Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 09.28.2009
Money figures show there's trouble ahead Private credit is contracting on both sides of the Atlantic. The M3 money data is flashing early warning signals of a deflation crisis next year in nearly half the world economy. Emergency schemes that have propped up spending are being withdrawn, gently or otherwise. Unemployment benefits have masked social hardship unto now but these are starting to expire with cliff-edge effects.The jobless army in Spain will be reduced to €100 a week; in Estonia to €15. Whoever wins today's elections in Germany will face the reckoning so deftly dodged before. Kurzarbeit, that subsidises firms not to fire workers, is running out. The cash-for-clunkers scheme ended this month. It certainly "worked".
World Bank says don't take dollar's place for granted World Bank President Robert Zoellick said the United States should not take the dollar's status as the world's key reserve currency for granted because other options are emerging. In excerpts released on Sunday from a speech that he is to deliver on Monday, Zoellick said global economic forces were shifting and it was time now to prepare for the fact that growth will come from multiple sources.
Regulators close Ga. bank; 95th US failure in '09 Regulators on Friday shut down Atlanta-based Georgian Bank, the 95th U.S. bank to fail this year as loan defaults rise in the worst financial climate in decades. In coming months, more banks are expected to buckle under the weight of commercial real estate and other loans that go sour. Those failures could imperil the insurance fund for deposits, already at the lowest point in nearly 20 years. The Federal Deposit Insurance Corp. took over Georgian Bank, with about $2 billion in assets and $2 billion in deposits as of July 24. First Citizens Bank and Trust Co., based in Columbia, S.C., agreed to assume the assets and deposits of the failed bank. Georgian Bank's five branches will reopen Monday as offices of First Citizens Bank.
Borrowing 'Til We Drop: The Government Debt Bomb U.S. consumers have finally stopped borrowing more money each quarter. In fact, they're actually starting to reduce their debts. If this process continues--if consumers get their debts down to reasonable levels--it will eventually make the country's primary economic engine, shoppers, stronger and more sustainable. Meanwhile, however, the economy is being sustained by one huge borrower that is taking on debt faster than it has any time since World War II: The government. Government spending and government lending is REPLACING private spending and lending. And if it weren't, the economy would have collapsed.
A Rich Uncle Is Picking Up the Borrowing Slack THE United States government is borrowing money like never before. The national debt rose by more than a third over a one-year period, far more than it ever did at any time since World War II. In the past, when the government became a heavy borrower, there was talk about crowding out private borrowers. But this time, interest rates have remained low and no one seems to be worried about that.
GOLD VS DOLLAR
Fed’s Strategy Reduces U.S. Bailout to $11.6 Trillion The Federal Reserve decided to keep pumping $1.25 trillion of new money into the mortgage market to focus on rescuing the U.S. economy as the financial system revives and banks ask for less help. The Fed is allowing some of the 10 support programs it created or expanded after the credit crisis began in August 2007 to expire or shrink. That caused the first decline in the amount of money the U.S. has committed on behalf of taxpayers to end the recession, according to data compiled by Bloomberg.
Podesta Says Value-Added Tax ‘More Plausible’ as Deficits Grow John Podesta compared the nation’s current budget crisis to the situation former President Bill Clinton faced in 1993 and said some form of a value-added tax is “more plausible today than it ever has been.” “There’s going to have to be revenue in this budget,” said Podesta, Clinton’s former chief of staff and co-chairman of President Barack Obama’s transition team, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing today.
Selecting the Dominant Theme: Money Supply, Real Assets, and Global Growth The current economic environment is characterized by several trends, each of which suggests Real Assets as a core theme.
Liquidity has been shown to be indispensible in the minds of policymakers: the first signs of economic weakness constitute a crisis and generate a panic call for liquidity.
Global monetary growth should equal or exceed 10% per annum over the foreseeable future to accommodate the growth “fix” in the developed world and the urgency of the growth in emerging markets.
Real Assets: property, commodities, raw materials, metals, will benefit from the increasing supply of paper money (based on the premise in point #2 at the rate of at least 10% per year).
The I.M.F. and Central Banks are going to support Gold! As an almost revered subject, the question of whether central banks across the world will be buyers or sellers of gold is one usually left until after the event. Central Banks themselves are usually very unhappy to talk about their gold policy. When they do it is a once-in-several-years-event. As a result we watch the behavior patterns of the last decade to see what lies ahead. First we look at the I.M.F and look at just how it will support gold. The I.M.F. Gold Sales.
World Gold Panic Gold Prices Set to Skyrocket - Are you ready? . . . . Gold is looking to wrap up September with record monthly prices. The yellow metal has traded over $1,000 an ounce in 12 of the 18 trading days of the month so far. And with only three business days left in September next week, the average monthly price for gold is currently $998 an ounce. This compares to March 2008, when gold prices topped the $1,000 level for the first time in history and averaged $968 for the month. A new average monthly record is extremely bullish for gold prices right now. It is a sign that the third and final investment mania stage of the gold bull market is in bloom — that's when gold prices skyrocket.
Gold to Usher in Brave New World “You Lie!” - Looks like US politics are starting to heat up a bit. The nation deserves a little excitement. Clinton was a lot of fun but George just seemed to put us all to sleep. The way both parties are going at it today you’d think this was Custer’s Last Stand. Maybe a better analogy is the Rubicon. . . . . . . . . Nouriel Roubini - "…fiat currencies globally are being created at a double digit rate by the world's central banks....” “Short-term rates of 0% are bullish for gold, which serves as a store of value but is a useful hedge against deflation as well, since deflation is inherently destabilizing for financial assets. In the 2001-03 deflationary period, gold rose more than 30%, not to mention the prospect of a return to a dollar bear market... “”Gold tends to be less sensitive to global economic slowdown than industrial metals or energy and works better as a hedge against crisis than inflation”
Despite G20 weasel words gold should stay in the driving seat However much politicians try to talk it up, the global economy still looks to be in a parlous state and the dollar is likely to return to weakness, with both elements positive for gold Dollar strength and a boost in profit taking saw gold close below $1,000 this past weekend after a couple of weeks where it has spent most of the time above the magic figure. But, has anything really changed? In essence one suspects that, given the amount of time spent above the level, $1000 may no longer be seen as the psychological barrier it had proved to be, but just another point on a continuing upward path in the gold price. When it breaks back up through this level, which it surely will, may mostly depend on the strength or otherwise of the dollar in the short term.
The gold rush fueled by fear: Thousands of small investors flock to bullion for safety To be honest there's not a lot you can do with it apart from look at it, but that has not prevented generations of investors from coveting gold. In recent weeks gold fever has returned, with the price breaking through the $1,000 an per ounce barrier - and the driving force appears to be fear. Evy Hambro, who runs the £1.7billion BlackRock Gold & General investment fund, which invests in gold mining shares, says: 'First it was fear of recession and now it is fear of inflation and worries over the weakness of the US dollar. People are looking for gold as a currency that can preserve their purchasing power over time.'
Marc Faber Weak Dollar Means Inflation
What If Everyone in the World Wanted a 1-ounce Gold Coin? If we’re right about where the price of gold is headed, the general public will someday clamor to buy all things gold. While gold stocks will be where the real leverage is, the rush will start with gold itself. As a gold editor, I have a very natural question: is there enough to go around? According to the U.S. Census Bureau, there are 6.783 billion earthlings. Meanwhile, CPM Group, a highly respected industry organization, estimates there are 4.8 billion ounces of above-ground gold in the world. And this includes jewelry, electronics, and dental. So, even if everyone around the world volunteered to have their chain, cross, or tooth melted into a coin, we’re already short. Those towards the end of the line are out of luck.
Déjà vu all over again? Unlike before, sentiment now supports a higher gold price Gold's drop in recent days, after rising to the $1,020-an-ounce level just one week ago, certainly appears to be déjà vu all over again. On four previous occasions over the last two years, gold has approached, or slightly exceeded, the $1,000 level. On each of those earlier occasions, gold promptly retreated. But there is one big difference: Gold timers are a lot more discouraged now than on any of those four previous occasions. Contrarian analysts, who believe that the consensus is rarely right, therefore give gold better odds this time around of mounting a rally that rises to markedly higher levels. If so, then this week's correction in the gold market would be a mere pause -- and not the beginning of a major bear market.
Gold Fails to Break to New Highs, What's It Waiting For? The latest thrust didn’t quite make it into new all time high territory. What is it waiting for? Gaddafi talked, Ahmadinejad smiled, Chavez smelled, Obama whined and throughout it all Medvedev must have been smirking. What more is there to get gold screaming into new highs? Although the week’s gold action seemed to be taking a turn for the worst it still has had no real impact upon the long term trend for gold. The long term P&F chart is still in a strong bullish trend although it has changed direction this past week and still might move lower without long term impact. The price remains above its positive sloping long term moving average line. The long term momentum indicator remains in its positive zone although it has dropped below its now negative sloping trigger line. The long term volume trend remains positive with the volume indicator above its positive sloping trigger line. Despite the weakness starting to show in the momentum indicator, to be expected during a short down price period, the rest of the indicators are still strongly positive giving us a long term rating that is BULLISH.
Gold Falls, Capping First Weekly Drop Since July; Silver Sinks Gold fell, capping the biggest weekly decline since mid-July, as the metal’s failure to reach a record discouraged investors who had bet on a longer rally. Silver tumbled. Gold traded below $1,000 for the second straight day after climbing to $1,025.80 on Sept. 17, near the all-time high of $1,033.90 set in March 2008. Silver sank the most in a week since February. Before today, silver surged 44 percent and gold rose 13 percent this year, heading for a ninth-straight annual gain.
Audit the Fed Gold "Audit the Fed" questioning exposes key kink in the Federal Reserve's Gold Manipulation armor! Alan Grayson made great strides today in getting the Federal Reserve to admit that there is a problem with the ownership of Fed gold and has gotten the General Council of the Federal Reserve, Scott G. Alvarez, to agree to a GAO audit..of sorts. Here is the exchange and you can tell that Mr. Alverez is dancing around the gold audit question trying to steer the line of questioning towards the physical presence of the gold and NOT any ownership issues related to loans, swaps or derivatives.
Rep. Alan Grayson: "Has the Federal Reserve Ever Tried to Manipulate the Stock Market?"
IMF vows to have say on currencies ’Fund could avoid singling out countries for blame’ The IMF will not shy away from commenting on controversial currency issues in its new role supporting the G20 accord on a framework for balanced global growth agreed in Pittsburgh on Friday, its managing director has said. His comments came as the World Bank president welcomed G20 endorsement of a plan to create a crisis-response loan facility for the poorest countries. “If the IMF is not talking about currency, who will?” said Dominique Strauss-Kahn, IMF chief. Asked whether this meant including currency issues in the IMF’s reports back to the G20 on progress implementing the balanced growth agenda, he said: “Yes.”
Fed May Reveal Names Of Foreign Borrowers Under pressure from Congressional critics like Ron Paul, Alan Grayson, and Barney Frank, the Federal Reserve may reveal the names of foreign banks it has lent money to. WSJ: The Federal Reserve, under pressure from Congress to be more transparent, is "giving serious consideration" to releasing the names of firms that receive loans from the central bank, a top Fed official said Friday. At a House hearing, Fed General Counsel Scott Alvarez struck a conciliatory tone when a top lawmaker indicated that he wanted more information revealed about the Fed's loans.
Hard-pressed politicians produce irritating taxes State and local governments are raising taxes and inventing new ones as they scramble to balance their budgets even as the nation's economy begins to emerge from the deepest recession in seven decades. State budgets typically take a year or two to reflect improvements in the national economy, the National Association of State Budget Officers and the National Governors Association explained in its latest fiscal survey of states. The report warned that "state fiscal conditions will remain weak in fiscal 2010 and likely into fiscal years 2011 and 2012."
The Inflation/Deflation Forces Battles On here is a great debate raging between students of monetary economics. On the one hand, there are the deflationists who point to the massive deleveraging in the housing, mortgage, credit and stock markets. The fall in prices in these asset markets, at least through March 2009, was devastating and destroyed trillions of dollars of wealth and credit. On the other hand, there are the inflationists who focus on Fed policies and the money supply. Since the onset of the financial crisis, the Fed has taken the federal funds rate down to 0% and initiated countless programs including the purchase of $1.45 trillion in Fannie Mae (FNM) and Freddie Mac (FRE) debt and mortgage backed securities, guaranteeing hundreds of billions of dollars in new bank debt, purcashing hundreds of billions of commercial paper, etc… This has resulted in a massive increase in the money supply which logically will lead to inflation, argue the inflationists.
Julian Robertson: Inflation Could Hit 15-20% Mr. Robertson explains just how dependent the US has become on China and Japan. Should the Chinese and Japanese stop buying US bonds, inflation could hit 15-20%.
"It's almost Armageddon if the Japanese and Chinese don't buy our debt,”
"I don't know where we could get the money. I think we've let ourselves get in a terrible situation." Yet who would be worse off in this doomsday scenario?
Rampant Debt Monetization Means U.S. Financial System is Doomed Nearly half the nation's 25 biggest retail chains expect to hire fewer holiday workers this season than they did last year, another sign that retailers aren't counting on recession-strained shoppers to relax the tight grip on their pocketbooks this year. About 40% of stores surveyed across a broad swath of retailing, including consumer-electronic chain Best Buy Inc., teen-retailer American Eagle Outfitters Inc., and luxury-goods seller Saks Inc., told the Hay Group, a human resources consulting firm, that they expect to hire between 5% and 25% fewer temporary workers this year than last, when the recession forced many retailers to trim staff in response to falling sales. That's a grimmer outlook than the Hay survey found a year ago, when 29% of retailers said they would be slashing their holiday workforce.
IMF’s Strauss-Kahn Seeks Recovery First, Then Inflation Fight Former U.S. Federal Reserve Chairman Alan Greenspan expressed concern over inflation, while Dominique Strauss-Kahn, the International Monetary Fund’s managing director, speaking to the Yalta European Conference in southern Ukraine, suggested first securing an economic recovery. “Going out of the crisis will have consequences, we need to discuss an exit strategy,” said Strauss-Kahn during the video link. “But we need to secure the recovery before we address the problem” of inflation.
The Price of Pretense in Pittsburgh by Peter Schiff As another G20 meeting rolls around, this time on home soil, the time comes once again for the economically curious but politically unconnected to wonder what is really happening behind closed doors. But while admiring the pageantry, chuckling at the awkward group photos, and parsing the joint communiqués like newly found Dead Sea scrolls, the overwhelming majority of observers will miss the meeting's dominant theme: hypocrisy.
Before We Eulogize the Dollar In debates over the fate of the U.S. dollar there appears to be a need for clarification. While since last spring the dollar has declined about 15% in value compared to a basket of other major currencies, on the domestic front a dollar today buys about 30% more common stock than it did two years ago at the peak, and the dollar also rose substantially in value vs. real estate during the same period. This distinction is critical because for most people the value of the dollar in terms of foreign currencies is probably not a day-to-day concern. Any change the dollar’s purchasing power in terms of domestic assets, however, is very important both now and when planning for the future. Tens of trillions of dollars of credit-from-nowhere now in existence fuel demand for goods and services, bidding up asset prices across the entire world economy. This mountain of credit was built on three pillars.
Fractional reserve banking.
Government debt issuance.
Packaging of collateralized debt obligations (CDOs) into "securities."
Leaders of G-20 Vow to Reshape Global Economy One year after a financial crisis that began in the United States tipped the world into a severe recession, leaders from both rich countries and fast-growing powerhouses like China agreed on Friday to a far-reaching effort to revamp the economic system. The agreements, if carried out by national governments, would lead to much tighter regulation over financial institutions, complex financial instruments and executive pay. They could also lead to big changes and more outside scrutiny over the economic strategies of individual countries, including the United States.
How G-20 Affects Your Life
U.S. dollar seen caught in G20 meeting's crosshairs A pledge from Group of 20 leaders to bring the global economy back into balance is not seen as good for the dollar in the long run, underscoring its anemic performance in recent weeks. Short-term reactions in other markets to the G20 meeting of rich and emerging economies in Pittsburgh this past week will be muted, analysts say, but bank stocks and energy prices could also be hurt over a longer period of time by G20 actions.
Scepticism over G20 pledge of new era World leaders promised a new era of economic co-operation at the close of the G20 summit in Pittsburgh on Friday, endorsing new guidelines for bankers’ pay, a tight timetable for regulatory reform and a new framework for balanced growth. But little progress was made on trade or climate change and many experts expressed doubt that the accord on growth would actually result in policy changes by leading nations.
G-20 Agrees to Boost Emerging Nations Clout at IMF, World Bank Leaders from the Group of 20 nations vowed to give emerging countries a greater say at the International Monetary Fund and the World Bank, recognizing their rising influence as the global economy starts to recover. Policy makers agreed to boost the clout at the IMF of China and other “underrepresented” emerging markets through a transfer of at least 5 percentage points of so-called quotas, which determine voting shares and access to IMF loans, from countries with disproportionate influence. They also decided to boost emerging nations’ share at the World Bank by “at least” 3 percentage points.
G-20 Pledges to Avoid Protectionism After Obama’s Tire Tariff Global leaders pledged to avoid protectionism, repeating a promise made at earlier summits of the Group of 20, just two weeks after President Barack Obama imposed tariffs on Chinese tire imports. At the conclusion of a two-day meeting in Pittsburgh, the leaders said in a statement today that they would also redouble efforts to reach by next year a new agreement to cut tariffs and subsidies in the World Trade Organization as part of the so-called Doha Round.
U.S., China Have a ‘Credibility’ Gap on G-20’s Economic Pledge A push from U.S. President Barack Obama and Chinese leader Hu Jintao to shrink trade and investment imbalances is probably years away from being fulfilled, according to comments from their own officials. Group of 20 leaders met in Pittsburgh yesterday aiming to reduce global capital imbalances blamed for contributing to the financial crisis, including a U.S. reliance on borrowing from abroad to finance spending, and Chinese dependence on exports.
G-20 Unites to Curb Bank Pay, Align Economic Policy Group of 20 leaders built on the common front they forged in fighting the financial crisis to chart a shared path toward a more stable banking system and a stronger global economy. President Barack Obama and his counterparts ended their Pittsburgh meeting yesterday promising to “raise standards together” to ensure banks restrain pay and build up capital buffers. They also established a peer-review process to monitor individual efforts to rebalance economies and to hand emerging nations a greater say in managing world growth.
G-20 Puts Off Climate Finance, Asking Ministers to Study Aid Group of 20 leaders put off tackling how to help poor nations deal with climate change, directing finance ministers to report in November on “a range of possible options” for the world’s most vulnerable countries. The world leaders also agreed to phase out almost $300 billion in subsidies for fossil fuels in the “medium term.” They asked that each country develop strategies and timetables to end the government aid, according to a statement issued after the meeting yesterday in Pittsburgh.
Faber: Dollar Weakening the Market
Credit Thaw Risks Turning Treasurys' Gains to Mush The Treasury market has benefited from the fragile state of the U.S. economy, but the unfolding recovery in the credit markets could yet push government bonds off their perch. Corporate-debt markets are overtaking the real economy on the road to health. Central-bank officials are now paying more attention to these stronger signals to guide them in deciding how soon to remove market support and to start raising interest rates.
The Fed's Toughest Job Lies Ahead! Talk that was simmering before, about how the Fed will manage the eventual withdrawal of its massive economic stimulus programs, intensified this week when the Fed’s statement after its FOMC meeting was even more positive about the economic recovery than its previous statements. The Fed said “Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be stabilizing.”
Treasuries Gain as Recovery Concern Fuels Demand at Auctions Treasury 10-year notes gained the most in six weeks as reports signaling the housing recovery will be slow to gain speed bolstered demand at three note auctions totaling $112 billion. The Federal Reserve reiterated that inflation would remain subdued and said it would leave rates low for an “extended” period of time. The difference in yields between two- and 10- year notes narrowed to 2.34 percentage points yesterday, the lowest since May 18. Reports next week are forecast to show consumer confidence and the unemployment rate rose in September.
Double Dip Economic Recession? Unemployment is high and rising. But if the recession is over, won't employment start to rise? The quick answer is no. We look deeper into the Statistical Recovery and find yet more reasons to be concerned about near-term deflation. This week we consider all things unemployment and ponder the need to create at least 15 million jobs in the next five years to return to a full-employment economy - and the implications for both the US and world economies if we don't. Economic is often about what we can clearly see, and yet it is understanding what we can't see that gives us true insight. We start with a collection of facts that we can see and then begin a thought exercise to find the implications.
The “Other” Carry-Trade… HRA Journal Commentary Until the middle of this decade Yen-carry trade was all the rage. Traders borrowed money at ultra low rates in Tokyo and then moved it into higher yielding assets. The difference between the low cost of Yen and higher yields elsewhere, the “positive carry”, was pocketed. Hedge funds ran this trade, using huge leverage levels. This trade was blamed by some for the run up in base metal prices during this period, on the assumption that hedgers were loading up on metal with this leveraged capital.
Yen Rallies to Seven-Month High as Japan Opposes Intervention The yen rose to a seven-month high versus the dollar as Japan’s new government reiterated its opposition to intervening to stem a currency’s gain and the Federal Reserve pledged to keep interest rates low. Sterling dropped to a three-month low below $1.60 this week after Bank of England Governor Mervyn King was quoted by a newspaper as saying the pound’s weakness is aiding in rebalancing the U.K.’s economy. The dollar reached a one-year low versus euro on increased demand for riskier assets before a report next week forecast to show U.S. job losses slowed.
Tepid Economic Data Suggest a Sluggish Recovery Consumer sentiment and new-home sales showed signs of improvement Friday, while sales of durable goods fell, signaling the U.S. economy's recovery won't be a smooth ride. Optimism among U.S. consumers reached its highest level in September since January 2008, and new-home sales posted their fifth-straight month of improvements. But manufacturers' orders for durable goods -- big-ticket items designed to last three years or more -- tumbled 2.4% to a seasonally adjusted $164.44 billion in August, on a plunge in aircraft orders.
Wolin Says Financial Regulatory Overhaul Likely This Year Deputy Treasury Secretary Neal Wolin, the department’s No. 2 official, said he expects Congress to revamp financial regulations for Wall Street this year. Congress is considering legislation that would impose tighter regulations on banks, lenders, and other financial institutions following the worst recession since the Great Depression. One proposal, the creation of a Consumer Financial Protection Agency, remains a top priority for President Barack Obama, Wolin said in an interview today at a conference hosted by the Congressional Black Caucus in Washington.
Enter the Recession’s Waiting Room A BUNCH of the guys drove straight to a bar. You get laid off from a job that pays $15 an hour, plus health care and other benefits — it’s Miller time. Time for a convoy to one of the watering holes in this town, 80 miles west of Omaha, where you can buy a beer at 10 in the morning. Few of the employees of Katana Summit, a wind-tower manufacturer, saw it coming. On that day in early August, and in another round of cuts a few weeks later, about half of the plant’s 195-person payroll was eliminated, a shock that came with one notable consolation: the executives said they hoped to hire everyone back soon.
Don't bank on your home as an ATM The coming decades won't repeat the dramatic rise in real estate values that previous generations experienced, economists say. It may be time to return to viewing the home simply as a place to live. For generations of Americans, a home was seen not simply as a dwelling, but as an engine of personal wealth. That view was promoted by the home-building and real estate sales industries as well as the U.S. government, which subsidized home loans and provided tax deductions for mortgage interest. There have been booms and busts along the way, but from the second half of the last century through the start of this one, nothing derailed the real estate locomotive on its uphill climb. The train stalled here and there and rolled back now and then, but each time it roared back up and got homeowners to the mountaintop.
Home buyer tax credit might be extended for service members Rep. Charles B. Rangel's bill would also stop the IRS from taking back the credit from those who couldn't use their houses as a principal residence for 36 months because they had to deploy elsewhere. Reporting from Washington - Will Congress extend the wildly popular $8,000 home buyer tax credit beyond its Dec. 1 expiration date? That's a question generating huge pressure on Capitol Hill from would-be buyers who haven't found the right house as well as from realty agents, builders, lenders and squads of lobbyists working on their behalf.
Durable Goods Orders Unexpectedly Drop Demand for U.S. durable goods unexpectedly fell in August and sales of new homes rose less than forecast, restraining the pace of the economic recovery. Orders for goods made to last several years dropped 2.4 percent, the biggest decline since January, the Commerce Department said today in Washington. Consumer sentiment improved, a separate report showed.
Another Reason We Won't Have A V-Shaped Recovery: Jobs In order for the U.S. economy to go roaring right back to the 3%-4% long-term growth the bulls are looking for, consumer spending will have to rebound. Consumer spending is still 70%+ of the economy, and it's hard to get a supertanker cruising along at top speed if 70% of its power is removed. In order for consumer spending to come roaring back, however, one critical thing has to happen: • Consumers have to be employed
U.S. Job Seekers Exceed Openings by Record Ratio Despite signs that the economy has resumed growing, unemployed Americans now confront a job market that is bleaker than ever in the current recession, and employment prospects are still getting worse. Job seekers now outnumber openings six to one, the worst ratio since the government began tracking open positions in 2000. According to the Labor Department’s latest numbers, from July, only 2.4 million full-time permanent jobs were open, with 14.5 million people officially unemployed.
The Mortgage Machine Backfires WITH the mortgage bust approaching Year Three, it is increasingly up to the nation’s courts to examine the dubious practices that guided the mania. A ruling that the Kansas Supreme Court issued last month has done precisely that, and it has significant implications for both the mortgage industry and troubled borrowers. The opinion spotlights a crucial but obscure cog in the nation’s lending machinery: a privately owned loan tracking service known as the Mortgage Electronic Registration System. This registry, created in 1997 to improve profits and efficiency among lenders, eliminates the need to record changes in property ownership in local land records.
Mortgage Electronic Registration Systems (MERS): A System Designed to Create the Mortgage Back Security Bubble. I’ve gotten many e-mails regarding the Mortgage Electronic Registration Systems (MERS) case out of the Kansas Supreme Court. This is an important case but first let us discuss what MERS is. MERS claims to be a privately-held company and their function is keeping track of a confidential electronic registry of mortgages and the modifications to servicing rights and ownership of the loans. However, if you dig deeper into MERS and their shareholders you will find the same crony bankers that have led our economy off the financial cliff. Some of the shareholders include AIG, Fannie Mae, Freddie Mac, WaMu, CitiMortgage, Countrywide, GMAC, Guaranty Bank, and Merrill Lynch. It is a stunner how these same players show up in every financial war we have been dealing with.
Job losses, early retirements hurt Social Security Big job losses, spike in early retirements claims from seniors swamp Social Security system Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s. The deficits -- $10 billion in 2010 and $9 billion in 2011 -- won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.
With Stimulus Fading, Here Comes Credit Crunch Part II The Telegraph's feisty Ambrose Evans-Pritchard pours a gallon of ice cold water over your v-shaped dreams. There's no real growth, even with massive government stimulus, and oh yeah, there's another credit crunch coming. Whoever wins today's elections in Germany will face the reckoning so deftly dodged before. Kurzarbeit, that subsidises firms not to fire workers, is running out. The cash-for-clunkers scheme ended this month. It certainly "worked".
Ford Begins Work on 3rd China Car Plant in Asia Push Ford Motor Co. began work on a third Chinese car plant as it strives to challenge General Motors Co. and Volkswagen AG in a country set to pass the U.S. as the world’s biggest auto market. The $490 million plant will make revamped Focus cars when it opens in 2012, Ford Chief Executive Officer Alan Mulally said today at a groundbreaking ceremony in Chongqing, southern China. The factory, which will be able to make 150,000 vehicles a year, will boost Ford’s overall car capacity in the country to 600,000.
VP Biden: If stimulus fails, 'I'm dead' Vice President Joe Biden told the nation's governors Thursday that if the $787 billion stimulus fails, "I'm dead." Biden, who holds regular calls with governors and mayors to chart the progress of the stimulus package, said he was pushing accountability standards purely out of "self-interest." "If it fails, I'm dead," he said. Biden held the conference call with almost all the governors -- Louisiana Gov. Bobby Jindal (R) did not participate -- to encourage them to make the Oct. 15 deadline for reporting the number of jobs created and saved by the stimulus package.
Bill Clinton speaks of vast, right-wing conspiracy Bill Clinton says a vast, right-wing conspiracy that once targeted him is now focusing on President Barack Obama. The ex-president made the comment in a television interview when he was asked about one of the signature moments of the Monica Lewinsky affair over a decade ago. Back then, first lady Hillary Rodham Clinton used the term "vast, right-wing conspiracy" to describe how her husband's political enemies were out to destroy his presidency.
Bill Clinton: Vast Right-Wing Conspiracy Now Targeting Obama
Bill Clinton: 'Vast right-wing conspiracy' still going strong Former President Bill Clinton said Sunday that the “vast right-wing conspiracy” that worked against his presidency is alive and well, albeit in slightly reduced numbers. “It's not as strong as it was, because America has changed demographically. But it's as virulent as it was,” Clinton said on NBC’s "Meet the Press." Clinton went on to say that the things being said about President Barack Obama are “like when they accused me of murder.” He said it’s poisonous for the nation.
Obama at the Precipice THE most intriguing, and possibly most fateful, news of last week could not be found in the health care horse-trading in Congress, or in the international zoo at the United Nations, or in the Iran slapdown in Pittsburgh. It was an item tucked into a blog at ABCNews.com. George Stephanopoulos reported that the new “must-read book” for President Obama’s war team is “Lessons in Disaster” by Gordon M. Goldstein, a foreign-policy scholar who had collaborated with McGeorge Bundy, the Kennedy-Johnson national security adviser, on writing a Robert McNamara-style mea culpa about his role as an architect of the Vietnam War.
China’s Mr. Wu Keeps Talking AT 79, Wu Jinglian is considered China’s most famous economist. In the 1980s and ’90s, he was an adviser to China’s leaders, including Deng Xiaoping. He helped push through some of this country’s earliest market reforms, paving the way for China’s spectacular rise and earning him the nickname “Market Wu.” Last year, China’s state-controlled media slapped him with a new moniker: spy.
Banking, Energy Sanctions Are Iran Option, Gates Says Iran’s construction of a secret nuclear facility may prompt additional economic sanctions, including restrictions on banking and on oil and gas technology, U.S. Defense Secretary Robert Gates said. “There is no military option that does anything but buy time,” Gates said in an interview on CNN’s “State of the Union” today. The U.S. and the other members of the United Nations Security Council should also continue to pursue negotiations, such as the meeting scheduled with Iran on Oct. 1, he said.
Iran tests short-range missiles amid nuclear tension Iran tested a missile-launching system and two types of missiles Sunday, the state-run Press TV said. The missile tests come amid tension over the Islamic republic's nuclear program. The missiles, fired at targets around the country Sunday, included the Fateh-110, a short-range ground-to-ground missile, and Tondar-69, a short-range naval missile, the station said. Iran plans to test the long-range Shahab missile on Monday.
Clinton: Iran needs to prove it isn't pursuing nuclear weapons Iran said it test-fired short-range missiles in a show of force Sunday as Secretary of State Hillary Rodham Clinton said that the country would have to prove it is not developing nuclear weapons or face more sanctions. Clinton, in an appearance taped Friday for CBS' "Face the Nation," said that the revelation of a nuclear facility near the holy city of Qom just raised additional suspicions about the intent of the Iranians' nuclear program. "We believe that it is a covert facility designed for uranium enrichment," she said.
U.S. to Iran: Prove your nuclear program is peaceful Top U.S. officials say the underground nuclear facility that Iran revealed last week is illegal and likely intended for military purposes. "I think that certainly the intelligence people have no doubt that ... this is an illicit nuclear facility, if only ... because the Iranians kept it a secret," Defense Secretary Robert Gates said in an interview broadcast Sunday on CNN's "State of the Union."
General Stanley McChrystal demands 40,000 more troops for Afghanistan The US commander of Nato forces in Afghanistan has asked for 40,000 more troops, according to reports in Washington. General Stanley McChrystal’s request was delivered to Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff, at a meeting in Germany on Friday, The New York Times reported. News of the recommendation emerged as another British soldier was killed in Afghanistan, taking total British fatalities since 2001 to 218. Three French soldiers and two American military personnel also died over the weekend.
Afghans divided over foreign forces Nato allies seen as oppressors and saviours A bullet-shaped niche hewn from the mountainside is all that remains of the colossal stone Buddha that watched over the Bamiyan valley for 1,500 years before the Taliban demolished it with dynamite. Fragments of the fallen giant and its smaller twin joined the debris left by armies past: from the carcasses of Soviet tanks to the hilltop ruins of the City of Screams, site of a 13th century massacre by Genghis Khan.
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