Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Fri 01.30.2009
Federal Reserve sets stage for Weimar-style Hyperinflation The Federal Reserve has bluntly refused a request by a major US financial news service to disclose the recipients of more than $2 trillion of emergency loans from US taxpayers and to reveal the assets the central bank is accepting as collateral. Their lawyers resorted to the bizarre argument that they did so to protect ‘trade secrets.’ Is the secret that the US financial system is de facto bankrupt? The latest Fed move is further indication of the degree of panic and lack of clear strategy within the highest ranks of the US financial institutions. Unprecedented Federal Reserve expansion of the Monetary Base in recent weeks sets the stage for a future Weimar-style hyperinflation perhaps before 2010.
Are we in a Depression? I was in Vancouver at the first of the week. Joe Martin had me on a panel at his January Gold show. I got a lot of questions while I was there about the state of the economy that is obviously on the minds of many. And then Ken Gerbino did a piece on Tuesday listing the reasons there would not be a depression. I have a world of respect for Ken; he's a friend and a very astute guy. In this case, he happens to be dead wrong. Readers should understand first of all, there is no definition for either recession or depression; they are variations of the same thing. So someone could rightly argue that the Great Depression wasn't really a Great Depression but more of a Great Recession on Crack. There is no line in the sand as it were. In 1932 we were the world's greatest creditor nation. Today we are the world's greatest debtor nation. Anyone who can read has known since 2001 when Treasury Secretary Paul O'Neil released his study on the state of US finances that we are essentially bankrupt as a nation. At that time we were some $43 trillion in debt. It's more like $100 trillion and growing daily now.
'Buy American' hotly debated Business groups opposed The first of what might be many trade disputes during the Obama presidency erupted on his first full day in the White House. On Jan. 21, the House Appropriations Committee voted 55-0 for an amendment increasing the "Buy American" mandate for infrastructure projects funded by the $819 billion stimulus bill. The amendment, introduced by Rep. Peter J. Visclosky, an Indiana Democrat who chairs the Congressional Steel Caucus, would require the use of American-made iron and steel for infrastructure projects funded by the stimulus bill. Sen. Byron L. Dorgan, North Dakota Democrat, has introduced an even more restrictive "Buy American" mandate in the Senate. "If we are going to expend such a massive sum of money, it must be spent on American products and workers," said Mr. Visclosky, who noted that the U.S. steel industry is operating at 44 percent of capacity.
US-EU trade war looms as Barack Obama bill urges 'Buy American' The prospect of a trade war between the US and Europe is looming after "Buy American" provisions were added to President Barack Obama's $820 billion stimulus package. The EU trade commissioner vowed to fight back after the bill passed in the House of Representatives late on Wednesday included a ban on most purchases of foreign steel and iron used in infrastructure projects. The Senate's version of the legislation, which will be debated early next week, goes even further, requiring that any projects related to the stimulus use only American-made equipment and goods. The inclusion of protectionist measures has quickly raised hackles in Europe. Catherine Ashton, the EU trade commissioner, said: "We are looking at the situation. The one thing we can be absolutely certain about, is if a bill is passed which prohibits the sale or purchase of European goods on American territory, that is something we will not stand idly by and ignore."
US-China currency war eclipses Davos, and threatens the world Turning a corner in the labyrinthine corridors of the Davos nerve-centre, I ran smack into Chinese premier Wen Jiabao - followed by a regiment of retainers and senior offices in full regalia. They have not quite adapted to the "sport" dress code of capitalism in Alpine retreat. Jeroen van der Weer - a Davos stalwart - wears horrendous corduroy trousers (pink sometimes) with a 1950s-era Tyrolean woolly. I dread to think how they react to Swiss prices if they venture into the restaurants. Mr Jiabao smiled at me benignly, but he is not in a good mood. Indeed, he is fuming over the remarks by US Treasury Secretary Tim Geithner that China was "manipulating" its currency to gain market share. Reports were circulating this afternoon in Davos that Mr Jiabao erupted into a tirade after lunch at the mere mention of Mr Geithner's name.
Max Keiser : Tim Geithner's currency war with China Max Keiser gives his take on Timothy Geithner's ruffling feathers of China about the currency war.
Russian prime minister Vladimir Putin calls for end of dollar stranglehold Russian prime minister Vladimir Putin has called for concerted action to break the stranglehold of the US dollar and create a new global structure of regional powers. "The one reserve currency has become a danger to the world economy: that is now obvious to everybody," he said in a speech at the World Economic Forum. It is the first time that a Russian leader has set foot in the sanctum sanctorum of global capitalism at Davos. Mr Putin said the leading powers should ensure an "irreversible" move towards a system of multiple reserve currencies, questioning the "reliability" of the US dollar as a safe store of value. "The pride of Wall Street investment banks don't exist any more," he said.
Be afraid: US protectionist stance echoes 1930s disaster The US Congress has been busily adding knee-jerk, selfish provisions to Barack Obama's giant fiscal stimulus package to favour American iron and steel companies. This is the sort of shortsighted protectionism that led the world down its disastrous path in the 1930s. No wonder the European Commission is worried. We all should be. Restrictions on trade such as the raising of tariffs and other barriers to imports are held to be responsible for making the depression of the 1930s worse. The worse the depression got, the more the peoples of the world suffered. In some countries extremist politicians became more popular. We are already seeing a wave of social unrest across Europe including Thursday's big strike in France.
Stimulus Package: There Is No Free Lunch As the House passes its version of the $819 billion dollar "stimulus package" and the Senate readies their nearly $900 billion dollar response, investors are going to have their hands full deciding exactly how to navigate the ramifications. Let me start by saying that I am optimistic for America, the global economy, and our investment approach. Dynamic markets always provide opportunity that can be exploited by savvy traders. Government investment in renewable energy programs, infrastructure repair and expansion, and health care initiatives will certainly benefit some growth companies that operate in these sectors. It is my job to uncover these opportunities for investment returns. However, I would be less than honest if I didn't voice concerns over the power we are giving the federal government over what I would consider to be the "private sector economy." My mother used to tell me "there is no such thing as a free lunch" and that is certainly true in politics and economics.
An $800 Billion Mistake As a conservative economist, I might be expected to oppose a stimulus plan. In fact, on this page in October, I declared my support for a stimulus. But the fiscal package now before Congress needs to be thoroughly revised. In its current form, it does too little to raise national spending and employment. It would be better for the Senate to delay legislation for a month, or even two, if that's what it takes to produce a much better bill. We cannot afford an $800 billion mistake. Start with the tax side. The plan is to give a tax cut of $500 a year for two years to each employed person. That's not a good way to increase consumer spending. Experience shows that the money from such temporary, lump-sum tax cuts is largely saved or used to pay down debt. Only about 15 percent of last year's tax rebates led to additional spending.
Gerald Celente Global Economic Meltdown Pt 1/2 We're going into the collapse of '09; commercial real estate collapse is next.
Gerald Celente Global Economic Meltdown Pt 2/2
White House shows tilt to $1 trillion 'bad bank' Crucial lenders would be helped The Obama administration is leaning toward setting up a "bad bank" that would buy toxic loan assets from large troubled banks such as Citigroup in a major new program that would be run by the Federal Deposit Insurance Corp. and is likely to cost at least $1 trillion. The program could be announced as early as Monday as part of a comprehensive plan to address burgeoning housing foreclosures and credit problems, said banking and federal officials familiar with the administration's deliberations. Senate Banking, Housing and Urban Affairs Committee Chairman Christopher J. Dodd, Connecticut Democrat, told reporters Thursday that the "bad bank" would be part of a "combination of ideas" to deal with the twin crises in the banking and housing markets, adding that he "wouldn't be surprised" if the Obama administration initially funded it out of the $700 billion Wall Street bailout program.
Does any Know Where the Economy is Going? The U.S. economy has been in a recession for more than a year now. The current administration is now debating an additional stimulus package to help turn the economy around. Lead by followers of John Maynard Keynes, the father of deficit spending, the U.S. government is bent on spending its way out of the recession. Do these programs have a chance to help the economy recover and start a new long-term economic expansion? This is the first of a three part series on the prospects for the economy. Without a road map, the current leaders of our economy are following the theory without any guideposts or road maps based on historical experience. They are taking a significant risk. First, we will look at the mess we are in. Then their answer followed by two other possible outcomes.
Economic Signs Turn From Grim To Worse Another Wave of Evidence Of a Deepening Recession On the eve of what is expected to be the clearest evidence yet of the nation's deepening recession, bad news rolled in from across the economy and the world. Sales of new homes in December plummeted, corporations announced plans to cut another 13,000 U.S. jobs, unemployment claims jumped and a troubled icon of U.S. manufacturing, Ford Motor Co., yesterday announced a massive loss. Early this morning in Japan, the government there announced that factory output had fallen by 9.6 percent and joblessness in the world's second-largest economy jumped to 4.4 percent, the largest increase in 41 years.
Economy likely shrank at fastest clip since '82 Economy's fourth-quarter performance probably worst in quarter-century; outlook remains dim The country tumbled deeper into recession and probably logged its worst economic performance in a quarter-century during the final three months of last year as battered consumers and businesses throttled back spending. The U.S. economy is deteriorating at an alarming clip as the housing, credit and financial crises -- the worst since the 1930s -- feed on each other in a vicious cycle that has proven difficult for Washington policymakers to break.
Opec pledges to push oil above $50 Opec members need an oil price above $50 a barrel to make exports worthwhile, the head of the cartel said today, adding that more production cuts were possible this year. "We are not happy with $40 even $50 a barrel," Abdalla Salem El-Badri, Opec Secretary-General, told a panel discussing energy security at the World Economic Forum in Davos. Even $50 did not guarantee a "decent income for our countries", he said, adding: "I hope that the price will pick up ... a $50 price will not permit us to invest." Asked about further cuts by the cartel, he said: "If we still have some downward problems [on prices], Opec will not hesitate to take some quantity out of the market.
The Real Long-Run Value of Gold, Part I "Gold must hit $2,200 an ounce to match its real peak of Jan. 1980. Or so almost everyone thinks..." WHAT'S IN A NUMBER...? Ignoring the day-to-day noise, more than a handful of gold dealers and analysts reckon gold will hit $2,200 an ounce before this bull market is done. Why? Because that's the peak of 1980 revisited and re-priced in today's US dollars. Simple, right? Too simple by half, in fact. First, betwixt spreadsheet and napkin, there's often a slip. Several targets you'll find out here on the net put the old 1980 top nearer $2,000 in today's money. One Gold Coin dealer puts the figure way up at $2,400 an ounce.
Silver investigation: Stakes are enormous If the US regulator's current investigation into the silver futures market is looking at allegations of ongoing price manipulation it is the first of its kind - according to a former CFTC director of enforcement. Previous Commodity Futures Trading Commission (CFTC) investigations have been into market manipulations that have already taken place. The potential for the current silver investigation to halt an ongoing manipulation could have significant implications for the price of silver.
How realistic is a North American currency? Uniting U.S., Canada, Mexico money could result from crisis "World, hold on. Instead of messing with our future, open up inside." -- Bob Sinclair Thomas Jefferson once said: "When you reach the end of your rope, tie a knot in it and hang on." As the global financial system pushes on a string, investors are desperately trying to hold tight. The New World Order is upon us, full of hope, promise and a fair amount of fear. In our recent discussion regarding the direction of our country, we noted the risks of catering to conventional wisdom and the implications for the U.S. dollar. See MarketWatch column on New World Order. The Minyanville mantra is to provide financial news you need to know before you know you need it. That's a fine line to walk, as foresight often flies in the face of mainstream acceptance.
A Response to My Critics by Peter Schiff, Euro Pacific Capital My popularity on television and the internet has led a very small money manager to use his popular financial blog to promote his fledgling business by attacking the recent poor performance of my long-term investment strategy. The post is causing quite a stir and compels me to provide some badly needed context. To achieve his ends, this individual has distorted much of what I have been saying and writing, and has twisted the facts to support his own preconceived conclusion. In essence, his piece is nothing more than an overt advertisement (and a highly deceptive one at that) to use my popularity to advance his career. In so doing he has given my critics, particularly some who have been embarrassed by their roles in the "Peter Schiff was Right" video, their moments of retribution. In addition, some members of the press who have never been among my greatest fans are seizing the opportunity to discredit me as well. The crux of the blogger's arguments are that my beliefs in "decoupling, hyperinflation, and that the dollar is going to zero" have been completely discredited by the events of 2008, and that the resulting investment losses suffered by my clients last year confirms the fatal flaws in my approach.
Chinese Premier Blames Recession on U.S. Actions - $$ Beijing Rethinks Some of Its American Investments Chinese Premier Wen Jiabao squarely blamed the U.S.-led financial system for the world's deepening economic slump, in the most public indication yet of discord between the U.S. government and its largest creditor. Leaders in China, the world's third-largest economy, have been surprised and upset over how much the problems of the U.S. financial sector have hurt China's holdings. In response, Beijing is re-examining its U.S. investments, say people familiar with the government's thinking. Mr. Wen, the first Chinese premier to visit the annual global gathering of economic and political leaders in Davos, Switzerland, delivered a strongly worded indictment of the causes of the crisis, clearly aimed largely at the United States though he didn't name it. Mr. Wen blamed an "excessive expansion of financial institutions in blind pursuit of profit," a failure of government supervision of the financial sector, and an "unsustainable model of development, characterized by prolonged low savings and high consumption."
New bank bailout could cost up to $2 trillion Government officials seeking to revamp the financial bailout have discussed spending another $1 trillion to $2 trillion to help restore banks to health, the Wall Street Journal said, citing people familiar with the matter. The paper said the Barack Obama administration could announce its plans within days but has not yet determined the final shape of its new proposal, and the exact details could change. The administration is also seeking more effective ways to pump money into banks, and is considering buying common shares in the banks, according to the paper.
Don't forget those toxic assets Until banks get the bad stuff off their balance sheets, they stand no chance of returning to normal lending. It is hard to ignore the reality that the banking crisis is experiencing another significant flare-up. Headlines are becoming scary again, with questions now raised about the future of institutions (see Bank of America) that had been somewhat shielded from the brunt of the initial storm that broke out last September. At the core of the latest disturbing twist of events is the fact that banks, while in the midst of a severe recession, continue to be weighed down by an enormous amount of toxic assets on their balance sheets that policymakers somehow never got around to address.
William Seidman on 'bad banks' William Seidman, the former chairman of the Resolution Trust Corp., discusses his opinion of the "bad bank" remedy for the financial crisis. Seidman joins Reuters' Carrie Lee and Dan Burns.
Cost of shoring up U.S. banks may be in trillions The cost of restoring confidence in U.S. financial firms may reach $4 trillion if President Barack Obama moves ahead with a "bad bank" that buys up souring assets. The figure far exceeds even the most pessimistic estimates of how great the loan losses might be because there is so much uncertainty about default rates, which means the government may need to take on a bigger chunk of bank debt to ease concerns. Goldman Sachs economists said ideally the public sector would step in to remove the hardest-to-value assets, which would alleviate nagging worries about future losses and hopefully help get lending going again.
The real cost of TARP Kristen Roberts, Reuters Economics Specialist Editor joins Carrie Lee to discuss how the government's Troubled Asset Relief Program might ultimately cost taxpayers less than some might expect.
Americans receiving jobless benefits hits record Labor Department says number of Americans receiving unemployment benefits at all-time record The number of people receiving unemployment benefits has reached an all-time record, the government said Thursday, and more layoffs are spreading throughout the economy. The Labor Department reported that the number of Americans continuing to claim unemployment insurance for the week ending Jan. 17 was a seasonally adjusted 4.78 million, the highest on records dating back to 1967. That's an increase of 159,000 from the previous week and worse than economists' expectations of 4.65 million. As a proportion of the work force, the tally of unemployment benefit recipients is the highest since August 1983, a department analyst said.
Kodak posts 4Q loss, plans up to 4,500 job cuts Eastman Kodak loses $137 million in 4th-quarter, plans to cut up to 4,500 jobs Eastman Kodak Co. said Thursday it is cutting 3,500 to 4,500 jobs, or 14 percent to 18 percent of its work force, as it posted a $137 million fourth-quarter loss on plunging sales of both digital and film-based photography products. The photography products pioneer said its loss in the October-December period amounted to 51 cents a share. That compares with a year-ago profit of $215 million, or 75 cents a share.
Economic stimulus? Feds want your medical records Electronic database to include lawsuit, mental health, abortion, sexual details A little-discussed provision in President Obama's economic stimulus plan would demand that every American submit to a government program for electronic medical records without a choice to opt out, and it has privacy advocates more than a little alarmed. Patients might be alarmed, too, privacy advocates said, if they realized information such as documentation on abortions, mental health problems, impotence, being labeled as a non-compliant patient, lawsuits against doctors and sexual problems could be shared electronically with, perhaps, millions of people.
Senate Passes Health Insurance Bill for Children Immigrant Clause Opens Rift The Senate overwhelmingly approved legislation yesterday to provide health insurance to 11 million low-income children, a bill that would for the first time open the program to legal immigrant children and pregnant women. The State Children's Health Insurance Program, which is aimed at families earning too much money to qualify for Medicaid but not enough to afford private insurance, currently covers close to 7 million youngsters at a cost of $25 billion.
Jobless claims jump to record, durable orders slide The number of Americans claiming jobless benefits hit a record high in mid-January, while orders for long-lasting factory goods fell for a fifth month in December, according to data on Thursday that showed the economy in steep decline. Piling on the gloom for an economy mired in recession for more than a year, sales of newly built single-family homes slumped to their lowest levels since records started in 1963. The batch of bleak data cast doubt on whether the economy would begin to recover in the second half of the year, since stability in the housing market, the root of the worst financial crisis in more than 70 years, may be a prerequisite.
Ford reports $5.9 billion loss The U.S. automaker says that, despite increasing losses, it doesn't expect to have to ask the government for an emergency loan. Ford Motor reported that its ongoing losses soared in the fourth quarter, but the company reiterated it still does not need the federal bailout already received by its two U.S. rivals. Ford reported a net loss of $5.9 billion, or $2.46 a share, up from a loss of $2.8 billion in the same quarter a year ago. For the full year, Ford lost $14.6 billion, and the company has now lost nearly $30 billion over the past three years.
Eddie Bauer cutting jobs in Bellevue Struggling retailer Eddie Bauer said today it has eliminated 193 jobs, including 71 at its downtown Bellevue headquarters. The layoffs also include Eddie Bauer's information technology operations in the Chicago area, a distribution center in Columbus, Ohio, and a call center in New Brunswick, Canada. Together, they represent a 15 percent reduction in the company's non-store staff. Eddie Bauer now employs about 390 people at its headquarters. President and Chief Executive Officer Neil Fiske said the layoffs are part of a previously announced plan to cut up to $15 million from the company's operating cost structure this year. Eddie Bauer cut as much as $50 million last year. Calling the fourth-quarter retail environment "brutal," Eddie Bauer also announced recently that it will reduce the size of its board from 10 to seven members and freeze salaries.
LA man upset over job kills wife, 5 kids, himself A man who fatally shot his wife, five young children and himself Tuesday had earlier faxed a note to a TV station claiming the couple had just been fired from their hospital jobs and together planned the killings as a final escape for the whole family. "Why leave the children to a stranger?" Ervin Lupoe wrote, according to KABC-TV. The station called police after receiving the fax, and a police dispatch center also received a call from a man who stated, "'I just returned home and my whole family's been shot." Officers rushed to the home in Wilmington, a small community between the ports of Los Angeles and Long Beach, about 8:30 a.m., apparently within minutes of the killings. Officers could still smell the gunshot residue in the air.
Starbucks cutting 6,700 jobs, closing 300 cafes The Seattle-based coffee company is closing stores again and slashing significantly more jobs than expected to stem eroding profits. It's business as usual at a Starbucks in Ballard. But business overall is down for the coffee giant, which announced layoffs and store closures. All that penny-pinching advice about cutting back on your $3-a-day latte habit finally got through to the caffeine-addicted masses, who have pulled back so dramatically that they sent Starbucks into a tailspin. The Seattle-based coffee company is closing stores again and slashing significantly more jobs than expected to stem eroding profits. Starbucks surprised workers and Wall Street on Wednesday with plans to close 300 more stores, eliminating 6,000 store positions by fall. The firm will lay off 700 more workers in the next couple of weeks, including 350 people or about 11 percent of its Seattle headquarters.
NYC: 23,000 city jobs in danger of being cut More spending cuts loom on the horizon for New York City, which could see a $4 billion deficit in the new budget that starts July 1. New York City dwellers will have to cope with billions of dollars more in spending cuts and thousands of city workers could lose their jobs, under a plan the mayor is due to unveil Friday, according to a source familiar with the proposal. More than 23,000 city workers might lose their jobs through layoffs or attrition unless Mayor Michael Bloomberg convinces the state and U.S. governments and the city's approximately 300,000 workers to let him curb benefits, from Medicaid to pensions, said the source, who requested anonymity.
Florida beans and corn destroyed, potatoes delayed BELLE GLADE, Fla. - Cold weather damaged most of Belle Glade's winter green beans and sweet corn. As growers assessed damage from a series of freezes that struck south Florida growing regions during the overnight hours of Jan. 20-23, buyers should expect far fewer south Florida beans and corn. "All of our beans were wiped out," said Bryan Biederman, assistant sales manager for Pioneer Growers Co-op, one of the region's largest growers of beans and corn. "Any corn we had planted for the month of March has been wiped out. It was truly a setback for our winter program."
Global Worries Over U.S. Stimulus Spending DAVOS, Switzerland - Even as Congress looks for ways to expand President Obama's $819 billion stimulus package, the rest of the world is wondering how Washington will pay for it all. Few people attending the World Economic Forum question the need to kick-start America's economy, the world's largest, with a package that could reach $1 trillion over two years. But the long-term fallout from increased borrowing by the United Stated government, and its potential to drive up inflation and interest rates around the world, seems to getting more attention here than in Washington. "The U.S. needs to show some proof they have a plan to get out of the fiscal problem," said Ernesto Zedillo, the former Mexican president who helped steer his country through a financial crisis in 1994. "We, as developing countries, need to know we won't be crowded out of the capital markets, which is already happening." Mr. Zedillo said that Washington, unlike most other countries, had the option of simply printing more money, because the dollar was a reserve currency for the rest of the world. Over the long run, that could force long-term interest rates higher and drive down the value of the dollar, undermining the benefits that come with its special status.
Grim Japan and U.S. figures show world crisis deepening Japan sank deeper into recession with industrial output tumbling and inflation slipping to almost zero, while key U.S. data later on Friday were also expected to mirror the worsening global financial crisis. Japan's industrial production fell a record 9.6 percent in December, while annual core inflation slowed to a mere 0.2 percent. Rising unemployment, slowing household spending and no improvement in the industrial outlook added to fears that Japan was flirting with deflation and would post a horror GDP figure in February if exports do not bail it out.
Davos . . . .
by Ambrose Evans-Pritchard WEF 2009:I will never come back to Davos Damn, we are all sitting here in open-mouthed astonishment. Turkish premier Tayyip Erdogan has just stormed off the rostrum after calling Israel's president Shimon Peres a "killer" to his face. Mr Peres in turn has been thundering and fulminating at the top of his voice for 25 minutes -- while the UN Secretary-General Ban Ki-moon sat in embarrased silence next to him, mostly looking at his shoes. The incensed leaders then walked out passed packed ranks of trembling Davos enthusiasts - all believers in civilized comity, and all horrified by this display of raw and visceral feeling - into a hall where a light-hearted Strauss Waltz being played with shocking insouciance. If we journalists missed our deadlines - and leaving a big gap in our newspapers tomorrow - you must forgive us, because we none could concentrate on anything as this extraordinary spectacle of Mid-East passion unfolded before our eyes. Mr Peres -- winner of the 1994 Nobel Peace prize -- had reason to be angry. The Turkish leader called today for the Obama administration to list Israel as a terrorist state for alleged atrocities against civilians in Gaza.
Turkish Prime Minister walks off stage over Gaza Turkish Prime Minister Recep Tayyip Erdogan had enough of Israeli President Peres' lies and walked off the stage in Davos saying he will never come back. Peres basically tried to say that there had been no siege and there has been no starvation in Gaza during the massacre. When does he give back that Nobel prize? If only others had the integrity of Erdogan.
Protectionist fear grips world forum Threatens trade, leaders say DAVOS, Switzerland | Business and political leaders attending the annual World Economic Forum expressed fears Thursday that growing protectionist pressures could undermine international trade - one of the few fully functioning pillars of the global economy. "Everybody here is talking about protectionism. There's not a prime minister present not talking about protectionism," said Peter Sutherland, chairman of BP and Goldman Sachs International. Those fears were aggravated by Wednesday's addition of a "Buy American" steel provision to an $819 billion economic stimulus package to help the U.S. economy navigate out of recession. The European Union was quick to put Washington on notice. "We are looking at this very carefully. If European goods are to be excluded from the U.S., we would not stand idly by," Peter Power, spokesman for EU Trade Commissioner Catherine Ashton, told The Washington Times.
Leaders of Turkey and Israel clash at Davos panel DAVOS, Switzerland: Prime Minister Recep Tayyip Erdogan of Turkey walked off the stage after an angry exchange with the Israeli president, Shimon Peres, during a panel discussion on Gaza at the World Economic Forum on Thursday, and vowed never to return to the annual gathering. Erdogan apparently became incensed after he was prevented by the moderator from responding to remarks by Peres on the recent Israeli attack. The panel was running late and Peres was to have had the last word, participants said. Panel discussions at Davos are strictly restricted to one hour, but Erdogan insisted on responding to Peres. Red faced, and with one hand grasping the arm of the moderator, David Ignatius of the Washington Post, Erdogan turned to the Israeli president. "Peres, you are older than me," he said. "Your voice comes out in a very high tone. And the high tone of your voice has to do with a guilty conscience. My voice, however, will not come out in the same tone."
At Davos, an upside-down world Business leaders are arguing for more regulation, while politicians are appealing for a hands-off approach. At last year's gathering of the world's elite at this Alpine ski resort, the tone was one of unbridled optimism. CEOs, government leaders and heads of NGOs had the luxury to discuss the rapid growth in new technologies, innovation in the financial industry (oops), and ways to combat hunger, disease and global warming. This year's World Economic Forum conjures a radically different zeitgeist. At first glance, some things about Davos haven't changed. Attendance is still strong, with at least 2,500 movers and shakers wandering the halls and standing-room-only crowds at many of the events -- although one session on how business could help make the world better was sparsely attended.
Rupert Murdock warns that government may not work
Davos 2009: Sour CEO survey More than fourteen hundred business leaders are here in Davos - and unsurprisingly - their mood is more than a little subdued, according to a survey. Consultants PwC, have been asking why in a new poll released in Davos this week. Only one in five expect growth this year, while only a third are very confidant their business will grow in the next three years.
Russia's S7 cancels Boeing 787 order Russia's S7 has become the first airline to cancel a major contract for Boeing Co's 787 Dreamliner, as the country's airlines face their worst-ever financial crisis. The order for 15 787s, due to be delivered in 2014, was worth about $2.4 billion at list prices. The cancellation is a blow for Boeing, whose new, lightweight jetliner has not yet left the ground and is about two years behind schedule. S7, the main domestic rival to Russia's flag carrier Aeroflot , will seek to lease the planes instead, the company said on Thursday.
Davos 2009: Pakistan PM interview Prime Minister Yousaf Raza Gilani discusses terrorism, plus relations with India and the new Obama administration. Pakistan faces the world's most intractable problems every day. Instability at home, instability on its borders and instability in its economy. Last year it went through a political revolution after Benazir Bhutto was assassinated and army chief Pervez Musharraf stood down as head of state. Now a new government headed by Prime Minister Yousaf Raza Gilani has to face these problems.
Davos 2009: Economies too fragile Steps need to be taken to make market economies more resilient, said European Central Bank President Jean-Claude Trichet The financial crisis has shown that market economies are too fragile and steps need to be taken to make them more resilient, said European Central Bank President Jean-Claude Trichet in an interview on the 'Davos Today' programme. He added that all options for solving the crisis should be explored and that vested interests should not be allowed to get in the way Trichet said that while granting the European Central Bank responsibility for banking supervision was one option being explored, the Bank's governing council had not reached a position on the idea.
Davos 2009: Soros on bank rescues (George Soros voiced concerns about the details of current bank rescue plans in an interview on the 'Davos Today' TV programme. The model of placing 'toxic assets' in a 'bad bank' in order to get banks lending again requires more thought, said George Soros, who believes that changes to the approach will be needed if banks are to gain the confidence to lend again. Soros also reiterated his belief that the credit crunch has proved that unregulated financial markets are unstable describing the system as 'broken'.
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Nation's economic mood darkens Americans appear unwilling to spend our way out of recession This is one recession Americans aren't going to spend their way out of. The Conference Board said Tuesday its Consumer Confidence Index edged down to 37.7 this month, a record low, from a revised 38.6 in December. It stood at about 87 just a year ago. Americans are battered by headlines about massive job cuts, including thousands at Home Depot, Corning, General Motors and Caterpillar in just the past two days, and are still watching the values of their homes and retirement funds dwindle. "Virtually, there is no confidence out there," said Bernard Baumohl, chief global economist at The Economic Outlook Group LLC. "Household anxiety has reached a point that we can count them out to get us out of the recession."
Economic pain to be 'worst for 60 years' The world economy will this year suffer its worst performance for more than 60 years with a serious risk that 50m people will lose their jobs, international organisations warned on Wednesday. The warnings came as the Federal Reserve expressed fresh concern about deflation, noting that the US economy had "weakened further" since its last policy meeting in December. The US central bank made no immediate move to purchase Treasury securities - disappointing some in the markets - and signalled that its preference is to expand targeted credit operations instead. The Fed said it would "assess whether expansions of or modifications to lending facilities would serve to further support credit markets".
Fed Adopts Policy to Modify Mortgages, Stem Home Foreclosures The Federal Reserve will ease terms on residential mortgages acquired in the rescues of Bear Stearns Cos. and American International Group Inc., seeking to stem foreclosures. The Fed policy is targeting borrowers who are 60 days or more overdue on loan payments and covers modifications of interest rates and payment plans. The program uses the Fed’s authority in the $700 billion Troubled Asset Relief Program and was released today by the House Financial Services Committee.
Roubini: A Severe Global Economic Contraction Nowhere to hide!
NYU's Roubini: "Nowhere to Hide" from Global Slowdown Nouriel Roubini of NYU’s Stern School of Business is making fresh headlines, as he's forecasting an even more dire outlook for the global economy. In an interview yesterday with Bloomberg News in Zurich, Roubini said: The U.S. will lose 6 million jobs with unemployment reaching at least 9 percent.
The U.S. economy will expand 1 percent at most in 2010.
Economic growth in China will slow to less than 5 percent.
He reiterated his statements that the biggest U.S. banks are insolvent, and that losses could reach $3.6 trillion, far exceeding his original estimates. Is Roubini -- nicknamed "Dr. Doom" for his pessimistic yet accurate forecasts in recent years -- off the mark? We ask colleague and fellow NYU economist Lawrence White. One message from White is clear. Acknowledge losses swiftly or we risk a Japan-like drawn-out recession with no near-term recovery in sight. Yesterday, White and Henry Blodget also discussed:. . .
House OKs $819B stimulus bill with GOP opposition Democratic-controlled House OKs $819 billion stimulus bill with GOP in unanimous opposition In a swift victory for President Barack Obama, the Democratic-controlled House approved a historically huge $819 billion stimulus bill Wednesday night with spending increases and tax cuts at the heart of the young administration's plan to revive a badly ailing economy. The vote was 244-188, with Republicans unanimous in opposition despite Obama's frequent pleas for bipartisan support. "This recovery plan will save or create more than three million new jobs over the next few years," the president said in a written statement released moments after the House voted. Still later, he welcomed congressional leaders of both parties to the White House for drinks as he continued to lobby for the legislation.
Obama's Stimulus: Good For Government, Bad For the Economy
US stimulus bill forced through by Democrats The House of Representatives on Wednesday night approved its version of the proposed US fiscal stimulus with overwhelming Democratic support but, in an early setback for Barack Obama, not a single Republican backed the $825bn plan. The president has spent much of his first week in office reaching out to Republicans in a bid to forge a bipartisan consensus behind the stimulus but the House vote indicated that opposition is hardening. The White House welcomed the 244-188 vote as an "important first step" towards final legislation, which Mr Obama wants to sign into law by mid-February, but the president also made clear he was open to changes as debate shifts to the Senate. "I hope that we can continue to strengthen this plan before it gets to my desk," Mr Obama said in a statement. "But what we can't do is drag our feet or allow the same partisan differences to get in our way."
Today's Commodity Prices Forecast Tomorrow's Inflation I know this is a hard one to believe, being that we are obviously in the middle of a deflationary period, but savvy institutional players are already starting to position themselves for inflationary times ahead. Inflation! Have I lost my mind? Actually, no... Let me explain what I mean. Former central banker Volcker (who is on Obama’s economic team) is prepping the world for deficits of $2 to $3 trillion dollars as the U.S. goes into one of the biggest spending sprees that (believe it or not) will make George Bush’s spending look like child’s play. The financial world is listening. They’ve seen the leading indicators of the economy in the beginning stages of perking up. They’ve seen stocks stabilize and they’ve seen the down draft in commodities halt.
Treasury Weighs Hard Choices To Save Banks Any Path Carries Risk of Failure President Obama's top advisers are in the final stages of debating several perilous options to right the financial system, all of which are likely to prove unpopular and in some cases carry a significant risk of failure, according to sources in contact with the officials. The rapid deterioration of the economy has accentuated these hard choices. The health of many banks is getting worse, not better, as the downturn makes it difficult for all kinds of consumers and businesses to pay back money they borrowed from these financial firms. Conservative estimates put bank losses yet to be declared at $1 trillion.
Edmund Phelps Says U.S. Needed 'More Coherent' Stimulus Edmund Phelps, a professor at Columbia University and winner of the 2006 Nobel Prize in economics, talks with Bloomberg's Francine Lacqua and Erik Schatzker about the U.S. government's plans to stimulate the economy and ease the credit crisis. Phelps, speaking at the World Economic Forum meeting in Davos, Switzerland, also discusses measures to remove toxic assets from banks' balance sheets and the outlook for U.S. housing.
FDIC May Run ‘Bad Bank’ in Plan to Purge Toxic Assets The Federal Deposit Insurance Corp. may manage the so-called bad bank that the Obama administration is likely to set up as it tries to break the back of the credit crisis, two people familiar with the matter said. U.S. stocks gained, extending a global rally, on optimism the bad-bank plan will help shore up the economy. The Standard & Poor’s 500 Stock Index rose 1.9 percent to 861.63 as of 9:54 a.m. in New York. Bank of America Corp., down 54 percent this year before today, rose 87 cents, or 13 percent, to $7.37. Citigroup Inc., which had fallen 47 percent this year, climbed 18 percent. FDIC Chairman Sheila Bair is pushing to run the operation, which would buy the toxic assets clogging banks’ balance sheets, one of the people said. Bair is arguing that her agency has expertise and could help finance the effort by issuing bonds guaranteed by the FDIC, a second person said. President Barack Obama’s team may announce the outlines of its financial-rescue plan as early as next week, an administration official said.
Soros urges U.S. to create "good bank" as aggregator DAVOS, Switzerland (Reuters) - The United States needs to recapitalize its banks but should consider the creation of a "good bank" when considering how to deal with the toxic assets, hedge fund manager George Soros said on Wednesday. Speaking to Reuters Television at the World Economic Forum in Davos, Soros said the planned U.S. fiscal stimulus and proposals for creating a "bad bank" to pool banks' bad loans and assets may help ease the economic crisis stateside. But he said these were "only palliatives." "They need a thorough reorganization of the mortgage system and you have replenish the equity of the banks," Soros told Reuters. "That now would require an injection of about a trillion and half dollars -- much more than if they had done it previously under the TARP (the $700 billion Troubled Asset Relief Program agreed by Congress last year)."
Currencies and the Bad Bank Plan . . . . . . Bad Bank Plan - There is no question that equities are still leading currencies for the time being and over the next few weeks, the Obama Administration could announce a plan to create an “aggregator bank” that would soak up the bad debt sitting on bank balance sheets. This would free up capital for the banks which would hopefully encourage lending and restore investor confidence. If Obama announces a bad bank plan, it could squeeze shorts in financial stocks and take the entire index higher. Since currencies are still moving in lockstep with equities, a rebound in stocks could help reduce risk aversion and take some of the steam out of dollar rally.
Focus on question of Fed Treasury buys, FOMC comment Wed
Record $40 billion 2-year note auction looms
U.S. Treasury debt prices rebounded on Tuesday, after a week of steep losses made bond investors consider at what point the Federal Reserve might step in to support the market by buying longer-dated Treasuries. Treasury bonds have been losing ground due to the prospect of a huge wave of U.S. government debt issuance, which has increasingly started to weigh on bond prices and push yields higher. However, with the Federal Reserve starting a two-day policy meeting on Tuesday, the market began to anticipate whether the central bank might use the opportunity to shed some light on whether or when it might start buying longer dated Treasuries. Chairman Ben Bernanke signaled in December that the central bank is considering doing so.
Central banks were not the big buyers of synthetic triple AAA … Ricardo Caballero argues that the current crisis stems from (flawed) efforts to construct safe assets out of risky assets in order to meet a surge in investor demand for safe assets. He is on to something. There was a surge in demand for safe assets that pushed yields on Treasuries (and Bunds, OATS and Gilts) down at the peak of the boom. And investment banks – with help from the rating agencies — did respond by constructing new kinds of products that combined higher yields than Treasuries (or Agencies) and the appearance of safety. Caballero thinks the banks constructed these securities to meet demand from central banks and sovereign funds.
Will the FOMC Raise Rates? Will they or won't they? That's the question du jour, at least with respect to today's FOMC announcement. There's obviously nothing they can do on rates, so the big issue is whether the Fed takes the leap and announces a program to buy longer-dated Treasuries. Such an outcome would hardly be unprecedented; the BOJ, for example, has purchased JGBs in the secondary market for more than a decade via its rinban program. For the Fed, it would seem to be more a matter of "when", rather than "if", they pursue such a policy; after all, buying government duration is part of the "Bernanke QE playbook" that he's been following to a tee so far.
Fed signals low rates will continue Conceding that the economy is still spiraling downward on most fronts, the Federal Reserve signaled on Wednesday that it would expand its use of unconventional measures to directly prop up lending for mortgages, consumer loans and businesses. "The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability," the Fed said Wednesday in its statement. The Fed has already been buying mortgage-backed securities and said in its statement that it would expand its intervention as needed. The committee also served notice that it would purchase longer-term Treasury bonds, a move that would drive down long-term interest rates of all types.
Dollar Gains as Fed Runs Out of Room to Cut Rates The Federal Reserve has officially run out of room to cut interest rates. For the first time since August 2007, they left interest rates unchanged at a target range of 0 to 0.25 percent. The dollar rallied because the Fed did the minimum of what was needed to pacify the market, which was to say that they could purchase Treasuries but are not going to do so right now.
Fed to Try Additional Unusual Methods It Could Buy Up Long-Term Bonds The Federal Reserve yesterday indicated that it will pursue further unconventional steps to try to stimulate the economy, as it left the interest rate it controls essentially at zero. With its main tool for managing the economy spent, the Fed has been finding new ones -- and shows every indication of continuing the practice as it tries to grapple with a rapidly deteriorating economy. The Federal Open Market Committee said it stands ready to buy up more mortgage-backed securities, could start buying long-term government bonds, and may take further steps to make loans more widely available. Those measures would push down the interest rates on loans that consumers take out to buy homes or cars or that businesses take out to buy new equipment.
Morgan Joseph: Fixing Financials: Nationalizing banks is not a good idea
Banks boosted as Geithner talks of a clean-up Beaten-down US bank stocks surged on Wednesday as new Treasury secretary, Tim Geithner, played down talk of nationalisation, fuelling hopes for a comprehensive clean-up of toxic assets on terms palatable to investors. Mr Geithner told reporters: "We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system." The Treasury secretary said the Obama administration was "looking at a range of options" for dealing with toxic assets clogging up bank balance sheets. He said: "We hope to be in a position relatively soon to lay out what we believe is a viable programme."
Geithner: hope to unveil recovery plan soon Treasury Secretary Timothy Geithner said on Wednesday the Obama administration was working on a plan to repair the battered financial system and boost recovery that should be ready fairly soon. "We are looking at a range of options," Geithner said as he started a meeting with department officials charged with oversight of the Troubled Asset Relief Program (TARP), adding: "We hope to make decisions and be in a position relatively soon" to make them public.
Billions more needed for financial rescue Next financial rescue, including asset purchases, could cost hundreds of billions more The Obama administration is developing proposals to help rescue the banking system that could cost taxpayers hundreds of billions of dollars beyond the $700 billion bailout Congress already has approved. Details are still being worked out. But the administration is looking to spend hundreds of billions more to address the foreclosure crisis, help banks get out from under weighty bad assets and expand liquidity programs. Looming above these is a proposal to set up a federal bank -- dubbed a "bad bank" -- that would buy troubled assets clogging financial institutions' balance sheets. This would free the institutions to lend money and would entice wary investors back into the market, proponents say.
Bob Dole: 'Somebody Has to Pay Someday' for Bailouts Bob Dole told CNSNews.com that 'somebody has to pay some day' for the massive spending President-elect Obama has planned and the enormous deficit and debt he has inherited. He also said the U.S. cannot spend its way out of a recession.
Schiff Still Has One Thing Right Our colleague Mish Shedlock did quite a hatchet job on hyperinflationist Peter Schiff the other day - much of it deserved, if the evidence that Mish presented is to be believed. The two have never seen eye to eye, since Mish, like us, is an unreconstructed deflationist. But his indictments against Schiff have less to do with the Inflation vs. Hyperinflation argument than with allegations that Schiff's actual performance as an investment advisor has not been so stellar as one might have inferred from his high-profile exposure as a doomsdayer. Mish says that while Schiff has been essentially correct about doomsday, his actual investment portfolio got the details completely wrong, especially in its short-dollar orientation. (The same could probably be said of another world-class self-promoter, Jimmy Rogers.)
Dow considers first dividend cut since 1912 Dow Chemical on Tuesday said it was considering breaking one of the longest streaks in US corporate history of consistent dividends by making its first cut to pay-outs to investors since 1912. In a reversal of its pledge not to cut its $1.6bn-a-year dividend, Dow said it was prepared to consider reducing the pay-out to help pay for the $15bn takeover of US rival Rohm & Haas. The news came as it emerged that Saudi Aramco, the kingdom's national oil group, was one of the companies talking to Dow about a joint venture for its plastics business. The venture has been in disarray since last year when Kuwait's state-controlled oil company pulled out at the last minute, leaving Dow without a key funding source for the Rohm & Haas deal. Dow declined to comment on the plastics joint venture and Saudi Aramco could not be reached.
Real estate agents say home-price tide has turned, sellers are capitulating How low can they go? More than a year after housing prices began to consistently fall in the Chicago area, it's still the unanswered question on the minds of home buyers, sellers, real estate agents and economists, as one report after another confirm a residential real estate market in dire shape. There's no magic answer, but the general consensus is that the declines aren't over yet. On Tuesday, a key index showed that Chicago-area home values in November posted the biggest one-month decline on record. The latest drop in the S&P/Case-Shiller Home Price index has all but wiped out the local market's gains and returned prices to May 2004 levels.
S&P Case/Shiller Index Drops 18.2% in November Interview with Index Co-Creator Karl Case, Also Economics Professor at Wellesley College
Toll on 401(k) Savings Adds Years More of Toil Millions of Americans lost more than a quarter of their 401(k) retirement savings in 2008 because of the stock market's collapse, a setback that could force them to work longer or severely curtail their spending as they grow older. In an analysis of their participants' accounts, Fidelity Investments, Vanguard and T. Rowe Price -- three of the nation's largest 401(k) plan providers -- also found that some employees were further eroding their savings by taking hardship withdrawals to pay for current financial needs. Many Americans have seen their wealth evaporate with the drop in home values, the rise in the cost of living and the stagnation of wages. Now, as they tap into nest eggs to pay bills, they face leaner retirements as well. Particularly vulnerable are baby boomers who expected to retire in the next few years.
SOUTH FLORIDA Experts share grim outlook on economy Rising unemployment will make 2009 a painful year for tens of thousands of South Florida families. And the pain could continue into 2010 or even 2011. As bad as 2008 was for the region's economy, our troubles won't be ending anytime soon. The earliest economists foresee a recovery is the middle of this year, and most think that's optimistic. The end of 2009 or the first half of 2010 is more likely. But the start of a recovery won't mean an instant shift from cloudy skies to sunshine. Economists worry that this recession could resemble an ''L'' more than a ''U.'' In other words, when the economy stops declining, it could start moving sideways rather than sharply upward.
Government to examine ways to unblock car finance The government and car makers said on Wednesday they were urgently trying to find ways to work around a rule that stops car financing companies getting direct access to credit from the Bank of England. The move came as the two sides discussed the government's 2.3 billion pound package of loan guarantees, designed to rekindle demand as the financial crisis hammers sales in one of Britain's key manufacturing sectors. Also on Wednesday, Toyota joined the growing list of auto firms seeking ways to cut costs at its British plants, and the Italian government sat down with manufacturers to discuss possible rescue measures.
New York City fears return to 1970s While many U.S. cities worry that their economies are deteriorating to the level of the 1930s Great Depression, New York City fears reliving a more recent decade that features strongly in city lore. The 1970s were a low point in city history as a fiscal crisis almost pushed it into bankruptcy, crime rates soared, and homeless people crowded sidewalks as public services crumbled. Almost a million people fled New York's Mean Streets during the decade for the safer, more stable suburbs, a population decline that took more than 20 years to reverse. When discussing the current crisis, Mayor Michael Bloomberg, now seeking a third term, promises that he will not allow the city to return to the darkness of those days, although he stresses that it faces "giant financial problems."
Senate GOP Leader Warns of ‘Looming Entitlement Crisis’ – $495K Per Household Americans face a ‘looming entitlement crisis’ in which every American household already shares nearly $500,000 in debt, Senate Minority Leader Mitch McConnell (R-Ky.) said Friday at the National Press Club. McConnell, who became the most powerful Republican in Washington with the departure of former President Bush on Tuesday, called on Democrats to use their expanded powers to address the entitlements problem. “The expansion of entitlement spending is a looming crisis that has been overlooked for too long,” said McConnell. “With control of the White House and big majorities in Congress, Democrats now owe it to the American people to put their power to work on this vital issue.”
Market Outlook: Seeing Continued Deflation as We Face a "Government Bubble"
SCHIP Expansion Amounts to ‘Socialized Medicine’ Senate Republicans Say Senate Republicans say expansion of the State Children’s Health Insurance Program (SCHIP) amounts to an attempt by congressional Democrats to socialize the nation’s health-care system. “One could certainly conclude that,” Sen. Jon Kyl (R-Ariz.), said in response to questions from CNSNews.com. “This is yet one more way to get people off of private coverage and onto government coverage so that little by little you eventually end up with a majority of people on government coverage.” SCHIP, or the State Children’s Health Insurance Program, is a joint federal-state program designed to provide healthcare coverage to children whose parents cannot afford private coverage.
Paul McCulley: Housing, Fed, and Bonds
Fed moves to help distressed homeowners Federal Reserve moves ahead on plan to provide foreclosure relief With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes. Under the program, the Fed has a number of options to provide relief, including lowering the amount the homeowner owes on the mortgage, reducing the interest rate or lengthening the term of the loan. It's unclear how many homeowners would benefit. However, the relief plan would apply to the billions of dollars of mortgage assets the Fed is holding on its books because of last year's bailouts of Bear Stearns and insurer American International Group. In general, a borrower must be at least 60 days delinquent to qualify for help, although the Fed has leeway to make some exceptions. A 2008 law that set up the $700 billion bailout fund instructed the Fed to take such foreclosure relief action.
IBM layoffs now 4,200 -- may go higher IBM won't disclose plan, but union fears as many as 16,000 may lose their jobs IBM's not-so-secret layoffs may have reached 4,200 today, according to Alliance@IBM, which believes that thousands of other employees will be losing their jobs as well before the cuts end. IBM isn't discussing its job actions and that has made the union the primary source of information about the layoffs. The union's Web site has been so busy with traffic that its server was knocked offline this afternoon from the load, according to Lee Conrad, a former IBM employee who is now the national coordinator of Alliance@IBM.
Banks, credit unions scramble in wake of Heartland breach Several have begun reporting fraud associated with exposed cards In the first real indication of the scope of the recently disclosed data breach at Heartland Payment Systems Inc., banks and credit unions from Washington to Maine have begun to reissue thousands of credit and debit cards over the past few days. Several have also begun disclosing fraud associated with payment cards that were reported to them by Visa and MasterCard as having been exposed in the breach. A Pennsylvania law firm today filed the first class-action lawsuit related to the breach. Chimicles & Tikellis LLP in Haverford, Pa., filed the lawsuit on behalf of Alicia Cooper, a resident of Woodbury, Minn., and others who might have been affected by the breach.
Corporate Aviation: Don't Come fly with the CEOs
Boeing Plans to Cut 10,000 Jobs as Demand Slows Boeing Co. said it plans to cut 10,000 jobs, or about 6 percent of its workforce, after a strike, program delays and a global recession contributed to a fourth- quarter loss. The job reductions, disclosed on a conference call today, include 4,500 that were previously announced in the commercial- plane half of Boeing's business. Earlier the Chicago-based company reported a net loss of $56 million, or 8 cents a share, compared with profit of $1.03 billion, or $1.36, a year earlier. Boeing faces a potential increase in canceled or deferred orders this year as airlines cope with a drop in travel demand and tight credit. It also must carry development costs on the delayed 787 Dreamliner, which is now due to reach the first customer in early 2010, about two years later than planned.
Obama says tough decisions soon on Iraq, Afghan wars The United States must make tough decisions soon about the wars in Iraq and Afghanistan, President Barack Obama said on Wednesday after receiving his first briefing from the heads of the U.S. armed forces. Obama, who is weighing accelerating the withdrawal of troops from Iraq and boosting U.S. forces in Afghanistan, was speaking after a nearly two-hour meeting with Defense Secretary Robert Gates and the Joint Chiefs of Staff at the Pentagon. "We are going to have some difficult decisions that we are going to have to make, surrounding Iraq and Afghanistan most immediately," the president said.
Israeli warplane bombs Gaza tunnels as US envoy George Mitchell warns over ceasefire Israel has resumed its bombing of part of the Gaza Strip known to contain smuggling tunnels to Egypt. The strikes, which threaten to derail the fragile ceasefire, come after Israel said a rocket was fired from Gaza towards the town of Ofakim, falling in an unpopulated area. The rocket attack was claimed by the Al-Aqsa Martyrs Brigades, an offshoot of moderate Palestinian president Mahmud Abbas's Fatah faction. An Israeli army spokesman confirmed a warplane had bombed the tunnels.
Hamas undermines the ceasefire:
Egypt attacks Iran and allies in Arab world CAIRO (Reuters) - Egypt aired its grievances against Iran, the Palestinian Islamist movement Hamas and the Lebanese Shi'ite group Hezbollah, saying they worked together in the fighting over Gaza to provoke conflict in the Middle East. "(They tried) to turn the region to confrontation in the interest of Iran, which is trying to use its cards to escape Western pressure ... on the nuclear file," Foreign Minister Ahmed Aboul Gheit said in an interview with Orbit satellite channel broadcast Wednesday. Aboul Gheit also said that Egypt undermined Qatar's attempts to arrange a formal Arab summit on Gaza earlier this month, arguing that it would have damaged "joint Arab action." "Egypt made the summit fail... This summit, if it had taken place as an Arab summit with a proper quorum, would have damaged joint Arab action. We can see what others do not see," he said.
U.S. envoy tries to shore up Gaza ceasefire JERUSALEM (Reuters) - President Barack Obama's Middle East envoy called on Wednesday for a Gaza ceasefire to be strengthened and extended, and promised after talks in Israel and Egypt that Washington would pursue Middle East peace vigorously. A surge of violence has threatened the fragile separate truces that Israel and the Gaza Strip's Hamas rulers put into effect on January 18 after a 22-day Israeli offensive. Israeli aircraft bombed smuggling tunnels under the Gaza-Egypt border in a response to the killing on Tuesday of an Israeli soldier on patrol along Israel's frontier with the coastal enclave.
Iran: American apology in order Perhaps this is what happens when the United States attempts to open a dialog with Iran: Mahmoud Ahmadinejad demands an apology. The vituperative Iranian president, delivering his first public address since President Barack Obama's inauguration last week and Obama's own overture to the Muslim world this week, suggested today that the "change'' which Obama promised in his campaign means that the new American leader must apologize for U.S. "crimes" against Iran, including American support for the 1953 coup in Tehran and the backing of Iraq during the war between Iraq and Iran. "We welcome change, if it's fundamental and in the right direction," Ahmadinejad said today in a televised speech. "Real change is change in the tone of talks with people, to enter from the door of respect, and not to pursue expansion and imperialism."
Obama Tells Muslim World that America is a Nation of ‘Muslims, Jews, Christians’ -- and Infidels? In his interview with al-Arabiya on Tuesday, President Obama said he intended to send a message that America is willing to forge a new partnership with the Arab world. “(W)hat I want to communicate is the fact that in all my travels throughout the Muslim world, what I've come to understand is that regardless of your faith -- and America is a country of Muslims, Jews, Christians, non-believers -- regardless of your faith, people all have certain common hopes and common dreams,” Obama told Hisham Melhem, the Washington Bureau Chief for al-Arabiya. But mentioning “non-believers” to a Muslim audience was dicey, according to some experts on Arabic and Arab culture, given the fact that to some Muslims and nations, “non-believer” is synonymous with “infidel.”
Obama Al-Arabiya Full Interview
Davos . . . .
Davos '09 and the Failure of Leadership The crisis the world is suffering through now is a failure of leadership. The leaders of the world are in Davos. If the world is watching what happens here this week, it will be to hear solutions and see responsibility and accountability. I'd say that's not off to a great start, at least on the latter. This morning, I started my Davos week with talk of trust. The Edelman Trust Barometer presentation revealed plummeting trust in financial, government, and journalistic institutions: 62% of adults in 20 countries trust companies less than they did a year ago. Trust in government is even lower. Nonetheless, the first trend I spot here: the rise of government. News reports have been saying that this will be a dialed-down Davos, but I don't see that; it's the same Davos with the same pastries and parties. The change I do sense is less of a presence and apparent swagger from business and more from government. "Power has shifted from Wall Street to Pennsylvania Avenue," said a speaker at the Edelman event.
FT's Barber Says Obama Advisers `Right' to Miss Davos
Economists Sound Off at Davos Reporting from the World Economic Forum in Davos, CNBC interviewed a number of prominent economists and business leaders about the global financial crisis and what can be done. Robert J. Shiller, a professor of economics and finance at Yale, said there might be a much-needed silver lining to the dark clouds hanging over Switzerland. "I am hopeful that we will respond to this crisis," he said. "This is creative destruction, and something creative will come out of it." Mr. Shiller added that first and foremost, the stimulus package currently being debated in Congress needs to restore confidence in the economy. On the other hand, Nouriel Roubini, an economist at N.Y.U., stayed true to his nickname of Dr. Doom. "For now the only light at the end of the tunnel is the incoming train wreck," he said, predicting that the crisis would worsen in coming months.
Confidence evaporates, currency row brews at Davos Delegates in Davos were united in the view that an economic upturn is some way off. Lars Thunnel, head of the International Finance Corporation, the private arm of the World Bank, said he expected economic malaise sparked by the credit crisis to linger. Stephen Roach, Morgan Stanley's Asia chairman, agreed the next three years would be tough. "The concept of a vigorous 'V'-shaped recovery is for business cycles of the past but not for this post-bubble, post-crisis business cycle. It is going to be a long slog in 2010, in 2011," he told Reuters. That grim scenario has left sovereign fund Dubai International Capital wary of making big long-term investments even though it sees asset prices at reasonable levels.
SOROS AT DAVOS 2009
Gloom Deepens Among Executives, Economists at Davos Gloom is deepening among business leaders and economists, casting a pall over this year’s World Economic Forum in Davos, Switzerland. “The crisis is getting worse,” Rupert Murdoch, chief executive officer of News Corp., said at a press conference to kick off the five-day event today. “It’s going to take very drastic action to turn that around, if it can be turned around, quickly. I believe it will take quite a long time.” Concerns over the economic outlook are virulent as executives from JPMorgan Chase & Co.’s Jamie Dimon to Stephen Green of HSBC Holdings Plc join more than 2,500 counterparts, academics and policy makers in the ski resort for five days of soul-searching and deal-making.
AIG's Frenkel Says 2009 `Will Be A Bad Year' Worldwide
Russia and China blame capitalists for crisis DAVOS, Switzerland: The leaders of the former bastions of the Communist bloc took the stage here on Wednesday to rebuke their capitalist brothers for dragging the world into crisis but also to assure them that, working together, they can rapidly restore the global economy to health. In the official opening address of the World Economic Forum, Prime Minister Vladimir Putin of Russia spoke of a financial "perfect storm" that has decimated the old system, rendering it obsolete. "A year ago, American delegates speaking from this rostrum emphasized the U.S. economy's fundamental stability and its cloudless prospects," he said, speaking through a translator. "Today, investment banks, the pride of Wall Street, have virtually ceased to exist."
Wen and Putin lecture western leaders The leaders of China and Russia on Wednesday turned the tables on their western counterparts who have dictated the world's economic agenda, lecturing them for policy failures they said had led to the global financial crisis. Wen Jiabao, the Chinese premier, and Vladimir Putin, Russia's prime minister, used the World Economic Forum in Davos to argue that the two rising powers must play a bigger role in a new economic order. Mr Putin mocked American delegates who had talked at last year's Davos gathering about the US economy's "fundamental stability and its cloudless prospects", saying that "investment banks, the pride of Wall Street, have virtually ceased to exist".
Putin's View: 'We're All in the Same Boat' Making his first appearance as Russian leader before the annual gathering of business and political leaders in Davos, Switzerland, Prime Minister Vladimir V. Putin struck a conciliatory tone toward the West. He explicitly wished the new administration of President Obama well, and urged cooperation on energy security, the economy and even disarmament. Mr. Putin used a 30-minute speech before a packed auditorium on Wednesday to paint Russia as a reliable partner in energy, trade and politics amid the widening global economic crisis. "We can't afford being isolationist or economically selfish," Mr. Putin said. Describing the world financial crisis as a "perfect storm," he added: "We are all in the same boat."
Putin Says Global Economy Needs `Common Standards'
Putin Turns Down Michael Dell's Aid Offer at Davos Perhaps Vladimir V. Putin is more of a Mac man. After a speech Wednesday at the World Economic Forum in Davos, Mr. Putin, Russia's prime minister, took some questions from Davos attendees. Michael Dell, the founder and chief executive of Dell, posed the first query. He asked how technology companies could help Russia make the best use of its talent and technology. Mr. Putin appeared less than impressed with the question. "You see, the trick is that we don't need any help," Mr. Putin said, according to a video of the event on YouTube. "We are not invalids. We do not have limited capacity." Reports from the event suggest that the audience was taken aback by Mr. Putin's aggressive remarks. The version of the event on YouTube, however, seems to put things in a less caustic light. (The reports also have Mr. Putin saying Russia does not have "limited mental capacity" rather than just "limited capacity" in an infrastructure sense, as the translation seems to imply.)
Trichet says system fragile as confidence melts DAVOS, Switzerland (Reuters) - Confidence among the world's top bosses meeting in Davos has evaporated and European Central Bank chief Jean-Claude Trichet said on Wednesday a too fragile financial system needed reform. But a brewing currency row between the United States and China cast doubt on the political will to act in concert. Chinese Premier Wen Jiabao and Russian Prime Minister Vladimir Putin will both address business and political leaders in the Alpine ski resort later on Wednesday, to offer their remedies for the worst economic crisis in 80 years. Business chiefs and policymakers here for the four-day World Economic Forum said there was no easy solution to the credit crisis that has torpedoed global growth and major government programmes are needed.
Trichet Says Next Important Rate Meeting Is in March
White House plan puts bull's-eye on talk shows Posted agenda issues warning about new 'obligation' review The White House is promising new reviews of the "obligations" to the government by broadcasters who "occupy the nation's spectrum" just as the president has targeted conservative talk radio icon Rush Limbaugh for a public attack, raising concerns over the possible restoration of the "Fairness Doctrine," a policy that failed as unneeded and unconstitutional two decades ago. Paul Ibrahim of NorthStarWriters.com http://www.northstarwriters.com/pi150.htm cited Obama's warning to congressional Republicans that "you can't just listen to Rush Limbaugh and get things done" in suggesting the president has become the "driving force" behind a new "systematic" plan to "intimidate and demonize Obama's opponents." That such a campaign was launched only days after Obama's inauguration is "tremendously perturbing," he wrote. "Welcome to the politics of hope 'n' change. Obama's startling attempt to hang Limbaugh's scalp on the wall is a warning that the new ruler does not want unity – he demands it," Ibrahim wrote.
Limbaugh Slams Obama Says New Prez Is Not A 'Unifier' Conservative radio king Rush Limbaugh shot back at President Obama this afternoon - saying the new commander-in-chief is "not a unifier and not bipartisan" and is "more frightened of me" than he should be of Republican leaders. "I think [Obama] wants me to fail," Limbaugh said on his show, rebutting Obamas' comments Friday that GOP lawmakers should not be listening to the right-wing talk show host. Obama had warned Republicans on Capitol Hill Friday that they need to quit listening to Limbaugh if they want to get along with Democrats and the new administration.
Rush Limbaugh on Hannity - part 1
Rush Limbaugh on Hannity - Part 2 The Future of Conservatism
Gold Is the Only Long Term Bull Market One of our themes over the years has been that monetary factors are driving the major trends in the financial markets. To put it another way, we have tended to downplay the effects on market prices of non-monetary drivers such as the expansion of the internet, the industrialisation of China, and "Peak Oil". For example, in the 8th August 2007 Interim Update we wrote: As explained in the past, when it comes to the "commodity supercycle" we are definitely sceptics. We concur with the view that commodity prices in general and metal prices in particular are in long-term upward trends, but we do not think these trends are being driven by the strong growth of "Chindia" or the global spread of capitalism or the industrialisation of Asia or the movement of billions of people to the ranks of the "middle class" or any of the other catchphrases routinely used to neatly explain the price action. In our opinion, these explanations rank alongside slogans such as "new economy" and "technology-driven productivity miracle" that were used to legitimise the price action of tech stocks during the boom of the late-1990s.
Economic Stimulus or Economic Boomerang? We are all familiar with how a boomerang works. It is a weapon of great power when used properly. However, when thrown carelessly it can turn on you. Instead of hitting its target it comes back to harm you. In this regard, the economic stimulus package is like a boomerang. If implemented properly, it may be a powerful weapon in fighting the current financial crisis. If implemented carelessly, it will make a victim of us.
Ron Paul on "CNN's Money" with Poppy Harlow 01-27-2009
World economy leads to currency instability and strong gold The fast deteriorating world economy is putting pressure on currencies. Fast rising unemployment is going to cause social strife, and gold is reacting accordingly. World unemployment rising fast US unemployment is publicly stated to be 7%. But those numbers are understated. If you add the people who stopped looking, and the part timers who want full time, that number roughly doubles. ShadowStats.com talks about that. 14% unemployment is over 1 in 8 people. You can basically apply that rate to the US and Europe as well. Now, we estimate the US will see a minimum of 3 million more jobs lost in 09, probably a lot more, maybe 4 to 5 million. If we take the number of people working in the US (roughly 130 million) 3 million more lost jobs will increase unemployment by roughly 2 to 3%. That would bring official US unemployment to 10%, and the unofficial rate to about 20% by the end of 09. That is depression level unemployment.
Fed in uncharted waters, eyes new tools Fed in uncharted waters, eyes tools to battle recession, expected to hold rates at record low With the country reeling from a recession, Federal Reserve policymakers are weighing what other tools they can use to brace the economy. Fed Chairman Ben Bernanke and his colleagues wrap up a two-day meeting Wednesday, where they are all but certain to leave a key interest rate at a record low to provide relief. "They will hold rates down for a good long time and do everything they can to turn the economy around," said Bill Cheney, chief economist at John Hancock Financial Services. At the same time, the Fed could unveil new actions -- or provide more clues as to its thinking -- to deal with a stubborn trio of crises -- housing, credit and financial.
Fed Shift Leaves Experts Blind, Complicates Central Bank’s Job Investors will have a tougher time assessing Federal Reserve policy when officials today replace interest rates with emergency credit programs as their main tool for steering the economy. Without rates as their main policy gauge, Chairman Ben S. Bernanke and the Federal Open Market Committee also will find it more difficult to anticipate the impact of their statements on financial markets during the worst credit crisis in seven decades.
FDIC May Run 'Bad Bank' in Obama Plan to Remove Toxic Assets The Federal Deposit Insurance Corp. may manage the so-called bad bank that the Obama administration is likely to set up as it tries to break the back of the credit crisis, two people familiar with the matter said. FDIC Chairman Sheila Bair is pushing to run the operation, which would buy the toxic assets clogging banks’ balance sheets, one of the people said. Bair is arguing that her agency has expertise and could help finance the effort by issuing bonds guaranteed by the FDIC, a second person said. President Barack Obama’s team may announce the outlines of its financial-rescue plan as early as next week, an administration official said.
Someone owes you $X, and doesn't have the funds to pay you.
The central bank monetizes $X amount of new government borrowing to build roads and bridges we don't need, and to pay for wars that destroy personnel and infrastructure.
Since new money has been created, the financial experts declare that the central bank has "prevented deflation" and thereby "saved the economy".
You are still broke. You have to shut down your factory, liquidate its assets (to the benefit of those who are subsidized), lay off all your workers, and stop producing goods.
This isn't a "solution"; it's a scheme to take wealth away from producers, and to give it to politically-connected spenders.
Any asset that is an inflation hedge isn't fungible, but it will produce bogus "capital gains" against a deflating currency, so that you will be forced by way of taxation to give up some of your savings when you convert back to currency. Drip, drip, drip...there it goes...away.
Any asset that is productive will have a hard time finding customers, unless that customer is a bank or the government. Any asset that is fungible is subject to inflation, and any asset backed by the "full faith and credit" of the US government comes with a premium price tag despite loss of purchasing power to inflation.
Ron Paul on "Morning Joe" 01-27-2009
Senate Panel Adds $70 Billion Tax Relief to Stimulus The U.S. Senate’s tax-writing committee added $70 billion in relief from the alternative- minimum tax to an $825 billion economic stimulus proposal. The provision benefiting more than 30 million households, primarily with incomes between $100,000 and $500,000 annually, was approved by voice vote today as an amendment to $272 billion in tax cuts the Senate Finance Committee already had planned for the broader stimulus plan. Inclusion of the alternative-minimum tax relief would swell the stimulus plan’s tax cuts to $342 billion. The tax relief is anchored to President Barack Obama’s campaign promise to give workers a reduction of up to $1,000 by reducing Social Security payroll taxes. The Obama administration urged exclusion of the AMT provision when the House drafted its stimulus bill, House Ways and Means Committee Charles Rangel said last week.
Stimulus for Who? This week the House is expected to pass an $825 billion economic stimulus package. In reality, this bill is just an escalation of a government-created economic mess. As before, a sense of urgency and impending doom is being used to extract mountains of money from Congress with minimal debate. So much for change. This is déjà vu. We are again being promised that its passage will help employment, help homeowners, help the environment, etc. These promises are worthless. This time around especially, Congress should know better than to pass anything of this magnitude without first reading the fine print. There a many red flags that I have found in this bill. At least $4 billion is allocated to expanding the police state and the war on drugs through Byrne grants, which even the Bush administration opposed, and the COPS program, both of which are corrupt and largely ineffective programs. To help Big Brother keep a better eye on us and our children, $20 billion would go towards health information technology, which would create a national system of electronic medical records without adequate privacy protection. These records would instead be subject to the misnamed federal “medical privacy” rule, which allows government and state-favored special interests to see medical records at will. An additional $250 million is allocated for states to nationalize individual student data, expanding Federal control of education and eroding privacy.
Patching Up The World With Golden Glue It was in the Wall Street Journal, in their "Best of WSJ.Com's Money Blogs" where I got the news that "As any private banker will tell you, the wealthy have become gold bugs. They are buying futures, gold bars, just about anything made from the shiny stuff." Personally, this was surprising, since I didn't know how or why bankers would know what the wealthy are doing, especially as concerns gold, but maybe this is because my relationships with my bankers are always frosty for one reason or another, usually centered around my failure to maintain a minimum balance in my checking account and then getting loud and angry when they hit me with a service fee as a result.
Jim Rogers at the Asian Financial Forum pt 1/2 Jan 19-20, 2009 Politicians made same mistakes in the past and we're headed for another depression
Jim Rogers at the Asian Financial Forum pt 2/2 Jan 19-20, 2009
Has Gold Appreciated Too Much to Be Inflation Protection? . . . . . It’s no secret that the Fed has been flooding the markets with cash. And eventually all of that cash is going to cause inflation to creep up. The question is whether the price of gold has appreciated too much to be the inflation protection it needs to be? . . . . . Or, it could be that all of this inflation-speak is nothing more than a smoke screen for the fact that the United States and China haven’t been playing nicely. And the rush to gold has been in response to the world’s two largest economies slap-fighting over Yuan rates.
China and the U.S. Play Chicken: Currency Manipulation "China is manipulating its currency," proclaims incoming Treasury Secretary Geithner. Talking about "manipulation" is helpful only if one's intent is to impress a local and insult a foreign audience. More productive may be plain talk - the U.S. and China could issue a joint statement along the lines of: "China and the U.S. agree that both will act in their respective self-interest in setting exchange rate policy." Many factors including supply and demand for a currency ultimately determine exchange rates. The U.S. is doing its share to try to manipulate the dollar, albeit with mixed results. Amongst others, last summer, the Treasury decided to make the guarantee for the housing agencies Fannie and Freddie more explicit. With the Chinese and other foreigners being the main buyers of U.S. debt in recent years, there was a threat that these buyers would abstain. Foreign investment in the U.S. had fallen off a cliff in the second quarter of 2008; the absence of foreign buying could have caused a panic in the dollar.
IMF chief turns up heat on China over yuan The head of the International Monetary Fund turned up the heat on China over its exchange rate policies yesterday, arguing that it was clear that the Chinese yuan was "significantly undervalued". Dominique Strauss-Kahn, the IMF’s managing director, said that it was in Beijing’s clear interest to allow the yuan to strengthen on foreign exchanges and insisted that the fund had been straightforward on the issue and had repeatedly spelled out this assessment. Mr Strauss-Kahn’s intervention stepped up pressure on China over its currency only days after Tim Geithner, who was last night confirmed as President Obama’s Treasury Secretary by the US Senate, sent a tremor through markets as he signalled a potential shift to a harder line from Washington over the yuan.
Deflation Risk Dipping As Stagflation Risk Rises Raise your hand. Did you purchase the 30 Year US Treasury Bond at the 27-year high of $142.66, in December 2008? Because you’re not just making a single bet you can ride senior sovereign debt into the mouth of deflation. You’re making an additional bet that the private banking system can detonate and collapse while at the same time Washington can continue to service its debt, as tax revenues virtually disappear. Or perhaps you’re making a third bet, that the US is so exceptional future purchasers of US Treasuries will be happy to know that all new auctions will be monetized. Regardless of your thinking, I see US Treasuries as having too many ways to lose, and only a few ways to win.
Bankers braced for bitter pill of regulation at Davos Two years ago anyone uttering the words "state" and "regulation" in the same sentence would have been sneered at in high-powered banking circles gathered by the ski slopes of Davos. Now, more than 18 months into the biggest financial upheaval in the last eighty years, those bank executives that still have jobs are preparing to swallow large doses of regulatory medicine to help cure a crisis they are accused of causing. With bank lending still frozen, the world sliding into recession and more than 300,000 financial jobs already gone, policymakers are replacing bankers in the driving seat at this year's World Economic Forum (WEF) to discuss short- and long-term solutions to the sector's woes.
Davos Annual Meeting 2009 - Klaus Schwab Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, shares more details about the Annual Meeting 2009 in Davos which runs from 28 January until 1 February in the alpine resort of Davos. Creating a voice of global solidarity is the top challenge of the conference. [US cabinet members are officially 'absent']
Ben Verwaayen and Klaus Schwab Mission statement - Committed to improving state of the world and what the Davos Economic Forum is doing to accomplish this end in this agenda setting forum.
Davos 2009: with global crisis in mind Some 2,500 guests from 96 countries are gathering at the World Economic Forum in Davos. It has already been called one of the most significant Davos forums in the event's 40 year history.
Davos Annual Meeting 2009 - Alexander Izosimov Alexander Izosimov, Chief Executive Officer, AO VimpelCom, explains his outlook for the global economy over the coming five years. Alexander Izosimov is a participant in the Annual Meeting in Davos which runs from 28 January to 1 February 2009. Talks about regulatory backlash and availability of access cash and consumer credit which will incur a painful adjustment.
Geithner takes a pay cut Newly installed US Treasury Secretary Timothy Geithner, one of the least wealthy men to head the department in recent years, took more than a 50% pay cut, according to his federal financial disclosure form. Mr Geithner, confirmed by the Senate yesterday, earned $411,200 in 2008 and the first two weeks this year as president of the Federal Reserve Bank of New York. As the country's 75th Treasury secretary, Geithner makes an annual salary of $191,300, the Treasury's Web site says. One consolation may be a $US434,668 severance payment from the New York Fed that Geithner listed as an asset on his disclosure form, released today in Washington. The value of Geithner's holdings ranged between $770,000 and $1.8 million.
Twenty-five people at the heart of the meltdown ... The worst economic turmoil since the Great Depression is not a natural phenomenon but a man-made disaster in which we all played a part. In the second part of a week-long series looking behind the slump, Guardian City editor Julia Finch picks out the individuals who have led us into the current crisis:
Alan Greenspan, chairman of US Federal Reserve 1987- 2006
Mervyn King, governor of the Bank of England
Bill Clinton, former US president
Gordon Brown, prime minister
George W Bush, former US president
Senator Phil Gramm
Abby Cohen, Goldman Sachs chief US strategist
Kathleen Corbet, former CEO, Standard & Poor's
"Hank" Greenberg, AIG insurance group
Andy Hornby, former HBOS boss
Sir Fred Goodwin, former RBS boss
Steve Crawshaw, former B&B boss
Adam Applegarth, former Northern Rock boss
Dick Fuld, Lehman Brothers chief executive
Ralph Cioffi Bear Sterns banker
Matthew Tannin Bear Sterns banker
Lewis Ranieri "godfather" of mortgage finance
Joseph Cassano, AIG Financial Products
Chuck Prince, former Citi boss
Angelo Mozilo, Countrywide Financial
Stan O'Neal, former boss of Merrill Lynch
Jimmy Cayne, former Bear Stearns boss
Christopher Dodd, chairman, Senate banking committee
Geir Haarde, Icelandic prime minister
The American Public
John Tiner, FSA chief executive, 2003-07
Money For Nothing Why Ben Bernanke Dreams of Throwing Money Out of Helicopters People who want to find out what Federal Reserve Board Chairman Ben Bernanke has in mind for the economy need to read some history. Bernanke declares himself a “Great Depression buff,” and as a professor at Princeton, he published an entire book devoted to the subject. The work in question, Essays on the Great Depression, published by Princeton University Press in 2000, offers vital clues to his thinking. From his interpretation of this prior disaster, he draws a key conclusion: policymakers must at all costs prevent deflation. Unfortunately for the economy, Austrian business cycle theory http://mises.org/story/672 gives us strong reason to reject both Bernanke’s historical analysis and his policy recommendations.
Traders 'gamble' with taxpayers' money, say MPs Hedge funds were accused today of gambling against the taxpayer when they bet that the share prices of British banks will fall. A powerful cross-party committee of MPs also told the UK's embattled hedge fund managers that they were "snubbing the public" by refusing to sign up to a basic set of standards for best-practice behaviour. In a showdown appearance before the Treasury Select Committee, four leading hedge fund managers were forced to defend allegations that they were profiting from the country's economic misery. They also fought off calls for greater scrutiny from regulators. Just a day after it emerged that Paulson & Co, a renowned American hedge fund, had made an estimated £270 million in profits from betting against Royal Bank of Scotland, which is majority state-owned, some of the industry's best-known players were thrown onto the back foot over the controversial practice of short-selling.
Obama Appoints Top Notch CFR, Bilderberg Members In a flurry of diplomatic activity in his first week in office, U.S. President Barack Obama on Thursday named special envoys for the Middle East and the Afghanistan-Pakistan region. Newly confirmed Secretary of State Hillary Clinton said Obama had chosen George Mitchell, a former senator and seasoned international trouble-shooter, as an envoy who will try to jump-start moribund Arab-Israeli peace talks.
Ron Paul on Obama's Foreign Policy 1-25-09 Dr. Paul discusses President Obama's interventionist foreign policy in the Middle East.
SEC 'lacks funds to detect large-scale frauds' America's financial regulator lacks the resources to detect frauds such as the $50 billion Ponzi scheme allegedly perpetrated by Bernard Madoff, according to a senior official of the US Securities and Exchange Commission (SEC). In draft testimony prepared for the Senate Banking Committee, Linda Thomsen, the SEC's director of enforcement, said that the regulator used virtually all of its resources to "pursue fires". She said: "Additional resources would give us the capacity to pursue smoke before it becomes a fire." The SEC has been criticised for failing to uncover Mr Madoff's alleged financial fraud despite numerous warnings from whistle-blowers over ten years and several investigations into the fund manager's brokerage business.
Citigroup cancels $50 million jet deal Responding to rising outrage over reports that it was going to take delivery of a $50 million, 12-passenger jet, Citigroup said this morning that it is canceling the jet order, period, end of story. "We have no intent to take delivery of any new aircraft," was the statement from Michael Hanretta, a Citigroup spokesman. This is, to put it politely, a full, 180-degree reversal. The company said Monday it would take delivery of the Dassault jet because it was actually reducing the size of its air fleet and the new jet would ultimately add efficiency to Air Citigroup. Citigroup would also have to pay millions of dollars in penalties if it didn't accept the jet, the company said. What's more, in an attempt (unsuccessful) to appease critics, Citigroup said it wasn't using any of $45 billion it received from the federal financial bailout for the jet.
Corning cutting jobs as profits dive New York-based glass and ceramics maker Corning Inc. is cutting 3,500 jobs, including more than 500 in Corning, N.Y., after its fourth-quarter profits fell 65%. Corning Inc. said Tuesday it is cutting 3,500 jobs, or 13% of its payroll, as demand slumps for glass used in flat-screen televisions and computers. The specialty glass and ceramics maker, the world's largest maker of liquid crystal display glass, announced the cutbacks as its fourth-quarter profit plunged 65% to $249 million, or 16 cents a share, from $717 million, or 45 cents a share, a year earlier. Excluding one-time items, its profit of 13 cents a share came in well below Wall Street's forecast of 20 cents a share. Sales fell 31% to $1.1 billion from $1.6 billion, below $1.2 billion in sales forecast by analysts polled by Thomson Reuters. The company also cautioned that per-share profits before one-time items will likely be canceled out in the first quarter. Sales will fall below fourth-quarter levels as projected LCD glass volumes slump 20% to 25%, it said.
Home prices plunge record 18.2 percent in November Home prices plunged a record 18.2 percent in November from a year earlier as the country's housing market remains in the throes of a deep recession, according to an index from Standard & Poor's. Prices in 20 metropolitan areas tracked by S&P fell 2.2 percent from October as housing continues to suffer from a huge supply of unsold homes, tighter lending standards and record foreclosures. The drop in prices on a month-over-month basis was slightly steeper than expectations, based on a Reuters survey of economists. However, the annual rate of decline for the Standard & Poor's/Case-Shiller composite index for 20 cities was not as steep as economists had expected. S&P said its composite index of 10 metropolitan areas also fell 2.2 percent in November from October for a 19.1 percent year-over-year drop, matching the previous month's record decline. Prices in 11 metro areas fell at record rates from a year earlier. Prices in 14 cities fell more than 10 percent from November 2007.
Resistance to Housing Foreclosures Spreads Across the Land Community-based movements to halt the flood of foreclosures have been building across the country. And they're not the usual suspects. . . . . "The small home-owners of the United States are organizing," Steele concluded, "tardily perhaps, but none the less surely." It wasn't just homeowners -- three months earlier the governor of Iowa had called out the National Guard after farmers stormed a courthouse and threatened to hang the judge if he didn't stop issuing foreclosures. They left him in a ditch, bruised but alive. By the end of the 1930s, farmers' and home-owners' struggles had pushed the legislatures of no fewer than twenty-seven states to pass moratoriums on foreclosures. The crowds appear to be gathering again -- far more quietly this time but hardly tentatively. Community-based movements to halt the flood of foreclosures have been building across the country.
Consumer confidence falls again to record low Consumer confidence fell to a record low in January as a downtrodden housing sector and worsening job prospects kept the country in a somber mood. The Conference Board, an industry group, said its sentiment index fell to 37.7 from a revised 38.6 in December, confounding forecasts for a small uptick. "Consumers remain quite pessimistic about the state of the economy," said Lynn Franco, director of The Conference Board Research Center. "Until we begin to see considerable improvements in the expectations index, we can't say the worst of times are behind us."
FedEx plane crashes in Texas Two crew members were taken to a hospital after a FedEx cargo plane crashed on landing Tuesday morning at the Lubbock, Texas, airport, officials said. The injuries appeared to be minor, said James Loomis, director of Lubbock Preston Smith International Airport. There was a small fire on the plane, the Federal Aviation Administration and FedEx spokeswoman Sandra Munoz said. Munoz said she was not sure about the extent of the damage.
Paterson denies Kennedy leaks in Senate fiasco Gov. David Paterson denies any role in the leak to the press about unproven allegations that Caroline Kennedy had problems with taxes, payment of a nanny, and in her marriage. Gov. David Paterson on Monday tried to distance himself from critical remarks about Caroline Kennedy that were leaked to the media by a person close to Mr. Paterson after Ms. Kennedy abruptly withdrew her name from consideration as a possible U.S. Senate appointee. Mr. Paterson's statements came as newspapers around the state were sharply critical of his handling of the Senate appointment and publicly questioned his ability to lead the state during a daunting fiscal crisis. Mr. Paterson denies any role in the leak to The Associated Press and some other news organizations about unproven allegations that Ms. Kennedy had problems with taxes, payment of a nanny, and in her marriage.
Congress Seeks To Authorize & Legalize FEMA Camp Facilities A new bill has been introduced in the U.S. House of Representatives called the National Emergency Centers Act or HR 645. http://www.govtrack.us/congress/billtext.xpd?bill=h111-645 This bill if passed into law will direct the Secretary of Homeland Security to establish national emergency centers otherwise known as FEMA camp facilities on military installations. This is an incredibly disturbing piece of legislation considering that the powers that be have already set in motion an agenda to setup a nationwide marital law apparatus through U.S. Northern Command and the Department of Homeland Security. Apparently, the fusion centers, militarized police, surveillance cameras and a domestic military command is not enough. Even though we already know that detention facilities are already in place, they now want to legalize the construction of FEMA camps on military installations using the ever popular excuse that the facilities are for the purposes of a national emergency. With the phony debt based economy getting worse and worse by the day, the possibility of civil unrest is becoming a greater threat to the establishment. One need only look at Iceland, Greece and other nations for what might happen in the United States next. With this in mind, it appears as if these so called national emergency centers will be used in a national emergency but only if the national emergency requires large groups of people to be rounded up and detained. If that isn’t the case, than why have these national emergency facilities built in military installations?
Apocalypse in 2012? Date spawns theories, film Just as "Y2K" and its batch of predictions about the year 2000 have become a distant memory, here comes "Twenty-twelve." Fueled by a crop of books, Web sites with countdown clocks, and claims about ancient timekeepers, interest is growing in what some see as the dawn of a new era, and others as an expiration date for Earth: December 21, 2012. The date marks the end of a 5,126-year cycle on the Long Count calendar developed by the Maya, the ancient civilization known for its advanced understanding of astronomy and for the great cities it left behind in Mexico and Central America. (Some scholars believe the cycle ends a bit later -- on December 23, 2012.)
Obama to step up battle in Afghanistan, aides say President Barack Obama is planning to refocus U.S. efforts in Afghanistan to concentrate military might on the battle against Al Qaeda and the Taliban, with less emphasis on reconstruction and governance, senior administration officials said Tuesday. Obama is also considering whether to maintain a close relationship with Hamid Karzai, the Afghan president, who has come to be viewed by some members of the new Obama administration as a possible impediment to American goals in Afghanistan, the officials said. On both fronts, the new approach represents a departure from the course taken by the Bush administration, which maintained a close relationship with Karzai and embraced an ambitious agenda that included the promotion of democracy.
Pakistan’s Crackdown on Militants Leaves Imams Preaching Jihad A dozen Pakistani policemen stood watch last week outside a Lahore mosque known to be a stronghold of the Lashkar-e-Taiba guerrilla group -- while the imam inside preached jihad to thousands of worshippers. The squad’s presence was part of Pakistan’s vow to curb Lashkar, which India blames for the Nov. 26-29 Mumbai terrorist attack that killed 164 people, and it showed how limited that effort has been. As the officers heard Saifullah Khalid’s sermon blaring over loudspeakers, he demanded more attacks on India. "Muslims under the leadership of Lashkar-e-Taiba and Jamaat ud-Dawa will conquer all South Asia!" Khalid roared. "Nobody can stop us from fighting India!"
Guatemala's Perfect Heist Guatemala's private banks got a stimulus package from Banco de Guatemala in November and December last year, just like some handpicked US banks did in the Bush administration. Not the same amount of money, but with the same goal, to increase liquidity in the system and subsequently the private banks would then give loans to businesses and people to keep the economy going. The same "bla, bla, bla" theory that was on the news channels of the US for months.
Japan plans stimulus for ailing companies HONG KONG: Japan on Tuesday outlined a plan to inject state funds into ailing companies in exchange for stakes in them, a move that echoed the partial nationalization of troubled financial firms in the United States and some European countries. The announcement, by the Ministry of Economy, Trade and Industry, is the latest in a string of efforts by the Japanese authorities to aid companies - in this case especially small and medium-sized businesses - that are struggling to keep up operations as demand dwindles. It comes amid a global debate about the potential pitfalls of nationalization.
U.K. announces £2.3 billion financing plan for carmakers LONDON: The British business secretary Peter Mandelson said Tuesday that the government would offer carmakers loan guarantees underwriting £2.3 billion of financing aimed at helping the industry cope with recession and new environmental rules. Automakers will be eligible to tap £1.3 billion, or $1.8 billion, of European Investment Bank funding and another £1 billion of Treasury guarantees on loans "This industry is not a lame duck and this is no bailout," Mandelson told lawmakers in Parliament. He said the motor industry had been "at the front line of the downturn, with output falling further and faster than any other sector. We need to counter this to prevent an irreversible loss of jobs and skills."
Obama tells Muslims, 'Americans are not your enemy' PARIS: In one of his first interviews since taking office, President Barack Obama struck a conciliatory tone toward the Islamic world, saying he wanted to persuade Muslims that "the Americans are not your enemy" and adding that "the moment is ripe for both sides" to negotiate in the Middle East. His remarks, recorded in Washington on Monday night, signaled a shift - in style and manner at least - from the Bush administration, offering a dialogue with Iran and what he depicted as a new readiness to listen rather than dictate. Obama spoke as his special Middle East envoy, George Mitchell, arrived in Egypt to meet with President Hosni Mubarak at the start of an eight-day tour whose itinerary includes Israel, Jordan, Saudi Arabia, France and Britain.
Hamas tried to hijack ambulances during Gaza war PALESTINIAN civilians living in Gaza during the three-week war with Israel have spoken of the challenge of being caught between Hamas and Israeli soldiers as the radical Islamic movement that controls the Gaza strip attempted to hijack ambulances. Mohammed Shriteh, 30, is an ambulance driver registered with and trained by the Palestinian Red Crescent Society. His first day of work in the al-Quds neighbourhood was January 1, the sixth day of the war. "Mostly the war was not as fast or as chaotic as I expected," Mr Shriteh told the Herald. "We would co-ordinate with the Israelis before we pick up patients, because they have all our names, and our IDs, so they would not shoot at us." Mr Shriteh said the more immediate threat was from Hamas, who would lure the ambulances into the heart of a battle to transport fighters to safety.
'Uranium For Iran Nuke In 2009' Iran will have enough enriched uranium to make a single nuclear weapon later this year, the prestigious International Institute for Strategic Studies (IISS) predicts. During 2009, Iran will probably reach the point at which it has produced the amount of low-enriched uranium needed to make a nuclear bomb."But being able to enrich uranium is not the same as having a nuclear weapon." However, the survey reports doubts over US Intelligence estimates that Iran halted its work on nuclear weapons six years ago. This points to Tehran's continued development of long-range ballistic missiles able to reach targets in Israel and beyond. The IISS recommends a mixture of carrot and stick as the best international response.
On Restoring Confidence in the Markets Congressman Ron Paul gives us his thoughts on restoring confidence in the markets moments after the President's address this morning. Oct 10, 2008
On Capital and Capitalism Can we solve our economic problems with never ending "liquidity injections"? If you have more debt and inflation than actual capital, do you really have capitalism?
On Market Intervention
On Safety Nets
On the End of Capitalism?
History . . . from Davos meeting last year
Davos Annual Meeting 2008 - Understanding Iran's Ambitions Unease and uncertainty continue to surround Iran's policy-making and its strategic objectives with respect to the Middle East and the West. How should the international community engage Iran in the context of energy security, nuclear non-proliferation and regional stability?
'Next rally of Gold will be at $930-950 levels' Prices of gold and silver rocketed on last Friday and this has invited a short to medium term bull run for the precious metals. Safe haven buying of yellow metal spurred the price of white metal too. Gold remained star performer last week after three incessant minor weekly losses. On Friday gold kissed 900 USD/oz levels but didn’t manage to close above the psychological barrier but closed well above the strong previous resistance levels of 892 USD/oz. Gold may touch the levels of 932 USD/oz this week.
Gold Positioning Breakout to New Highs on Weakening U.S. Dollar Gold is now in position to break out to new dollar highs and embark on a very powerful run. It is not its action on Friday which gives rise to this positive view, although that was certainly impressive enough, but the extremely bearish action in the dollar last week, which suggests that it is on the verge of a breakdown and savage decline. On the 1-year chart for gold in dollars we can see how the sharp rally on Friday broke it above the resistance at the December highs and above an inner downtrend line. We were earlier inclined to the view that gold would probably drop down to form a symmetrical Right Shoulder to complement the Left Shoulder of the large Head-and-Shoulders bottom shown on the chart, but Friday's breakout has negated that scenario.
'Gold and Silver will perform better than equities' Last week the broad market slide lower on heavy volume as the DOW tries to hold the 8000 level. If this support level is broken then we could see another leg lower with the DOW sliding down to the 6500 level. The reason I am mentioning this is because gold surged higher on Friday with big volume as traders start to anticipate this drop as well as the drop in the USD which is currently at a short term resistance level. If the market starts to drop, then holding gold stocks may not be the best safe haven. When the market sells off it tends to pull all stocks with it, by holding GLD fund or physical gold, SLV fund or physical silver, and the USO fund or physical crude oil, you could have better returns on your investment trading the commodity rather than going long stocks in a bear market.
Gold Jumps as Government Spending Boosts Inflation-Hedge Demand Gold rose to the highest closing price in almost five months in New York on speculation that government spending will spur inflation, boosting demand for the precious metal as a hedge. Silver also gained. Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, rose 4.7 percent last week to a record 832.6 metric tons. In 2008, the metal advanced for the eighth straight year as U.S. equity and commodity indexes lost more than 30 percent. "Massive injections of liquidity into the global banking system will serve to drive gold prices higher," said Dennis Gartman, an economist and the editor of the Gartman Letter in Suffolk, Virginia.
The Greater Depression - Doug Casey Jan 3rd part 1 Casey see this as the worst crisis in the last 200 years
The Greater Depression - Doug Casey Jan 3rd part 2 Talk about gold in relation to dollars, putting gold price in tens of thousands of dollars per ounce
One of Two Scenarios for Gold and Stocks is Developing It appears that one of two scenarios is developing. Scenario A, "the meltdown scenario" means that we are in the thick of things now. This would actually be preferable to Scenario B, "the reflation scenario", which would result in an even greater meltdown after a significant "tradable bounce". Rarely does one day of trading reveal much, but Friday's trading was spectacular. It appeared that scenario A was in effect as gold moved sharply higher at the opening and the other commodities (keep your eye on silver and oil and its relationship to gold) moved lower with the overall market. But silver and oil scored extremely impressive reversal rallies with oil's gains actually outpacing gold's by day's end.
Gold Consolidates Strong Gains Above $900 Gold has consolidated on the strong gains seen last week of 6.43% rise in the week (silver +6.6%). Gold fell initially in Asia to $890/oz before rising sharply in early trading in Europe to over $907/oz. Much of the technical damage done in recent weeks has been overcome and gold is again looking bullish from a technical and fundamental viewpoint. But gold needs a daily or better a weekly close above the recent October high of $925/oz if it is to again surpass last year's record high of over $1,000/oz.
Geithner Wins OK For Treasury Despite Tax Woes Timothy Geithner won confirmation as U.S. Treasury secretary on Monday as the U.S. Senate set aside misgivings about his past income tax problems in light of his experience battling the financial crisis. Geithner, 47, was expected to be sworn in quickly to help lead President Barack Obama's efforts to stabilize a worsening economy. The Senate approved his nomination on a 60-34 vote. With the U.S. economy in full-blown crisis, Geithner's experience in dealing with the past year's rapid-fire rescues of key financial firms trumped the taint from his late payment of $34,000 in self-employment taxes when he worked at the International Monetary Fund earlier this decade. The new Treasury chief is expected to soon unveil reforms to the United States' $700 billion financial bailout program to provide more support for housing and credit markets, and possibly a new effort to absorb troubled assets from banks.
Bernanke's Gamble on the Dollar There are several things of interest this week. The first and foremost is the Fed's FOMC two day meeting with their announcement on Wednesday at 2:15. It is important despite the fact that rates are effectively at zero, and the Fed has declared for 'quantitative easing.' How does the Fed intend to implement this quantitative easing? Another way to ask this is to say, "What is the next bubble?" Quantitative easing implies market distortion, and traders will be keen to understand where and how that distortion will play, because they are still geared for supercharged returns in an environment where fewer and fewer opportunities exist.
Obama plan draws cries over largess Stimulus package includes contraceptives, Mall sod From $400 million for NASA climate-change research to $650 million for digital TV converter-box coupons, the unprecedented spending in President Obama's economic stimulus is provoking questions about whether it can create jobs and jolt the country out of recession. The $825 billion bill, which is headed for likely House passage Wednesday, is increasingly being scrutinized by Republicans and economists because it doles out billions of taxpayer dollars for everything from the 2010 census to university research to contraceptives at family-planning clinics - areas far removed from the meltdown in finance, housing and automotive industries. "This bill is not all stimulus," said David M. Walker, the former head of the U.S. Government Accountability Office and president of the fiscal issues advocacy group Peter G. Peterson Association.
Hyperinflation Germany 1923
Restoring Sound Money in America There is a determined grassroots movement in the United States seeking the restoration of sound money. There are many different groups comprising this movement, but all share the same aim. It is to restore gold and silver to its rightful role as the money of the United States, as mandated by the Constitution. I have written about this movement before. In "The Quest for Sound Money in New Hampshire" in May 2005 I discussed the bill, called the "New Hampshire Sound Money Bill", that was drafted by Constitutional scholar and lawyer, Dr. Edwin Vieira. It was presented to the New Hampshire legislature, but sadly, remains pending in committee. If enacted, the bill will enable people to use gold and silver in their transactions with the state of New Hampshire.
Fed May Gain More Financial Oversight Some Worry Plan Would Give Bank Too Much Power Congress is moving to create strong new oversight of the financial sector that would likely give the Federal Reserve authority to examine the workings of a wide range of companies in an attempt to address one of the key failures that led to the financial crisis. But the initiative, which could be finalized in the House by spring, is raising concerns about whether it would muddy the Fed's traditional mission and concentrate too much power in a single federal body.
Forecast of a grim economic year 39 percent of business analysts surveyed see more job cuts ahead in bleak year for workers. It's shaping up to be another lousy year for workers, with more companies expecting to cut payrolls in the months ahead. That's part of the latest outlook from forecasters in a survey to be released today by the National Association for Business Economics. Its conclusions: the U.S. faces its worst business conditions since the report's inception in 1982. The report said 39 percent of forecasters predicted job reductions through attrition or "significant layoffs" over the next six months, up from 32 percent in October's survey. About 45 percent in the current survey anticipated no change in hiring plans.
Obama to Direct More From Bailout Fund to Consumers President Barack Obama's administration will direct more of the second half of a $700 billion financial rescue plan to open up credit for consumers and businesses and stem home foreclosures, his spokesman said. The president will use the second $350 billion outlay from the Troubled Asset Relief Program "far differently" than the Bush administration did, White House press secretary Robert Gibbs said.
Obama Mystique Raises Clout to Mythic Proportions President Barack Obama is walking, talking, and acting like a conservative. There’s daily footage of him as the devoted husband and doting dad. He speaks reverentially about the founders of the nation and the need to serve the country and each other. He wears his faith on his sleeve, even inviting famed Pastor Rick Warren to the inauguration to ask for God’s blessing. But the conservative symbols and imagery stand in stark contrast to the left-of-center agenda emerging from his administration: executive orders that weaken America’s national security and safety, taxpayer funding of abortions, three-quarters of a billion dollars in pork included in the bailout bill, etc. We’ve seen presidential liberalism in action before. But what’s different this time around is that Obama is in a better position to move the country to far-left regions than were any of his predecessors.
Bernanke Risks ‘Very Unstable’ Market as He Weighs Buying Bonds Federal Reserve Chairman Ben S. Bernanke and his colleagues may try once again to cure the aftermath of a bubble in one kind of asset by overheating the market for another. Fed policy makers meeting tomorrow and the day after are exploring the purchase of longer-dated Treasury securities in an effort to push up their price and bring down their yield. Behind the potential move: a desire to reduce long-term borrowing costs at a time when the Fed can’t lower short-term interest rates any further because they are effectively at zero.
Geithner Debt Sales to Benefit From Paulson Failures Former Treasury Secretary Henry Paulson’s inability to restore confidence in the financial system is creating unprecedented demand for U.S. debt as his successor prepares to sell the most bonds in history. Timothy Geithner, who may be confirmed as head of the Treasury today, will have the benefit of near record-low yields as he presides over auctions of as much as $150 billion of notes and bonds the next three weeks. Goldman Sachs Group Inc., one of the 17 primary dealers that are required to bid at the auctions, said last week the U.S. will likely borrow a record $2.5 trillion this fiscal year ending Sept. 30, almost triple the $892 billion in notes and bonds sold in fiscal 2008.
Hank Paulson Rhetoric
Obama Announces "New Rules" To Address Crisis As part of his rescue plan, Obama Signals Tough Restrictions on Banks in Rescue Package. President Barack Obama signaled that he would toughen restrictions on and oversight of banks as part of a fresh plan to aid the battered industry. Obama blasted the banks yesterday over reports that they’ve spent money renovating offices after receiving billions of dollars from the government and vowed they would be held accountable for any aid they receive in the future. The tough talk seemed designed to build support for a rescue plan that aides say Obama will roll out soon by reassuring lawmakers and voters that the administration will keep close tabs on money it hands out. Pressure for a plan is building after the Standard & Poor’s 500 Index fell for the third straight week, in part because of concerns about the health of the banks.
Obama Signals Tough Restrictions on Banks in Rescue Package President Barack Obama signaled that he would toughen restrictions on and oversight of banks as part of a fresh plan to aid the battered industry. Obama blasted the banks yesterday over reports that they’ve spent money renovating offices after receiving billions of dollars from the government and vowed they would be held accountable for any aid they receive in the future.
Rules no longer apply on the Hill There's a perverse logic to having the stealth release of that painful deficit projection and giddy rollout of big-ticket projects occur even before MPs regroup for this week's budget. Parliament, you see, has become a realm where radical change is the new normal. Traditional protocol and processes no longer apply. The past 72 hours have featured an unprecedented cross-Canada blitz of ministerial announcements as the federal government acclimatizes the taxpayer to deficit financing and releases its procurement list piecemeal, the better to get a bigger bang for every borrowed buck.
Thain Defends BofA Deal, Will Pay Back Office Costs Former Merrill Lynch CEO John Thain said the acquisition of the brokerage giant by Bank of America was the right thing to do but blames Merrill Lynch's huge losses on the administration of his predecessor, Stanley O'Neal, according to a memo Thain sent to Merrill Lynch employees after his ouster last week. Thain also says he'll reimburse Bank of America for the $1.2 million renovation of his office last year, which sparked controversy last week after it was reported by CNBC.
Dividends being cut at fastest pace in 50 years Dividends being cut at fastest pace in 50 years; Pfizer slashes its dividend in half Dividends are being cut at the fastest pace in at least 50 years, and many of the reductions are coming from U.S. companies investors have been relying on to provide income during the recession. Already this year, seven companies in the Standard & Poor's 500 index have decreased their dividends, removing some $12 billion from shareholders' pockets in the coming months. On Monday, Pfizer became the latest blue-chip company to do so.
Is Money Supply a Relative Absolute? There has been some chatter over an intriguing blog entry from friend Cassandra over the weekend Inflation v. Deflation with regard to the Fed's monetization of debt. The principle assertion seems to be that if the Fed is merely replacing existing credit dollar for dollar as it is written off, then the result is not inflationary.
If the original wholesale money market borrowing and lending was not inflationary, then why should its substitute be inflationary? Indeed, the real question is whether the expansion of the Fed's balance sheet is keeping pace with the contraction of money market credit more generally. If not, then the consequence may be deflationary.
Implicit in this of course are two conditions. The first, that the level of wholesale borrowing and lending and not been and would have continued not to be inflationary, and secondly, that the expansion of the Fed's balance sheet is equivalent dollar for dollar.
Layoffs Spread to More Sectors of the Economy Furloughs, wage reductions, hiring freezes and shorter hours simply did not do enough. A year into this recession, companies across the board are resorting to mass job cuts. Home Depot, Caterpillar, Sprint Nextel and at least eight other companies announced on Monday they would cut more than 75,000 jobs in the United States and around the world — a gloomy start to the workweek for employees anxious about holding their own as the economy sinks. Caterpillar, the maker of heavy equipment, is slashing its payrolls by 16 percent. Texas Instruments said late in the day that it would eliminate 3,400 jobs, or 12 percent of its work force.
Tens of thousands more layoffs are announced Economic forecasters see gloomy outlook as tens of thousands more layoffs are announced It's already been a lousy year for workers less than a month into 2009 and there's no relief in sight. Tens of thousands of fresh layoffs were announced Monday and more companies are expected to cut payrolls in the months ahead. A new survey by the National Association for Business Economics depicts the worst business conditions in the U.S. since the report's inception in 1982. Thirty-nine percent of NABE's forecasters predicted job reductions through attrition or "significant" layoffs over the next six months, up from 32 percent in the previous survey in October. Around 45 percent in the current survey anticipated no change in hiring plans, while roughly 17 percent thought hiring would increase.
A Town In Crisis The Winter of our Hardship 60 Minutes (1.25.2009) The town of Wilmington, Ohio has been devastated by the economic crisis and, as Scott Pelley reports, DHL, the town's largest employer, is shutting its domestic operation.
Big Companies Around Globe Lay Off Tens of Thousands Workers around the world, and particularly in Europe and the United States, faced another round of job cuts on Monday that swept across several industries. In the United States, several corporations said Monday morning that they would cut a total of 45,000 jobs, slashing costs to survive a recession that has taken a toll on new orders, profits and companies’ outlooks for growth. The cuts announced Monday included 20,000 jobs at the heavy-equipment manufacturer Caterpillar; 8,000 at the wireless provider Sprint Nextel, 7,000 at Home Depot and 8,000 from the expected merger of the pharmaceutical makers Pfizer and Wyeth.
Companies in U.S. to Slash More Jobs, Business Economists Say More U.S. companies project they'll pare staff in the next six months as pessimism mounts the economy will contract this year, according to a survey by the National The poll's net employment reading fell to a minus 22 this month, the lowest level since 2001, from minus 15 in the previous survey in October, the report showed today. More than three- fourths of the participants forecast the economy will shrink this year, twice as many as in the last survey.
62,000 Jobs Are Cut by U.S. and Foreign Companies Employers have tried to nip and tuck their labor costs by reducing overtime, shortening the workweek and freezing wages, but now, they are reaching for the saw. On Monday alone, companies across the employment spectrum announced more than 65,000 job cuts in the United States and around the world, a stark sign that businesses are enduring a painful, protracted downturn. Monday's toll included 20,000 cuts at Caterpillar, the world's largest maker of construction and mining machinery; 8,000 jobs at the wireless provider Sprint Nextel; 7,000 workers at Home Depot, and 8,000 from the expected merger of the pharmaceutical makers Pfizer and Wyeth. The beleaguered automaker General Motors announced that it would cut shifts at plants in Michigan and Ohio, where the downturn has hit hardest, eliminating some 2,000 jobs.
Obama’s Order Is Likely to Tighten Auto Standards President Obama directed federal regulators on Monday to move swiftly on an application by California and 13 other states to set strict limits on greenhouse gases from cars and trucks. He also ordered the Transportation Department to begin drawing up rules imposing higher fuel-economy standards on cars and light trucks. The directives make good on an Obama campaign pledge and signal a sharp reversal of Bush administration policy. Moving quickly on tailpipe emissions and on mileage rules are emphatic actions Mr. Obama could take to quickly put his stamp on environmental policy. Mr. Obama announced the actions in the East Room of the White House, saying that his orders were intended “to insure that the fuel-efficient cars of tomorrow are built right here in America.”
Timing of Stricter Standards Worries Automakers Automakers said Monday that they were working toward President Obama's goal of reducing fuel consumption, but rapid installation of stricter emissions standards could force them to drastically cut production of larger, more profitable vehicles in a time of severe financial duress. Mr. Obama ordered the government on Monday to reconsider whether California and other states could regulate vehicle emissions and help control greenhouse gas emissions, a reversal of a position taken by the Bush administration. The announcement came as General Motors and Chrysler are borrowing billions of dollars from the government to avoid bankruptcy, and as Toyota prepares to report its first operating loss in 70 years. Shortly after the president spoke, G.M. said it would cut 2,000 jobs at plants in Michigan and Ohio because of slow sales.
Detroit Calls Emissions Proposals Too Strict Automakers said Monday that they were working toward President Obama’s goal of reducing fuel consumption, but rapid imposition of stricter emissions standards could force them to drastically cut production of larger, more profitable vehicles, adding to their financial duress. Mr. Obama directed the Environmental Protection Agency to reconsider the Bush administration's past rejection of a California application to regulate auto pollution. Mr. Obama ordered the government on Monday to reconsider whether California and other states could regulate vehicle emissions to help control greenhouse gas emissions, a reversal of a position taken by the Bush administration. The announcement came as General Motors and Chrysler are borrowing billions of dollars from the government to avoid bankruptcy, and as Toyotaprepares to report its first operating loss in 70 years. Shortly after the president spoke, General Motors said it would cut 2,000 jobs at plants in Michigan and Ohio because of slow sales.
Auto Supplier Industry May Ask for Bailout Money The auto supplier industry's top executives are meeting this morning to discuss approaching the Obama administration for a piece of the $700 billion financial rescue plan. More than a dozen chief executives and chief financial officers are finalizing how much they will seek in federal assistance, said Glenn R. Stevens, a vice president of the Original Equipment Suppliers Association. Last month, the Bush administration granted General Motors and Chrysler $17.4 billion in loans from the rescue plan.
Retail sales forecast to fall in 2009 Retail sales likely to fall 0.5 pct in 2009, after modest rise in 2008; confidence still low The nation's retailers had a rough 2008, but this year will likely be even scarier, according to a sales forecast released Tuesday from the world's largest retail trade organization. Retailers are expected to record a 0.5 percent drop in revenue in 2009, the first annual decline in three decades and perhaps much longer, according to a National Retail Federation forecast released Tuesday. That's well below the modest 1.4 percent gain they recorded for 2008. Massive layoffs, slumping home prices and tight credit are keeping shoppers tightfisted.
Fannie to Tap U.S. for as Much as $16 Billion in Aid Fannie Mae, the largest source of home-loan money in the U.S., said it will need to tap as much as $16 billion in emergency funds from the U.S. Treasury Department to stay afloat as deterioration in the housing market persists. Fannie's planned request, announced today, follows Freddie Mac, which said Jan. 23 that it will need as much as $35 billion more in federal aid. Unprecedented mortgage losses drove the net worth of both companies below zero last quarter, they said in separate securities filings.
House Prices Dropped in 70% of U.S. States in 2008 Home prices fell in 34 U.S. states in 2008 as it became harder to get a mortgage and foreclosures hammered property values, First American CoreLogic said. Prices for single-family detached houses fell a record 10.6 percent nationally, the biggest annual decline in data that goes back to 1976, Santa Ana, California-based First American said today in its year-end report. "The geographic breadth of the decline expanded in 2008," Mark Fleming, First American's chief economist, said in an interview. Even markets with few foreclosures "are being drawn in by fundamental economic conditions."
***** Time to Prepare for the Collapse Take the time to prepare for the coming financial woes. The financial stability of our country is in peril. Unemployment continues to rise. The housing market continues to fall. Banks are failing at an unprecedented rate. The stock markets are unstable, as is our dollar. Folks, the new regime in Washington is not going to fix this problem! No matter how many bailouts they want us to pay for, we are only applying a band-aid to a gapping wound in the financial jugular vein of this country! It will not stop the bleeding. We have got to start facing the facts and preparing for the total collapse of our financial system as we know it. Start downsizing now! Get your pantries stocked with food, water, essential vitamins and medicines. Making these preparations now may not only save your life, but will ensure that your quality of life is not reduced in the face of economic disaster.
NRA: Untold stories of Gun Confiscation after Katrina What happened to the 2nd amendment?? The video you will see on this web site is horrifying. The crimes committed against law-abiding gun owners are beyond comprehension. The arrogance of anti-gun politicians and government officials and their hate of freedom will churn your stomach. The law is the law, the Constitution is the Constitution. If ONE local mayor or police chief can decide what the Second Amendment means, it opens the door to tyranny—where ANY mayor or police chief can say what the Second Amendment means.
Homeland Security Checkpoint - Unconstitutional Homeland Security checkpoints are being set up more frequently all across USA. Here is what you should do, should you run into one of these unconstitutional checkpoints. Know your rights, and stick by them.
Suspicionless Checkpoints: A growing threat to individual liberty Ever since SCOTUS first opened Pandora's box in the late 1970's by carving out a 4th Amendment loophole for immigration checkpoints, the use of suspicionless checkpoints across the country has continued to proliferate at an alarming rate. Today, it's not uncommon to find enforcement agencies across the country utilizing roadblocks of one form or another to control local communities and create new revenue streams for politicians and bureaucrats. While roadblocks are conducted under a number of different guises, they all share a common set of traits. Specifically, they:
Operate with no individualized reasonable suspicion of wrongdoing
Seek to control and intimidate local communities as opposed to serve and protect them
Raise revenue for expanding government programs through fines, citations & arrest
The U.S. Census Bureau's American Community Survey (i.e. Interrogation) After being delayed several years due to budget shortfalls, one of the largest invasions of our privacy is now in full swing, compliments of the U.S. Census Bureau and a cadre of Department of Commerce corporate partners. In the past, the American people only had to put up with this unconstitutional nonsense once every ten years. A time frame frequent enough to be annoying but not frequent enough to evoke formal resistance. With the advent of the misnomered American Community Survey however, circumstance have changed dramatically. U.S. Census bureaucrats have somehow misinterpreted clear constitutional guidance regarding a simple head count once every 10 years for representation purposes as a mandate to invade America's privacy on a recurring monthly basis. Below you will find a discussion of this unconstitutional program along with links to commentaries, news articles, corporate involvement, and government documentation that highlight this newest invasion of our homes and privacy along with general information regarding the decennial census. 250,000 homes are now being targeted every month by the Census Bureau and its corporate lackeys to comply, under threat of prosecution, with a survey demanding answers to over 70 privacy invading questions. Questions, that as Congressman Ron Paul and others have pointed out, are none of the government's business.
Roadblock Revelations Exposing The Police State One Checkpoint At A Time Welcome to the blog page for Checkpoint USA. Here you will find general information and discussions regarding the growing threats to our right to privacy & travel.
Calif farmers idle crops, veggie prices may rise Consumers may pay more for spring lettuce and summer melons in grocery stores across the country now that California farmers have started abandoning their fields in response to a crippling drought. California's sweeping Central Valley grows most of the country's fruits and vegetables in normal years, but this winter thousands of acres are turning to dust as the state hurtles into the worst drought in nearly two decades. Federal officials' recent announcement that the water supply they pump through the nation's largest farm state would drop further was enough to move John "Dusty" Giacone to forego growing vegetables so he can save his share to drip-irrigate 1,000 acres of almond trees. "Taking water from a farmer is like taking a pipe from a plumber," said Giacone, a fourth-generation farmer in the tiny community of Mendota. "How do you conduct business?"
Federal departments fall short on civil liberties The departments of Defense, State, and Health and Human Services have not met legal requirements meant to protect Americans' civil liberties, and a board that's supposed to enforce the mandates has been dormant since 2007, according to federal records. All three departments have failed to comply with a 2007 law directing them to appoint civil liberties protection officers and report regularly to Congress on the safeguards they use to make sure their programs don't undermine the public's rights and privacy, a USA TODAY review of congressional filings shows.
'German Banks Are on the Edge of the Abyss' The German government is desperately trying to find a way to save the country's ailing banking sector. Can a so-called "bad bank" solve the problem by taking over toxic assets? German commentators aren't convinced, but they are certain that something needs to be done. Several government rescue packages later, the troubled German banking sector is still showing no sign of recovering from the financial crisis. The discussion over what to do with the hundreds of billions of euros worth of toxic securities the banks still have on their balance sheets has received fresh impetus in Germany after it became clear that the Special Fund for Financial Market Stabilization -- known as Soffin after its German acronym -- is not succeeding in its intended aim of helping out troubled banks and jump-starting financial markets. Günther Merl, the head of the agency that manages Soffin, announced Wednesday that he was resigning -- the second person to quit the agency's steering committee within the last three months. Insiders say that Merl was frustrated at having his authority usurped by government and Finance Ministry officials.
Is Switzerland the next Iceland? Gigantic Swiss Banks Hold Steady -- For Now The Swiss economy is dwarfed by the size of its leading banks, and there are growing worries about their health. The government says everything is fine, but some disagree. They exist also in Zürich: "Masters of the Universe." You can recognize these money-moguls from their swanky rides -- their Porsches, their Audis, their BMWs. And yet recently these chariots of high finance have been spotted being sold to auto dealers at fire-sale prices -- a sure sign that the bank crisis has arrived here too. "First and foremost it is the financial center of Switzerland that will bleed," prophecies Beat Bernet, bank expert at the University of St. Gallen. By now people are even contemplating the unthinkable: the collapse of Europe's leading bank, the largest money manager in the world, UBS.
Credit crunch claims Icelandic Government after 'Household Revolution' The global economic crisis claimed its first government yesterday when Iceland’s ruling coalition collapsed amid a cacophony of popular protest. The Government of Geir Haarde, the Prime Minister, resigned en masse after days of mounting anger over the country’s financial meltdown. The protests, which began peacefully after the nationalisation and overnight bankruptcy of Iceland’s three main banks, turned violent last week with the nation experiencing its worst riots in 60 years. At their height 32,000 people — more than 10 per cent of Iceland’s population — took to the streets of Reykjavik banging pots and pans in what came to be known as the “Household Revolution”.
Iceland's ruling coalition collapses A NATIONAL unity government is on the cards for Iceland following the collapse of its ruling coalition yesterday, the first government to fall victim to the global financial crisis. Three months after Iceland’s debt-laden banks imploded, sparking economic chaos and mass street demonstrations, prime minister Geir Haarde handed in his resignation and that of his government after just 18 months yesterday. “I will have a meeting with the opposition leaders to discuss the possibility of a national unity government,” said Mr Haarde. On Friday he called a snap election for May and announced he would not stand for office after doctors discovered a cancerous tumour in his oesophagus.
Max Keiser: Predicted the collapse of Iceland in April, 2007. Watch for the scene in the Blue Lagoon in which Max predicts a global Depression to be caused when all these debts driven by low interest rates burst.
Iceland - Banking Crisis and collapse Today ,Minister of Business Affairs ,Bjorgvin G. Sigurdsson,resigned . Today there was also a protest ,against the violence last week in Reykjavik. He also dismissed the head of the country's financial supervisory authority Saturday night before he left office, and requested the resignations of the entire board of the agency. It was in support of the Police force in Reykjavik. At the protest yesterday,there was lots of hugs and flowers,and some of the protesters where offering free hugs to the public.
Riot in Iceland - 21 January 2009 People protested again today in Reykjavik. First at the government house - where the prime minister had problems driving away. Police had to assist him ,and eggs and other stuff where thrown at his car. Then the protesters continued protesting at the parliament building. Parliement work was suspended today ,after the protest yesterday . Protesters made fires around in front of the parliament. Police had trouble putting the fires out. They are still downtown protesting.
U.S. bankers avoid glitz of Davos, image a concern It used to be a prized invitation for Wall Street CEOs and top government officials. But for the U.S. banking elite, a ticket to this year's World Economic Forum in Davos risks becoming as toxic as the mess left over from the subprime mortgage crisis. Up until a few weeks ago, the guest list for the January 28-February 1 annual gathering of the world's leading business and political figures in the Swiss ski village was going to include top executives from the biggest U.S. banks and the leading economics and finance names of the new administration of U.S. President Barack Obama. But now that list is shrinking fast. Citigroup Chief Executive Vikram Pandit decided not to go. Obama's top economic adviser Larry Summers, Treasury Secretary-designate Timothy Geithner, who is facing a confirmation vote Monday, as well as Federal Deposit Insurance Corp Chairman Sheila Bair have pulled out.
Davos Annual Meeting 2009 - Stephen S. Roach Stephen S. Roach, Chariman, Morgan Stanley, Asia, explains his outlook for the global economy over the coming five years and his participation in the Annual Meeting in Davos which runs from 28 January to 1 February 2009. Roach blames ALL OF US for the economic mess.
Davos Annual Meeting 2009 - Duncan Niederauer Duncan Niederauer, Chief Executive Officer, NYSE Euronext, shares his view on the key elements of the future shape of financial governance and his participation in the Annual Meeting in Davos which runs from 28 January to 1 February 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.
Where We Are Headed: Stock Market, Gold, Silver January 20th, 2009 probably one of the biggest days of this year, marked by several key new appointments. We have inaugurated our 44th president, Barack Hussein Obama, elected into office with the hopes that he will bring with him, a magic wand and resolve two decades of excess liquidity and derivative growth. A hope that will, undoubtedly, be shattered very quickly. Obama will simply continuing doing what actually start this problem and that is, print more money (or the new politically correct term, quantitative easing). The only ideal “solution” at this point, is for current government to successfully create another bubble somewhere. This band aid, patch up, job would simply prolong the inevitable but it would be a “solution” nonetheless and we could all get back to our shopping malls and baseball games. For if a bubble is not created, there will literally be no way of repaying all the fiscal stimulus packages popping up all over the globe. It is not the principle that is of concerned, for I do not believe that will EVER be repaid, but going forward, even interests payments will be of concern. If these packages do not move the economy, you can mark my words, there will be dozens of countries defaulting. America is very quickly moving up the ranks in the list of candidates.
Gold "Shines as Inflation-Hedge" as US and UK Left with No Choice "But Default & Devaluation" The PRICE of WHOLESALE GOLD BULLION clung onto Tuesday's sharp 4% gains early in London today, adding to the "Obama Bounce" for Euro and UK investors while world stock markets fell for the ninth session in thirteen during 2009 so far. "Gold experienced massive fund buying when New York markets opened" yesterday, notes Walter de Wet, senior commodities analyst for Standard Bank in Johannesburg. "It rose $25 in less than 30 minutes. Stop-losses [for bearish Gold Futures traders] were triggered at $860, and gold eventually reached $866.50. "At these levels, good physical selling set in, but was easily absorbed by the market. In New York, buying slowed down with Mr. Obama's inauguration."
Ron Paul on the House Floor 1-21-09 Default & liquidation of the currency; government bailouts will produce another depression. Bretton Woods 1971 has ended!
Holding "Gold in Lieu of Cash" Recommended as Banking Stocks Bounce; Physical Bullion Demand Jumps THE PRICE OF GOLD dropped $10 per ounce to $845 early in London on Thursday, while world stock markets continued to recover from Tuesday's sharp sell-off. Gold Bullion held flat for Eurozone buyers, however, as the single currency ticked low against the Dollar. Government bond prices rose. Crude oil retreated from a one-week high of $45 per barrel. "Gold has been well supported below $850 (the 200-day moving average)," says a technical note from Mitsui, the international gold dealers, today "but it has not been able to break the resistance at $865." "The rebound in stock markets may be negative for gold," adds Peter Fertig at Dresdner Kleinwort in Hainburg, Germany speaking to Bloomberg. "The fear of bank nationalization had been supportive for gold over the past few days."
Gold bounces back as manipulation plan is exposed When I last wrote on gold, the metal's very promising year-end rally was attracting attention, especially because the world's banking problems, and the response of governments, had created an outstanding macro case for gold. Paradoxically, the only party-pooper was the section of Bill Murphy's radical gold bug service, LeMetropoleCafe.com, that follows Indian gold offtake. It was complaining that the world's largest consumer was not buying. Gold promptly broke down some $80. But after the low on Jan. 15, (at which point LeMetropoleCafe's India section was moved to ask, "Is India back?") gold, and the gold shares, rebounded. Comex gold closed on Wednesday at $850.10, up $42.4, or 5.2%. The Australian gold service The Privateer's magisterial $US 5X3 point-and-figure chart has not only reversed its Jan. 5 downturn but has broken through a major downtrend. See the chart: http://www.the-privateer.com/chart/gold-pf.html Needless to say, the credit crisis continues, generating even more ugly headlines recently.
Is Gold and the Balance of Power Shifting from the West to the East? Here is an interesting set of charts, and a unique conclusion to match, from Moneyweek. As we recall, the folks at GATA have been showing this sort of market analysis for some time now, to a cooler reception than a Madoff whistleblower at the Chris Cox retirement party. We'd be open to hearing of other serious interpretations of this phenomenon. But be forewarned; to say it is just nonsense is, well, nonsense. It is a statistically valid hypothesis, albeit an unexplained and a bit odd, at least for the moment. Can a money machine really exist in free and efficient markets? Economic theory says it cannot, that it must be due to some flaw or inefficiency, or an artificial scheme such as the regular returns from the Madoff Fund. We might agree with the surmise that it involves the steady selling of leased gold from the West into the gold markets, but that could only be confirmed by an audit, and an admission from some large central bank that they have been obligating increasingly large amounts of their inventory into the public markets in a previously undisclosed manner.
Gold, Precious Metals Climb as Investors Seek to Store Value Gold rose, along with silver, platinum and palladium as investors sought a store of value amid tumbling New York and European equity markets. The Standard & Poor's 500 Index fell as much as 3.4 percent. Initial claims for unemployment benefits matched a 26-year high in the U.S. last week, while housing starts slumped to a record in December, raising concerns the recession is deepening. Some investors buy precious metals during turbulent times to protect value amid instability in equity and other markets.
Ron Paul discusses Geitner nomination - Bloomberg TV 1/21/09
Geithner Says China Is Manipulating Its Currency Timothy F. Geithner, who took a big step toward confirmation as Treasury secretary on Thursday, told senators that the Obama administration believes China is "manipulating" its currency, suggesting a more confrontational trade stance toward that country than under the Bush administration. Mr. Geithner's comment, made in writing to the Senate Finance Committee hours before it voted 18 to 5 to recommend that the full Senate confirm him, is certain to anger the Chinese government and raise fears that it could sell off some of its huge reserves of dollars. But it remained unclear whether Mr. Geithner was signaling that the new administration would make a legal finding that China is engaging in currency manipulation this spring, when it is required by a 20-year-old law to report to Congress on such issues.
Longer-Term Treasuries Fall on Concern Foreign Demand May Ease Longer-term Treasuries fell, pushing 30-year bond yields to a seven-week high, as Treasury Secretary- nominee Timothy Geithner's charge China is "manipulating" its currency fueled concern foreign demand for U.S. debt may ease. Yields on 30- and 10-year U.S. securities rose for a fourth day. The Treasury Department said that next week it will sell $78 billion in two- and five-year notes and 20-year Treasury Inflation Protected Securities, or TIPS. "There's concern on the China front," said Kevin Flanagan, a Purchase, New York-based fixed-income strategist for Morgan Stanley's individual-investor clients. "Do they fire back and stop buying Treasuries, especially given the huge amount of supply we're going to need to underwrite over the next few years?"
Financial Firms Need $1 Trillion More in Equity Financial companies must receive another $1 trillion of equity capital before stocks can stage a sustained recovery, said Amit Rajpal, an asset manager at London- based hedge fund firm Marshall Wace LLP. Governments will have to provide the money by buying common shares to restore confidence and encourage private investors to step back in, said Hong Kong-based Rajpal, who manages the Marshall Wace Global Financials Fund.
CODE RED:Economy in Collapse - Drastic Actions Will Be Taken President Barack Obama will use his poll shattering popularity to swiftly enact policies that will prove to be among the most costly and potentially destructive in America's history, predicts Trends Research Institute Director Gerald Celente. "We are forecasting dramatic measures will soon be taken by the Obama Administration that will worsen the credit crisis and severely damage the nation's economic system," says Celente. According to The Trends Research Institute Director, the new President who swept into the White House on a tidal wave of unprecedented enthusiasm and the blessings of a strong majority, will have free reign to take whatever actions he deems necessary. "Whatever Obama wants, Obama gets. Desperate, scared and not knowing what to do to survive the economic storm, people are seeking a messiah to save them, and Obama is their man," said Celente. "When fear rules, reason and logic are ruled out." (According to an AP poll, 71 percent of Americans believe the economy will improve during the first year of the Obama presidency.)
Mervyn King paves way to start Bank print presses The Bank of England's Governor paved the way last night to unleash the weapon of “printing money” in a last-ditch drive to combat the rapidly deepening recession. Mervyn King braced Britain for a further sharp slump and a “difficult year for all of us”, and laid the groundwork for the Bank to turn to “unconventional measures” as interest rates fall towards zero. The Governor made clear that the Bank is preparing to turn soon to so-called “quantitative easing” measures - pumping money into the economy by buying bonds from banks, firms and the Treasury - after interest rate cuts to a record low of 1.5 per cent left it short of ammunition. While he warned that such drastic action may be needed to limit the recession, Mr King said that the Bank was still weighing up when it should resort to it. “I stress that we are not there yet,” he said.
Jim Rogers sees Renminbi replacing US Dollar as world reserve currency Legendary global investor Jim Rogers said the Renminbi may possibly replace the US dollar as the international reserve currency 15 years from now. Addressing the Asian Financial Forum in Hong Kong, an event that brought together about a thousand participants from around the globe, Rogers said he found Asia to be the place where "the world is changing" as he toured the world in 1990 through 1992. "This is going to be the new centre of the world, not just the financial but the political world," he said. The only currency that could replace the US dollar "this year" would be the euro, while the only conceivable currency that can replace the dollar as the reserve currency "15 years from now" is renminbi. Rogers said he believed China will rise despite possible setbacks.
JPMorgan chief says worst of the crisis still to come The chief executive of US bank JPMorgan Chase, Jamie Dimon, told the Financial Times on Thursday that the worst of the economic crisis still lay ahead as hard-hit consumers default on their loans. "The worst of the economic situation is not yet behind us. It looks as if it will continue to deteriorate for most of 2009," he told the business daily. "In terms of our sector, we expect consumer loans and credit cards to continue to get worse."
Banks of America Investors who have been pining for a chance to buy into the beleaguered banking sector may have a bit longer to wait. Just this past Friday holders of Bank of America's stock were greeted with the reporting of the company's first quarterly loss ($1.79 billion) since 1991. To make matters worse, the company cut its quarterly dividend from $.32 to $.01. The loss prompted a new rescue package totaling $138 billion, which comes on the heels of the recent round of government injected capital of $25 billion last year. That level of distress has forced the shares of the largest U.S. bank by assets down 74% in the last 6 months. But it's not just BofA that has been suffering lately; the Financial Select Sector SPDR has nearly 2/3 of its value in that same time period.
You Have To See What Merrill's John Thain Spent On His Office...Wow! In Charlie Gasparino's Daily Beast column, Charlie reveals how Merrill Lynch’s CEO, (now owned by Bank of America, spent over $1 million to redecorate his office last year. Are you kidding me? In early 2008, just as Merrill's CEO John Thain was preparing to cut expenses, eliminate thousands of jobs and exit businesses to save the dying Merrill Lynch, Thain was also spending embarrassing money on the redesign of his office. John Thain spent $1.22 million of Merrill's money to refurbish his office.
These Are the Folks We Rescue? John Thain is out of a job. But what a job. And what an office. And what a deal. He leaves with millions in bonuses he snuck in before his merger with Bank of America (BAC: 6.28, -0.32, -4.85%). Just the tip of a staggering financial iceberg that was the Merrill Lynch titanic sold to Bank of America. We're told John Thain's meeting with B-of-A's Ken Lewis was brief.
Thain Resigns Amid Losses at Bank of America John A. Thain, the former chief executive of Merrill Lynch, resigned from Bank of America on Thursday after the bank suffered unexpected losses stemming from its acquisition of the giant brokerage. Mr. Thain tendered his resignation Thursday morning after a 15-minute meeting with Kenneth D. Lewis, the chief executive of Bank of America. "Ken Lewis flew to New York today to talk to John" after requesting a meeting, a spokesman for Bank of America, Robert Stickler, said. "They mutually agreed that his situation was not working and he resigned." The relationship between the two men soured over the last month as Mr. Lewis grew increasingly frustrated, believing that Mr. Thain did not have a good grasp of the firm's operations, according to an individual who is aware of the tensions between the two men but who does not have authorization to speak publicly. Mr. Thain had been put in charge of the bank's trading, investment banking and brokerage operations after Bank of America acquired Merrill Lynch in January.
Sweden's Fix for Banks: Nationalize Them The Swedes have a simple message to the Americans: Bite the bullet and nationalize. Officials in Washington are trying to figure out how to shore up American banks that once ruled the financial world but now seem to weaken by the day, despite receiving hundreds of billions of dollars in government aid. With Sweden's banks effectively bankrupt in the early 1990s, a center-right government pulled off a rapid recovery that led to taxpayers making money in the long run. Former government officials in Sweden, many of whom come from the market-oriented end of the political spectrum, say the only way to solve the crisis in the United States is for the government to be prepared to temporarily take full ownership of the banks.
Smaller Banks' Losses Expected to Bring Mergers The government may view Bank of America and Citigroup as too big to fail, and dozens of other banks may soon find they have to get bigger. Capital One Financial, Fifth Third Bancorp, KeyCorp, Huntington Bancshares and SunTrust Banks announced sharp fourth-quarter losses on Thursday, the start of a trickle of red ink at the nation's small and midsize lenders that could result in a flood of mergers in an industry that is already consolidating. Most of these banks were never big players in credit cards, subprime mortgages or credit-default swaps. But they were major lenders to commercial real estate developers, home builders and small corporations. As the recession tightens, losses have started to surge.
'Bad bank' could cost trillions Timothy Geithner, President Obama's pick to head the Treasury Department, said Wednesday that the administration is considering setting up a "bad bank" to purchase toxic loans from troubled banks in a new program that could cost taxpayers $3 trillion to $4 trillion. Mr. Geithner raised the prospect of a "bad bank" at a Senate Finance Committee hearing during which he was questioned about his nonpayment of past taxes and his role in overseeing the recent bailouts of failing Wall Street firms. His nomination appears headed to approval despite the questions.
Steve Forbes - The USD Dollar / Global Economy
Big Slide in 401(k)s Spurs Calls for Change The stock-market rout has ignited a crisis of confidence for millions of Americans who manage their own retirement savings through 401(k) plans. After watching her account drop 44% last year, Kristine Gardner, a 35-year-old information-technology project manager in Longview, Wash., feels no sense of security. "There's just no guarantee that when you're ready to retire you're going to have the money," she says. "You either put it in a money market which pays 1%, which isn't enough to retire, or you expose yourself to huge market risk and you can lose half your retirement in one year." Many retirement experts have come to a similar conclusion: The 401(k) system, which has turned countless amateurs like Ms. Gardner into their own pension-fund managers, has serious shortcomings.
Smaller Stimulus Leaves Room for Restructuring As all recovery hopes are now pinned on the efficacy of Washington's 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 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 Obama's planned expenditure as relatively small. They will argue that to affect a noticeable change in America's $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.
Crisis Solved: Give Money to Healthy Banks, Let FDIC's Bair Handle the Dying Why should taxpayers have to keep bailing out banks that aren't lending and are black holes? Why can't Congress just force these banks to write down their bad debt then recapitalize them? Why doesn't the government create a bank that does not have toxic assets and will fill the void of much needed loans to businesses who need them? "Lack of political courage [and] ignorance of finance" in Congress are the answers to these and related questions, according to Chris Whalen, managing director and co-founder of Institutional Risk Analytics. "Our friends in Washington who've been receiving a lot of money from Wall Street don't want to put these people out of work."
Hyperinflation, Collapsing Dollar, Depression 2.0 (Forbes Dec 20, 2008) Inflation rates will be higher than in the 1970s
Contemplating the Demise of Bank of America, Citi and JPMorgan The collapse in the share prices of our country’s three largest money center banks over the last week has been truly stunning and is assuredly a crisis of confidence. What started out as a growing unease that the losses of the past year would continue into late 2009 and early 2010 for Bank of America, J.P. Morgan and Citigroup has now snowballed into utter fear that these banks, along with their European peers, could potentially face nationalization as government regulators strive to save a financial system that is still on the brink of cataclysmic failure.
Geithner apologizes for not paying taxes Treasury Secretary-designate Timothy Geithner told the Senate he was sorry his past transgressions were now an issue at a time of deepening economic crisis. Treasury Secretary-designate Timothy Geithner said Wednesday he was careless in failing to pay $34,000 in Social Security and Medicare taxes earlier this decade but declared "I have paid what I owed." He apologized to Congress. Mr. Geithner told the Senate Finance Committee he was sorry that his past transgressions were now an issue in his confirmation at a time of deepening economic distress. He urged Congress to act quickly and forcibly to deal with the crisis. A top administration priority is to foster economic recovery and "get credit flowing again," Mr. Geithner testified. As to his failure to pay payroll taxes from 2001 to 2004 while he worked for the International Monetary Fund, Mr. Geithner said: "These were careless mistakes. They were avoidable mistakes."
Capital One Reports $1.42 Billion Loss on Charges Capital One Financial Corp., the Mclean, Virginia-based credit-card company, had a $1.42 billion loss in the fourth quarter on impaired-goodwill charges from its auto lender and a $1 billion boost to reserves for soured loans. The loss was $3.74 a share, compared with net income of $226.6 million, or 60 cents a share, a year earlier, the company said today in a statement. The loss from continuing operations was $3.67 a share, missing the 29-cent average profit estimate of 20 analysts surveyed by Bloomberg. Capital One booked an $810.9 million non-cash impairment on its auto-finance unit and said it expected $8.6 billion in loan defaults in 2009. Capital One slumped 45 percent in the past year in New York trading as late payments and defaults rose. Consumers are struggling to repay debt of all kinds as unemployment climbed to 7.2 percent in December, the highest level in almost 16 years, according to the Labor Department.
Another Real Estate Crisis is About to Hit For a picture of the US real estate crisis, imagine New Orleans wrecked by Hurricane Katrina, and before the waters even begin to recede, a second Katrina hits. The 1,120,000 lost US retail jobs in 2008 are a signal that the second stage of the real estate bust is about to hit the economy. This time it will be commercial real estate--shopping malls, strip malls, warehouses, and office buildings. As businesses close and rents decline, the ability to service the mortgages on the over-built commercial real estate disappears. The over-building was helped along by the irresponsibly low interest rates, but the main impetus came from the slide of the US saving rate to zero and the rise in household indebtedness. The shrinkage of savings and the increase in debt raised consumer spending to 72% of GDP. The proliferation of malls and the warehouses that service them reflect the rise in consumer spending as a share of GDP.
Housing Starts, Permits in U.S. Slump to Record Low U.S. builders broke ground in December on the fewest houses since record-keeping began as sales and credit dried up, signaling the real-estate slump will keep hurting economic growth. Housing starts fell 16 percent last month to an annual rate of 550,000 that was less than forecast and the lowest since the government started compiling statistics in 1959, the Commerce Department said today in Washington. Building permits, an indicator of future projects, were also at a record low. Builders, whose shares have lost 76 percent of their value over the last three years, are slashing prices to compete with a record number of foreclosed homes coming onto the market. Barack Obama's advisers say the president will use up to $100 billion in financial-rescue funds to ease the mortgage crisis.
December home sales in California fall 38% from a year earlier The median price dropped to $249,000 last month from $402,000. California home sales rose sharply last month, but the median price plummeted 38% from a year ago as bargain hunters scooped up foreclosure properties, MDA DataQuick reported. The state's median home price dropped to $249,000 last month from $402,000 in December 2007, DataQuick said. The median price is the point at which half the homes sold for more and half sold for less. The La Jolla tracking service said 37,836 houses and condos were sold in California last month, up 18% from November and 48% from December 2007.
New homes get smaller Say goodbye to McMansions, Americans are buying 'right-sized' homes These days, a bigger home isn't always a better one: Recent research suggests that homes being built today are getting smaller. The average size of homes started in the third quarter of 2008 was 2,438 square feet, down from 2,629 square feet in the second quarter, according to the U.S. Census Bureau. Similarly, the median size of homes started in the third quarter was 2,090, down from 2,291. The statistics confirm what the housing industry has suspected for a while. "We've been hearing for a long time 'Why is the home size not declining?'" said Gopal Ahluwalia, vice president of economic research for the National Association of Home Builders. He spoke about the trend at the International Builders' Show, held in Las Vegas this week. Anecdotally, he had heard smaller homes were being built as housing prices tumbled and the economy began to weaken. Still, "we never had data to back it up," he said.
UNEMPLOYMENT: How Do We Measure A Shortage Of Work? According to the U. S. Department of Labor (DOL), employers cut 524,000 jobs in December, 2008. The seasonally adjusted unemployment rate increased to 7.2%. That's bad news for a struggling economy. Unemployed people have fewer spending options. They tend to buy only what they absolutely need. Food tops the list. Rent or mortgage payments come next. Then utility bills, emergency medical expenses, and money for transportation - most likely in the form of car or truck payments and fuel. Purchases of clothing, a new car, electronics, toys, and so on can be deferred. Savings erode all too quickly. Personal confidence ebbs. Family life is strained. But December's unemployment numbers do not tell the whole story. It would appear the unemployment rate could exceed 10% before the end of 2009.
Here Comes the Socialism 2009-2010 will rank with 1913-14, 1933-36, 1964-65, and 1981-82 as years that will permanently change our government, politics and lives. Just as the stars were aligned for Wilson, Roosevelt, Johnson and Reagan, they are aligned for Obama. Simply put, we enter his administration as free-enterprise, market-dominated, laissez-faire America. We will shortly become like Germany, France, the United Kingdom, or Sweden - a socialist democracy in which the government dominates the economy, determines private-sector priorities and offers a vastly expanded range of services to many more people at much higher taxes.
Ron Paul Blasts Secret Government Running Economy 9/18/2008 Congressman Ron Paul has issued a stinging address concerning the financial crisis in which he outlines how the current economic problems, created via malinvestment and shift to a debt based economy, are now being mismanaged by private interests in secret. Whats more he says he is not sure the Federal Reserve has any idea what to do next and that the Congress is totally oblivious to the whole sorry state of affairs - a cocktail of elements he warns puts the middle class of America in serious jeopardy.
Microsoft to slash 5,000 jobs, misses on 2Q profit Microsoft to slash 5,000 jobs, reports lower-than-expected profit and sales for 2nd quarter Microsoft Corp. said Thursday it is cutting 5,000 jobs over the next 18 months, a sign of how badly even the biggest and richest companies are being stung by the recession. The layoffs appear to be a first for Microsoft, which was founded in 1975, aside from relatively limited staff cuts the software company made after acquiring companies. The company announced the cuts as it reported an 11 percent drop in second-quarter profit, which fell short of Wall Street's expectations. Microsoft shares plunged 7 percent in morning trading. Microsoft said it was being hurt by deteriorating global economic conditions and lower revenue from software for PCs. The holiday quarter of 2008 was the worst the PC market had seen in several years.
Jobless claims surge, housing starts tumble The number of workers lining up for jobless benefits surged last week, while new housing starts and permits hit record lows in December, pointing at an acceleration in the economy's downward spiral. First time applications for state unemployment insurance benefits increased to a seasonally adjusted 589,000 in the week ended January 17 from a revised 527,000 the prior week, the Labor Department said on Thursday. It was the highest level of initial claims since a matching reading in the week of December 20 and beat analysts' forecasts for a rise to 540,000 new claims versus a previously reported count of 524,000 the week before. The last time claims were higher was in 1982, when they notched a weekly rise of 612,000.
Sony forecasts first annual net loss in 14 years Sony forecasts first annual net loss in 14 years as CEO vows to turn around company Sony Chief Executive Howard Stringer acknowledged Thursday he had not gone far enough with cost cuts and efforts to combine entertainment with electronics as his company projected its first annual loss in 14 years. "More has to be done and more can get done," Stringer said at a hastily called news conference at Sony's Tokyo headquarters. "We have a long way to go." Sony Corp. said it will offer early retirement to employees at its prized TV division, seeking to trim personnel costs there by 30 percent. It is also slashing jobs at its movies, music and game businesses. Sony did not give a head count target for the reductions. It said it is cutting 1,000 temporary workers when it closes one of two TV plants in Japan.
Oil Hits $45 on Positive News From U.S. Companies Vienna, Austria (AP) - Positive news from U.S. companies and economic optimism spurred by the U.S presidential inauguration boosted prices Thursday, with crude trading around $45 a barrel. Growing expectations of rising demand from China and India also supported markets. Light, sweet crude for March delivery jumped $1.45 to $45 a barrel by midday in Europe in electronic trading on the New York Mercantile Exchange after trading as high as $45.03.
On Plane to Texas, Critiques of the Speech On the plane, no longer Air Force One but now Special Air Mission 28000, they talked about the speech. George W. Bush, the former president, was heading home to Texas with his inner circle, having just left the west front of the Capitol, where his successor first thanked him for his service and then proceeded to trash it. The Bush team had worked assiduously to make the transition smooth for incoming President Obama and stayed out of the way as he used the post-election period to take leadership of the economy even before being sworn in. And now, as far as some of them were concerned, the new president had used his inaugural lectern to give the back of the hand to a predecessor who had been nothing but gracious to him.
Hillary Clinton: 'It's going to be hard' Secretary of State Hillary Clinton arrived at the State Department this morning, and President Barack Obama and Vice President Joe Biden will follow at Foggy Bottom this afternoon -- as a sign of the importance the new administration will place on diplomacy. Clinton, speaking of the "potential and possibility'' of American foreign policy, drew a warm welcome from a diplomatic bureaucracy that has played second fiddle to military policy for much of the Bush administration's two terms. There are three legs to the stool of American foreign policy, Clinton said: Military power, diplomacy and development -- and two of those reside at the State Department and the U.S. Agency for International Development. At State, where career diplomats complain that U.S. military policy has overridden diplomacy for eight years, Clinton's words of encouragement were met with repeated applause this morning.
Gordon Brown brings Britain to the edge of bankruptcy Iain Martin says the Prime Minister hasn't 'saved the world' and now faces disgrace in the history books When will the Gordon Brown nightmare end? Photo: Jane Mingay They don't know what they're doing, do they? With every step taken by the Government as it tries frantically to prop up the British banking system, this central truth becomes ever more obvious. Yesterday marked a new low for all involved, even by the standards of this crisis. Britons woke to news of the enormity of the fresh horrors in store. Despite all the sophistry and outdated boom-era terminology from experts, I think a far greater number of people than is imagined grasp at root what is happening here. The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic.
Evelyn De Rothschild Warning Masses - Too Late (Holding Bonds, Oil, Gold) CNBC Dec 18, 2008 E.D. Rothschild talks about the future of stocks and bailout of banks and corporations
Chinese Translation Cuts Out Parts of Obama Speech The official Chinese translation of President Barack Obama's inauguration speech was missing his references to communism and dissent, while a live broadcast on state television Wednesday quickly cut away to the anchor when the topic was mentioned. The comments by the newly installed U.S. president veered into politically sensitive territory for China's ruling Communist Party, which maintains a tight grip over the Internet and the entirely state-run media. Beijing tolerates little dissent and frequently decries foreign interference in its internal affairs. At one point, Obama said earlier generations "faced down communism and fascism not just with missiles and tanks, but with sturdy alliances and enduring convictions." He later addressed "those who cling to power through corruption and deceit and the silencing of dissent -- know that you are on the wrong side of history." The Chinese translation of the speech, credited to the Web site of the official China Daily newspaper, was missing the word "communism" in the first sentence. The paragraph with the sentence on dissent had been removed entirely.
Russia Strikes, and Wins—Again! Last fall, Russia brokered a deal with Germany that darkened the Kremlin’s shadow over Georgia. Last week, a similar deal was done over Ukraine. Last August, when Russia invaded the tiny nation of Georgia, Trumpet editor in chief Gerald Flurry wrote, “Russia’s attack on Georgia … marks the beginning of a dangerous new era in history” (emphasis mine throughout). Dr. George Friedman from Stratfor said this about it: “The war in Georgia … is Russia’s public return to great-power status.” Securing Georgia within the Russian sphere of influence could be considered stage one of Putin’s plan to shore up its periphery, and return Russia to "great-power status." And it was largely successful, thanks in no small part to the complicity of Germany! If you haven’t already, I urge you to read "Russia’s Attack Signals Dangerous New Era."
Obama tempers hopes for economy Gloomy reports worsen outlook President Obama's campaign slogan, "Yes we can," is becoming more like "Yes we can, but it will take awhile" when it comes to the economy. A rash of gloomy economic reports Thursday demonstrated why his administration has been working to dampen expectations for a quick economic recovery. Microsoft Corp. announced 5,000 layoffs -- the first mass layoffs in its history -- and the government last week recorded the highest one-week tally of new unemployment claims in 26 years. Housing starts, meanwhile, fell nearly 16 percent in December to an annual rate of 550,000 units, the lowest number since the Commerce Department started tracking the statistic 50 years ago. Mr. Obama and his aides want the public to understand that the grim picture is not going to brighten any time soon. They have said repeatedly that they expect 2009 to be a tough year, even as they call for quick action on an $800 billion economic stimulus bill. That legislation, they say, would create or restore 3 million jobs, exceeding the 2.6 million jobs that were lost last year.
Obama and the Muslims: An Inauguration of a New Era? On Inauguration day, Muslims and citizens worldwide optimistically and anxiously began purging the sordid memory of the disastrous and obtuse arrogance of the Bush administration. Even Obama, the "chosen one," cannot completely cleanse the collective stain of the "Bush Era" that squandered global good will with two failed wars, a belligerent rhetoric of "clash of civilizations," unyielding support for Israel's occupation of Gaza and the West Bank, and the shameful, morally indefensible legacies of Guantánamo Bay and Abu Ghraib. To quell the simmering discontent and unrest between the United States and Muslims, Obama - the appointed Superman of the 21st-century, globalized, multicultural world - can flex his powers and demonstrate heroism by embracing diplomacy, renouncing hypocritical and selfish policy initiatives, and spearheading a dialogue fueled by respect and mutual understanding.
Obama’s Decision to Close Gitmo Called ‘Dangerous and Irresponsible’ President Barack Obama on Thursday is expected to issue an executive order that would close the Guantanamo Bay detention center with one year. He campaigned on the promise to do so, something that cheered those who say the prison at the U.S. Naval base violates the human rights of America's terrorist enemies. The Obama administration already has suspended trials for terrorist suspects at Guantanamo for 120 days pending a review of the military tribunals. According to the Associated Press, a draft of the executive order to close Gitmo reads as follows: "In view of the significant concerns raised by these detentions, both within the United States and internationally, prompt and appropriate disposition of the individuals currently detained at Guantanamo and closure of the facility would further the national security and foreign policy interests of the United States and the interests of justice."
Iran Says Obama Must Seek 'New' Mideast Foreign Policy Iran said Wednesday it is "ready for new approaches" from President Barack Obama as Islamic countries cautiously welcomed his promise of mutual respect between the U.S. and Muslims. Despite the reception, it remained clear that Iran and postwar Gaza will pose early tests of Obama's inauguration speech offer to the Muslim world to "extend a hand if you are willing to unclench your fist." Obama, who called the leaders of Israel, the Palestinian Authority, Egypt and Jordan Wednesday to voice his commitment to Arab-Israeli peace, said while campaigning that he would seek dialogue with Iran to defuse the years long confrontation over Tehran's nuclear ambitions and support of militant groups around the Middle East.
The Credit Card Crunch Credit card companies are reducing the risk of defaults by taking drastic steps, even if they hurt good customers in the process. Randall Pinkston reports.
Obama Calls for Tighter Credit Card Restrictions . . . . on deceptive practices of credit card companies from campaign June, 2008.
Changing Credit Card Terms (CBS - Oct 14, 2008) Financial contributor Vera Gibbons shares tips with Harry Smith for monitoring the terms of your credit card in the changing financial climate.
Democracy vs. Republic: Most aren't taught the difference... In this excerpt from a seminar by Martin Red Beckman, the difference between a Democracy and a Constitutional Republic is examined. Most of us are not taught this difference in school, nor is the type of government envisioned by the founders practiced in the USA. The rest of the seminar examines more closely the power of the people OVER the government, and how you can exercise that power in More.. the Constitutional Republic.
The Collapse of Capitalism and the Safety Net of Gold For Ponzi schemes to succeed, they must expand faster than the request for redemptions. If they do not, they will collapse. This is what happened to Bernard L Madoff Investment Services, the largest Ponzi scheme in history. The same is about to happen to capitalism. Although capitalism is not a Ponzi scheme, credit-based economies, sic capitalism, and Ponzi schemes share the same fatal flaw. Both must constantly expand or they are in danger of collapse. Today, because capitalist economies are no longer expanding, but contracting, their continued contraction will lead to collapse.
Gold Declines as Stronger Dollar Outlook Cuts Investment Appeal Gold retreated in Asia as the dollar resumed its climb against the euro, diminishing interest in the metal as an alternative investment. Bullion declined as the dollar gained for the third day in four against the euro. The European currency may fall 15 percent against the dollar by mid-year as European banks restrict lending and sovereign bond spreads widen due to the deepening global economic slowdown, according to BNP Paribas SA. "Gold's inverse relationship with the dollar is still pretty strong," Jiang Zhiwei, an analyst at BOC International, said in a report. "That and risk aversion is what's been driving the market in the past few months."
Obama’s Inaugural: Hubris Will Bring Him Down President Barack Obama’s inaugural speech was supposed to be one of the great inaugural addresses of all time. It was supposed to encourage us, to inspire us. Instead, it deflated us. Obama’s inaugural address deflated us because it perfectly crystallized the quandary America now finds itself in: we wanted our faith renewed through a "transformational moment" -- but now we’ve got a faithless man for president. Obama has no faith in God’s stake in the American destiny; instead, God merely "calls on us to shape an uncertain destiny." Despite his protestations to the contrary, Obama has no faith in Americans; instead, he wishes to change our hearts of stone for hearts of flesh: “we can no longer afford indifference to suffering outside our borders; nor can we consume the world’s resources without regard to effect.” Obama has only one deep and abiding faith: faith in himself. He mentioned humility three times during his inaugural address. The gentleman doth protest too much. This inauguration, in Obama’s view, was about his personal elevation; his accession to the White House was "a moment that will define a generation," a moment when the nation "set aside childish things." Most evocatively, Obama cited his inauguration as a moment when all cynics were thrust aside because "the ground has shifted beneath them." The imagery of Moses (Obama) facing down Korah (Rush Limbaugh and the political right) and the ground swallowing up Korah is unmistakable.
Wall Street Snubs Obama Euphoria was almost universal yesterday…except on Wall Street. "Dad, don't pick on Obama," said Maria, calling from California. "I watched the inauguration yesterday. It was moving. Really moving. They seem like such nice people…and they really want to do what's right. At least, that's the way it seems to me…" We watched the TV news. The British press focused on the race issue. Blacks interviewed by the BBC spoke of the 'historic moment'…of the dreams of Martin Luther King finally realized…of a new era of race relations. There were hoorahs and tears… We were never fond of racism, so we weren't especially tearful upon reading the obituaries for it. Besides, we're a little suspicious of the coroner's report. We'd like to see the toe tag, just to be sure. Still, everyone wants Obama to succeed. His mother and grandmother, looking down from heaven. His relatives in Kenya. His party. His country. The entire world. Even we hardened cynics here at The Daily Reckoning wish him well. But we weren't born yesterday.
Ron Paul : "Bailouts Are A Contagious Disease"1/21/2009 Obama is Bush on steroids!
Three-quarters of stimulus to go in 18 months Obama administration wants to spend 75 percent of stimulus over 18 months Facing Republican resistance to a massive economic stimulus plan, the Obama administration on Wednesday said $3 of every $4 in the package should be spent within 18 months to have maximum impact on jobs and taxpayers. Peter Orszag, the director of the White House Office of Management and Budget, said Wednesday that if House or Senate versions of the bill do not spend the money as quickly, the White House will work with lawmakers to achieve the 75 percent goal. Congress is working on a stimulus bill of at least $825 billion.
Geithner Pledges Prolonged Effort to Stabilize Banking System Timothy Geithner, President Barack Obama’s nominee for Treasury secretary, pledged an expanded and prolonged government role in everything from stabilizing banks to ensuring credit for small businesses. Geithner, who today may take a step toward confirmation with a Senate Finance Committee vote, told lawmakers yesterday “we’re at the beginning of this process of repairing the system, not close to the end.” He committed to “much more substantial action” on a “very dramatic scale.”
Obama’s Inaugural: Hubris Will Bring Him Down President Barack Obama’s inaugural speech was supposed to be one of the great inaugural addresses of all time. It was supposed to encourage us, to inspire us. Instead, it deflated us. Obama’s inaugural address deflated us because it perfectly crystallized the quandary America now finds itself in: we wanted our faith renewed through a “transformational moment” -- but now we’ve got a faithless man for president. Obama has no faith in God’s stake in the American destiny; instead, God merely “calls on us to shape an uncertain destiny.” Despite his protestations to the contrary, Obama has no faith in Americans; instead, he wishes to change our hearts of stone for hearts of flesh: “we can no longer afford indifference to suffering outside our borders; nor can we consume the world’s resources without regard to effect.”
Gold Surges on Inauguration Day; Concerns Regarding Derivatives, ETFs Yesterday was an historic day for the world with the inauguration of the 44th President of the United States of America. Gold rallied by more than 2% despite continuing dollar strength and oil's collapsing 7% to just over $34 per barrel (Light Sweet Crude Oil Future - Combined - FEB09: -7.6%) . While the dollar is up on hopes that President Obama can turn around the ailing US and indeed the global economy, stock markets internationally are under pressure again with increasing concerns regarding the international banking and financial system.
Hyperinflation Will begin In China And It Will Destroy The Dollar The conventional wisdom on China is dead wrong. Specifically, there is a widespread belief, as expressed by Goldman Sachs, that "China will keep the yuan trading within a narrow range in 2009 due concerns about exporters." Worse still, others are even predicting that China will devalue its currency! The sheer wishful thinking is astounding! The idea that "China will keep the dollar peg to help its exporters" ranks all the way up there with "Housing prices always go up" and "You can spend your way to prosperity".
Taxpayers could spend trillions on 'bad bank' Timothy Geithner, President Obama's pick to head the Treasury Department, said Wednesday that the administration is considering setting up a "bad bank" to purchase toxic loans from troubled banks in a new program that could cost taxpayers $3 trillion to $4 trillion. Mr. Geithner raised the prospect of a "bad bank" at a Senate Finance Committee hearing during which he was questioned about his nonpayment of past taxes and his role in overseeing the recent bailouts of failing Wall Street firms. His nomination appears headed to approval despite the questions.
US banks 'insolvent' as losses top $US3.6tn US financial losses from the credit crisis may reach $US3.6 trillion ($5.5 trillion), suggesting the banking system is "effectively insolvent," said New York University Professor Nouriel Roubini, who predicted last year's economic crisis. "I've found that credit losses could peak at a level of $US3.6 trillion for US institutions, half of them by banks and broker dealers,'' Roubini said at a conference in Dubai today. "If that's true, it means the US banking system is effectively insolvent because it starts with a capital of $US1.4 trillion. This is a systemic banking crisis.'' Losses and writedowns at financial companies worldwide have risen to more than $US1 trillion since the US subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg.
The Obama Stimulus Plan Won't Work President Barack Obama and his economic team will soon attempt to convince Congress that spending upwards of $1 trillion tax dollars (more or less) will shorten the recession. A good part of the spending will be on public works and infrastructure projects that aim to create (or save) many millions of jobs. Some of the spending will be in the form of grants to state governments to prevent cutbacks in education and medical services. And a smaller (and laudable) part of the program provides tax relief to some individuals and corporations. Although some economists supported the bank and auto bailouts and although many more support a major federal stimulus package, this economist holds that both measures are counter-productive. Both are likely to prolong the economic slump and not shorten it.
A very flawed monetary order Surely, at some point in time, some group of wise men somewhere will finally get together and realize that, during an era of excessive speculation, a monetary order where half the world's money floats freely and a good portion of the rest is rigidly fixed to the U.S. dollar is not an optimal system. News comes today that the British pound, a high flier not more than six months ago, has hit a seven-and-a-half year low against the greenback as the U.K. government ratchets up its government rescue plans for the nation's banking system.
Obamanomics Will Fail the American People Obamanomics, the economic program of the Obama administration, will fail to help the U.S. economy. Instead it will undermine the economy. It will fail to help the American people as a whole, although it will benefit some. It will succeed in augmenting the government. The depression is causing and threatening to cause many failures of banks, companies, whole states like California, localities, pension funds, federal home loan banks, and so on. Unemployment is rising. The Obama administration, following the Bush administration and the roadmap laid down by the New Deal and the Employment Act of 1946, will try to stop these failures and the unemployment using government action. This will fail. The system is too large for the government to bail out without destroying any semblance of free markets. Even if the system were not so large, government action would still fail, as will be explained in some detail.
The Obama Economic Miracle "In capitalism of the 21st century, there is room for the state.."-Tony Blair January 8, 2009 Paris Meeting on the Financial Crisis Now that America has been exposed to the generality known as the Obama Economic Stimulus Plan by our media, the President plans to provide a deliberately vague road map to nowhere that only William Jefferson Clinton's defense attorney could appreciate. President Obama has engaged in the same "creature in the closet" approach which is designed to scare people like a child is spooked just like Hank Paulson used to terrify the politicians of DC during his famous "Reichstag Fire" speech to them on September 16th and 17th of 2008.
Recession or depression? Too early to tell Many differences between now and 1930s but some similarities, too By every measure - lost jobs, plunging stock prices, scarce credit and a profound loss of confidence in the banking system - the economy is in awful shape.The nation's 11th recession of the postwar era began in December 2007 and easily could become the longest since the Great Depression, although most foreacasters expect a weak recovery to begin in the second half of this year. But what are the odds that we're the early stages of what will eventually become a depression rather than just a recession?
Jim Rogers on a Chinese TV 19 January 2009 Discusses the biggest challenges to China.
House panel passes economic rescue plan A House of Representatives panel on Wednesday backed a $358 billion package of new government spending, the first key test for a massive Democratic plan aimed at boosting the ailing U.S. economy. The House Appropriations Committee voted 35-22 to approve the spending, part of an $825 billion package President Barack Obama has sought to help the economy, which has been in a recession since December, 2007.
The True Scope of the Housing Bust Any sober-minded investor who wants to face reality, no matter how grim, needs to hear this expert tell why the current housing mess is so much more substantial than the real estate pain experienced even during the Depression. For example, get this: Pinto says that if current price/default trends hold, then by the end of this year we as a nation will have a loan-to-value ratio of nearly 110%! That would be a first in history.
De-Leveraging Is Not Deflation "Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term 'inflation' to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages." -- Ludwig von Mises It's true that just about every asset class is coming down in price right now. This, however, is not deflation -- as I have said so many times recently, much to many readers' unqualified chagrin. To the contrary, these declines are the products of de-leveraging -- not deflation -- and the distinction is nearly incalculably important, although the subtlety seems to elude even the most astute these days.
Economists predict continuing economic gloom for U.S. during next 4 years Government seemingly only hope to ignite pistons to drive growth Transfixed by the daily spectacle of dismal economic news and wild Wall Street swings, few Americans have looked up to see what a wide array of economists say lies beyond the immediate crisis. And with good reason: The picture isn't pretty. The sleek racing machine that was the U.S. economy is unlikely to return anytime soon despite the huge repair efforts under way. Instead, it probably will continue to sputter and threaten to stall for years to come. The prospects are so gloomy, according to a recent study, that Americans may be slightly worse off in four years than they are now.
Where is the safe haven? As the US$1.19 trillion forecast 2009 US budget deficit combines with the forthcoming $825 billion (and counting) stimulus package, observers seem convinced that for some mystical reason US Treasuries are a "safe haven" - endlessly attractive to Asian and Middle Eastern central banks and therefore able to yield considerably less than the expected rate of inflation over their life. But what if this irrational investment preference ceases to hold? US government bonds have not always been the world's safest investments, to say the least. The phrase "not worth a Continental" encapsulates the inflationary finance that was used to win the Revolutionary War, while US state bonds were notorious in the 19th century City of London after Pennsylvania defaulted in 1841. Even during the Civil War, there were moments when the Confederate credit appeared more solid than Union credit - after all, absent the threat of military invasion, the Confederacy was a stable agrarian economy with several reliable cash crops.
Peter Schiff on CNBC Market's Down Day Jan. 20 2009 pt 1/2
Peter Schiff on CNBC Market's Down Day Jan. 20 2009 pt 2/2 Peter talks about temporary fall off in gold, and temporary strength of dollar.
Generally free-ish with respect to financial regulation and credit.
Overleveraged housing markets after a bubble.
Banks that felt they could hedge risks and enhance returns through structured finance and derivatives.
Aggressive approaches to bail out financial institutions.
There's probably more, but now I want to highlight one difference: the US Dollar is the global reserve currency and the British Pound is not. Thus Britain, as it tries to reflate, runs up against borrowing constraints faster than the US does. Those limits aren't showing up in their interest rates yet, but it is showing up in the currency, which has been falling rapidly of late. With the creation of so much liquidity out of thin air, the surprise is not that the British Pound is weak, but that the US Dollar is strong, and still regarded as a safe haven. Then again, what are the alternatives?
U.S. $3 billion loan part of Chrysler-Fiat deal Chrysler LLC's deal with Fiat SpA depends on the U.S. automaker receiving an additional $3 billion emergency loan from the U.S. government, the company's product development chief said on Wednesday. "I think that is part of the deal," Frank Klegon said when asked if the automaker needed the additional $3 billion for the Fiat deal to be completed. "That is part of the process. The expectation is that that is an important part of it."
GM dethroned; Toyota tops world sales Toyota Motor Corp. sold more cars and trucks worldwide than any other automaker last year, seizing the crown General Motors Corp. held for 77 years. But with its overall sales having fallen for the first time in 10 years, and the entire industry in a slump, there's little for the Japanese company to celebrate. GM said Wednesday it sold 8,355,947 cars and trucks around the world in 2008, falling about 616,000 vehicles short of the 8.972 million Toyota announced Tuesday. GM said the shortfall was mainly caused by the economic downturns in the U.S. and Europe that slashed vehicle demand in those major markets, where Toyota doesn't have as large of a presence.
Pay freezes spread during brutal recession More employers freezing pay because of recession -- even the White House What do Tropicana Casino and Resort, Avis and the White House now have in common? They're all freezing the pay of some of their workers. It's part of a growing trend by employers facing the fallout -- economic and political -- from a brutal recession. For companies, pay freezes are a key cost-cutting tool for surviving hard times. For President Barack Obama, who ordered a pay freeze for White House employees earning over $100,000 a year, the move on his first full day in office sent a message to a nervous country: We're in this together. "During this period of economic emergency," Obama said, "families are tightening their belts, and so should Washington."
American, United hit by declining demand he major U.S. airlines have grounded aircraft and eliminated flights, but those moves might not be enough in the face of a recession that is choking demand for air travel. Their struggles, however, could be working to the benefit of consumers. American Airlines and United Airlines said Wednesday they lost more money in the fourth quarter. United parent UAL Corp. lost $1.3 billion, hurt by a wrong bet on the direction of oil prices. The company plans to cut 1,000 more jobs.
EBay's income dropped 31% as traffic declined The weak economy took its toll on eBay as the auctioneer reported its first revenue decline in a decade. EBay reported net income in the fourth quarter declined 31 percent to $367 million, or 29 cents a share, from the year-ago quarter. Even as the most-visited retail site on the Web with 84.5 million visitors, eBay's traffic in December was about 4 percent lower than the year before. Overall holiday spending online was down about three percent from last year, according to market researcher ComScore. During the year, eBay made considerable changes aimed at reducing the company's dependence on its auction business, where growth has slowed in favor of fixed-price sales. The company, based in San Jose, California, said revenue fell 7 percent to $2.04 billion, its first drop in sales in 10 years.
Disney sends buyout offers to 600 parks execs Walt Disney Co said on Wednesday it sent voluntary buyout offers to 600 executives at its domestic theme parks to cut costs amid an economic meltdown that has depressed attendance and prompted the company to deeply discount Walt Disney World stays. Disney said if the buyout offer, which expires February 6, does not produce enough reductions, the company will consider layoffs. A company spokeswoman declined to say what amount of savings or head count reductions Disney was trying to achieve, or what the cost of the terminations would be. The buyout offers come about six weeks after Disney said its hotel bookings had started to rebound as a result of the discounts. The move appears to be part of "significant" costs savings the company promised investors late last year.
Intel to shut sites and cut up to 6,000 jobs Intel Corp (INTC.O) said on Wednesday it would close manufacturing plants in Malaysia and the Philippines, as well as its only remaining factory in Silicon Valley, cutting as many as 6,000 jobs. The announcement comes a day after the world's largest maker of microprocessors used in personal computers slashed prices on a number of its chips and a week after it reported a decline in fourth-quarter revenue. Intel said it would close two assembly test facilities in Penang, Malaysia, and one in Cavite, Philippines.
Strong Profit, but Ericsson Plans 5,000 Job Cuts Ericsson, the Swedish maker of wireless networking gear, posted an unexpectedly strong profit Wednesday but said it would cut as many as 5,000 jobs in anticipation of a slowdown. The Ericsson chief executive, Carl-Henric Svanberg, said on Wednesday in an interview that the company would speed up restructuring efforts despite having largely escaped the fallout from the recession so far. He spoke after Ericsson posted a sixth consecutive year of revenue growth in 2008, paced by worldwide growth in mobile communications. Ericsson will lay off workers, reduce the number of consultants and other temporary staff, and consolidate research and development activities. About 1,000 of the 5,000 job cuts will affect Swedish employees, primarily in Stockholm. The company declined to say where the rest would be cut.
Jim Rogers: UK's future bleak US investment guru Jim Rogers, who earlier in the week said sterling is finished, has told Sky News the financial system is a disaster and the future looks bleak because the UK does not have much to sell any more.
Obama Sworn In Again, Using the Right Words In golf, they call it a mulligan. A do-over. There's no formal name for what President Obama and Chief Justice John G. Roberts Jr. did last night. After flubbing his one role on Inauguration Day -- administering the oath of office to Obama -- Roberts traveled to the White House to re-administer the oath. Just to make sure. "We decided it was so much fun . . .," Obama joked while sitting on a couch in the Map Room. Obama stood and walked over to make small talk with pool reporters as Roberts donned his black robe. "Are you ready to take the oath?" Roberts asked. "I am, and we're going to do it very slowly," Obama replied. After a flawless recitation that included no Bible and took 25 seconds, Roberts smiled and said, "Congratulations, again."
Obama and the other ceasefire In his inaugural speech as the 44th president of the United States, Barack Hussain Obama offered an olive branch toward the Muslim world by promising "a new way forward, based on mutual interest and mutual respect". At the same time, Obama confirmed that America is still embroiled in a "war on terror" by stating, "Our nation is at war, against a far-reaching network of violence and hatred." With conflicts still raging in Iraq and Afghanistan, and the entire Middle East riveted by the seismic impact of the 22-day war in smoldering Gaza, Obama's message of peace was exquisitely timed. After eight years of "clashing civilizations" that defined the George W Bush administration, whose green light to Israel's offensive on Gaza must surely count as its final blunder, the world's expectation of meaningful change in US foreign policy are quite high. These hopes were bolstered by Obama's inaugural promise to set aside "worn-out dogmas" and to begin a new era of global cooperation to tackle the burning issues that confront the world today.
Obama's Agenda: the Middle East, Economy and Ethics President Obama launched immediately into the grim reality of his new job today, placing calls to the leaders of Middle Eastern countries and conducting his first presidential meetings on the economy and Iraq this afternoon. He later signed a series of executive orders and directives to implement new ethics rules for his administration in keeping with a campaign promise to bring greater transparency to the White House. And he declared "a new era of openness" in government.
On Palestinian question, tough choices for Obama JERUSALEM: With the rule of Hamas in Gaza apparently unchallenged and its popularity growing in the West Bank, the new Obama administration faces an immediate policy choice: support a Palestinian unity government, as Egypt and the Palestinian president, Mahmoud Abbas, want, or continue to isolate Hamas and concentrate on building up the West Bank as a political alternative to radical Islam. The issue is urgent because of the international effort to rebuild a bombed-out Gaza while trying to avoid letting Hamas take credit for the reconstruction, as Hezbollah did in southern Lebanon after the 2006 war. But the choice is more fundamental. It goes to the heart of what President Barack Obama can accomplish in the Israeli-Palestinian peace process when the Palestinian side remains violently divided against itself. In a series of calls to Middle Eastern leaders on Wednesday, President Barack Obama did not tip his hand, simply calling for a role for the Palestinian Authority in Gaza's reconstruction.
Pakistan's shift alarms the US KARACHI - Ongoing tension between India and Pakistan in the wake of the terror attack on the Indian city of Mumbai last November in which 179 people died at the hands of gunmen linked to Pakistan has clouded Islamabad's role in the United States-led "war on terror". Mindful of this, US Central Command commander General David Petraeus paid a one-day visit to Pakistan on Tuesday. In meetings with senior officials, including army chief General Ashfaq Parvez Kiani, Petraeus said that the US and the international community would continue to support Pakistan, but it needed "to put its house in order" on the issue of militants.
China can't stop India's missile system India considers its emerging anti-missile system an absolute necessity. As each day passes, the signs of instability in Pakistan become more troubling and the drum beat grows louder from Pakistan's Swat Valley, where a militant culture is taking root which is neither tolerant nor passive in nature. Beijing cannot be happy about India's anti-missile plans and what this might mean for China's long-term strategic interests in the region. More than anything else, it is the uncertainty of the outcome that is causing it such discomfort. The US seems determined to surround China with US-built anti-missile systems. Using North Korea as a valid excuse at first, the US anti-missile footprint could soon extend from Japan - including Japanese cruisers stationed offshore - and South Korea to Taiwan and India.
John Stossel 20/20 : Politically Incorrect Guide To Politics - Pt 1 of 6
John Stossel 20/20 : Politically Incorrect Guide To Politics - Pt 2 of 6
John Stossel 20/20 : Politically Incorrect Guide To Politics - Pt 3 of 6
John Stossel 20/20 : Politically Incorrect Guide To Politics - Pt 4 of 6
John Stossel 20/20 : Politically Incorrect Guide To Politics - Pt 5 of 6
John Stossel 20/20 : Politically Incorrect Guide To Politics - Pt 6 of 6
President Barack Obama 2009 Inauguration and Address President Barack Obama took the oath of office as the 44th president of the United States and delivered an inaugural address focusing on the themes of sacrifice and renewal on January 20, 2009.
Rejecting Bush Era, Reclaiming Older Values Barack Obama’s Inaugural Address on Tuesday was a stark repudiation of the era of George W. Bush and the ideological certainties that surrounded it, wrapped in his pledge to drive the United States into “a new age” by reclaiming the values of an older one. It was a delicate task, with Mr. Bush and Dick Cheney sitting feet from him as Mr. Obama, only minutes into his term as president, described the false turns and the roads not taken. To read his words literally, Mr. Obama blamed no one other than the country itself, critiquing “our collective failure to make hard choices” and a willingness to suspend national ideals “for expedience’s sake” — a clear reference to the cascade of decisions ranging from interrogation policies to wiretapping to the invasion of Iraq.
Obama’s Inaugural Address Interactive video and transcript of President Barack Obama's inaugural remarks on Jan. 20, 2009.
'The Fierce Urgency of Now' I doubt that we will ever see two days in a row in modern times that link the two African-American orators of our day like Monday and Tuesday of this week. How will these days affect the US markets? Of course no one knows. What is clear to those celebrating the holiday this Monday was that King went to the mountaintop and saw the other side. His message was a message of hope in the midst of endless despair. And for many, by noontime Tuesday, they will have "reached the promise land." You have seen a political campaign this year like none other. The issues changed along the trial, and by October, the economy was center stage. But well beyond the financial issues, the voters cast ballots for the ideologies of "change" and "hope." And yet the majority of reporting today on our financial markets, our banking systems, and world economy attempts to paint a dismal scene.
Obama: We must change with the world President Barack Obama signalled a decisive break with the Bush years on Tuesday, vowing a “new era of responsibility” in which he would rebuild the economy and restore America’s standing in the world. Moments after taking the oath of office to become the 44th US president, Mr Obama declared the country “ready to lead again” and set out policies on issues ranging from the economy to climate change and the struggle against Islamist extremism. “The world has changed, and we must change with it,” he told an exuberant crowd of hundreds of thousands gathered in Washington’s National Mall to mark the inauguration of the country’s first African-American president. “Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.”
Obama speaks of 'crisis' facing US President Barack Obama says he is taking the helm of a nation that is "in the midst of crisis." He said in his inaugural address that the challenges "will not be met easily or in a short span of time". But he said, "they will be met." Describing the challenges ahead, he said: "That we are in the midst of crisis is now well understood. Our nation is at war, against a far-reaching network of violence and hatred. "Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age.
Obama’s Open and Shut Approach to Access According to President-elect Barack Obama’s latest radio address, this will be “the most open and accessible inauguration in history.” I guess he forgot to tell his inauguration committee. They have “struck deals with three television networks to the tune of more than $5 million,” according to the Jan. 17 Washington Post. So much for open government. Obama hasn’t even taken the oath of office and he’s blocking media outlets that don’t pay. He even shut out C-Span – almost unheard of in Washington. Instead, his inauguration is raking in cash and limiting access to ordinary Americans to help pay for the festivities.
Obama to Meet War Council on First Full Day The new commander in chief's promise to end the war in Iraq - and his hope for a turnaround in Afghanistan - will be on the agenda Wednesday when he meets with top commanders and national security aides. Two senior officials said Obama was summoning his defense secretary, Robert Gates, and the chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, to the White House, along with Gen. David Petraeus, who has responsibility for both wars as Central Command chief.
Obama Becomes Banker-in-Chief in Credit Market Freeze The U.S. economy has little chance of recovering from what may prove to be its worst recession since World War II unless President Barack Obama shows he can get banks to lend money again. Since the Bush administration and Congress last year approved the $700 billion Troubled Asset Relief Program that injected capital into Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co., individuals and companies aren’t getting any of it as fourth-quarter lending by the biggest banks by assets plummeted. The asset-backed market, which is supposed to enable banks to keep lending by transforming loans into tradable securities, remains frozen, leaving would-be lenders unable to package and sell mortgages, credit-card debt and auto loans.
New U.S. President Looks in Vain for Head of U.S. Treasury President Barack Obama is inheriting the worst recession in decades and it's possible that in his first few days -- and potentially weeks -- he won't have a Treasury secretary to guide fiscal policy. Obama's Treasury Secretary-designate Timothy Geithner, who is still officially the president of the New York Federal Reserve, last week admitted that he didn't pay Social Security and Medicare taxes from 2001 to 2004 when he worked for the International Monetary Fund. In addition, he employed an immigrant housekeeper who, though she was legally in the U.S., continued to work for Geithner during a three-month period when her papers were expired.
Rahm Emanuel (Chief of Staff) at the Inaugration. . . . setting the tone for the Obama administration?
Profile: Rahm Emanuel, Barack Obama's new enforcer Barack Obama may be on course to be one of the most loved presidents in US history, but as his 18th Century predecessor John Adams once observed, it is on fear, not love, that most successful governments are founded. With that in mind, President-elect Obama had a shortlist of one when it came to choosing his White House Chief of Staff; Rahm Emanuel, a politician so ferocious that even his own mother calls him by his nickname of "Rahmbo". If the Democratic Congressman accepts the job as Mr Obama's enforcer, Mr Emanuel, universally characterised as a foul-mouthed attack dog who can end the career of anyone who stands in his way, will serve as a perfect counterpoint to the sugar-coated Mr Obama. Mr Emanuel, 48, who served as an aide to President Clinton, has proved in the past that he bows to no-one when it comes to getting the job done, as Tony Blair discovered when he visited the White House at the height of the Monica Lewinsky scandal in 1998. As he prepared for a public appearance with the president, Mr Blair was warned by Mr Emanuel: "This is important. Don't **** it up."
Stock market delivers worst Presidential inauguration performance ever. What does it mean? The US stock market gave President Obama a less than enthusiastic welcome on his inauguration day, with the DJIA declining 4% to close under 8000. What does this bode for the future? Is there any meaningful correlation between inauguration day stock market performance and the stock market over a President’s term? We reviewed the DJIA for each Presidents' first day going back to 1929 to see what today’s stock market reaction might foretell. A presidential inauguration is hardly market news. There’s no timing surprise, as if the market doesn’t know when the swearing it ceremony is scheduled to take place, and presidents rarely say anything new during inauguration speeches to warrant a major change in market sentiment. But the market’s reaction today cannot be quickly dismissed as coincidental, either, caused by newly developing troubles in the financial system. Let’s put today in historical perspective. Herbert C. Hoover 4/4/29 Franklin D. Roosevelt 4/5/33 Franklin D. Roosevelt 1/7/37 Franklin D. Roosevelt 1/20/41
Strong Gold, Strong Dollar "Because the Dollar Index (DX) is an outmoded and artificial measure of dollar strength, containing nothing to account for the Chinese renminbi for example, it may not be a true reflection of the progress of this inflation." (see: The Fed Is Monetizing Debt and Inflating the Money Supply) A number of people have remarked about the strong dollar and strong upmove in gold today. It does seem counterintuitive. The euro is weak because of the solvency situtations in Ireland and Spain. This is taking the euro down and the dollar higher. At the same time there is a flight to safety occurring into gold, but not into commodities in general. It is not a flight from inflation, it is a flight from risk to relative safety. At least for today. But by the way, keep an eye on the Treasuries, particularly the longer end of the curve, as we have previously advised.
Schmidt's Gold Thoughts The 1930s was the birth of Keynesianism. Economists needed a simple answer as to why they had been so wrong. Since then, the U.S., and much of the rest of the world, has endured 70 years of economic concepts that have generated a continuous lack of success in economic matters. Most professions would seriously review their methodology when faced with as many repeated failures. Not so for the economics community. They just keep coming with more of the same failed policies.
Where is the safe haven? As the US$1.19 trillion forecast 2009 US budget deficit combines with the forthcoming $825 billion (and counting) stimulus package, observers seem convinced that for some mystical reason US Treasuries are a "safe haven" - endlessly attractive to Asian and Middle Eastern central banks and therefore able to yield considerably less than the expected rate of inflation over their life. But what if this irrational investment preference ceases to hold? US government bonds have not always been the world's safest investments, to say the least. The phrase "not worth a Continental" encapsulates the inflationary finance that was used to win the Revolutionary War, while US state bonds were notorious in the 19th century City of London after Pennsylvania defaulted in 1841. Even during the Civil War, there were moments when the Confederate credit appeared more solid than Union credit - after all, absent the threat of military invasion, the Confederacy was a stable agrarian economy with several reliable cash crops.
Jim Rogers: 'Sell any sterling you might have. It's finished'Investment guru issues grim warning as sharp fall in inflation hits pound Fresh concerns about the British economy and fears for the stability of the UK's financial system pushed sterling to new record lows against the dollar, euro and yen yesterday. One of the world's leading investors voiced the markets' concerns. Jim Rogers, of the Singapore-based Rogers Holdings and co-founder of the Quantum fund with George Soros, told Bloomberg Television: "I would urge you to sell any sterling you might have. It's finished. I hate to say it, but I would not put any money in the UK." Mr Rogers added that the pound will fall below its record low of $1.0520 reached in February 1985. Given near parity with the euro, it raises the intriguing possibility that the pound/dollar/euro exchange rate could yield a "triple parity"
Jim Rogers: The slide in sterling has turned "disorderly
Jim Rogers: Don't own sterling
Treasuries Are the Key In 2009 In 2008, the market that was the trigger for other markets was the currency market. The bottom in the dollar led to a peak in commodities and helped spur massive deleveraging and selling of various holdings. For certain, the increasing strength of the Yen also caused great damage to the global economy and global capital markets. There were only a handful of places to hide, free of volatility and immediate risk. Either you owned government bonds, the dollar or the yen. Gold advanced in 2008, though with extreme volatility compared to other safe-havens. We believe that 2009 will be similar to 2008 in that a particular market will affect all other markets. As we showed in the Market Outlook, Treasuries are very likely to be the key market and that also includes foreign government bonds (of the largest nations). There is a reason its simple. In a deflationary environment money moves to the safety of government bonds. Governments increase their size to help the economy fight deflation, which cripples the private sector. A recovery ensues after money exits government bonds for more productive purposes.
'Time to Sell' Treasuries, Biggest Korean Fund Says A rally that sent U.S. Treasuries to their best year since 1995 is coming to an end, South Korea’s National Pension Service, the country’s biggest investor, said. U.S. government efforts to combat the recession will prompt the Federal Reserve to raise interest rates this year, said Kim Heeseok, who oversees $160 billion as head of global investments for the service in Seoul. The decline would snap a surge that sent the securities up 14 percent last year, according to Merrill Lynch & Co.’s U.S. Treasury Master index, as investors sought the relative safety of debt. "It’s time to sell U.S. Treasuries," said Kim, who took over as head of investments at the start of the year. "The stimulus plan may cause inflation. The U.S. will raise the benchmark interest rate."
The Fed is Monetizing Debt and Inflating the Money Supply Here are the latest figures on the growth of the various money supply measures. The charts indicate that the growth in the money supply is due to a significant monetization of debt by the Fed in expanding its balance sheet and deficit spending by the Treasury, rather than organic growth from credit expansion from commercial sources and economic activity. The negative GDP figures confirm this. You could imagine this as a tug of war if you wish. On one side is the deflationary force of bad debt and falling aggregate demand. On the other is the Treasury, the Fed, and the Congress, using the triple threat of deficit spending, monetization of debt, and stimulus programs. The limits of the power of the Feds are the value of the dollar and the acceptability of Treasury debt. There is no lack of debt that can be monetized. To think otherwise is fantasy. But there are limitations about how much the dollar can bear, which is why the banks and moneyed interests have shoved their way to the front of the line, and are gorging themselves now with a little help from their friends in the Treasury and the Fed. When the time comes they intend to throw the public agenda under the bus. Its an old script, many times performed with minor enhancements.
Preventing the Greatest Heist in History There’s currently an idea to fix the financial system that’s getting quite a bit of traction: an RTC-type program whereby the government would buy $1 trillion of troubled assets from struggling U.S. banks, with the goal of restoring them to health so they can begin lending again, leading to an economic recovery. The problem with this idea (let’s call it “New RTC”) is that either the government will pay market prices for the toxic assets – in which case, it will simply accelerate the collapse of our financial system – or pay above-market prices, in which case taxpayers will likely suffer big losses. There is another option, however, which involves debt holders taking a share of the losses. If steps are not taken to ensure that this happens, the greatest heist in history will have occurred: at least $1 trillion will be transferred from taxpayers to debt holders of failed financial institutions. This must not be allowed to happen.
Bloodbath of the banks Royal Bank of Scotland announced the biggest loss in British corporate history yesterday. The news triggered fears the bank would be nationalised and caused a bloodbath in shares across the sector, overshadowing the Government's latest financial bailout. RBS stunned the market by predicting a loss of up to £28bn for 2008, writing off as much as £8bn of toxic assets and £20bn from the value of acquisitions, including the disastrous takeover of the Dutch bank ABN Amro in 2007. The scale of the losses raised fears that RBS would be fully nationalised and that other banks, such as Barclays, could find themselves controlled by the state.
RBS Will Be Guinea Pig for 'Creeping Nationalization' Royal Bank of Scotland Group Plc, facing the biggest loss in British history, promised to make 6 billion pounds ($8.7 billion) available to U.K. borrowers as the lender took another step toward full government control. In exchange for government guarantees on losses from toxic debt, the bank will have to sign a binding agreement with the Treasury on how much it will lend and on what terms. Auditors will move in to check the bank is following the government directive. "We’ll be one of the first guinea pigs," RBS Chief Executive Officer Stephen Hester told reporters on a conference call yesterday. The Edinburgh-based company is in talks with the Treasury about terms of the agreement. Loans will only be made "on commercial terms and to creditworthy people," he said.
Loan defaults, deflation and bonds There seems to be a lot of confusion about how loan defaults affect the money supply, so we'll quickly cover some old ground. When a bank makes a loan by creating new currency, the money supply grows by the amount of the loan. If the bank's customer (the borrower) subsequently defaults, the money supply is not immediately affected because the money that was loaned remains within the economy (the borrower spent the money, so the money is now held by other people). However, when the borrower defaults the lending bank is forced to write off its investment and the resulting capital loss could mean that the bank in question will be less able or willing to make new loans. In other words, widespread defaulting on bank loans will not cause the total money supply to fall, but it can lead to slower money-supply growth in the future.
Notable Bankruptcies of 2008: Final Tally 231 bankruptcies falls far short of the 289 “major” bankruptcies in 2000 and 383 in 2001 (the dotcom bust). However, I would not be surprised to see 2009 challenge the 383 mark from 2001. In fact, if we believe the predictions of my colleague Edward Altman, we should not be surprised to see the number of “major” bankruptcies exceed 400 (see NYU’s Altman Sees 2009 Default Rate Doubling). Obviously default is not the same thing as bankruptcy; however, they trend together.
Obama's national health records system will be costly, daunting But an electronic health records system could save the nation $300B a year President-elect Barack Obama has said that a national electronic health records system will be a priority in his first term, not just for streamlining workflow at hospitals and physician offices but to cut costs and improve the quality of health care. And while he has pledged to invest $10 billion a year over the next five years on the effort, the price tag for such a system could be closer to $100 billion over the next 10 years, according to experts. They also note that sticking to his five-year timetable could prove to be daunting. Money for the e-health records (EHR) system would come out of the $825 billion economic stimulus package Obama hopes to push through Congress. "The magnitude of what we're going to need to do on the Obama scale is just incredible to think about, when you consider linking all these medical records across all these different towns, cities, states," said Dr. Charles O. Frazier, a vice president of clinical innovation at Riverside Health System in Newport News, Va. "We have enough of a problem with that in our own health system."
Fresh Bank Worries Batter Stocks; Dow Falls Below 8,000 Stock markets had one of their worst Inauguration Day losses in more than a century, skidding more than 4 percent. Financial companies plunged more than 15 percent, their biggest one-day drop in nearly two decades, as investors worried that the troubles facing the country’s biggest banks might be larger and deeper than anyone had thought. Even after record corporate write-downs and a $700 billion bailout to shore up the financial system, banks are still reporting huge losses, lining up for new government lifelines and cutting their profit outlooks.
As Bank Crisis Deepens, Obama Has No Quick Fix Even before they have settled into their new jobs, President Obama’s economic team faces an acute crisis in the nation’s banking system that has no easy answers and that they are not yet prepared to address. The president’s advisers watched most banking shares fall sharply on Tuesday, reinforcing what Obama officials have known for weeks: that their most urgent financial problem is an immense new wave of losses at banks and other lending institutions that threatens to further cripple their ability to resume normal lending. But when Timothy F. Geithner, the president’s nominee to be the Treasury secretary, appears before the Senate Finance Committee on Wednesday for his confirmation hearing, he is not expected to have a detailed plan ready.
Biblical debt jubilee may be the only answer Once again, Britain leads the world in the macabre speciality of saving banks. The Treasury's £200bn plan to soak up toxic debt will be followed within days by a US variant from the Obama team. Germany cannot be far behind. As one bail-out succeeds another at ever more inflated price tags, rescue fatigue is becoming palpable. People are bewildered, fearing that good money is being thrown after bad. The doubts are understandable but there are tentative signs of a thaw in the global credit system. Libor lending rates in the US, Britain and Europe have fallen sharply. US mortgage rates have dropped from 6.5pc to 4.88pc since October. Companies can issue bonds again. "It is easy to conclude that none of the Government's policies are working," said Professor Peter Spencer from York University. "We must not lose sight of the fact that they have prevented the collapse of the monetary system." This is not does mean that recovery is imminent. Nothing can prevent a long purge as years of credit leverage give way to debt deflation.
Flocks Of ETFs Ready To Fly, Crash In 2009 ETF providers kicked off 2009 in high gear, introducing three new ETFs in as many weeks. The first ETF to track the world's largest Islamic country debuted on the NYSE Tuesday. Market Vectors Indonesia Index includes 25 companies based in Southeast Asia's largest economy, according to Van Eck Global, the ETF's provider. It carries an expense ratio of 0.71%. Just after unleashing an arsenal of 14 wildly popular triple-leveraged ETFs, Direxion Shares on Jan. 8 launched two more to cover the midcap space.
Is the Economy Going to Get Worse?"The Market Could Tank Very Soon" After the Inauguration of President Barack Obama Exactly the Opposite of What You've Been Told Most Americans have been told by the Bush administration and the talking heads that things will get worse for a couple of months, but then the economy will start to turn around and improve in the second half of 2009 after Bushco and Obamaco's bailout and stimulus programs kick in. In fact, the smart money is saying that the exact opposite will happen. Specifically, Marc Faber, Robert McHugh, Societe Generale, Mish and others are saying that the stock market is now in a bear market bounce, buoyed by the hope of the general population that Obama will turn things around. But that at some point after the inauguration, people will realize that Obama's plan won't stop the crisis, and that things are going to get worse. At that point, they say, the market will really tank.
The United Ponzi States of America If you thought Madoff’s Ponzi scheme was bad, don’t look now, but you’re in one. Anyone can work a simple swindle. But you need to be a special kind of con man to bilk billions from otherwise intelligent people. Bernard L. Madoff was one such man. Charles Ponzi was another. But the biggest fraud and scam master of all goes by the name of Uncle Sam. Just what does a person have to do to make his name synonymous with fraud? Charles Ponzi, the father of the “Ponzi scheme,” knows. Unfortunately, so does Uncle Sam. And taxpayers across America are about to find out. In 1903, a destitute Charles Ponzi stumbled upon a way to make some quick cash by taking advantage of the postal system. When the postal service sent letters overseas, it was common for senders to include an international reply coupon. This coupon could be exchanged for postage back to the country from which the letter was sent. Charles found out that due to exchange rates, you could purchase postal reply coupons cheaply in some foreign countries, then send them back to the United States to swap them out for American stamps of higher value. Then you could sell the stamps.
Brokers land in the rough Morgan Stanley and Bank of America are upping the ante to create the largest brokerages in the nation, even as individual investors head for the exits. Last week, Morgan Stanley agreed to buy half of Smith Barney and form the nation's second-largest brokerage, a behemoth with more than 20,000 employees. Meanwhile, Bank of America is working feverishly on its absorption of Merrill Lynch to form what will rank as the nation's largest brokerage, with $2.5 trillion of client assets. Too bad about the timing. “People aren't buying cars nowadays, much less securities,” says Allen Gutterman, president of a small Manhattan recruiting company who closed his own brokerage account and is using his cash to build a business. At this point, the last person he wants to hear from is a stockbroker pitching the latest investment idea. "This is about self-preservation," he says.
UK cannot take Iceland's soft option The British government faces an excruciating choice. It cannot let Royal Bank of Scotland and its fellow mega-banks go to the wall. Yet it risks being swamped by the massive foreign debts of these lenders if it takes on their dollar, euro and yen exposure by opting for full nationalisation. Britain has foreign reserves of under $61bn dollars (£43.7bn), less than Malaysia or Thailand. The foreign liabilities of the UK banks are $4.4 trillion – or twice annual GDP – according to the Bank of England. The mismatch is perilous. It is why sterling has crashed 10 cents from $1.49 to $1.39 against the dollar in two days. The markets have given their verdict on Gordon Brown's latest effort to "save the world". Credit default swaps (CDS) measuring risk on British debt have reached an all-time high of 125, just below Portugal. The yield spread on 10-year Gilts over German Bunds has doubled to 53 since last week.
Clear Channel Plans to Trim 1,850 Jobs The parent company of Clear Channel Communications, struggling in the advertising downturn, announced on Tuesday that it was eliminating 1,850 positions, or about 9 percent of its staff. The dismissals were effective immediately. The company, CC Media Holdings, which owns billboards and radio stations under the Clear Channel name, had been hit hard recently. In the third quarter, its revenue from radio broadcasting fell 7 percent. Outdoor advertising had a milder decline — because of the popularity of digital billboards, it fell just 1 percent. "Everyone in our investor group, on the board and in the executive leadership team remains bullish about the long-term growth prospects for Clear Channel," Mark P. Mays, Clear Channel’s chief executive, wrote in a memorandum to employees. "Clear Channel Communications has more resources than any of our peers. The tools are here. The support is here."
Warner Brothers to Cut 800 Jobs Warner Brothers said it would eliminate 800 jobs, or about 10 percent of its global work force, as it struggled with declining DVD sales and a poor outlook for scripted television programming. While not unexpected — Warner had been quietly preparing Hollywood to expect cuts — the layoffs rattled the movie capital because the studio is regarded as one of the industry’s healthiest. With a parade of hits like "The Dark Knight," "Sex and the City," "Get Smart" and "Four Christmases," Warner recorded global ticket sales of $1.77 billion in 2008, up 25 percent from a year earlier.
Fiat Acquires 35% Stake in Chrysler DETROIT — The Italian automaker, Fiat, agreed on Tuesday to take a 35 percent stake in the struggling American auto company Chrysler, which was forced last month to seek a federal bailout amid fears it might not survive. The deal, announced by Fiat at its headquarters in Turin, Italy, and by Chrysler in Auburn Hills, Mich., means Chrysler will have significant foreign ownership again after only 18 months as an independent company. Cerberus Capital Management bought Chrysler in 2007, after it was put up for sale by Daimler of Germany. The two companies operated as DaimlerChrysler for nine years.
Syria Calls for German Involvement in Middle East Peace Process Is Syria about to break its alliance with Iran for a new alliance with Germany? Syrian President Bashar Assad is widely considered a lapdog of Iran’s ayatollahs. After all, his country has waged war against Israel, offered nuclear assistance to Iran and supported both Hezbollah and Hamas politically. Despite this résumé, however, recent news indicates that Assad just might be willing to distance himself from Iran in return for a larger role in Middle East “peace” negotiations. “We would like to contribute to stabilizing the region. But we must be included and not isolated, as has been the case until now,” said Assad in an interview with German newsmagazine Der Spiegel. “We are willing to engage in any form of cooperation that is also helpful when it comes to America’s relations with other countries.”
Henry Kissinger: The world must forge a new order or retreat to chaos Not since JFK has there been such a reservoir of expectations As the new US administration prepares to take office amid grave financial and international crises, it may seem counterintuitive to argue that the very unsettled nature of the international system generates a unique opportunity for creative diplomacy. That opportunity involves a seeming contradiction. On one level, the financial collapse represents a major blow to the standing of the United States. While American political judgments have often proved controversial, the American prescription for a world financial order has generally been unchallenged. Now disillusionment with the United States' management of it is widespread.
Henry Kissinger and the New World Order A compilation movie about Henry Kissinger and his New World Order plans.
Henry Kissinger New World Order again
China Sees Threat in U.S. Arms Sales BEIJING — The Chinese government announced Tuesday that the nation faces important threats in the form of independence movements related to Taiwan, Tibet and the western desert region of Xinjiang, and that American arms sales to Taiwan continue to jeopardize stability in Asia. The announcement came in a white paper on national defense released Tuesday by the State Council, the Chinese equivalent of a cabinet. The paper said that "China’s security situation has improved steadily," but that "being in a stage of economic and social transition, China is encountering many new circumstances and new issues in maintaining social stability."
Ruble Hits 11-year Low As Russia Accelerates Devaluation The Russian ruble fell yesterday (Monday) to levels not seen since the 1998 banking crisis, as the nation’s central bank devalued the currency for the sixth time in seven days. The devaluation is seen as a sign of further deterioration in the Russian economy and comes despite government efforts to orchestrate an orderly retreat. A drop in the price of oil, the war in Georgia, and a gas-export dispute with the Ukraine have put a huge dent in the Russian economy, which now teeters on the verge of recession. The devaluations reflect the new reality of low prices and falling demand for oil and other exportable commodities.
Sovereign Credit of Spain and Greece Downgraded ... Who's Next? Standard & Poors stripped Spain of its AAA sovereign credit rating today. Greece got downgraded on January 14th. Ireland is on the watch list and - given its severe financial problems - might be next. Portugal is also on S&P's watch list. America may not be far behind either, although it might be exerting severe political pressure on the rating agencies to maintain the status quo.
Republican Senator Blocks Clinton's Confirmation The confirmation of Hillary Rodham Clinton to be secretary of state will be held up for at least a day due to the objection of a single senator. Sen. John Cornyn, R-Texas, is blocking a unanimous vote on Clinton for Tuesday because he is not satisfied with Clinton's responses to concerns over foreign donations to her husband Bill Clinton's foundation, his office said. Cornyn's spokesman Kevin Mclaughlin said the senator is not trying to block her confirmation, but is seeking more debate on the donation issue. Jim Manley, spokesman for Senate Majority Harry Reid, D-Nev., said that if a voice vote is blocked there will be a roll call vote Wednesday. He predicted that "she will receive overwhelming bipartisan support at that time."
Flight 1549 passengers to get $5K for lost bags Passengers on the flight, which made an emergency landing in the Hudson last week, were given $5,000 for their lost bags, and news surfaced the plane had engine woes two days earlier. U.S Airways has sent $5,000 checks to each of the 150 passengers on Flight 1549 to compensate them for lost luggage and other belongings. In a letter sent to passengers, an airline executive said she was "truly sorry." The letter also explained that passenger belongings left behind in the plane could be stuck with investigators for months. The airline also said it would reimburse passengers for their ticket costs. The letters came the same day as reports surfaced that the jet had experienced an engine compressor failure two days before the crash. National Transportation Safety Board spokesman Peter Knudson said the board's examination of the Airbus 320's maintenance records show "there was an entry in the aircraft's maintenance log that indicates a compressor stall occurred on Jan. 13." The compressor, or fan, draws air into the engine.
President Franklin Roosevelt 1933 Inauguration Newsreel footage of President Franklin Delano Roosevelt's first inauguration on January 20, 1933.
President Truman 1949 Inauguration Newsreel footage of President Truman's first inaugural address on January 20, 1949.
President Eisenhower 1953 Inaugural Address President Eisenhower delivered his first inaugural address on January 20, 1953.
President Kennedy 1961 Inaugural Address President Kennedy delivered his inaugural address on January 20, 1961.
President Johnson 1965 Inaugural Address President Johnson delivered his inaugural address on January 20, 1965.
President Nixon 1969 Inaugural Address President Richard Nixon delivered his first inaugural address on January 20, 1969.
Gerald Ford 1974 Inauguration Vice President Gerald Ford was sworn in as the 38th President of the United States after the resignation of President Nixon.
President Jimmy Carter 1977 Inaugural Address President Carter notes that the nation must be strong at home in order to be strong abroad, and he emphasizes assisting freedom and human rights causes all over the world. Carter strives to rebuild Americans' confidence in the government as well as equality for all Americans.
President Reagan 1981 Inaugural Address President Reagan delivered his first inaugural address on January 20, 1981.
President George H. W. Bush 1989 Inaugural Address President George H. W. Bush delivered his inaugural address on January 20, 1989.
President Clinton 1993 Inaugural Address President Clinton delivered his first inaugural address on January 20, 1993.
President George W. Bush 2001 Inaugural Address President Bush gave his first inaugural speech on January 20, 2001.
Silverlight tapped to stream Obama's inauguration It will be used Tuesday on the Inaugural Committee's Web site Microsoft's Silverlight technology has been chosen to stream President-elect Barack Obama's swearing-in ceremony live on the Presidential Inaugural Committee's Web site, Microsoft said Friday. Obama and Vice President-elect Joe Biden are due to be sworn in and deliver inauguration speeches at noon on Tuesday in Washington, D.C. Both events will be streamed live on the Inaugural Committee site using Silverlight, a cross-browser technology for delivering live and on-demand video over the Web. Obama was elected Nov. 4 as the first African-American U.S. president, giving Tuesday's inauguration particular historical significance.
For new first lady, hints of agenda and tone She celebrated her 45th birthday in a vintage train car, amid balloons and crepe-paper streamers, and cheering crowds serenaded her by name. She danced in front of the Lincoln Memorial to Stevie Wonder's "Higher Ground" with her husband and daughters clapping by her side. She assembled care packages for soldiers in Iraq and Afghanistan, and, in this long, whirlwind weekend, marveled that she would soon be the public face of America's first family. On Inauguration Day, Michelle Obama will become the first African-American to assume the role of first lady, a woman with the power to influence the nation's sense of identity, its fashion trends, its charitable causes and its perceptions of black women and their families. Already, the outlines of her style and public agenda have begun to emerge.
Obama, Keynes, and Pragmatism On several occasions of late, I have read or heard the phrase, "We are all Keynesians now," an erudite way of expressing the idea that the free market is dead. And that the fate of the global economy now relies almost entirely on pragmatic measures yet to be taken by governments, most notably that of the United States. Given that the word "pragmatic" is often used to describe President Obama, it appears that the man of the hour has arrived just in the nick of time. Not to be a spoilsport, but there is much wrong with this latest entry in the thick and well-worn journal labeled "Popular Delusions." First and foremost, the idea that the world's largest debtor nation should be stood up as role model is laughable. That is like hiring the town's serial bankrupt to run the bank. Putting aside the irony, the inherent conflict of interest destroys any U.S. credibility as an honest broker in the current scenario. Secondly, while the incoming team has done a superior job of spinning pragmatism into the Obama brand, it is another thing altogether to actually demonstrate the quality when the shoe leather hits the fast-moving pavement.
Bank Bailout Bait & Switch - CBSNews (01-09-2009) Banks knew from the beginning. Hank Paulson is hand picking the winners and losers.
Got money? Buy Gold & wait! Even as investors across the globe are pitching for gold what is reining in gold prices in India. If you analyze last weeks trends, gold, after being in the grip of bears for the most part of the week, recovered during the weekend. On Friday, it gained three per cent to close at $847.2 an ounce but during late fixing, it slipped to $833.75, indicating the continuing volatility. So, gold is not soaring as expected. The reasons is the global meltdown impact. In reality, people have stopped buying the yellow metal from spot markets because of the shortage of liquidity.
Gold Is A Beach Ball Being Held Under Water Perhaps the best analogy to explain the fundamental condition of gold is that it's like a beach ball being held under water, where at some point it will escape the clutches of its oppressor, springing it into the light of day for all to see its true worth. Even a child could understand such a condition when explained in terms of a beach ball. When it comes to the day-to-day trials and tribulations of gold however, it's not that simple unfortunately, because although gold is the oldest form of true money on the planet, it's also a political metal caught up in the biggest fiat currency / Ponzi scheme in the history of mankind. It's the Ponzi scheme that even though Bernie Madoff has now made it fashionable to expose them, you will not hear talked about in the mainstream media. This is because ‘ The Creature From Jekyll Island ' is still in control all these years later, given it's feeling its oats these days for sure. That is to say, the Fed, and it's counterparts around the world, are finally staring at the same end game dynamics as Madoff was seeing just a few weeks ago now, but because their game is much larger and complex, it's going to be with us for a little while longer yet.
'Next big rally in Gold & Crude Oil will begin soon' While gold was extremely popular the past few years, I think it’s safe to say crude oil is unbeatable for popularity, as it’s a resource which almost everyone uses on a daily basis and it affects all of us in the wallet when oil prices rise as fuel, shipping costs and petroleum products start to cost more and more. This is the first time I have REALLY noticed everyone is following the price of oil. When kids start talking about it, then you know its being watched like a hawk from all types of individuals and traders. When crude oil peaked at $147.90 back in July, people were starting to panic. The increase on fuel alone was really taking a toll on commuters and shipping costs went through the roof, which hurt almost every business in some way. That being said, oil is now back down at support and looking ready for a bounce.
Stop the Government Bailouts! Tell Washington Enough is Enough! Patrick O’Brien starts a grassroots effort to Stop the Intervention
Why allocate more for Gold in 2009? In times of turmoil in 2008, Gold and Government bonds emerged as clear winners. In dollar terms, gold prices increased for eighth consecutive year with gains of 5% in 2008. . . . . Going forward, gold prices are expected to continue its upward journey. The macro economic and supply demand factors are supportive of higher prices. The uncertainty that surrounds the global economy would continue to underpin gold’s role as a safe haven. There is an increasing likelihood that global deflationary scenario would change to an inflationary one as central banks globally pump in money created out of thin air; leading to a rally in gold prices.
Gold Drops in London on Slumping Oil Prices, Stronger Dollar Gold fell in London as crude oil slumped and the dollar gained against the euro, reducing the metal’s appeal as an inflation hedge and alternative investment. Oil declined today on forecasts faltering global economic growth will drive down fuel demand, while the dollar rose as much as 1.2 percent against the euro. Bullion, which typically moves in the opposite direction to the U.S. currency, climbed 3.1 percent on Jan. 16, the biggest gain in more than a month. Gold is “still moving with oil and the dollar and it depends on what’s going on in these markets,” Wolfgang Wrzesniok- Rossbach, head of marketing and sales at Hanau, Germany-based Heraeus Metallhandels GmbH, said by phone. Trading volume will be low today because of the Martin Luther King Day holiday in the U.S., he said.
Gold will emerge winner in this Tug of War A Federal Reserve balance sheet that has grown from 900 billion to well over 2 trillion since last fall may be on its way to 10 trillion according to some observers. There is no denying it's been pedal to the floor in money-printing efforts to restore the credit markets back to health. What also needs to be restored is profits for the banking industry. It is that industry, after all, that the Fed really answers to. It is also an industry that knows how to profit from inflation. Throughout history bankers and the ruling classes have profited from inflation, as a transfer of wealth occurs at the expense of the vast majority of the population.
Ron Paul: Bailouts NOT constitutional on Glen Beck
Buffett says US in 'economic Pearl Harbor' Buffett says in NBC interview that US is in 'economic Pearl Harbor' Billionaire investor Warren Buffett says the U.S. is engaged in an "economic Pearl Harbor." In an interview that aired Sunday on "Dateline NBC," the chairman and CEO of Berkshire Hathaway Inc. said the nation's economic situation is not as bad at World War II or the Great Depression, but it's still pretty severe. Buffett said Americans are in a cycle of fear, "which leads to people not wanting to spend and not wanting to make investments, and that leads to more fear. We'll break out of it. It takes time." Buffett's interview centered on President-elect Barack Obama and the tough task he faces in fixing the U.S. economy.
4Q earnings could indicate economy's direction Wall Street looks to week's big earnings to help answer questions about economy's direction As hundreds of fourth-quarter earnings reports stream in this week, Wall Street's reaction will turn on companies' answers to one question: When will the recession end? "Not soon" is what the market heard last week. Big banks posted ugly numbers and told investors they were still struggling with rickety balance sheets. That revived fears that the economic recovery that some analysts have forecast for the second half of the year won't materialize.
The End of Banking as We Know It THE concept of the financial supermarket — the all-things-to-all-people, intergalactic, behemoth banking institution — bit the dust last week. The first death notice came on Tuesday, when Citigroup, Exhibit A for the failure of the soup-to-nuts business model, said it was dismantling. Just over a decade after the deal-maker Sanford I. Weill tried to meld insurance, investment banking, mortgage lending, credit cards and stock brokerage services, the dissolution began. Citigroup, it turned out, was too big to manage, too unwieldy to succeed and too gigantic to sell to one buyer. A few days later, Bank of America, another serial acquirer of troubled institutions —Merrill Lynch and Countrywide Financial most recently — fessed up that its deals now need taxpayer backing. The United States government invested an additional $20 billion in Bank of America (after $25 billion last fall) and agreed to guarantee more than $100 billion of imperiled assets.
Banks: Nationalize, Cleanse and Get It Over With Washington is doing what Washington does best. Resurrecting old ideas and dressing them up as a new solution. The latest is the “aggregator bank”. Some sort of financially engineered solution to the ongoing problem with our banking system. It’s just new lipstick on the old TARP pig. The concept is the same one they have tried to sell since the beginning. Buy the bad assets from the banks and do something, anything with them. No plan except to get them out of the banks. Logically, some sane minds outside the Beltway have said from the outset, “Yes, but what price do you intend to pay for these assets?” The newest proposals try a bit different spin but still ignore the essential question. Do the banks, their managements and their shareholders get a sweetheart deal or do we buy these at market and probably tank the banks?
Ron Paul - Danger of hyperinflation 1/16/09 Dollar financial system established in 1971, has already ended, and if we're not careful, we'll get what Germany got (hyperinflation) that ushered in the Nazi regime. First, hyperinflation, then world war.
Citigroup Splits Up After Fifth Straight Quarterly Loss Citigroup Inc. Friday succumbed to the reality of its dwindling capital base and plunging stock price, announcing it is splitting into two separate companies in what amounts to a death knell for the "financial supermarket" model. Chief Executive Officer Vikram Pandit’s move will wipe out the legacy of former chief Sanford "Sandy" Weill, by creating "Citicorp" to house the New York-based company’s global bank, and "Citi Holdings" for its "non-core" and toxic assets backed by the U.S. government. "The financial supermarket was buried today," Bill Smith, founder Smith Asset Management Inc. in New York, told MSNBC. Smith, whose company owns shares of Citi, is one of many critics that have repeatedly called for a breakup.
Economic experts renew calls for Mediterranean Union bank (TUNIS) - Financial experts from Europe and north Africa renewed calls for a new regional bank for the Mediterranean Union, according to a report released Sunday after week-long talks on economic integration. Participants from Germany, France, Algeria, Morocco and Tunisia who attended the talks in Tunis called for the creation of a "regional bank dedicated to Euro-Mediterranean partnership" on a number of mainly environmental projects. They also urged countries on both sides of the Mediterranean Sea to speed up the integration process. Previous calls for a regional bank have been rejected by the World Bank and European Investment Bank on cost grounds.
Roubini: "synchronized global recession"
European Shares Lower After British Bank Bailout European stock markets declined Monday with banks in free fall as investors fretted over a second British government bailout of the sector in just over three months. Royal Bank of Scotland shares fell 60 percent after it announced significant losses. Europe’s early gains were erased as the markets feared for the future of the region’s banks and the possibility that much of the sector may have to be nationalized or receive further government help to stave off collapse. Germany’s DAX closed down 1.15 percent while France’s CAC-40 declined 0.9 percent. Most attention was on the FTSE 100 index of leading British shares, which fell 0.9 percent, after the British government said it would be creating a program to insure bank loans in the hope that the banks will start lending again.
Gorbachev Looks Forward to New U.S. Policy Under Obama Former Soviet head of state says world needs 'strong' America to face down economic crisis, but hopes for change in Russia policies from new administration. Former Soviet leader Mikhail Gorbachev said Thursday that the overwhelming election of Barack Obama shows that Americans want change, and he called on the incoming president to extend his promised changes to U.S. relations with Russia and Iran. "The entire world felt that America wanted change and was expecting change," Gorbachev, 77, said in an interview with The Associated Press. He noted that some in Russia have called Obama the American Gorbachev because of his promises to bring change to his country. Obama's detractors in Russia say his policies will lead to the collapse of the U.S., pointing to the collapse of the Soviet Union in 1991 following Gorbachev's reforms.
Irish bank shares plunge in value The government is pressing ahead with nationalising Anglo Irish Shares in Ireland's three remaining publicly-listed banks have plunged following the nationalisation of Anglo Irish Bank. In afternoon trade, Allied Irish shares were down 62%, Bank of Ireland fell 49% and mortgage and insurance specialist Irish Life & Permanent dropped 41%. Investors are worried about all three firms' exposure to Ireland's slumping property and construction markets. Parliament will start debating the bill to nationalise Anglo Irish on Tuesday. Analysts said shares in Allied Irish and Bank of Ireland were being hit particularly hard because of growing investor fears that the banks' existing shares will be heavily diluted when both banks formally accept billions in government investment this spring.
RBS Plummets Amid Concern Bank May Be Nationalized Royal Bank of Scotland Group Plc slumped by the most in two decades in London trading on concern the government may have to take full control of the bank after forecasting the biggest loss ever reported by a U.K. company. The stock dropped 67 percent, the most since September 1988, to 11.6 pence, paring the Edinburgh-based lender’s market value to 4.6 billion pounds ($6.7 billion). “Nationalization at zero value is implicit in the price,” said Derek Chambers, an analyst at Standard & Poor’s Equity Research Ltd. who has a “hold” rating on the stock. The stock price “is an option on the vague chance that it doesn’t get nationalized.”
No respite for Europe’s banks There was no respite for Europe’s troubled banks on Monday as the prospect of horrific fourth-quarter results across the sector was writ large by Royal Bank of Scotland posting the largest loss in UK corporate history. German financial shares, heavily sold last week, were hammered again as investors reeled on the RBS news and from weekend press reports suggesting that the 20 largest German banks had written down just a quarter of the €300bn of toxic assets on their balance sheets.
Irish, British Banks Head Towards Zero On Nationalization Concerns Equity prices in the three remaining Publicly Traded Irish Banks Collapse after Anglo Irish Bank was nationalized. Nationalization Concerns Sink RBS. Bloomberg is reporting RBS Plummets Amid Concern Bank May Be Nationalized. My position is Darling is saying one thing and doing another. When does Obama follow suit? No respite for Europe’s banks. . . The Financial Times is reporting No respite for Europe’s banks. If you get the idea that the global banking system is insolvent, you have the right idea.
Marc Faber: New UK bailout and banking situation; 2nd half of 2009 will be worse 01.19.09 - P1
Marc Faber 01.19.09 P2 UK Banking intervention will prolong the agony. People who created the liquidity problem are in charge of the bailout. Faber owns physical gold.
Should We Force Banks to Lend? Why save banks if they will not lend? That has become a significant political issue on both sides of the Atlantic as governments confront the reality that preventing the financial system from collapsing is not the same as repairing it. In Britain, that led the government of Prime Minister Gordon Brown to announce a new round of bailouts, with a twist. “In return to access to any government support, there will have to be an increase in lending, and that will be legally binding,” Mr. Brown told a news conference today. In the United States, aides to President-elect Barack Obama sounded a similar theme. “The focus isn’t going to be on the needs of banks,” Mr. Obama’s chief economic adviser, Lawrence H. Summers, said. “It’s going to be on the needs of the economy for credit.” There is little doubt that many in the public are fed up with wealthy bankers who get large salaries and bonuses from banks that would have failed had the government not stepped in.
Nadel’s 32% Returns in Doubt as Manager Disappears Brad Lerner was pleased when a November statement showed his $500,000 investment in a fund run by Arthur Nadel had gained 8.5 percent for the year as the Standard & Poor’s 500 Index fell 39 percent. Lerner, an internist from Sarasota, Florida, never got a December statement. Instead, one of Nadel’s partners came to him last week with the news that the fund manager couldn’t be found. Lerner, 55, and others whose money was invested by Nadel’s Scoop Management Inc. in Sarasota may have lost as much as $350 million, law enforcement officials say. “Hindsight is 20-20,” Lerner, who had most of his life savings in the Viking IRA fund, said in a Jan. 17 interview. “But I guess it was too good to be true.”
Niall Ferguson - Mary Poppins & Financial History . . . why bankers underestimated the liquidity crisis Excerpt from Niall Ferguson speaking about his book and TV series "The Ascent of Money" at the London School of Economics and Political Science. Broadcast on BBC Parliament, 14 December 2008
It's Just Time - The decline and fall of the US, the global financial system, or capitalism? Martin Armstrong (former Chairman of Princeton Economics Internatinoal, Ltd) predicts collapse by March, 2009. "The object of this treatise is to demonstrate that there is substance behind the old adage that "history repeats." . . . . "
Murkiness in the NYMEX Pits As the Banks Hoard Oil "Morgan Stanley hired an oil tanker to store crude oil in the Gulf of Mexico, joining Citigroup Inc. and Royal Dutch Shell Plc in trying to profit from the contango, two shipbrokers said in reports earlier today." There is a sharp contango in the near months in the NYMEX oil pit, and it will get sharper as the attempts to suppress the price near term, most likely to punish Russia, Venezuela and Iran, falter. Then it will flatten as market adjusts prices to normalcy. Let's see if Bloomberg gives us a more coherent update. But its funny that Citigroup, Morgan Stanley, and probably other banks are buying oil now to store in tankers and deliver later when the paper chase falters. Nice use of the bailout money. Why lend when you can speculate on market inefficiency which you help to create?
Goldman Sees ‘Swift, Violent’ Oil Rally Later in Year Goldman Sachs Group Inc. commodity analyst Jeffrey Currie said he expects a “swift and violent rebound” in energy prices in the second half of the year. Oil prices may have reached their lowest point already, after falling to $32.40 in mid-December, and are expected to rise to $65 by the end of this year, the analyst said. There is scope for a “new bull market” in oil, Currie said. World oil demand is likely to fall by about 1.6 million barrels a day this year, the Goldman analyst said today at a conference in London. That’s bigger than the reduction expected by the International Energy Agency, which last week forecast a decrease of about 500,000 barrels a day, or 0.6 percent, this year.
Oil falls below $35 ahead of busy earnings week Oil falls below $35 as investors brace for dismal US corporate results Oil prices fell to below $35 a barrel Monday as investors eyed a slew of U.S. corporate earnings this week for signs of weakening consumer demand amid the worst recession in decades. Light, sweet crude for February delivery was down $1.88 to $34.63 a barrel by mid-afternoon in Europe in electronic trading on the New York Mercantile Exchange.
Fiat nearing a deal for stake in Chrysler The Italian carmaker Fiat is nearing a deal to take a large stake in Chrysler, the most financially troubled of the Detroit automakers, and begin selling small cars in the United States through Chrysler, a person with knowledge of the talks said Monday. The deal could give Fiat control of 35 percent of Chrysler by later this year and possibly raise its stake in the American company to as much as 55 percent, said the person, who spoke on condition of anonymity because the discussions were private.
Banks Foreclose on Builders With Perfect Records TEMPE, Ariz. — Dave Brown, one of this city’s best-known home builders, had kept his head above water through the housing downturn, not missing a single interest payment on his loans. So he was confounded a few months back when one of his banks, spooked by the decline in his company’s revenue, suddenly demanded millions of dollars in additional collateral to continue carrying loans on his projects. He was unable to come up with the money, and in October, JPMorgan Chase foreclosed on five of his developments. Shortly thereafter, Brown Family Communities, 33 years in the business, decided to shut its doors.
Bailout Crimes 1/2 Lew Rockwell interviewed by Brian Wilson on WSPD. More from Lew Rockwell: He is President of the Ludwig von Mises Institute. He wrote Speaking of Liberty. He wrote The Left, the Right and the State (forthcoming). He has an archive of LewRockwell.com articles.
Bailout Crimes 2/2
Southern California Foreclosures Push Sales Higher Southern California home sales rose 51 percent in December as a surge in foreclosures pushed prices of single-family houses and condominiums down from a year earlier, MDA DataQuick said. A total of 19,926 new and existing houses and condos sold last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, up from 13,240 a year earlier, the San Diego-based research company said today in a statement. The median home price in the region fell 35 percent to $278,000. “The markets that were part of the frenzy, that’s what’s in trouble now,” MDA DataQuick analyst John Karevoll said in an interview. Foreclosures, which often sell at steep discounts, lured buyers as President-Elect Barack Obama worked on plans to revive the housing market using the second half of the $700 billion Troubled-Asset Relief Program. Lenders including Bank of America Corp., and financial institutions such as Goldman Sachs Group Inc. benefited from the government’s initial distribution of bailout money as their mortgage-related assets plunged in value.
How Should Obama Reform Health Care? As the nation eagerly awaits the swearing in of the next president, a lingering concern is how President Obama will fix our beleaguered health care system. In The New Yorker this week, the writer and physician Dr. Atul Gawande offers practical advice and a history lesson for getting it done. Dr. Gawande begins with the story of Starla Darling, a pregnant woman who feared losing health care coverage before the birth of her baby. Her story, “When a Job Disappears, So Does the Health Care,” was chronicled in The Times last year by my colleague Robert Pear. While many reformers say the current medical system should be scrapped, Dr. Gawande makes the case that a better solution is to build on what we have.
The Secret Animal Rights Agenda Of America’s Next Regulatory Czar Barack Obama’s pick for “regulatory czar,” Harvard Law School Professor Cass Sunstein, may be the incoming president’s most popular appointment so far. Judging from his resume -- best-selling author, “pre-eminent legal scholar of our time,” and an endorsement from The Wall Street Journal -- we can almost understand why. Almost. Because as we’re telling the media today, there’s one troubling portion of the new Office of Information and Regulatory Affairs (OIRA) Administrator’s C.V. that has seems to have flown under everyone’s radar: Cass Sunstein is a radical animal rights activist. Don’t believe us? Sunstein has made no secret of his devotion to the cause of establishing legal “rights” for livestock, wildlife, and pets. "[T]here should be extensive regulation of the use of animals in entertainment, scientific experiments, and agriculture," Sunstein wrote in a 2002 working paper while at the University of Chicago Law school.
Civil Liberties Under Obama 1/2 Lew Rockwell interviews Judge Andrew Napolitano, Fox News Senior Judicial Analyst and co-host of "Brian & the Judge" radio show More from Judge Napolitano: He wrote A Nation of Sheep. He wrote The Constitution in Exile. He wrote Constitutional Chaos: What Happens When the Government Breaks Its Own Laws. Articles on LewRockwell.com: o Franklin Delano Bush o How Congress Has Assaulted Our Freedoms in the Patriot Act o Civil Liberties in Wartime o Do You Solemnly Swear To Ignore the Constitution?
Civil Liberties Under Obama 2/2 Government ha power to incarcerate after acquittal!
Bush Commutes Prison Sentences of Ramos, Compean In his final acts of clemency, President George W. Bush on Monday commuted the prison sentences of two former U.S. Border Patrol agents whose convictions for shooting a Mexican drug dealer ignited fierce debate about illegal immigration. Bush's decision to commute the sentences of Ignacio Ramos and Jose Compean, who tried to cover up the shooting, was welcomed by both Republican and Democratic members of Congress. They had long argued that the agents were merely doing their jobs, defending the American border against criminals. They also maintained that the more than 10-year prison sentences the pair was given were too harsh. Rancor over their convictions, sentencing and firings has simmered ever since the shooting occurred in 2005.
The Passing of the Mainstream Media People who write commentary do a good deal of research. Well, unfortunately, that is not always true. Would that it were. To write with authority, however, they/we must. It is important, even vital, that their/our facts are , indeed, facts and that they are as accurate as is possible and that attribution is given to those deserving of it… A number of years ago, when I switched over from the broadcast media to the Internet as a base for my commentaries, the first thing I noticed was that in order to find out what was REALLY happening in America I had to go to off shore news outlets. Our homegrown news media is SO biased in favor of the left that anything that has any attachment to the right, and may bode well for America, is, somehow, ignored. They just don’t tell you about it. It’s called omission… among other things.
It’s No Mirage, the Cardinals Actually Won Just as everyone prepares to be amazed at the inauguration of the nation’s first black president, the sports world steps up to stretch fans’ amazement muscles anew. You thought Barack Obama’s winning an election was a cultural whiplash moment? How about the Arizona Cardinals in the Super Bowl? No, that was not a Sunday afternoon mirage. You did not dream it. The Cardinals actually won the N.F.C. championship game, sending red confetti raining down on the sport. If you slept through the mostly dreadful history of the Cardinals — and that would be most of us — here are the Cliff Notes: They won an N.F.L. championship in 1947 while in Chicago, bounced around the country before finding a home in the desert Southwest, continued to win a pitiful number of games and last made the playoffs in 1998. Their most televised moment in recent history was a rant by the former coach Dennis Green, screaming “We are who we thought they were,” after (surprise!) a collapse and loss to the Bears.
Pilot Lands an Inaugural Invitation DANVILLE, Calif. (AP) -- US Airways pilot Chesley B. "Sully" Sullenberger and his family are going to the presidential inauguration, the mayor of his California hometown said Sunday. Mayor Newell Arnerich said the town of Danville is also planning a welcome home for the pilot who landed his crippled aircraft safely in the Hudson River last Thursday. An aide to President-elect Barack Obama said Sunday evening that all five members of the Flight 1549 crew have been invited to the inauguration Tuesday. The aide spoke on condition of anonymity because details were still being worked out.
What your computer's drive will look like in 5 years Hard disk drives may soon be replaced by solid-state disk (SSD) drives As solid-state disk (SSD) technology closes in on hard disk drive (HDD) capacity and price, experts say it may not be long before spinning disks are a thing of the past and a computer's storage resides in flash memory on the motherboard. By making the drive part of a system's core architecture -- instead of a peripheral device -- data I/O performance could initially double, quadruple or more, according to Jim McGregor, chief technology strategist at market research firm In-Stat. "Instead of using a SATA interface, let's break that and instead of making it look like a disk drive, let's make it look like part of the memory hierarchy," McGregor said. "Obviously, if you break down that interface, you get more performance."
While waiting for USA inauguration, Who's in charge in Europe? Tomorrow, the guard changes in Washington, D.C., USA. Europe has been relatively quiet. It does not appear that Javier Solana will be present at the inauguration. His itinerary shows he has a busy day, instead, in Brussels. It is clear to me that his present low profile is being maintained; but that his powers are far from diminished. The European "chain of command" is shown in this Western European Union article. For the benefit of the "uninitiated" Javier Solana controls the Western European Union as its Secretary General. SG/HR which you will read in numerous "chain of command" paragraphs is Javier Solana's position with the European Union. With the changing of the guard, we have an already friendly to Javier Solana Washington, even friendlier. Solana has already expressed high hopes about working mutually with the Obama administration, as has Mikhail Gorbachev. Joe Biden reportedly once said he wished he could vote for Javier Solana as President of the United States. Joe Biden, come tomorrow, is Vice President of the United States. President-Elect Obama once served under Joe Biden's Chairmanship of the Senate Foreign Relations Committee. Hillary Clinton is Secretary of State-Designee. Javier Solana has held meetings with her in the past two years in Washington, D.C. It was her husband, Bill Clinton, as President of the United States who boosted Solana to the all-powerful NATO headship on November 30, 1995. It looks to me like it is a heady time coming up for Javier Solana who given his Middle East roles and anti-Piracy patrol is likely to become much higher profile in the days to come.
Javier Solana - 16 Jan 09 - Part 1 As leaders from Hamas and Israel work towards a ceasefire agreement to end the fighting in Gaza, Sir David talks to the Secretary-General of the EU Council, Javier Solana, about how and when an agreement could be reached.
Lessons from history:
DeMint Explains Opposition to Bailout Sen. Jim DeMint (R-S.C.) speaks on the Senate floor about why he opposes the bailout bill being pushed though Congress and who is really to blame for the financial fallout on Wall Street (Oct. 1, 2008).
Niall Ferguson and other guests - Discussing the British Empire looks at effect of decaying old empires and plantation politics on the bloody 20th century and the single most importance of economics (globalized marketplace world) BBC Radio 2006 (1 of 4)
Niall Ferguson - BBC Radio 2006 (2 of 4)
Niall Ferguson - BBC Radio 2006 (3 of 4)
Niall Ferguson - BBC Radio 2006 (4 of 4)
Lincoln Prelude to the Presidency coming February 9th on WMFE TV (PBS) To commemorate Abraham Lincoln's 200th birthday in 2009, a new documentary immerses viewers in a critical, but often overlooked, time in the stateman's life. LINCOLN: PRELUDE TO THE PRESIDENCY pieces together a critical 23-year period (1837-1860) through interviews with noted historians, researchers and experts, and re-enactments filmed at historic sites in central Illinois. Prominent scholars Doris Kearns Goodwin and Orville Vernon Burton (The Age of Lincoln) describe how Lincoln's formative experiences as a young lawyer on Illinois' Eighth Judicial Circuit informed his views on the issues he would eventually face as president, including several cases involving slavery. http://www.wmfe.org
PTG - closed today for MLK Day New radio show tomorrow.
Barack Obama speech at Lincoln Memorial 1/18/09 Celebration of American Renewal
Livestation invites you to join live, interactive coverage of the inauguration of Barack Obama Our partner channels have lined up special inauguration coverage http://www.livestation.com/inauguration which you can flick between in your Livestation player http://www.livestation.com/downloads to sample the different perspectives being offered.
Inauguration Crowd Will Test Cellphone Networks The cellphone industry has a plea for the throngs descending on the nation’s capital for the presidential inauguration: go easy on the mobile communications. The largest cellphone carriers, fearful that a communicative citizenry will overwhelm their networks, have taken the unusual step of asking people to limit their phone calls and to delay sending photos. The carriers are also spending millions of dollars to temporarily and substantially upgrade their networks in Washington. Dropped calls, lost photos or delayed text messages are always a risk during spikes from sporting events and concerts. People often feel compelled to share these events with others, and that takes bandwidth.
For Obama, Rare Chance for Bold Start on Big Task President-elect Barack Obama is well on his way to finding the silver lining in the economic storm he is inheriting. The two-year, $825 billion economic recovery plan taking shape in Congress includes billions of dollars for renewable energy and a national electricity grid to distribute it, lower taxes for all Americans but the affluent, computerized medical records and modernized schools. These are all down payments on Mr. Obama’s ambitious campaign promises, affording him an opportunity few new presidents have had. Not since Franklin D. Roosevelt at the depths of the Great Depression has a president entered office with a bipartisan green light to spend and cut taxes so much.
Inauguration Day, 2009: A Day of Mourning For the victims of future wars, and for our old republic When Thomas Jefferson was inaugurated, he sought to dismantle the evolving Federalist tradition of pomp and circumstance. In a ceremonial sense, royalism seemed to have been restored, or so it seemed to him. As this blogger put it, "Dressed in simple attire, Jefferson walked over to the Capitol with a phalanx of riflemen, friends, and fellow citizens from his home state of Virginia." In these last days of the American Empire, such austere republicanism would be considered impossibly quaint. Having long ago morphed into Jefferson's worst nightmare, the closer we get to the end, the more glamorous our inaugurals become. The poorer we are, the more millions we'll throw at a ceremony that is really the crowning of a monarch – and not just any old king, but an emperor bestriding the globe. Appearances must be kept up. Like a bankrupt living on a palatial estate – one step away from foreclosure – we bask in imperial splendor even as the repo man comes knocking at the door. At a time such as ours, the spectacle of jeweled and gowned courtiers feasting on inaugural canapés is beyond tacky.
Ron Paul 1/16/2009 "I'm Afraid The Endpoint Will Be The Destruction Of The Dollar" NO restoration of confidence and nobody knows where the money is or what it will do. . . something very sinister is going on. . .
Gold, platinum rise on weak dollar SINGAPORE : Despite profit taking by investors, Gold rose to a one-week high during early Asian trade Monday as dollar weakened against the euro amid stock markets recovery. At 9.30 a.m in Singapore, gold rose as high as $845.55 an ounce, its highest level since Jan. 12, before slipping to $837.60.
2009: Year of Gold! One thing is clear. Gold will be the ultimate winner in 2009, an year, according to pundits that will spell doom for several economies. Eve as the world is fighting recession, gold industry is witnessing a flurry of activities with several mines resuming held-up projects and seeking to open fresh mines. A lot of investments have been pumped into gold mining sector in past couple of months, anticipating a major gold rush in the coming days. So, year 2009 may belong to gold. And, this high expectation is bound to make some impact on the yellow metal’s prices.
Pastor Lindsey Williams Details "Economic Calamity" Ahead This is a summary by "Tom" of a recent interview of Williams by Gianni Hayes After two hours of interview I had four legal pages of notes. I am going to relate as best I can the highlights of that interview. Some of you will get duplications because some of you are on more than one of my mailing lists. Please understand. I consider this matter to be extremely important! This will be rough, since it will be stream of consciousness, right off of my note pad. But it is the message that is important and not the delivery.
Gold $2000 by year end ? Real estate, stock market, and the economy are NOT reflating as the government hopes, with all the stimulus to the banking system. When the T-Bill Bubble bursts, the money will flood into gold, silver and energy. Bob Chapman's review on Jan 17, 2009
Gloom is boom for gold, may cross $1,000/ounce Gold is the only commodity which thrived on the meltdown. In fact, the global economic crisis has come as a godsend for gold and the yellow metal is making use of the blessing in disguise to the maximum. Following the boom caused by the meltdown impact gold prices may shoot up to over $1,000 per ounce in 2009.
Gold emerges lone saviour for investors! If you have any doubt about gold’s omnipotent role in ensuring a safe haven for all investors, just read a new research report which says that turnover in gold rose by 58 per cent last year to a record $20.2 trillion. As you know the yellow metal has been a safe haven for investors for centuries and whenever a crisis arrived, gold always emerged as the lone saviour for people. This time also when recession hit almost all nations, gold recorded increased trading.
Obama Advisers Say They Will Aim TARP Funds at Widening Credit Top advisers to President-elect Barack Obama signaled they will emphasize getting credit to consumers and businesses rather than helping banks as the new administration deploys the second half of the $700 billion rescue fund. “The focus isn’t going to be on the needs of banks; it’s going to be on the needs of the economy for credit,” Lawrence Summers, the president-elect’s top economic adviser, said on CBS’s “Face the Nation” program yesterday. Obama’s team will manage the Troubled Asset Relief Program “in a much different way,” David Axelrod, Obama’s chief political adviser, said on ABC’s “This Week” program.
'Fear is driving the global Gold market' David Mason discusses market fears, a weakening U.S. dollar and "the most important factor" that will drive gold ahead of the commodities pack in 1Q09. . . . I'm of the opinion that fear and the relationship with the U.S. dollar is, quite frankly, probably driving no more than 40% of the gold market. Fear will drive it, and a weakening in the U.S. dollar, which some people are betting will happen—those are only two components. Now the most important factor is just straight supply-demand imbalance.
Dismal bank earnings presage more trouble ahead Despite bailout, banks facing more trouble ahead recession, unemployment gather steam The hemorrhaging among the nation's biggest banks was supposed to have subsided after the government doled out $350 billion in federal bailout money last fall. That hasn't happened. Instead, both Bank of America Corp. and Citigroup Inc. have had to turn to the government for more cash as losses related to toxic assets, souring consumer loans and the sinking economy blow holes in already flimsy financial balance sheets.
Peter Schiff: Stimulate Economy By Cutting Government (1/16/2009 Wall Street Journal Interview 1.16.2009)
Bailout Is a Windfall to Banks, if Not to Borrowers At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money. “Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.” As the incoming Obama administration decides how to fix the economy, the troubles of the banking system have become particularly vexing.
Obama Bank Rescue May Make New Effort to Resolve Toxic Assets President-elect Barack Obama is likely to back a financial-rescue effort that channels capital to banks and deals with troubled assets clogging balance sheets, according to people familiar with the matter. Obama’s team will also use part of the $350 billion remaining from the Troubled Asset Relief Program to help stem foreclosures and assist municipalities that are having trouble borrowing, the people said. The Federal Reserve and Federal Deposit Insurance Corp. are advocating a government-backed “bad” or “aggregator” bank to acquire hundreds of billions of dollars of troubled securities now held by lenders.
Boisterous and strong economies now imperiled Two of the world's most open and successful economies face tough times as the global downturn marks the end of one era and opens a new period of peril and possibility for both. Singapore and Ireland have staked their fortunes on being small, export-oriented, investor-friendly dynamos. Singapore was one of the original Asian Tiger economies, and the label passed to the Atlantic nation in the 1990s, as 15 years of 5 percent average growth earned Ireland its "Celtic Tiger" reputation.
Peter Schiff 1/17/09 - Financial Sense News Hour [Part 1]
Peter Schiff 1/17/09 - Financial Sense News Hour [Part 2]
Madoff’s ‘Street-Smart’ Aide DiPascali Was Investors’ Go-To Guy Frank DiPascali Jr. joined Bernard Madoff’s firm a year after graduating from a Catholic high school in Queens, New York. Over a 33-year career, he rose through the ranks, eventually calling himself chief financial officer. For investors like Tim Murray of Minnesota, DiPascali was a “street-smart New Yorker” who fielded calls about the millions of dollars he entrusted to the firm. “To a Madoff customer with a discretionary account, he is the guy,” said Murray, 57, a real-estate developer. “There is nobody else.” Now, U.S. prosecutors and regulators are probing whether DiPascali, 52, played a role in an alleged $50 billion Ponzi scheme that led to Madoff’s arrest on Dec. 11, people familiar with the matter said. Victims include banks, hedge funds, charities and wealthy investors such as director Steven Spielberg and philanthropist Carl Shapiro. Madoff, who hasn’t responded to the charge, is under house arrest at his New York apartment.
Washington goes beyond Tarp to save Citigroup and Bank of America In one of the most dramatic days on Wall Street, the US Government threw a lifeline yesterday to Citigroup and Bank of America, which could leave American taxpayers on the hook for up to $373 billion. The rescue came as Citigroup split itself in two while Merrill Lynch, which was taken over by Bank of America, reported a $15.3 billion loss for the fourth quarter. BoA made its first quarterly loss for 17 years. Citigroup announced its fifth consecutive quarterly loss and hinted that the departure of Robert Rubin, the former US Treasury Secretary, who resigned as a director last week, would not be the last from the board.
Paulson defends financial bailout program Treasury Secretary Henry Paulson on Friday defended his handling of the $700 billion financial rescue program, saying it has made real progress toward achieving financial stability. Paulson said the Bush administration made the correct calls on major decisions in operating the program, even though he and other officials sometimes had to operate with imperfect information that was frequently changing. His remarks came hours after the government reached an agreement to provide billions of dollars in additional support to Bank of America Corp., and a day after Congress turned back an effort to block release of the second half of the bailout pot. Paulson also indicated the administration had explored the possibility of establishing a new government-backed bank that would be used to remove bad loans and other toxic assets from commercial banks' balance sheets.
One Idea for Bank Crisis: Quarantine the Bad Assets U.S. Officials Look To Solution Used By Sweden in '91 A housing bubble bursting, banks faltering toward failure, a nation plunging into recession. The year was 1991, and the Swedish government responded with a dramatic plan: Unpaid loans and other troubled assets would be dumped into new state-owned banks, scrubbing the banking industry of problems in the hope of sparking a lending revival. U.S. government officials now are considering a similar plan to address the simmering financial crisis, part of a broader discussion about ways to revamp a federal rescue effort that has helped curb panic but failed to slow bank losses or increase lending.
Max Keiser on THE ORACLE BBC Jan16 2009 pt 1/2 ....... bankers are more dangerous than standing armies - Thomas Jefferson Interview with Ullrich Fichtner from Der Spiegel magazine (Germany could bail out both Brittan and France), Kerry Quinlan and Nigel Eccles of http://HubDub.com talking on Obama, in part 2. . . . astute observation "...... America got drunk and now the government has to keep the party going..."
Max Keiser on THE ORACLE BBC Jan16 2009 pt 2/2 Talk about Obama's inauguration and how he is being hailed as 'president of the world"; Obama is exceedingly popular in the UK. Talk of hyperinflation in Zimbawbe and how it's coming to the UK and US.
States are putting the bite on Internet sales Shopping online can be a way to find bargains while steering clear of crowds - and sales taxes. But those tax breaks are starting to erode. With the recession pummeling states' budgets, their governments increasingly want to fill the gaps by collecting taxes on Internet sales, which are growing even as the economy shudders. And that is sparking conflict with companies that do business online only and have enjoyed being able to offer sales-tax-free shopping. One of the most aggressive states, New York, is being sued by Amazon.com Inc. over a new requirement that online companies must collect taxes on shipments to New York residents, even if the companies are located elsewhere. New York's governor also wants to tax "Taxman" covers and other songs downloaded from Internet services like iTunes.
Necessity drives automaking changes LANSING, Mich. | Jim Woodard retired as an executive from General Motors Corp. in March 2008 after more than 39 years, much of it spent in labor relations as a liaison with the company and its hourly union workers. Watching at the production facilities in Lansing where he worked his entire career, Mr. Woodard, 58, saw car models evolve over the decades. He looked on as union contracts were negotiated. He winced as, in recent times, losses mounted and factories closed. Mr. Woodard acknowledges that GM's strategy over the years sometimes has been poor, but he thinks the company finally turned it around and now deserves a chance to return to profitability.
Today's Outrage: Bank of America's Secret Backroom Bailout (see video) In mid-December, the WSJ tells us, Bank of America (BAC) went to Hank Paulson and threatened that if he didn't give the firm another TARP bailout, they'd abandon the Merrill Lynch deal and cripple the financial system. Paulson then apparently spent more money he didn't have, promising that he would rescue BAC yet again. (This a month or so after an annoyed Ken Lewis said he didn't want or need the original TARP infusion). There is only one word to describe this: Outrageous. Aaron and I discuss what happened in the accompanying piece with Joe Nocera, Business Columnist for the New York Times. Talking about the nation’s banking system, Nocera sums it up nicely: They're "not on our side."
Treasuries' True Risk “A ship is safe in harbor, but that's not what ships are for.” -- William Shedd The majority of analysts today believe Treasury prices will fall when the appetite for risk returns. That is certainly one way to justify the fact that the price of Treasuries hovers at historical -- and dangerous -- highs. But there is another more volatile, yet less scrutinized potential outcome to this tale: Treasury prices may succumb, not because an appetite for risk drives capital to other asset-classes, but because Treasuries -- the yields of which are commonly referred to as the "risk-free rate of return" -- are finally exposed as, perhaps, the riskiest assets around.
How the Treasury Bubble Will Burst and Why The deflationary credit contraction, or as some call a Kondratieff Winter, is intensifying. For the time being the worldwide financial and monetary systems have taken a step back from complete oblivion. The usual measurements such as the TED spread, three-month LIBOR and the two year swap spread have shown improvement. This improvement should not be mistaken for a miraculous healing because the fiat currency fractional reserve banking system is terminal. Eventually it will be replaced by a commodity currency with 100% reserves and no counter-party risk.
Bank of America Shocker: How Much More Will Taxpayers Take? (see video) How dumb do they think we are? That was my first reaction on reading The Wall Street Journal's account of how Hank Paulson and Ben Bernanke urged Bank of America CEO Ken Lewis to not abandon Merrill Lynch when faced with mounting losses related to the deal, but instead take $138 billion in bailout funds: "Bernanke and Paulson also urged Mr. Lewis to finish the deal and not invoke a material-adverse change clause, saying it was in his interest to finish the deal," says The WSJ story. "If they walked away, it would reflect poorly on the bank and suggest it hadn't done its due diligence and wasn't following through on its commitments." (Lewis didn't refuted this account today, saying: "The U.S. government was 'firmly of the view' that canceling or delaying the transaction might result in 'serious systemic harm,'" the Journal subsequently reported.)
Ron Paul & Benjmain Franklin: Two Peas, Same Pod
Summers Says TARP Will Focus on Consumers Rather Than Banks Barack Obama will focus more on helping consumers, local governments and businesses than banks as his administration deploys the second half of the $700 billion rescue fund, said Lawrence Summers, the president- elect’s top economic adviser. “The focus isn’t going to be on the needs of banks; it’s going to be on the needs of the economy for credit,” Summers said on CBS’s “Face the Nation” program. Obama’s team will manage the Troubled Asset Relief Program “in a very different way,” he said. Summers’ remarks indicate banks and their executives face tougher scrutiny in seeking money from the bailout after the Obama administration takes office Jan. 20. The TARP may be redirected to address “housing to prevent foreclosures,”
Chrysler Financial gets $1.5B loan from bailout Chrysler's finance arm gets $1.5B gov't loan, quickly announces 0 percent offer for car buyers The Treasury Department said Friday it will provide a $1.5 billion loan to Chrysler LLC's financing arm, and the automaker announced it will immediately use the money to offer zero-percent financing on several models and expand lending to car buyers with less than ideal credit. The Treasury said the new aid is in addition to the $17.4 billion in loans earmarked for Chrysler and General Motors Corp. last month in an effort to buy time for the two companies to reorganize and ultimately return the domestic auto industry to profitability.
For Businesses Big and Small, It's Lights Out Instead of Restructuring, More Are Quick to Liquidate With the economy in the tank, companies are doing all they can to stay afloat. For many, though, even the most desperate measures have not been enough. Former giants in American business have recently tilted into extinction. Circuit City announced Friday it would follow Linens 'n Things and Sharper Image into liquidation and sell its assets. Over the next two years, analysts say, countless other businesses will simply fade away. "This is now an unprecedented time as far as how bad things have gotten," said Scott Peltz, managing director of RSM McGladrey, a consulting firm that helps turn around troubled companies.
Deflation concerns grow as consumer prices shrink As deflation concerns grow, consumer prices shrink, some wonder: could the Fed have done more? Consumer prices tumbled yet again in December, and inflation last year logged its smallest advance since the early 1950s, fanning new fears that the country may face a dangerous bout of deflation. Worries about out-of-control price increases -- which had gripped the Federal Reserve and the country just seven months ago are now a distant memory. Some wonder in hindsight: Should the Fed have kept cutting interest rates all last year to help the recession-shocked country, rather than stopping in the summer and early fall out of concerns that lower rates would spur inflation?
The Federal Reserve holds a monopoly on the issuance of currency in the USA.
If all money created is debt and counts as principal, where does the money come from to pay interest on this debt?
Prior the the Emergency Economic Stabilization Act/TARP Act of September 2008, commercial banks were required to hold 10% of deposits as reserves.
The reason for the credit spread blowups of October/November 2008 was because in the same TARP Act the Fed was allowed to pay interest on deposits without publicly stating the interest rate
As a result of various acts of Congress in 2008, the Federal Reserve now has the authority to buy all sorts of assets (commercial paper, corporate bonds, mortgage loans, etc.)
Much of the Fed's activity is not made public
There is debate over the constitutionality
Peter Schiff: "Obama Is Going To Help Destroy The Country" CNN interview from Jan 10, 2009 on Obama's plan
Silver and the Minimum Wage My mission statement is, "To teach and empower people to understand the benefits of an Honest Monetary System." Although the words gold and/or silver are not even mentioned in my mission statement, they are both very important components in an honest money system - they instill trust. And the lack of trust is the core issue of today's economic problems. Our banking institutions and well established investment firms do not trust each other, and the system is grinding down. This has even affected the "Big Three" automakers, who are experiencing problems in this economy. . . but it wasn't always that way.
Global economy to shrink; deflation greatest threat, says UN The deepening global recession means that the world economy as a whole could shrink next year and will battle to avoid destructive Thirties-style deflation, the United Nations said yesterday. The UN alert over what threatens to be the worst year for the global economy since the Second World War came as fears of deflation were stoked when US producer price inflation slid into negative territory, registering an annual fall of 1.5 per cent last month. In a bleak assessment of world prospects, the UN said that the global economy was now deteriorating at such a pace that its main projections in yesterday’s grim report were already out of date.
Dick Fuld, the man who brought the world to its knees Dick Fuld ran Lehman Brothers as if he were at war. He drove the bank hard and ignored the signs of collapse. Andrew Gowers, former editor of the Financial Times, who was working at the heart of the bank as it brought the global economy to the brink of disaster, reveals the inside story The temperature in the room seemed to drop several degrees as the boss’s voice came on the speaker phone. “I don’t think we’re going bust this afternoon,” he said, “but I can’t be 100% sure about that. A lot of strange things are happening . . .” The four of us gathered in Lehman Brothers’ offices at Canary Wharf looked at each other, our eyes widening. We had just spent the day bashing the phones in a frantic effort to reassure journalists, investors, bankers, anyone who would listen. That was our job as members of Lehman’s communications team. The bank was fine, we kept saying. It was brimming with cash. Sure, the share price had dropped 48% in New York, but that was a panic reaction to another investment bank’s collapse and nothing to do with us. What’s more, the US authorities had indicated they would not allow another institution to fail.
Cost of Borrowing Zooms Up for Corporations Like consumers and homeowners, America’s corporations binged on easy credit when times were flush, racking up huge debts. Now the bills are due, and paying them back will not be easy, or cheap. This year alone, more than $700 billion in corporate loans will come due, according to Standard & Poor’s. That is the size of the federal bailout of the financial sector. Many companies were counting on being able to borrow more money to meet those obligations and kick their debt further down the road. But with the credit markets still tight, corporations are being forced to pay much higher interest rates than they did a few years ago, putting more strain on balance sheets already hammered by falling profits and a grinding recession.
PETER SCHIFF Politicians Want To Continue Bubble Building 1/3 Bloomberg interview from Dec 1008 - Peter Schiff discusses how the Federal Reserve is devaluing the dollar and how the government and the politicians are doing the wrong thing increasing government, driving manufacturing out of the country through a lack of capitalism.
PETER SCHIFF Politicians Want To Continue Bubble Building 2/3
PETER SCHIFF Politicians Want To Continue Bubble Building 3/3
More Joining American Military as Jobs Dwindle [WWII didn't get us out of the depression; it took care of the unemployment problems] As the number of jobs across the nation dwindles, more Americans are joining the military, lured by a steady paycheck, benefits and training. The last fiscal year was a banner one for the military, with all active-duty and reserve forces meeting or exceeding their recruitment goals for the first time since 2004, the year that violence in Iraq intensified drastically, Pentagon officials said. And the trend seems to be accelerating. The Army exceeded its targets each month for October, November and December — the first quarter of the new fiscal year — bringing in 21,443 new soldiers on active duty and in the reserves. December figures were released last week.
How Bin Laden Bankrupted America The five ways For a man who spent years living in caves, Osama bin Laden sure knows his Sun Tzu and the basics of jujitsu. Sun Tzu's famous dictum was "know yourself" and "know your enemy." Jujitsu is based upon using your enemy's strength against him, e.g., like Jack in "Jack and the Beanstalk," who used the giant's own size and anger to get him to crash from his own weight. Bin Laden understood that the way to beat America was to turn its power back upon itself. His early stated aim was to bankrupt America. He knew his own weaknesses, and he profoundly understood America's, how its pride and fears could trigger irrational, self-destructive reactions.
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