Daily Digest

Daily Digest - October 19

Monday, October 19, 2009, 9:57 AM
  • Good News on Wall Street Means.... What Exactly?
  • Micro Farming with Two Acres and Some Tools - a Daily Blog
  • Dairy Industry Going Down the Tubes
  • A Rare Glimpse Into The Fed's Discount Window Courtesy Of The Brewing Lehman-Barclays Scandal
  • Where The Hell Is The Outrage?
  • Drop in foreclosures called ‘very scary’
  • Has the Government Sowed the Seeds for Green Shoots or Another Depression?
  • Gold at $2,000 Becomes Inflation-Adjusted Bullseye for ‘80 High
  • Foreclosed Ex-Homeowners Turn to Shelters

Economy

Good News on Wall Street Means.... What Exactly? (David M.)

It’s literally amazing to me that our press corps hasn’t yet managed to draw a distinction between good news on Wall Street for companies like Goldman, and good news in reality.



I watched carefully the reporting of the Dow breaking 10,000 the other day and not anywhere did I see a major news organization include a paragraph of the “On the other hand, so ___ ing what?” One might point out that unemployment is still at a staggering high, foreclosures are racing along at a terrifying clip, and real people are struggling more than ever

Dairy Industry Going Down the Tubes (David M.)

The USDA should have started buying the overstocks of bulk cheese months ago. The crisis, in the wake of the huge ethanol speculations of 2008 that pushed up feed prices, was known, seen, acknowledged. There was no mystery about what was happening and there were remedies

A Rare Glimpse Into The Fed's Discount Window Courtesy Of The Brewing Lehman-Barclays Scandal (pinecarr)

Many of the individuals negotiating the Sale Transaction on the Lehman Sellers' behalf became Barclays' employees following the closing. Indeed, McDade told Lowitt that Barclays deemed eight individuals, including Lowitt himself, as critical to the transaction. The other seven were Skip McGee, Ajay Nagpal, Tom Humphrey, Eric Felder, Gerald Donini, Mike Gelband and Hyung Lee.

Where The Hell Is The Outrage? (Douglas A.)

I don't know about you, but I am outraged.

Drop in foreclosures called ‘very scary’ (Vinny A.)

Lenders’ actions show they think properties are not worth pursuing. Nobody is sure exactly how many bank walkaways are occurring. For various reasons, they can’t be identified in searches of public real estate and court data without individually pulling case files, experts say. But nobody questions that they are on the increase.

Has the Government Sowed the Seeds for Green Shoots or Another Depression? (Vinny A.)

Note: To those who think that keeping quiet about bad news and gloomy forecasts will help the economy recover, or that talking about them is unpatriotic, please read this.



You probably heard that Nicu Harajchi - CEO of N1 Asset Management - told CNBC on Friday that we're heading into a full-blown depression.

Gold at $2,000 Becomes Inflation-Adjusted Bullseye for ‘80 High (Vinny A.)

Gold’s rally to a record means prices are still 53 percent below the 1980 inflation-adjusted peak.

Foreclosed Ex-Homeowners Turn to Shelters (Vinny A.)

The first night after she surrendered her house to foreclosure, Sheri West endured the darkness in her Hyundai sedan. She parked in her old driveway, with her flower-print dresses and hats piled in boxes on the back seat, and three cherished houseplants on the floor. She used her backyard as a restroom.



The second night, she stayed with a friend, and so it continued for more than a year: Ms. West — mother of three grown children, grandmother to six and great-grandmother to one — passed months on the couches of friends and relatives, and in the front seat of her car. But this fall, she exhausted all options. She had once owned and overseen a group home for homeless people. Now, she succumbed to that status herself, checking in to a shelter.

Environment

Micro Farming with Two Acres and Some Tools - a Daily Blog (David M.)

Tiny Farm Blog is one day to the next on a small organic farm… Starting with zero farm and garden experience near the end of 2002, I’m still at it full-time and more into it than ever! The first four years (2002-2005), it was mainly a one-man show, with much help from a few, and support from many.

13 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - October 19

Oct. 17 (Bloomberg) -- Harvard University’s failed bet that interest rates would rise cost the world’s richest school at least $500 million in payments to escape derivatives that backfired.

"Oct. 19 (Bloomberg) -- In its 190-year history, Jefferson County, Alabama, has endured a cholera epidemic, a pounding in the Civil War, gunslingers, labor riots and terrorism by the Ku Klux Klan. Now this namesake of Thomas Jefferson, anchored by Birmingham, is staring at what one local politician calls financial “Armageddon.”"

  • 4)

NC To Hike Pension Contribution

  • "State and local North Carolina governments will need to raise their pension contribution, Global Pensions reports. They will have to increase it to 6.71% from the current 3.57% to make up for an underfunded status, according to the state treasurer."
  • 5)

Police pension benefits curtailed

"CORPUS CHRISTI — Cherie Roberts retired from the Corpus Christi Police Department two years ago after 26 years and five car crashes in the line of duty.

Her spine, she said, looked like a piano keyboard on medical imagery scans. But at 53 she thought she had a plan — and that her union had promised — to pay for health insurance until she was eligible for Medicare.

She was wrong.

Trustees for a union-run health insurance trust voted to curtail benefits in July, citing unsustainable obligations."

"Saving Jobs, Preserving Public Services

Local governments throughout California are facing severe financial

challenges due to the worst economic downturn since the Great Depression.

As a consequence, many agencies are laying off and furloughing employees

resulting in decreased public services and employee hardship. Complicating

the economic picture is the 23% loss on CalPERS investments in 2008,

which will result in increased retirement costs for local agencies beginning

in Fiscal Year 2010-11. This will further distress agencies and lead to more

reductions in jobs and services"

"DENVER -- The board that oversees Colorado state pensions approved a bailout plan Friday to keep the troubled program from going bankrupt."

"An unusual pension benefit for police and firefighters could cost Baltimore $164.9 million next year, nearly double what the city is now paying and a figure that the city's finance director says taxpayers cannot afford.

After years of calls for pension reform, board members who oversee the nearly $2 billion system said their Tuesday vote that passes the whopping bill on to City Hall is a message that the fund is close to a breaking point and needs attention."

"Oct. 19 (Bloomberg) -- The U.S. dollar will extend declines as the global economy’s recovery prompts investors to shift away from U.S. assets, according to Pacific Investment Management Co., which runs the world’s biggest bond fund."

"Mr Putin also said Russia might consider payments for the gas supplied to China in rubles. He said that "We have talked about this possibility with China and our energy companies have raised this issue for example Gazprom."

He added that "We could consider this, but this does not mean our Chinese partners have to have rubles. We're prepared to accept payment for yuan but a balance would be needed. He also said the next meeting of the Shanghai Cooperation Organization finance ministers will look at an initiative by Kazakhstan to institute electronic settlements in national currencies.”"

"Prime Minister Roosevelt Skerrit was among nine regional leaders of the Bolivarian Alliance for the Peoples of the Americas (ALBA) who attended the seventh summit in Cochabamba, Bolivia.

Delegations from Bolivia, Cuba, Venezuela, Ecuador, Nicaragua, Honduras, Dominica, Saint Vincent and the Grenadines, and Antigua and Barbuda agreed to forgo the US dollar for a new regional trade currency to be called the Regional Single Compensation System (sucre). The Sucre will “replace the dollar in commercial exchanges,” between member nations."

(more info on this here under the title: "US Dollar on Skids in Lat. America ")

"NEW YORK (Reuters) - Hedge-fund manager David Einhorn, who warned about Lehman Brothers' precarious finances before it collapsed, said on Monday he's betting on rising interest rates and holding gold as a hedge for what he described as unsound U.S. policies.

"If monetary and fiscal policies go awry" investors should buy physical gold and gold stocks, Einhorn said at the fifth Annual Value Investing Congress in New York. "Gold does well when monetary and fiscal policies are poor and does poorly when they are sensible."

Einhorn is president of Greenlight Capital, with more than $5 billion in assets under management."

"Russia is planning to issue $18 billion of dollar-denominated government bonds early next year.

This will be the first government debt issue aimed at international investors since 2000.

It will also be, conveniently, a huge $18 billion short-dollar position."

(More info. Also posted at the Financial Times)

.....always the same story for the dollar

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Johnny Oxygen
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Re: Daily Digest - October 19
Bernanke Urges US to Start Cutting Record Budget Deficit.
 

Federal Reserve Chairman Ben Bernanke on Monday called for the United States to whittle down its record-high budget deficits and for countries like China to get their consumers to spend more, moves that would help combat skewed global trade and investment flows that contributed to the financial crisis.

http://www.cnbc.com/id/33381140#

WOW! There really is no reality. Up is down and down is up. How strange is it that only a few ever call these guys out on their glaring contradictions?

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ejanea
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Re: Daily Digest - October 19

I am so pleased to see the tiny farm link.  I often try to explain how much one can grow in a small area with hand tools.   It has taken me several years but I now grow almost all of the food for two people on one acre.  As I have commented previously,  carbohydrate self -sufficiency is the hardest to achieve,  and potatoes deliver the most for the effort expended.  

I am lucky that I live in a grain growing area,  and I can buy milling wheat inexpensively. 

The best thing to do for security and for mental health is to start. Potatoes and silver beet (swiss chard) give thebest results for a smaller effort.

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dcm
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Re: Where the Hell is the Outrage

Thanks Douglas for Where the Hell is the Outrage. I have never seen Mish this angry. Then again, I've never been this angry either. Black Swan's comments are excellent as well.

As a former prosecutor,  I look at things through a criminal lens. But frankly,  that's all I see now  - criminals. And just like criminals, the more desperate things become, the more outrageous and dangerous their actions become. And with it, grow the number of victims. The new SEC COO is a joke right? And Geithners phone calls make me want to puke. We're a third world country with a first world appetite...and dessert is starting to taste like poison. 

The only thing that makes sense to me now is that our country is morally, legally and democratically broken. Both political parties have become nothing more than criminal organizations in bed with financial (and other) organizations robbing the citizens. Literally, it's not a metaphor anymore. It's a nightmare, one I continually dream and fear my children will carry in their waking hours. 

And if you haven't noticed, no phone calls,  marches or blogs seem to effect them. I have to do something. I have to take the excellent education and energy I receive from this site and others and move forward into action.

We cannot accomplish anything unless we first dismantle both political parties. Anything short will simply fail. Someone should start a movement called "The Party's Over" where the sole objective is to make sure no one from either party is re-elected, at any level....ever. Life is nothing like a political party so why in God's name should we vote like one. We should never vote for any kind of party. We should insist our leaders are truly independent and demand that they listen to us. Once they are elected, we must insist they investigate, indict and imprison the guilty. We must reinstate financial regulation and , more important, insist our leaders use it. Every industry needs regulation. Criminal law is regulation. What else will deter them?  We should publicly fund every single election and make it a serious crime to accept any kind of donation while in office.      

We should also fight the political and economic criminal goliaths with the only thing they care about  and despeartely need - money. We should  start a "Plastic Gandhi" movement, divide into four groups with each group not purchasing a thing (or very close to it) for one week. That would be a challenge but it might just get some attention.

This really is our responsibility, for our children, ourselves and what's left of our country.

Mish and this mess have me all fired up      

         

    

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TheRemnant
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Re: Where the Hell is the Outrage
dcm wrote:

Thanks Douglas for Where the Hell is the Outrage. I have never seen Mish this angry. Then again, I've never been this angry either. Black Swan's comments are excellent as well.

As a former prosecutor,  I look at things through a criminal lens. But frankly,  that's all I see now  - criminals. And just like criminals, the more desperate things become, the more outrageous and dangerous their actions become. And with it, grow the number of victims. The new SEC COO is a joke right? And Geithners phone calls make me want to puke. We're a third world country with a first world appetite...and dessert is starting to taste like poison. 

The only thing that makes sense to me now is that our country is morally, legally and democratically broken. Both political parties have become nothing more than criminal organizations in bed with financial (and other) organizations robbing the citizens. Literally, it's not a metaphor anymore. It's a nightmare, one I continually dream and fear my children will carry in their waking hours. 

And if you haven't noticed, no phone calls,  marches or blogs seem to effect them. I have to do something. I have to take the excellent education and energy I receive from this site and others and move forward into action.

We cannot accomplish anything unless we first dismantle both political parties. Anything short will simply fail. Someone should start a movement called "The Party's Over" where the sole objective is to make sure no one from either party is re-elected, at any level....ever. Life is nothing like a political party so why in God's name should we vote like one. We should never vote for any kind of party. We should insist our leaders are truly independent and demand that they listen to us. Once they are elected, we must insist they investigate, indict and imprison the guilty. We must reinstate financial regulation and , more important, insist our leaders use it. Every industry needs regulation. Criminal law is regulation. What else will deter them?  We should publicly fund every single election and make it a serious crime to accept any kind of donation while in office.      

We should also fight the political and economic criminal goliaths with the only thing they care about  and despeartely need - money. We should  start a "Plastic Gandhi" movement, divide into four groups with each group not purchasing a thing (or very close to it) for one week. That would be a challenge but it might just get some attention.

This really is our responsibility, for our children, ourselves and what's left of our country.

Mish and this mess have me all fired up      

 

 

The argument for transparency. accountability, and ethics within government has been asked from time immemorable.  The United States Constitution did not prevent this mess from happening, nor will a return to it prevent it from happening again.

The fallacy is that a government always includes taxation power and a violence monopoly. A government must have a violence monopoly; otherwise, people would refuse to pay taxes. With a violence monopoly and a taxation/economic monopoly, then the evil power of the State will grow over time. Even if State employees are initially all saints, eventually someone evil will work their way into a position of authority and the descent begins.  Even if it were possible to return to a sharply limited government, it would rapidly degenerate into the current mess again.

It's time to try something else.

You cannot vote, protest, nor educate 51% of the majority into agreeing with you.  This is your average voter:

 

Have a look at the agorism link in my signature.  It might get the juices flowing.  Channel your anger into productive change.

 

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Re: Daily Digest - October 19

Rolling on the floor laughing my @ off. Bernanke telling Congress to rein in the spending. Like a meth dealer telling his clients not to get hooked.

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saxplayer00o1
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Re: Daily Digest - October 19

"ALBANY — New York has another financial problem: Its trust fund to pay the unemployed has dried up, and the state will owe the federal government $2.2 billion by year’s end to keep it running, state officials said.

The deficit doesn’t impact the unemployed getting their weekly checks, but it does mean the state will continue to borrow from the federal government to pay out the benefits. And that means higher taxes may ultimately be put on employers to pay back the debt.

“The bad economy, the recession, has caused a huge drain on the trust fund,” said Nancy Dunphy, deputy commissioner for employment security at the state Department of Labor."

"FRANKFORT — Kentucky lawmakers might consider dipping into local school districts' contingency funds to help balance the 2010-12 state budget, according to House Speaker Greg Stumbo.

Stumbo, a Prestonsburg Democrat, told The Courier-Journal in an interview that he has discussed the issue with Gov. Steve Beshear, who did not indicate his position.

"We do have a bunch of money that the schools have saved in their budgets, their 'Rainy Day' funds," Stumbo said. "And there's a pretty good sum of money there which will help us get through.""

 

....Not to worry. $1 million isn't much

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Headless
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Re: Daily Digest - October 19

dcm,

You sound like I feel. I have completely given up on any kind of legal solution to this problem: not going to happen, as folks like those that "work" at Goldman et al are so far removed from reality--and so busy admiring/coveting each other's thievery--that there is absolutely no reason for any of them to even want to consider a cease-looting; there is no reason, in their minds; they don't GET IT! They will stop when they are dead. Period. Of course, this is not a "productive contribution to the conversation," and you will likely not have the opportunity to read this reality bite since Chris edits me every time a point this FACT out.

A little logic:

M:Our middle class cannot survive continued looting by Wall Street;

m: Wall Streeters will not stop looting until they are dead;

Likely: C1: the middle class will cease to exist and Wall Streeters will be dead.

Likely: C2: the middle class will survive, which implies a timing adjustment to C1

Unavoidable, via the premises: C sub U: Wall Streeters will be dead.

 

JAG's picture
JAG
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Re: Daily Digest - October 19

Thanks for the TinyFarmBlog link David M. I really enjoy sites like that.

Jeff

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JAG
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Holy Guacamole!

How The Fed Bailed Out The World

I'm going to have to reread this to fully comprehend it, but holy guacamole! 

 

Woodman's picture
Woodman
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Re: Daily Digest - October 19

[

Cool, that tiny farm blog will get me psyched up again even though my active garden area has dwindled to a few cold frames now.  Agree with ejanea's post above on the ease of potatoes and chard.  I got over 100 pounds of potatoes grown in a 10' x 40' area with 3 rows safely stored in my cellar and am feasting on them most nights now.  I can't clip chard leaves fast enough to keep up with growth.

Tom 

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Damnthematrix
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Re: Daily Digest - October 19

This from the business section of the New York Times no less:

http://www.nytimes.com/aponline/2009/10/16/business/AP-US-Deficit-Danger.html?_r=3&hp

Federal Deficit Hits All-Time High of $1.42 Trillion

By THE ASSOCIATED PRESS
Published: October 16, 2009

WASHINGTON (AP) -- What is $1.42 trillion? It's more than the total national debt for the first 200 years of the Republic, more than the entire economy of India, almost as much as Canada's, and more than $4,700 for every man, woman and child in the United States.

It's the federal budget deficit for 2009, more than three times the most red ink ever amassed in a single year.

And, some economists warn, unless the government makes hard decisions to cut spending or raise taxes, it could be the seeds of another economic crisis.

Treasury figures released Friday showed that the government spent $46.6 billion more in September than it took in, a month that normally records a surplus. That boosted the shortfall for the full fiscal year ending Sept. 30 to $1.42 trillion. The previous year's deficit was $459 billion.

As a percentage of U.S. economic output, it's the biggest deficit since World War II.

''The rudderless U.S. fiscal policy is the biggest long-term risk to the U.S. economy,'' says Kenneth Rogoff, a Harvard professor and former chief economist for the International Monetary Fund. ''As we accumulate more and more debt, we leave ourselves very vulnerable.''

Forecasts of more red ink mean the federal government is heading toward spending 15 percent of its money by 2019 just to pay interest on the debt, up from 5 percent this fiscal year.

President Barack Obama has pledged to reduce the deficit once the Great Recession ends and the unemployment rate starts falling, but economists worry that the government lacks the will to make the hard political choices to get control of the imbalances.

Friday's report showed that the government paid $190 billion in interest over the last 12 months on Treasury securities sold to finance the federal debt. Experts say this tab could quadruple in a decade as the size of the government's total debt rises to $17.1 trillion by 2019.

Without significant budget cuts, that would crowd out government spending in such areas as transportation, law enforcement and education. Already, interest on the debt is the third-largest category of government spending, after the government's popular entitlement programs, including Social Security and Medicare, and the military.

As the biggest borrower in the world, the government has been the prime beneficiary of today's record low interest rates. The new budget report showed that interest payments fell by $62 billion this year even as the debt was soaring. Yields on three-month Treasury bills, sold every week by the Treasury to raise fresh cash to pay for maturing government debt, are now at 0.065 percent while six-month bills have fallen to 0.150 percent, the lowest ever in a half-century of selling these bills on a weekly basis.

The risk is that any significant increase in the rates at Treasury auctions could send the government's interest expenses soaring. That could happen several ways -- higher inflation could push the Federal Reserve to increase the short-term interest rates it controls, or the dollar could slump in value, or a combination of both.

The Congressional Budget Office projects that the nation's debt held by investors both at home and abroad will increase by $9.1 trillion over the next decade, pushing the total to $17.1 trillion decade under Obama's spending plans.

The biggest factor behind this increase is the anticipated surge in government spending when the baby boomers retire and start receiving Social Security and Medicare benefits. Also contributing will be Obama's plans to extend the Bush tax cuts for everyone except the wealthy.

The $1.42 trillion deficit for 2009 -- which was less than the $1.75 trillion that Obama had projected in February -- includes the cost of the government's financial sector bailout and the economic stimulus program passed in February. Individual and corporate income taxes dwindled as a result of the recession. Coupled with the impact of the Bush tax cuts earlier in the decade, tax revenues fell 16.6 percent, the biggest decline since 1932.

Immense as it was, many economists say the 2009 deficit was necessary to fight the financial crisis. But analysts worry about the long-term trajectory.

The administration estimates that government debt will reach 76.5 percent of gross domestic product -- the value of all goods and services produced in the United States -- in 2019. It stood at 41 percent of GDP last year. The record was 113 percent of GDP in 1945.

more...

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Re: Holy Guacamole!
JAG wrote:

How The Fed Bailed Out The World

I'm going to have to reread this to fully comprehend it, but holy guacamole! 

JAG, I got a "page not found" with that link - even though the main page has the synopsis posted.

I did find it here:

http://www.istockanalyst.com/article/viewarticle/articleid/3562536

Thanks for posting about it.

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