Get out now! By Andrew Bary The bubble in Treasuries looks ready to pop, sending prices on government debt sharply lower. But just about every other corner of the bond market beckons. THE BIGGEST INVESTMENT BUBBLE TODAY may involve one of the safest asset classes: U.S. Treasuries. Yields have plunged to some of the lowest levels since the 1940s as investors, fearful of a sustained global economic downturn and potential deflation, have rushed to purchase government-issued debt.
U.S. Treasuries Are the Biggest Bubble of All There is no doubt that the current environment is a deflationary credit contraction in contrast to an inflationary credit expansion. The inflationary credit expansion lasted for at least 60 years and perhaps even as long as 100-600 years. Change is here and change is now. The zenith was reached and a few years ago the deflationary credit contraction began. 2008 was simply the aroma of the appetizers being prepared. Soon we will get our first course of at least a nine course meal. Oh, the anticipation. Those who fail to adapt will see entire fortunes of staggering amounts vaporized. For example, former billionaires Bjorgflur Gudmundsson and Luis Portillio whose net worth in March were $1.1B and $1.2B respectively have current net worths of nothing and $15M respectively. Riches have become extremely slippery.
Bonds in 2009: A Tough Call by John Browne The second half of 2008 will be remembered as the era in which justifiably panicked investors fled the global equity markets and flooded into the bond markets, particularly the U.S. Treasury market. As I write this, the migration largely continues. For those investors and market observers who put a high premium on rationality it seems perverse that so many are accepting the historically low returns offered in the U.S. Treasury market, particularly in the short end, where yields are near zero. At some intra-day prices, yields have even turned negative.
U.S. governors seek $1 trillion federal assistance By Jon Hurdle Governors of five U.S. states urged the federal government to provide $1 trillion in aid to the country's 50 states to help pay for education, welfare and infrastructure as states struggle with steep budget deficits amid a deepening recession. The governors of New York, New Jersey, Massachusetts, Ohio and Wisconsin -- all Democrats -- said the initiative for the two-year aid package was backed by other governors and follows a meeting in December where governors called on President-elect Barack Obama to help them maintain services in the face of slumping revenues.
44 States Face Huge Budget Shortfalls The Center on Budget and Policy Priorities is reporting States Face A Great Fiscal Crisis. At least 44 states faced or are facing shortfalls in their budgets for this and/or next year, and severe fiscal problems are highly likely to continue into the following year as well. Combined budget gaps for the remainder of this fiscal year and state fiscal years 2010 and 2011 are estimated to total more than $350 billion.
Could Gold Be 2009's 'Trade of the Year?' Phew, I think we’re all breathing a collective sigh of relief - 2008 is officially over! Don’t get me wrong, I wish the markets would go up forever and we all could be rich and never have to worry about a thing. Realistically, that just isn’t going to happen. Those of us prepared for what is ahead, however, realize its times like these when genuine opportunity is created. In that spirit, I’d like to reveal the ‘Trade of Year.’ It’s not too often a trade like this comes along, as it’s only created by a truly chaotic market. This trade will capitalize on a small market sector, which is completely out of whack. To top it off, the rare blend of limited downside and unlimited upside will have any investor or trader salivating. In a few moments you’ll see why this truly is the ‘Trade of the Year.’
Banks' 'Catatonic Fear' Means Consumers Don’t Get TARP Relief By James Sterngold As the new owner of $172.5 billion of preferred shares and warrants in 208 U.S. financial institutions, the Treasury Department hasn’t succeeded in thawing frozen credit markets, leaving taxpayers propping up an industry that won’t lend to them. While inter-bank lending rates have fallen since Congress approved the $700 billion Troubled Asset Relief Program on Oct. 3, most bank lending to consumers remains tight and interest rates high. The average credit-card rate was 14.33 percent on Dec. 16, according to IndexCreditCards.com in Cleveland, almost unchanged from 14.41 percent in October 2007.
Dollar Rises to Three-Week High Against Euro on U.S. Stimulus By Ye Xie and Anchalee Worrachate The dollar rose to a three-week high against the euro and advanced versus the yen on speculation President-elect Barack Obama’s fiscal stimulus will help the U.S. economy recover from recession. The greenback also gained versus the Swiss franc and the Danish krone as a transition official said Obama’s package will include hundreds of billions of dollars of tax breaks. The pound appreciated against the euro, dimming the possibility it will slide to parity, on bets the U.K. government will guarantee asset-backed securities to revive bank lending.
Peter Schiff January 2 2009 Bloomberg - Money and Politics
Every Empire Tries It by Larry L. Beane II Every empire tries it: the debasement of the currency in a dishonest and desperate bid to get something for nothing in order to pay for the spiraling costs of empire. Today, we call it Keynesian Economics, and it is still carried out by modern imperators and their senatorial lackeys who use currency debasement as a "hidden tax" to fleece the plebs to pay for imperial expansion and to take care of their friends and patrons. Of course, every empire thinks it will avoid the fates of every other previous empire: "This time, it will be different, it can't happen here." But the reality is that honest money just works better all the way around, for everyone. It is a fact of history and mathematics that no one, not even a mighty imperial government convinced of its own omnipotence, can actually get something for nothing nor create wealth out of thin air. There is no philosopher's stone, and there is no free lunch.
NY Fed begins purchasing mortgage securities Stephen Bernard Federal Reserve Bank of NY begins buying mortgage-backed securities to spur housing market The Federal Reserve Bank of New York said Monday it has begun purchasing mortgage-backed securities in an effort to bolster the battered housing market. The program, initially announced Nov. 25, allows the Fed to spend $500 billion to buy mortgage-backed securities guaranteed by mortgage giants Fannie Mae and Freddie Mac and another $100 billion to directly purchase mortgages held by Fannie, Freddie and the Federal Home Loan Banks. The program is aimed at driving down the price of mortgages and making home loans more available. The New York Fed is overseeing the program for the Federal Reserve. The New York Fed is working with four investment managers -- BlackRock Inc., Goldman Sachs Asset Management, PIMCO and Wellington Management Co. -- to purchase the securities.
Fed Officials Back 'Big Stimulus' to Fight Recession By Scott Lanman and Vivien Lou Chen Federal Reserve officials, after taking the historic step of cutting the benchmark interest rate to as low as zero, are calling for greater government spending to help revive the U.S. economy. San Francisco Fed President Janet Yellen said yesterday at an economics conference in San Francisco that "it’s worth pulling out all the stops" with an economic recovery package. Charles Evans, president of the Chicago Fed, told the same gathering he believes a "big stimulus is appropriate."
Citigroup's Derivatives Reduce Bailout to a Non-Event Responding to a rhetorical “What does a bank do?” question at a Town Hall meeting last November, Citigroup (C) CEO Vikram Pandit explained that “a bank takes deposits and puts them to work by investing and making loans.” But the phenomenal exposure to derivatives on Citigroup’s books has nothing whatsoever to do with either taking deposits or making loans. As of June 30, 2008, the notional value of Citigroup’s derivative contracts exceeded a whopping $37 trillion; the ultimate fate of those contracts far outweighs the positives detailed in the Town Hall presentation.
Congress Is Ready to Push Ahead on Economic Plan The 111th Congress convenes Tuesday, and Democratic leaders intend to quickly put their expanded majorities to work on the economic recovery package promised by President-elect Barack Obama as well as some measures that stalled in the 110th. But the pace on the stimulus bill won’t be quite as fast as once expected. Congressional leaders pulled back on Sunday from their push to have the giant economic bill on Mr. Obama’s desk by the Inauguration Day.
Quick passage of stimulus bill will not be easy for new Congress The 111th U.S. Congress convenes Tuesday, and Democratic leaders intend to quickly put their expanded majorities to work on the economic recovery package promised by President-elect Barack Obama as well as some measures that stalled in the 110th. But the pace on the stimulus bill won't be quite as fast as once expected. Congressional leaders pulled back on Sunday from their push to have the giant economic bill on Obama's desk by the Inauguration Day.
Engines of Recovery Flame Out as Economy Seeks Obama-Fed Rescue By Rich Miller The engines that have lifted the U.S. economy out of every recession since World War II will be of little help this time around. Inventory rebuilding, household spending, home construction and payroll growth -- the forces that powered, to a greater or lesser extent, each recovery since 1945 -- may remain missing for much of 2009. A glut of unsold properties may keep housing depressed, while shriveled savings will discourage consumers. Companies may be reluctant to restock and rehire while their profits are squeezed. "There are no obvious drivers of growth from the private sector," says Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York.
Obama: My Tax Relief Plan Is Not a Political Ploy
Public Works Don't by Jim Davies A financial report I encountered says that "President-elect Barack Obama, who takes office Jan. 20, has said his first priority will be to pass an economic stimulus plan that will invest in public works and create or save 3 million jobs." I don't doubt that it's accurate, and so am horrified. One thing he and his admirers have glossed over is that almost the entire infrastructure of the United States is already a vast, long-running "public works program." If there is a road so full of potholes that the cost of repairing damage to vehicles that use it exceeds the estimated cost of repairing the road (and they now admit there are plenty), that fact is a stunning indictment of the public works program that put the road down in the first place and failed to maintain it ever since. Government has had 100% control of that infrastructure, ever since the market was almost totally excluded from road ownership" some time early in the19th Century.
U.S. commercial property in a downward spiral Vacancy rates in office buildings exceed 10 percent in virtually every major city across the United States and are rising rapidly, a sign of economic distress that could lead to yet another wave of problems for the beleaguered financial sector. With job cuts rampant and businesses retrenching, more empty space is expected from New York to Chicago to Los Angeles in the coming year. Rental income would then decline and property values would slide further. The Urban Land Institute predicts 2009 will be the worst year for the U.S. commercial real estate market "since the wrenching 1991-1992 industry depression."
"Damn the Torpedoes, Full Speed Ahead!" by Tony Allison Destination: Japan or Zimbabwe? The famous quotation above comes from the Battle of Mobile Bay in 1864 during the Civil War. Union Admiral David Farragut needed to capture Mobile Bay and Fort Morgan, but was facing a bay strewn with mines (called "torpedo fields" back then) that had already taken down the USS Tecumseh with all 94 men going down with the ship. Coming under fire from both the Confederate fleet and Fort Morgan, Farragut had to decide between retreat or taking on the minefield. Farragut issued his now historic order, eluded the minefield and emerged victorious.
Gerald Celente America like Zimbabwe Total Collapse pt 1/2
Gerald Celente America like Zimbabwe Total Collapse pt 2/2
Obama Is Bush III by Kevin R. C. Gutzman The 2003 invasion of Iraq was sold to the public at the time as being justified in part by Iraqi dictator Saddam Hussein's possession of weapons of mass destruction and his harboring of al Qaeda terrorists. In the wake of the Bush Administration's 2003 invasion of Iraq, word leaked out that several prominent figures around Bush long had wanted to invade Iraq; for them, 9/11 was the perfect cover, and the WMD and al Qaeda arguments mere window dressing. By the time the world knew the justifications were false, Iraq had been conquered and Saddam had been removed. President-elect Barack Obama now says that he is going to reverse the current course of the US economy. This contraction, largely the result of the popping of the Fed-induced housing bubble, would come to a natural end in a matter of months anyway. That's how the market works: if there is a government-induced binge, the fever breaks and the patient can return to health.
Debunking the Gold Bears Main Argument by Boris Sobolev Gold bears tirelessly repeat that deflationary periods are characterized by heightened demand for cash. For the United States, this means a strong US dollar. Since the USD and gold are inversely correlated, the bears conclude that the gold bull market is over given that we have entered into a severe deflationary period. This may seem like a strong argument but it does not withstand a more detailed analysis. Although the inverse relationship between the US dollar and gold is true most of the time, there have been extended periods when both gold and USD appreciated in value. We only have to go back a few years to see a positive relationship between the two. Believe it or not, even in 2008, gold gained 5.8%, while the US Dollar Index gained 7.5%.
Strategic Reality 101 by J. R. Nyquist The year 2009 will mark the end of failed policies and false assumptions. In all probability, there will be new policies based on new false assumptions. Washington will be forced to rethink the country's priorities: New assessments will appear as Barack Obama enters office; American troops will be pulled out of Iraq; the U.S. Congress will allow the nation's nuclear arsenal to sink into disrepair; government programs will be cut as the economic crisis worsens; millions will be thrown out of work; bankruptcies will occur on all sides. Some will say that capitalism has failed and socialism is the only alternative. In South America, Asia and Africa a new anti-American bloc will rise against capitalism.
US will emerge as undisputed top dog in 2009 Interest rates near zero across the G10 bloc will prevent a replay of the Great Depression, but they will not pull us quickly out of the doldrums, writes Ambrose Evans-Pritchard. Central banks will do whatever it takes to combat debt deflation. Even Frankfurt will join the rush to print money, buying every form of debt from mortgages to corporate bonds. The Fed will follow the Bank of Japan in propping up stock markets. Puritans will grumble, but the surprise will be how it long takes for this stimulus to gain traction. We will learn the term "pushing on a string". Western societies will feel the first shivers of raw fear as people twig that the authorities are not in control. Iceland's winter will set an awful example. Job losses will reach 1m a month in the US at the point of peak pain. Economists know this is a late-cycle effect - darkest before dawn - but the public will see it otherwise. This will be the phase that shakes society. The geopolitical landscape will look different. Cohesive states with a rule of law and old democracies - the Anglosphere, Holland, France, Scandies - will muddle through. They will start to enjoy a political premium in investor psychology, despite horrendous debts. Obama's America will shine. The country will reemerge as undisputed top dog, the only one with real demographic, scientific, and strategic depth. As first into the crisis, it will be the first to hit bottom. Those expecting the dollar to collapse will have to wait.
Obama pushes Congress on recovery plan By Brian Knowlton, Peter Baker and Carl Hulse President-elect Barack Obama met Monday with congressional leaders and his economic team as he worked to advance an economic recovery program that advisers say will include $300 billion in tax cuts meant partly to win over skeptics who said the plan focused too heavily on government spending. "The people's business can't wait," Obama said after meeting with the House speaker, Nancy Pelosi, who in turn vowed to work with the new administration with "great civility, great fiscal discipline." Obama, adding a note of urgency, said that he was expecting a "sobering" jobs report this week.
Obama & congress to talk stimulus
Obama plunges into econ talks, predicts approval Obama plunges into econ crisis talks at Capitol; big tax cuts could win approval by Feb. President-elect Barack Obama plunged into rare pre-inaugural crisis talks with congressional leaders Monday, declaring the national economy was "bad and getting worse" and embracing tax cuts now expected to reach $300 billion. He predicted lawmakers would approve a mammoth revitalization package within two weeks of his taking office. If the two-year plan is enacted, workers would see larger paychecks almost immediately because taxes withheld by the government would drop. The break would be retroactive to Jan. 1, and couples receiving a $1,000 tax cut would begin receiving an extra $40 in twice-monthly paychecks as the government tries to spark more consumer spending.
A setback for Obama's plans By Jim Lobe Israel's massive week-long aerial assault on Gaza and subsequent ground invasion are likely to complicate president-elect Barack Obama's hopes of aggressively pursuing Israeli-Palestinian peace negotiations, and risk inflicting greater damage to Washington's standing in the Arab world, according to most analysts in Washington. Indeed, if the current campaign goes on much longer, Obama could face a major international crisis - comparable to Israel's failed 2006 war against Lebanon's Hezbollah - just as he takes office on January 20. "With this assault, the fallout has already started to spread considerably beyond the constituency of people who are Palestinians," noted Helena Cobban, a veteran Middle East analyst who cited popular protests in Egypt, Jordan and elsewhere in the Arab world on her blog, justworldnews.org.
Obama is losing a battle he doesn't know he's in The president-elect's silence on the Gaza crisis is undermining his reputation in the Middle East Barack Obama's chances of making a fresh start in US relations with the Muslim world, and the Middle East in particular, appear to diminish with each new wave of Israeli attacks on Palestinian targets in Gaza. That seems hardly fair, given the president-elect does not take office until January 20. But foreign wars don't wait for Washington inaugurations. Obama has remained wholly silent during the Gaza crisis. His aides say he is following established protocol that the US has only one president at a time. Hillary Clinton, his designated secretary of state, and Joe Biden, the vice-president-elect and foreign policy expert, have also been uncharacteristically taciturn on the subject.
Keynes offers us the best way to think about the financial crisis By Martin Wolf We are all Keynesians now. When Barack Obama takes office he will propose a gigantic fiscal stimulus package. Such packages are being offered by many other governments. Even Germany is being dragged, kicking and screaming, into this race. The ghost of John Maynard Keynes, the father of macroeconomics, has returned to haunt us. With it has come that of his most interesting disciple, Hyman Minsky. We all now know of the "Minsky moment" - the point at which a financial mania turns into panic. Like all prophets, Keynes offered ambiguous lessons to his followers. Few still believe in the fiscal fine-tuning that his disciples propounded in the decades after the second world war. But nobody believes in the monetary targeting proposed by his celebrated intellectual adversary, Milton Friedman, either. Now, 62 years after Keynes' death, in another era of financial crisis and threatened economic slump, it is easier for us to understand what remains relevant in his teaching.
Follow the money - Bernie Madoff
Bernie Madoff 'mailing valuable jewellery to family' from house arrest Bernard Madoff, the Wall Street fund manager accused of a $50billion (£34m) fraud, should be jailed immediately for mailing "very valuable" jewellery to his relatives while under house arrest, US prosecutors have argued. Mr Madoff will remain on bail while a judge considers whether he has violated the terms of an asset-freeze order by sending away five items worth an estimated $1million. As the former investor appeared in court, Democrat and Republican representatives on the capital markets committee grilled regulators from the Securities and Exchange Commission (SEC), investors and other witnesses in an attempt to get to the bottom of how the alleged fraud was allowed to continue for more than a decade. The committee chairman, Paul Kanjorski, a Democrat, said SEC investigators should have spotted Bernard Madoff's alleged fraud earlier given the "red flags" raised with the authorities.
Judge urged to put Madoff in jail By Joanna Chung and Alan Rappeport in New York and Andrew Ward in Washington US prosecutors asked a federal judge on Monday to jail Bernard Madoff pending his trial, saying he violated a court order by transferring more than $1m of valuables from his Manhattan apartment. Mr Madoff and his wife made four or five transfers of jewellery, watches and cufflinks to third parties including his brother and son, a court was told by Marc Litt, an assistant US attorney.
UNINTENDED CONSEQUENCES 20th CENTURY & BEYOND by James Quinn "The law of unintended consequences is what happens when a simple system tries to regulate a complex system. The political system is simple. It operates with limited information (rational ignorance), short time horizons, low feedback, and poor and misaligned incentives. Society in contrast is a complex, evolving, high-feedback, incentive-driven system. When a simple system tries to regulate a complex system you often get unintended consequences." Andrew Gelman
Andrew Gelman is dead on. He states that the political system is simple. I'd go a step further and say that lifetime politicians and entrenched government bureaucrats are simple. They show no indication of knowledge or expertise in American history or rational financial theory. The President, Congress, Federal Reserve, and Treasury try mightily to direct our economy. It is an impossible task. With a GDP of $14 trillion, there are thousands of inputs and outputs that feed the system. Their hubris leads them to believe that they are in control and can manipulate the gears of capitalism in a way that will produce their desired outcomes. If a desired outcome occurs, it is simply due to dumb luck. The more likely result of their manipulations of our complex system is a set of bigger problems that never occurred to them.
Exposing the Federal Reserve G. Edward Griffin We'll start way back in history to give some kind of historical perspective to this; we'll go back to the first century BC and the tiny kingdom of Phrygia. There was a philosopher by the name of Epictetus and it was Epictetus who said: "Appearances are of four kinds: things either are as they appear to be; or they neither are nor appear to be; or they are but do not appear to be; or they are not and yet appear to be." When I read that statement for the first time, I had a big chuckle over it and I thought for sure that if Epictetus were alive today he would probably be a Harvard professor of money and banking; it sounds like so many explanations that I have read about various aspects of the Federal Reserve System. What he did was he took a fairly simple concept but by the time that he was through explaining it, we didn't have any idea what he was talking about. All Epictetus said was that appearances can sometimes be deceiving. That's all he said but by the time he was through explaining the four different ways in which they can be deceiving, we were left back at the switch somewhere.
Ignoring the Oracles: You Are With the Free Markets, or Against Them It's hard to tell what's more striking about Raghuram Rajan's 2005 presentation at the Kansas City Fed's Jackson Hole symposium - the way many of the dangers he laid out came to pass, or the way he was attacked, and then discounted. Mr. Rajan came to the conference, dedicated to soon-to-retire Fed Chairman Alan Greenspan, with strong bona fides as a pro market advocate. He and University Chicago colleague Luigi Zingales wrote a 2003 book, "Saving Capitalism from the Capitalists," that argued at length that free-market capitalism is the best way to organize an economy, and that free financial markets - through their ability to direct funds to where the economy needs them most - are crucial to the system's success. But when he suggested at Jackson Hole that markets could get it badly wrong sometimes, and that central banks should consider responding to that, he was lambasted as nostalgic for the old days of highly regulated banking.
The Ponzi Scheme in Every Hedge Fund By Ari J. Officer Bernard Madoff's $50 billion Ponzi scheme continues to rock the financial world. But most hedge funds actually engage in similar - albeit legal - practices in the short run. In the past, these practices helped inflate their gains as well as hedge-fund managers' salaries and bonuses, but recently they helped bring about the failure of many major hedge funds. At the heart of the difference is the distinction between realized and unrealized gains. Gains are realized when assets are liquidated to cash. For instance, if you buy a stock for $100 and it is currently trading at $200, you have made $100 in unrealized gains. If you sell it at $200, you have made $100 in realized gains. Most hedge funds do not regularly liquidate their entire portfolio, so they report unrealized gains to their investors and to the public.
Savers facing accounts with no interest By Edmund Conway and Myra Butterwort Millions of savers are braced for zero per cent accounts within days as the Bank of England is poised to cut interest rates to the lowest level in its 315-year history. Experts have warned the return on savings could plumb new depths with the Bank expected to take unprecedented steps to regain control over the economy. They widely believe the Bank will reduce borrowing costs to below their 2 per cent level - and possibly all the way down to 1 per cent - in its first meeting of the year next week. More than 7 million people have saving accounts which already pay interest of 1 per cent or less. If a cut is passed on in full by banks, these accounts will dive towards negative territory for the first time on record. Many elderly people who rely on the income from savings have found themselves struggling in recent months as returns fall.
Why did Richardson withdraw?
Panetta Is Surprise Pick to Run the CIA - $$ By Siobhan Gorman In a surprise move, President-elect Barack Obama picked Leon Panetta, a former congressman and chief of staff to President Bill Clinton, to be the next director of the Central Intelligence Agency, according to Democratic officials. The unusual pick shows that Mr. Obama is seeking a government veteran with managerial and political savvy to run the agency responsible for some of the most controversial U.S. antiterrorism programs -- some of which Messrs. Obama and Panetta have openly opposed.
Whitman starts race for California governor By Matthew Garrahanin Meg Whitman fired the starting gun on the race to succeed Arnold Schwarzenegger as California governor on Monday when the former chief executive of eBay abruptly resigned from the boards of three companies. Ms Whitman, who continues to own a 2 per cent stake in eBay, the internet auction site, worked on John McCain's presidential campaign and has privately expressed interest in running for California governor in 2010 as the Republican candidate. Her resignation on Monday from the boards of eBay, Procter & Gamble and DreamWorks Animation is the clearest signal yet that she is considering a run for the post.
U.S. Auto Sales Fell 36% in December By Kendra Marr Declines Expected To Continue in '09 The auto industry capped off 2008 with its worst sales in 16 years as Americans continued to steer clear of dealerships in December, according to sales figures released yesterday. Industry-wide, automakers sold 896,124 new cars, minivans and trucks in December, a drop of 36percent compared with December 2007, according to preliminary data released yesterday by the industry research firm Autodata. Sales at General Motors, Toyota, Ford, Chrysler and Honda -- the U.S. auto market's five largest manufacturers -- all fell sharply in a month when recession fears grew and domestic automakers sought help from Congress to avoid financial collapse. GM said sales were down 31 percent. Ford's sales plummeted 32 percent, Toyota's fell 37 percent, and Chrysler's sales dropped 53 percent. Honda's sales slid about 35 percent in December.
Home ownership goals created house of cards By Emmet Pierce Lender guidelines were 'obliterated' in buying frenzy Government long has promoted home ownership as a means of strengthening communities and building the wealth of its citizens, but the recent housing market collapse has some analysts wondering whether consumers have gotten too much of a good thing. While federal policies helped tens of thousands of U.S. consumers achieve home ownership during the housing boom, they also opened the door to the widespread use of risky loans, a national credit crunch and a wave of foreclosures. "Public policy has been used to promote home ownership since the wake of the Great Depression," said Mark Zandi, chief economist at Moody's Economy.com. "These efforts were overdone this decade during the housing boom and bubble." In 2005, the year the San Diego County real estate boom peaked, the home ownership rate in the county was 58.2 percent, according to the U.S. Census Bureau's American Community Survey. By 2007, the rate in the county had fallen to 55.9 percent. That marked a loss of nearly 22,000 owner-occupied residences.
[Some of you guys may not appreciate this next story, but your wives surely will!]
After 250 years, Waterford Wedgwood falls into administration Waterford Wedgwood, the 250-year-old maker of luxury glassware and china, fell in administration today, putting 2,700 jobs in the UK and Ireland at risk. The loss-making company, whose brands include Waterford crystal, Wedgwood and Royal Doulton fine bone china, Rosenthal porcelain and Spring premium cookware, ran out of time in its attempt to raise fresh capital. Politicians on both sides of the Irish Sea warned that the collapse of the company had severe implications for communities where china and glass have been manufactured for generations. The mayor of Waterford said it would be a "national disaster" for Ireland if production at the crystal factory ceased.
Japanese Asset Bubble: Lessons from the Economic Asset Bubble of Japan, The Heisei Boom. What parallels exist between the Japanese asset bubble and our current financial environment? It is hard to believe that we have learned so little from previous asset bubbles. Many of our policymakers have turned a blind eye to the Great Depression, euphorically thinking that somehow all variables of risk had been eliminated from the system. It would be one thing to acknowledge our current predicament and at least try something different from the past to combat the current financial demons we are facing. Instead, we are using policy moves from the past that had little impact in resolving financial problems.
Asia needs to fully wake up to the scale of the West's economic crisis By Ambrose Evans-Pritchard Asia is not going to rescue the world economy. The news from Japan, China, and the Pacific tigers has moved from awful to calamitous since the global industrial system snapped in October. A raw reality is being laid bare. The mercantilist export model of the East is proving dangerously geared to the debt-driven excesses of the West. As we go down, they go down too. Some are going down even harder. Japan's industrial output contracted by 16.2pc in November, year-on-year. "For an economy which lives from the prowess of its industrial exports, this is simply earthquake," said Edward Hugh from Japan Economy Watch. Japanese exports fell 26.7pc. Real wages fell by 3.1pc, the seventh monthly fall. Taken together, the figures are worse than anything during Japan's "Lost Decade". They have a ring of 1931.
In China, Bush nostalgia By Kent Ewing HONG KONG - Bush-bashing - that thriving international industry which over the past eight years has crossed borders, cultures, races and the economic divide - will lose most of its sporting appeal when US President George W Bush hands over to his successor, Barack Obama, on January 20. There will no doubt follow another global wave of celebration and surge of hope as America's first African-American president, who has promised to restore the country's tattered image abroad at the same time that he fixes the economic mess he has inherited from the Bush team, takes the helm in a much-anticipated inaugural address.
Israel vows no let-up over Gaza Israeli Defence Minister Ehud Barak says Palestinian militant group Hamas has suffered a "hard blow", but insists the offensive in Gaza will continue. "We still haven't reached our objectives," Mr Barak told Israeli MPs. Israel said its forces had carried out ground, air and sea attacks across Gaza. Palestinian sources said a family of seven was among those killed. A top Hamas leader in the Gaza Strip, Mahmoud Zahhar, said the Islamists were heading for "victory" against Israel. Intense diplomatic efforts are under way to try to secure a ceasefire in Gaza, with separate missions to the Middle East being led by the French president, and a high-level EU team. But Israeli Foreign Minister Tzipi Livni, after meeting EU diplomats, rejected calls for an immediate truce.
Gaza conflict: Mid-East reaction BBC reporters look at reaction in the Arab world to events in Gaza, where, after a week of airstrikes, Israeli ground forces are battling Hamas militants. JIM MUIR, BEIRUT, LEBANON MAGDI ABDELHADI, CAIRO, EGYPT LINA SINJAB, DAMASCUS, SYRIA
Israel's self-defeating Gaza offensive By Gideon Rachman By sending ground troops into the Gaza Strip, Israel has crossed a line that brings it perilously close to strategic failure. Just as with the Lebanon war of 2006, an air bombardment has failed to stop rocket fire into Israel - and has been followed by a ground invasion. The Israeli government says it has learnt the lessons of its stalemated war with Hizbollah, the Lebanese militia. Gaza is more hospitable terrain than southern Lebanon; Hamas is militarily weaker than Hizbollah; Israel is better prepared and is using new tactics. Maybe so. But what are Israel's strategic needs? The first is the protection of Israeli citizens; the second is the re-establishment of Israel's deterrent power; the third is the preservation of international support; and the fourth some prospect of durable peace. Each one of these objectives is now in peril.
Israel must prepare to turn its military might from Gaza to Iran By Amir Oren Brig. Gen. Sami Turjeman is commander of the 36th Division in the Golan Heights, and is one of the most outstanding officers of his rank in the Israel Defense Forces. He is expected to be promoted this year to the rank of major general. Turjeman was head of the operations division at the General Staff during the tempestuous years of 2006 and 2007 - when the IDF embarked simultaneously on operations in both Lebanon and in the Gaza Strip, in the wake of the abduction of Gilad Shalit, and then attacked the North Korean nuclear reactor in Syria.
Attacks on Gaza doomed, expert believes By Ferry Biedermann in Beirut Israel's attempt to force the Palestinian group Hamas to comply with a ceasefire on its terms through its offensive against the Gaza Strip is doomed to fail, an international expert on the region predicts. The attacks on Gaza would leave Hamas in place, said Alastair Crooke. "It is nothing tangible that you can knock down, it is not a building," he explained. Israel was also repeating some of the mistakes it made during the 2006 war against Hizbollah, Mr Crooke argued in an interview with the Financial Times. The country's leadership was divided on the course of action and had no clear view of the endgame, he said.
For Israel, a chance to attack in Bush's final days By Scott Shane In recent days, as European Union and UN officials have called urgently for a cease-fire in the Gaza Strip, the Bush administration has squarely blamed the rocket attacks of the Palestinian militant group Hamas for Israel's assault, maintaining to the end its eight-year record of stalwart support for Israel. President George W. Bush said in his weekly radio address over the weekend that the United States did not want a "one-way cease-fire" that allowed Hamas to keep up its rocket fire, and Vice President Dick Cheney echoed the point, declaring that only a "sustainable, durable" peace would be acceptable.
Bringing the Arab-Israeli War Home by Michael Scheuer If America were blessed with a noninterventionist foreign policy, we could all thank Israeli Prime Minister Ehud Olmert for giving President-elect Barack Obama a thoroughgoing lesson in the absolute irrelevancy of Israel and Palestine to the national interests of the United States. More than a week into Israel's invasion of Gaza, America is still alive and kicking and none of our citizens are dead, which is the way it should be, as this is their religious war and not ours. If stubborn noninterventionism were our creed – as the Founders intended – the Gaza war could continue for two more days or two more months and we could simply shrug and mutter "Who cares?" America could simply go on its way, rebuilding its economy and marveling over the madness of two religions fighting to the death over a barren sandpit at the eastern end of the Mediterranean. Unfortunately, America today is run by a political and media elite that is addicted to intervention. This would be bad enough if these men and women had the brains to intervene and produce a result that benefits U.S. interests, but they are not.
Mideast, Russia issues send oil above $47 Dirk Lammers Oil climbs as market rallies on Israel-Gaza fighting and Russia-Ukraine gas dispute Israel's ground offensive in Gaza and a dispute between Ukraine and Russia over gas imports pushed oil prices above $47 a barrel Monday, but some analysts say there's more than just unrest in the Middle East behind the rally. Light, sweet crude for February delivery rose 92 cents to $47.26 a barrel on the New York Mercantile Exchange, after jumping $1.74 on Friday to settle at $46.34.
EU tries to defuse Ukraine-Russia gas dispute The European Union on Monday scheduled talks with Russia to press for a speedy resolution of a dispute with Ukraine that has reduced gas supplies to eastern and southern Europe. The Russian gas monopoly Gazprom cut off gas supplies to Ukraine on Jan. 1 in a dispute over debts and pricing that shows no sign of ending, worrying European consumers that depend on Russia for a quarter of their natural gas.
Online video viewing jumps 34 percent Americans appear to be getting more comfortable watching videos online--and Google is the clear winner. Internet users in the U.S. watched 12.7 billion online videos in November, an increase of 34 percent versus a year ago, according to numbers released Monday by market researcher ComScore. Thanks to YouTube, Google Sites retained the crown as the top U.S. video property with nearly 5.1 billion videos viewed--or about 40 percent of all videos viewed online--with the video-sharing site accounting for more than 98 percent of Google's traffic. Fox Interactive Media was a distant second with 439 million videos watched (or 3.5 percent), followed by Viacom Digital with 325 million videos watched (2.6 percent).
This is too funny!! . . . . Uncle Jay Explains: Year-end! 12-22-08
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