Daily Digest

Daily Digest - October 16

Friday, October 16, 2009, 9:38 AM
  • It's time for the banks to pay
  • The Results of Hyperinflation
  • One of the proofs that the real economy and the finance world have been completely unhinged
  • Sorry, No Jobs, This is California
  • Tired Of Being Robbed By The Fed? Here Is Your Chance To Tell Your Senator
  • Greenspan: Break Up the Big Banks, It Will Be Good for the Economy, Minor Regulation Won't Work
  • U.S. Foreclosure Filings Jump 23% to Record in Third Quarter
  • Will e-bikes be the new 'commuter cool'?
  • Home Food Gardening Surge Credited to Economy; 7 Million More Families Take Up Hoes in 2009

Economy

It's time for the banks to pay (Robinson)

"So far, the shameful management skills of the banks' executives have cost US taxpayers more than $1 trillion in cash in the form of TARP bailout money and FDIC payments for failed banks, of which more than 120 have gone bankrupt since the beginning of the meltdown. This figure is even bigger if you consider guarantees extended by the government for institutions such as Fannie Mae and Freddy Mac, not to mention the massive capital injected directly to banks by the US Federal Reserve." 


It’s one of the proofs that the real economy and the finance world have been completely unhinged (David M.)

William Black Inteviewed on Democracy Now. Gonzales - Where is the outrage? It seems to me, at this stage, with the—as the foreclosures continue to escalate in numbers, and yet we’re seeing these enormous profits less than a year after the financial crisis. There doesn’t seem to be the kind of outrage, even in Congress, that there was six months or eight months ago. Black - There’s no palpable outrage, certainly not in Congress. The reform efforts on derivatives, for example, are a scandal. They exempt virtually all of the problem derivatives, and they’re designed to exempt it.

Sorry, No Jobs, This is California (David M.)

The state has 12.2 percent unemployment, above the national U.S. level of 9.8 percent, and at odds with California's image as an oasis of opportunity in hard times. In the 12 months through August, California's construction industry shed 142,000 jobs, or 18.5 percent of its work force, marking the largest decline on a percentage basis over the period of surveyed industry groups.

Tired Of Being Robbed By The Fed? Here Is Your Chance To Tell Your Senator (David M.)

Hot on the heels of realizing that the money you have now is getting close to worthless in order to bail out the Wall Street oligarchy, courtesy of the Chairman, Alan Grayson is taking his initiative to delay Bernanke's nomination direct to the people, and here is your chance to be heard. A new website Unmask the Fed is soliciting Americans' endorsement in getting to the bottom of the following question: Chairman of the Federal Reserve, Ben Bernanke, is up for confirmation to his second term, but he has still refused to disclose where he sent $2 trillion in taxpayers' money. Send a message to your Senators and ask them to make Bernanke come clean before his confirmation moves forward!

Greenspan: Break Up the Big Banks, It Will Be Good for the Economy, Minor Regulation Won't Work (Vinny A.)

Alan Greenspan has joined the long and distinguished list of experts calling to break up the too big to fails. As Bloomberg writes today: U.S. regulators should consider breaking up large financial institutions considered “too big to fail,” former Federal Reserve Chairman Alan Greenspan said. Those banks have an implicit subsidy allowing them to borrow at lower cost because lenders believe the government will always step in to guarantee their obligations. That squeezes out competition and creates a danger to the financial system, Greenspan told the Council on Foreign Relations in New York. “If they’re too big to fail, they’re too big,” Greenspan said today. “In 1911 we broke up Standard Oil -- so what happened? The individual parts became more valuable than the whole. Maybe that’s what we need to do.”

U.S. Foreclosure Filings Jump 23% to Record in Third Quarter (Vinny A.)

U.S. foreclosure filings climbed to a record in the third quarter as lenders seized more properties from delinquent borrowers, according to RealtyTrac Inc. A total of 937,840 homes received a default or auction notice or were repossessed by banks, a 23 percent increase from a year earlier, the Irvine, California-based seller of default data said today in a report. One out of every 136 U.S. households received a filing, the highest quarterly rate in records dating to January 2005.

Energy

Will e-bikes be the new 'commuter cool'? (joemanc)

Keith Felch is admittedly a big guy, but more than a few super-fit cyclists in Southern California have been left wondering how that dude just went flying by. Keith Felch calls his electric bike a "hill eraser" because he can ride it to work without breaking a sweat. And then his wife, Mary, comes motoring past. "They stare, like how can a girl go past me," she says, laughing. It takes the other riders a few seconds but then they figure it out. They have electric motors.

Environment

Home Food Gardening Surge Credited to Economy; 7 Million More Families Take Up Hoes in 2009

One unsurprising spinoff of the current economic recession is a double-digit increase in the percentage of home gardeners planting their own food. The National Gardening Association reported Thursday that its survey, The Impact of Home and Community Gardening in America, revealed a jump from 10% to 19% of households planning to grow their own food in 2009.

16 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - October 16

"Even as regulators try to replenish deposit insurance fund, it will be over two years before it boasts a positive balance, warns agency chief."

6) Worries over police, fire pensions could prompt special session (CHARLESTON, W.Va.)

"Current law requires the state Public Employees Insurance Agency to "bill" school boards for their share of the unfunded liability -- more than $3 billion of the total state liability of $7.8 billion -- even though there has been no attempt by PEIA to collect those charges."

"The long-expected sale of the Boston Globe collapsed at the last minute after the Taylor clan lowered their bid in the face of the New York Times [NYT] Co.’s demand they take on more in unfunded pension liabilities, according to a person briefed on the situation.

The Herald reported last week that the Times wanted potential buyers to shoulder $115 million in unfunded pension liabilities - nearly twice the original $59 million demand - for the Globe and Worcester Telegram & Gazette."

"America's largest public-pension fund, Calpers, revealed that a former board member had reaped more than $50 million in fees for arranging investments that could saddle state taxpayers with hundreds of millions of dollars in losses.'

"As many as 2,000 state jobs could be eliminated, Governor Deval Patrick warned yesterday, unless unions agree to concessions necessary to help close an estimated $600 million budget shortfall that could trigger spending cuts throughout state government."

  • 11)

Hawaii state worker furloughs not enough to close budget gap

  • "The administration has projected a budget deficit of about $1 billion through June 2011."
  • 12)

State eyes $1.1 billion in budget cuts in ’10 (Tenn.)

  • "NASHVILLE — Tennessee may have to slash as much as $350 million more from its budget next year on top of $753 million in already planned reductions."
  • 13) Muni Sales Fall to

$7 Billion as Yields Jump Most Since January

  • "Oct. 16 (Bloomberg) -- Municipal bond sales fell this week as the biggest jump in benchmark tax-exempt borrowing costs since January prompted state and local-government borrowers such as Hawaii to postpone deals."
  • 14)

Big Layoffs in Puerto Rico Won't Be Stopped, Governor Says

  • "Unemployment may surpass 17 percent next month, after 17,000 school teachers and other public employees lose their jobs Nov. 6. A large protest on Thursday remained peaceful."
  • 15)

City projects $90M budget shortfall (San Jose)

  • "The city of San Jose is projecting a $90 million budget shortfall for 2010-2011, prompting City Manager Deborah Figone to warn employees of another round of layoffs."
  • 16)

Tice: Gold Could Pass $3,000

"How far can it go?

“We don’t think it will end until we get to $2,500, $3,000 or so. And gold could go beyond that,” he says.

That’s because of inflationary economic policy, Tice maintains.

“We essentially are printing money. Quantitative easing is debasing our currency,” he says.

“Congress is spending like drunken sailors. The investigator general for TARP (the Troubled Asset Relief Program) has stated that it’s possible that the cost to the American taxpayer for all the bailouts, backstops, guarantees, etc. could exceed $23 trillion.”

That picture isn’t too pretty. “We’ve never seen anything like this in our history,” Tice says."

"Thursday's report by the Rockefeller Institute of Government showed second-quarter tax revenues in the 50 states dropped a record 16.6 percent, or $200 billion. Every state but Vermont, which had a one-time estate tax settlement, saw sales, personal income and corporate tax receipts fall during the quarter. Thirty-six states reported double-digit declines."

        (More than financial, but always worth listening to...click on "more info" for links)

"WASHINGTON (Dow Jones)--Foreign demand for long-term U.S. financial assets grew in August even as China trimmed its holdings of U.S. Treasury securities. But analysts say the boost in capital inflows may not be enough to support the U.S. dollar."

 

.........yet our (reserve currency) dollar and our debt keeps telling the world

james_knight_chaucer's picture
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Re: Daily Digest - October 16

Yes, I took up with a Ho in 2009. She has gone now because I would not pay her!

freeeeeman's picture
freeeeeman
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miss the gold boat?

did i miss the gold boat? seems like prices are pretty high right now. i bought a few ounces for $970 awhile back but it seems like prices just aren't coming down... worth buying now or wait a few months to see what is going to happen?

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Re: Daily Digest - October 16

http://www.itulip.com/forums/showthread.php?p=127376#post127376

Snippets from the full article:

The Game - Part I: Queen of Hearts

For over ten years we’ve debated a dozen analysts who forecast an extended price deflation here in the U.S. They keep coming back, even though the deflation they repeatedly predict year after year never arrives.

The Game: What deflationists don’t understand

How did I make the forecasts of bubble crashes and brief deflations that turned out to be accurate in 2001 and 2009? How did I know the Fed was going cut rates to zero, execute a program of quantitative easing, make direct purchases of long bonds, and purchase asset-backed securities or any other assets that financial firms made billions selling during the so-called boom? Do I possess great powers of prediction? Do I consult a crystal ball covered in blue velvet in the dark corner of my basement?

Rules of The Game: Re-inflation by stealth currency devaluation

In a debt deflation crisis, also known as a “balance sheet recession,” economic policy makers have four main tools to use to keep an economy out of a liquidity trap or get out of one.

1. Expand the monetary base
2. Reduce long-term interest rates
3. Run fiscal deficits
4. Depreciate the currency

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Re: miss the gold boat?
freeeeeman wrote:

did i miss the gold boat? seems like prices are pretty high right now. i bought a few ounces for $970 awhile back but it seems like prices just aren't coming down... worth buying now or wait a few months to see what is going to happen?

Can you think of any fundamental reasons why the dollar would strengthen? Does gold really go up? Or is it really predicated on the dollar?

2 good reads.....1 and 2

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LogansRun
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Re: miss the gold boat?
freeeeeman wrote:

did i miss the gold boat? seems like prices are pretty high right now. i bought a few ounces for $970 awhile back but it seems like prices just aren't coming down... worth buying now or wait a few months to see what is going to happen?

You shouldn't be buying gold for profit anyway.  So "NO", you didn't miss the boat if you're buying for the right reason.  

freeeeeman's picture
freeeeeman
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Re: miss the gold boat?

thanks davos! i will read those tonight after work.

and i'm more interested in protecting my wealth than making a profit. i have cash just sitting in an account earning almost nothing. i could put it  in my mortgage and "earn" 6% or i could put it in gold. i've listened to the "financial sense news" guys debate about inflation vs deflation and while i think the dollar will buy more in the future for some things (housing, stocks) i'm not sure it's a good idea to just have liquid cash if the value is going to drop.

i can see the value of the dollar rising a bit short term b/c of the tightening of credit (reducing money supply), but it doesn't seem reasonable in the long run. but gold dropped a lot in the early 80s and i'm not entirely sure why. i'd had to lose have of my the value of any investment....

thanks for your replies! i appreciate it.

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Davos
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Re: miss the gold boat?
freeeeeman wrote:

thanks davos! i will read those tonight after work.

and i'm more interested in protecting my wealth than making a profit. i have cash just sitting in an account earning almost nothing. i could put it  in my mortgage and "earn" 6% or i could put it in gold. i've listened to the "financial sense news" guys debate about inflation vs deflation and while i think the dollar will buy more in the future for some things (housing, stocks) i'm not sure it's a good idea to just have liquid cash if the value is going to drop.

i can see the value of the dollar rising a bit short term b/c of the tightening of credit (reducing money supply), but it doesn't seem reasonable in the long run. but gold dropped a lot in the early 80s and i'm not entirely sure why. i'd had to lose have of my the value of any investment....

thanks for your replies! i appreciate it.

Anything can and probably will happen. I myself certainty can't be certain as to how this will play out.

That said, my list of G's is growing. I have faith in G(religious edit for those agnostic friends)d, Gold, Guns, Green Energy, Good food, and Government will scr#w it up, make it worse. 

If they find some hidden treasure of gold that could change things. If they come out with some sort of energy development that could change things. Aside from that they are in between a rock and a hard place. That being; massive debt and deficits and few lenders (YOY TIC data was down half a trillion) and shrinking revenues. That (governmental side/currency) I worry more about then the private sector, as banks only account for 24% or so of money creation. 80 trillion hanging out there and 2 trillion coming in a year and 4 trillion going out a year spells insolvent to any third grader with a pocket calculator.

To sum it up, I myself don't see how they are going to get out of the mess short of a re-valuation of our currency.

I have little faith in the market and even if it keeps going if you go to chart of the day and look at the gold to Dow chart you will see that the Dow isn't even keeping up with gold.

Best luck with what you decide to do. Take care

PS Here is the chart I posted several months ago showing the 9 year (CURRENT BEAR MARKET). It's only a rally when you look at it to the dollar, that thing worth about 4 cents. When every Fiat currency is in a race to the bottom it puts blinders on the horses. 

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SagerXX
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The gold boat?

(assuming one believes that we'll eventually suffer a dollar collapse [or equivalent])...

As long as you're on the boat before the collapse [or equivalent] occurs, you're fine.  You may pay more per oz. than folks who got on the boat earlier, but post-dollar-collapse you won't care if you paid $500, $970 or $1800 since something > nothing (which is what the dollar will be worth then)...

Just my $0.02 (or 0.00001901 ounces of gold)...

Viva -- Sager

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Re: Daily Digest - October 16

Hey Chris-Did you know your Crash Course was listed as a reference in Jeremy Grantham's 2nd quarter letter (see GMO website). I think you are really catching on with the big boys!!

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Re: Daily Digest - October 16

Kudos to Max Keiser, my new hero.

 Time mark is 4:55:

“Another SUICIDE BOMBERS  operation, give us another $ 700 Billion or we are going blow this economy up, you know these bankers in WallStreet are the equivalent of SUICIDE  BOMBERS  in another countries.   They threaten to blow themselves up and blow up the economy in an exchange for huge bailout money”

 

 Do not miss part 2:

 "WallStreet Jehadist are blowing the economy”

 “how they can have record bonuses if they did not steal the money”

 “ You are delusionary, prices (real estate) are not bottomed and real estate market has not bottomed.  Delinquencies and foreclosure are skyrocketing that is not sign of real estate market bottoming.  More wish full thinking and positive spin and justification for bonuses that should never be paid.   Unless you want to pay other the terrorist, why do not you pay Osama Benlanden for great work he did in 9/11.  I mean that the same as giving JPMorgan a bonus or GoldmanSches a bonus. They are all terrorists destroying the economy, one is using derivatives one using airplains”

 

freeeeeman's picture
freeeeeman
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Re: Daily Digest - October 16

davos, as an atheist myself, i thought the "religious edit" was funny. made me chuckle! and thanks for the links and all you do on this site. that "chart of the day" is indeed interesting, but who is to say gold isn't going to plummet like it did a few years after vietnam? why, despite reagan running up tons of debt, did gold prices remain flat until after clinton?

my problem is that i see the logic gold advocates say and have watched CM's CC many times, but i wonder if there isn't another big piece of the puzzle that is missing?

Davos's picture
Davos
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Re: Daily Digest - October 16
freeeeeman wrote:

 but i wonder if there isn't another big piece of the puzzle that is missing?

Could be, if you find something please share. Take care

Damnthematrix's picture
Damnthematrix
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$400/gal gasoline anyone...?
 http://rawstory.com/2009/10/us-pays-400-per-gallon-for-gas-in-afghanistan/

US pays $400 per gallon for gas in Afghanistan

By John Byrne
Friday, October 16th, 2009

 

Correction: An earlier version of this story incorrectly attributed the $400 figure to the Congressional Research Service. The number is from the Pentagon.

Last year, the price of gasoline in the United States topped the $4 per gallon mark.

This year in Afghanistan, the price has topped $400.

The stunning revelation emerged Thursday in a report from the Pentagon to House officials. The information conveyed offers new insight into a recent report by the Congressional Research Service, which found that the US spends $1 million per year for each servicemember on the ground in Afghanistan.

Why so much? The cost includes shipping, which sometimes includes the pricetag of a helicopter flight. Sending fuel by helicopter is woefully inefficient, because it uses up almost as much fuel as it carries.

Speaking to the Capitol Hill newspaper The Hill, House Appropriations chairman John Murtha (D-PA) said the figure was “worrisome” and "we started looking into it.”

Afghanistan is also landlocked, meaning that fuel must be transported in ways that stretch the limits of economic reason.

Because the country has no seaports, fuel is shipped to Karachi, in Pakistan, then carried across land by commercial trucks through Afghanistan. For remote bases, gasoline is sometimes transported by air.

"One of the most expensive ways to supply fuel is by transporting it in bladders carried by helicopter; the amount that can be flown at one time can barely satisfy the need for fuel," the Hill notes.

The paper notes that the $400 pricetag is referred to in Pentagon argot as the “fully burdened cost of fuel.”

The government's Defense Energy Support Center provides fuel to the military at $2.78 per gallon, the conveyance of which then grows exponentially more expensive as it travels through dangerous combat zones.

Gen. James Conway, who runs the Marine Corps, told a Navy forum that perilous risky routes up gasoline that originally cost $1.04 gallon up to $400.

“These are fairly major problems for us,” Conway was quoted as saying.

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Re: Daily Digest - October 16

Goldman Sachs-Robbing and Thieving The American Sucker-AGAIN

Marc Faber On Gold and Silver Bloomberg oct 13 09

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Re: Daily Digest - October 16

wroth5 - thank you I saw that. 

My first clue was the number of people who enrolled over the coming weeks with an email address something like [email protected]

Mr Grantham and I agree that one of the really big trends out there in the world of wealth preservation and management centers on the concept of scarcity.

Noting the extreme difficulty that we currently seem to be having untangling the concepts of inflation and deflation, with which we humans have a lot of experience, I happen to believe that the entirely unfamiliar concept of permanent scarcity will elude all but the most gifted of financial managers.

To get at the core of the idea, I believe you must begin with a structural understanding of how our money systems is constructed and operates.  This is why I re-posted the "Exponential Money in a Finite World" article today.

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