Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 01.26.2009
Bad news: we're back to 1931. Good news: it's not 1933 yet Barack Obama inherits an economy already contracting at an annual rate of 6%, much like the mid-Depression year of 1931 (-6.4%) This may beat Germany (-7%) Japan (-12% and Korea (-22%) over the fourth quarter. But that merely underlines the dangers ahead as the collapse of global trade chokes the mini-boom in US exports, setting off another stage of the crisis. The US is losing 500,000 jobs a month. Brazil lost 650,000 in December. Beijing says 10m Chinese have lost their jobs since the crunch began. Japan's exports fell 35pc last month, year-on-year. The central bank is printing money furiously, buying bonds to prevent a relapse into deflation. So yes, it is like early 1931. Citigroup and Bank of America have more or less disintegrated. JP Morgan's health is failing fast. General Motors and Chrysler survive only on life-support from the US taxpayer.
GOLD - VOLATILITY 2009 Already into 2009 we are experiencing trend-threatening moves in various markets. Should we believe that the markets are directionless? Can we rely on the charts to give us direction? What of the fundamentals of markets are they reliable guides? Most important of all, are investors capable of responding to the directions given by fundamental and technical indicators? Are these ridiculous questions? They would have been a couple of years ago, but now need to be considered carefully.
Gold inches down after rally, hovers below $900 Gold inched down to hover below $900, pausing from a rally late last week, when it rose 5 percent on strong investment demand. -- By 0042 GMT, spot gold was down close to 1 percent at $889.65 an ounce against New York's notional close of $898.10. -- On Friday, the precious metal reached record highs in both sterling and euro terms, signaling bullion's strength against not only the U.S. dollar but currencies across the board. -- COMEX gold futures slipped in Asia to $890.50 compared to $895.80, its settlement on Friday on the COMEX division of the New York Mercantile Exchange.
Gold Will Shine in 2009 (Part II) Get ready for the "economic pipes" to be unclogged and for a tidal wave of inflation to head our way! I assure you that Obama's economic advisors will be the "drain-o" that gets the pipes unclogged. When this happens, the Fed knows that it will have to "mop up" this excessive liquidity in the financial system. However, here's what I predict will happen: The Fed, while it wants to be a forecaster of the economy really just ends up becoming a "responder" after the fact to what's going on in the economy. Therefore, between the time that the Fed starts to see the inflationary signs in the economy and starts the process of draining the excess liquidity from the economy, it will be too late. The hyper inflationary effects will already be in play. They will be "late to the ball game" yet again. When all of this starts to happen (and possibly a bit beforehand), savvy gold investors will sense it coming and will buy up gold ahead of time…positioning themselves like a surfer that gets out ahead of the coming wave that will propel him forward.
Peter Schiff 1/23/09 - CNBC Gold Rally on concerns of a banking collapse
Coconuts and Gold The GGG performance for December was +22.1%, The S&P 500: +1.6%. Gold is currently $853. A survey of government bond dealers and other market analysts report that in 2009 a U.S. government deficit of $2 trillion is expected. This number is beyond anything ever seen before. One would think that the stock market would collapse on this dismal economic news. When one thinks about it, all the money that will be borrowed or printed and then spent by the government will generally end up in the hands of corporations. Bailout money given to people is spent on Budweisers, Marlboros, Big Macs, toothpaste, etc. Bailout money sent to Wall Street and banks eventually is lent to someone and then spent on something. Therefore a $2 trillion borrowing binge by the government as well as the creation of even more money by the Federal Reserve which could total another trillion dollars means increased revenues and profits for corporations. This eventually will be bullish for stocks. However, it is also the road to economic ruin.
U.S. Mint Actions Discourage Gold Ownership Over the past several months, the United States Mint has announced a series of actions and policy changes that make it more difficult for the average individual to buy gold. There have always been plausible or semi-plausible explanations, but the consequence of each action has been to limit or discourage gold ownership.
GOING LONG Finding Elusive Gold in This Market At this writing, gold is still 15% off its peak, at least in U.S. dollars. Yet at the same time, the metal is cruising at or near all-time highs against a host of other currencies, including the Swiss franc, British pound, Canadian dollar, Australian dollar, and Indian rupee. That currency disparity means buyers around the world are prepared to pay much more for gold, relative to their own currencies, than is reflected in the New York spot market, which prices gold in dollars.
Is America Broke Part 3 A Solution for the Financial Crisis This is the third and final paper in the Is America Broke series. In the first two articles, several of the contributing factors to today's financial crisis were discussed. Several important questions were asked: Why is the most advanced economy in the world buckling at the knees, acting like a punch weary fighter? How did the largest creditor nation on earth become the largest debtor nation? Are soaring debt levels consummate with wealth creation or a diminishing standard of living?
The World Won't Buy Unlimited U.S. Debt $$ We're asking others to sacrifice for our 'stimulus.' Barack Obama has spoken often of sacrifice. And as recently as a week ago, he said that to stave off the deepening recession Americans should be prepared to face "trillion dollar deficits for years to come." But apart from a stirring call for volunteerism in his inaugural address, the only specific sacrifices the president has outlined thus far include lower taxes, millions of federally funded jobs, expanded corporate bailouts, and direct stimulus checks to consumers. Could this be described as sacrificial? What he might have said was that the nations funding the majority of America's public debt -- most notably the Chinese, Japanese and the Saudis -- need to be prepared to sacrifice. They have to fund America's annual trillion-dollar deficits for the foreseeable future. These creditor nations, who already own trillions of dollars of U.S. government debt, are the only entities capable of underwriting the spending that Mr. Obama envisions and that U.S. citizens demand.
Peter Schiff: Oh, he saw it coming 'Dr. Doom' became a star by predicting last year's market meltdown. And now his 2009 forecast is even scarier. A couple of years ago, when Peter Schiff first began appearing regularly on TV to warn of an impending real estate collapse that would crash the U.S. economy and stock market, he was surprised and disappointed to find that he was rarely, if ever, approached by strangers in restaurants. "I'd walk down the streets of New York and figure, 'Gee, you know, I'm on CNBC, CNN,'" says the brash 45-year-old president of brokerage Euro Pacific Capital. "But nobody ever recognized me."
SILVER AND THE CHINESE Bloomberg put out some interesting news regarding the silver market stating that refined silver output in China has peaked and it could stop growing because less will be produced as a result of halting of mine expansions, higher costs for production and lower prices received for the metal itself. . . . . In July China revoked the export rebates on silver to control use of limited natural resources. This will force China to rely on imports to fill the needs for the precious metal. "China has the world's biggest potential for silver consumption,'' said Li Xiaoni, vice president of China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters.
Real Silver Availability Much has been written about the actual amount of physical silver that exists in world above ground inventories. Due to decades of industrial consumption depleting world inventories, there is remarkably little silver remaining. I have estimated perhaps one billion ounces of silver bullion equivalent exists at anywhere near current prices, and my estimates are much higher than most published estimates. Considering that the cumulative world mine production through the ages has been roughly 40 billion ounces, that means only 2.5% of that total production remains in bullion equivalent form. That's shocking. This is one of the key reasons for buying silver, namely, there isn't much left.
Geithner Warning on Yuan May Renew U.S.-China Tension Timothy Geithner’s warning that President Barack Obama believes China is “manipulating” its currency may trigger renewed tensions between two of the world’s three biggest economies. Geithner, Obama’s nominee for Treasury secretary, also told senators the administration will press China to “adopt a more aggressive stimulus package” to boost its domestic economy. The remarks on manipulation were a shift from President George W. Bush’s team, which stopped short of using the term in criticizing China’s exchange-rate management.
Geithner blows up the world Geithner's comment today that President Obama believes that China is 'manipulating the yuan' takes us straight into Great Depression territory. With Paul Volcker at his side, I had hoped that Obama would be perspicacious enough not to touch the third rail of global economics, namely protectionism. Nothing, absolutely nothing that Obama might have done could be worse than this. If the US looks at the global jobs market as a zero-sum game in which the US has to claw back manufacturing jobs which China has taken away, we are back to beggar-thy-neighbor and the 1930s.
Ron Paul "Tim Geithner Was A Part Of The Problem" 1/21/2009
US says China ‘manipulating’ the renminbi Tim Geithner, President Barack Obama’s choice for Treasury secretary, on Thursday accused China of “manipulating” its currency and pledged “aggressive” diplomatic action to drive Beijing into action. The comment – a politically loaded term likely to raise tensions with Beijing – marked the Obama administration’s first public intervention in what will be one of its most critical international economic relationships. The US has long felt that China has artificially depressed the value of its currency to boost exports – to the detriment of US business – but the Bush administration always stopped short of formally declaring China a currency manipulator. In a written response to questions from senators, Mr Geithner, whose nomination was supported on Thursday by a clear majority of the Senate’s finance committee, said: “President Obama – backed by the conclusions of a broad range of economists – believes that China is manipulating its currency.” Mr Obama would “use aggressively all the diplomatic avenues open to him to seek change in China’s currency practices”, he said.
IMF in discord over renminbi The International Monetary Fund is caught in a stand-off between members over whether to label China’s currency as “fundamentally misaligned”, a politically explosive move that could stoke global tension over economic imbalances. The issue is so controversial the IMF’s executive board has not discussed the Chinese economy since 2006, in spite of rules saying it should regularly assess member economies. The decision touches directly on one of the most divisive issues among governments worldwide: the extent to which huge current account deficits and surpluses and artificially managed exchange rates have contributed to the financial crisis. Washington has long pressed Beijing to let the renminbi rise.
Euro, Pound Fall on Speculation Economic Woes Will Be Prolonged The euro declined for a third day versus the dollar on speculation business sentiment in Germany slumped as credit losses spread through Europe, fueling expectations the European Central Bank will lower interest rates. The British pound approached a 23-year low versus the greenback on speculation the Bank of England will cut interest rates to zero. The yen advanced toward a seven-year high versus the euro before U.S. data that may show home sales fell and the world's largest economy contracted the most since 1982, spurring demand for Japan's currency as a haven.
US Treasury Department Official Allegedly Aided and Abetted Banking Fraud (Again) Darrell Dochow earns $230,000 per year at Treasury in banking regulation. He reportedly gave Indymac some suggestions on cooking their books, and then allowed the exception to the rules to accomplish it. It appears to have been a blatant and obvious accounting fraud. Mr. Dochow is also the official who presided over the Lincoln Savings and Loan scandal. Having looked into Charles Keating's eyes and seeing him a good man, he reportedly overrode the protests and findings of fraud from the banking experts. After his S&L debacle he was apparently demoted, but brought back into a position of importance under the Bush Administration. All the details on this have not yet been made public.
Merrill Lynch Execs Paid Themselves $15 Billion on $21.5 Billion in Losses in 2008 No wonder John Thain was sacked. On the surface it appears that he and his management were 'hiding' or at best unaware of enormous losses that were only revealed after they were purchased by the Bank of America, and the recipient of enormous amounts of government funds. And to make matters worse, they continued to pay themselves huge salaries and bonuses for the year despite those losses. It will be interesting to see if there is any meaningful investigation of this. We doubt it very much. The Democratic leadership have shown themselves to be a lot of noise and little meaningful action so far, and almost all the Republicans are outrageous hypocrites. Such is the state of the deep capture of the government.
It's A Depression! This past weekend, visiting our local Chapters book store, we were struck with the large display up front of books telling us about the new depression, how we got there and how to survive it, books about the Great Depression and a host of others. Bemused by the entire display, we decided to purchase I.O.U.S.A. One Nation. Under Stress. In Debt (Addison Wiggin and Kate Incontrera, John Wiley & Sons, 2008). I.O.U.S.A. is also the name of a documentary film that was recently shown both in Canada and the USA and was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival. The book comes from the folks who bring us The Daily Reckoning. It should come as no surprise that there are those out there who believe we are headed into another Great Depression. It is also no surprise that there is an even larger body that are in denial of the collapse that has taken place and there are those still issuing rosy forecasts of a short painful downturn followed by a quick robust rebound.
Big Inflation Coming Late 2008's stock panic has certainly had a complex and multifaceted impact on popular psychology. Mindsets and outlooks that were scoffed at as recently as 6 months ago have suddenly become fashionable. One of the more intriguing is the meteoric rise to prominence of the deflation thesis. The growing legions of deflationists see an unstoppable depression-like deflationary spiral approaching like a freight train. They cite some convincing data. The stock markets have been cut in half in just a year. In the past 6 months, some key commodities prices fell farther and faster than they did in the entire Great Depression. House prices are down by double digits across the nation, with no bottom in sight. And credit is a lot harder to come by today than in any other time in modern memory.
Max Keiser : THE ORACLE January 23 2009 pt 1 of 2 Good banks, bad banks, British sterling on the run; Citigroup and BofA. Gordon Browne blames US for global economic problems. . . . People love capitalism on the way up; hate it on the way down. SPAM sales in US are up! . . . Hormel added 2nd shift in pork process plant.
Max Keiser : THE ORACLE January 23 2009 pt 2 of 2 Empty shelves of big box retailers suggest pre-glasnost and post-capitalism economy; explanation of contango (oil futures are high).
Bailout aid doesn't stop banks from trying to shape U.S. policy The financial giant Bank of America says it is no longer lobbying the U.S. government about its unfolding bailout. After receiving $45 billion in bailout money, lobbying was just too unseemly. "We are very sensitive to the fact that we have taxpayer money," said Shirley Norton, a spokeswoman for the company. Citigroup, recipient of another $45 billion, made the opposite call. While trying to keep a low profile, the company is still fielding an army of Washington lobbyists working on a host of issues, including the bailout. In the fourth quarter, it spent $1.77 million on lobbying fees, according to its lobbyists' filings.
Nationalization gets a new, serious look Only five days into the Obama presidency, members of the new administration and Democratic leaders in Congress are already dancing around one of the most politically delicate questions about the financial bailout: Is the president prepared to nationalize a huge swath of the nation's banking system? Privately, most members of the Obama economic team concede that the rapid deterioration of the country's biggest banks, notably Bank of America and Citigroup, is bound to require far larger investments of taxpayer money, atop the more than $300 billion of taxpayer money already poured into those two financial institutions and hundreds of others.
White House Pushing Stimulus Package President Barack Obama and his top advisers sought over the weekend to broaden the appeal of his proposed $825 billion economic-stimulus package and to defend the way they are pushing it through Congress. But some senior Republicans said Sunday that as the stimulus plan stands, they would oppose it. The new administration has begun a campaign to build momentum behind the economic-stimulus plan and propel it to passage by mid-February. The White House released a report Saturday revealing details about the package, which would pay for a variety of projects, like laying 3,000 miles of transmission lines for a national electric grid, securing 90 major ports and guaranteeing health insurance for 8.5 million Americans in danger of losing coverage.
Obama faces pressure for faster action The rapidly unraveling U.S. economy is piling pressure on President Barack Obama to try bolder recession-fighting tactics even before all his economic advisers have found their desks. The headlines in the first 72 hours of Obama's term included up to 5,000 job cuts at Microsoft, a gloomy economic outlook from General Electric and the steepest Inauguration Day stock market drop on record. His choice for Treasury secretary, Timothy Geithner, is still awaiting Senate confirmation after the embarrassing disclosure that he had failed to pay certain taxes.
Smaller Stimulus Leaves Room For Restructuring As all recovery hopes are now pinned on the efficacy of Washingtons next stimulus package, President Obama has opened the bidding at $825 billion. Most Republicans see this number as too big, and many Democrats see it as too small. If the question is one purely of impact, then under these circumstances, the Democrats are probably correct. Measured against the underlying problem, the erosion of some $20 trillion from American household wealth in just two years and the waste of some $3 trillion (including long tail medical liabilities) on a fruitless war in Iraq, populists and democrats will label Obamas planed expenditure as relatively small. They will argue that to affect a noticeable change in Americas $14 trillion economy, a much larger stimulus is needed. However, this would be the sort of change that would paralyze the economy for years, perhaps decades.
U.S. Bank and Trust? Only five days into the Obama presidency, members of the new administration and Democratic leaders in Congress are already dancing around one of the most politically delicate questions about the financial bailout: Is the president prepared to nationalize a huge swath of the nation's banking system? Privately, most members of the Obama economic team concede that the rapid deterioration of the country's biggest banks, notably Bank of America and Citigroup, is bound to require far larger investments of taxpayer money, atop the more than $300 billion of taxpayer money already poured into those two financial institutions and hundreds of others.
BofA had role in Merrill bonuses Bank of America played a role in Merrill Lynch’s controversial decision to pay $4bn in bonuses in December just as mounting losses were threatening to derail BofA’s takeover of the Wall Street firm, according to people close to the situation. BofA has said that the payment of $4bn in compensation in a fourth quarter in which Merrill racked up $15bn in losses was sanctioned by John Thain, Merrill’s chief executive. Ken Lewis, BofA’s embattled chief executive, ousted Mr Thain on Thursday after news of the bonus payments appeared in the Financial Times. BofA told the FT last week that Mr Thain had made the decision to pay bonuses in December instead of January and it had been “informed” of the move. The bank said Merrill was an independent company until the deal closed on January 1.
Canceling the Debts of Greedy Pigs Bloomberg.com reported that "The Federal Reserve, engaging in what Chairman Ben S. Bernanke this week termed 'credit easing,' bought $23.4 billion of Fannie Mae, Freddie Mac and Ginnie Mae mortgage bonds under a program aimed at lowering home-loan rates" which goes along with another Bloomberg news item that said this same Federal Reserve Chairman Ben S. Bernanke and Vice Chairman Donald Kohn "urged a new effort to address the toxic assets held by financial companies", by which he obviously means "create the money to buy them." This shameful behavior fits perfectly with the Wall Street Journal, editorializing about President Bush, that "While the Fed is most to blame, the Administration encouraged the credit excesses. It populated the Fed Board of Governors with Mr. Greenspan's protégés, notably Ben Bernanke and Donald Kohn, who helped to create the mania and even now deny all responsibility."
Liquidation risk grows as finance dries up US companies face a greater risk of liquidation because sources of finance to let them reorganise under the country’s bankruptcy code are drying up in the global financial crisis. In the US, companies on the verge of insolvency can restructure themselves under a Chapter 11 bankruptcy protection process, sometimes taking years. But the credit crunch has severely limited the availability of so-called ‘debtor in possession’ financing that is vital to give them this second chance. With previous big providers of DIP financing, such as GE Capital, shying away from the market, companies may have to rely on their existing lenders, says Standard & Poor’s, the rating agency.
Can Fiscal Stimulus Revive the US Economy? Most economists and various commentators are in agreement. They hold that the US government must sharply increase its spending in order to arrest the economic crisis that could turn into a prolonged slump. According to the Congressional Budget Office (CBO), in the absence of a stimulus plan, the unemployment rate could jump to above 9% by early 2010. Some other experts are of the view that without the stimulus plan the unemployment rate could easily surpass the 10% mark.
Fed focus turns to credit easing at policy meeting With interest rates already near zero, the Federal Reserve this week will seek to flesh out new unconventional ways to free-up lending, but action may need to await details on how President Barack Obama will tackle the financial crisis. The Fed, which will issue a policy statement around 2:15 p.m. EST on Wednesday at the end of a two-day meeting, is searching for ways to end a deepening year-long recession and restore confidence to businesses and consumers shocked by the financial havoc wrought by a housing market collapse.
At Davos, crisis thins the guest list GENEVA: The Masters of the Universe no longer sit atop the magic mountain. Not long ago, at the annual gathering of the World Economic Forum in Davos, Switzerland, Richard Fuld Jr. of Lehman Brothers held forth on the state of the global economy before mesmerized journalists and cowering subordinates while other Wall Street stars mingled after-hours with the likes of Claudia Schiffer, the German supermodel. As business, government and nonprofit leaders trek up the peak made famous by Thomas Mann's novel, but now better known for the gabfest that begins Tuesday, star power no longer is in. Politicians, not corporate titans, are poised to be the big draw this year, echoing the broader power shift away from the free market as one government after another tries to prop up its sinking economy.
Jim Rogers UK will go bankrupt pt 1/2
Jim Rogers UK will go bankrupt pt 2/2
Mood of sobriety and self-recrimination at Davos In recent years, Goldman Sachs has been renowned for hosting one of the hottest parties during the World Economic Forum’s glittering annual meeting in Davos. No longer. This year, in a nod to the new mood of sobriety and self-recrimination, the US broker has quietly cancelled its party and sharply reduced its delegation to the event, which starts on Wednesday. It is far from alone. John Thain was due to host a high-profile breakfast meeting on Friday in Davos – until he was unceremoniously ousted from his post at Merrill Lynch on Thursday, in the latest casualty of the financial crisis. Lehman Brothers, which used to send a formidable delegation to the snowy resort, has also disappeared. Vikram Pandit, the embattled chief executive of Citigroup, has withdrawn this year. So has Howard Stringer, the CEO of Sony, the media and electronics group.
Economy in Crisis: Three Bears and a Missing Goldilocks 2006 and 2007 were framed by financial pundits as a time when we could truly have the Goldilocks economy. Growth wouldn't be too fast or too slow, but just right. The Fed had both hands on the wheel and was goosing things just enough to keep the ship headed in the right direction. Of course all the while the same pundits chose to ignore raging inflation at the consumer level as energy and food prices headed for the stratosphere. While the fall of energy prices has been spectacular, however, the drop in food prices has been virtually nonexistent. As in the story of Goldilocks, there were some bears who weren't too happy about Goldilocks and her plans for their porridge.
Pelosi open to more money for banks House Speaker Nancy Pelosi, California Democrat, says she is open to additional government rescue money for banks and financial institutions, but she is demanding that taxpayers get an ownership stake in return. She did not name a dollar figure in a television interview broadcast Sunday, and she did not use the term "nationalization" when referring to additional rescue dollars. She said that if the government puts more money into struggling banks, then an ownership stake would be sought.
Wall Street can be a stern taskmaster to presidents Not that Barack Obama needed a wake-up call on Inauguration Day, but the stock market provided one anyway. On the day Mr. Obama assumed the presidency, the Dow Jones Industrial Average delivered its worst Inauguration Day performance in its 113-year history, tumbling 332 points (more than 4 percent) and falling through the 8,000 level. And that wasn't the worst of the news. Mr. Obama entered the White House inheriting a banking crisis that was again quickly reaching a boiling point, on a day that already-beaten bank stocks tumbled further, as Citigroup slumped 20 percent, JPMorgan Chase lost 21 percent and Bank of America plunged 29 percent.
Democrats: Stimulus plan no quick fix for economy The White House warned Sunday that the country could face a long and painful financial recovery, even with major government intervention to stimulate the economy and save financial institutions. "We're off and running, but it's going to get worse before it gets better," said Vice President Joe Biden, taking the lead on a theme echoed by other Democratic officials on the Sunday talk shows. At the end of the Obama administration's first week, the party in power at both ends of Pennsylvania Avenue sought to lower expectations for a quick fix despite legislation expected to pass by next month that would pump billions of dollars into the economy. Democrats also opened the door for even more government aid to struggling banks beyond the $700 billion bailout already in the pipeline.
Biden, Summers Sound Economic Warnings, Push Stimulus White House officials warned Americans that economic prospects are darkening as they sought to ensure rapid Congressional approval of President Barack Obama's $825 billion stimulus package. Vice President Joe Biden told the CBS program "Face the Nation" that "it's worse, quite frankly, than everyone thought it was." Larry Summers, Obama's top economic adviser, said the economy faces "very difficult" months, speaking today on NBC's "Meet the Press."
Obama faces Republican rancor as economy reels President Barack Obama entered his first full week in office Monday battling to win over Republicans hostile to his signature plan to haul the US economy out of a paralyzing recession. Obama's 825-billion-dollar stimulus bill, which is set for debate in Congress this week, has become a litmus test of the new Democratic president's pledge to drain Washington of partisan rancor. Before heading to Capitol Hill to lobby for the bill in person Tuesday, Obama was Monday hoping to add a crucial name to his cabinet with the Senate expected to confirm his pick for Treasury secretary, Timothy Geithner.
Obama aide won't rule out more money for bailouts President Barack Obama's top economic adviser would not rule out on Sunday that more money may be needed to stabilize the U.S. financial system as a deep recession increases banks' losses. Lawrence Summers, head of the National Economic Council, also said there was no question that tax cuts passed under former President George W. Bush needed to be repealed, though he would not be pinned down on exactly when.
Slump Probably Deepened as Credit Froze: U.S. Economy Preview The worst credit crisis since the Great Depression sent the U.S. economy into a tailspin at the end of 2008 as consumers and businesses retrenched, reports this week may show. Gross domestic product contracted at a 5.5 percent annual rate from October through December, the biggest drop since 1982, according to the median estimate in a Bloomberg News survey ahead of Commerce Department figures due Jan. 30. President Barack Obama and Congress are working to pass an economic stimulus plan worth $825 billion by mid-February to stem what may be the worst recession in the postwar era. Federal Reserve policy makers, under Chairman Ben S. Bernanke, also meet this week amid growing expectations they'll unveil more tools to unclog lending after having cut interest rates to as low as zero.
New York City to Get $3.4 Billion U.S. Stimulus, Schumer Said A federal stimulus package including $125 billion to help states and cities pay for schools and Medicaid would send almost $3.4 billion to New York City, U.S. Senator Charles Schumer and U.S. Representative Charles Rangel said. New York's Independent Budget Office estimates that the city's deficit will sink to $7 billion by fiscal year 2010, or June 30, 2011. Schumer and Rangel said that although the stimulus package will help alleviate the city's budget crunch, the funding won't eliminate the tough choices city and state officials are going to have to make. The economic stimulus package would give New York City $1.8 billion for Medicaid and $1.6 billion for education, Schumer's office said in a news release. "The stimulus package is going to be a shot in the arm for New York City," Schumer said at a City Hall news conference, where he and Rangel were hosted by Mayor Michael Bloomberg.
The Other US Border Fence What most Americans don't realize is that construction of a legal fence to prevent US taxpayers from escaping from the IRS's controlled pastures is progressing on schedule. Congress has been expanding and strengthening this fence for decades, and the Heart Heroes Earning and Assistance Relief Act was only the latest nail in the soon to be tightly sealed coffin. The US is the only country besides Libya that taxes the world wide income of it's non-resident citizens, and the HEART act has made expatriation much more difficult, and much more expensive.
Oil Cartel Keeps Cuts on Track After months of gradually closing the oil spigot, members of the OPEC cartel have managed to stop the slide in oil prices - at least for now. Showing an unusual degree of discipline, members of the Organization of the Petroleum Exporting Countries have slashed their output by more than three million barrels a day in recent months as they sought to put a floor under oil prices, which have fallen by $100 a barrel since last summer. That is about 75 percent of the production cuts pledged by members of the cartel since September. The cuts have been led by Saudi Arabia, the world's top exporter, which has trimmed its production to eight million barrels a day this month, down from nearly 10 million barrels over the summer.
Housing stocks: No bottom yet If you think the sector has gone as low as it can, think again, says housing guru Ivy Zelman. With another dismal read Thursday on new home construction, it looks like 2009 will be a rough year for homebuilders. But recent rallies in housing stocks suggest that investors think otherwise. Don't bet on it, says housing analyst Ivy Zelman. Housing permits and starts both tumbled to record lows in December, according to a Commerce Department report on Thursday. With foreclosures surging and a glut of homes on the market, Zelman believes the overall pain will continue well into 2010 - and that the market won't bounce back until 2012.
Who Needs Economists When We Have the Home Builders? I mean really! As you know, plenty of very highly paid Street economists at many a major brokerage or banking firm got it dead wrong over the last few years. Not just a little bit off, but dead wrong! "No one ever could have seen this coming." How many times have you heard that one over the last few months? C'mon, anyone who is even a semi-serious student of credit and economic cycles saw "this coming" a mile away. In fact, personally over the last few years I have been relying in part on the homebuilders of this world to tell me exactly what was to come ahead, and they have obliged significantly. Thanks guys (and gals). And sure enough they have been dead right. Not close, but dead right.
Mystery Prison Buses in the Desert On a recent visit to Tucson, Arizona, where I was invited to give a presentation on monetary reform, I was disturbed by a story of strange goings on in the desert. A little over a year ago, it seems, a new industrial facility sprang up on the edge of town. It was in a remote industrial zone and appeared to be a bus depot. The new enterprise was surrounded by an imposing security fence and bore no outward signs identifying its services. However, it soon became apparent that the compound was in the business of outfitting a fleet of prison buses. Thirty or so secondhand city buses were being reconfigured with prison bars in the windows and a coat of fresh paint bearing the "Wackenhut G4S" logo on the side.
World Agenda: riots in Iceland, Latvia and Bulgaria are a sign of things to come Our third global political column explores the start of an age of rebellion over the financial crisis - beginning in Iceland Icelanders all but stormed their Parliament last night. It was the first session of the chamber after what might appear to be an unusually long Christmas break. Ordinary islanders were determined to vent their fury at the way that the political class had allowed the country to slip towards bankruptcy. The building was splattered with paint and yoghurt, the crowd yelled and banged pans, fired rockets at the windows and lit a bonfire in front of the main door. Riot police moved in. Now in the grand sweep of the current crisis, a riot on a piece of volcanic rock in the north Atlantic may not seem to add up to much. But it is a sign of things to come: a new age of rebellion. The financial meltdown has become part of the real economy and is now beginning to shape real politics. More and more citizens on the edge of the global crisis are taking to the streets. Bulgaria has been gripped this month by its worst riots since 1997 when street power helped to topple a Socialist government. Now Socialists are at the helm again and are having to fend off popular protests about government incompetence and corruption.
40 Al-Qaeda Terrorists Dead After Exposure to the Plague Seven years after they transformed George W. Bush's presidency, al-Qaeda terrorists are pushing to the top of his successor's priority list. The very day Barack Obama was sworn in as President, warning Americans "our nation is at war against a far-reaching network of violence and hatred," there were reports an al-Qaeda affiliate recently abandoned a training camp in Algeria after 40 terrorists died from being exposed to the plague during a biological weapons test. The report, which first surfaced in the British tabloid newspaper The Sun, claims members of al-Qaeda in the Land of the Maghreb (AQLIM) hurriedly abandoned their cave hideouts in Tizi Ouzou province, 150 kilometres east of the Algerian capital Algiers, after being exposed to plague bacteria. The newspaper said they apparently became infected while experimenting with biological weapons.
Wall Street Unspun [Part 1] Andrew Schiff (Peter's Brother and VP of Europac) 1/21/09 - good history of who did what and the results, from depression era to the 1970's when Nixon took up off gold standard and we had high inflation, and beyond - related to situation today.
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