Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 03.30.2009
Global Currency Risks, Market Worries All Point to Gold Gold and silver rose ($939.80 up $4.40 - Silver $13.65 up 18 cents) Thursday on deepening concerns about the dollar and fears that its reserve currency status is threatened. This week could see sharp moves in financial markets as the dollar's dominance in the international monetary system is set to be questioned at the G20 Summit (Thursday, April 2nd). The US creditors in China and Russia are proposing creating a new supra-national reserve currency, thereby lessening dependence on the dollar. Treasury Secretary Tim Geithner let slip on Wednesday that Washington was "open" to the idea. It is not just large holders of US debt who have voiced concerns about US economic, monetary and fiscal policies. The holder of the EU presidency, the Czech Republic's prime minister, Mirek Topolanek, condemned American remedies for the global recession as "the road to hell".
Obama denies bailout funds for automakers White House: GM, Chrysler fail to submit restructuring plan that will get them more money The White House says neither GM nor Chrysler submitted acceptable plans to receive more bailout money, setting the stage for a crisis in Detroit and putting in motion what could be the final two months of two American auto giants. President Barack Obama and his top advisers have determined that neither company is viable and that taxpayers will not spend untold billions more to keep the pair of automakers open forever. In a last-ditch effort, the administration gave each company a brief deadline to try one last time to convince Washington it is worth saving, said senior administration officials who spoke on the condition of anonymity to more bluntly discuss the decision.
White House questions viability of GM, Chrysler White House sets tough deadline to force overhaul of ailing US carmakers President Barack Obama is sending a blunt message to Detroit automakers: To survive -- and win more government help -- they must remake themselves top to bottom. Driving home the point, the White House ousted the General Motors chairman as it rejected GM and Chrysler's restructuring plans. Obama is set to elaborate on that message Monday when he announces what his White House told reporters over the weekend: Neither GM nor Chrysler submitted acceptable plans to receive additional federal bailout money.
[A taste of socialism??? . . . . more to come] Unveiling the Government Car Warranty Good news, American auto owners! If you’ve been eyeballing a Lexus or a CRV because you want to own a car whose maker will be around long enough to honor the warranty, take another look at Detroit. Instead of handling their own warranties, Uncle Barack and his dog Spot will handle your warranty — along with a hefty new bureaucracy:
China questions the dollar's value - 26 Mar 09 - Part 1 Days before the G20 financial summit in London, Zhou Xiaochuan, the governor of the People's Bank of China, called for a new currency to eventually replace the US dollar. The dollar, which was made the reserve currency after World War II, has come under increased pressure of late. Barak Obama, the US president, cast doubt upon calls by senior Chinese authorities for the creation of a new global currency to replace the dollar as the standard bearer for the world.
No Givens As Obama Steps Onto World Stage After 69 days in which international issues have taken a back seat to attempts to rescue the economy at home, President Obama takes the world stage this week as a wildly popular figure among the people of Europe, but one who faces a difficult task in selling his plans to the continent's leaders. The president plans to push for a new approach to the war in Afghanistan, aggressive action to stop the proliferation of weapons and a more united European effort to combat the global recession. But if the U.S. president thought his popularity would cause foreign governments to fall quickly into line behind a new American leadership, experts warn, he could be in for a rude awakening.
G-20 Targets Hedge Funds as Leaders Near Consensus Leaders of advanced and emerging economies are closing ranks behind plans for tougher rules on financial markets to prevent another collapse like the one that wiped out much of Wall Street. A global approach to regulation has been gaining momentum ahead of the Group of 20 summit April 2 in London. U.S. President Barack Obama, U.K. Prime Minister Gordon Brown and their G-20 counterparts aim to merge their national blueprints for strengthened regulation into a united front to rein in hedge funds, derivatives trading, executive pay and excessive risk- taking by financial firms.
Obama calls for G20 ‘unity’ President Barack Obama is voicing optimism that this week’s crucial G20 summit will set the framework for recovery, saying that world leaders know they must “deliver a strong message of unity” for the sake of the global economy. Speaking to the Financial Times on the eve of what some believe will be the most fateful economic summit in decades – but which others dismiss as a talking shop that will do little to halt further global contraction – Mr Obama played down talk of a split between the US and the leading continental European economies, notably Germany and France.
China questions the dollar's value - 26 Mar 09 - Part 2
Obama interview: Full text FT: Let’s talk about the G-20. What will be your benchmarks for success? Obama: The most important task for all of us is to deliver a strong message of unity in the face of crisis. There’s some constituent parts to that. Number one, all the participating countries recognise that in the face a severe global contraction we have to each take steps to promote economic growth and trade; that means a robust approach to stimulus, fighting off protectionism.
Geithner Says Some Banks Need ‘Large Amounts’ of Assistance U.S. Treasury Secretary Timothy Geithner said some financial institutions will need substantial government aid, while warning against any attempt to tax investors who join a federal program to buy tainted assets from banks. “Some banks are going to need some large amounts of assistance,” Geithner said yesterday on the ABC News program “This Week.” The terms of a $500 billion public-private program to aid banks “cannot change” for investors or they’ll lose confidence in the plan, he said on NBC’s “Meet the Press.”
President Obama On His Goals For The G20 Summit
On eve of G20 summit, new blow to Gordon Brown Senior cabinet members dampen expectations of global spending deal Ministers were struggling to maintain momentum for the G20 summit last night after it emerged that any spending decisions would be deferred to a later meeting, further narrowing the scope of this week's London talks, which have been plagued by divisions between European leaders and Gordon Brown. Yesterday, Kevin Rudd, the Australian prime minister who will hold pre-summit talks with Brown tomorrow, said it was now up to the International Monetary Fund to determine how much additional support the world economy would need next year, and that there had never been any expectation that the decisions on that package would be taken in London. "That was never the intention," he said. "A mechanism has been established for us to reflect on for what we need for the future. There will be a further summit, well in time for 2010, I assume, which will actually look at what metrics, what numbers, will be needed then."
Only a united front at the London G20 can save the world from ruin Industrial production is collapsing faster than during the Great Depression. Social and political devastation will not be far behind, unless the G20 can heal global divisions, writes Ambrose Evans-Pritchard. By the time world leaders gathered to vent their spleens at the London Economic Conference in June 1933, the Slump had already done its worst. Catastrophic policy errors – tight money – had caused the 1930-31 recession to metastasize into debt deflation. Hitler had been let into government with three cabinet seats, enough to give him the Prussian police and Reich interior ministry. It was all he needed.
New reserve currency idea needs work-German minister Proposals for creating a new global reserve currency to replace the U.S. dollar are gathering momentum but need further examination, Germany's development minister said on Friday. Heidemarie Wieczorek-Zeul, Germany's minister for economic cooperation and development, is a member of a panel of experts established by U.N. General Assembly President Miguel d'Escoto Brockmann to analyze the global financial crisis and recommend reforms. One of the recommendations in an 18-page report the panel issued this week is to create a new reserve currency system based on the International Monetary Fund's Special Drawing Rights, or SDRs, to replace the U.S. dollar as the top reserve unit, an idea China supports.
Calls for new global currency
A world currency moves nearer after Tim Geithner's slip US Treasury Secretary Tim Geithner confessed on Wednesday that he had not read the plans by China's central bank governor for a "super-sovereign reserve currency" run by the International Monetary Fund, but nevertheless let slip that Washington was "open" to the idea. Whoops. This is how matters quickly escalate in geo-finance. China's suggestion – backed by Russia, Brazil, and India, and clearly aimed at breaking US dollar hegemony – is making its way onto the agenda of the G20 Summit next week. 'Dollar-dämmerung' no longer looks so far-fetched. China's paper, by Governor Zhou Xiaochuan, is couched in understated language – more a 'thought experiment' than a declaration of monetary war. His ideas could be mistaken for the musings of an academic theorist. Nobody should be fooled by decorum.
Struggle Over I.M.F. Becomes Focus as Crisis Summit Nears Barely six months ago, the International Monetary Fund emerged from years of declining relevance, hurriedly cobbling together emergency loans for countries from Iceland to Pakistan, as the first wave of the financial crisis hit. Now, with world leaders gathering this week in London to plot a response to the gravest global economic downturn since World War II, the fund is becoming a chip in a contest to reshape the postcrisis landscape. The Obama administration has made fortifying the I.M.F. one of its primary goals for the meeting of the Group of 20, which includes leading industrial and developing countries and the European Union. But China, India and other rising powers seem to believe that the made-in-America crisis has curtailed the ability of the United States to set the agenda. They view the Western-dominated fund as a place to begin staking their claim to a greater voice in global economic affairs.
Printing Money Can't Make More Money TGR: Will gold retain its value if we move into an inflationary environment? JT: Yes, I’m convinced it will. Let’s distinguish between an inflationary period and a period of global growth. We’ve had a lot of global growth until recently and gold was not a very good place to be. We can inflate the monetary system but we can’t really get the global banking system to inflate or to expand as it did in Bob Hoy’s six examples of the last 300 years. In fact, it’s really tough getting the banks to lend money now, for two reasons. One, they’re not lending money to people because loans portfolios look like a black hole. In terms of loan losses, no one knows where bottom is. Because they can’t figure that out, they’re trying to shore up their capital base and trying to make sure their equity is intact. . . .
The Fault Lines Emerge For a few fleeting, horrifying moments this past week the fault lines that underlie the global economic crisis erupted into plain view. With deft and quick effort leaders in Washington, Europe and Asia papered over the fissures and fears largely subsided. But the shock of plain truths which resulted in violent currency movements are the latest reminder that the 21st century economic order will bear little resemblance to the world we now know. The tremors began in Beijing, where a essay from the governor of the People's Bank of China seemed to favor the creation of an IMF currency to replace the U.S. dollar as the world's reserve. In Europe, the rotating president of the European Union, outgoing Czech Prime Minister Mirek Topolanek, characterized America's plan to combat the widening global recession as the "road to hell." At same time, British Member of the European Parliament Daniel Hannan made headlines the world over with his stinging rebuke of the inflationary and debt-focused policies of the current UK government.
U.S. Eases Its Stance on Global Stimulus A Move to Dispel Conflict in Europe Ahead of Summit LONDON, March 29 -- The Obama administration on Saturday moved to quell a public war of words with European leaders over the need to boost government spending to combat the financial crisis, making clear it has no desire to dictate spending targets for other countries. The diplomatic effort comes as President Obama prepares to make his first trip across the Atlantic this week for a series of meetings, including Thursday's economic summit in London. In recent days, European leaders have sharply criticized the United States, which they said was pushing them for more global stimulus.
G-20 summit - Gordon Brown "we need a global new deal"
What the G20 has to do in London The meeting of the heads of government of the Group of 20 leading high-income and emerging countries in London is a defining moment. At a time of economic crisis, the leaders of countries that generate the vast bulk of global economic activity must point the way towards shared solutions. If they do achieve this, the summit may not be regarded as the beginning of the end of this crisis, but it will surely be the end of the beginning. The very fact that the G20 is seen as the right body to address this challenge is significant. No longer is it possible for a small number of western countries – together with Japan – to resolve the world’s economic challenges. While the G20 is too large a grouping, it contains all the world’s important economies. Here, above all, the rising powers do not feel they are mere guests, as at meetings of the Group of Eight leading high-income countries. This, then, is indeed the right group. Its first summit was in Washington last November. The London summit should be the second in a series.
Anglo-American Capitalism on Trial LONDON — Sitting in a gilded upper room at 10 Downing Street last week listening to Prime Minister Gordon Brown outline his ambitions for reforming the world economy had something of an out-of-this-world feeling. With Mr. Brown seated beneath a 16th-century oil painting of Queen Elizabeth I, it was tempting to imagine for a moment that Britain was again rising grandly to the challenges of the age, in the way of Good Queen Bess. The occasion was a briefing for reporters on the Group of 20 summit meeting to be held Thursday at a conference center in the London docklands, close to the historic City of London, Britain’s financial hub. Mr. Brown was intense, and prolific with facts. He was also visibly exhausted, hours before leaving on a five-day, 20,000-mile trip to Europe, the United States and Latin America before the conference.
Obama Will Face a Defiant World on Foreign Visit President Obama is facing challenges to American power on multiple fronts as he prepares for his first trip overseas since taking office, with the nation’s economic woes emboldening allies and adversaries alike. Despite his immense popularity around the world, Mr. Obama will confront resentment over American-style capitalism and resistance to his economic prescriptions when he lands in London on Tuesday for the Group of 20 summit meeting of industrial and emerging market nations plus the European Union. The president will not even try to overcome NATO’s unwillingness to provide more troops in Afghanistan when he goes on later in the week to meet with the military alliance.
The Federal Reserve Has Failed Its Economic Mission Mission statements have been around for many years and define the purpose of a company and its goals. Now the U.S. Treasury and the Federal Reserve have jointly issued a mission statement for their cooperation during this economic crisis. The key elements are:
Since the Treasury does not have enough tools in this crisis, the Fed will use theirs (of course in close cooperation with the Treasury) to make credit flow, to prevent any systemic failures to the financial system, and fix what is wrong.
Federal Reserve is the lender of last resort. They are to do whatever is necessary to make credit flow in all areas.
The Federal Reserve needs more power and will go to Congress to get more.
The Treasury will take the Maiden Lane assets (the toxic Bear Stearns “assets”) from the Fed. I thought toxic assets were profitable if you would hold to maturity (satire).
TALEB, ROUBINI !!! BERNAKE TAKING DOWN ECONOMY !!!
The Financial Crisis Is Escalating Out of Control The current financial crisis we are in is escalating out of control. I question whether the current administration has anyone who understands what is happening, why it is happening, and is operating without some vested interest; never mind whether they have the correct answers as to how to solve it. The creation of a new entity "The Public-Private Investment Corporation" to purchase toxic debt funded by some $1 Trillion of taxpayer money is going to buy up mortgages, car loans, credit cards loans and other toxic debt off balance sheets for banks and other lenders... If these assets are sold to large investor groups, hedge funds and other such entities at 5 cents on the dollar, then it is an open admission that the tax payer will never see any return on his investment and those in power will have scratched the backs of many who put us in this position in the first place. This is the definitive version of the AIG bonuses being paid and we will unwittingly agree to this, not that we have any say, because of the language and structures used to deceive us.
A new plan needed as the cycle grows vicious So you think you can see the green shoots of recovery? You draw comfort from the recent stabilisation of forward-looking indicators such as new home sales in the US? Or you think the stock market rally marks the end of the crisis? Of course, economic growth rates are bound to improve soon for technical reasons. Otherwise, not much would be left of the global economy by the end of the year. Even if a recovery were to start early in 2010, as some optimistic forecasters believe, most of the pain of the recession is still ahead of us: unemployment and default rates will rise sharply everywhere. Most of the pain in the financial sector is also still ahead of us. This will feel like a depression long after it has ceased to be one.
Is Business Cycle Broken This Time? The U.S. national debt soared in the 1980’s on the record deficit spending of the Reagan Administration to get the country out of the panic of the 1970’s recessions and stagflation. There was no way to escape the consequences. Economists competed with each other with dire forecasts of how this time was different and the nation was headed inevitably into bankruptcy. Remember that huge electronic clock set up somewhere that they’d periodically show us on TV, as it kept track of the millions that were being added to the national debt every minute - or was it every second?
Sweden to America; Slow Down on the Socialism. It doesn't Work. Even France Knows. Glenn Beck
White Collar Crime Pays in America The Savings & Loan Crisis had Michael Milken. The dotcom charade had Bernie Ebbers, Kenneth Lay, and Jeffrey Skilling. These men have been selected as the scapegoats to distract the public away from the real criminals that caused each crisis. And now, the world’s largest real estate and banking crisis – much larger than all previous heists combined – has Bernie Madoff. He will serve the same purpose. Michael Milken was certainly involved in the S&L crisis, but he wasn’t the only villain. After only serving a couple of years (for good behavior) at Club Fed, he returned to society a very wealthy man. What other type of behavior besides “good” is possible at Club Fed? While he was most definitely involved, Milken served as the scapegoat of the S&L crisis. He is like many scapegoats from white collar crimes who manage to get off easy. One reason is because they have big money to buy their way out. But another reason is because white-collar crime is deemed to be relatively benign in America. This mentality must change now. Americans must demand it.
Dark Clouds Hover Over US Economy Any criticism of Obama's economic illiteracy -- no matter how accurate -- is in danger of being met with a storm of abuse from his cultist followers. Even Bill Clinton supporters weren't this bad: and I do speak from experience. But facts are facts and economic laws are what they are. Pointing to the Dow as evidence of Obama's success only reveals a complete ignorance of economics and economic history. It is true that I said that I would not be surprised to see the Dow drop to 3000 -- and I still wouldn't. But my point was not that the Dow will collapse -- I never said it would -- or that a 1930s-type depression is on the way -- I have stated emphatically that this is not the case -- but that conditions are so erratic today that at this stage of the game it is not possible to really know whether we are seeing extreme fluctuations around an upward trend or a bear rally.
Overhaul Targets Money Market Plan Also Limits Hedge Funds The broad regulatory overhaul outlined by Treasury Secretary Timothy F. Geithner last week is aimed at restoring confidence in the financial system, reducing the chances that people unknowingly invest in high-risk securities and boosting investors' protections from scam artists like Bernard L. Madoff. The effectiveness of the measures will probably depend on their final wording after Congress, regulators and the industry get through hashing out the details. For individual investors, a few features are discernible based on the details released so far. Money-market mutual funds are likely to be better protected against runs and panics.
Glenn Beck, Ron Paul, George Soros - Global New Deal New Monetary Scheme - New World Order - from Feb 24, 2009.
Move Your Money Out of the Country… and Soon We are patriots. We have proudly served in our country's military, have extended a helping hand to its public sector, and have plowed our entrepreneurial enterprise into its once fertile soil. We love America, but these days, America does not love us back. It takes without giving and squelches free enterprise. These days, America is no longer the land of the free, especially when it comes to the market. Just look at the headlines, seemingly ripped from the pages of Atlas Shrugged: Unconscionably large bank bailouts. Punishing regulations and tax requirements. An arctic business climate. Government money bombs. Riots and protests. Slowing trade. Protectionist rhetoric. Demonized corporate executives. Even pirates hijacking cargo ships. One can guess what will happen next. We predict the next several years will usher in larger, more obtrusive governments, resulting in a decline of personal liberty and financial privacy. The world will become increasingly polarized between two groups: those who consider government intervention a great idea, and the rest of us who happen to be sane.
'Perfect storm' puts all types in financial peril The current financial crisis is all-inclusive; our path to prosperity or even simple financial stability seemingly obliterated. With every furlough, layoff or stock market drop, Americans of all ages and backgrounds are seeing their incomes dwindle, bills pile up and financial options disappear. The number who are suffering has increased by 3 million the past year, according to a recent Gallup-Healthways survey. Some 37% of us said we were worried about money last week. Last year, 3.2 million consumers contacted the National Foundation for Credit Counseling, up from 2.2 million in 2007 and 1.4 million in 2006.
Geithner won't say if more bailout money needed U.S. Treasury Secretary Timothy Geithner said on Sunday the government will have about $135 billion left after banks give back some bailout money and declined to say whether he will ask Congress for more. Treasury expects the banks this year to return about $25 billion of money that they received from the government, because they were able to replace it with private capital or decided that they do not want money with strings attached. "We have roughly $135 billion left of uncommitted resources. The rest is out the door," Geithner said on ABC-TV's "This Week with George Stephanopoulos" program. That means some $565 billion out of $700 billion approved by lawmakers last October already has been deployed and Geithner said banks still need help.
Jim Rogers Geithner does not know what he is doing ...
Bank bailout funds mostly spent The federal government has spent all but $135 billion of the Wall Street bailout fund established by Congress last year, Treasury Secretary Timothy F. Geithner said Sunday. And while downplaying speculation that he and the Obama administration would ask Congress for more money to help failed banks, Mr. Geithner didn't dismiss the possibility either. "The important thing is that we are going to work with the Congress to make sure that we have the resources needed to do this right," he said on ABC's "This Week With George Stephanopoulos." "The lesson of financial crises is governments tend to do too little. They wait too long to escalate."
Double-digit unemployment looms, OECD tells G8 The global economic crisis will hit jobs hard, with unemployment set to reach double digits in many developing and advanced countries, the Organization for Economic Cooperation and Development (OECD) said on Sunday. "By the end of 2010 the unemployment rate could be approaching double digit figures in all G8 countries with the sole exception of Japan, as well as in the OECD area as a whole," the OECD forecast in a background paper to G8 labor and employment ministers gathering in Rome.
Geithner: The Regulatory War Ahead Fresh off his hit performance with the bank-rescue plan, Treasury Secretary Timothy Geithner seems to be on a roll. His broad proposal to overhaul regulation of whole swaths of the financial sector drew applause from most quarters on Mar. 26. Investors didn't seem at all unsettled by the prospect of intensified government oversight, as the Standard & Poor's 500-stock index rose 2.3% and Wall Street closed in on a second straight week of strong gains. But the plan offered few specifics in many of the areas it addressed, from tougher regulation of complex financial derivatives to new rules for money-market funds. And Geithner steered well clear of some of the most contentious questions facing policymakers -- the questions that are sure to turn agreement about broad principles into a pitched, possibly months-long political battle that pits financial interests against consumer advocates and one another.
Debt: The next big American crisis? Instead of accumulating wealth, many falling further behind on payments The economy is in freefall and no one's sure where rock bottom is. And as the mortgage crisis and mounting job losses melt away the American dream, another fundamental economic problem is being exposed: America's debt epidemic. Elizabeth Warren: Middle class America is under attack.
GM's Wagoner out at Obama's request The White House has asked General Motors CEO Rick Wagoner to resign, and the head of the auto giant will do so immediately as President Obama prepares Monday to lay out details of his proposed path forward for the U.S. auto industry. A White House official, speaking Sunday on condition of anonymity before Mr. Obama's announcement, said Mr. Wagoner "was asked to and agreed to step down." General Motors and Chrysler LLC received a combined $17.4 billion in loans from the federal government last year, and since have asked for a further $21.6 billion -- $16.6 billion for GM, $5 for Chrysler.
Is California Going Bust? There has been many a time in California's history when it seemed to outsiders to be barreling toward a cliff and to insiders as a place for unbounded optimism. A favorite Silicon Valley bumper sticker says, "Dear God, one more bubble before I die." That optimism is being sorely tested. Statewide unemployment, at 10.1%, is well above the national average of 8%. Per capita income growth, which used to be above average, is now lagging. In the last year home prices fell 35% in San Francisco, 30% in San Jose and 27% in San Diego, according to Radar Logic, a New York real estate derivatives firm. Half of the home sales in Los Angeles are from banks dumping foreclosed properties at steep discounts.
Warren Buffet The Economy is falling off the cliff
More Support for Health-Care Fix But Funding Coverage Still Sticking Point The fault lines are emerging in the upcoming battle over health-care reform. Recent movement on Capitol Hill and by major health-care players suggests that consensus is growing for action this year, but deep rifts remain over how to pay for expanded coverage and whether a new government-sponsored program should be offered to people who have trouble buying private insurance. A coalition of hospitals, insurers, employers, physicians, drug makers and consumers released a report yesterday endorsing a set of policy changes that could cut in half the number of uninsured Americans.
N. Korea launch threatens to undo talks SEOUL (AP) -- North Korea's plans to launch a rocket as early as this week in defiance of warnings threatens to undo years of fitful negotiations toward dismantling the regime's nuclear program. The United States, South Korea and Japan have told the North that any rocket launch -- whether it's a satellite or a long-range missile -- would violate a 2006 U.N. Security Council Resolution prohibiting Pyongyang from any ballistic activity, and could draw sanctions. North Korea said sanctions would violate the spirit of disarmament agreements, and said it would treat the pacts as null and void if punished for exercising its sovereign right to send a satellite into space.
Changes in D.C. prompt run on guns and ammo ‘Manufacturers are going full-bore’ to produce amid fear of new regulations CHEYENNE, Wyo. - Concern that the Obama administration could impose a new ban on some semiautomatic weapons is driving worried gun owners to stockpile ammunition and cartridge reloading components at such a rate that manufacturers can't meet demand. Attorney General Eric Holder last month suggested that the Obama Administration favors reinstituting a U.S. ban on the sale of assault weapons. President Bill Clinton first signed such a ban into law in 1994, generally blocking some military-style guns with magazines that hold many cartridges. President George Bush had allowed the ban to expire.
Russia to create Arctic armed forces Russia wants to set up a military force in the Arctic to protect its national interests. However, officials say this is not a plan to militarize the region. By 2020 Russia believes the region will become its main source for oil and gas.
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