Daily Digest

Daily Digest - September 28

Monday, September 28, 2009, 9:38 AM
  • Ticker Guy: Post-HR1207 Hearing (Video)
  • David Rosenberg's Special Report (at ZeroHedge)
  • Max Keiser talks to Stacy Herbert about the IMF sales of 403 tons of gold (Video)
  • Is The Fed Hiding Gold Swap Arrangements With Foreign Central Banks?
  • Staycation (Chart on page)
  • Ron Paul on Fed Transparency, We Shouldn't be Afraid of the Truth (Video on page)
  • Niall Ferguson Discusses the G20 (Video, H/T Ernie)
  • Bailout Costs.....to Date
  • G-20 gridlock leaves global financial system at risk (H/T Dogs)
  • $1,900.00 or do Time (Congress excluded)

Economy

Ticker Guy: Post-HR1207 Hearing (Video)

David Rosenberg's Special Report (at ZeroHedge)

While we disagree that Rosenberg has anything to defend against, be it strategy critics or vapid iconoclasts who mimic whatever they overhear during dinner conversations, the report below is a must read for those unacquainted with David Rosenberg's work, who would like to catch up to the key issues that one of the best economists discusses on a day to day basis.

Max Keiser talks to Stacy Herbert about the IMF sales of 403 tons of gold (Video)

Is The Fed Hiding Gold Swap Arrangements With Foreign Central Banks?

There is not one asset that, over the decades and especially since the collapse of the gold standard, has received more claims of manipulation than gold. Yet evidence has always been impossible to come by. Are the interests imposing a gold price ceiling just too strong? If GATA's latest dispatch is correct, then yes, and they reach to the very pinnacle of modern financial oligarchy, represented by none other than the US Federal Reserve. GATA believes that the Fed has implicitly confirmed the existence of gold swap arrangements. As we all recall, the Fed issued nearly half a trillion in foreign CB liquidity swap lines whose primary reason was to make sure that foreign banks which were all massively short the dollar did not collapse, as the dollar skyrocketed into the end of 2008, after the capital markets became paralyzed and the dollar-short trade promptly became unwound. Could gold swaps be a comparable method for the Fed to explicitly permit foreign entities to keep gold prices low?

The other question of whether or not this confirmation needs an depth investigation over potential prior contradictory disclosure is left for the proper authorities. Of course, when it pertain to the Fed, there are no proper authorities. After all, the Fed is accountable to no one.

Staycation (Chart on page)

Ron Paul on Fed Transparency, We Shouldn't be Afraid of the Truth (Video on page)

Niall Ferguson Discusses the G20 (Video, H/T Ernie)

Bailout Costs..... to Date

===========================================================
 --- Amounts (Billions)---
 Limit Current
===========================================================
Total $11,563.65 $3,025.27
-----------------------------------------------------------
 Federal Reserve Total $5,870.65 $1,590.11
 Primary Credit Discount $110.74 $28.51
 Secondary Credit $1.00 $0.58
 Primary dealer and others $147.00 $0.00
 ABCP Liquidity $145.89 $0.08
 AIG Credit $60.00 $38.81
 Commercial Paper program $1,200.00 $42.44
 Maiden Lane (Bear Stearns assets) $29.50 $26.19
 Maiden Lane II (AIG assets) $22.50 $14.66
 Maiden Lane III (AIG assets) $30.00 $20.55
 Term Securities Lending $75.00 $0.00
 Term Auction Facility $375.00 $196.02
 Securities lending overnight $10.42 $9.25
 Term Asset-Backed Loans (TALF) $1,000.00 $41.88
 Currency Swaps/Other Assets $606.00 $59.12
 GSE Debt Purchases $200.00 $129.21
 GSE Mortgage-Backed Securities $1,250.00 $693.60
 Citigroup Bailout Fed Portion $220.40 $0.00
 Bank of America Bailout $87.20 $0.00
 Commitment to Buy Treasuries $300.00 $289.22
-----------------------------------------------------------
FDIC Total $2,477.50 $356.00
 Public-Private Investment (PPIP)$1,000.00 0.00
 Temporary Liquidity Guarantees* $1,400.00 $301.00
 Guaranteeing GE Debt $65.00 $55.00
 Citigroup Bailout, FDIC Share $10.00 $0.00
 Bank of America Bailout, FDIC Share $2.50 $0.00
-----------------------------------------------------------
HUD Total $306.00 $3.25
 Hope for Homeowners (FHA) $300.00 $3.20
 Neighborhood Stabilization (FHA) $6.00 $0.05
-----------------------------------------------------------

G-20 gridlock leaves global financial system at risk (H/T Dogs)

NEW YORK— A year after the panic that brought the world’s financial system to the brink of collapse, the Group of 20 nations will now assume the role of a permanent council on global economic cooperation. But there is still no global regulatory framework to prevent another major market meltdown. As the leaders of the world's top industrialized nations gather in Pittsburgh, that will be another item on the menu while they sip wine and nibble on hors d'oeuvres.

$1,900.00 or do Time (Congress excluded)

Taxation Chief of Staff Tom Barthold confirming the penalty for failing to pay the up to $1,900 fee for not buying health insurance.

Violators could be charged with a misdemeanor and could face up to a year in jail or a $25,000 penalty, Barthold wrote on JCT letterhead. He signed it "Sincerely, Thomas A. Barthold."

10 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4061
Re: Daily Digest - September 28

 Lots of news on the U.S. dollar today:

1) "On Monday, World Bank President Robert Zoellick is expected to deliver a speech where he will question the validity of keeping the dollar in its dominant reserve position, in light of other emerging options around the world.

"The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency. Looking forward, there will increasingly be other options to the dollar," says Zoellick in remarks pre-released by the World Bank."

(More info) NewsZoellick: U.S. Dollar's Reserve Currency Status Not Certain

2) From Money Week "The end may be near for the dollar"

(Error while checking the link, so here's the Google search for the Money Week article)

"When China achieves this objective, then the risk to America's living standards would be sufficiently severe to engender a policy response of grave proportions. David Bloom, Currency Chief of HSBC, recently said that the dollar looked awfully like sterling after the First World War!"

3) Ditch the Dollar?

4) China Starts 6 Billion Yuan Bond Sale in Hong Kong

"The government said this month that the debt sale is designed to help elevate the “international status” of the yuan, after Premier Wen Jiabao said in March that he is worried about the prospects for the dollar as a reserve currency."

5) People's Bank of China will purchase up to 32 billion Special Drawing Rights (SDRs),

(This is from BeijingReview.com "China's National English Weekly" and describes how this purchase can

affect the U.S. dollar and interest rates)

6) Japan might prove dollar's nemesis, not China

 Hong Kong: Chinese policymakers' recent statements on the need for an alternative to the US dollar as a reserve currency have given rise to frenzied speculation that the country might at some stage "drop the bomb" --- that is, sell its massive holdings of US Treasuries.

But David Roche, president of independent research consultancy Independent Strategy, reckons the monetary "nuclear option" might instead be exercised by Japan, where public debt runs at 170% of GDP and a new, "clueless, populist, big-spend" government recently took office.

===================================================================

Other news:

1) Bailouts for smaller banks?

2) Reading seeks to join Farrell, New Castle as distressed city under Pa.’s Act 47 law

3) Danville Bankruptcy? (bottom of page)

4) Furloughs, layoffs may be state's next steps (New York)

5) People On Food Stamps At Record High (Bottom chart)/ Lost at sea (Multiple charts)

6) State Rep. Mike Tryon, R-Crystal Lake, spoke to the board for a few minutes at the opening of Thursday's night's meeting to give trustees an update on the state budget. He said Illinois has a deficit of $9.6 billion and the state's pension program is $72 billion under-funded. The state also has $50 billion in bonded debt liability, Tryon said. He added that federal stimulus money accepted earlier this year came with spending strings attached that will require cash outlays of more than $1 billion per year.

"Even doubling or tripling the income tax will not get us out of this," Tryon said. "We have to reform the spending we are doing."

7) Pumped-up pensions squeeze city (Atlanta)

In the 2002 fiscal year, when Mayor Shirley Franklin took office, the city paid $43 million to its employee pension plans. As of June 30, that cost had more than tripled, to $136 million, according to official City Council pension reports.

As a result, Atlanta has had to shovel tens of millions of dollars more into worker pensions, even as the city’s revenues have declined and officials have laid off hundreds of workers. And residents have paid ever larger chunks of their property taxes to city worker retirement plans.

8) Early retirements strain Social Security system

9) Pension debt waits for New Jersey's next governor (With chart)

10) Everything seems wrong with Sacramento's budget

idoctor's picture
idoctor
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Posts: 1731
Re: Daily Digest - September 28

I can't get the link to come up with Naill Ferguson?

portals's picture
portals
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Posts: 22
Re: Daily Digest - September 28

Davos:

I read your message the other day about you leaving the CM website, and did not get a chance to respond.  I would just like to say that it has been a legitimate priviledge and pleasure to read your posts, and I know you will be sorely missed by everyone who visits this site regularly.

Take care, and good luck in all your future ventures.

Tom

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Ruhh
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Posts: 259
Re: Daily Digest - September 28

South America fighting the international bankster powers

 

South American leaders have backed plans to create a development bank to finance projects in the region.

The Bank of the South aims to be an alternative funding source to the likes of the International Monetary Fund (IMF) and the World Bank.

read more at http://news.bbc.co.uk/2/hi/business/8278228.stm

Things could get really interesting if we see China jump on board.

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Phantom13
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Posts: 2
Re: Daily Digest - September 28

Davos,  I have been following your post for the last six months and have looked forward to them each day. Good luck in your endeavors, maybe you will still "Guest Host" once in a while..Great job...

dcm's picture
dcm
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Posts: 205
Re: Gas, Greyson & the G-20

http://kickingthegasoline.com/financial-justification/the-peak-oil-downside-will-be-steeper-than-the-upside/ 
 
 

"Those readers who have some passing familiarity with the concept of peak oil have no doubt seen a picture of the traditional statistical distribution known as a “bell shaped curve.” These bell shaped curves make sense to people, because in a world with finite resources, what goes up, must come down. These symmetrical bell shaped curves are however lulling us into an attitude of complacency, leading us to believe that we have decades to move off of oil. This is just not so, and this article discusses five serious reasons why this erroneous perception needs to promptly be abandoned. "

 

 

http://www.telegraph.co.uk/finance/comment/liamhalligan/6234947/No-reform-just-a-cosmetic-patch-for-a-discredited-flawed-regime.html 

 

"The G20 has "taken bold and concerted action to forge a new framework for strong, sustainable and balanced growth".

Obama's oratory was typically impressive. The trouble is, it wasn't true. No specific rules on banks' capital reserves were announced at this summit. No leverage caps were agreed. Nothing "bold" was done to lessen systemic dangers or overhaul the global regulatory regime.
Pittsburgh produced nothing more than the usual photo calls and drab theatre"
 
http://www.zerohedge.com/article/werewolf-dollars-clothing
 
Matt Taibbi on Alan Greyson on The Fed (& Goldman)
 
"And, at the end of the day, when dealing with the only force in the world more powerful than the vampire squid, the only weapons available are humor and truth. Expect much more of both in non-mainstream media outlets near you" / 
 
 

 

IceViking's picture
IceViking
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Posts: 15
Re: Daily Digest - September 28-- FDIC broke

The FDIC is clearly out of money,  where they'll get "the money" now ("fly on the wings of love fly baby fly")

 

NEW YORK (MarketWatch) - Federal bank regulators on Tuesday will again tackle the thorny issue of how to fund ongoing responsibility to insured depositors at a backlog of failing banks.

The Federal Deposit Insurance Corp will consider several options at its meeting in an attempt to figure out how to raise enough money to keep depositors to failed institutions whole.

Ninety-five banks have already failed in 2009, up from 25 in 2008 and only 3 in 2007.

And, 50 institutions were closed in the third quarter for a total estimated cost to the FDIC of $14.9 billion, according to researchers at Keefe Bruyette and Woods.

"This compares to the declining Deposit Insurance Fund balance of $10.4 billion as of the second quarter of 2009," Keefe's Washington analyst Brian Gardner said in a report published Monday.

In August, the Federal Deposit Insurance Corp. reported that the number of distressed banks rose to the highest level in 15 years during the second quarter, as its insurance fund continued to shrink. See full story.

Somewhere, the FDIC has to find the money

The FDIC is eyeing three primary ways to fund its shortfall, which include another special assessment on member banks, loans from the banking industry, or accessing its credit line at the Treasury.

"We think that the FDIC board members are actively considering alternatives to another special assessment on banks so as not to further impact already weak banks," Gardner said.

"We think borrowing from Treasury is something that the FDIC wants to avoid. Meanwhile, borrowing from the banks would, in our view, improve the industry's political standing in Washington," he concluded.

However, last Friday FDIC chief Sheila Bair appeared to throw some cold water on that idea, telling an industry panel in New York that "It's a possibility, I assume. I don't see that as a preferred option, but it is something in the statute."

The industry has to cover the losses from bank closures, which are a direct result from the bad banking practices that led to the crisis, in one form or another. "It's about funding mechanism," Bair said Friday at the annual meeting of the Clinton Global Initiative in New York.

Rounding out the regulatory and legislative agenda in Washington this week, the SEC holds round table discussions on Tuesday and Wednesday to address short sale rules, and Gardner told clients that he expects there might be some indication provided about when a modified uptick rule may be finalized.

Gardner suggested too that investors should be prepared for the introduction of legislation restructuring the rules for overdraft fees soon, saying, "Press reports have suggested that Sen. Dodd is looking at the issue and Chairman Barney Frank said at his press conference last week on credit cards that he is working on an overdraft bill."

Greg Morcroft is MarketWatch's financial editor in New York.
http://www.marketwatch.com/story/fdic-me....

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4061
Re: Daily Digest - September 28

Jeff Nielson on subprime 2.0

 

"Meanwhile, sales statistics over the last two months show US "REO" (bank-owned real estate) sales will be less than 2 million units. This adds to the existing glut of 20 million empty homes.

What is worse is that the US housing sector hasn't even gotten to the peak of its mortgage-resets of bad loans from the last bubble. This upcoming spike in resets begins next year and will continue through 2011, before beginning to tail-off in 2012.

To make this upcoming "train-wreck" even worse still, the US's spendthrift baby-boomers are starting to retire, and their retirements are grossly under-funded -- even if the US's pension system can remain solvent.

With real estate comprising 75% of the assets for these financial lemmings, and with these boomers needing to come up with trillions of dollars just to come close to maintaining their standard of living, there is no mystery as to what they will be selling -- year after year after year. "

mono's picture
mono
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Posts: 70
Re: Daily Digest - September 28

Naill Ferguson, what a brilliant interview and what a brilliant mind. I wish one could see this kind of 

in depht, informative display of intelligence on german TV. Enlightening.

 

Davos, thanks for your work, you will be missed over here. My days usually started with a morning coffee and your Daily Digest´s.  All the best to you.

 

ernie's picture
ernie
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Posts: 39
Re: Daily Digest - September 28
idoctor wrote:

I can't get the link to come up with Naill Ferguson?

 

You need windows media player I think, I used VLC as I have a Mac.

Here is the transcript page, try the video link on the right of that.

 

http://www.abc.net.au/lateline/content/2008/s2695950.htm

 

- Ernie.

 

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