Daily Digest

Daily Digest - October 27

Tuesday, October 27, 2009, 9:50 AM
  • Death of 'Soul of Capitalism'
  • An Overview Of The Fed's Intervention In Equity Markets Via The Primary Dealer Credit Facility
  • Iceland Says Goodbye to the Big Mac
  • Ex-A.I.G. Chief Is Back In Business With A New Venture
  • U.S. Bank Charge-off Rate Exceeds Great Depression
  • Dollar Hits 14-Month Low Against The Euro
  • Doubling Down At America's Biggest Pension Fund
  • Our Drunken Uncle Sam
  • Grayson calls Fed adviser 'K Street Whore'
  • China Expert Urges FX Reserves Shift; Dollar Falls
  • $13 an Hour? 500 Sign Up, 1 Wins a Job
  • The Future of Solar Power
  • Plants for the Future
  • Lasagna Gardening

Economy

Death of 'Soul of Capitalism': 20 reasons America has lost its soul and collapse is inevitable (David M.)

No, not just another meltdown, another bear-market recession like the one recently triggered by Wall Street's too-greedy-to-fail banks. Faber is warning that the entire system of capitalism will collapse. Get it? The engine driving the great "American Economic Empire" for 233 years will collapse, a total disaster, a destiny we created. OK, deny it. But I'll bet you have a nagging feeling that maybe he's right, that the end may be near. I have for a long time: I wrote a column back in 1997: "Battling for the Soul of Wall Street."

An Overview Of The Fed's Intervention In Equity Markets Via The Primary Dealer Credit Facility (David M.)

Recently, Zero Hedge presented a snapshot analysis of the various securities that made up the triparty repo agreement involving JPM, Lehman and the Fed. We uncovered numerous bankrupt companies' equities that were being pledged as collateral for what ultimately was taxpayer exposure. To our surprise, this discovery is not an exception, and in fact in the days immediately preceding the collapse of Bear Stearns first, and subsequently, Lehman Brothers, the Federal Reserve established and refined a program that permitted banks to pledge virtually any security as collateral, including not just investment grade bonds and higher ranked securities, but also stocks of companies, the riskiest investment possible, and a guaranteed way for taxpayer capital to evaporate in the context of a disintegrating financial system, all with the purpose of bailing out Wall Street's major institutions.

Iceland Says Goodbye to the Big Mac (Nickbert, Vinny A.)

The Big Mac, long a symbol of globalization, has become the latest victim of this tiny island nation's overexposure to the world financial crisis. Iceland's three McDonald's restaurants -- all in the capital Reykjavik -- will close next weekend, as the franchise owner gives in to falling profits caused by the collapse in the Icelandic krona.

Ex-A.I.G. Chief Is Back In Business With A New Venture (M.W.)

Maurice R. Greenberg, who built the American International Group into an insurance behemoth, is at it again. Even as he has been lambasting the government for its handling of A.I.G. after its near collapse, Mr. Greenberg, who was ousted from A.I.G. in an accounting scandal in 2005, has been quietly building up a family of insurance companies that could compete with A.I.G. To fill the ranks of his venture, C.V. Starr & Company, he has been hiring some people he once employed. Now, Mr. Greenberg may have received some unintended assistance from the United States Treasury.

U.S. Bank Charge-off Rate Exceeds Great Depression (M.W.)

Bank charge-offs -- loans written off as uncollectable -- have reached $116 billion year to date, or 2.9 percent of outstanding loans on an annualized basis, Moody's said in a report. By comparison, bank charge-offs were about 2.25 percent in 1932, the third year of the Great Depression.

Dollar Hits 14-Month Low Against The Euro (M.W.)

The dollar hit a fresh 14-month low against the euro Monday as a regional Chinese central bank researcher argued for diversification of the country’s reserves away from the greenback, while a strong economic report from South Korea sparked an equities rally and dulled the buck’s safe-haven luster.

Doubling Down At America's Biggest Pension Fund (M.W.)

The nation's largest pension fund suffered heavy losses from its plunge into alternative investments. Now Calpers is doubling down, with potentially drastic implications for teachers, firefighters, and other public employees.

Our Drunken Uncle Sam (M.W.)

According to two separate Government Accountability Office scenarios, America's long-term fiscal outlook is "unsustainable." The GAO used two simulations, an optimistic one making the assumption of historically lower-than-average non entitlement spending and higher-than-average tax revenues, and a second model assuming that spending and revenues would keep to historical averages. But both simulations show that the federal government is on an unsustainable fiscal path. No surprise, since Uncle Sam is spending like a drunken sailor.

Grayson calls Fed adviser 'K street whore' (Vinny A.)

Alan Grayson, Florida Democrat, has a reputation for inflammatory rhetoric, but he took it even further when showing his disdain for Federal Reserve senior adviser Linda Robertson by calling her a “K Street whore” in a recent radio interview. “This lobbyist, this K street whore, is trying to teach me about economics,” Mr. Grayson fumed in a segment for a radio program hosted by Alex Jones on the Genesis Communications Network.

China Expert Urges FX Reserves Shift; Dollar Falls (Vinny A.)

The dollar should remain the principal currency in China's $2.27 trillion stockpile of foreign exchange reserves, but the share of the euro and yen should increase, according to an opinion piece in Monday's Financial News, a paper published by the People's Bank of China. The dollar fell to a 14-month low as word of the report spread before recouping some of its losses after the author, Zhou Hai, told Reuters he was only expressing a personal opinion.

$13 an Hour? 500 Sign Up, 1 Wins a Job (Vinny A.)

As soon as the job opening was posted on the afternoon of Friday, July 10, the deluge began. C.R. England, a nationwide trucking company, needed an administrative assistant for its bustling driver training school here. Responsibilities included data entry, assembling paperwork and making copies. It was a bona-fide opening at a decent wage, making it the rarest of commodities here in northwest Indiana, where steel industry layoffs have helped drive unemployment to about 10 percent.

Energy

The Future of Solar Power: Not Only Bright, But Also Thin (jeaninedargis)

The modernist box that won this year's Solar Decathlon, a contest for solar-powered houses sponsored by America's Department of Energy, had solar panels of the conventional, crystalline sort on its roof. But the walls were covered in solar cells made with thin coatings of silicon and other materials in the place of expensive slices of crystal. Thin film, as this technology is known, is still less popular than crystalline cells and its move to the mainstream has been a year or two away for a decade. But its time may have come at last.

Environment

Plants for a Future: Edible, Medicinal, and Useful plants for a healthier world (David M.)

Plants For A Future is a resource centre for rare and unusual plants, particularly those which have edible, medicinal or other uses. We practise vegan-organic permaculture with emphasis on creating an ecologically sustainable environment based largely on perennial plants. Winter Salads: Although it is relatively easy to grow leaves for winter consumption, most of the plants used in conventional gardening tend to be annuals (such as cabbage or spinach) and are also nicer when cooked. There are relatively few well known winter salad leaves and many of these (such as winter lettuce) require protection in all but mild winters. I would like to look at a few alternative winter salad plants and how they can be grown outdoors without protection to provide tasty salads throughout the winter.

Lasagna Gardening: The basics of a non-traditional method of gardening that is organic, earth friendly and easy. (David M.)

Unless you live in the forest, you probably want a neater, more organized garden. But to have any kind of garden—neat or otherwise—you first need good soil. Traditionalists would agree on the good soil premise and either crank up the tiller or get out the cultivator. My neat layers promote good soil without tillers or cultivators. You take the first step by simply covering the earth, creating a moist dark place where earthworms will come. Once you see worm activity, you know you're on the right track to having good soil.

22 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4060
Re: Daily Digest - October 27

"Oct. 26 (Bloomberg) -- Salvatore Calvanese, the treasurer of Springfield, Massachusetts, for four years, had a ready defense for why he risked $14 million of taxpayer money on collateralized-debt obligations laden with subprime mortgages in 2007.

He didn’t know what he was buying, he says, and trusted the financial professionals who sold them and told him they were safe.

“I thought they were money markets that were just paying more,” Calvanese said in an interview. “Nobody ever used the term ‘CDO,’ and I am not sure I would have known what that was anyway.”

Such financial mistakes, often enabled by public officials’ lack of disclosure and accountability for almost 90 percent of government financings in the $2.8 trillion municipal bond market, are costing U.S. taxpayers as much as $6 billion a year, according to data compiled by Bloomberg in more than a dozen states."

 

"The dollar will become worthless when people eventually realize the fiscal situation in the U.S. is a "disaster,"said Marc Faber, publisher of the Gloom, Boom & Doom report.

"It will go to a value of zero eventually, but not right now," Faber said today in an interview on Bloomberg Television. "Looking at Mr. Obama's administration, it should already be there. I think it will take about 10 years until people realize that the fiscal situation of the U.S. is a complete disaster.""

 

"The deal contributed to the more than $14 billion that over 18 months was handed to Goldman Sachs, whose former chairman, Stephen Friedman, was chairman of the board of directors of the New York Fed when the decision was made. Friedman, 71, resigned in May, days after it was disclosed by the Wall Street Journal that he had bought more than 50,000 shares of Goldman Sachs stock following the takeover of AIG. He declined to comment for this article."

"PHOENIX - Arizona faces the prospect of large-scale layoffs of school teachers next year due to the state's budget problems, state Superintendent of Public Instruction Tom Horne said Monday."

"The state Employment Development Department estimates that this underemployment rate hit 21.9 percent in September."

"The most recent results of the Moody’s/REAL Commercial Property Index continues to suggest that the nation’s commercial real estate markets are now firmly experiencing a tremendous downturn with prices plummeting a whopping 32.80% on a year-over-year basis and a stunning 40.62% since the peak set in October 2007."

"The San Jose Redevelopment Agency on Monday released its long-awaited budget for 2010 and beyond. Because of state raids and the ongoing recession, the five-year, $560.6 million operating and capital spending plan is half of what it was a year ago.

The budget not only borrows $75 million from the city's affordable housing fund — which must be repaid within five years —"

"What if you gave a house giveaway and nobody came? This was almost the scene last week as Wayne County (Detroit) tried to auction off almost 9,000 repossessed properties only to find over 80% of them drew nary a single bid, even with the minimum set at $500." (More info)

  • 10)

Look at  AP article on how good an 11.3% drop in housing prices is

  •      Hints: $8,000 tax credit, summer
  • 11)

Tax Hikes anyone?(Google News search)

  • ........

He's everywhere

dcm's picture
dcm
Status: Silver Member (Offline)
Joined: Apr 14 2009
Posts: 205
Re: Daily Digest - October 27

Thanks SaxPlayer for the Goldman piece. I don't know about you, but I have just about had it with Goldman running (my Govt) and ripping (me off). If we know this much dirt without an audit, I wonder what the books would show? Has everyone called their fearless congressmember and told them to back Ron's bill? If this does not pass or gets castrated before passing, then we know the total breakdown has occurred.    

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - October 27

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Re: Daily Digest - October 27

dcm

I've posted this response before, but here is goes again.

Currently the US is THE world power and within the US the FED is THE most powerful organization. So by default the FED is the most powerful organization in the world. And no one is going to be allowed to audit the most powerful organization in the world. It just won't ever happen. There will be a lot of talk and maybe a meek 'investigation'. But no full blown audit.

Its sad but, I think, true.

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
A Final Warning

This was just posted on Matterhorn.

A FINAL WARNING from Egon von Greyerz

http://goldswitzerland.com/index.php/final-warning/

mainecooncat's picture
mainecooncat
Status: Gold Member (Offline)
Joined: Sep 7 2008
Posts: 488
Re: Daily Digest - October 27

Maybe I'm missing something or just ignorant, I don't know. But why would someone like Peter Schiff who I assume (though perhaps mistakenly) has considerable wealth in various forms finance a house for thirty years -- unless he's buying some multi-million dollar affair? Does he really want to spend double, triple, or quadruple what the house is actually worth knowing that it's probably still going to lose value in the near future as he admits? Heck, why not find an exotic lender who'll write up a 40 yr. mortgage. This confuses me.

alcatwize's picture
alcatwize
Status: Bronze Member (Offline)
Joined: Dec 24 2008
Posts: 78
Re: Daily Digest - October 27

Well, one possible explanation is that he thinks the dollar will hyper inflate in which fixed debts because relatively cheap.  This is speculation, but it could be a possible play if one really thinks the dollar will collapse.

kmaher's picture
kmaher
Status: Bronze Member (Offline)
Joined: Feb 5 2009
Posts: 82
Re: Daily Digest - October 27

If he expects inflation, and I know he does, every dollar he borrows will be paid back in the future with a dollar that could be worth far less.  If you are confident in being able to continue to meet your payments, this would be a reasonable tactic.

dcm's picture
dcm
Status: Silver Member (Offline)
Joined: Apr 14 2009
Posts: 205
Re: Daily Digest - October 27

A FINAL WARNING from Egon von Greyerz

http://goldswitzerland.com/index.php/final-warning/

 

"dollar down gold up"

see, it's getting so bad, and so late in the game, we don't even have time for verbs

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Protests of the Bankers

never mind....

joemanc's picture
joemanc
Status: Martenson Brigade Member (Offline)
Joined: Aug 16 2008
Posts: 834
CNBC Viewership down 50% in October

Wow!!!

Quote:

Specific shows that are likely to follow the fate of Dennis Kneale's recently cancelled 8pm gobbledygook are likely the Kudlow Report and Mad Money, which are down 59% and 56%, respectively.

http://www.zerohedge.com/article/cnbc-viewership-plunges-50-october

I guess the question is, what did everyone start watching instead? Bloomberg?

freeeeeman's picture
freeeeeman
Status: Bronze Member (Offline)
Joined: Aug 11 2009
Posts: 25
Re: CNBC Viewership down 50% in October

isn't anyone else suspicious when someone who is selling gold tells us that the market is going to crash and the best way to protect yourself is to buy gold? i have some (along with other metals) but w/ all stimulous dollars floating around, the market is bound to go up b/c the money has to go somewhere.... it doesn't tend to sit on the sidelines forever....

joemanc's picture
joemanc
Status: Martenson Brigade Member (Offline)
Joined: Aug 16 2008
Posts: 834
GMAC getting another bailout, #3

If at first you don't suceed, try, try, try, again:

Quote:

The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said. The latest infusion would come in the form of preferred stock. The government's 35.4% stake in the company could increase if existing shares eventually are converted into common equity.

http://online.wsj.com/article/SB125668489932511683.html

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
City Of Houston Is Bankrupt

Mish reports that The City of Houston Is Bankrupt

I'm a native Houstonian, and I have to say that its 2005 here in Houston. I have never seen so much real estate development go on here. Everywhere you look you see ginormous buildings being erected. A house just sold on my street for the asking price in 2 weeks. The recession never happened here.

But yet, the city, the 4th largest in the nation, is bankrupt. Seems there is more here than meets the eye.

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - October 27

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Re: CNBC Viewership down 50% in October

Speaking of Dennis Kneale. Has anyone notice his face is only on the lower portion of his head? I'm just sayin'.

BN37's picture
BN37
Status: Bronze Member (Offline)
Joined: May 17 2008
Posts: 39
Re: Daily Digest - October 27

That is what he said in the video. It's at about 4:40.

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: CNBC Viewership down 50% in October

a;most everyone's eyes are half way between their chin and the top of the skull...... one of the first things you learn in art school!

Mike

rowmat's picture
rowmat
Status: Gold Member (Offline)
Joined: Nov 15 2008
Posts: 358
Re: CNBC Viewership down 50% in October

That's it!!

I always suspected he was an alien!! Surprised

Johnny Oxygen wrote:

Speaking of Dennis Kneale. Has anyone notice his face is only on the lower portion of his head? I'm just sayin'.

scotthw's picture
scotthw
Status: Bronze Member (Offline)
Joined: Oct 16 2008
Posts: 59
Re: Daily Digest - October 27

Thank you so much for throwing in a few positive articles (the ones at the end of the digest) along with the negative.  I needed some help with my blood pressure.

scotthw's picture
scotthw
Status: Bronze Member (Offline)
Joined: Oct 16 2008
Posts: 59
Re: City Of Houston Is Bankrupt
JAG wrote:

Mish reports that The City of Houston Is Bankrupt

I'm a native Houstonian, and I have to say that its 2005 here in Houston. I have never seen so much real estate development go on here. Everywhere you look you see ginormous buildings being erected. A house just sold on my street for the asking price in 2 weeks. The recession never happened here.

But yet, the city, the 4th largest in the nation, is bankrupt. Seems there is more here than meets the eye.

I am a native Texan and have lived in Houston, my daughter lives there now, and I too can attest to the fact that the recession was barely a blip there.  I did take note of this paragraph:

"Thus the City’s problems are a result of greatly overspending and not a result of insufficient revenues. All of this occurred before the current severe recession. Now the City has the added burden of the recession"

So it looks like ordinary mismanagement, not recession triggered.

Doug's picture
Doug
Status: Diamond Member (Online)
Joined: Oct 1 2008
Posts: 3124

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