Daily Digest

Daily Digest - September 2

Wednesday, September 2, 2009, 9:54 AM
  • Countdown To Dollar Implosion Madness (H/T Jag)
  • Paulson told this person (who is writing a biography, apparently) that he intended to use the TARP money to inject into the banks and not buy toxic assets a full ten days before he testified before Congress
  • TrimTabs' CEO Charles Biderman Discusses Massive Insider Selling
  • ROFL! China Tells IBs: Stuff It!
  • Seller, beware: Feds Cracking Down on Secondhand Sales of Some Products
  • Is Your State's Unemployment System in Danger? (Map H/T www.TheComingDepression.com)
  • Robert Kiyosaki: Preparing for the Worst
  • Mothballed Ships
  • And so it begins...
  • Interview with Barney Frank (Video)

Economy

Countdown To Dollar Implosion Madness (H/T Jag)

It never ceases to amaze me what hype people will believe. The latest is a series of posts by Jim Sinclair who on August 14, started a countdown to dollar oblivion.

Paulson told this person (who is writing a biography, apparently) that he intended to use the TARP money to inject into the banks and not buy toxic assets a full ten days before he testified before Congress

Watch the above - six minutes and worth every bit of it.

From that interview (specifically, at 3:20 in):

Paulson told this person (who is writing a biography, apparently) that he intended to use the TARP money to inject into the banks and not buy toxic assets a full ten days before he testified before Congress.

He then testified before Congress to exactly the opposite.

This is about as clear an allegation of perjury (which, by the way, we've heard before - remember Kashkari making essentially the same allegation in his Congressional testimony?) as I've seen.

TrimTabs' CEO Charles Biderman Discusses Massive Insider Selling

"Insider selling is 30x insider buying, while corporate stock buybacks are non-existent. Companies are saying they don't want to touch their own stocks."

"I don't know where the money is coming from to keep the markets from not plunging."

One can offer some suggestions.

ROFL! China Tells IBs: Stuff It!

We reap what we sow, and may the "foreign banks" (you know this includes some nice juicy ones over here in the US) get stiffed and stuffed.

Seller, beware: Feds cracking down on secondhand sales of some products

The initiative, which targets toys and other products for children, enforces a new provision that makes it a crime to resell anything that's been recalled by its manufacturer.

Is Your State's Unemployment System in Danger? (Map H/T www.TheComingDepression.com)

Robert Kiyosaki: Preparing for the Worst

2. In my view, this global crisis has been caused by the Federal Reserve Bank, the U.S. Treasury, Wall Street, and the central banks of the world. They caused the problem, profited excessively in doing so, and now profit by being asked to fix the problem. Every time I hear a politician mention the word stimulus, my mind flashes back to high school biology class, when I touched battery wires to a dead frog to make it twitch. Today, you and I are the dead frogs. Pretty soon the dead frog will be fried frog. In the 1980s, our government’s hot money stimulus was measured only in the millions of dollars. By the 1990s, the government had to ramp the stimulus voltage into the billions in order to get the frog to twitch. Today the frog has jumper cables with trillions in high-voltage hot money pouring through the lines. While most us feel better when we have more high-voltage money in our hands, none of us feel good about higher taxes, increasing national debt, and rising inflation for the long term. Another old saying goes, “Sometimes the cure is worse than the disease.” I say the government stimulus cure is killing us frogs.

Mothballed Ships

And so it begins...

Check out this frightening post by bear's bear Tim Knight. He could well be right in his conclusions. Where I would take issue with him however is in his last word, 'jerks'. In its place I would insert 'hubris laden, power drunk bureaucrats who think they can micromanage every aspect of this once supposedly free market system for the good of the entire union of card carrying comrades'. In other words, jerks. Okay, I take no issue with him.

Interview with Barney Frank (Video)

28 Comments

SteveS's picture
SteveS
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"Today" says recession is over

Wish I had a link, but it doesn't look like the entire show is archived.

Anyway, In a finacial segment the reporter noted that home and car sales were up last month, "proof that the recession is over"! I almost choked on my breakfast and rewound the DVR to be sure that is what was said. It was.

And two sentences later she noted that a major ailine (I forget which) is laying off 900 employees.......

 

 

livsez's picture
livsez
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Re: Daily Digest - September 2

I want to say Thank You Davos for all the effort you put into the Daily Digest.  It is essential daily reading for me.

Listening to NPR interview military experts this week regarding Afghanastan it's apparent that the Military Industrial Complex is alive and well.  As a film editor, I figure I can share some poignant art with everyone.  Here is a music video I edited back in 2005. 

 

 

 

Headless's picture
Headless
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Re: Daily Digest - September 2

I sure hope Chris is busy preparing a "Special Address" to allow us our necessary dose of voyeur venting in regards to the "productivity" number.

Just how stupid are these people such that they have assumed the average reader is stupid enough to swallow the the most recently prescribed horse pill labeled "Record Productivity" without asking: "Hey, how come  that thing is so big? What's inside that there thing?"

Help us Chris! I can't stand this anymore!

Davos's picture
Davos
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Re: Daily Digest - September 2
livsez wrote:

I want to say Thank You Davos for all the effort you put into the Daily Digest.  It is essential daily reading for me.

Listening to NPR interview military experts this week regarding Afghanastan it's apparent that the Military Industrial Complex is alive and well.  As a film editor, I figure I can share some poignant art with everyone.  Here is a music video I edited back in 2005. 

Hello Livsez, A pleasure to contribute to this fine community that Chris created. That is one of may favite songs it is on my iPod. The video is super.

Not to get political but since you mention it, your post reminds me of what a really smart 79 year old investor just dropped in my inbox.

President Hamid Karzai's government -- his vice presidential running mate is a drug trafficker -- as so "inept, corrupt and predatory" that people sometimes yearn for restoration of the warlords, "who were less venal and less brutal than Mr. Karzai's lot."

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gregroberts
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Re: Daily Digest - September 2

"Mr. Walker concludes that “We face large and growing structural deficits largely due to known demographic trends and rising health care costs.” Further, “GAO’s simulations show that balancing the budget in 2040 could require actions as large as cutting total federal spending by 60 percent, or raising federal taxes to two times today's level.”

To close the revenue gap through growth, the United States economy would need to expand in the double-digit range for the next seventy-five years. During the boom years of the 1990s, the economy grew at an average rate of 3.2%. Walker concludes, succinctly: “we cannot simply grow our way out of this problem.”"

http://www.capmag.com/article.asp?ID=5631

DavidC's picture
DavidC
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Re: Daily Digest - September 2

President Hamid Karzai along with Lord (aargh) Peter Mandelson (unrelated topic wise!), when watching interviews with them on television, make my skin crawl.

How someone like Karzai can be considered as a potential unifying force for Afghanistan, with all the shenanigans that have taken place during the elections there just astonishes me - yup, just as much as the Central Banks and Governements are doing for us in the US and UK (not to mention the others!).

DavidC

Headless's picture
Headless
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Re: Daily Digest - September 2

Greg,

You included:

"To close the revenue gap through growth, the United States economy would need to expand in the double-digit range for the next seventy-five years."

That would imply a growth of about 127 THOUSAND% over that 75 year period (using the lowest possible double-digit growth rate, namely, 10%).

Is that something that Walker said?

Davos's picture
Davos
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Re: Daily Digest - September 2

Hello Greg:

That was a good watch. I had seen something like that years ago when he was in office. I thought 2040, how old will my kids be then?

One crisis sure shortened that.

Watching that cracks me up, the money we paid in was spent. What a joke. Him taking it to an arena outside the bread and circus poiticians, how pathetic. Like the book IOUSA says "Leadership deficit".

Thanks for the watch.

irongamer's picture
irongamer
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Re: Daily Digest - September 2
livsez wrote:

I want to say Thank You Davos for all the effort you put into the Daily Digest.  It is essential daily reading for me.

Totally agree with livsez, these daily updates are great. Keep up the good work and thank you.

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - September 2

It will be interesting to see how government(s) react to the large municipal bankruptcies that may be happening in the near future. Jefferson County may be a matter of  just a few days away from Chapter 9

http://www.al.com/news/birminghamnews/metro.ssf?/base/news/1251879399152730.xml&coll=2

 

Still Detroit could go either way

http://news.google.com/news/search?um=1&ned=us&hl=en&q=detroit+%22chapter+9%22

 

Yesterday Oakland was even mentioned as a possibility in the future:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/31/EDG219GEM4.DTL

It looks like Chicago will just write $500 million worth of vehicle violations to make up for their budget deficit

http://www.chicagonow.com/blogs/parking-ticket-geek/2009/09/parking-ticket-fyi-city-slowly-turns-up-enforcement.html

 

Doug's picture
Doug
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Re: Daily Digest - September 2

Greg

Do you happen to know when Walker's clip appeared?  It was apparently several years ago.  He must be spitting nails today.  Two Federal offices I've always respected are his GAO and the CBO (Congressional Budget Office).  They are real economists who deal in real numbers.

Doug

Davos's picture
Davos
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Re: Daily Digest - September 2
Doug wrote:

Greg

Do you happen to know when Walker's clip appeared?  It was apparently several years ago.  He must be spitting nails today.  Two Federal offices I've always respected are his GAO and the CBO (Congressional Budget Office).  They are real economists who deal in real numbers.

Doug

+1 and they have Douglas Elmendorf and Elizabeth Warren - two pretty cool people in my book!

Doug's picture
Doug
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Re: Daily Digest - September 2

Davos

Having spent a fair portion of my life on ships of different kinds, it is a sad thing to see them lying at anchor with nothing to do.  BTW, technically they are not mothballed, just idle.

Doug

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Re: Daily Digest - September 2

Funny thing. A few days back the CNBC crew of Erin Burnett and Mark Haines were holding up a company as a shinning example of a green shoot. It was a company that manufactures Ship/Boat Fenders. Record sales.

I wanted to tell them that that’s what you use when you park a boat/ship. That’s a bad thing.

britinbe's picture
britinbe
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Re: Daily Digest - September 2
Davos wrote:

Hello Greg:

That was a good watch. I had seen something like that years ago when he was in office. I thought 2040, how old will my kids be then?

One crisis sure shortened that.

Watching that cracks me up, the money we paid in was spent. What a joke. Him taking it to an arena outside the bread and circus poiticians, how pathetic. Like the book IOUSA says "Leadership deficit".

Thanks for the watch.

Looks like the road is heading due south as far as asset deflations goes.  Given that vid is ca 18 months old, it stikes me that there can be little likelihood of an up-tick, but one thing that also stikes me is that in the UK, there was a big play by the financial companies for the 50+ home owners to go for an equity release scheme, to make retirement just that little bit more comfortable.  What the chances that these funds are also under water??,

Doug's picture
Doug
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Re: Daily Digest - September 2

farmjohnny

Welcome aboard, so to speak.

Quote:

Funny thing. A few days back the CNBC crew of Erin Burnett and Mark Haines were holding up a company as a shinning example of a green shoot. It was a company that manufactures Ship/Boat Fenders. Record sales.

I wanted to tell them that that’s what you use when you park a boat/ship. That’s a bad thing.

Boy, talk about irony.

Doug

Davos's picture
Davos
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Re: Daily Digest - September 2
Doug wrote:

Davos

Having spent a fair portion of my life on ships of different kinds, it is a sad thing to see them lying at anchor with nothing to do.  BTW, technically they are not mothballed, just idle.

Doug

Hello Doug, my bad, and I paid for my flying lessons when I was a kid working as a mate on a charter boat, I still call lines lines not ropes so I should have caught that. Take care

Farmer Brown's picture
Farmer Brown
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Re: Daily Digest - September 2

A good big-picture insight:

Why Our Economy Is Utterly Screwed

Steve Liesman once again stunned me with his lack of understanding of matters economic today, when he commented that "in all recessions since 1970 at least the original part of it (recovery) has been jobless."

Yes, Steve, but why is any of this a surprise?  What part of this graph isn't instantly obvious to anyone with more than two firing neurons in their head?

That's credit and population growth normed to a base of 1970.  Population went from roughly 205 million to roughly 304 million during that time, a 50% increase.

Outstanding consumer credit went from $128 billion to $2,525 billion, or a 1,973% increase - and this is only consumer credit, ignoring mortgages, financial firm credit, business credit, commercial real estate and of course government debt!

Why are we not seeing "robust" economic growth when we exit recessions?  Why is there no real hiring going on?  Why can we not have a robust economic recovery?  Why are we are replacing good jobs with "McJobs" that pay half as much - or less?  And more importantly, where did all the "so-called prosperity" really come from, especially from 1994 on?

In each and every instance of recession from 1970 onward we have "pulled forward" more and more demand and created fake "prosperity" through the creation of ever moredebt that we have goaded consumers to take on.  By doing so we have crippled the ability of the economy to grow, redirecting as much money as possible to a handful of people and firms (commonly known as "banks" and other "financial companies") instead of directing that effort and money into productive enterprises such as building cars, television sets and similar items.

THIS time though the recession didn't come from "ordinary business conditions"; it instead happened because the credit carrying capacity among both consumers and businesses hit the wall - they could no longer make the debt service payments and started to default. 

It began with "subprime" mortgages but that was nothing other than the first "hiss" of trouble out of the pressure vessel as the structural integrity of the fraud-laced credit system, where "capacity to pay" became a bad joke, had begun to disintegrate.

We pushed the envelope of fraudulent credit creation and the sale of fraudulently-underwritten debt too far - and it blew up in our collective faces!

Rather than admit complicity in the myriad Ponzi-style scams that underlay all of the financial system for more than thirty years (or have it shoved in their face) The Fed and financial "wizards" along with The Bush Administration (who was responsible for and complicit in refusing to fix the fraud during the 00-07 timeframe) chose to try to sweep it under the rug with "yet more liquidity" and "yet more lending."

President Obama and his administration made a critical error after having won in November by refusing to stand up and take these scammers on face-to-face.

He decided to instead continue and even accelerate the scam!

It can't and won't work because the underlying issues have not been resolved and the bogus debt has not been forced out and defaulted - it remains clogging up the system, destroying the ability of the credit-intermediation system to function properly.

Period.

Folks, the facts are impossible to ignore.  We are in this recession because consumer and business borrowing capacity hit the wall.  We have removed almost none of that outstanding credit from the top to today, as this chart shows (which I have printed here an endless number of times!)

We have taken a measly 4.5% off the maximum outstanding credit amount (incidentally reached in January of this year) to date.  4.5%!  That's nothing - it is absolutely insufficient to return the system to normal functioning and restore sound economic growth - we need five times or more that much contraction!

The bad news folks is that we will get that contraction, and if The Government and Fed do not force it to happen "voluntarily" we'll get double that much - as much as a 50% decrease in outstanding credit - coupled with a deflationary credit collapse.

The small crack in the market the last few days is a warning: The fraud-laced game is about up and we are running out of time to do the right thing.

Stop listening to the media idiots - they have not and will not discuss this facet of the crisis because doing so means admitting that their corporate parents are a huge part of how we found ourselves in this mess, along with all the advertising they've stuck in your face for the last 30 years to "go on, buy now, pay later!"

But irrespective of whether CNBC talks about it or not the mathematical reality of credit capacity as it relates to both population and earnings capacity is a mathematical reality.  No amount of magical handwaving will change it, leaving us with only two choices: we either force the bad debt out into the open and default it, thereby shrinkingboth the balance sheets of banks and consumers (at the same time) or we continue to try to "press our bets" and take the risk of a second credit-system dislocation that will be far worse than what we experienced last fall and this spring.

At present we are choosing path #2 - a river that is quickening in pace. 

Does anyone have an idea what that funny roaring noise around the next corner might be?

Ignignokt's picture
Ignignokt
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Re: Daily Digest - September 2

Does anyone have an idea what that funny roaring noise around the next corner might be?

That would be the reality train, don't worry most people put their heads down so they'll be fine!

FireJack's picture
FireJack
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Re: Daily Digest - September 2

So I get the impression the Denninger see the collapse coming this fall. Could we possibly pull through another year with the US government adding anther 12 trillion to the US debt? Seems to me there is one big wave coming but lots of people stil say were years away from anthing major happening.

 

What exactly would happen though? Could the credit market really just seize up? The US dollar blow up overnight? I'm not sure if I should stock up on freeze dried goods (and potaotes/squash) or run for the hills.

JAG's picture
JAG
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Illegal to Short the Markets w/ inverse ETFs?

Re: And So It Begins...

I know the inverse ETFs/Funds don't short the market directly, they use future options, but if this portends a potential banning of short selling in our future, God help us. The shorts are the traders who buy shares in a market decline. If they eliminate the shorts, then how is anybody going to sell anything during a decline? 

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One1776
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Re: Daily Digest - September 2

Great Bailout Site: http://bailout.propublica.org/main/map/index

Maps and charts and more great stuff.

Enjoy!!

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JAG
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Port Traffic Disconnect

I have seen several articles talking about the global drop in port traffic, but I live near a major container port and I see more port traffic than I have ever seen. Everyday I drive the same highway, and in the last couple months, the truck traffic moving containers to and from that port has easily tripled. It s extremely annoying to see big trucks as far as the eye can see clogging up the freeway. 

Just another disconnect between my real life and the blogosphere I guess.

idoctor's picture
idoctor
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Re: Daily Digest - September 2

Peter Schiff Truth Among Lies - Peter Schiff The Movie v 1.0

Gold, currencies, CNBC, & deficts make us rich?

Pete Stark Blows Up Over National Debt (Davos IMHO you will love this one LOLWink!) WOW with leadership & rock solid thinking like this Dow less than 3000 sometime in the near future one would thing????

OK......OK....flush Big Parma’s latest high dollar lobotomizer antidepressant & enjoy the Best Medicine for "free" we all need a good laugh LOL....enjoy.............   Tim Hawkins - The Government Can

 

Newsroom / Sudden Ominous Music Heard Across U.S., Nation Panicking

Davos's picture
Davos
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Re: Daily Digest - September 2
idoctor wrote:

Pete Stark Blows Up Over National Debt (Davos IMHO you will love this one LOLWink!) WOW with leadership & rock solid thinking like this Dow less than 3000 sometime in the near future one would thing????

Thank you iDoctor: I can get going now with only 1/2 a cup of coffee after watching that! The only question I have is: Is the guy corrupt or is he stupid and just believe this? Take care

PS Dow and dollar tanked as a result, I totally agree.

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idoctor
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Re: Daily Digest - September 2

Davos I almost wish it was corruption since there might be some hope of fixing that but stupidity........which is what I believe it is.....THERE IS NO HOPE IMHO!

Davos's picture
Davos
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Re: Daily Digest - September 2
idoctor wrote:

Davos I almost wish it was corruption since there might be some hope of fixing that but stupidity........which is what I believe it is.....THERE IS NO HOPE IMHO!

Rolling on the floor laughing!!! And you are likely correct. So sad that it is funny. Take care

Jeff Borsuk's picture
Jeff Borsuk
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Posts: 150
Re: Daily Digest - September 2

Thanks Farmer Brown!

Jeff

 

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