves everything. Our current economic mess is mainly due to the greed of the so-called private sector corrupting everyone in sight so as to be able to steal from the public at large.

I am a great supporter of private enterprise and the entrepreneurial spirit - I haven't held a job working for anyone else in over 50 years (stayed on with a company I sold for a year once). Clearly there are great benefits in terms of innovation, productivity and efficiency, however there is also endless opportunities for corruption and greed to enter such a system, especially in the monopolistic venue within which most government activities operate.

Would be a good start to hire a few thousand prosecutors and begin weeding out the bad actors, beginning with Wall Street and working down the food chain. Confiscate their ill gotten gains and put the funds back into the pension plans they stole from in the first place.

Jim

State Capitalsim (Fascism) cannot exist with out the buffer of State Socialism (Communism), and visa versa. The constant battle between the two in the State (Authoritarian Government) is what helps assure stability. (As an aside, I think Obama advocates communism, not socialism, and he certainly is not a fascist.)

Libetarian Capitalism (Libertarianism) will lead to constant fear and conquest; each person fighting to hoard the most, creating artificial scarcity so they can extort more out of those who have none. It works, but it is a hell of a way for the majority to live. The people on top think they are happy, but fear of loss is their constant companion.

Lbertarian Socialism (Anarchism) is the only answer if we want to live in sane world. Compassion through assurance that when the community suffers, all suffer, and when the community gains all gain.

Please do not respond with a knee jerk reaction to this reply. The two choices above are preferences and I would not dictacte that one should live in my preferences. On man's dream is anpother man's nightmare. But mixing the two, with out an autoritarian state, is immposible.

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Re: Daily Digest - October 12

Another conversation about food systems from 2003 by Robert Paterson

http://smartpei.typepad.com/robert_patersons_weblog/2009/10/a-warning-ab...

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In the "I don't know what it means but it's still...

...weirding me out department":

On Saturday I noticed a WWII-era bomber (B-17?) flying NE (on a path S of my home in the Hudson Valley).  Not so weird, just kinda cool.  Low altitude, maybe 2000 feet?

On Sunday I noticed a WWII-era bomber (B-17?) flying SW along the same path.  Mmmm...okay...just flying home from wherever they went.

Today I have a day off, and sitting here at the computer I hear it flying NE on the same path again.  Although it's overcast & raining right now, I recognize the sound of its engines (deep, throaty).  What th-?

Are we bombing Newfoundland with vintage aircraft now?  Or maybe the Taliban have an old reconditioned U-boat off the coast of Nantucket?

I know this has nothing to do with the three Es, but life is wacked-up enough without visitations such as these...

I guess I should be glad Bernanke's not buzzing my house in a Huey Cobra...

Viva -- Sager

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Re: Daily Digest - October 12

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=aKf0E1HUDo.E

"The unemployment rate is rising because more people are re-entering the labor market or joining it for the first time as the economy stabilizes, Stone said."

I have never heard this explanation for our rising unemployment.  It sounds absurd.  is it just me?

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Re: Daily Digest - October 12

MarkM Quote:

"The unemployment rate is rising because more people are re-entering the labor market or joining it for the first time as the economy stabilizes, Stone said."

I have never heard this explanation for our rising unemployment.  It sounds absurd.  is it just me?

Seems like today they will say about anything to get a square peg to fit in a round hole LOL. All the cheer leading on CNBC is really sad. Maybe I take it wrong but it always seems to have this tone of get in before it is too late. Sounds like baiting people & their hard earned money to risk it only to be snatched by the corrupted game at some point. They always seem to frown on anyone who doesn't go along with their BS. I would be held accountable for this type of behavior in my profession & wish they would be also.

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Damnthematrix
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what are they smokin'.......??

US economists declare recession over

By Washington Correspondent Kim Landers

Posted 44 minutes ago

A poll of American economists reveals that an overwhelming majority believe the recession in the United States is over.

The US has been in recession for almost two years, but a new survey of 44 professional economic forecasters by the National Association for Business Economics has declared that the "great recession is over".

It says more than 80 per cent of economists believe an expansion has begun but they also expect the recovery to be slow.

Forecasters expect economic growth to reach 2.9 per cent in the second half of this year, without inflation becoming a problem.

The association's president-elect, Lynn Reaser, says the labour market is still a concern.

"[Forecasters] actually believe that we will recover all of the lost output by the end of next year, but it will take quite a bit longer before we finally regain all the lost jobs, probably not before 2012 or beyond," she said.

Unemployment is set to rise to 10 per cent in the first quarter of next year, before edging down to 9.5 per cent by the end of the year.

idoctor's picture
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Re: Daily Digest - October 12

It says more than 80 per cent of economists believe an expansion has begun but they also expect the recovery to be slow.

Wonder if this was the same 80% that never saw this "little glich" in this economy in the 1st place?

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Re: Daily Digest - October 12

Oct 2 (Reuters) - An index of future U.S. economic growth slipped in the latest week, but its yearly growth rate climbed to a new record high, indicating a smooth recovery in the near-term, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index slipped to 127.1 in the week to Sept. 25 from an upwardly revised 127.9 the prior week, which was originally reported as 127.8.

Last week's figure marked a 60-week high.

The index's yearly growth rate rose to new all-time high of 25.1 percent in the latest reading from 24.3 percent the prior week.

"With WLI growth rising to yet another record high, the economic recovery is highly unlikely to falter in the next few months," said ECRI Managing Director Lakshman Achuthan.

 

This seems off the mark to me, but the ECRI have a good track record.  Anyone care to comment?

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Re: Daily Digest - October 12
idoctor wrote:

It says more than 80 per cent of economists believe an expansion has begun but they also expect the recovery to be slow.

Wonder if this was the same 80% that never saw this "little glich" in this economy in the 1st place?

What would be sweet is a Unified Scorecard of Economists' Divinations (or USED), where one could see name-by-name, and prognostification-by-prognostification, who said what and when.  Which would help us weight their words when they came out and made their next statement/prediction.  Or would such a thing put economists out of biz?  I don't want to add to the U-9...Innocent

A fellah can dream, can't he?

Viva -- Sager

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Re: Daily Digest - October 12

U.S. Economy Better Than I Expected Jim Rogers Oct 12, 2009 03:

I don't believe JIm has changed his mind about anything....just that the stimulus has propped up our economy better than he'd expected.....we're still heading down the same road we've been on, and he knows it.
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Re: Daily Digest - October 12

http://www.informationclearinghouse.info/article23698.htm

Dollar Reaches Breaking Point as Banks Shift Reserves

By Ye Xie and Anchalee Worrachate

Oct. 12, 2009 (Bloomberg) -- Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.

“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”

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Re: Daily Digest - October 12

USD & Take US to your Leader?

William Fleckenstein Discusses Stock Outlook, Strategy: Video

Euro Advances on `Anti-Dollar' Sentiment of Investors: Video

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Re: Daily Digest - October 12

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Re: Daily Digest - October 12

 

Consider that most economists' idea of a dream job is to work for the FED, that should give you an idea why most of them cant see the obvious.

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Re: In the "I don't know what it means but it's still...

http://www.collingsfoundation.org/cf_schedules.htm   You probably saw one of these planes, maybe the B17. They go all around the country and spend a weekend somewhere charging money for rides. I have always wanted to do it but the weather hasn't  always cooperated. I remember being on the local lake one summer afternoon and this big plane(B17)  flew low over the lake twice. It was fantastic. So, I think Newfoundland is safe, for now.

Damnthematrix's picture
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Re: Daily Digest - October 12
Low tax revenues and (soon) higher fuel prices will mean
fewer police and increased chaos, leading to ... :

http://news.yahoo.com/s/nm/20091009/pl_nm/us_usa_state_budgets

U.S. states suffer "unbelievable" revenue shortages

By Lisa Lambert Lisa Lambert Fri Oct 9, 5:59 pm ET

WASHINGTON (Reuters) – The U.S. economy may be creeping toward recovery after the worst slowdown since the Great Depression, but many states see no end in sight to their diving tax revenues.

Tax revenues used to pay teachers and fuel police cars continue to trail even the most pessimistic expectations, despite the cash from the economic stimulus plan pouring into state coffers.

"It's crazy. It's really just unbelievable," said Scott Pattison, executive director of the National Association of State Budget Officers, and called the states' revenue situations "close to unprecedented."

Most states had been pessimistic in forecasting their tax revenues for the 2010 fiscal year, Pattison said. So far, collections have fallen below even those low targets.

Lower tax revenues could lead to higher taxes or another sharp reduction in services if receipts do not show signs of improvement before year-end, as every state but Vermont is required by law to balance their budgets.

That could mean fewer teachers, early prisoner releases and fewer highway repairs as residents battle soaring unemployment.

States are coming off a terrible first quarter, which for most states began on July 1. <snip>

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always look on the bright side of life.......

Al Qaeda hit by financial crisis

http://www.abc.net.au/news/stories/2009/10/13/2713007.htm?section=justin

The United States says the terrorist organisation Al Qaeda is facing a severe financial crisis.

The US Treasury has its own intelligence division and is deeply involved in trying to curtail terrorism by choking off its sources of funding.

The assistant treasury secretary responsible for monitoring terrorist finances, David Cohen, says such efforts led to Al Qaeda now finding itself in a financial predicament, weakened and with waning influence.

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Re: In the "I don't know what it means but it's still...
PraySam wrote:

http://www.collingsfoundation.org/cf_schedules.htm   You probably saw one of these planes, maybe the B17. They go all around the country and spend a weekend somewhere charging money for rides. I have always wanted to do it but the weather hasn't  always cooperated. I remember being on the local lake one summer afternoon and this big plane(B17)  flew low over the lake twice. It was fantastic. So, I think Newfoundland is safe, for now.

I'm certain it was a B-17;  as a boy I was fascinated by military aircraft (esp. WWII, although I spent my time with the Fokkers and the Spaads too) and learned (w/help from my Pops) to recognize them (American/British/German/whatever) by their silhouette, the same way the USAF taught their people.

Just seemed odd that it was back'n'forth on a weekday.  Prolly they were just going home after a weekend of giving folks a thrill.  Thanks for your reply!

Viva -- Sager

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