Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Fri 02.27.2009
America's $3 trillion IOU Obama's plan aims to reshape government at a high price The massive budget blueprint that President Obama released Thursday puts his stamp on the entire operation of the federal government - fulfilling campaign promises of redistributing the tax burden and stripping Bush-era policies that the Democrat dubbed irresponsible, while amassing more than $3 trillion in debt over the next two years. From making permanent a tax cut for workers to ending tax cuts for the better-off, the president signaled his vision for government in a document outlining massive new spending - $3.6 trillion in 2010 alone. The proposal would make a down payment on universal health care and tackle his No. 1 priority of curbing the effects of climate change. It greatly adds to the national debt, projecting deficits of $1.8 trillion in 2009 and $1.2 trillion in 2010.
Hitler's Economics For today's generation, Hitler is the most hated man in history, and his regime the archetype of political evil. This view does not extend to his economic policies, however. Far from it. They are embraced by governments all around the world. The Glenview State Bank of Chicago, for example, recently praised Hitler's economics in its monthly newsletter. In doing so, the bank discovered the hazards of praising Keynesian policies in the wrong context.
Government could own up to 36 pct. of Citigroup Citigroup reaches deal that could give the government up to a 36 percent stake in the bank The U.S. government will exchange up to $25 billion in emergency bailout money it provided Citigroup Inc. for as much as a 36 percent equity stake in the struggling bank. The deal announced Friday -- the third attempt at a rescue plan for Citigroup in the past five months -- is contingent on private investors also agreeing to a similar swap. The aim is to keep the New York bank holding company alive and bolster its capital as it faces growing losses amid the intensifying global recession. Existing shareholders would see their ownership stake shrink to as litte as 26 percent and the bank said it is eliminating all dividends on common shares.
Economy shrinks at fastest pace in 26 years Economy shrinks at faster-than-expected 6.2 percent pace in fourth quarter, worst in 26 years The economy contracted at a staggering 6.2 percent pace at the end of 2008, the worst showing in a quarter-century, as consumers and businesses ratcheted back spending, plunging the country deeper into recession. The Commerce Department report released Friday showed the economy sinking much faster than the 3.8 percent annualized drop for the October-December quarter first estimated last month. It also was considerably weaker than the 5.4 percent annualized decline economists expected. Looking ahead, economists predict consumers and businesses will keep cutting back spending, making the first six months of this year especially rocky.
China on gold buying spree to grab bullion market BEIJING: Chinese investors beware! Don’t get trapped in the glitter of gold. In China, investors have been rushing to gold following the crash of global markets. But, the investment in gold is also riddled with risk and this is a critical time now where investors should be cautious with their gold investment. According to analysts, gold can be a very good product for holding its value. But the risks for paper gold and gold futures are nearly 10 times bigger than real gold investment. Buying gold related stocks can also be a risky move.
Worried Investors Want Gold on Hand The global recession and worries about the stability of the financial system have sent the price of gold to $1,000 an ounce. But more surprising is that buyers are taking the unusual and expensive step of taking possession of it. "We're having some of our strongest months ever," said Scott Thomas, president and chief executive of American Precious Metals Exchange, a precious-metals dealer in Edmond, Okla. "The bottom line is our numbers are probably double what they were last year, and last year was very busy." Bob Coleman, who runs a bullion fund out of Nampa, Idaho, has taken multiple deliveries of gold and silver since last fall for his clients. The fund, Dollars and Sense Growth Fund, primarily invests in precious metals for high-net-worth individuals. "It's more of a trust issue," says Mr. Coleman. "Given all the turmoil in the market, people prefer to have access to the metal." Sales of American Eagle gold bullion coins at the U.S. Mint in Philadelphia more than doubled in the first two months of this year.
Gold Targets $1,200 as Central Banks Sales Dwindle Momentum and technical driven players with speculative short term horizons such as hedge funds are again pressurizing gold however the fundamentals of strong investment demand and anemic supply shall likely see gold well supported between $900/oz and $930/oz. A period of correction and consolidation was clearly needed and this will likely lead to gold targeting the $1,200/oz level in the coming weeks. While jewelry demand has fallen and scrap supply has increased significantly in recent weeks, this is being negated by the hugely increased investment demand for gold coins, bars, certificates and ETF’s. The increase in scrap supply is due to owners of jewelry selling in order to raise much needed cash. Ironically, it shows that there is no ‘mania’ for gold amongst the “man in the street” at the retail level. Quite the opposite, consumers internationally are selling their gold rather than buying.
Obama brings back era of big government Bill Clinton declared more than a decade ago "the era of big government is over." With his new budget, President Barack Obama has brought it back. Obama's $3.55 trillion budget proposal represents a gamble that Americans are ready for the sort of change they embraced by electing him in November, including a tax increase on Americans making more than $250,000 a year. He proposes expansion of spending on the U.S. healthcare system, on greater energy independence and on education, hoping Americans weary of paying for a raft of expensive bailouts for banks and the car industry will go along. "What I won't do is sacrifice investments that will make America stronger, more competitive and more prosperous in the 21st century -- investments that have been neglected for too long," Obama said in rolling out his plan on Thursday.
Obama’s Budget Plan Sweeps Away Reagan Ideas The budget that President Obama proposed on Thursday is nothing less than an attempt to end a three-decade era of economic policy dominated by the ideas of Ronald Reagan and his supporters. The Obama budget — a bold, even radical departure from recent history, wrapped in bureaucratic formality and statistical tables — would sharply raise taxes on the rich, beyond where Bill Clinton had raised them. It would reduce taxes for everyone else, to a lower point than they were under either Mr. Clinton or George W. Bush. And it would lay the groundwork for sweeping changes in health care and education, among other areas. More than anything else, the proposals seek to reverse the rapid increase in economic inequality over the last 30 years. They do so first by rewriting the tax code and, over the longer term, by trying to solve some big causes of the middle-class income slowdown, like high medical costs and slowing educational gains.
The Obama Fraud: An Open Video to Barack Obama Supporters Barack Obama is being hailed by his supporters as one of the greatest leaders to ever guide America. He is the voice of hope and change that this county is dying for. Unfortunately, when you look past the side issues and media hype, you discover that there is little meaning to his rhetoric. He is controlled by the same corporate and globalist interests that Bush and Clinton were controlled by. He is a C.F.R. puppet and it is very dangerous to blindly support him. For the record, I am not a McCain/Bush supporting republican nor an Obama supporting democrat; I am a concerned American that cares about the Constitution.
What to Do in 'The Greater Depression' Bullion and oil appear in the lineup of power players that Doug Casey thinks investors can count on as the world slips deeper and deeper into what he calls the “Greater Depression.” Despite the raging economic storm and Doug’s doubts that Western civilization’s governments will take the actions needed to quell it, though, the Chairman of Casey Research is nowhere close to calling the game. In fact, he sees silver lining in the clouds of crisis—opportunity—and expresses optimism that technological advances, coupled with capital rebuilding once over-consumption runs its course, will prevail eventually. The Gold Report caught up with the peripatetic author, publisher and professional international investor between polo matches in New Zealand, one of several nation-states he calls home from time to time.
Obama's $2-3-Trillion Political Gamble It's the biggest spending bill of it's kind ever passed by Congress. And it only took a day for negotiators to reconcile the House and Senate versions of the bill. Congressional Democrats realized pretty quickly they had no choice but to basically agree to the demands of those three Senate Republicans. So they did, and did it relatively quickly. And the White House and Democrats say this bill meets President Obama's original demand to create or save 3.5-million jobs. The $789-billion stimulus bill is compromised of:
$242 billion for tax cuts
$311 billion for infrastructure, education and federal investments
$196-billion for aid to state, local governments, and individuals for food stamps and unemployment
We have never seen anything like this. Overall, with TARP money and money from the Federal Reserve, the government is pushing $2-3-trillion into the economy.
Dramatic Changes in the U.S Dollar / Gold Relationship Who knows where things will go from here - yesterday was certainly an interesting day for both the trade-weighted U.S. dollar and gold - but the relationship between the two certainly seems to have changed quite dramatically over just the last month. What used to be an inverse relationship that saw the two going in different directions more than 70 percent of the time has turned into a very positive correlation over just the last month or so, the two moving together for 15 consecutive days as of last Thursday.
Platinum-Gold price differential almost zero Platinum made a surprising jump higher in mid-February, reaching at $1,087/oz on the 12th, 11% above its level at the start of the month and its highest since September 2008. While such a move could easily be reversed, there are a few solid reasons why platinum has returned to favour. On the supply side, quarterly reports from the mining houses showed that production is responding to lower prices, albeit relatively slowly. The cutbacks will help erode what might have been a significant surplus this year. Looking at demand, sales of new vehicles might be stabilising, albeit at very low levels.
Obama budget pushes change, carries risks President Barack Obama has pulled out his most potent weapon -- the dry federal budget -- to try to carry out his promise of change, including winding down the Iraq war, expanding health care and tackling global warming. But in proposing a record $3.55 trillion federal budget for next year, Obama's gambit is full of political and financial risks that Congress will have to weigh when it debates his proposals and writes its own budget blueprint in coming weeks. The popular president, who came to office on January 20 with a vow of bipartisanship, is not expected to attract much support from opposition Republicans for a document that is packed with ever-rising domestic spending and tax increases on the wealthy. And even some of Obama's Democrats, who control both chambers, might have a hard time swallowing new spending and cuts in some sacred programs such as agriculture.
Bank 'Stress-Tests' Could Discourage Many to Lend The government's "stress-test" of the nation's largest banks could end up discouraging lending as banks hoard cash to appear healthier to regulators, banking analysts say. The reason: most banks want to avoid taking more government money because of the onerous restrictions the government places on the funds. As a result, they are likely to become even more conservative with their money and pull back on lending—defeating a major goal of the bank bailout in the first place. "The stress test may well create some unintended consequences, and among those unintended consequences would be the chance that banks would hoard capital leading up to the government examinations," says Greg McBride, senior financial analyst at Bankrate.com.
Why More US Banks Aren't Being Allowed to Fail With all the doom and gloom surrounding the banking industry from the toxic assets to the nasty recession, you’d think banks would be failing at a furious pace. Think again. Since the recession began in January 2008, the FDIC has closed just 39 banks—25 in 2008 and 14 thus far in 2009. By contrast, more than 1000 institutions were closed during 1988 and 1989 when the savings and loan crisis was at its peak. Another 850-plus failed in the ensuing three years when the S&L crisis intersected with the fairly mild recession of 1990-1991. In 1933, the government closed all 17,000 of the nation’s banks for a long, bank holiday weekend and some 5,000 never reopened. If all this doesn’t hold up to logic, then try politics. "It’s worse than the statistics indicate," says veteran bank analyst Bert Ely. "One of the problems is how slowly regulators move in dealing with this problem." Sure, there are more banks now than in the 1930s and 20 years ago — roughly 8,300 today — but analysts say that still doesn’t explain the huge difference.
China banks told to halt lending to US banks Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday. The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.
China to Stop Buying U.S. Debt? China has just under $2 trillion invested in America. Its appetite for U.S. debt allows the American government to continue to spend as if there is no tomorrow. But tomorrow is nearing. China is getting fed up with buying America’s debt. In a global recession, a lot of strategic assets are priced cheap, and China has a lot of money. According to official figures, China owns $1.95 trillion in foreign assists. Brad Setser of the Council on Foreign Relations says that in reality the figure is around $2.3 trillion. Setser estimates that $1.7 trillion of these assets are dollar denominated, making China the largest creditor to the United States. Last year, China lent America $400 billion—a sum equivalent to more than 10 percent of China’s gross domestic product. “Day after day, China is the single biggest buyer of treasury bonds in the market,” wrote Setser in a recent report. “Never before has the U.S. relied so heavily on another country’s government for financing.”
The Coming Depression: See It Clearly Through Historical Eyes Over 95% of investors claim not to have seen the current downturn coming nor do they accept the probability of a coming depression (at least they did not by the end of 2007). There continues to be conversation whether we are near a bottom. Much money on the sidelines is eagerly waiting to go back into the market or more likely, existing investments with big book losses waiting for the market to recover. Yet when our probable course is viewed in historical terms, there is a very clear and likely path, much further reduction in the value of everything particularly including real estate, equities, bonds and most commodities (gold is shaping up as a hedge against the problems). What does history tell us?
Jim Rogers: Become a farmer if you want to survive the coming Collapse Expect turmoils and civil unrest in the US in the coming few years.
'There will be blood' Harvard economic historian Niall Ferguson predicts prolonged financial hardship, even civil war, before the ‘Great Recession' ends Harvard author and financial crisis guru Niall Ferguson has landed with a thud in Ottawa, spreading messages that could make even the most confident policy makers squirm. The global crisis is far from over, has only just begun, and Canada is no exception, Mr. Ferguson said in an interview before delivering a presentation to public-policy think tank, Canada 2020. Policy makers and forecasters who see a recovery next year are probably lying to boost public confidence, he said. And the crisis will eventually provoke political conflict, albeit not on the scale of a world war, but violent all the same. “There will be blood.” The Buy America penchant pushed by the U.S. Congress in passing the recent stimulus bill was only the tip of the iceberg. Abu Dhabi buying Nova Chemicals at bargain-basement prices on Monday is a sign of things to come, with financial power quickly being transferred over to the world's creditors – namely sovereign wealth funds – and away from the world's debtors. And much of today's mess is the fault of central bankers who targeted consumer-price inflation but purposefully turned a blind eye to asset inflation.
California’s Newly Poor Push Social Services to Brink In California’s Contra Costa County, 40,000 families are applying for just 350 affordable-housing vouchers. Church-operated pantries are running out of food. Crisis calls have more than doubled in the city of Antioch, where the Family Stress Center occupies the site of a former bank. The worst financial crisis in seven decades is forcing thousands of previously middle-income workers to seek social services, overwhelming local agencies, clinics and nonprofits. Each month 16,000 people, including many who were making $60,000 to $100,000 annually just a few years ago, fill four county offices requesting financial, medical or food assistance. “Unless we do things differently, not only will we continue to be on life support, but the power to the machine is going to die,” said county Supervisor Federal Glover, who represents Antioch and the cities of Pittsburg and Oakley about 50 miles (80 kilometers) east of San Francisco.
Las Vegas Running Out of Water Means Dimming Los Angeles Lights On a cloudless December day in the Nevada desert, workers in white hard hats descend into a 30- foot-wide shaft next to Lake Mead. As they’ve been doing since June, they’ll blast and dig straight down into the limestone surrounding the reservoir that supplies 90 percent of Las Vegas’s water. In September, when they hit 600 feet, they’ll turn and burrow for 3 miles, laying a new pipe as they go. The crew is in a hurry. They’re battling the worst 10-year drought in recorded history along the Colorado River, which feeds the 110-mile-long reservoir. Since 1999, Lake Mead has dropped about 1 percent a year. By 2012, the lake’s surface could fall below the existing pipe that delivers 40 percent of the city’s water.
The Three Missteps in President Obama’s Economic Turnaround Plan U.S. President Barack Obama’s speech to the joint session of Congress late Tuesday was a beautiful performance. His language was exquisite, his delivery was superb, his rhetoric - at times - truly uplifting. It no doubt reflects a fault in my makeup that I found it not entirely convincing - but then I’m a math major and a former banker. The speech - which took the place of the State of the Union address since it’s Obama’s first year in office - concentrated almost entirely on economics, and in particular on the financial and economic crisis currently facing the United States. President Obama’s comments were least convincing when they focused on the financial aspects of the crisis.
Facts and figures from Obama's first budget President Barack Obama on Thursday released an outline of his budget for fiscal year 2010 that begins October 1. The budget is a summary version of a more detailed proposal he will release in April. Here are some details: DEFICIT Obama forecast a budget deficit of $1.75 trillion in the current fiscal year 2009. That is equivalent to 12.3 percent of gross domestic product (GDP), making it the highest deficit as a share of the economy since World War Two. The deficit totaled $455 billion in 2008, which was an all-time high in dollar terms.
Obama’s Budget Chief Doesn't Know Total Cost of Obama's Health-Care Plan Even President Obama’s budget chief doesn’t know how much it will eventually cost to enact the president’s vision of health-care reform. The proposed $3.5 trillion budget for the 2010 fiscal year, which would raise the federal deficit to $1.75 trillion, contains $634 billion for health-care reform to come from tax increases and “savings” in the medical system – money to expand health coverage for Americans currently without health insurance. But Peter Orszag, the director of the White House Office of Management and Budget (OMB), was unable – when asked by CNSNews.com – to come up with the total cost for Obama’s plan to reform the nation’s healthcare system.
Obama budget plan forecasts soaring deficits President Barack Obama forecast the biggest U.S. deficit since World War Two in a budget on Thursday that urges a costly overhaul of the healthcare system and would spend billions to arrest the economy's freefall. An eye-popping $1.75 trillion deficit for the 2009 fiscal year underlined the heavy blow the deep recession has dealt to the country's finances as Obama unveiled his first budget. That is the highest ever in dollar terms, and amounts to a 12.3 percent share of the economy -- the largest since 1945. In 2010, the deficit would dip to a still-huge $1.17 trillion, Obama predicted. With that backdrop, his budget represents a gamble that Americans are ready for the sort of change they embraced by electing him in November -- a shift of wealth through higher taxes on the rich to pay for more government attention to healthcare, education, climate change and social programs.
Obama budget has $5 billion for infrastructure bank U.S. President Barack Obama called for the creation of a National Infrastructure Bank in his budget released on Thursday, saying it would "expand and enhance existing federal infrastructure investments." "The mission of this entity will be to not only provide direct federal investment but also to help foster coordination through state, municipal and private co-investment in our nation's most challenging infrastructure needs," according to budget documents. The budget, which must be approved by Congress, requests $5 billion for the bank in fiscal year 2010 which starts October 1, and anticipates that it will receive $25.2 billion from then through 2019.
Debt markets take fright at 'EU bond' The capital markets have become increasingly uneasy over proposals to use the European Investment Bank as an all-purpose fireman to prop up weaker regions of the eurozone or come to the rescue of Eastern Europe. The borrowing cost on the EIB's 10-year bonds has risen to 90 basis points above the benchmark German Bunds. The yield is now closer to the borrowing costs of Spain and even Italy, suggesting that investors already suspect the bank will be used to issue "EU bonds" for rescue purposes – whatever its original mandate. The EIB, the world's biggest multilateral lender, was able to borrow for years at rates that were almost the same as the German government – or even lower – enabling the entire EU to take advantage of the Germany's credit-rating for project finance. The change has been abrupt. The bank said this week that yields had been pushed up by the avalanche of sovereign bond supply as governments around the world tap investors for $3 trillion (£2.1 trillion) of fresh money. But EIB debt has been hit surprisingly hard.
Peter Schiff Reaction to the State of the Union Address Feb-24-09
Obama Budget Includes $634 Billion for Government-Funded Health Care President Barack Obama is sending Congress a budget Thursday that projects the government's deficit for this year will soar to $1.75 trillion, reflecting efforts to pull the nation out of a deep recession and a severe financial crisis. A senior administration official told The Associated Press that Obama's $3 trillion-plus spending blueprint also asks Congress to raise taxes on the wealthy in 2011 and cut Medicare costs to provide health care for the uninsured. The president's first budget also holds out the possibility of spending $250 billion more for additional financial industry rescue efforts on top of the $700 billion that Congress has already authorized, according to this official, who spoke on condition of anonymity before the formal release of the budget.
Obama healthcare plan relies on the evidence President Barack Obama's budget proposal relies on the evidence when it comes to healthcare reform, using research done by government and other groups on the best ways to change the system and save money. It pulls heavily from reports by the Commonwealth Fund, Institute of Medicine and others that show extending health insurance coverage to more people will save money by preventing illness or catching diseases early, before they become expensive. About 46 million Americans have no health insurance. The nonprofit Commonwealth Fund has also published studies showing that moving from paper medical records and prescribing to electronic technology can save money. Health information technology is a cornerstone of the Obama healthcare reform plan.
Insurers, drugmakers take hit under Obama plan U.S. President Barack Obama's 2010 budget proposal takes direct aim at drugmakers and health insurers to help fund an overhaul of the U.S. healthcare system. His plan, outlined Thursday, calls for lowering Medicare payments to private insurers, allowing consumers to buy cheaper medicines from overseas and preventing drug companies from making deals that block generic competition. Shares of U.S. health insurers suffered, with Humana Inc down 19 percent, Aetna Inc off 11 percent, Cigna Corp down 7 percent, UnitedHealth Group Inc off 12 percent and WellPoint Inc down 9 percent in afternoon trading. Shares of drugmakers also fell. The American Exchange Pharmaceutical Index, which includes GlaxoSmithKline Plc, Merck & Co Inc and Johnson & Johnson, was down 3.6 percent, underperforming the broader market. Congress will consider the White House proposal as it spends the coming months crafting a spending plan for fiscal 2010 that begins October 1. While Obama could seek action on anti-competitive drug deals and drug imports without Congress, many other changes would need lawmakers to implement them through legislation.
U.S. Companies Will Continue to Pull Back Business Spending on Durable Goods The nosedive in U.S. durable goods orders is more proof the slump in the economy is far from over and companies will continue to cut back on business spending. The drop "illustrates the magnitude of the current slump in investment and the overseas demand for US exports," Capital Economics economist Paul Ashworth said. Ex-transportation, durable goods orders fell 2.5% in January, against expectations for a 2.2% drop. No component saw improvement, save civilian aircraft and communication equipment orders. "Off on the wrong foot? That's an understatement! 2009 started off with the economy being in its maximum state of recession stress," Dr. Ken Mayland, economist at ClearView Economics, said following the report.
GM posts $9.6 billion fourth-quarter loss DETROIT -- General Motors Corp. posted a $9.6 billion fourth-quarter loss and said it burned through $6.2 billion of cash in the last three months of 2008 as it fought the worst U.S. auto sales climate since 1982 and sought government loans to keep the century-old company running. The nation’s biggest domestic automaker said Thursday it lost $30.9 billion for the full year and expects to state in its upcoming annual report whether its auditors believe the company remains a “going concern.” GM and its auditors must determine whether there is substantial doubt about the automaker’s ability to continue it operations. Chief Financial Officer Ray Young said the determination will depend a lot on whether GM gets further government loans and whether it can accomplish its restructuring goals.
GM posts $30.9 billion loss, keeps spending billions DETROIT - For General Motors Corp. nothing has stopped the bleeding. Not cutting 50,000 jobs in the U.S. Not closing 11 factories. Not $13.4 billion in government loans. The teetering company, once the symbol of American industrial might, revealed today that it burned through $19.2 billion in cash last year on its way to a $30.9 billion loss. The century-old automaker said its only hope of living another year is more aid from the government. GM has continued to spend on a company too big for the market, paying workers when plants are closed and covering other costs such as machinery, marketing, pensions and healthcare. Expenses are so high and income so low that GM warned that auditors are reviewing whether it can continue as "going concern." Auditors are determining whether there is substantial doubt about the company's ability to stay in business.
Peter Schiff - Austrian Economist Peter Schiff applies Austrian Economics on a wide range of topics.
Billions flow to water, sewer funds in Obama budget U.S. states would get a significant bump in funds for clean drinking water and sewer systems under the budget President Barack Obama proposed on Thursday. According to budget documents, $3.9 billion would go to the Clean Water State Revolving Fund and the Drinking Water State Revolving Fund in an "historic increase" that would fund more than 1,700 water projects in states, Native American tribes and territories. That comes on top of $4 billion that will go to the funds through the recently-enacted economic recovery plan. The Environmental Protection Agency estimates that for every federal dollar put into these funds, at least $2 in financing is provided to municipalities, according to the budget supplement. The states' revolving funds use federal money for leverage and for offering low interest loans to communities.
Obama seeks higher taxes on private equity in 2011 Corporate takeover financiers could be hit by steeper taxes on certain profits starting in fiscal 2011 under a long-range federal budget outline released by President Barack Obama on Thursday. In a move that would hurt private equity and hedge fund managers, Obama's plan calls for increased federal revenues of $2.7 billion in fiscal 2011 from taxing so-called "carried interest" as ordinary income. Carried interest is the main source of profits for partners in private equity firms, some hedge fund deals and other partnerships involving oil and gas, timber and real estate. At present, the carried-interest system allows partners in such firms to take 20 percent of returns for investing just 1 or 2 percent of their own money in a fund. Carried interest is taxed at the 15 percent capital gains rate, not the ordinary income rate of up to 35 percent.
Panel Suggests Higher Gas Tax A commission established by Congress to study options for financing the nation’s roads and bridges recommended on Thursday raising the federal gas tax by 10 cents a gallon. In a report, the National Surface Transportation Infrastructure Financing Commission cited a “crisis” of neglect for infrastructure, and also called for an eventual switch to a tax based on miles driven, rather than gasoline consumed.
Taxing motorists by the mile: Inevitable Taxing motorists by the miles driven, as opposed to gallons of gas consumed, is the way to go - according to a federal commission's report today. Trouble is, the White House already has deemed the idea of a Vehicle Mileage Traveled tax "a no go'' -- the words of the White House press secretary the day it was reported that the president's transportation secretary was talking up the VMT tax. "The White House was somewhat premature'' in its reaction to Transportation Secretary Ray LaHood's creative thing, says Robert Atkinson, chairman of the National Surface Transportation Infrastructure Financing Commission mileage plan. The nation's reliance on gas taxes is unsustainable and "likely to erode more quickly than previously thought," the commission's report released today says. Spending per mile traveled has dropped almost 50 percent, adjusted for inflation, since the Highway Trust Fund was created in the late 1950s.
Fannie Mae seeks $15.2B in US aid after 4Q loss Fannie Mae seeks $15.2 billion in government aid after posting $25.2 billion 4th-quarter loss Fannie Mae said Thursday it needs $15.2 billion in government aid -- though that figure is expected to grow -- because it lost nearly $59 billion last year as the foreclosure crisis mushroomed. The Washington-based mortgage finance company hemorrhaged $25.2 billion, or $4.47 per share, in the fourth quarter. That compares with a loss of $3.6 billion, or $3.80 a share, in the year-ago period. Fannie's net worth -- the value of its assets minus the value of its liabilities -- fell below zero at the end of the quarter, forcing the company to request funding from the government for the first time. The government seized control of Fannie Mae and its sibling Freddie Mac in September and last week doubled their lifelines to $200 billion each to guarantee they would never fail. Treasury Secretary Timothy Geithner said the increase in cash is "not a judgment about the expected losses ahead. It's just a way to make sure people understand that they will be able to play this role going forward."
The Schiff Report 2nd episode Feb 24 2009
J.P. Morgan to cut 12,000 jobs related to WaMu deal The New York bank expects about $2 billion in net savings to be achieved through the acquisition of Washington Mutual, including about $1.4 billion related to the job cuts. J.P. Morgan Chase & Co. said Thursday it will eliminate about 12,000 jobs as it folds in the operations of Washington Mutual Inc. According to slides on the company's Web site from an investor day presentation, the New York bank expects about $2 billion in net savings to be achieved through the acquisition, the majority of which will be realized by the end of this year. This includes about $1.35 billion related to the job cuts, the bank said.
Jobless Claims Data Points to Possible 750k Loss in U.S. Nonfarm Payrolls The upside surprise in U.S. initial jobless claims points to a continued deterioration of the U.S. labour market, and the possible loss of up to 750,000 jobs in February's official nonfarm payrolls report. Initial claims rose to 667k in the week ending Feb. 21, well above the 625k level economists had expected. The previous week's reading was also upwardly revised to 631k, the U.S. Department of Labor reported. Continuing claims rose above expectations as well, coming in at 5.112 million compared to the 5.025 million expected. Ken Maylan of ClearView Economics called the rise in initial claims "painful," but noted that on an adjusted basis, weekly claims exceeded 1 million claims in the 1982 recession.
Laid Off? No New Job? How Bad Can It Get? Yes, times are tough. The big banks are on life support. Home prices are in the pits. The stock market's tanked. Unemployment's way, way up. And … uh-oh. How are you doing? What about your home? Your investments? Your job? How safe is it? What's the worst that can happen to you? We put that question to the expert -- Joshua Piven, author of the best-selling "Worst-Case Scenario Survival Handbook" series. His tongue-in-cheek answer is not pretty: "You lose your job, you run out of savings or a safety net, have to sell [your] home, it's a down market and you can't sell your house, you move, pull the kids out of school, it's not easy to get another job and your whole lifestyle has to change. "Then there's homelessness, maybe spiraling alcoholism, and then living on the side of the train tracks." Ugh. More people are facing an extended period of joblessness and the potential financial difficulties that go along with it.
BofA CEO Ken Lewis keeps lips sealed BofA CEO Lewis refuses to give names of Merrill execs who got bonuses; NY AG issues subpoena The New York attorney general's office has subpoenaed Bank of America Corp. seeking the names of Merrill Lynch executives who received $3.6 billion in year-end bonuses, after Chief Executive Ken Lewis failed to provide those details during a lengthy deposition Thursday evening. Lewis, who traveled to New York on the company's corporate jet, said that he "answered the questions that were asked to the best of my knowledge." Lewis' deposition was part of an ongoing investigation by New York Attorney General Andrew Cuomo into the timing of Merrill Lynch's bonuses and whether proper disclosure was made to shareholders about the size of the bonuses. They were granted just before Bank of America's acquisition of Merrill closed, and as that bank was seeking additional government aid on top of $25 billion it had already received.
FBI arrests Stanford Financial Group exec Chief investment officer for Stanford Financial Group arrested on obstruction charge FBI agents arrested the chief investment officer of troubled Stanford Financial Group on Thursday, accusing Laura Pendergest-Holt of obstructing a Securities and Exchange Commission fraud investigation. The SEC has been investigating allegations of an $8 billion investment fraud involving Texas billionaire R. Allen Stanford's financial group. Pendergest-Holt was arrested in Houston, where Stanford Financial Group is based. The FBI said she was taken to the federal detention center and would appear in federal court Friday morning for an arraignment. "She is looking forward to working with the government to get all the facts out and put this behind her," her attorney Brent Baker said Thursday night.
Peter Schiff names the Top Culprits Chief culprit is Alan Greenspan . . .
Senate Votes Down Fairness Doctrine The Senate has barred federal regulators from reviving a policy, abandoned two decades ago, that required balanced coverage of issues on public airwaves. The Senate vote on the so-called Fairness Doctrine was in part a response to conservative radio talk show hosts who feared that Democrats would try to revive the policy to ensure liberal opinions got equal time. The Federal Communications Commission implemented the doctrine in 1949, but stopped enforcing it in 1987 after deciding new sources of information and programming made it unnecessary.
Vast Majority of Baby Boomers Have Accumulated Little to No Wealth Attention Baby Boomers: If you are trying to sell your home, more than 30% of you will have to bring money to the table. And the combination of falling house and stock values means that the vast majority of people near retirement have accumulated little or no wealth, meaning they will be almost completely reliant on Social Security and Medicare to support them in their retirement years. These are the findings of “The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble,” a report by the Center for Economic and Policy Research (CEPR), a non-partisan research firm. “The collapse of the housing bubble, which led to the current recession, has already destroyed almost $6 trillion dollars in housing wealth for homeowners,” said report co-author Dean Baker, who will testify today before the Senate Special Committee on Aging. “This reality is compounded by the recent collapse of the stock market. The result is that many baby boomers will only have Social Security and Medicare to rely on in their retirement.”
Rocky Mountain News closing after Friday edition DENVER – The Rocky Mountain News, Colorado's oldest newspaper and a Denver fixture since 1859, will publish its last edition Friday. Owner E.W. Scripps Co. said Thursday the newspaper lost $16 million last year and the company was unable to find a buyer. "Today the Rocky Mountain News, long the leading voice in Denver, becomes a victim of changing times in our industry and huge economic challenges," Scripps CEO Rich Boehne said. The News is the latest — and largest — newspaper to fail amid a recession that has been especially brutal for the industry. Four owners of 33 U.S. daily newspapers have sought Chapter 11 bankruptcy protection in the past 2 1/2 months. A number of other newspapers are up for sale. "People are in grief, and they're very, very upset trying to process all the emotions that go with it and trying to recognize that we will be putting out our final edition tomorrow," said News publisher John Temple.
NRA-ILA Grassroots Minute 02/27/09
Light At The End Of The Tunnel Turned Off! t is a painful time for Americans of my age. We have the memories of an America, glorious and honorable in her past—a past, which has been forgotten and erased, in many cases, from the history books of America’s students… Above all things our America was honorable. A young American today would be hard pressed to define “honor.” To define “dishonorable” is much easier. One has only to turn one’s attention to the actions of the American Congress, ruled by the American Left, for a real-time view of dishonor. As we Americans view ourselves in that inner mirror, we can know that even today, America can be defeated… only by herself. And that is the shameful path we have chosen. One of our Founding Fathers and President, John Adams, once said: “Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.
Montana Senate Approves Pro-Life Personhood Amendment Montana became the first state on Thursday to pass a Personhood Amendment – which establishes legal rights for humans from the moment of conception – in the state Senate. SB 406 states: “All persons are born free and have certain alienable rights … person means a human being at all stages of human development of life, including the state of fertilization or conception, regardless of age, health, level of functioning, or condition of dependency.” "Senator Dan McGee, writing the language of SB 406 himself, has shown what it truly means to be pro-life," Keith Mason of Personhood USA said in a statement. "Senator McGee's successful efforts on behalf of all human beings at all stages of human life are a giant step forward in historic efforts to ensure the rights and protection of every individual."
Dr. Tiller to Stand Trial for Late-Term Abortions A judge has refused to toss out the criminal case against a doctor accused of violating Kansas' late-term abortion law. Sedgwick County Judge Clark Owens on Wednesday denied a defense request to dismiss charges against Dr. George Tiller of Wichita or throw out evidence because of the conduct of former prosecutor Phill Kline. Owens found that Kline's conduct during the investigation of Tiller did not warrant such action.
Judge denies Tiller motion to dismiss case Sedgwick County District Judge Clark Owens on Wednesday denied a motion by lawyers for Wichita abortion provider George Tiller to dismiss his criminal case. The ruling prompted a lawyer for former Kansas Attorney General Phill Kline to say Kline's investigation of Tiller had "once again been vindicated." Tiller will go to trial March 16 on 19 misdemeanor counts related to how he obtained second opinions for late-term abortions. "We are continuing forward with the case and preparing for trial," said Ashley Anstaett, spokeswoman for Attorney General Steve Six, whose office is prosecuting the case.
Japanese Opposition Wants American Troops Out of Japan The number of American troops stationed in Japan should be cut as Tokyo takes on more responsibility for its own defense, says Japanese opposition leader Ichiro Ozawa. According to United Press International, Ichiro Ozawa, leader of the main opposition Democratic Party of Japan, said Tuesday that stationing U.S. soldiers in Japan doesn’t make much sense given the geopolitical realities of the day, the Kyodo news agency reported. “I think putting Japan-based troops on the front line does not have much significance in times like these, and the 7th Fleet would be enough for the U.S. presence in the Far East from a strategic viewpoint,” Ozawa told reporters in Kashiba, Japan.
Pakistan needs 'urgent' help The United States and its allies must act urgently to prevent Pakistan - the only predominantly Muslim nation with nuclear weapons - from descending into a spiral of economic, security, and political crises, according to a new report released here by an influential think-tank. The 27-page report, "Needed: A Comprehensive US Policy Towards Pakistan", called for at least US$4 billion to $5 billion in new aid for Islamabad of which $1 billion should be earmarked for the military and the police, to help ward off the growing threat posed to the central government by Islamic militants based in the frontier regions with Afghanistan and linked to al-Qaeda. "Simply put, time is running out for stabilizing Pakistan's economy and security," the task force warned. "We cannot stress the magnitude of the dangerous enough nor the need for greater action now," it stressed, adding that failure to provide needed assistance could well result in "state failure".
Ahmadinejad’s Apocalyptic Ambitions “Oh Allah, give me the strength to hasten the return of the Promised One.” That is an unusual request, particularly given the stage on which it was made. For the few ever given the opportunity to speak before world leaders at the UN General Assembly, the occasion is generally used to define and debate world problems, advance national foreign policy, garner support for humanitarian programs or request financial assistance. Iranian President Mahmoud Ahmadinejad is different. Given the opportunity, he has no compunction about standing before world leaders, bowing his head, and praying for the personal strength to usher in the return of the Promised One.
Why the U.S. Government Should be Cut Off Like a Subprime Borrower By Peter Schiff With millions of homeowners now struggling to repay money that they clearly never should have borrowed, our leaders have been righteously wagging fingers at predatory lenders who allegedly enticed innocent borrowers, and the country, into a financial snake pit. While the mortgage industry clearly deserves a good share of the blame, unindicted co-conspirators abound. The ringleaders are still at-large and are, in fact, busy hatching a plan that would dwarf their earlier mistakes. Contrary to the message bouncing off the marble walls of the Capitol building, most borrowers in the inflating housing bubble clearly understood the terms of their loans. Most knew that they could not afford their mortgage payments once their teaser rates expired, but enthusiastically jumped into the debt pool anyway, believing that guaranteed real estate appreciation, or a quick and profitable sale, would keep them afloat, or bail them out.
A Second Try at Calming Bank Investors Government Wants New Infusions to Be Regarded as Capital The revised financial aid plan for troubled banks that the Obama administration is launching this week is the government's second attempt to convince investors that it is giving banks the money they need to cover mounting losses and survive the recession. The government has insisted that its investments should be counted as capital, the reserve that banks must maintain against losses. The Bush administration went so far last year as to rewrite the regulatory definition of capital to include the federal aid, which comes in the form of preferred shares.
Gold Most Favored Investment This Year, World Gold Council Says Gold is the most favored investment this year ahead of investment-grade bonds and other assets, according to a survey of investment advisers, the producer-funded World Gold Council said. About 60 percent of the 31 advisers surveyed in Europe expect investors to take fewer risks this year compared with 2008, while about 30 percent expect investors to be less risk averse, the London-based council said today in a report. Almost 60 percent expect better market conditions this year.
Bernanke: Bail out bad borrowers too Federal Reserve Chairman Ben Bernanke said Wednesday that the embattled housing market has crippled the economy, and at-risk homeowners need a bailout - even if they knew they couldn't afford their home in the first place. "Some borrowers presumably knew what they were getting into," Bernanke said before the House Financial Services Committee. "But from a public policy point of view, the large amount of foreclosures are detrimental not just to the borrower and lender but to the broader system." "In many of these situations we have to trade off the moral hazard issue against the greater good," he added. Bernanke's comments come after President Obama unveiled a $75 billion plan Feb. 18 to help up to 9 million borrowers suffering from falling home prices and unaffordable monthly payments. Borrowers with little or no equity will be able to refinance their mortgages at the current market rate, and monthly payments will be reduced for at-risk borrowers.
Plan to Repair U.S. Banking System Unveiled by Former Hedge Fund Manager The economic house of the United States is ready to collapse upon itself, leaving us exposed and defenseless against the next Great Depression. Bureaucratic handymen with a staple gun and a trillion-dollar roll can’t paper over holes in bank balance sheets or fill in the others created by plunging consumer spending. It won’t work. What is needed - and what would arrest the slide in U.S. housing prices - is a renewed general confidence in protective regulations, and tax incentives for investors to buy troubled assets and to make equity investments in banks.
In Geithner We Trust Eludes Treasury as Market Fails to Recover It was 2004 and Tim Geithner, president of the Federal Reserve Bank of New York, had a message for the Federal Open Market Committee in Washington. He told his 18 colleagues gathered around the long mahogany table that a clearinghouse was needed to monitor risks in the burgeoning $5 trillion market for credit-default swaps -- the over-the-counter derivatives that would later spin out of control and help take down Wall Street. In a move that may have foreshadowed his role as President Barack Obama’s Treasury secretary, Geithner over the next two years nudged financial firms to voluntarily clear a backlog of swap trades. They stopped short of creating a clearinghouse to bring more transparency to the market.
U.S. Sets a Six-Month Deadline for New Bank Capital The government set a six-month deadline for the biggest 19 U.S. banks to raise any new capital deemed necessary after a mandatory review of their balance sheets. The regulators will oversee the so-called stress tests by the end of April, which will identify how much extra cushion each bank will need, the Treasury said today in Washington. Lenders will have six months to raise private capital or accept government funds and the conditions that come with it. “While the vast majority of U.S. banking organizations have capital in excess of the amounts required to be considered well capitalized, the uncertain economic environment has eroded confidence in the amount and quality of capital held by some,” the Treasury said, announcing guidelines for new bank reviews.
Obama Showers Wall Street Fees With Muni Stimulus While U.S. President Barack Obama criticized Wall Street bonuses, his stimulus plan offers bankers the opportunity to boost fees with incentives that may lead to $65 billion in municipal bond sales. School districts and local borrowers from Pennsylvania to California have already sold $465 million of tax-exempt bonds since Feb. 17 under revised rules in Obama’s stimulus package, signed last week, according to data compiled by Bloomberg. Municipal Market Advisors, a Concord, Massachusetts-based research firm, estimates the new measures may drive more than $65 billion in new bond sales through 2010. Banks that advise state and local governments and market their debt may collect $314 million in fees as a result of the sales, based on Bloomberg data. Municipal bond offerings, which totaled $392 billion last year, may expand as underwriters urge clients to take advantage of the stimulus tax breaks.
Gov't says 'mass layoffs' soared in January A purist could argue that the word nationalization should only be used to describe situations in which the government owns a company, the government runs the company and the government plans to keep on running the company. That kind of nationalization is wildly unpopular in the United States. So it's no surprise that Obama administration officials have objected so vigorously when their plans to rescue the banking industry are described as a form of nationalization. To understand why others continue to use the word, however, it's helpful to consider each of three components: Ownership, control and long-term intent.
What Is 'Nationalization'? Depends Who You Ask. A purist could argue that the word nationalization should only be used to describe situations in which the government owns a company, the government runs the company and the government plans to keep on running the company. That kind of nationalization is wildly unpopular in the United States. So it's no surprise that Obama administration officials have objected so vigorously when their plans to rescue the banking industry are described as a form of nationalization. To understand why others continue to use the word, however, it's helpful to consider each of three components: Ownership, control and long-term intent.
The Best Argument Against Nationalization We are very much in favor of the US government forcing banks to tell the truth about how little their assets are worth (take the writedowns) and then going to the shareholders and bondholders to fill the capital hole. It is hard to see how the government can do this without actually temporarily seizing such banks. Thus, in cases where it is warranted, we support "nationalization." We are NOT, however, in favor of the government actually running the banks. This would be a disaster. One of the big flaws of the current approach to the crisis, in fact, is that the government is already quasi-managing the banks (see Citi), while insisting that it not actually taking them over. As today's Wall Street Journal illustrates, the current situation at Citi is probably worse than temporary nationalization.
Government Offers Details of Bank Stress Test The Obama administration ordered the nation’s 19 biggest banks on Wednesday to undergo stress tests to check whether they could hold up if the economy deteriorated further. But analysts say the administration’s worst projections, which it describes as unlikely, is not much more dire than what many private forecasters already expect. According to the new Treasury Department guidelines, the banks would have to assume that the economy contracts by 3.3 percent this year and remains almost flat in 2010. They would also have to assume that housing prices fall another 22 percent this year and that unemployment would shoot to 8.9 percent this year and hit 10.3 percent in 2010.
'Oil is good buy at $40. Gold is good buy at $900' Bullion and oil appear in the lineup of power players that Doug Casey thinks investors can count on as the world slips deeper and deeper into what he calls the “Greater Depression.” Despite the raging economic storm and Doug’s doubts that Western civilization’s governments will take the actions needed to quell it, though, the Chairman of Casey Research is nowhere close to calling the game. In fact, he sees silver lining in the clouds of crisis—opportunity—and expresses optimism that technological advances, coupled with capital rebuilding once over-consumption runs its course, will prevail eventually. The Gold Report caught up with the peripatetic author, publisher and professional international investor between polo matches in New Zealand, one of several nation-states he calls home from time to time.
Gold investments to boom in Middle East DUBAI: Amidst dwindling property prices, increasing unemployment and dip in equity trading, there is a glittering line of hope as far as gold investments are concerned in the Middle East nations. Gold investments across the Gulf countries are set for a sharp rise this year. According to the World Gold Council (WGC), several Middle East nations including the City of Gold, Dubai, are going to be action centers for gold investments. “We feel Middle East nations are going to witness lots of investments in gold sectors. Several global companies including gold mining processing and production companies are looking at Middle East for major investments,” says Lama Al Saheb, head of marketing WGC head of marketing in Middle East.
Home Sales and Prices Continue to Plummet Sales of previously owned homes fell 5.3 percent in January from December, an industry group reported Wednesday. The National Association of Realtors reported that existing-home sales, fell to an annual rate of 4.49 million in January, the slowest rate in more than a decade. Sales were down 8.6 percent from January 2008. The median home price fell to $170,300, its lowest point since March 2003. The median price in January was down 26 percent from its peak of $230,100 in July 2006.
Ben Bernanke and the Unabridged "May Happen" List for 2009 Satire From Lillpop Fed Chairman Ben Bernanke made instant headline news by telling Congress that America’s gut-wrenching recession MAY end in 2009… His words brought immediate relief to Wall Street investors and others worried about America’s dire economic circumstances, including President Obama who is not sure whether it is better to tell the American people that it will take many years to heal the mess, or to promise a miraculous halving of the deficit by the end of his first term. While the “Bernanke Bounce” was a welcome change of pace after six consecutive sessions of dreadful news, the Fed Chair made a number of other forecasts which he believes are just about as likely as an economic recovery in 2009.
Waiting for Inflation? It May Take Awhile Talk of the inevitable incoming inflationary spike has increased as gold broke through $1000 an ounce, Chairman Bernanke discussed the Fed retracting liquidity and money supply surged. Of course this chatter has spilled into the bond market and is one of the legs of the “short the bond bubble” theme. However, a close inspection of the mechanics of inflation suggest that it may be a long time before we have to worry about rising prices.
Tax Suspicions Grow on Swiss Accounts Federal authorities suspect the scandal over Americans’ secret offshore accounts at UBS, the big Swiss bank, runs far deeper than they believed only a week ago. While UBS admitted last week that it had failed to properly withhold American taxes on 17,000 accounts held by affluent Americans, the authorities are now investigating how the bank and its intermediaries handled taxes for an additional 35,000 accounts, according to two people briefed on the investigation. At issue is whether UBS withheld taxes, as required by American law, and, if so, where the money went, these people said. If UBS failed to collect taxes on all 35,000 accounts, the bank could owe the Treasury Department as much as $800 million in taxes, interest, fines and penalties, according to a tax lawyer briefed on the investigation, who spoke on the condition he not be named because he is representing UBS clients.
Peter Schiff "Obama should fire his economists and ask Ron Paul what to do!"
Stocks drop as Obama speech and housing data weigh Stocks fell on Wednesday as investors found little new in a major speech by President Barack Obama on how he planned to stabilize the economy, while gloomy home sales data weighed on the market. Long-standing worries about recession and the fate of the banking sector persisted despite Obama's speech to Congress on Tuesday night, sending shares of financial services companies, big manufacturers and energy companies lower. "The market was up 4 percent yesterday and I think that was probably a little excessive given the economic backdrop," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles. "There was a little bit of an overshoot to the upside yesterday and we're just giving some of that back early as President Obama didn't have anything substantive to say last night."
Obama urges quick action on Wall Street reform President Barack Obama called on Wednesday for a sweeping overhaul of Wall Street regulations, saying big changes were needed to avoid a repeat of the financial meltdown. Obama convened a high-level White House meeting on the issue that included Democratic and Republican lawmakers who said they would work with the administration to craft legislation in the next few weeks. Obama, a Democrat, said "painful experience" showed the rules needed to be modernized. The economy cannot sustain "21st century markets with 20th century regulations," Obama told reporters after the meeting with lawmakers.
Obama’s Cap on Carbon Pollution Is A Huge Tax Increase, Republican Lawmaker Says In his speech to Congress Tuesday night, President Barack Obama “committed himself to the largest annual tax increase in the history of America,” warns a Republican congressman. The implementation of a cap-and-trade system, something Obama favors, would raise $300- to $330-billion a year, said Sen. Jim Inhofe (R-Okla.). “As bad as the stimulus spending bill was, this would be much worse because instead of being one-time spending, the cap-and-trade tax increase would keep occurring year after year,” Inhofe said.
Higher Taxes, Fewer Govt. Services Coming Despite Obama's Pledge In his first address to a joint session of Congress last night, President Obama called for expensive and broad efforts in three major areas -- energy, health care and education. He also suggested government bailouts are far from over. In short, Obama outlined a broad, ambitious overhaul of domestic policy after eight years under President George W. Bush. Will the blueprint work? Our guest Joe Brusuelas, director of market economics for Moody's Economy.com, so far likes what he has heard, saying now is the time for decisive leadership on spending issues. And that's a compliment coming from Brusuelas, who publicly had supported Senator John McCain.
The next big financial meltdown? The mortgage and credit sickness that brought banks and brokers to their knees has now infected the companies that insure our lives and protect our families. The life insurance companies that millions of Americans entrust to help protect their families or pay the bills in their golden years are caught in a downward spiral eerily similar to the one that has brought down banks and brokers. Like Bear Stearns and Lehman Bros., life insurers Hartford Financial Services, Principal Financial Group, Lincoln National and many others all have significant exposure to mortgage-backed securities and other risky debt instruments. They're reporting huge losses that -- if they continued -- could trigger a meltdown.
Obama's words on home aid ring hollow President Barack Obama knows Americans are unhappy that their taxes will be used to rescue people who bought mansions beyond their means. But his assurance Tuesday night that only the deserving will get help rang hollow. Even officials in his administration, many supporters of the plan in Congress and the Federal Reserve chairman expect some of that money will go to people who used lousy judgment. The president skipped over several complex economic circumstances in his speech to Congress — and may have started an international debate among trivia lovers and auto buffs over what country invented the car. A look at some of his assertions:
Obama Seeks $634B over 10 Years for Health Care President Barack Obama's first budget will seek $634 billion over 10 years as a down payment on health care reform, a senior administration official said Wednesday. The official said Obama's proposal is meant to start a dialogue with Congress over how to provide coverage for an estimated 48 million uninsured while also slowing health care costs, which amount to $2.4 trillion a year and keep rising even as the economy is shrinking. The senior official spoke on condition of anonymity because the budget won't be released until Thursday. Obama's request comes on top of recent health care expansions approved by Congress and also described by his administration as down payments toward overhauling the health care system. Those include $32 billion to expand coverage for the children of low-income workers and $19 billion to speed the adoption of computerized health records.
This is a MUST-SEE Video . . . Testimony of illegal alien care from 1 Florida hospital
Obama Chooses Locke to Run Commerce Department President Barack Obama on Wednesday announced he has chosen former Washington Gov. Gary Locke as his nominee for Commerce secretary, trying a third time to fill a key Cabinet post for a country in recession. "I'm sure it's not lost on anyone that we've tried this a couple of times. But I'm a big believer in keeping at something until you get it right. And Gary is the right man for this job," Obama said, standing with the fellow Democrat in the Indian Treaty Room at the Eisenhower Executive Office Building near the White House.
A Contrived Crisis? You Decide Through a series of supposedly random but arguably deliberate chain of events, America is poised to jettison 220 years of a free market system called capitalism, in favor of the tried and failed system of socialism. Myself and others are now starting to question how we reached this point… Last summer, as McCain and Obama were in the midst of their campaigns to capture the presidency, a series of events dramatically changed the focus of the campaign from Iraq to the economy. From that point on, Obama took the lead and eventually won the presidency.
Citi customers angry about reported gov't plans Citigroup customers disgruntled as government considers taking a larger stake in the company The sight of a Citibank logo makes Rumi Turkel cringe. She's seen her banking fees climb, and found out Tuesday that interest rates on her savings accounts have fallen again. That's not to mention the substantial amount of money she says her family has lost from owning stock in the bank's parent company, Citigroup Inc. Like other Citi customers interviewed by The Associated Press on Tuesday, she is infuriated that the company has reportedly approached regulators about expanding government ownership of the bank, which has already received $45 billion in bailout money and guarantees to cover losses on hundreds of billions of dollars in risky investments.
Home sales sink unexpectedly, lowest since 1997 Home sales sink unexpectedly in Jan. to lowest level since 1997; rebound hinges on jobs, banks Sales of existing homes sank unexpectedly last month to the lowest level in nearly 12 years as potential buyers worried about their jobs and awaited details of President Barack Obama's plans to stabilize the housing market. But the banking industry's teetering fortunes and mounting job losses could stall any recovery. Falling prices and low mortgage rates don't make much of a difference for people who are out of work -- or fearful of losing their jobs. The most optimistic outlook is for a spring revival as home prices plummet. Government officials, hoping to spur demand, on Wednesday rolled out the details of a new $8,000 tax credit for first-time buyers. About 40 percent of all home sales last year were from first-time buyers.
Gov't says 'mass layoffs' soared in January 'Mass layoffs' increased sharply last month as companies cut costs amid worsening recession Employers took a large ax to their payrolls in January, the government said Wednesday, and the cuts are likely to get worse over the next few months. The Labor Department reported that mass layoffs, or job cuts of 50 or more by a single employer, increased to 2,227 in January, up almost 50 percent from the same month last year. More than 235,000 workers were fired as a result of last month's cuts. January was a bad month for the labor market. Companies from a wide range of sectors announced thousands of layoffs, including Home Depot Inc., Boeing Co., Pfizer Inc. and Caterpillar Inc.
U.S. consumer confidence plunges to record low in February U.S. consumer confidence plunged to another record low in February with expectations that already dire economic conditions will continue to weaken and the jobs market will further deteriorate. The Conference Board, an industry group, said on Tuesday that its sentiment index fell to 25.0 from a downwardly revised 37.4 in January. The median forecast of economists polled by Reuters was for a reading of 35.5. The February reading was a new all time low for the index, which began in 1967. "All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months," said Lynn Franco, director of The Conference Board Research Center.
Defaults by Franchisees Soar as the Recession Deepens List of Small Business Administration-Backed Bad Loans at 500 Brands Increased 52% in Most Recent Fiscal Year The recession is bruising businesses across the franchising industry. From ice-cream parlors to tanning salons, franchisees' defaults on loans guaranteed by the U.S. Small Business Administration are piling up in amounts unseen in years. A list of loans at 500 franchises shows the number of defaults by franchisees increased 52% in the fiscal year ended Sept. 30, 2008, from fiscal 2007. Loan losses totaled $93.3 million, a 167% jump from $35 million just 12 months earlier. The figures, a stark barometer of the downturn's severity and scope, could give pause to banks that have loan money about where to lend next. Banks that make SBA-guaranteed loans say they use the annual list as guidance in assessing future commitments.
U.S. is a vast arms bazaar for Mexican cartels PHOENIX: The Mexican agents who moved in on a safe house full of drug dealers last May were not prepared for the fire power that greeted them. When the shooting was over, eight agents were dead. Among the guns the police recovered was an assault rifle traced back across the border to a dingy gun store here called X-Caliber Guns. Now, the owner, George Iknadosian, will go on trial on charges he sold hundreds of weapons, mostly AK-47 rifles, to smugglers, knowing they would send them to a drug cartel in the western state of Sinaloa. The guns helped fuel the gang warfare in which more than 6,000 Mexicans died last year.
America -- They Are Laying the Groundwork to Change the U.S. Constitution! WAKE UP AMERICA! Socialist Democrats are in the process of hijacking your country right from under you. These brazen people aren’t doing it in baby steps either. They are making bold moves every day. Their proposals may seem benign to you, however, if you open your eyes, you will see that these people are “An Enemy Of America.” Why do I say this? First, we have a socialist President, along with his confederates in the Congress and United States Senate who tried to sneak Universal Health Care into his so-called stimulus bill. Oh, Universal Health Care, at least the start of this socialist program is in Hussein’s package, but he was hoping that no one caught it.
Tea Party revolution brewing The kettle's whistling. Tea Parties are popping up all over the country. People are flocking to these sites which have cropped up practically overnight in search of information about rallies, demonstrations and Tea Parties in their cities. The revolution is brewing! "Somebody in our government needs to finally pay attention. It is what I've been talking about that was coming for a very long time and that is disenfranchisement which will turn into anger and then turn into God knows what," Glenn Beck said Friday on his radio program about CNBC'S Rick Santelli's passionate comments made Thursday from the floor of the Chicago Mercantile Exchange.
Oklahoma House passes sovereignty bill Path set for other states seeking to reassert constitutional rights Oklahoma's House of Representatives is the first legislative body to pass a state sovereignty resolution this year under the terms of the Tenth Amendment. The Oklahoma House of Representatives passed House Joint Resolution 1003 Feb. 18 by a wide margin, 83 to 13, resolving, "That the State of Oklahoma hereby claims sovereignty under the Tenth Amendment to the Constitution of the United States over all powers not otherwise enumerated and granted to the federal government by the Constitution of the United States." The language of HJR 1003 further serves notice to the federal government "to cease and desist, effectively immediately, mandates that are beyond the scope of these constitutionally delegated powers."
European Creationists Take On Darwin By Jens Lubbadeh The US isn't the only place with heated debates about Darwin's theory of evolution: Europe has its own hardcore creationists and intelligent design backers, too. Increasingly, they are making their voices heard. He hesitated because he knew full well that his findings would have dramatic consequences on established notions of the world. For 20 years, Charles Darwin kept his revolutionary ideas about evolution to himself. "It's like confessing to a murder," he wrote to a friend. His anxiety was justified -- because it was no less than God himself who would fall victim to his theory of evolution. And so Darwin, a former student of theology who was married to a deeply devout woman, put off publishing his groundbreaking work "On the Origin of Species." In the end, he only published it when he did because he was forced to. Otherwise, Alfred Russel Wallace -- who had proposed his own theory of natural selection -- would have beat him to it.
'If One Major Bank Collapsed, Others Would Fall Like Dominoes' German regional bank HSH Nordbank has been saved from collapse through a bailout by the states of Schleswig-Holstein and Hamburg. Observers warn, though, that the states may be entering into an unknown risk they are ill-equipped to handle. Schleswig-Holstein Governor Peter Harry Carstensen and Hamburg Mayor Ole von Beust looked relaxed and confident Tuesday when they announced their states' joint rescue package for the troubled regional lender HSH Nordbank. But many observers are asking if the duo really knew what they were getting into.
Obama to Seek $75.5 Billion More for Wars in 2009 President Barack Obama will seek $75.5 billion more for combat operations in Iraq and Afghanistan through the end of this fiscal year, according to three people familiar with the request. It will be submitted along with the fiscal 2010 budget Obama sends to Congress tomorrow. That proposal will request $130 billion for the wars in fiscal 2010 in addition to a total Defense Department budget of about $534 billion, the people said. The amounts for the wars are less than Defense Secretary Robert Gates asked for and in keeping with expectations that the president plans a major reduction of the 142,000 U.S. troops now in Iraq.
And you think they don't HATE Americans and the USA?? Kuwaiti Professor Fantasizes about a Biological Attack at the White House and Prays for the Bombing of a Nuclear Plant on Lake Michigan
Kuwaiti prof: 330,000 dead from 4 pounds of anthrax Outlines potential White House attack that would make 9/11 'small change' A professor from Kuwait, the country liberated from Saddam Hussein's attack squads by the United States in the first Gulf War, has outlined on Arab television a potential terror attack that would involve smuggling anthrax from Mexico into the U.S. and killing 330,000 people in 60 minutes. The plan was described by Abdallah Al-Nafisi in a speech that aired on Al-Jazeera television Feb. 2, according to MEMRI, the Middle East Media Research Institute, an independent nonprofit that provides translations and analysis of media reports.
Fox News Strategy Room w/ Judge Napolitano, Ron Paul, Glenn Beck 02/25/2009 Part 1
Fox News Strategy Room w/ Judge Napolitano, Ron Paul, Glenn Beck 02/25/2009 Part 2
Fox News Strategy Room w/ Judge Napolitano, Ron Paul, Glenn Beck 02/25/2009 Part 3
Fox News Strategy Room w/ Judge Napolitano, Ron Paul, Peter Schiff, Glenn Beck 02/25/2009 Part 4
Fox News Strategy Room w/ Judge Napolitano, Ron Paul, Glenn Beck 02/25/2009 Part 5 Ron Paul anticipates they will destroy the dollar . . .
Fox News Strategy Room w/ Judge Napolitano, Ron Paul, Glenn Beck 02/25/2009 Part 6
Home mortgage relief for millions of illegals Obama's program provides $275 billion to assist homeowners facing foreclosure Illegal aliens can apply for mortgage relief under the Obama administration's $275 billion plan, according to immigration experts and a group the government will use to help homeowners modify loans. Steven Camarota, director of research at the Center for Immigration Studies in Washington, D.C., told WND approximately 1 million households headed by illegal immigrants acquired mortgages through the beginning of 2007, before the housing bubble burst. "There is no legal prohibition against illegal immigrants owning homes," he said, "and in most cases mortgage lenders will accept a taxpayer ID or a Matricula Consular card issued by a Mexican Consulate office as identification to illegal immigrants from Mexico."
Obama Assures Nation: ‘We Will Rebuild’ President Obama urged the nation on Tuesday to see the economic crisis as reason to raise its ambitions, calling for expensive new efforts to address energy, health care and education even as he warned that government bailouts have not come to an end. In his first address to a joint session of Congress, Mr. Obama mixed an acknowledgment of the depth of the economic problems with a Reaganesque exhortation to American resilience. He offered an expansive agenda followed by a pledge to begin paring an ever-climbing budget deficit. “While our economy may be weakened and our confidence shaken, though we are living through difficult and uncertain times, tonight I want every American to know this,” Mr. Obama said. “We will rebuild, we will recover, and the United States of America will emerge stronger than before.”
Republican Response to Pres. Obama Address to Congress
Obama vows to lead US from dire 'day of reckoning' Obama vows to lead nation from 'day of reckoning' to a brighter future in address to Congress Standing before the nation on a "day of reckoning," President Barack Obama summoned politicians and public alike Tuesday night to forge a path out of the worst economic disaster in a quarter-century by embracing shared sacrifice and costly new endeavors to improve health care, schools and the environment. "The time to take charge of our future is here," Obama declared in his first address to a joint session of Congress, watched by millions of worried Americans on television and the Internet. Adding words of reassurance, he said, "Tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before."
Obama calls for health-care reform in 2009 President Obama pledged Tuesday night to cure Americans from what he called "the crushing cost of health costs," saying the country could not afford to put health-care reform on hold. "This is a cost that now causes a bankruptcy in America every 30 seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes," Obama said in his speech to a joint session of Congress. Obama pointed to the increasing number of uninsured and rapidly rising health-care premiums, which he said was one reason small business closed their doors and corporations moved overseas. Obama's prescription for health-care reform included making "the largest investment ever" in preventive care, rooting out Medicare fraud and investing in electronic health records and new technology in an effort to reduce errors, bring down costs, ensure privacy and save lives.
Did Marx Know All This Was Coming? "Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism." - Karl Marx, 1867, Das Kapital That quote is almost assuredly bogus. We haven't tormented ourselves by re-reading sections of Das Kapital. Once in college was enough. This quote, though, has been making the rounds on the Internet, as if Marx and his minions somehow knew all this was coming. Whether the analysis is accurate is a separate question from whether Marx ever wrote it. German is a torturous language to read in translation, full of compound sentences and words. And it's highly unlikely, writing in the late 19th century, that Marx would have referred to the working class buying houses and technology. The horseless carriage hadn't even been invented yet, much less the iPod, the BlueRay, or the George Foreman grill. Nope. This is a clever bit of revisionism by some unemployed Marxist student or tenured professor trying to discredit the free market while rehabilitating the Marxist playbook.
Obama to America: Tighten your belts No more extravagant buying, get ready for more regulations The president told the nation tonight the "day of reckoning has arrived" for Americans after a spree of extravagant buying, too-few regulations and not enough long-term financial planning. Obama said he will submit a budget this week that he sees as a vision for America and a blueprint for the future. He says the budget will reflect the harsh reality of the worst economic crisis since the Great Depression, one for which he was quick to blame his predecessor, Republican George W. Bush. "While our economy may be weakened and our confidence shaken, though we are living through difficult and uncertain times, tonight I want every American to know this: We will rebuild, we will recover," Obama said in his televised speech before a joint session of Congress with all the trappings of a State of the Union Address. "And the United States of America will emerge stronger than before." Five weeks after taking office, Obama pressed the case for his economic revival plans that includes a health-care system overhaul, new centralized education priorities and investment in alternative energy sources.
Wall Street points lower after Obama speech After rally sparked by Bernanke, US futures point lower as Obama speech lacks specifics U.S. futures pointed lower after President Barack Obama's address to Congress Tuesday evening, as investors didn't get the specifics they hoped for on the government's plan to rescue troubled banks. Earlier in the day markets rallied after Federal Reserve Chairman Ben Bernanke gave Wall Street a double dose of reassurance. He told Congress Tuesday the recession might end this year, and that regulators aren't planning to nationalize banks. The news alleviated some of investors' worries about the economy and the banking industry, and lifted the Dow Jones industrial average and Standard & Poor's 500 index off their lowest levels since 1997. Anticipating that Obama would provide specifics about his plans to stabilize the financial system and further stimulate the economy, investors drove beaten-down financial shares up sharply.
Bernanke: Recovery depends on banks The economy will start to recover from a severe recession this year only if the government is successful at reviving the foundering banking system and collapsed credit markets, Federal Reserve chairman Ben S. Bernanke testified Tuesday morning. In testimony before the Senate Banking Committee, the Fed chief stressed once again that massive fiscal stimulus and even the Fed's only efforts to keep interest rates at record lows will not suffice to revive the economy from recession so it can start growing again next year. The banking system and financial markets are the critical element, he said. "If actions taken by the administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability -- and only if that is the case, in my view -- there is a reasonable prospect that the current recession will end in 2009," he said.
Nouriel Roubini and Mark Zandi on Bank Nationalization - Charlie Rose 2/18/09
Bernanke: economy suffering 'severe contraction' Bernanke: economy suffering 'severe contraction,' pledges to use all tools to provide relief Federal Reserve Chairman Ben Bernanke told Congress Tuesday the economy is suffering through a "severe contraction" and pledged to use all available tools to lift the country out of the recession that already has cost millions of Americans their jobs. In testimony prepared for the Senate Banking Committee, Bernanke said the economy is likely to keep shrinking in the first six months of this year. Housing, credit and financial crises -- the worst since the 1930s -- plunged the economy into its worst downhill slide in a quarter-century at the end of last year.
Bernanke Testimony to be Closely Watched for Inflation Target Federal Reserve Chairman Ben Bernanke's two-day testimony to the U.S. Senate and the House of Representatives, which begins Tuesday, will be closely-watched for any new revelations on government programs to rescue the U.S. economy. Most economists say Bernanke's testimony may not hold much new information last week's speech and Q&A session with the press as well as the release of minutes from the Jan. 28 Federal Open Market Committee meeting. Still, Bank of Tokyo-Mitsubishi economist Ellen Zentner said that when Bernanke speaks, the market watches. She said he would probably have to justify the Fed's recent forecast downgrades "and possibly lay out, albeit in a broad sense, what additional steps can be taken by the government to help turn around the U.S. economy". He needs to show the Fed still has tools to save the economy, she said. Economists at Deutsche Bank called his testimony "potentially one of the most significant [events] in terms of market impact".
Stocks up as Bernanke says recession to end in '09 Federal Reserve Chairman Ben Bernanke has steadied Wall Street by telling Congress the recession would end this year. Bernanke, making his semiannual report to the Senate Banking Committee, said the economy is likely to keep contracting in the first six months of 2009 — hardly a surprise to Wall Street. But he also said the recession will end this year and that he would use all available tools to help end it. Bernanke's comments helped the market absorb a worrisome report on consumer spending. The Conference Board's consumer confidence index for February came in at 25, well below expectations. The finding is the latest sign that consumers are deeply worried about the recession and the safety of their jobs.
Why US and IMF want to dump gold onto market A Golden Sword of Damocles? . . . . It’s true – the United States and the IMF (International Monetary Fund) have a lot of gold in reserve. Some of you fear a good chunk of that gold could be dumped on the market, acting as a sharp break to the yellow metal’s rise. Let’s start by asking the question, just how much gold do these guys have? The World Gold Council regularly updates the stats on official holdings of central bank reserves. According to December 2008 data from the WGC, the U.S. holds 8,133.5 tonnes (metric tons) of gold. The IMF holds 3,217.3 tonnes. When you do the math, that adds up to 11,350.8 metric tons (tonnes), or 12,512 short tons, of gold. Converted to ounces at $1,000 per ounce, that’s a touch over $400 billion bucks worth of bullion. Does this count as a lot? Yes and no.
Ron Paul & Glenn Beck - "International Governments - Global New Deal" 2/24/2009
FDIC: 'Stress Test' Will Determine Banks' Health The head of the Federal Deposit Insurance Corp. said Tuesday additional government steps to shore up the shaky financial system will hinge in part on a test to determine how the largest banks would fare in an even weaker economy. Chairman Sheila Bair cautioned at the same time against rushing to a judgment that Washington intends to take over the industry, saying, "I think there's ambiguity in the word 'nationalization.' " "I think that is something that would be surprising," she said. White House press secretary Robert Gibbs said the Obama administration is "going to help banks get through this crisis, but nobody imagines nationalizing banks." Bair said that a "stress test" for some 20 of the largest banks this week will help federal policymakers "what type of additional capital investments the government may need to make."
Treasury, Citigroup debate control Nationalization fears hit stocks The federal government is negotiating a deal with Citigroup that may expand its ownership share to the point that it effectively nationalizes the nation's third-largest bank. The Treasury and bank regulators sought to reassure investors Monday by pledging to stand behind Citi and other major banks, outlining a new strategy of allowing banks to convert Treasury's preferred stock in the banks to common shares. The move boosts bank capital without having to invest more taxpayer money, but also gives the government substantial ownership of the firms - raising the specter of nationalization.
"Nationalization" of Citi and BofA Inevitable in '09 In the past few months, an increasing number of economists have become convinced that the best "fix" for the banking system is a government takeover and restructuring of companies like Citigroup. And some voices in the government are finally supporting this idea. Over the weekend, Senator Lindsey Graham said he thought "nationalization" has to be considered, because he doesn't want to throw good money after bad. What would this mean, exactly? The government running our banks for the next decade? No, says our guest Chris Whalen of Institutional Risk Analytics. "Nationalization" is a poor word to describe the process. "Receivership and restructuring," along the lines of what the FDIC did with WaMu, is the right way to think about it.
U.S. Clears Path to Bank Takeovers Obama's Revised Plan for Industry Aid Could Result in Nationalization The Obama administration yesterday revamped the terms of its emergency aid to troubled financial firms, setting a course that could culminate with the government nationalizing some of the country's largest banks by taking a controlling ownership stake. Administration officials said the change, which allows banks to repay the government with common stock rather than cash, is intended to give banks more capital to withstand a continued deterioration of the economy, and not to nationalize the banking system. But in seeking to bolster investor confidence in troubled companies such as Citigroup, the government said it is willing to acquire large chunks of their shares. . The move is a significant gamble. The magnitude of the effort could underscore the severity of the crisis, further alarming investors. The government could also forego billions of dollars in dividend payments.
Gone in 60 Days: Citi and Bank of America Won’t Live to See May Citigroup and Bank of America won’t live to see May. The government will take them over within the next 60 days. The announcement may come as soon as tomorrow evening. . . . . We’re going to make another bold prediction. Bank of America and Citigroup won’t live to see May. The two banks will be nationalized in the coming weeks, and we think that the announcement can come as soon as tomorrow evening (Friday evenings are when major bank announcements and failures occur). The US government has already committed half a trillion dollars to these two firms which is more than 10 times the amount it would cost to buy and control both companies. The market doesn’t believe that $500 billion is enough to save these companies. All the kings horses and all the kings men can’t put humpty dumpty back together again.
Bank Nationalization Isn't the Answer Trust me. I've done this before. People who should know better have been speculating publicly that the government might need to nationalize our largest banks. This irresponsible chatter is causing tremendous turmoil in financial markets. The Obama administration needs to make clear immediately that nationalization -- government seizing control of ownership and operations of a company -- is not a viable option. Unlike the talking heads, I have actually nationalized a large bank. When I headed the Federal Deposit Insurance Corporation (FDIC) during the banking crisis of the 1980s, the FDIC recapitalized and took control of Continental Illinois Bank, which was then the country's seventh largest bank.
Nassim Taleb: Time to Nationalize US Banking System?
Treasury's strategy: 'What elephant?' At some point, the feds or the private sector will have to absorb banks' bad assets. If the administration keeps ignoring that fact, we can't move forward. I don't think it's worth spending a lot of time discussing the Treasury's not-ready-for-prime-time nonplan plan to fix the banks. Accounts have been nearly unanimous in concluding that what was promised to be "shock and awe" turned out to be nothing more than "aw shucks, we're confused." (Read Jon Markman's "Geithner's first test is a disaster" for one example.) Reckoning with the rotten assets One of these days, the mind-boggling mass of bad assets held by banks will have to be sold to the private sector at a price or, more likely, transferred to the government. However, the real sticking point continues to be discovering the prices at which these various assets can be sold. It looks as though the Treasury is unwilling (or unable) to acknowledge that elephant in the room, which is the first variable that must be solved for if we are to move forward.
Fed Chief Vows to Use Every Tool to Stem Crisis While the United States economy is likely to worsen significantly over the next year, the Federal Reserve is “committed to using all available tools” to stanch the financial crisis and unfreeze credit markets, the Fed chairman, Ben S. Bernanke, told the Senate Banking Committee on Tuesday. But he added that there is a risk that the economy could get even worse than recent forecasts. In the first leg of his twice-annual report to both houses of Congress on the state of the economy and the Fed’s actions, Mr. Bernanke painted a dire picture of the financial markets going forward, but assured the committee that government agencies were taking all necessary actions to thaw credit markets.
There's only one Cure for a Depression In contrast with a depression, a recession is relatively easy to bring to an end. The genesis of a recession is caused by excessive credit creation on the part of banks and the Fed. The superfluous money drives prices higher and the rate of inflation begins to increase at a pace that makes the Fed uncomfortable. The Central bank then begins to raise rates in order to soak up that liquidity and put an end to its easy monetary policy. The higher interest rates serve to choke off consumer borrowing and the amount of money in the system compared to the total availability of goods and services becomes reduced. Any inflation that was in the economy gets squeezed out. Once prices return to a favorable level, the Fed begins to reduce rates again and the boom bust cycle repeats. That's the playbook response to a minor reduction in GDP. However, the only cure for a depression is time. Not the abrogation of the free market. The seeds of a depression are sown when an extreme over supply of money and credit is allowed to continue for a protracted period of time. When this phenomenon occurs, it produces a pernicious level of debt to pervade throughout the economy.
The long and the short of it "The great boom that the world is enjoying, is in effect an enormous shorting of cash and going long on debt. Eventually, there will be a short squeeze on cash which will have to be covered by going long on cash and shorting debt." This appears to be a succinct description of events we are now seeing. A tenet of the Austrian School of Economics holds that all human action involves choosing. I am indebted to Professor Antal E. Fekete for the insight that choice involves going long what we choose and giving up - shorting - what we give in exchange. The US consumer has been shorting cash for decades. The very low, sometimes negative savings rate has shown that Americans have not wanted to accumulate cash. Americans did not want to go long on cash, they wanted to short it. They went long on houses to live in, houses to speculate with, boats to have fun with, new cars, extra cars, ocean cruises. They also went long on stocks - now selling for 50% of their value in October 2007.
This Isn't Socialism We Are Heading To, But It May Very Well Be the Other 20th Century "ism" Under socialism the means of production come under control of the state. De jure ownership resides with the government, de facto ownership resides with the public officials who control access. The reality of economic life under state socialism is one of attenuated property rights, where control rights are in the hands of state officials, but above ground cash flow rights are cut off. What we saw in operation under such a system is that those who possessed control rights used that position to their best ability to generate cash flow rights which were hidden from official view. This is one of the reasons why post-communist privatization was more difficult in practice than on paper --- the existing status quo of "ownership" rights was rarely taken into account in the grand designs.
Spending bill stuffed with earmarks President Obama on Monday vowed to reel in wasteful Washington spending and blasted deceptive "accounting tricks" used by the Bush administration to fund the Iraq war even as House Democrats released a $410 billion stopgap spending bill studded with thousands of pork-barrel projects. The 1,000-plus-page spending bill provides a fat target for deficit hawks. It includes hundreds of pages of earmarks - pet spending projects inserted by lawmakers, ranging from $185,000 for coral reef research and preservation in Maui County, Hawaii, to $55,000 in meteorological equipment for Pierce College in Woodland Hills, Calif., to $9.9 million for science enhancement at historically black colleges in South Carolina.
Suspend 'Mark-to-Market' Accounting Rule? We've noticed some recent chatter about "mark-to-market." That's the 2-year-old accounting rule requiring companies to value an asset for its immediate sale price on the open market. The rule made sense following Enron, Worldcom and other scandalous debacles. It prevents companies from lying about what certain assets are worth. But now some folks claim the rule goes too far, forcing companies to write down the value of certain assets even though they could end up being worth something down the road. So why not suspend the rule?
AIG's Distress: Are There Enough Fingers for This Dike? [AIG's plan to bleed the government dry] Management at AIG has calculated exactly how much money the Treasury and Fed will have access to after all of the TARP, financial stimulus, and mortgage bailout projects have been funded. The insurance company then plans to ask for whatever is left to fund its deficits so that it can stay in business, effectively making the federal government insolvent. According to CNBC, AIG is about to post another huge loss. "Sources close to the company said the loss will be near $60 billion due to writedowns on a variety of assets including commercial real estate." The financial channel also reports that the need for capital may be so great that AIG might have to enter Chapter 11, something the government has spent over $130 billion trying to prevent. Just like Detroit, Bank of America, and Citigroup, AIG is playing a game of chicken with Washington that the government does not feel it can afford to lose.
Analysts Using Credit Default Swaps to Predict Currency Movements High-level currency traders - such as analysts at Citigroup and Bank of Tokyo-Mitsubishi - are using credit default swaps to analyze the trend of currencies. Specifically, according to an article in Bloomberg, many traders believe that the level of higher credit default swaps against a given country, the worse that nation's currency will do.
Oil Primed for Quick Climb, But Don't Fantasize About Return to 2008 Highs If any market qualifies as rockier than equities, consider oil. Crude prices have done a complete roundtrip from $40 a barrel, up to $147/barrel last summer, only to tumble back down to today's levels under $40/barrel. So what exactly happened? As our guest James Cordier, president of Liberty Trading Group, explains, oil's recent adventure was the result of a "perfect storm" of many factors.
Global demand was rising, along with hedge fund speculation.
The dollar was falling, boosting all dollar-denominated commodities.
China and other major oil consumers were providing fuel-price subsidies that propped up demand.
But by the summer of 2008, when those subsidies were removed and the global economy sputtered, oil's unraveling began. So is the oil party over? Not exactly. Once the economy begins its recovery, expect oil prices to race up to the $60-$70/barrel levels, Cordier forecasts.
A Sharp Drop in Home Prices at End of Year Home prices in the United States plunged at the fastest pace on record in December, a sign that housing is likely to continue declining in the months ahead as the economy sinks deeper into recession. Single-family home values in 20 major metropolitan areas fell 18.5 percent in December compared with a year earlier, according to a data released Tuesday by Standard & Poor’s Case-Shiller home price index. Housing prices dropped 2.5 percent from November to December. Nationwide, housing prices in the last three months of 2008 sank to their lowest levels since the third quarter of 2003. Prices fell in all of the 20 cities surveyed by Case-Shiller, but the declines were starkest in Phoenix and Las Vegas as well as much of Florida and Southern California, where development has all but dried up.
Consumer confidence plummets to new low in Feb. Consumer confidence plummets to new low in Feb. as consumers grapple with massive layoffs Americans' already battered confidence in the economy went into free fall in February, sinking to new lows as consumers grow more fearful over massive job cuts and shrinking retirement accounts. The dismal news came just hours after major retailers including Target Corp., Home Depot and Macy's Inc. reported depressed fourth-quarter results as shoppers focus on necessities like food. And another widely watched index showed home prices tumbled by the sharpest annual rate on record in the fourth quarter and in December. The New York-based Conference Board said Tuesday that its Consumer Confidence Index, which was down slightly in January, plummeted more than 12 points in February to 25, from the revised 37.4 last month. That was well below the 35.5 level that economists surveyed by Thomson Reuters expected.
Socialized Medicine on the Installment Plan The withdrawal of Tom Daschle as President Obama's nominee for secretary of health and human services is generally viewed as a setback for the president's health care reform plans. Even so, the Obama administration is already well on its way toward putting the government in charge of our health care system. Less than two weeks into his administration, President Obama has already signed a massive expansion of the State Children's Health Insurance Program (SCHIP). The bill is ostensibly designed to provide health insurance to children from poor families. The language of the bill, however, will allow states to increase SCHIP income eligibility to 400 percent of the poverty level – amounting $83,000 for a family of four. Furthermore, the bill allows states to disregard some household expenses, like mortgages, in determining eligibility. Consequently, some families earning as much as $100,000 could receive government provided health insurance.
Pro-lifers Call HHS Candidate Sebelius “The Most Pro-Abortion Governor in the Country' Kansas Gov. Kathleen Sebelius (D), the leading candidate to head the U.S. Department of Health and Human Services, is “the most pro-abortion governor in the country,” according to pro-lifers. Sebelius, who is reportedly President Obama’s top choice for the position of HHS secretary, has often stirred controversy within Kansas due to her history of vetoing abortion legislation -- and her alleged connections with Wichita-based late-term abortionist George Tiller. “There’s absolutely no doubt that she is the most pro-abortion governor in the country,” said Cheryl Sullenger, senior policy analyst at Operation Rescue in Wichita.
U.S. May Set Greenhouse Gas Standard for Cars The Obama administration is considering establishing national rules for regulating greenhouse gas emissions for automobiles, according to White House officials, a move backed by both auto manufacturers and some environmentalists. For weeks, administration officials have been meeting with car companies as well as green groups and representatives from California -- which is awaiting word on whether it will receive a federal waiver to regulate greenhouse gas emissions from vehicles -- to try to broker a deal on the issue. On Sunday, Carol M. Browner, assistant to the president for energy and climate, said she and others backed the idea of a single standard for cars and trucks. "The hope across the administration is that we can have a unified national policy when it comes to cleaner vehicles," Browner said at the Western Governors' Association meeting in Washington.
Ghost Town: The Future of the American Economy? If you want to get rich, don’t waste your time mining gold; instead, mine the gold miners. A related truism is this: You can tell how rich the goldfields are by how rich the local businesses are. Is boom-town America on its way to becoming a dusty ghost town? Judging from business reports, America is no longer the land of golden opportunities, and the economy is drying up. How can you know ahead of time whether your bustling gold town is about to turn into an empty ghost town? Once upon a time, the Wall Street Journal used the term “barometric box” to describe the predictive nature of certain industries. This describes how “causes” in one industry lead to “effects” in all others. Roy Harris of cfo Magazine describes how watching these “barometric box” companies reveals the current health of the economy. Unfortunately, barometric box indicators say America should prepare for lean times ahead.
Nassim Nicholas Taleb - What is a "Black Swan?"
Why Aren't You Hearing About House Resolution 45 (HR 45)? "The Take America’s Guns” Bill! Here it comes! And most of you haven’t heard a word about it, now, have you? Why do you suppose that is, huh? Could it be that the Mainstream Media is so deeply in the tank for Obama? Or could it be their very own leftist agenda motivating them to keep the lid on this story? Do you suppose they think that if you learn about it (HR 45) you might get off you tired, lazy, butts and begin lobbying your Congressman/woman and Senators to stop this hellish piece of legislation? Methinks the correct answer is… all of the above! ? Put simply, the MsM DOESN’T WANT YOU TO HEAR ABOUT IT! ATTENTION all you Conservative BLOGGERS: if this story is to get out, to be disseminated to the American people, then you are going to have to do it. So, let’s be about it! OK, as an American you need to know exactly what this bill says and what it is proposing. We urge you to go to the official site if the US House of Representatives (for legislation), “THOMAS”, and read it, in its entirety, for yourself. You’ll find it HERE . Keep in mind: “Like the old saying goes...once they know where all the guns are, it will be easier to come take them....”
World's economies tumbling like dominoes Almost everybody now realizes how grave the crisis has become. But we won't be able to escape from this dark place until we understand how we got here. Lately, I have been struck by how bleak and black the newspapers have been in their coverage of the economy. Not that I've been surprised, but one can never know when events in the economy will coalesce into the news that causes the masses to realize how difficult the environment is. In reading the papers, it was obvious to me that it's becoming clear to everyone that "the next time down" is well under way, though the average person wouldn't call it that. 1980-82 versus now I was trying to remember the last time I had seen the economic news quite as ugly. For me, the 1980-82 period is the closest example I have lived through. Of course, it was quite a bit different.
Crisis Prompts Calls to Boost IMF Reserves Eastern Europe's Struggles May Test Fund's Capacit A looming financial crisis in Eastern Europe is fast depleting International Monetary Fund reserves, fueling tensions between the wealthy but cash-strapped countries that have traditionally controlled it and emerging economies that have the resources to shore it up. The faltering economies of Eastern Europe were on the minds of European leaders as they met in Berlin over the weekend. They called for doubling the IMF's resources, to $500 billion, to cope with crises spawned by the worldwide recession. Since last fall, the IMF has lent more than $30 billion to Hungary, Belarus, Latvia, Serbia and Ukraine. All have been hurt by collapsing demand for exports; foreign investors who have pulled back sharply, partly to cover losses at home; and falling currency values. And some may be coming back for more.
Prepare Yourself for Higher Gas Prices With the economy tumbling, joblessness rising, and the stock market at 11-year lows, about the only positive thing for Americans' pocketbooks lately has been (relatively) lower gas prices. But this too shall pass, according to James Cordier, president of Liberty Trading Group in Tampa. Corider, whose firm specializes in selling options on commodities, notes that while oil supplies are at a 16-year high, gasoline inventories are at a 5-year low. So when demand rises with the summer driving season - which he says it will even as many Americans opt for "staycations" - expect prices at the pump to rise 20-30 cents per gallon. If you're looking for a villain in this scenario, the refiners fit the bill; they have kept capacity idle in anticipation of the coming demand and hope to profit from the widening crack spread - or the difference in price between crude oil and refined products.
Mexican drug wars may cross into Ariz. Police warn lawmakers about cartel gunbattles Violence involving Mexican narcotics cartels threatens to bleed across the border into Arizona and other states already coping with an epidemic of drug-related murders and kidnappings, law-enforcement officials told an Arizona Senate subcommittee on Monday. During their testimony, the experts described recent gunbattles just south of the border where Mexican gangs fought rival cartels as well as police, blasting away with machine guns and lobbing hand grenades. "This is organized crime," said Arizona Attorney General Terry Goddard. "The enemy we are combating is extremely well organized, extremely disciplined and extremely well trained." Goddard joined federal, state and local police leaders in a state Judiciary Committee session convened to evaluate the effects and perils of border-related violence.
Calif. lawmaker introduces bill to legalize pot A state legislator is reviving the debate about legalizing marijuana as a way of raising money for cash-strapped state and local governments. Assemblyman Tom Ammiano, a San Francisco Democrat, introduced a bill Monday that if approved by the California Legislature would put pot on the same legal footing as alcohol. Adults over the age of 21 would be allowed to buy it, and driving under the influence of marijuana would be prohibited. Under Ammiano's proposal, which has been endorsed by some law enforcement officials, pot would be taxed at a rate of $50 per ounce and bring an estimated $1 billion into state coffers. In 1996, California became the first state to legalize medical marijuana.
Ammiano wants to make marijuana legal in state California would become the first state in the nation to legalize marijuana for recreational use under a bill introduced Monday by Assemblyman Tom Ammiano of San Francisco. The proposal would regulate marijuana like alcohol, with people over 21 years old allowed to grow, buy, sell and possess cannabis - all of which is barred by federal law. Ammiano, a Democrat in his third month as a state lawmaker, said taxes and other fees associated with regulation could put more than a billion dollars a year into state coffers at a time when revenues continue to decline. He said he thinks the federal government could soften its stance on marijuana under the Obama administration. "We could in fact have the political will to do something, and certainly in the meantime this is a public policy call and I think it's worth the discussion," Ammiano said. "I think the outcome would be very healthy for California and California's economy."
Mexican drug gangs wage war VILLA AHUMADA, Mexico — It was 3 a.m. when Griselda Munoz says she got the first terrifying phone call: "Mom, there are people all over, and they're shooting!" A convoy of gunmen had invaded the ranch where her son, Jorge Marrufo, 32, was working. As shots crackled in the background, he told her he was running into the desert to hide in the sagebrush. Before dawn, another call: "If anything happens to me, tell my kids I love them." Later that day, Munoz found her son at a morgue with his skull caved in and four bullet holes in his chest. He was among 21 people killed Feb. 10 in this town near the U.S. border after drug gangs abducted several men, then fought a massive running gunbattle with the Mexican army — one of the bloodiest episodes yet in Mexico's war on drugs.
Drug violence spins Mexico toward 'civil war' A shootout in a border city that leaves five alleged drug traffickers sprawled dead on the street and seven police wounded. A police chief and his bodyguards gunned down outside his house in another border city. Four bridges into the United States shut down by protesters who want the military out of their towns and who officials say are backed by narcotraffickers. That was Mexico on Tuesday. What is most remarkable is that it was not much different from Monday or Sunday or any day in the past few years. Mexico, a country with a nearly 2,000-mile border with the United States, is undergoing a horrifying wave of violence that some are likening to a civil war. Drug traffickers battle fiercely with each other and Mexican authorities. The homicide rate reached a record level in 2008 and indications are that the carnage could be exceeded this year.
Mexico needs Obama's eye With a full plate ranging from war to recession, a new president might want to avoid Mexico. Topping the reasons are the minefield of immigration policy, a raging drug war, and free-trade frictions. But President Obama can't afford to dodge a foreign-policy challenge on his southern doorstep. Mexico is the latest and most sweeping test of the "too big to fail" imperative as White House policymakers try to steady a shaky world. Mexico is hardly in the same dire shape as the auto or banking industries. But it has problems that light up the worry-meter. These issues can't be solved on one side of the border alone. The situation requires a steady, unswerving partnership that both countries have not yet forged.
Liberals Mobilize Against Obama’s Afghanistan Plan President Barack Obama’s plan to send an additional 17,000 troops to Afghanistan is stirring opposition from anti-war activists, many of whom voted for Obama. And House Speaker Nancy Pelosi, who recently made a stop in Afghanistan, said on Monday that members of Congress returned with “many questions” for the Obama administration. In an interview with Fox News’s Alan Colmes on Monday, Bill Ayers – a former member of the Weather Underground and an early Obama supporter – called Obama’s called for additional troops a “colossal mistake.” “I fear that this brilliant young man, this hopeful new administration, could easily burn their prospect of a great presidency in the war in Afghanistan or elsewhere,” Ayers said.
Jailed Billionaires Show New Face of China as Markets Unravel If China’s richest man knew he was about to become the most prominent casualty of the country’s love-hate relationship with capitalism, he didn’t show it this past August. Huang Guangyu, a peasant’s son who became a billionaire by building Gome Electrical Appliances Holding Ltd. from scratch, outlined plans for continued expansion of the 800-store appliance chain. He told the board members gathered in the company’s mauve- carpeted executive offices 61 floors above Hong Kong’s Victoria Harbor that Gome’s profit had tripled in the first half of 2008 from a year earlier. The directors lunched on Cantonese dishes ordered in from Man Wah, one of the city’s ritziest restaurants. “It was a very pleasant, chatty meeting,” says Mark Greaves, 51, chief executive officer of London-based investment bank Hanson Capital, who is one of the company’s two non-Chinese directors. “Mr. Huang talked about his crusade to take Gome to all corners of China.”
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Taleb Says Crisis Is Harder to End Than Depression The financial crisis will be harder to end than the Great Depression and may force banks to be nationalized, “Black Swan” author Nassim Nicholas Taleb said. A more complex financial system makes the current problems, which cut global stock market value by 55 percent to $28 trillion since October 2007, worse than the contraction in the 1930s, Taleb said in a Bloomberg Television interview today. Bonuses paid on Wall Street encouraged risk taking with no regard for losses, he added. Rare and unforeseen events are known as “black swans,” after Taleb’s 2007 book, “The Black Swan: The Impact of the Highly Improbable.” The financial crisis isn’t one, he said. Watch his Bloomberg video (or click on VIDEO tab)
Commodities Outlook - Gold's Melting Value - Bloomberg
AIG in talks with Fed over another bail-out AIG is in talks with the US government over a new bail-out aimed at giving the stricken insurer, which is already 80 per cent-owned by the authorities, fresh capital to absorb an expected fourth-quarter loss and more time to sell assets. People close to the situation said AIG could announce the new rescue plan as early as next week, together with fourth-quarter results that are likely to show a loss bigger than the $24.5bn reported in the previous three months. A new bail-out of AIG would be the third time in five months that the US taxpayers have come to the rescue of a company that was once a global insurance powerhouse and is now fighting for its survival.
Beware doomsayers, gold may hit $6,000/oz! YES, gold futures closed in New York on Friday at $1002.20 an ounce. So, talk about the gold bubble bursting can’t be far away. The world has started speculating heavily on the gold bubble, which, according to some analysts, will burst very soon. But reality is far from that. Do you know the present gold prices are far from what it was in 1980. And definitely gold will have to reach its inflation adjusted 1980 high of $2,400/oz before it can come down. In fact, it is currently less than half the value that it was in 1980. There cannot be a bubble in an asset class unless it rises to all time inflation adjusted highs and often times asset bubbles result in prices of multiples of their previous record highs.
Silver: Potential safe haven like Gold It is time investors look closely at the white metal and give it its rightful place as a safe haven. Some very significant aspects of Silver have come forth in these trying times. As we mentioned in our earlier reports about Silver’s ability to race ahead Gold in a rally but drop faster than a brick when the market turns, losing more than it had gained and eventually losing much more than Gold. Its higher lows and lower highs have proven this time and again.
**Fixing the Banking System - Bloomberg 2.23.2009 Time to Nationalize Banks? A "Bad Bank" for Toxic Assets? What is the FDIC's Role? - Roundtable Discussion with Josh Rosner of Graham Fisher & Co., Catherine Mann of Brandeis International Business School, and Mark Sunshine of First Capital
Timothy Geithner, the man who will run Obama's economic team, is a basketball playing 'pressure junkie' Barack Obama will this weekend hand the levers of the US economy to a pressure junkie who shares his love of basketball. He has revealed details of his economic team - who will be in charge of America's response to the greatest financial crisis for 80 years - in an attempt to boost confidence in his ability to tackle his gravest problem on taking office next month. Democratic sources have told The Sunday Telegraph that the President-Elect is disgruntled with the failure of Congress or the Bush administration to act quickly to tackle the continuing turmoil in the markets. Mr Obama's transition team on Friday night leaked that Timothy Geithner, the chairman of the New York branch of the Federal Reserve is a sure bet to become Treasury Secretary.
Auto team drives imports Fed task force has few new U.S. cars . . . . The co-chairs of the task force -- Treasury Secretary Timothy F. Geithner and White House National Economic Council Director Lawrence Summers -- both own foreign automobiles. Geithner owns a 2008 Acura TSX, registered in New York. He once owned a 1999 Honda Accord and a 2002 Acura MDX, according to public records. Geithner is the president's designee for purposes of enforcing loan agreements with GM and Chrysler and must approve or reject any proposed transactions by either company that would cost $100 million or more. His maternal grandfather, Charles Moore, was a vice president at Ford Motor Co. from 1952-63, according to Peter Geithner, the secretary's father. But Geithner wasn't very interested in cars growing up -- in part because he graduated from high school in Asia, his father said.
SP 500 Still Overvalued by 46% as Dividends Plummet at Record Pace We have not reached a sustainable bottom yet in US equity prices despite the infomercials and chief strategist's exhortations to buy them while they are cheap on the financial news channels. Stocks are valued based on their returns, and those returns are based on real cash flow and profits paid out to shareholders as dividends or stock buybacks to boost share prices. For too many years US companies have essentially robbed Peter to pay Paul, servicing short term profits by offshoring US jobs, manipulating their balance sheets, and appropriating the savings of the world through the US reserve currency mechanism.
China’s record demand for Treasuries (and all US assets) in 2008 . . . . China has now released data on the PBoC’s other foreign assets (what I have called China’s hidden reserves) for December. The US TIC data for December is now out at as well. The two together permit us to paint a reasonably comprehensive picture of Chinese demand for US financial assets in 2008. This post updates the estimates of China’s true demand for US assets laid out in my paper with Arpana Pandey.* It consequently touches on the central subject of Geoff Dyer’s FT analysis piece, namely the scale of China’s holdings of US assets and China’s willingness to continue to add to its US portfolio.
Bear Market's Bite Could Go Deeper Dow at 6-Year Low, but Analysts Say More Pain Lies Ahead With the Dow Jones industrial average plunging past its lowest point since the financial crisis began, panicked investors are asking: How much uglier can it get? Many market analysts and technicians armed with reams of historical data say that even though the Dow has given back all its gains -- and more -- from the five-year bull market that ended in 2007, it is unlikely the market has hit bottom. Mark Arbeter, chief technical strategist at Standard & Poor's Equity Research, said the current market environment is showing few of the signs that have characterized previous lows -- high price volatility, high volumes of trading and even higher levels of fear.
Dow, S&P Slip To 1997 Levels Investors Still Wary of Recovery Plans Stock markets tumbled to 12-year lows yesterday as new details of the government's plan to shore up ailing banks failed to quell investors' fears of a long and difficult recovery. The Dow Jones industrial average closed down 250.89, or 3.4 percent, to 7114.78 -- a level not seen since the bull market of 1997. The Standard & Poor's 500-stock index dropped 26.72, or 3.5 percent, to 743.33, another 1997 level. And the tech-heavy Nasdaq composite index fell 53.51, or 3.7 percent, to 1387.72. "Basically, it's a disaster," said David Dietze, chief investment strategist at Point View Financial Services. "There's much more pain ahead."
Treasury, Citigroup discuss partial takeover Nationalization fears hit stocks The federal government is negotiating a deal with Citigroup that may expand its ownership share to the point that it effectively nationalizes the nation's third-largest bank. The Treasury and bank regulators sought to reassure investors Monday by pledging to stand behind Citi and other major banks, outlining a new strategy of allowing banks to convert Treasury's preferred stock in the banks to common shares. The move boosts bank capital without having to invest more taxpayer money, but also gives the government substantial ownership of the firms - raising the specter of nationalization.
Controlling the Banks - Bloomberg Bank Nationalization - Interview with Former New York State Bank Superintendent Elizabeth McCaul, Now of Promontory Financial Group (Bloomberg News) 2.23.2009
A Third Rescue Would Give Washington a 40% Stake in Citigroup Inside Citigroup headquarters, everyone is buzzing about the N-word. Nationalization, at least a partial one, seems inevitable for the troubled financial giant. As Washington prepares to tighten its grip on the struggling company, the implications - for Citigroup and the rest of the financial industry - are starting to sink in. Under a plan federal regulators were discussing on Monday, the government may end up owning as much as 40 percent of Citigroup, which has already grabbed two multibillion-dollar lifelines from Washington.
Nation faces enormous fiscal obstacles Agency reports warn nation must tackle challenges "A billion here, a billion there - pretty soon it adds up to real money," Sen. Everett Dirksen famously observed. Mr. Dirksen, the late Republican fiscal conservative, held the Illinois Senate seat Barack Obama later occupied. To meet the standards of Monday's "fiscal responsibility summit" Mr. Obama hosted at the White House, Mr. Dirksen's quip would have to be adjusted by several orders of magnitude. Even "a trillion here, a trillion there" would not suffice.
Citi Seeking More Federal Aid Another Round of Help May Not Require Taxpayer Money Citigroup executives have approached federal regulators to discuss steps the government could take to strengthen the troubled company, according to two people familiar with the matter. The giant New York bank is under mounting pressure to convince investors that it can survive its financial problems. The government already has invested $45 billion in Citigroup and promised to limit its losses on a portfolio of more than $300 billion of loans and other troubled assets. But investors remain nonplussed, and the company's stock price has dropped 71 percent this year.
In Latest Plan for Banks, U.S. Could Demand Voting Stake The Obama administration put the nation's biggest banks on notice Monday that the government could become their biggest shareholder if regulators decide they are not strong enough to weather a deeper-than-expected downturn in the economy. In an unexpectedly assertive joint statement, the Treasury Department, Federal Reserve and federal bank regulatory agencies announced that the government might end up demanding a direct ownership stake in major banks after they undergo a tough evaluation of their strength, which is to begin shortly.
Bank stress tests to start Wednesday Federal regulators said Monday they plan to start evaluating the needs of major banks on Wednesday and served notice that the U.S. government "stands firmly behind the banking system" during the current financial crisis. They said they will ensure that the banks have the money and liquidity necessary to restore economic growth as part of a Capital Assistance Program that is to begin with an evaluation of the banks.
Stimulus Package Earmarks & Pork - The Today Show/NBC News Investigation Exposes pet projects such as . . . a high speed magnetic levitation rail line from Las Vegas to Disneyland
U.S. Pledges Capital for Banks as Stress Tests Begin U.S. financial regulators pledged to inject additional funds into the nation's major banks to prevent their collapse and will this week begin examinations to determine whether they have enough capital. Banks that cannot privately raise the additional capital they need after the so-called stress tests will get taxpayer money, regulators said in a statement in Washington. Government funds would be in the form of "mandatory convertible preferred shares" that would be exchanged into common equity "only as needed over time." Stakes the Treasury has already bought will be eligible to be changed to convertible preferred shares.
JPMorgan Cuts Dividend 87 Percent to 5 Cents a Share JPMorgan Chase & Co., the second- largest U.S. bank, slashed its dividend by 87 percent to 5 cents and said it plans to maintain that level "for the time being." The bank and its predecessors haven't cut the dividend since 1990. The move aims to protect the bank even if the economy deteriorates "significantly," Chief Executive Officer Jamie Dimon said in a statement today. It isn't "directly related" to the $25 billion that JPMorgan received under the government's Troubled Asset Relief Program, or TARP, Dimon said.
U.S. to provide 'capital buffer' as needed for banks Government reiterates position that banks must 'remain in private hands' As part of the latest efforts by regulators to thwart concerns that some banks need to be nationalized, U.S. regulators vowed Monday to provide a "temporary capital buffer" to financial institutions that fail a planned stress test and are unable to secure help from private sources. "The government will ensure that banks have the capital and liquidity they need to provide the credit necessary to restore economic growth," regulators from various agencies said in a joint statement. Shares of major banking institutions surged after the statement, in which the Treasury, Federal Reserve and other bank regulators asserted that no "systemically important" financial institution will be allowed to fail.
On Transparency of the Fed by Ron Paul This week the Federal Reserve responded to the American people's increased concerns over our monetary policy by presenting new initiatives aimed at enhancing the Fed's transparency and accountability. As someone who has called for more openness from the Fed for over 30 years, I was pleased to see the Fed acknowledge the legitimacy of this need. The Federal Reserve controls the flow of money and credit in our economy because Congress has abdicated its responsibility over the nation's currency. This process therefore occurs centrally, and almost completely outside the system of checks and balances. Because of legal tender laws, people are left with no real choice, except to build their lives and futures around this monopoly currency, vulnerable to powerful central bankers. The Founding Fathers intended only gold and silver to be used as currency, however, inch by inch over the decades, this country has backed away from this important restraint. Our money today has no link whatsoever to gold or silver. For many reasons, this is extremely dangerous, and has a lot to do with the boom and bust cycles that have resulted in the crisis in which we find ourselves today.
U.S. Pressed to Add Billions to Bailouts The government faced mounting pressure on Monday to put billions more in some of the nation's biggest banks, two of the biggest automakers and the biggest insurance company, despite the billions it has already committed to rescuing them. The government's boldest rescue to date, its $150 billion commitment for the insurance giant American International Group, is foundering. A.I.G. indicated on Monday it was now negotiating for tens of billions of dollars in additional assistance as losses have mounted.
Nouriel Roubini - Outlook for Government on Facing Global Economic Crisis - Bloomberg 2.20.2009 Analysis and Discussion with Roubini Global Economics Chairman and Economic Professor at NYU Stern School of Business Nouriel Roubini (Starting Bell)
Obama Vows to Cut Federal Deficit in Half by End of First Term [commnet: yesterday he vowed to cut deficit by two-thirds in first term!] States to Start Getting Funds to Cover Medicaid Costs Wednesday; Biden to Oversee Stimulus's Implementation President Obama launched a bipartisan effort today to restore fiscal discipline to the nation, pledging to cut the budget deficit in half in four years and reinstate pay-as-you-go rules to prevent the government from spending money it does not have. At the end of an extraordinary "fiscal responsibility summit," he called on a broad cross-section of Democratic and Republican lawmakers, independent experts, business leaders and advocates to help the administration move toward tough decisions on reforming Social Security, health care, the tax code, the budget process and federal procurement. And he announced that the White House will hold a "health care summit" next week in an effort to capitalize on momentum for change.
Paul Krugman: The econoclast The New York Times columnist and Princeton professor is in his policy-influencing prime, and has become one of the highest-profile advocates of bank nationalization. Paul Krugman couldn't help but do a victory dance last week when none other than Alan Greenspan, a most-ardent defender of laissez-faire capitalism, acknowledged that several big U.S. banks would probably have to be nationalized. "Comrade Greenspan: Seize the economy's commanding heights!" Mr. Krugman crowed on his blog ( http://krugman.blogs.nytimes.com ).
Entitlements on the back of an envelope Today’s “fiscal responsibility” summit, which was originally much feared as a Trojan Horse for Social Security cuts, has apparently been downgraded into relative obscurity. But I thought it might nonetheless be worth talking briefly about the math of the entitlements issue. Usually this is done with fairly elaborate projections, but I think the essence can be explained with a back-of-the-envelope calculation. So here goes. Right now, the federal government spends about 9 percent of GDP on the three biggies, Social Security, Medicare and Medicaid, with the total roughly evenly divided between retirement and medical care.
Dick Armey discusses Senate economic plan
Obama Picks Nation's First Chinese-American Governor for Commerce Secretary Official: Obama Likely to Name Locke to Commerce A senior administration official says that President Barack Obama's likely third pick for Commerce secretary is former Washington Gov. Gary Locke. The official spoke on condition of anonymity because the announcement has not yet been made. Locke was the nation's first Chinese-American governor when he served two terms in the Washington statehouse from 1997 to 2005. Obama's expected choice of Locke arose less than two weeks after his most recent pick, Republican Sen. Judd Gregg of New Hampshire, backed out.
Microsoft to Ask Laid-Off Workers to Return Portion of Severance Pay A few weeks after launching the first wide-scale layoffs in its history, Microsoft Corp. admits it screwed up a key part of the plan. The company is asking some laid-off employees for a portion of their severance back, saying an administrative glitch caused the software maker to pay them too much. Lou Gellos, a Microsoft spokesman, would not say how many of the 1,400 workers let go in January were overpaid, or by how much. Microsoft has said severance would be calculated by length of service and position in the company. The Redmond, Wash.-based software maker is asking former employees for reimbursement, by check or money order, within two weeks, according to a redacted letter posted by the technology blog TechCrunch. Gellos confirmed the letter's authenticity.
Forecasters see higher unemployment in 2009 Brace yourself: The recession is projected to worsen this year. The country stands to lose a sizable chunk of economic activity in 2009 as consumers at home and abroad retrench in the face of persistent economic troubles. And the U.S. unemployment rate - now at 7.6 percent, the highest in more than 16 years - is expected hit a peak of 9 percent this year. That gloomy outlook came from leading forecasters in the latest survey by the National Association for Business Economics to be released Monday. The new estimates are roughly in line with other recent projections, including those released last week by the Federal Reserve. "The steady drumbeat of weak economic and financial market data have made business economists decidedly more pessimistic on the economic outlook for the next several quarters," said NABE president Chris Varvares, head of Macroeconomic Advisers.
World Of Trouble How the mortgage industry destroyed itself. Three years before the housing market crash, Paul Bishop says he warned his superiors at World Savings that many of the mortgages they were granting were misleading and predatory.
Mortgage Whistleblower World Savings whistleblower Paul Bishop spoke with Harry Smith about when he first noticed the company was taking on unstable loans.
Elderly Emerge as a New Class of Workers -- and the Jobless Mary Appleby, 76 years old, lost her job in January as a cashier at a courthouse cafeteria here. She is now looking for minimum-wage work. Mary Bennett, 80, began filling out applications for fast-food restaurants and convenience stores after she was laid off last March as a machinist. Fred Dase, 81, a bartender until last summer, also needs another job. During past recessions, older workers simply would have retired rather than searching want ads and applying for jobs. But these days, with outstanding mortgages, bank loans and high medical bills, many of them can't afford to be out of work. With jobs so scarce, people in their seventh and eighth decades are up against those half their age in a desperate scramble for work.
China's dollar dilemma The flotation of Blackstone in June 2007 has already gone down as one of the symbolic events in America's financial bubble - the end-of-an-era deal when some of Wall Street's savviest insiders decided to cash out. Yet the listing of the private equity group could also be the turning point in another chapter of financial history; one that will shape the world that emerges from the current crisis: the moment when China really began to question its deep financial entanglement with the US.
Will Germany deliver on the Faustian bargain that created monetary union? If Der Spiegel is correct, the German finance ministry is drafting rescue plans to prevent default on the edges of the eurozone leading to a full-blown collapse of Europe's monetary system. This is an entirely appropriate policy in economic terms. One dreads to think what would happen if the world's twin reserve currency were to disintegrate at this stage. But what about the solemn pledge to voters by Germany's political elites – promiscuously given over the years – that monetary union would never leave them on the hook for the debts of half Europe? The vast imbalances that have been allowed to build up under the seductive protection of EMU leave German taxpayers facing bail-out liabilities that exceed the cost of reparations after the First World War, in proportional terms. The political ground has not been prepared for this. EMU was foisted on the German people without a referendum, in the face of deep public scepticism and scathing criticisms by the professoriat. This failure to secure a mandate for such a revolutionary undertaking is coming back to haunt them.
Beer sales: Economic indicator 101 So the Dow hit a low unseen since 1997 today, but the real economic indicator of the recession at hand may lie in another measure: "There has generally not been much of a relationship between alcohol purchases and changes in GDP -- the correlation is essentially zero,'' the good analytical folks at fivethirtyeight.com -- "politics done right'' -- note. "But something was very, very different in the fourth quarter of 2008,'' they report. "Sales of alcohol for off-premises consumption were down by 9.3 percent from the previous quarter, according to the Commerce Department. "This is absolutely unprecedented: the largest previous drop had been just 3.7 percent, between the third and fourth quarters of 1991. "Beer accounts for almost all of the decrease, with revenues off by almost 14 percent,'' they add.
Stimulus Watch - Projects by state StimulusWatch.org was built to help the new administration keep its pledge to invest stimulus money smartly, and to hold public officials to account for the taxpayer money they spend. We do this by allowing you, citizens around the country with local knowledge about the proposed "shovel-ready" projects in your city, to find, discuss and rate those projects. These projects are not part of the stimulus bill. They are candidates for funding by federal grant programs once the bill passes.
As It Falters, Eastern Europe Raises Risks Since the fall of the Berlin Wall, the countries of Eastern Europe have emerged as critical allies of the United States in the region, embracing American-style capitalism and borrowing heavily from Western European banks to finance their rise. Now the bill is coming due. The development boom that turned Poland, Hungary and other former Soviet satellites into some of Europe’s hottest markets is on the verge of going bust, raising worrisome new risks for the global financial system that may ricochet back to the United States. Last week, Wall Street plunged after Moody’s Investors Service warned that Western banks that had recently beat a path to Eastern Europe’s doorstep now faced “hard landings,” spooking investors with new fears that the exposure could spread beyond Europe’s shores.
A Crisis Is Separating Eastern Europe’s Strong From Its Weak PRAGUE — The owner of some of the Czech capital’s chic restaurants unveiled a novel approach this week to lure business clients to one of his upscale dining rooms: let diners pay what they like. The owner, Sanjiv Suri, hopes executives will not want to appear cheap to their guests when presented with a blank check after dining at the lunch buffet, laden with grilled vegetables instead of foie gras. Even if they pay nothing, he added, they will almost certainly return as paying customers. “During an economic crisis you need to be creative,” said Mr. Suri, sipping pinot noir in a half-empty dining room.
Don't miss this one - it will come back to "bite US" . . . Obama Issues Questionable Executive Order to Close Guantanamo Bay Newly minted president Barack Obama issues an executive order to close the terrorist detention center at Guantanamo Bay, Cuba. This video questions the wisdom of such a move. True, there were cases where innocent people were being held there unjustly, but what about those who are known sympathizers of terrorist groups? What SHOULD be in place is a system where solid verification of these individuals' affiliations (if any) is confirmed.
Soros sees no bottom for world financial "collapse" Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis. Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union. He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.
Volcker Speaks on Economic Crisis - Bloomberg
Gold’s Assault On the Clueless We’ve been monitoring gold’s vital signs closely, since any foray above $1000 is cause for nervousness. The yellow stuff has always been free to roam, and even to misbehave, below that price; but once above it, the bankers regard each rally with a glower of malice. While it is indisputable that debt deflation’s irresistible power has rendered the central banks incapable of exerting any meaningful control over the sovereign economies they represent, the bankers and the IMF still have the ability to crush any hint of rebellion by those gold bulls who would deign to challenge the monetary status quo. With their relatively large stocks of physical gold, and the complicity of institutional agents such as JP Morgan to help suppress “paper gold” in futures markets, the bankers still have enough influence over bullion’s price to temporarily suspend the laws of supply and demand.
Gold Little Changed After Gain Over $1,000, Highest Since March Gold was little changed after rallying above $1,000 an ounce last week for the first time in almost a year as investors sought a haven from slumping equities. Gold for immediate delivery traded at $987.03 an ounce after reaching $1,006.29 on Feb. 20, the highest since March. The metal has soared 45 percent from an October low of $682.41 as investor confidence in financial assets eroded and central banks pumped trillions of dollars into the banking system.
Oil Trades Near $40 a Barrel on Concern Recession Will Deepen Crude oil traded near $40 a barrel in New York as traders weighed the risk of a deepening global recession against government measures to revive economic growth. The Organization of Petroleum Exporting Countries may make another production cut should oil prices continue to fall, Chakib Khelil, the Algerian oil minister and former OPEC president, said yesterday. The dollar fell on speculation the U.S. government will take larger stakes in the nation’s banks. “Crude really has been seeking direction from other markets,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc. in Singapore. “In the near term, the rather dismal macro-economic backdrop will put a lid on oil prices.”
Santelli's Chicago Tea Party: The Quest for Our Nation's Soul CNBC’s Rick Santelli's calls for a Chicago Tea Party (here) are patriotic, American, and on point. A Chicago Tea Party is what our rabble-rousing founding fathers envisioned, and I will be there this July 4. Santelli’s diatribe of genius, fury and heart had one quick quote that you may have missed. “Don’t get scared, Joe. They’re already scaring you.” We are being scared into a submission. It’s not “their” intention, but you know that road to hell. We cannot submit. We have not so utterly gone down this road. Our government started this race to bottom in the dark days of November, 2008. This was about the time I decided that Paper Is Dead.
Saving America: Time to hit the streets? Jim DeMint's gentlemanly air and refined tone belie a power and an urgency in his words. The stately senator from South Carolina sees America's unique centuries-old system of freedom dying out. And he thinks we may have to take to the streets to save it. "I would think it's time to start thinking about peaceful demonstrations," he told us last week. Seriously? "Seriously. "The power of the people is there. Freedom is in the people's hands right now, and it's about to slip through." Of course, the recent "stimulus" debate is what's fresh on DeMint's mind. Despite DeMint's putting 15 aides on it overnight, no one in Washington was able to read the bill, which was the most expensive in American history -- as well as being perhaps the most irresponsible. The worst since the adoption of the income tax, DeMint figures.
Alan Keyes: Stop Obama or U.S. will cease to exist!!!!
Peter Schiff: How He Would Fix America Apparently there is a movement to get doomsayer investor/libertarian Peter Schiff to run for the U.S.. Senate in Connecticut. And a website has gone up to draft him. Here is the Schiff agenda as the website outlines it: 1. Increase savings and production. . . 2. Vote no on all bailouts. . . 3. Allow the recession to run its course. . . 4. Let the free market operate. . . 5. Drastically cut federal spending. . . 6. Cut corporate and personal income taxes. . . 7. Minimize corporate regulation. . . 8. Restore the value of the US dollar. . .
Predatory Legislators With millions of homeowners now struggling to repay money they clearly never should have borrowed, our leaders have been righteously wagging fingers at predatory lenders who allegedly enticed innocent borrowers, and the country, into a financial snake pit. While the mortgage industry clearly deserves a good share of the blame, unindicted co-conspirators abound. The ringleaders are still at-large and are, in fact, busy hatching a plan to dwarf the earlier mistakes.
Roubini says crisis end distant (see video) Nouriel Roubini, one of the few economists who foretold much of the current financial turmoil, on his view that the banking and credit crisis is still far from over.
Third time lucky for gold - the ultimate money? As this article was commenced, the gold price was at $997 and seemingly inexorably headed towards breaching the US$1,000 level once again. Indeed by the time you read this it may well already have done so. April futures had already marginally gone through the $1,000 level. The big question is, assuming spot gold does push through $1,000, will this be third time lucky for the gold bugs? Gold has breached $1,000 twice beforehand and on each occasion its climb into the four figure level was shortlived. This time it may well be a different situation with the likelihood that the price is poised to go higher still - and maintain its position above $1,000 for some little time to come.
The Citigroup/Gold Ratio In 2001, an investor who wanted to exchange his gold bullion for Citigroup (C) shares was able to acquire about six shares of stock for each ounce of gold. With Citigroup closing just under $2.00 yesterday and gold above the $1000.00 mark, that same swap now entitles the holder of gold to about 514 Citigroup shares. The change in fortunes says much less about gold, which is almost 300% above the 2001 lows, than it does about Citigroup, which has fallen about 96% from an early 2007 high.
Decoding What Gold Is Telling Us Well, gold bugs around the world have been having a good chuckle of late, as the market is re-affirming the often eccentric and practically religious views of gold bugs: gold is up over 11% for the year in US dollars, and up over 4% over just the past five trading days. Which begs the question: why? There are a few possible answers to this question:
Deflation. This crisis is global, and everyone is flying to safe stores of wealth. Over the big picture of human history, gold has served as the best store of wealth -- and thus gold is rising. In many ways this is the classic "gold is money" argument, one typically championed by Austrian economists. Robert Blumen has offered an excellent explanation of this argument.
Inflation. Gold is typically a hedge against inflation concerns, and as the US federal government continues to aggressively "stimulate" the economy, the rally in gold may be a reflection of increased concerns regarding inflation.
So which one is it?
Cramer: Staggering Losses of Capital If you want revelations, go over the largest-cap companies right now vs. the ones that were the largest-cap last year at this time. The stocks, the losses, the changes, they are staggering. First, the aggregate: The largest 100 companies a year ago were worth $8 trillion; they're now worth $5 trillion. That's a lot of missing trillions. In the day-to-day drudgery and decline, they seem largely unaccounted for until you look at each line item.
Wall Street awaits Treasury details Increasingly skeptical investors await Treasury plan details, signs gov't efforts are working This week, Washington will get another chance to prove to Wall Street it means business. Investors are expecting details on the Treasury Department's plans to fix the financial industry. The questions they want answered: How the government will decide which banks are healthy enough to be saved, how their toxic assets will be priced and how officials will convince private investors to buy them.
Ron Paul on Real Time w/ Bill Maher 02/20/2009
DeMint: Don't 'censor' talk radio President Obama's effort to clear the air last week has failed to ease conservative fears that the White House and congressional Democrats are conspiring to dominate the airwaves. At issue is the "Fairness Doctrine," a rule that, from 1949 to 1987, mandated that broadcasters present contrasting views on controversial issues. Despite Mr. Obama's denials, leading conservative talk-show hosts and their allies in Congress warn that a plan is afoot to revive the rule in camouflaged form with a simple goal in mind: silencing conservative talk radio.
As Doubts Grow, U.S. Will Judge Banks’ Stability The Obama administration will begin taking a hard look at the financial condition of the country’s 20 biggest banks this week to judge whether they could hold up even if the downturn worsens further than policy makers already expect. These reviews of the banks’ books, known as “stress tests,” are heightening a dilemma for Obama aides about how candid they should be about the health of banks like Citigroup and Bank of America. The tests are expected to take several weeks. Bank shares were pummeled last week, partly because of rumors that the government might nationalize some of the banks. Officials consider many of the top 20 banks “too big to fail.”
U.S. Rejects Nationalization of Citi and BAC Just as the US equity market was in the process of a major breakdown over the issue of possible government takeover of Bank of America and Citigroup, the White House made some comments that appeared to reject the notion of nationalization, and there was a sudden market turnabout. After Bank of America CEO Ken Lewis stated his bank was profitable and did not need government aid, BAC shares moved higher by about +20% in minutes. By the end of the session, however, the broad market rally ran out of steam.
Bank rescue details key to stave off bears Bears could have the upper hand again this week if Wall Street fails to get assurance that major banks can be rescued without being seized by the U.S. government. The Dow breached a six-year low in the holiday-shortened week amid mounting fears that the White House would nationalize banks, thus wiping out shareholders. Stocks pared losses in the final hours of trading on Friday after the White House said it strongly believed in a privately held bank system.
Investigator to lead stimulus oversight Obama to name former Abramoff investigator to oversee $787B stimulus President Barack Obama plans to announce Monday a former Secret Service agent who helped expose lobbyists' corruption at the Interior Department as his pick to oversee the $787 billion economic stimulus plan. Obama is set to name Earl Devaney as chairman of the new Recovery Act Transparency and Accountability Board, an administration official said Sunday. Vice President Joe Biden also will be given a role coordinating oversight of stimulus spending. The official spoke on the condition of anonymity because the White House had not made public the announcement.
Conference in Financial Crisis - Bloomberg
Why Does Obama Think Stimulus Can Shock Economy Back to Life? It would be unfair to pounce all over Team Obama this early in their administration. After all, while the Democrats bear a lot of responsibility for the knee-deep toxic mess now covering the floor of the engine room, the bulk of the responsibility has to rest on the shrugging shoulders of Obama’s immediate predecessor and those that came before him. Early though it may be, however, it’s not too early to come right out and say what needs to be said: when it comes to the steps being taken to address the current crisis, Obama has no clothes.
The Great Depression has Arrived - Collapsing American Dreams “They're out there losing millions and it's up to me and you to come running to the rescue. Well pardon me if I don't shed a tear/they're selling make believe and we don't buy that here/cause in the real world they're shutting Detroit down, while the boss man takes his bonus pay and jets on out of town/DC's paying out the bankers as the farmers auction ground/while they're living it up on Wall Street in that New York City town, here in the real world they're shutting Detroit down.” My favorite line is – “the boss man takes his bonus pay and jets on out of town.” Wow! All these collapsed dreams! All the thousands of baby boomers with calloused hands looking at 50% reduced portfolios.
Jumbo Loan Defaults Rise at Fast Pace as Rich Suffer Luxury homeowners are falling behind on mortgage payments at the fastest pace in more than 15 years, a sign the U.S. financial crisis that began with the poorest Americans has reached the wealthiest. About 2.57 percent of prime borrowers who took out jumbo loans last year were at least 60 days delinquent, according to LPS Applied Analytics, a mortgage data service in Jacksonville, Florida. They got to that level within 10 months, almost twice as quickly as 2007 borrowers and the fastest rate since at least 1992, when LPS Applied Analytics began tracking the market.
Obama plan would cut deficit by two-thirds in first term After a string of costly bailout and stimulus measures, President Barack Obama will set a goal this week of cutting the annual deficit by nearly two-thirds by the end of his term, administration officials said. This reduction will come in large part through Iraq troop withdrawals and higher taxes on the wealthy. Obama's budget outline, which he will release Thursday, will also confirm his intention to deliver this year on ambitious campaign promises on health care and energy policy.
Max Keiser UK is Doomed Feb 21 2009
Clinton Urges China to Keep Buying U.S. Treasury Securities Secretary of State Hillary Clinton urged China to continue buying U.S. Treasury bonds to help finance President Barack Obama’s stimulus plan, saying “we are truly going to rise or fall together.” “Our economies are so intertwined,” Clinton said in an interview today in Beijing with Shanghai-based Dragon Television. “It would not be in China’s interest” if the U.S. were unable to finance deficit spending to stimulate its stalled economy. The U.S. is the single largest buyer of the exports that drive growth in China, the world’s third-largest economy. China in turn invests surplus earnings from shipments of goods such as toys, clothing and steel primarily in Treasury securities, making it the world’s largest holder of U.S. government debt at the end of last year with $696.2 billion.
Dubai to take up $10bn UAE loan The United Arab Emirates is to lend Dubai $10bn to ease the emirate’s debt repayment schedule in an effort to rescue the struggling economy, officials say. The UAE central bank subscribed to half of a $20bn five year bond programme launched by the Dubai government. The unsecured paper yields a 4 per cent dividend. “This program will secure the necessary funding for Dubai to meet its financial obligations and continue its development program,” the Dubai government said on Sunday. Federal backing is designed to help restore confidence in the Dubai economy, the foundations of which are based on real estate, tourism and trade, making it particularly exposed to the global credit crunch.
Asia Agrees on $120 Billion Currency Pool Amid Crisis Asian nations will form a $120 billion pool of foreign-exchange reserves that can be used by countries to defend their currencies in an expansion of efforts to battle fallout from the global financial crisis. Finance ministers from Japan, China, South Korea and 10 Southeast Asian nations agreed to the fund at a summit yesterday in Phuket, Thailand. The amount is 50 percent more than was proposed last May, and a broadening of the current arrangement called the Chiang Mai Initiative that allows only bilateral currency swaps. No date was set for completion of the new pool.
When Consumers Cut Back: A Lesson From Japan As recession-wary Americans adapt to a new frugality, Japan offers a peek at how thrift can take lasting hold of a consumer society, to disastrous effect. The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy. Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.
Secret U.S. unit trains commandos in Pakistan BARA, Pakistan: More than 70 United States military advisers and technical specialists are secretly working in Pakistan to help its armed forces battle Al Qaeda and the Taliban in the country's lawless tribal areas, American military officials said. The Americans are mostly Army Special Forces soldiers who are training Pakistani Army and paramilitary troops, providing them with intelligence and advising on combat tactics, the officials said. They do not conduct combat operations, the officials added.
Gold Near 11-Month High, Breaks New Non-Dollar Records, as "Smart Investors Hedge Against Devaluations SPOT GOLD in US DOLLARS slipped back from a near 11-month high early in London on Thursday, bouncing off $970 an ounce as world stock markets held flat, down almost 5% for the week so far. A surge in after-hours trade overnight saw the Gold Price in Dollars come within a few cents of mid-July's top above $987 an ounce. Prior to that, gold reached its highest price ever amid the Bear Stearns collapse of March 2008. Versus the other major world currencies last night, the metal broke new record highs for British, European, Swiss, Canadian and Australian savers now Ready to Buy Gold. "Higher highs and higher lows keep the bullish trending price action in place," says a technical note from Scotia Mocatta, the London market maker.
Gold amid Inflation and Deflation "Inflation and deflation are both a crisis in money. Which leaves gold as a secure store of wealth against both monetary panics..." THE 1970s DIDN'T JUST curse the world with cheap German wine and the Bay City Rollers. That decade gave us soaring inflation, too. Gold's stellar run up to $850 per ounce, rising more than 24 times over, also came in the '70s. So gold, therefore, must deliver its strongest returns when the cost of living shoots higher. Right? Wrong. "In the long run, stocks have thrashed gold as great long-term hedges against inflation," says Jeremy Siegel, professor of finance at Wharton University, Pennsylvania. What's more, the eight-year bull run in Gold Prices so far this decade has come against the lowest average consumer-price inflation since the early 1960s.
Gold Continues to Climb as Economic Catastrophe Looms Last week, when Congress passed its $787 billion stimulus package, the size of the plan caused many observers to forget the water that has already passed under the bridge. Fewer still are wondering what havoc will erupt when all this liquidity eventually washes ashore. The latest spending, signed into law yesterday by President Obama, came on top of $300 billion committed to Citigroup, $700 billion for TARP 1, $300 billion for the FHA, $200 billion for TAF and some $300 billion for Fannie and Freddy. Just over the last six months, which excludes the initial Bush stimulus and several massive, unfunded Federal guarantees, nearly $5 trillion has been committed by the government to the financial industry. Rational observers cannot be faulted for concluding, despite Administration claims to the contrary, that the government is merely throwing money at the problem.
Gold primed to be 'mania asset' Gold is exhibiting all the classic signs of being in a structural bull market. On fears of inflation in early 2008, it rallied. Then, on fears of deflation in late 2008, it rallied again. So does gold perform better during inflation or deflation? In our view, that question is the wrong starting point. On the contrary, the rationale for owning gold, as it once again approaches the $1,000 an ounce level, is the prospect of mounting monetary disorder. The US Federal Reserve, having flooded the market with liquidity by more than doubling its balance sheet in less than six months, may be unable or unwilling to withdraw it in time for fear of precipitating a secondary relapse in economic activity. Other central bankers will also face intense pressures to "support" their domestic economy by weakening the currency, leading to competitive currency devaluations.
See 'tea party' call by CNBC analyst Reacts to Obama's economic plans with 'Howard Beale rant' on live TV With tongue only partially in cheek, a CNBC analyst on the floor of the Chicago Mercantile Exchange this morning responded to President Obama's proposed $275 billion deficit-financed homeowner bailout plan and other massive spending measures with a call for a new "tea party." Rick Santelli, in a nearly three-minute rant that drew approving hoots and comments from nearby traders, said the Obama administration's promotion of bad behavior must be causing the founding fathers to roll over in their graves. "We're thinking of having a Chicago Tea Party in July," Santelli told CNBC "Squawk Box" co-anchor Joe Kernan. "All you capitalists who want to show up at Lake Michigan, I'm going to start organizing."
Rick Santelli and the "Rant of the Year" Repeat from Thursday, in case you missed it.
Wilbur Ross Calls out Banking Chiefs
Liesman argues with Rick Santelli
Millions could get help, but is foreclosure plan fair? The Obama administration's $75 billion housing rescue plan promises to help millions of financially struggling homeowners keep their homes, but it may be too little and too late for millions of others. More than 3 million owners have lost their homes during the past three years, and almost 5 million more could follow this year through 2011, according to Moody's Economy.com.
Dow Hits 6-Year Low in Latest Milestone of Crisis Banking Shares Dive Again; Fears Over Jobs Intensify NEW YORK, Feb. 19 -- The Dow Jones industrial average slid to its lowest level in six years Thursday on fears about the weak financial system and a gloomy jobs outlook. The Dow's fall illustrates the rapid destruction of wealth in the stock market during the financial crisis. The Dow now stands at about half of its all-time high of 14,164, reached in October 2007. The total value of all shares of companies on the Dow has dwindled to $2.45 trillion, down from $4.51 trillion. With banks stocks weighing on the market Thursday, the Dow sank 1.2 percent to 7465.95, dipping below the bear market low of 7552 reached in November. The index is now at its lowest level since October 2002.
Late-Day Drop Sends Dow Below 7,500 Threshold Wall Street slipped lower on Thursday. The Dow Jones industrial average closed at its lowest level in six years amid concerns about the plans by the Obama administration to help homeowners in foreclosure and shore up the struggling banking system. After bouncing between light gains and losses, financial markets dropped in the last hour of trading. While stocks have been trading in a broad range over the last three months, analysts say that the indexes may be carving out a new, deeper trench, where the bottom of the old range becomes the top of the new one.
Fed's Lockhart Says Bank Nationalization Off the Table Nationalizing banks is "substantially" off the table, Federal Reserve Bank of Atlanta President Dennis Lockhart said following a speech in Alabama. Speaking to reporters after his speech, Lockhart said he was "unaware" of any serious consideration of bank nationalization. However earlier in the day, bank stocks plunged on fears that substantial losses could lead to the U.S. government taking control of banks, which could harm shareholders. Lockhart said correctly valuing assets is a central challenge to fixing banks and that the Treasury is not ruling out guarantees of toxic assets.
Ron Paul: small group of people can create money out of thin air!
Fed Leaders Issue Bleak Forecast Policymakers Project High Unemployment Through 2011, Vow Aggressive Action It could take years for the nation to fully bounce back from the recession, according to new projections by leaders of the Federal Reserve, who indicated that even once the economy starts expanding again, it will be an "unusually gradual and prolonged" recovery. The unemployment rate will remain elevated through at least 2011, according to the policymakers' official forecast, released yesterday, and the economy this year could shrink by 1.3 percent. That would mark the sharpest contraction in 27 years.
U.S. Tries a Trillion-Dollar Key for Locked Lending Credit cards, home equity lines, student loans, car financing: none come cheaply or easily in these credit-tight times. The banks, the refrain goes, just will not lend money. But it is not simply the banks that are the problem. It is also what lies behind them. Largely hidden from view is a vast financial system that serves as the banker to the banks. And, like many lenders, this system is in deep trouble. The question is how to fix it. Most banks no longer hold the loans they make, content to collect interest until the debt comes due. Instead, the loans are bundled into securities that are sold to investors, a process known as securitization.
The Banking Industry's Dirty Little Secret: Money Laundering For The Drug Cartels The United Nations’ Office on Drugs and Crime executive director Antonio Maria Costa recently told the Austrian magazine Profil that drug money has been the only thing that has kept many major banks in business… Costa said: “In many instances, drug money is currently the only liquid investment capital. In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor.” Costa went on to say that UNODC has discovered that “interbank loans were funded by money that originated from drug trade and other illegal activities.” Incredibly, he said there were “signs that some banks were rescued in that way.” In the last few years, large banks have been getting into the remittance industry, which sends over $50 billion annually from the U.S. to Latin America.
Merrill Lynch Jumps On Shovel Ready Bandwagon Reports of the death of Wall Street have been exagerated. The newest game in town is to get in on restructuring the American economy for the new age of Obama. First up on the agenda: find a "shovel ready" infrastructure project and start sifting through the soil for fees. Take, for example, the plan to replace the Tappan Zee Bridge that crosses the Hudson from Westchester County, just north of New York City. Replacing the huge bridge--it's very long because the river is pretty wide--will cost an estimated $16 billion.That's more than half of the total amount appropriated in the stimulus bill for this kind of project, so New York can't rely on Obamanomics to supply the money. But where Obama fails, maybe Wall Street can help. Yesterday the state Department of Transportation announced it had hired Merrill Lynch to help put together the financing for the bridge.
Commercial real estate's crisis point approaching? $171 billion in loans coming due this year With credit markets still shaky, about $171 billion in loans backed by offices, shopping centers, hotels and other commercial buildings are coming due this year. Experts increasingly wonder whether there's enough credit capacity in the system to refinance them. Yesterday, at a conference sponsored by the Burnham-Moores Center for Real Estate at the University of San Diego, bankers and real estate experts tried to tackle the crucial questions facing the market. Two of them were: When will the credit freeze thaw, and what can commercial landlords expect when dealing with lenders? The overall message was that it's too soon to know. Too much uncertainty remains over the direction of the economy and federal efforts to shore it up. For months, experts have been saying commercial buildings will be the next shoe to drop in a real estate-led downturn that began with toxic subprime home loans and has spread to every sector of the economy.
Public fears about troubled economy growing As the economy continues to struggle, the public is growing increasingly concerned about losing jobs, not having enough money to pay the bills and seeing their retirement accounts shrink, according to an Associated Press-GfK poll. Nearly half of those surveyed said they worry about becoming unemployed - almost double the percentage at this time last year. The poll released Wednesday also found public support dipped slightly in the past month for the $787 billion package of tax cuts and government spending President Barack Obama signed into law this week on the promise that it will save or create 3.5 million jobs and re-ignite the economy.
The Long Retreat by Patrick J. Buchanan "The situation in Afghanistan is deteriorating," said President Obama, as he announced deployment of 17,000 more U.S. troops. "I'm absolutely convinced that you cannot solve the problem of Afghanistan, the Taliban, the spread of extremism in that region, solely through military means." "(T)here is no military solution in Afghanistan," says Secretary of Defense Robert Gates. Said U.S. Commander Gen. David McKiernan yesterday, U.S. and NATO forces are "stalemated." Such admissions by our military and political leadership in a time of war call to mind other words heard back in 1951, when Gen. Douglas MacArthur delivered his farewell address to the Congress: "(O)nce war is forced upon us," said MacArthur, "there is no other alternative than to apply every available means to bring it to a swift end. War's very object is victory, not prolonged indecision. "In war, there is no substitute for victory."
Barter Fits the Bill for Strapped Firms Small businesses, squeezed for cash and unable to get loans, are turning to an ancient payment system: barter. Daniel Blank, creative director at Bureau Blank Inc., a New York graphic-design and brand-identity company, first used bartering when he started the company in 2004, because it was hard to get capital for a start-up. But he hadn't had to barter since then, until now. For the past couple of months, Mr. Blank has been getting advice on running his business from Joe Hunt, a former ad-agency owner who has started Workforce Enterprises LLC, a document-solutions company in New York. For about two hours each week, Mr. Hunt helps Bureau Blank with its accounting and finance operations, among other things.
The Hijacking of America Watching the perverted circus of corrupt politicians and administrators in Washington and New York the last six months is enough to make anyone with a brain want to shout a primal scream of disgust and anger. I use the word "brain" because it is becoming increasingly apparent that many Americans unfortunately are no longer using the gray matter that exists between their ears with regards to what is going on in our country. The rapidly accelerating chain of events moving us faster and faster towards economic oblivion is beyond shocking. It is happening much quicker than I anticipated. The numbers these stooges in Washington and New York are throwing around for the bailouts and economic stimulus package are simply too big for the average person to comprehend. First analogy: If someone spent one million dollars per day each and every day since Jesus was born, it would take another 731 years (beyond today) before one trillion dollars was spent.
$1,000,000,000,000 / $1,000,000 per day = one million days
one million days / 365 = 2740 years
2740 - 2009 = 731 (years remaining)
Second analogy looks at a million, a billion, and a trillion in terms of seconds. One million seconds comes out to be about 11? days. A billion seconds is 32 years. And a trillion seconds is 32,000 years! The third analogy puts dollar bills end to end. If you laid one dollar bills end to end, one trillion dollars would stretch nearly from the earth to the sun. It would take a military jet flying at the speed of sound, reeling out a roll of dollar bills behind it, 14 years before it reeled out one trillion dollar bills! But thelast analogy is the one that absolutely blows my mind. If you took freshly minted brand new $1,000 dollar bills and starting stacking them one on top of another, it would take a stack over 68 miles high to reach one trillion dollars!
"The Federal Government Is Bankrupt. If The Federal Government Were a Corporation, the President and Senior Treasury Officers Would Be In [Jail]" In the quote of the week, economist John Williams - who has been tracking the real fundamentals of the economy for many years at his website Shadow Stats - said: "The Federal Government Is Bankrupt ... If The Federal Government Were A Corporation … The President And Senior Treasury Officers Would Be In Federal Penitentiary." What's Williams talking about? He explains: "The federal government's deficit is hemorrhaging at a pace which threatens the viability of the financial system," Williams added. "The popularly reported 2009 [deficit] will clearly exceed $2 trillion on a cash basis and that full amount has to be funded by Treasury borrowing. . .
Inflation Not Dead Yet What happened to all those fears of deflation? AP: The Labor Department said Thursday that wholesale prices increased by 0.8 percent last month, the biggest gain since last July and well above the 0.2 percent increase that economists had expected. . . . . Some economists might say this is a good thing, since for all of inflation's evils, mainstream economics considers deflation to be much worse. Bet let's just common-sense this for a second: If the economy is worsening, wages are going down, and people are losing their jobs, don't higher prices just make things worse?
Wholesale inflation takes biggest jump in 6 months WASHINGTON Inflation at the wholesale level surged unexpectedly in January, reflecting sharply higher prices for gasoline and other energy products. The Labor Department said Thursday that wholesale prices increased by 0.8 percent last month, the biggest gain since last July and well above the 0.2 percent increase that economists had expected. The acceleration was led by a 3.7 percent surge in energy prices with gasoline prices jumping by 15 percent, the biggest gain in 14 months. Even outside the volatile food and energy sectors, wholesale prices showed a bigger-than-expected increase, rising by 0.4 percent. Economists had expected a slight 0.1 percent rise in so-called core inflation. Food prices were well-behaved last month, falling for a second straight month. The 0.4 percent decline in January reflected lower costs for beef and dairy products which offset gains in the price of vegetables and chicken products.
Bank of America, AmEx May Suffer on Card Defaults Credit-card defaults may rise beyond 10 percent this year, breaking records and wiping out more than half of annual profit for lenders including Bank of America Corp. and JPMorgan Chase & Co., analysts said. Loan failures are about to surpass a previous high of 7.53 percent as people losing jobs amid the U.S. recession can't repay debt, according to Fitch Ratings. The defaults may peak at 10 percent to 11 percent of loans by year end under a stress scenario, Goldman Sachs Group Inc. analyst Brian Foran said yesterday in an e-mail, reducing 2009 earnings for issuers including an almost 40 percent cut for American Express Co.
Now Facing Financial Crisis, Kansas Boosted State Spending Nearly 15% in Past Two Years Kansas, which faces a massive budget shortfall, has consistently increased its spending over the past decade, even as state revenues began to level off over the past few years. According to a National Governors Association/National Association of State Budget Officers report and the Kansas Division of the Budget, the state’s general fund spending has increased by at least 8 percent each year from Fiscal Year 2005 through Fiscal Year 2008--with total expenditures of $4.6 billion in FY 2005, $5.1 billion in FY 2006, $5.6 billion in 2007 and $6.1 billion in FY 2008. The state’s spending increased by 9.5 percent from FY 2007 to FY 2008. Additionally, the report said spending was set to increase by another 4.3 percent in 2009--to a projected $6.5 billion. The financially strapped state, meanwhile, now faces a dire economic situation.
Jobless hit with bank fees on benefits First, Arthur Santa-Maria called Bank of America to ask how to check the balance of his new unemployment benefits debit card. The bank charged him 50 cents. He chose not to complain. That would have cost another 50 cents. So he took out some of the money and then decided to pull out the rest. But that made two withdrawals on the same day, and that was $1.50. For hundreds of thousands of workers losing their jobs during the recession, there's a new twist to their financial pain: Even when they're collecting unemployment benefits, they're paying the bank just to get the money - or even to call customer service to complain about it. Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JP Morgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards.
Nearly 5M get jobless benefits Unemployment jumps 627,000 The number of Americans receiving jobless benefits rose to a record near 5 million in the first week of February, and new unemployment claims jumped by a surprising 627,000, the Labor Department reported Thursday. Economists had expected that new jobless claims would dip to 620,000 from the 623,000 of a week earlier. It was not to be. The number of new claims and the 4.99 million people who are continuing to receive unemployment benefits, up from 4.81 million the previous week, indicate there has been no letup in the toll that the worst recession since 1982 has been taking on American workers.
Newly poor swell lines at U.S. food banks MORRISTOWN, New Jersey: Cindy Dreeszen and her husband live in one of the wealthiest counties in the United States. They have steady jobs, his at a movie theater and hers at a government office. Together, they earn about $55,000 a year. But with a 17-month-old son, another baby on the way, and, as Dreeszen put it, "the cost of everything going up and up," the couple went to a food pantry this month to ask for some free groceries. "I didn't think we'd even be allowed to come here," said Dreeszen, 41, glancing around at the shelves of fruit, whole-wheat pasta and baby food. "This is totally something that I never expected to happen, to have to resort to this." Once a crutch for the most needy, food pantries have responded to the deepening recession by opening their doors to what one pantry organizer described as "the next layer of people," a rapidly expanding group of child-care workers, nurse's aides, real estate agents and secretaries who are facing a financial crisis for the first time.
Disney plans layoffs, streamlining as economy eats into revenue The Walt Disney Co. on Wednesday said it will eliminate an undisclosed number of jobs as part of a sweeping corporate overhaul at its domestic resorts, which includes plans to combine back-office operations at Walt Disney World and Disneyland. Disney would not say how many jobs it intends to cut or how much money it expects to save through the moves. The company employs about 80,000 people at its U.S. resorts, including 62,000 in Central Florida. With the shake-up, Disney will consolidate East and West Coast "operating infrastructure" -- responsibilities ranging from procurement to menu-planning to merchandise -- under Al Weiss, the president of worldwide operations for Walt Disney Parks and Resorts.
Its Muscle Car Glory Faded, Pontiac Shrivels Up DETROIT - With its history of building muscle cars like the GTO and the low-slung Firebird, Pontiac had good reason to take pride in its best-known marketing slogan from the 1980s, "We Build Excitement." Lately it has been using "Pontiac is CAR," a phrase more likely to catch the attention of grammarians than car buffs. And on Tuesday, when General Motors asked the federal government for more bailout money, it also announced a reorganization plan that included demoting Pontiac to a "focused niche brand," signaling that its lineup of vehicles would shrink and that it would no longer be a separate division.
Gerald Celente on Glenn Beck's Radio 19 Feb 2009 pt 1/2
Gerald Celente on Glenn Beck's Radio 19 Feb 2009 pt 2/2
States fearing mandates assert rights Worried the federal government is increasing its dominance over their affairs, several states are pursuing legislative action to assert their sovereignty under the 10th Amendment of the Constitution in hopes of warding off demands from Washington on how to spend money or enact policy. The growing concerns even have a handful of governors questioning whether to accept federal stimulus money that comes with strings attached. The sentiments to declare themselves legally independent from Washington have swept across as many as a dozen states, renewing a debate over so-called unfunded mandates that last raged in the 1990s. The states question whether the U.S. government can force states to take actions without paying for them or impose conditions on states if they accept certain federal funding.
FBI finds financier Stanford in Virginia Texas financier R. Allen Stanford was tracked down Thursday in Virginia, where FBI agents served him with legal papers in a multibillion-dollar fraud case. FBI agents, acting at the request of the Securities and Exchange Commission, served Stanford papers in Fredericksburg, Va., said FBI spokesman Richard Kolko. Stanford is not under arrest and is not in custody. In a civil papers Tuesday, the SEC alleged Stanford and three of his companies committed an $8 billion fraud that lured investors with promises of improbable and unsubstantiated high returns on certificates of deposit and other investments.
Marc Faber Eastern Europe is Collapsing Faber Says Germany, France May Have to Bail Out Marc Faber, publisher of the "Gloom, Boom & Doom Report" and managing director of Marc Faber Ltd., talks with Deirdre Bolton about the possibility that France and Germany may have to bail out entire nations as European government budgets buckle under the weight of recession. Faber also discusses the outlook for the U.S. stock market. Erik Schatzker joins the discussion
Israeli warning to Obama: Your talk gives Iran nukes Ex-Mossad chief says Tehran stalling, worries about president's 'learning curve' JERUSALEM - President Obama's policy of direct diplomacy with Iran may buy Tehran enough time to produce nuclear weapons, Shabtai Shavit, former chief of the Mossad intelligence agency, warned in an exclusive WND interview today. "I don't believe there is a political solution which can be achieved through negotiations with Iran," he said."My concern is that until Obama finishes his learning curve of the subject, the Iranians are going to have maybe the first or even more nuclear bombs." Shavit served as director of the Mossad from 1989 through 1996. He clarified that although diplomacy cannot be ruled out, from his experience he doesn't believe there can be a political solution with Iran.
Iran Has More Enriched Uranium Than Thought In their first appraisal of Iran’s nuclear program since President Obama took office, atomic inspectors have found that Iran recently understated by a third how much uranium it has enriched, United Nations officials said Thursday. The officials also declared for the first time that the amount of uranium that Tehran had now amassed — more than a ton — was sufficient, with added purification, to make an atom bomb. In a report issued in Vienna, the International Atomic Energy Agency said it had discovered an additional 460 pounds of low-enriched uranium, a third more than Iran had previously disclosed. The agency made the find during its annual physical inventory of nuclear materials at Iran’s sprawling desert enrichment plant at Natanz. Independent nuclear weapons experts expressed surprise at the disclosure and criticized the atomic inspectors for making independent checks on Iran’s progress only once a year.
Putin: Post-US World Blueprint The World Economic Forum took place in Davos Switzerland last week. The global picture enabled a nice snapshot of sentiment, fault for the crisis, blame doled out, the vacuum of leadership, the perks for blunderers in a country club setting (instead of prison), and warnings on a potential situation that could spiral out of control. Amidst all the finger pointing, surprisingly little blame was given to themselves, the corporate chieftains in attendance. Let's be clear! The Davos Forum was a funeral wake, and Putin rode in on a white horse to announce there is a new sheriff in town!! Davos afforded a unique opportunity for Russian self-styled leader Vladimir Putin to storm the forum stage and to steal the show. Putin presented a basic Blueprint for what should be called 'The Post-US World' as the United States and United Kingdom have lost the mantle of leadership and control.
Clinton: U.S. Preparing for Possible Regime Change in North Korea Clinton's stop in Seoul, the third in her week-long tour of Asian capitals, comes amid increasing tensions between the two Koreas. The Obama administration and America's Asian allies are preparing for a possible regime change in North Korea, Secretary of State Hillary Clinton said Thursday. Speaking to reporters aboard her plane from Indonesia to South Korea, Clinton said "the whole leadership situation (in North Korea) is somewhat unclear." She said the difficulties of dealing with the Stalinist regime of Kim Jong Il -- who is believed to have suffered a stroke last year -- have been compounded by "the uncertainties that come from questions about potential succession." She said the administration and its allies in the East are studying the scenarios surrounding such a succession of power.
For weekend viewing . . .
The Crash Course(New) End of Money? Chris Martenson Part 1 of 4
The Crash Course(New) End of Money? Chris Martenson 2 of 4
The Crash Course(New) End of Money? Chris Martenson 3 of 4
The Crash Course(New) End of Money? Chris Martenson 4 of 4
Paul Krugman Takes Listener Questions on CSPAN PT1
Paul Krugman Takes Listener Questions on CSPAN PT2
Paul Krugman Takes Listener Questions on CSPAN PT3
Paul Krugman Takes Listener Questions on CSPAN PT4
It's Getting Ugly: Economist Says Hoard Gold & Scotch Williams predicts hyperinflationary depression will mean a $100 dollar bill is worth less than toilet paper Respected economist John Williams, editor of ShadowStats.com, a popular web site that tracks real inflation figures, is advising that people hoard physical gold as well as food items in bulk so that they have some means with which to barter as the economic crisis turns ugly. "Three or four years into the future I think we could be in a hyperinflation, within the current year you're going to see much higher inflation than most people are looking at," Williams told MarketWatch. Williams said that his definition of hyperinflation would be a situation in which a $100 dollar bill would become more functional as a piece of toilet paper than a store of value. "This is a time when you want to preserve your wealth and assets because inflation will knock the value out of it," he added, advising that people buy physical gold and assets other than the U.S. dollar.
John Williams . . . "Go long Scotch!"
Want a Way Out of the Economic Stupidity? Buy Gold Make 203% as Washington becomes a global laughing stock According to our nation's new "Intel Czar," the economy is the number one threat to the U.S. right now. In testimony before the Senate Intelligence Committee, National Intelligence Director Dennis Blair warned that: "The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests." Now, one ought to keep in mind that Blair was addressing the committee just a day or so before Congress would be disgorging the bolus known as the 2009 Stimulus Act. As such, Blair, with his 49-page statement, was just one more player in the administration's full court press.
The New Currency Trade: Gold Vs. All Else Investors have taken to terming the flight from risky assets into gold a new currency trade. The ongoing concern about the enormous task of getting the world’s banks on track — bedeviling investors across the globe — has produced a safe-haven trade into the likes of Treasurys and the dollar. However, the dollar’s success is, in some ways, a mirage, improving only because other major world currencies have been dreadful. The dollar has strengthened in the last couple of months, along with gold, which is an odd occurrence, and speaks to the dearth of worthy investments around the world. But the shift to gold has picked up as “everyone is trying to devalue their own currency against everyone else,” says Sean Peche, manager at BlueAlpha Investment Advisory Limited in London.
Why Gold Rallying in all currencies In the latest manifestation of the world financial crisis, gold is rallying strongly now in all major currencies. Gold detached from the usual commodity drivers gradually over the period August 07 to the present, and closely reacted to any major new developments in the credit crisis. Gold now is almost totally dominated by ongoing credit crisis developments, and the massive attempts to bailout the financial system in every country. That is why gold and the USD are rallying together.
In times of crisis, never forget the value of gold The dollar is simply a piece of paper. Gold is a much better store of value and is the best insurance against future shocks . . . . People buy gold when they are nervous about the economy, and they are right to do so because gold is a unique commodity. It has to a high degree two qualities that are seldom found together: liquidity and reality. It has strong liquidity; it can almost always be bought, sold or exchanged. There are other liquid assets, of which the US dollar is probably supreme, but they lack gold's quality of real value. Dollars do not constitute a real asset, such as property or “real estate”. The dollar is simply a piece of paper. Gold has been a much better store of value than the dollar. . .
Why You Probably Shouldn't Trust Ben Bernanke's Rosy Forecast The Federal Reserve's FOMC released its minutes today showing that while its views on the economy of 2009 have grown darker, it still expects only a mild downturn that shrinks the economy from 0.5% to 1.3%. Our initial reaction to this was basically to scoff. We're expecting a lot worse than a 1.3% downturn. How can we think we know more than the geniuses at the Federal Reserve? Well, for one thing, these guys are terrible at economic forecasting. If you followed their predictions, you probably would have ended up bankrupt. Just go ask Lehman Brothers.
Fed Chief Defends Steps Taken to Contain Crisis The chairman of the Federal Reserve, Ben S. Bernanke, vowed on Wednesday to do whatever it took to pull the economy out of its downward spiral, even as he acknowledged that the most recent indicators were "dismal." Speaking at the National Press Club, the first time that a Fed chairman has taken questions from journalists in a public forum, Mr. Bernanke defended the central bank's efforts and tried to allay concerns that it had been printing money at a dangerous pace.
Bernanke Speaks on Economy (Part 1) - 2.18.2009
Bernanke Speaks on Economy (Part 2) - 2.18.2009
Fed Leaders Issue Bleak Forecast Policymakers Project High Unemployment Through 2011, Vow Aggressive Action It could take years for the nation to fully bounce back from the recession, according to new projections by leaders of the Federal Reserve, who indicated that even once the economy starts expanding again, it will be an "unusually gradual and prolonged" recovery. The unemployment rate will remain elevated through at least 2011, according to the policymakers' official forecast, released yesterday, and the economy this year could shrink by 1.3 percent. That would mark the sharpest contraction in 27 years.
The Grand Illusion An old friend who had been in the mortgage banking business told me a story about a smart old fox of a financier. A real estate developer had given a long presentation to this old fox with all sorts of rates, paybacks, revenue streams, time value of money, etc. etc. At the end of the presentation, the developer finished with the usual words: "Are you on board?" The old fox replied: "Ok, now how many dollars am I supposed to put in and how many dollars do you propose to give back to me." The machinations between the FED and the US Treasury, have taken the word bamboozle to new heights. Here is an example. "In the new consumer-lending program, the Treasury provides $100 billion of capital and the FED uses that as a cushion against which it could make up to $1 trillion in three-year loans …" (WSJ, Feb 12, pg. A4, FED Faces Constraints, by Jon Hilsenrath). Let me get this straight. The Treasury has no actual treasure. So, it is authorized by a Congress to borrow what it needs (that is because Congress has already spent all the tax revenue) and the Treasury will then issue $100 billion in Treasury instruments of some sort that supposedly qualify as 'capital'. Then that 'capital' will be transformed into $1 trillion in new currency. Congress is not raising taxes in order to provide a revenue stream. So where does this money come from? How does this magic work.
U.S. Doubles Fannie, Freddie Backing to $400 Billion The federal government yesterday doubled its commitment to Fannie Mae and Freddie Mac, promising to reimburse the companies for up to $400 billion in losses on their investments in mortgage loans. he massive expansion of the government backstop is a response to mounting strains on the two companies, officials said. It was announced as part of the Obama administration's broad plan to reduce foreclosures, which will further squeeze the companies' revenue by requiring the pair to refinance or modify millions of loans to lower monthly payments.
Obama Offers Homeowners Exploding Mortgages Ever since the credit crisis began, a lot of blame has been heaped on adjustable-rate mortgages, home loans that recalibrate according to market fluctuations. One brand of these innovative mortgages that have come under special criticism has been so-called "exploding A.R.M.'s" that lured borrowers with unusually low teaser rates that then reset skyward a few years later. These have often been derided as predatory, and lenders who offered them accused of luring homeowners into buying homes they couldn't afford for the long-term. Critics of these might want to check out the Homeowner Stabilization Plan put forward by the Obama administration today. The plan would reduce mortgage payments and interest rates for homeowners who have seen their payments rise to more than 38% of their monthly income. But those reductions last just five years, after which they begin to reset to higher rates. In short, Obama is just drawing out the teaser rates a bit longer.
President Obama Unveils Plan for Troubled Housing Market PT1 - 2.18.2009
President Obama Unveils Plan for Troubled Housing Market PT2 - 2.18.2009
Obama’s $75 Billion Foreclosure Plan Spells Relief for Bankers President Barack Obama offered $75 billion of relief yesterday to homeowners facing foreclosure. He also gave bankers a reprieve. Some lenders, including New York-based JPMorgan Chase & Co., have worried that proposed “cramdown” legislation giving judges the power to modify mortgages of those who file for bankruptcy would increase the number of filings. Obama, who said yesterday he supports a cramdown law, signaled that it would only be a last resort for struggling borrowers. “Allowing cramdowns is a bad idea,” said Andrew Sandler, a partner in the Washington office of law firm Skadden, Arps, Slate, Meagher & Flom LLP, whose clients include mortgage companies. “Obama’s program has the potential to reduce the number of bankruptcies. The fewer loans that go to bankruptcy and are subject to cramdowns the better.”
Obama's homeowner aid swells to $275 billion Program to help up to 9 million Americans pay mortgages President Obama offered a long-awaited plan Wednesday to spend up to $275 billion to help troubled homeowners refinance and stay in their homes. The program, which was far more expensive than the $50 billion the administration initially suggested, aims to assist up to 9 million homeowners who are behind on their mortgage payments, in danger of losing their homes or stuck with mortgages that they cannot refinance because their home's value has dropped below the outstanding loan value.
Obama's Stimulus Creates Useless Jobs Theres one reason, and one reason only, that President Barack Obamas stimulus passed so swiftly through Congress: Most Americans are worried about their jobs. And Barack Obama promises to save or create four million jobs. Even Obamas most ardent opponents embrace the make jobs programs embedded in the stimulus. Construction projects that put people to work, that fits the bill, Sarah Palin told Greta Van Susteran of Fox News. But these big, huge, expanded social programs that's not right, that's not fair. Neither Republicans nor Democrats get it. The problem isn't just the pork barrel social welfare spending. Its not merely the redistributionist scheme disguised as tax cuts. The public relations backbone of this bill -- government spending on our nations crumbling infrastructure -- is misguided. While the country's infrastructure may need revamping, this sort of spending will not stimulate the economy. It will not create the kind of jobs Americans need.
Stocks fluctuate on details of housing plan Stocks fluctuate in narrow range as president releases details on $75B mortgage relief plan Stocks fluctuated Wednesday as President Barack Obama released details of his $75 billion mortgage relief plan and investors remained uncertain about the prospects for the economy. The plan is designed to help stabilize the housing market and reduce foreclosures. Sharp drops in housing prices and sales and rising foreclosures have caused the toughest recession in decades. Obama's announcement of the plan comes a day after he signed into law a $787 billion economic stimulus plan he hopes will help revive the economy. "First of all, we have to address the housing market and the more plans that are needed and the more plans that are announced -- this is all part of the process," said Steven Goldman, chief market strategist, Weeden & Co., in Greenwich, Conn. He said it will take time for investors to determine whether the plans are working and that the lingering unknowns will lead to more volatility in the stock market.
$275 Billion Plan Seeks to Address Crisis in Housing MESA, Ariz. - President Obama announced a plan on Wednesday to help as many as nine million American homeowners refinance their mortgages or avert foreclosure, saying that it would shore up housing prices, stabilize neighborhoods and slow a downward spiral that was "unraveling homeownership, the middle class and the American Dream itself." The plan, which was more ambitious and expensive than many housing analysts had expected, drew praise from consumer advocates as well as the financial industry.
HUD Secretary Shaun Donovan explains the Obama housing plan in detail 2.18.2009
Modifying Mortgages Can Be a Tricky Business MIAMI GARDENS, Fla. - When her brother could no longer help support her, Luzetta Reeves asked her small mortgage company to cut her monthly payments. It did - by 11 percent - making it possible for her to afford her house here on her modest fixed income. In Miami, Jeffrey Mitchell saw his family income drop just as real estate taxes and insurance premiums increased, making his monthly mortgage payments crushing. He got a lower interest rate, too. But with the added fees and penalties, his monthly payment remained the same. He is now back in foreclosure.
Fed Debated Buying "Substantial" Amounts of Treasuries, FOMC Minutes Show (CEP News) - The Federal Open Market Committee (FOMC) meeting minutes revealed the Fed discussed the benefits of buying "substantial" amounts of U.S. Treasuries at its Jan. 28 meeting. The minutes also confirmed that Federal Reserve Bank of Richmond President Jeffrey Lacker dissented, "because he preferred to expand the monetary base by purchasing U.S. Treasury securities rather than through targeted credit programs." However, the FOMC said its would embark on the Treasury purchase plan only if circumstances show buying up bonds would improve private credit markets. For now, buying agency debt and mortgage-backed securities would be more effective, the minutes read.
Reaction with Rep. Scott Garrett - Obama's Housing Proposal - 2.18.2009 New Jersey Republican Scott Garrett reacts on Obama's Housing Plan, he says if housing plan contains what he hears, he is against it; What does plan do for 90% of Americans who did everything right Garrett added
More Details Are Pending, but First Some Answers The Obama administration's housing plan aims to help millions of homeowners who fall into two categories: either they have been struggling to pay their mortgages or they have been shut out of the refinancing market. The initiative gives lenders incentives to modify the mortgages of the three million to four million homeowners on the brink of foreclosure or who cannot make their monthly payments. The goal is to reduce the payments to levels they can afford.
California Foreclosure Center Shows Obama Challenge It has taken Susan Erb just three years to see the value of her Merced, California, home plunge by more than half to $350,000. Next month, her mortgage payment jumps 20 percent to $3,321 and she knows she can’t afford it. Her bank won’t rework the loan unless she stops paying altogether. “Now I know how people feel when I go knocking on their door,” said Erb, 53, a real estate agent who works for a company that notifies residents in foreclosed properties that they must vacate. “I’m in their shoes.” Merced, the epicenter of the U.S. foreclosure crisis, demonstrates the steep challenges President Barack Obama will face in trying to stem defaults. One in 59 housing units in the Merced metropolitan area received a foreclosure filing in January, the highest rate in the U.S., according to RealtyTrac Inc., an Irvine, California-based seller of default data. For- sale signs are everywhere and a building boom fueled by subprime mortgages has been brought to a standstill. Just 16 construction permits were issued last year. In 2005, there were 1,427.
Obama’s Stimulus Will Cause 'Lower Wages' for American Workers, Says Congressional Budget Office The huge economic stimulus package that President Obama signed into law Tuesday will result in “lower wages” for American workers, according to the Congressional Budget Office (CBO). The CBO analysis, dated Feb. 11 and sent to Sen. Judd Gregg (R-N.H.), says the $787-billion plan will increase employment in the short-term, but will run up deficit spending which will “crowd out” private investment in the economy in the long-term. The analysis concludes that the stimulus will put downward pressure on Gross Domestic Product (GDP) and wages after 2014. (The Gross Domestic Product is the total value of all goods and services produced in the United States in one year.)
"Stimulus" Has Never Worked "At this particular moment, only government can provide the boost necessary to lift us from a recession this deep and severe." - Obama, Brietbart, January 8, 2009 "We are spending more money than we have ever spent before, and it does not work. After eight years we have just as much unemployment as when we started, and an enormous debt to boot." - US Treasury Secretary, Henry Morgenthau, May, 1939
Professor Nouriel Roubini on the economy 2.18.2009 Dr. Roubini discusses the housing recovery plan, bank bailouts
Three Big Fears Have Market on Edge The DOW dropped below the November closing this morning. Joe Weisenthal of The Business Insider discuss the three big issues:
Bankrupt Detroit. Will Obama shovel another $20+ billion of taxpayer money at our rickety car-makers? Or will he take the more expensive but arguably more effective route of letting them file for bankruptcy?
Bank Nationalization. Since Tim Geithner dropped his lead balloon last week, the market has gotten busy solving the bank problem itself. The emerging answer? Temporary nationalization and restructuring of Citi, Bank of America, et al. Is Obama listening?
Housing Fix. Obama seems determined to help people who bought houses they can't afford and shaft everyone else--including homeowners who can still make their payments and renters who decided not to buy houses because they were too expensive. It will be interesting to see how effective this plan is and how it sits with the majority of the country--who won't get bailed out.
UBS to pay $780m to settle US tax probes UBS on Wednesday agreed to pay $780m in fines and turn over some customer names to the US government as part of a landmark settlement in which the Swiss bank admitted it helped thousands of clients evade taxes. The deferred prosecution agreement settles a long-running criminal investigation by the US Department of Justice into whether UBS helped wealthy US clients hide bank accounts from the Internal Revenue Service. The fine is one of the biggest yet and underscores the US government’s efforts to crack down on tax evasion. “The veil of secrecy has been pulled aside and we will continue to aggressively pursue those who shirk their federal tax obligations or assist others in doing so,’’ said John DiCicco, acting assistant attorney-general of the justice department’s tax division.
Swiss bank to ID U.S. tax evaders The world became smaller Wednesday for U.S. citizens seeking to hide money in Swiss bank accounts. Banking giant UBS AG, Switzerland's largest bank, agreed to pay $780 million to settle accusations that it helped U.S. customers hide money from the IRS. And in what the Justice Department described as an "unprecedented move," UBS agreed to provide the names of up to 20,000 Americans who sought to avoid paying income taxes by keeping secret accounts. According to court records, those U.S. customers, who had assets totaling about $20 billion, did not pay taxes on income earned on their UBS accounts. "The veil of secrecy has been pulled aside and we will continue to aggressively pursue those who shirk their federal tax obligations or assist others in doing so," said John A. DiCicco, acting assistant attorney general for the department's tax division.
America's Insolvent Banks John Hempton has 5,155 words on bank insolvency today, and makes the good point that "insolvency" is not well-defined. So what do I mean when I say that some big banks are insolvent? I mean that when you look at assets you shouldn't include things like goodwill, and instead concentrate only on concrete things like cash and retained earnings; then, value loans on a held-to-maturity basis. If you do that, those assets are worth less than the face value of total liabilities. Hempton makes the good point that mark-to-market values are significantly lower than held-to-maturity values because the buyers of distressed loans want much higher returns (on the order of 15%) than the discount rate (on the order of 5%) that you'd use to value a held-to-maturity value. So how do you work out a reasonable held-to-maturity value for an asset book? As Hempton says, you can't trust the banks themselves to tell you, because they will lie: the downside to telling the truth is death.
SEC drops the ball over Stanford A blog says Sir Allen's $8bn alleged fraud was clear, but not to the US regulator Last Tuesday the popular satirical blog "I'm Bernie Madoff" ran a spoof letter from Andy Madoff to his father, the alleged architect of the now infamous Ponzi scheme. The subject was Stanford Bank, the Antiguan-based financial group run by Sir Allen Stanford, the Texan businessman and cricket benefactor. "It seems that [Stanford Bank's] "consistent year over year returns and CD payouts of 7.5pc" are being questioned by a guy named Dalmady," writes Madoff Jnr. "[He] could be another nutcase like that guy Markopolos [the Madoff whistle-blower]. But maybe he's on to something ... maybe because Stanford Bank uses invisible auditors, just like you."
Morgan Stanley exec charged with embezzlement A former vice president of the investment bank has been arrested and arraigned on charges that he embezzled more than $2.5 million. A former Morgan Stanley vice president has been arrested on charges of embezzling more than $2.5 million from the investment bank. Richard Garaventa Jr., of Manalapan, N.J., pleaded not guilty Tuesday at his arraignment in Manhattan's state Supreme Court on grand larceny and other counts. He faces up to 25 years in prison if convicted. Prosecutor Jeremy Glickman said the 36-year-old defendant was authorized to request or approve checks for certain corporate payments from one of the company's in-house accounts.
Next Wave of Banking Crisis to come from Eastern Europe European banks face an entirely new wave of losses in coming months not yet calculated in any government bank rescue aid to date. Unlike the losses of US banks which derive initially from their exposures to low-quality sub-prime real estate and other securitized lending, the problems of western European banks, most especially in Austria, Sweden and perhaps Switzerland arise from the massive volumes of loans they made during the 2002-2007 period of extreme low international interest rates to clients in eastern European countries.
Zoellick urges EU to help east Europe Robert Zoellick, World Bank president, has called for European Union-led co-ordinated global support for the economies of central and eastern Europe, even as divisions emerge in the EU over handling the crisis. Speaking to the Financial Times amid turmoil in central and east European markets yesterday, Mr Zoellick said the bank was trying to work with the International Monetary Fund and other multilateral institutions to help the region but needed more backing from Brussels. “It’s got to have support from the European governments,” he said. “It’s 20 years after Europe was united in 1989 – what a tragedy if you allow Europe to split again.”
Ukraine must be rescued from tragi-comedy for Europe's sake Ukraine is degenerating into tragi-comedy. The president and premier are at daggers drawn. The finance minister has resigned in disgust, no longer willing to serve as a "political pawn" in a government that tears up its agreements. The IMF has stormed off, refusing to disburse the next tranche of its $16.4bn (£11.5bn) rescue loan. Kiev's leaders are winking at Russia, hoping that this sort of geo-strategic blackmail will force the West to open its purse strings. Meanwhile gross domestic product has contracted by 20pc over the last year, apparently worse than early Bolshevism or the Stalin famine. It would be tempting to leave this misgoverned country to its fate. That would be an error. If Ukraine defaults on its foreign debt – or lets its private companies default on their dollar and euro loans – it will lead to near instant contagion through much of Eastern Europe.
U.S. Forced to Offer Discounts to Lure Buyers of Failed Banks U.S. regulators are being forced to sell the assets of failed banks at a discount to lure buyers spooked by the likelihood of increased loan losses amid a deepening recession. The assets of four banks have been sold to healthier rivals at a combined discount of $107 million this year, the Federal Deposit Insurance Corp. said. The FDIC had to offer a discount just once in 2008, when it engineered 25 bank takeovers. Buyers for banks are in short supply after last year, when regulators closed the most lenders since 50 were shuttered in 1993. RBC Capital Markets analyst Gerard Cassidy predicts as many as 1,000 more will collapse within five years. The result may be a buyer’s market in which the FDIC will lay out even bigger sums to get rid of seized banks.
Do Not Trust This Market Following my update, I have included an article from one of the foremost economic analysts of our time, Ambrose Evans-Pritchard. He called the subprime crisis just 6 months before it hit, and this weekend came out with extraordinary comments about the banking and currency crisis hitting Europe and parts of Asia right now. The reasons why his warnings are important will be obvious, and it's important to remember that just as the U.S. appeared to be coming out of the Great Depression in 1932, a foreign banking and currency crisis helped to push the U.S. back into a Depression that lasted another eight years. We live in a global economy that is interconnected more than at any point in history, and as difficult as it is already going to be for the U.S. to recover from the recession / depression at hand, any kind of global meltdown will make the recovery that much more complex and lengthy.
"Nationalization" of Citi and BofA Inevitable in '09 In the past few months, an increasing number of economists have become convinced that the best "fix" for the banking system is a government takeover and restructuring of companies like Citigroup. And some voices in the government are finally supporting this idea. Over the weekend, Senator Lindsey Graham said he thought "nationalization" has to be considered, because he doesn't want to throw good money after bad. What would this mean, exactly? The government running our banks for the next decade?
THE BURNING PLATFORM "The US government is on a "burning platform" of unsustainable policies and practices with fiscal deficits, chronic health care underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon." - David M. Walker David Walker served as Comptroller General of the United States from 1998 through 2008. He is now the CEO of the Peter G. Peterson Foundation and leader of the Fiscal Wake Up Tour. He has been a lone voice in the wilderness for the last decade regarding our looming fiscal disaster. As head of the General Accounting Office he would go before Congress and explain that the country need to change course before we flounder in a Perfect Storm of debt. They listened to him respectfully and proceeded to add $5 trillion to the National Debt in the next eight years. The borrowing binge is now entering a hyper-speed phase. President Obama has been only concerned with speed rather than long term corrective actions. The $787 billion 1,074 page stimulus bill has been passed. President Obama has signed it. The market immediately dropped 500 points. It will have no impact on the economy in 2009. The bill will stimulate nothing but the National Debt.
Gold Declines on Speculation Rally to Seven-Month High Overdone Gold fell in Asia as some investors sold the precious metal following its climb to a seven-month high on concerns about a worsening global recession. Bullion’s 14-day relative strength index held above 70, a chart signal that prices may be set to drop. The metal climbed to $987.71 an ounce yesterday as investors sought a safe-haven asset. Immediate-delivery gold fell as much as 0.8 percent to $977.22 an ounce, before trading at $977.72 at 10:40 a.m. in Singapore. Gold for April delivery was little changed at $978.70 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Bankruptcy Could Be More Costly Businesses filing for bankruptcy need loans to work out their troubles, or face liquidation. But General Motors and its smaller rival, Chrysler, have threatened that they will need $125 billion, in what would be the largest bankruptcy financing packages ever, if they do not receive the additional federal aid they are requesting. G.M. alone has said that it needs $100 billion to finance its bankruptcy. To many, that figure seems far too high, and may be a negotiating tactic to keep the companies out of bankruptcy.
Paul Krugman: House Passes $787 Billion Stimulus Plan 2.14.2009
OREGON FAIL: WITH HARD TIMES AHEAD FOR BUSINESS AND REAL ESTATE, IT'S TIME TO LOOK SMALL There is something about Oregon that ignites something close to poetic inspiration, even among the most level-headed types. When I asked Hank Hoell recently about the state, he waxed on about hiking the spectacular Cascades, the dreamy coastal towns and the rich farmlands of the green Willamette Valley. "Oregon," enthused Hoell, president of LibertyBank, the state's largest privately owned bank, from his office in Eugene, "is America's best-kept secret. If quality of life matters at all, Oregon has it in spades. It is as good as it gets. It's just superb." As developer Shelly Klapper, a rare skeptic in the Beaver State, reminded me: "This is a state that buys its own hype." Hype or not, however, Oregon is hurting – something that's clear to even the most self-respecting narcissist. Over the past year, Oregon's economy has fallen off a cliff just about as fast as any state in the union.
Pink Slips Being Readied in California The Associated Press reports that pink slips are now being readied for some 20,000 state workers in California after another late-night session failed to produce a budget bill. Legislators could not find the one last Republican needed to join the other two who have already pledged their votes for a budget that includes $15.1 billion in spending cuts, $14.4 billion in tax increases, and $11.4 billion in new borrowing. The huge tax increases continue to be the major stumbling block for the minority party. Without a budget, governor Arnold Schwarzenegger is making good on his promise to cut payrolls by roughly 10 percent in corrections, health and human services, and other areas.
Bin Laden’s “Right-Hand Man in Europe” Mocks British Justice Another victory for terrorist “lawfare.” The story of Abu Qatada clearly shows the failings of the British justice system. Described by a judge as “Osama bin Laden’s right-hand man in Europe,” Qatada arrived in Britain in 1993. Since then, the taxpayer has lavished ?1.5 million upon him as authorities fight to deport him. Meanwhile, the government is more concerned about sticking to European laws than about protecting the British public. Abu Qatada, a radical Jordanian preacher, arrived in Britain with his family on a forged passport in 1993. He was granted asylum in 1994, and quickly began spreading hate.
'Obama diplomacy will give Iran nukes' Ex-Mossad chief warns Tehran stalling, worries about president's 'learning curve' JERUSALEM – President Obama's policy of direct diplomacy with Iran may buy Tehran enough time to produce nuclear weapons, Shabtai Shavit, former chief of the Mossad intelligence agency, warned in an exclusive WND interview today. "I don't believe there is a political solution which can be achieved through negotiations with Iran," he said. "My concern is that until Obama finishes his learning curve of the subject, the Iranians are going to have maybe the first or even more nuclear bombs." Shavit served as director of the Mossad from 1989 through 1996. He clarified that although diplomacy cannot be ruled out, from his experience he doesn't believe there can be a political solution with Iran.
The Resurgence of 1930s-Style Anti-Semitism Anti-Semitism was fashionable in Europe during the 1930s and was the precursor to the ultimate expression of hatred toward Jews: 1940s-style anti-Semitism. “All Jews to the gas.”. . . “Jews to the oven.” . . . “Kill the Jews.” Recently, those chilling slogans, chanted by tens of thousands, echoed in Europe’s streets. Yes, you read that correctly. These were, of course, popular slogans in Germany during World War ii. By this time, Hitler’s unchecked anti-Semitism had matured beyond boycotting Jewish stores, banning Jews from schools, firebombing synagogues and flogging Jews in dark alleys. By the early 1940s, the ultimate expression of hatred toward Jews had been reached: The führer was rounding Jews up like sheep, and cramming them—shocked and naked, men, women and children—into steel chambers, then gassing them. Granted, the recent Continent-wide choir was largely comprised of European Muslims protesting Israel’s incursion into Gaza and showing support for Hamas. European governments are by no means condoning 1940s-style Nazi anti-Semitism.
Egypt Holds Exercise To Prepare For Israeli Invasion CAIRO [MENL] -- Egypt, amid a troop buildup, has staged a major militaryexercise in the Sinai Peninsula meant to counter an invasion from Israel. Officials said the Egyptian military completed a major multi-serviceexercise in mid-February 2009 despite poor weather in the Sinai. They saidthe 10-day exercise, titled "Badawi-3," tested interoperability between theair force and infantry, both based on U.S. platforms and weapons, as well asEgypt's ability to repel an invasion from the east.
China Feasts on Miners as ‘Bank of Last Resort’ Wuhan Iron & Steel Group and Jiangsu Shagang Group Co., China’s third- and fifth-largest steelmakers, are shopping for iron ore mining stakes in Australia and Brazil, executives said in interviews. “We are evaluating and selecting” candidates in Australia and Brazil, said Shen Wenrong, Jiangsu-based Shagang’s chairman. “Going overseas is the government policy, so I believe we will get financing from Chinese banks.” Wuhan spokesman Bai Fang said his company is “looking for opportunities” amid lower acquisition costs for iron ore assets in Australia and “won’t rule out other countries.”
US Dollar will default in 2009 1/3 Feb 16, 2009
US Dollar will default in 2009 2/3 Feb 16, 2009
US Dollar will default in 2009 3/3 Feb 16, 2009
Peter Schiff Responds to Saudi Dollar Crash Video
Peter Schiff Responds to Saudi Dollar Crash Video - Part 2
Obama signs huge stimulus, readies foreclosure aid Huge stimulus signed, Obama readies $50 billion foreclosure aid, hears car restructuring plan DENVER (AP) -- Racing to reverse the country's economic spiral, President Barack Obama signed the mammoth stimulus package into law Tuesday and readied a new $50 billion foreclosure rescue for legions of Americans who are in danger of losing their homes. There was no recovery yet for beleaguered automakers, who were back in Washington for more bailout billions. General Motors Corp. said it was closing plants, Chrysler LLC said it was cutting vehicle models and both said they were getting rid of thousands more jobs as they made their restructuring cases for $5 billion more for Chrysler and as much as $16.6 billion more for GM. The United Auto Workers union said it had agreed to tentative concessions that could help Detroit's struggling Big Three.
A Bailout Aimed at the Most Afflicted Homeowners The long-awaited housing bailout will finally be announced on Wednesday. In a speech in Phoenix, a signature real estate boomtown gone bust, President Obama will explain his plan to reduce foreclosures. And the key to understanding that plan will be remembering that there are two different groups of homeowners who are at risk of foreclosure. The first group is made up of people who cannot afford their mortgages and have fallen behind on their monthly payments. Many took out loans they were never going to be able to afford, while others have since lost their jobs. About three million households — and rising — fall into this category. Without help, they will lose their homes.
Why Geithner's Bank Fix Will Fail Treasury Secretary Tim Geithner released his desperately awaited banking-system fix last week...and the market immediately dropped several hundred points. Why? Because the plan lacked what the market needs most right now: clarity. And, says our guest Chris Whalen of Institutional Risk Analytics, because it is just another half-measure that will attempt to prop up zombie banks and preserve the status quo.
Gold Climbs to Seven-Month High in London as Economy May Worsen Gold rose to its highest in almost seven months in London as investors bought the precious metal to preserve their wealth on speculation the global economy will deteriorate. Silver climbed to a more than five-month high. Stocks in Europe and Asia retreated on concern banks face further losses and lower debt ratings and as the economic slump deepens. Bullion has climbed 33 percent since October as governments lowered interest rates and spent trillions of dollars to combat the recession. Physical demand has pushed holdings in exchange-traded funds to records.
Economic meltdown fuels gold fever Now, you may witness gold fever in the bullion market. Reason for this is fear among investors. According to a newspaper report, gold markets continue to rise during the global economic downturn and could spur symptoms of gold fever, a newspaper has suggested. According to an article in the Las Vegas Review-Journal, investors are seeking a safe place to put their money, as equities could continue to fall in the US. John Dobra, an economics professor at the University of Nevada, Reno, told the publication: “If you’re asking why gold prices are going up while other things are falling, my standard answer is ‘fear’.”
Why gold & silver coins sales are surging in US Back in late 1985, the US Congress authorized the Gold Bullion Coin Act of 1985 which President Ronald Reagan promptly signed into law. It ordered the US Treasury, through its US Mint branch, to start producing gold bullion coins. This law outlined very specific requirements for these new coins, including that they be produced from gold mined in the United States. This legislation, partially in response to the soaring popularity of foreign national coins like the famous South African Krugerrand in the early 1980s, ushered in the modern era of American bullion coins. The American Gold Eagles and American Silver Eagles that emerged out of this program have since grown very popular among investors worldwide for several reasons.
Gold and Silver break through Resistance Bull markets move like advancing armies – they take out one objective at a time. Last week, gold and silver each took out an important objective by closing above key points that had previously provided considerable resistance. On Wednesday, February 11th, gold closed above $930, but silver that day was stopped at $13.50, its 200-day moving average and a key resistance point. Silver did not retreat, however. It remained firm and finally won the battle by breaking above this resistance point on Friday, closing at $13.62.
Bullish Long Term Outlook for Gold The long-term outlook for gold is very bullish, for to paraphrase Sir Winston Churchill’s famous remark, “never before in history have so many dollars chased so few ounces of gold (and silver)”.* The mountains of currency are rising, while the number of ounces of gold produced by gold mines is dropping. The passing of the Stimulus Bill, referred to by some as the Porkulus Bill, will add billions of dollars to an already ballooning deficit. Instead of allowing the excesses in the credit markets to work themselves out by letting healthy institutions prosper, while allowing unhealthy institutions to fail, the new administration, aided by Congress, is throwing gasoline at the fire by rewarding shoddy business practices. People like Barney Frank and Christopher Dodd, who strong-armed the banking industry to make questionable mortgage loans, are now helping to shape the decisions that will prolong the problems. The foxes are still in the hen house.
Gold Feeding Frenzy as Economy Worsens Ever seen what happens to a piece of meet thrown into a tank full of vicious piranhas? The water is whipped into a froth and within seconds the meatless bone sinks to the bottom. There’s virtually nothing left. The same thing is about to happen in the gold bullion market. After some apparent weakness in Asian markets, gold powered higher yesterday as news of the Japanese economic rout sent global markets into free fall. The only thing that stopped it from happening in the Unites States was the mixed blessing of a holiday keeping markets closed. I say mixed, because a second day of selling overseas means the American market will have two days of pent up selling pressure to be unleashed as the market opens this morning. The news keeps getting worse out of global G7 economies, and that has investors flocking to gold in recognition of its safe haven role.
Gold Setting Records in Non-dollar Currencies Gold’s performance in 2008 could look like a real yawner. After all, it only managed to eke out a 5.7% gain. Not the kind you’d normally brag about over cocktails. As we rang in the 2009 New Year, gold at $850 an ounce (in U.S. dollars) was roughly 15% below its all-time record high, set in March 2008. But everything in life is perspective. In a year when oil lost 59%, the Standard & Poor’s 500 Index was down 38%, and the Dow Jones Industrial Average gave back 30%, things could certainly be worse for gold bullion investors. Much worse, in fact. Just ask the typical investor about his portfolio: He’s likely to grumble, and change the subject. As it turns out, 2008 marks the eighth consecutive year that gold has clocked a positive annual return. It’s now starting to look like the trade of the decade.
China Asks the Trillion-Dollar Question “We hate you guys.” This was the message Luo Ping, director general at the China Banking Regulatory Commission, gave the United States. “Once you start issuing $1 trillion, $2 trillion … we know the dollar is going to depreciate, so we hate you guys, but there is nothing much we can do.” “Except for U.S. treasuries, what can you hold?” asked Luo. “Gold? You don’t hold Japanese government bonds or UK bonds. U.S. treasuries are the safe haven. For everyone, including China, it is the only option.” Yu Yongding, a former adviser to the Chinese central bank, said that China should seek guarantees that its $682 billion holdings of U.S. government debt would not be eroded away by “reckless policies.” He Zhicheng, an economist at Agricultural Bank of China, the nation’s third-largest lender by assets, stated that such a guarantee would be “one of the prerequisites for more purchases.”
U.S. Accuses Texas Financial Firm of ‘Massive’ Fraud Stopping what it called a “massive ongoing fraud,” the Securities and Exchange Commission on Tuesday accused Robert Allen Stanford, the chief of the Stanford Financial Group, of fraud in the sale of about $8 billion of high-yielding certificates of deposit held in the firm’s bank in Antigua. Also named in the suit were two other executives and some affiliates of the financial group. In the complaint, filed in Federal District Court in Dallas, the S.E.C. accused Mr. Stanford and two associates — James M. Davis, a director and chief financial officer of Stanford Group and the Antigua-based bank affiliate, and Laura Pendergest-Holt, the chief investment officer of both organizations — with misrepresenting the safety and liquidity of the uninsured CDs.
U.S. charges Allen Stanford with "massive" fraud Texas billionaire Allen Stanford and three of his companies were charged with "massive" fraud on Tuesday as federal agents swooped on his U.S. headquarters. In a civil complaint filed in federal court in Dallas, the U.S. Securities and Exchange Commission accused Stanford, a high-profile cricket promoter, and two executives of fraudulently selling $8 billion in high-yield certificates of deposit in a scheme that stretched from Texas to the Caribbean. "We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world," said Rose Romero, regional director of the SEC's office in Fort Worth, Texas.
Stanford International Bank Said to Bar Withdrawals Amid Probe Stanford International Bank Ltd., the Antigua-based affiliate of billionaire R. Allen Stanford’s U.S. investment firm, placed a 60-day moratorium on early redemptions of its certificates of deposit, people familiar with the matter said. Stanford Group Co. financial advisers have told three clients that they can’t redeem CDs sold by the firm prior to their maturity date, according to the customers, who asked that their names not be used. The bank in the past let customers pay a three-month interest penalty to get their money back before the contractual maturity of the certificates, the people said. “Bank depositors may withdraw funds in accordance with the terms of their accounts,” Stanford spokesman Brian Bertsch said.
Monetary Policy – not Obama’s stimulus – is what needs watching Let us take stock for a moment of Obama's brilliant economic management. The Democrats just bulldozed through the biggest barrel of pork in American history, the stock market dives, long term treasuries rise, manufacturing is stagnant, unemployment is still rising. Americans are being ruled by the most reckless and self-serving bunch of greedy political partisans to have ever held power. And what makes them especially dangerous to the country's prosperity is their utter stupidity. Obama's mindless adherence to Roosevelt's destructive economic policies have the appearance of a tragic comedy in the making — minus a happy denouement — given his attack on what he called "the same tired arguments and worn ideas that helped to create this crisis". This is a man who is incapable of grasping his own contradictions.
Obama’s Economic Stimulus Bill Most Ambitious Since Roosevelt President Barack Obama today signs into law one of the largest pieces of legislation in U.S. history, a $787 billion behemoth that combines massive tax breaks and government spending designed to resuscitate the moribund U.S. economy. The size of the new law and its speed moving through Congress -- it was approved within weeks of Obama’s inauguration -- place it among the most significant legislative accomplishments since President Franklin Roosevelt overhauled the U.S. government in his first 100 days, historians and political analysts say. “We have plenty of big, complicated pieces of legislation that come down the pike, but this bill is unprecedented,” said Stuart Rothenberg, an independent political analyst in Washington.
Top bankers are in no position to hold taxpayers to ransom If the experts who got us into this mess threaten to walk, then let them go, argues Tracy Corrigan Sir Fred Goodwin, erstwhile chief executive of the stricken Royal Bank of Scotland, is undoubtedly Britain's most famous banker – and since, in good times, bankers are boring and anonymous, his celebrity is not a good sign. In Sir Fred's case, the news is all bad. Last week, he apologised to everyone who has ever worked, banked or invested money with him. His reputation is in tatters and his name is uttered in tones of disgust. He is being sued by American investors and he has lost huge sums of his own money following the collapse of RBS. He is unlikely to work again and many old friends – Gordon Brown among them – now shun him. The outrage directed at Sir Fred is understandable, since his arrogant but disastrous stewardship of RBS pushed it to the verge of collapse.
Larry Pratt Gun Owners of America on Glenn Beck 02/16/2009 Larry Pratt, Executive Director of Gun Owners of America appears on Glenn Beck to discuss HR45.
U.S. Mayors Request Funding For A Police State On the weekend of January 16-18, 2009, the U.S. Conference of Mayors held their annual meeting. At the top of their agenda was the growing economic crisis and how their own municipal budgets have been affected. Of course, their solution is to ask for a taxpayer-funded bailout. However, this bailout request looks more like the national defense budget for a small country, than a plea to keep the lights on in city hall… The Mayors’ 2009 meeting report began: “The U.S. economy enters 2009 in crisis.” the report ends with 344 pages of requests from Washington. The Mainstreet Economic Recovery proposal can be viewed at USMayors.org. While the Conference of Mayors often asks for help from the federal government, this year’s list is larger than ever and incredibly heavy with requests for law enforcement. From armored vehicles to “live fire houses,” police departments both large and small seem to be preparing for full-scale war. The following is a small sampling of U.S. cities and their requests for police equipment:
Treasuries Gain as Global Slump Concern Deepens, Stocks Plunge Treasuries rose, pushing yields on benchmark 10-year notes to a three-week low, as concern eastern European banking losses will drive the global economy deeper into recession raised the haven appeal of U.S. government debt. U.S. securities climbed as stocks plunged worldwide after Moody’s Investors Service said credit ratings of banks with units in eastern Europe may be lowered. International demand for long- term U.S. financial assets rose more than economists forecast in December, a report showed. President Barack Obama plans to sign the $787 billion economic stimulus bill into law today.
Bailed-Out Banks Charge Taxpayers Highest Fees in FDIC Sales Citigroup Inc. and Bank of America Corp., recipients of $90 billion in bailout funds from American taxpayers, are charging financial companies three times more to sell bonds under a U.S.-backed rescue program than government- controlled Fannie Mae and Freddie Mac pay to issue notes with similar maturities. Since the Federal Deposit Insurance Corp. started guaranteeing debt in November, banks have charged clients, including themselves, more than $375 million in fees on $154 billion of deals in the U.S., according to data compiled by Bloomberg. Pittsburgh-based PNC Financial Services Group Inc., which received $7.6 billion from the U.S. Treasury, paid Citigroup and JPMorgan Chase & Co. 30 basis points, or $6 million, in December to sell FDIC-backed notes due in three-and- a-half years. A month later, JPMorgan and two other banks charged Freddie Mac 7.5 basis points for a similar offering. “The fact that you have U.S. government support in the form of the FDIC guarantee, there should be a reduction in fees,” . . .
"Worst Is Yet to Come:" Americans' Standard of Living Permanently Changed There's no question the American consumer is hurting in the face of a burst housing bubble, financial market meltdown and rising unemployment. But "the worst is yet to come," according to Howard Davidowitz, chairman of Davidowitz & Associates, who believes American's standard of living is undergoing a "permanent change" - and not for the better as a result of:
An $8 trillion negative wealth effect from declining home values.
A $10 trillion negative wealth effect from weakened capital markets.
A $14 trillion consumer debt load amid "exploding unemployment", leading to "exploding bankruptcies." "The average American used to be able to borrow to buy a home, send their kids to a good school [and] buy a car," Davidowitz says. "A lot of that is gone."
GM Seeks Up to $16.6 Billion in New Aid, Plans 47,000 Job Cuts General Motors Corp. asked the U.S. for as much as $16.6 billion in new loans, more than doubling the aid to date, and said it needs some of the cash next month to survive as it sheds brands and cuts 47,000 more jobs worldwide. Chrysler LLC, propped up like GM with federal assistance, said it’s seeking $5 billion more from the government and will shed 3,000 more positions. The automakers met a deadline yesterday to report progress in revamping operations with $17.4 billion in loans granted so far. Now, they must show the U.S. by March 31 that they can become profitable in order to keep the money. Along with Ford Motor Co., they got a boost when the United Auto Workers said it reached tentative agreements to help trim labor expenses.
Weakness Unmatched in 35 Years One of the best gauges of an economy is tax collections. No one pays taxes unless they have to, so collections are a real-world, real-time analysis of the US economy. And the best source I know of for tracking taxes is The Liscio Report, by Philippa Dunne & Doug Henwood. Tax collections are down. Philippa and Doug give us the actual numbers, which are not pretty. Bottom line? "What does this all mean? It suggests that the consumer retrenchment in this recession will be deep and long, and will probably continue into any recovery. The American consumer is no longer the world consumer of last resort, and that's an enormous change for both this country and the rest of the world to get used to."
Recession and bank worries slam Wall Street Stocks tumbled on Tuesday as investors confronted fresh signs that the recession is worsening and worried that efforts to stabilize the beleaguered financial system may not prove sufficient. The slide took the benchmark S&P 500 below the 800 level for the first time since the bear market low of November 21, weighed by financials, energy companies and big manufacturers. . . . "There's still trouble in the banking sector, trouble with respect to corporate earnings and nothing that we've seen is going to reverse that in the short term," said Dan Greenhous, market analyst at Miller Tabak & Co in New York. "I don't believe equities are appropriately priced for weakness through the entirety of 2009."
Little-known agency that insures pensions of 44 million workers braces for recession fallout The deepening recession spells trouble for a little-known government corporation that insures the pensions of 44 million workers and retirees. The Pension Benefit Guaranty Corp. already has an $11 billion deficit that seems sure to grow larger as Corporate America suffers through the worst economic crisis since the Great Depression. With companies reporting shortfalls in their pension funds, it's all but certain that the PBGC will be forced to take over the pension plans of a rising number of bankrupt businesses. That means more red ink at the corporation before things possibly can improve. The future financial health of the agency is hard to forecast. It is hinged on interest rates, the length of the recession and the PBGC's own luck in playing the market, where it has billions invested.
The Liquidationist Alternative As the Obama stimulus plan passes and Treasury Secretary Tim Geithner unveils the outline of a $1.5 trillion bank rescue package, the die has been definitively cast in favor of the Keynesian stimulus approach to the ongoing unpleasantness. That has been conventional wisdom since the Great Depression, but it’s still worth looking at what might have happened had policymakers followed an alternative route, the liquidationist approach favored by 1920s Treasury Secretary Andrew Mellon. In December 1929, as what we now know to have been the Great Depression loomed, Mellon outlined his formula for fighting recession, which had worked well in the previous episode of 1920-21. “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. … It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.’’ Mellon then foolishly remained at Treasury until 1932, a powerless spectator of the opposite approach taken by President Hoover, tarnishing his reputation for the rest of his lifetime and beyond.
Treasury's strategy: 'What elephant?' At some point, the feds or the private sector will have to absorb banks' bad assets. If the administration keeps ignoring that fact, we can't move forward. I don't think it's worth spending a lot of time discussing the Treasury's not-ready-for-prime-time nonplan plan to fix the banks. Accounts have been nearly unanimous in concluding that what was promised to be "shock and awe" turned out to be nothing more than "aw shucks, we're confused." (Read Jon Markman's "Geithner's first test is a disaster" for one example.) Reckoning with the rotten assets One of these days, the mind-boggling mass of bad assets held by banks will have to be sold to the private sector at a price or, more likely, transferred to the government. However, the real sticking point continues to be discovering the prices at which these various assets can be sold. It looks as though the Treasury is unwilling (or unable) to acknowledge that elephant in the room, which is the first variable that must be solved for if we are to move forward.
Government pension agency braces for recession WASHINGTON -- The deepening recession spells trouble for a little-known government corporation that insures the pensions of 44 million workers and retirees. The Pension Benefit Guaranty Corp. already has an $11 billion deficit that seems sure to grow larger as Corporate America suffers through the worst economic crisis since the Great Depression. With companies reporting shortfalls in their pension funds, it's all but certain that the PBGC will be forced to take over the pension plans of a rising number of bankrupt businesses. That means more red ink at the corporation before things possibly can improve.
Dr. Jerome Corsi: The Obama Honeymoon is Over!! 1/3
Dr. Jerome Corsi: The Obama Honeymoon is Over!! 2/3
Dr. Jerome Corsi: The Obama Honeymoon is Over!! 3/3
Ron Paul: On Reinstating the Draft Much has been made by the new administration of the idea of national service and volunteerism. While service to one’s community is certainly admirable, it is not the federal government’s place to “encourage” or promote volunteerism. Moreover, there are troubling signs that national service could transition from voluntary to mandatory, or de facto mandatory, such as the requirement of service in order to be granted a diploma, or something along those lines. Involuntary servitude was supposed to be abolished by the 13th Amendment, but things like Selective Service and the income tax make me wonder how serious we really are in defending just basic freedom. The income tax enslaves workers for nearly 4 months out of a year by garnishing what amounts to all their wages in that period of time. A military draft could demand your very life, without your consent. This should be unthinkable in a free society.
Wages, Unemployment, and Inflation This essay originally appeared in Christian Economics, March 4, 1958 Our economic system - the market economy or capitalism - is a system of consumers' supremacy. The customer is sovereign; he is, says a popular slogan, "always right." Businessmen are under the necessity of turning out what the consumers ask for and they must sell their wares at prices which the consumers can afford and are prepared to pay. A business operation is a manifest failure if the proceeds from the sales do not reimburse the businessman for all he has expended in producing the article. Thus the consumers in buying at a definite price determine also the height of the wages that are paid to all those engaged in the industries.
Wages Ultimately Paid By the Consumers
What Makes Wages Rise
What Causes Unemployment
Credit Expansion No Substitute for Capital
Inflation Cannot Go On Endlessly
The Policy Of The Unions
The Purchasing Power Argument
Wage Raises As Such Not Inflationary
The Dilemma of Present-Day Policies
Insincerity In The Fight Against Inflation
The Importance of Sound Monetary Policies
Why the U.S. Dollar Constantly Loses Value Ever wonder why your dollar doesn’t seem to stretch as far as it used to? There is a simple explanation: It’s worth less. The reason for that is, the nation’s money supply is constantly being expanded. Between 1783 and 1913, the U.S. dollar was a real store of wealth. Except during war-time periods, inflation within the U.S. was essentially zero. If you saved one dollar in 1800, a hundred years later you could still purchase approximately the same amount of goods with that dollar. But then in 1913 something changed, and the U.S. dollar started down a long, steady road of dollar devaluations. Using the U.S. government’s own figures, to obtain the same amount of purchasing power of $100 in 1913, you would need $2,038.38 today.
Trump Resorts files for bankruptcy again The company filed for Chapter 11 protection; Tuesday was the deadline to reach a new deal with bond holders to restructure $1.25 billion in debt. The three Atlantic City casinos once run by Donald Trump filed for Chapter 11 bankruptcy protection on Tuesday — for the third time. Trump Entertainment Resorts made the filing in U.S. Bankruptcy Court in Camden, N.J., four days after the real estate mogul whose name remains on the company and its three seaside gambling resorts resigned as chairman of its board. Mr. Trump was frustrated that bond holders and their allies on the board rebuffed his offer to buy the company and take it private. "Other than the fact that it has my name on it — which I'm not thrilled about — I have nothing to do with the company," Mr. Trump told The Associated Press Tuesday.
Massachusetts [& other states] May Consider A Mileage Charge for Motorists Boston (AP) - A tentative plan to overhaul Massachusetts' transportation system by using GPS chips to charge motorists a quarter-cent for every mile behind the wheel has angered some drivers. "It's outrageous, it's kind of Orwellian, Big Brotherish," said Sen. Scott Brown, R-Wrentham, who drafted legislation last week to prohibit the practice. "You'd need a whole new department of cronies just to keep track of it." But a "Vehicle Miles Traveled" program like the one the governor may unveil this week has already been tested -- with positive results -- in Oregon. Governors in Idaho and Rhode Island, as well as the federal government, also are talking about such programs. And in North Carolina, a panel suggested in December the state start charging motorists a quarter-cent for every mile as a substitute for the gas tax.
California Lawmakers Face Lockdown as Budget Falters in Senate California lawmakers failed to reach agreement on how to eliminate a $42 billion budget shortfall as Governor Arnold Schwarzenegger prepares to shut down hundreds of public works projects and fire thousands of state workers. Senate President Darrell Steinberg, a Democrat, plans to lock lawmakers in the capitol unless they pass a $40 billion package of tax increases, spending cuts and bond sales today. The bills, backed by the Republican governor and by Democrats, remain one Republican vote short. “We are dealing with a catastrophe of unbelievable proportions,” said Senator Alan Lowenthal, a Democrat from Long Beach. “We cannot deny it any longer.”
Wealthy cities discovering they're not recession-proof Beverly Hills, Santa Monica and Newport Beach, which are usually shielded from economic downturns, are seeing decreases in sales tax revenues, along with two-thirds of cities in Southern California. There are million-dollar mansions in foreclosure, layoffs on Rodeo Drive. And reservations are no longer a must at all but the most exclusive restaurants. As recently as the summer, many wealthy Southern California enclaves appeared beyond the reach of the worst recession in decades. But rich cities, it turns out, aren't always so different from the rest. City officials in Beverly Hills -- a place insulated from most economic downturns -- now project a $24-million drop in tax revenues over the next 16 months. The loss represents about 15% of the general fund budget, said Beverly Hills City Manager Roderick Wood.
Tax troubles for president's chief of staff Emanuel's rent-free Washington residence draws questioning There could be tax troubles on the horizon for White House Chief of Staff Rahm Emanuel, who reportedly has lived rent-free in Washington for five years but hasn't paid taxes on the imputed income from that, according to reports. He's the latest in a growing list of President Obama's nominees to have been involved in tax issues, according to those tabulating the tally in Washington. According to WND columnist Phyllis Schlafly, several of "Obama's major nominees are mired in political embarrassment. Three withdrew their names from consideration, one sneaked through confirmation because senators were still intoxicated with the Obama honeymoon, and Obama plans to use a waiver so the Senate will approve the fifth."
Jerome Corsi - North American Union PT 1
Jerome Corsi - North American Union PT 2
PROOF That The North American Union IS COMING! The Doublespeak about the North American Union...not only is the plan in motion, our highest "elected leaders" have deliberately lied about it, while lower-level "elected representatives" have plainly stated that it is, indeed, a fact, and that it has been a plan which has been in place for more than a decade of active development. It's high time that we remove our corrupt politicians from office, and take back our lives, and our countries.
G-20 needs joint efforts, not talk of a 'new order' PARIS: Nicolas Sarkozy talks of a meeting to "remake capitalism." Giulio Tremonti, Italy's finance minister, only a little less bombastically - his country's shrillest register is always held in reserve for Silvio Berlusconi - has called for "new rules so that a new world economic order" can be born. That sounds messianic. And it's a problem. When it comes to looking toward the G-20 summit meeting April 2 in London, where Barack Obama will meet with the representatives of 19 of the global economy's greatest powers, the misery of having no game-turning solution for the international economic and financial crisis is creating an over-compensating language of excessive expectations, illusion, and it's-not-my-responsibility positioning.
Obama boosts U.S. forces in Afghanistan A Democratic leader supports the troop request of "ground commanders.'' President Barack Obama, ordering the deployment of an additional 12,000 U.S. troops and 5,000 support personnel to Afghanistan, said today it "is necessary to stabilize a deteriorating situation in Afghanistan, which has not received the strategic attention, direction and resources it urgently requires.'' The president is authorizing 8,000 Marines and 4,000 soldiers - a Marine Expeditionary Force from Camp LeJeune, N.C., and an Army Stryker brigade from Fort Lewis, Washington - in addition to supporting forces to augment a U.S. force of about 30,000 troops already deployed in Afghanistan.
Switzerland threatened with bankruptcy In an interview with Swiss daily Tagesanzeiger, a well-known economist has warned that Switzerland risks bankruptcy, if the recent market turmoil centering on Eastern Europe is not contained quickly. At issue are loans made in Swiss Francs to Eastern European debtors. With many countries in the region falling into depression, currencies and asset prices are plunging. Therefore, debtors domiciled in Eastern Europe are increasingly expected to have difficulty with mounting foreign debt loads — and that spells trouble for Switzerland.
Germany to break postwar taboo with new bank law BERLIN/FRANKFURT (Reuters) - Chancellor Angela Merkel's government appears ready to end weeks of intense debate and back a new law this week which would give Berlin the right to seize private property for the first time in the postwar era. The law, an extension of bank rescue legislation agreed last year, is due to go before Merkel's cabinet on Wednesday and would set the stage for a nationalisation of Hypo Real Estate, a high-profile casualty of the financial crisis. Her government decided last month it needed to take control of Hypo, a Munich-based lender, after giving the bank 87 billion euros (77 billion pounds) in state guarantees over the past year and seeing no improvement in its financial condition.
Eastern Europe worries spark Western bank slide Several of Europe's top banks skidded on Tuesday as investors fretted that exposure to their once-fast growing Eastern neighbours will prove to be a thorn in the side of many lenders. The sell-off was sparked by a report from Moody's Investors Services, which said it's concerned about Western European banks that are supporting subsidiaries in Eastern Europe against a rapidly deteriorating global macroeconomic backdrop. "Deteriorating financial strength of East European subsidiaries has a negative spillover effect on their West European parents. Maintaining a robust risk-return profile during a downturn in the untested and still more volatile East European markets will prove a challenge going forward," the agency said.
Britain Busts Its Economy—Using Fancy Language Britain is running the risk of revisiting one of its darkest economic hours in the postwar period. That’s how bad it is, says opposition leader David Cameron. “If we continue on Labor’s path of fiscal irresponsibility, at some point—and it could be very soon—the money will run out,” Cameron said. Alas, it would be a good thing if Britain could run out of money. At least then there would be a limit to government spending. But David Cameron is talking as if it is still the 1970s and the pound still has gold reserves backing its value. Today, the UK Treasury has bottomless pockets. Money, after all, is just numbers.
Is Ireland the next big bomb in the global debt crisis? Ireland's main stock index dived 4% today, the fifth straight decline, after European media reports over the weekend focused on the possibility of the once-booming Emerald Isle reneging on its debt. "Fears are mounting that Ireland could default on its soaring national debt pile, amid continuing worries about its troubled banking sector," Britain’s Sunday Times reported. In the credit-default-swap market, the cost to insure $10 million in Irish sovereign debt against default jumped to $377,000 on Friday, up from $262,000 at the end of January and just $24,000 a year ago, MarketWatch.com reported.
"Hostile" forces seen stirring up China jobless BEIJING (Reuters) - China must guard against "hostile forces" within and outside the country working to stir up trouble among its masses of newly unemployed workers, a senior trade union official said in comments published on Wednesday. Beijing's Communist Party leadership has issued repeated warnings that legions of idle rural workers gathered in the country's struggling export hubs could pose a threat to the social stability. Clashes between police and unpaid workers locked out of failed factories have flared up across China in recent months, but the government bans independent trade unions, depriving workers of a key channel for resolving disputes.
Hillary Clinton promotes Tokyo stimulus Secretary of State Hillary Clinton, having tea with the empress of Japan today, also was having a somewhat more substantive meeting with the nation's foreign minister. As the American president signs a $787-billion stimulus back home, the travelling secretary was calling on Japan to boost its own economic stimulus spending.
Japan’s Finance Minister Quits After G-7 Blunder TOKYO — Japan’s finance minister resigned Tuesday after widespread criticism of embarrassing behavior at the weekend Group of 7 meeting in Rome. The minister, Shoichi Nakagawa, raised eyebrows for his slurred speech and muddled answers, and for appearing to fall asleep at a news conference in Rome on Saturday. A clip of Mr. Nakagawa in which he appeared to be groggy in front of journalists was posted on YouTube. After intense criticism from politicians who said he had embarrassed Japan, Mr. Nakagawa stepped down on Tuesday, adding to the woes of a government that is facing a backlash for its handling of the economic crisis.
Japanese finance minister drunk at G-7 February 16, 2009 - The Japanese finance minister, Shoichi Nakagawa, denied on Monday that he was drunk at a news conference in Rome where he slurred his words and said his political fate was up to the prime minister after the opposition called for him to be fired. Nakagawa, a close ally of Prime Minister Taro Aso, told reporters that he had drunk alcohol the day before the press conference and took medicine on his flight to Rome for a meeting of Group of 7 finance leaders and central bankers on Friday and Saturday. He said the combination may have affected him badly.
Is Israel assassinating Iran nuclear scientists? Israel is assassinating Iranian nuclear scientists as part of a covert war against the Islamic Republic's illicit weapons program, the Daily Telegraph on Tuesday quoted Western intelligence analysts as saying. The British daily said Israel's Mossad espionage agency was rumored to be behind the death of Ardeshire Hassanpour, a top nuclear scientist at Iran's Isfahan uranium plant, who died in mysterious circumstances from reported "gas poisoning" in 2007. Other recent deaths of important figures in the procurement and enrichment process in Iran and Europe have been the result of Israeli "hits", intended to deprive Tehran of key technical skills at the head of the program, according to the analysts.
Israel launches covert war against Iran Israel has launched a covert war against Iran as an alternative to direct military strikes against Tehran's nuclear programme, US intelligence sources have revealed. It is using hitmen, sabotage, front companies and double agents to disrupt the regime's illicit weapons project, the experts say. The most dramatic element of the "decapitation" programme is the planned assassination of top figures involved in Iran's atomic operations. Despite fears in Israel and the US that Iran is approaching the point of no return in its ability to build atom bomb, Israeli officials are aware of the change in mood in Washington since President Barack Obama took office. They privately acknowledge the new US administration is unlikely to sanction an air attack on Iran's nuclear installations and Mr Obama's offer to extend a hand of peace to Tehran puts any direct military action beyond reach for now.
Last article is an IMPORTANT READ!
John F. Kennedy vs The Federal Reserve On June 4, 1963, a virtually unknown Presidential decree, Executive Order 11110, was signed with the authority to basically strip the Federal Reserve Bank of its power to loan money to the United States Federal Government at interest. With the stroke of a pen, President Kennedy declared that the privately owned Federal Reserve Bank would soon be out of business. The Christian Law Fellowship has exhaustively researched this matter through the Federal Register and Library of Congress. We can now safely conclude that this Executive Order has never been repealed, amended, or superceded by any subsequent Executive Order. In simple terms, it is still valid. When President John Fitzgerald Kennedy - the author of Profiles in Courage -signed this Order, it returned to the federal government, specifically the Treasury Department, the Constitutional power to create and issue currency -money - without going through the privately owned Federal Reserve Bank. President Kennedy's Executive Order 11110 [the full text is displayed further below] gave the Treasury Department the explicit authority: to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury. This means that for every ounce of silver in the U.S. Treasury's vault, the government could introduce new money into circulation based on the silver bullion physically held there. As a result, more than $4 billion in United States Notes were brought into circulation in $2 and $5 denominations. $10 and $20 United States Notes were never circulated but were being printed by the Treasury Department when Kennedy was assassinated. It appears obvious that President Kennedy knew the Federal Reserve Notes being used as the purported legal currency were contrary to the Constitution of the united States of America.
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Tues 02.17.2009
Federal obligations exceed world GDP Does $65.5 trillion terrify anyone yet? As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world. The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account. The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the "2008 Financial Report of the United States Government" as released by the U.S. Department of Treasury. The difference between the $455 billion "official" budget deficit numbers and the $5.1 trillion budget deficit cited by "2008 Financial Report of the United States Government" is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.
Gold is Starting to Believe the Obama Administration Despite making loud headlines about stimulating the economy, the US government has been unable to raise the level of optimism among the general public, while the stock market seemed to drop into a deep state of apathy. Last week we received the long-awaited economic stimulus packet as well as the so-called plan for the rescue of the US financial system. We have already voiced our skepticism regarding the structure of the stimulus and its potential effect on the economy in a prior article. As far as the size of the $787 billion package, it is clear that it is too small and too spread out into 2010 and beyond to be called a stimulus. $787 billion is just 5.6% of the GDP and when spread over two years will account for just 2.8% at a time when many industrial economies around the world are contracting by 5-10% per year. It can only be called a life support package, not a stimulus.
Platinum Declines in Asia on Auto Industry Woes; Gold Advances Platinum dropped in Asia as a slumping automotive industry may curb demand as carmakers slash profit forecasts, output and jobs. Gold gained. Nissan Motor Co., Japan's third-largest automaker, today said it will stop output at three plants for as much as 13 days after demand plunged. General Motors Corp., racing to complete a report asking the U.S. to increase a $13.4 billion aid package, may close or sell as many as four plants under a spending-reduction drive in Europe.
Obama's Opening Salvo There is nearly universal agreement that the opening salvo of the Obama Administration's campaign to restore health to the financial system, delivered this week by new Treasury Secretary Geithner, fell with a loud and ugly thud. The most common criticism is that the announcement was short on detail. What is abundantly clear, however, is that the new Administration intends to push spending back up to pre-crash levels and to fill the entire credit void that has disappeared into the black hole of the American financial system. Whether or not the prior levels of spending and lending were justified by market conditions then, or now, appears to be largely unexamined.
Ron Paul Discusses Stimulus on CNN American Morning 02/16/2009
How the stimulus bill affects you The $787 billion package might cut your taxes, make your health insurance cheaper, fix the roads you drive on and keep the best teachers in your children's schools. And that's just for starters. Here's an examination of how the economic stimulus plan will affect Americans. Taxes. The recovery package has tax breaks for families that send a child to college, purchase a new car, buy a first home or make the one they own more energy efficient. Millions of workers can expect to see about $13 extra in their weekly paychecks, starting around June, from a new $400 tax credit to be doled out through the rest of the year. Couples would get up to $800. In 2010, the credit would be about $7.70 a week, if it is spread over the entire year. A $1,000 child tax credit would be extended to more low-income families that don't make enough money to pay income taxes, and poor families with three or more children will get an expanded earned income tax credit. Middle-income and wealthy taxpayers will be spared from paying the alternative minimum tax, which was designed 40 years ago to make sure wealthy taxpayers paid at least some tax but was never indexed for inflation. Congress fixes it each year, usually in the fall.
Big-City Leaders Call Stimulus a Fine Start But Advocates Hope Funding Measure Is Just Down Payment on Broader Plan New York City Mayor Michael R. Bloomberg (I) has said the federal money from the economic stimulus plan could save 14,000 teacher jobs and 1,000 police officer positions he had planned to cut. The money could expand the subway system, avert hospital closures and create a new urban economy surrounding energy retrofitting, according to other officials. Across the country, urban leaders and advocates say the stimulus plan that President Obama is to sign Tuesday will create jobs in cities and blunt the impact of the economic crash. But they hope the funding package only begins to hint at the ambitious urban policy agenda Obama has articulated. "It's a down payment," said Trenton Mayor Douglas H. Palmer (D), the past president of the U.S. Conference of Mayors. "But we're certainly on the right track."
Late Change in Course Hobbled Rollout of Geithner's Bank Plan Just days before Treasury Secretary Timothy F. Geithner was scheduled to lay out his much-anticipated plan to deal with the toxic assets imperiling the financial system, he and his team made a sudden about-face. According to several sources involved in the deliberations, Geithner had come to the conclusion that the strategies he and his team had spent weeks working on were too expensive, too complex and too risky for taxpayers. They needed an alternative and found it in a previously considered initiative to pair private investments and public loans to try to buy the risky assets and take them off the books of banks. There was one problem: They didn't have enough time to work out many details or consult with others before the plan was supposed to be unveiled.
Money As Debt (1 of 5)
No excuses if Obama can't fix 'his' recession If, like John Maynard Keynes, you believe that spending, any spending, will revive a flagging economy, the freshly minted, 1,000-page American Recovery and Reinvestment Act of 2009, calling for $504 billion in deficit-financed spending, is for you. Well, not quite. It seems that most of the money will not be spent very soon. About 30% won't hit the economy until 2011, and the balance is likely to be tied up in the procurement processes of the federal and state governments until well into 2010, and beyond. Besides, much of the spending will end up boosting other economies - subsidies for wind machines will benefit workers in the other countries in which such machines are manufactured, not our very own horny-handed toilers. And much of the spending will not create jobs for the unemployed: laid-off car workers do not have the skills to design the software to manage the "smart grid" that is the apple of the greens' eye.
Mirror, Mirror on the Wall... We have been fortunate enough to make some important calls over the past ten years. The top of the stock market in early April of 2000; the beginning of the gold bull market in June 2000; 9/11 in November ten months before it happened; the Iraq and Afghanistan Wars; the beginning of the real estate bubble; the top of that market in June of 2005; the beginning of the subprime fiasco in 2006 and the beginning of the commercial real estate freeze. We also forecast the terrible financial conditions facing states and the freezing up of insurance and the municipal bond market. We called the recession in February 2007 and told readers to get out of the market at 14,000. That's with the exception of gold and silver and oil shares. The recession was right on schedule. The depression that began two weeks ago happened quicker than we had anticipated, but it is here and now.
Money As Debt (2 of 5)
Obama May Press Banks to Cut Mortgage Payments President Obama's plan to reduce the flood of home foreclosures will include a mix of government inducements and new pressure on lenders to reduce monthly payments for borrowers at risk of losing their houses, according to people knowledgeable about the administration's thinking. The plan, to be announced Wednesday, is expected to include government subsidies for reducing a borrower's interest rate, which a lender would have to match with its own money. But officials cautioned that subsidies for lower interest rates would not in themselves help many troubled homeowners, because lenders were still likely to view many of those borrowers as bad risks and refuse to restructure their loans. As a result, they have been casting about for sticks as well as carrots to persuade the lenders to take part.
Diluted to Oblivion, Dead Banks A hard time came when deciding upon a title today. "Dead Banks Walking" or "Insolvent & Motionless Yet Standing" or "Much Ado About No Credit" or "The Bank Vampires" or "The Primary Dark Syndicates" made sense. But what came to mind when a comment made by the Jackass in June 2008 on the Vancouver stage at a Cambridge House Metals & Mining Conference. My words to close a panel discussion on the banks were "Just wait, in several months you will see the entire US banking system go insolvent, its stock prices dwindle to nothing, as it will be diluted into oblivion!" It happened. The response by the USGovt, the USFed, Wall Street banks, and the USCongress will result in very little remedy since their first objective is to keep in place the cover-up to their gigantic fraud, much of which still eludes the financial press. By the time conditions worsen, rescues will not be the primary objective any longer. Rather, prevention of collapse will become the urgent priority. Desperate official actions will result in turning the corner on inflation, from the so-called deflation toward hyper-inflation. The gold & silver price will find release. Already, their prices are disconnected from the USDollar.
Money As Debt (3 of 5)
President's day A creepy feeling ushers in President's Day this year as the suspicion grows that nobody in charge of anything knows what what to do next. The usual yin-yang consensus has solidified in congress along party lines, both equally idiotic. In the White House, Mr. Obama is under excruciating pressure to "do something" as systems unravel and economies augur into darkness. Amid all the anxiety and raging cluelessness, one thing is clear: we're doing everything possible to evade reality.
Greatest Wealth Transfer since Joseph was in Egypt We are on the threshold of a major move in gold equities, which would probably lead the Gold index on the JSE (Johannesburg Stock Exchange) to all time highs of 7000 plus within the next 2 to three years. With GOLD on 2732 on 12 Feb 2009, this is where I want to invest my savings when I am not putting it in real money (by now most readers should know what is real money). GOLD has just broken out of a down trend that started in 2006, and this breakout also, just about, almost signals a full recovery of gold equities from their fall that started in March 2008. I hope you know by now that gold is in a bull market that could still run many years; therefore the 7000 estimate could be too low. It therefore follows naturally that your successful gold miners will follow the success of gold.
Money As Debt (4 of 5)
2009 Outlook, Part 3 Currencies: Policies of INSOLVENCY, aka Dominoes! In 2008, the currency markets offered some of the greatest opportunities of all markets. Every currency had substantial moves 'up and down' and many times BOTH ways, as deleveraging and stampedes of panic swept through the markets at different times. 2009 will be no different, only now we are going to look for sharp differences in two in particular. Those that exist in REAL MONEY will skyrocket and pretenders to that moniker will decline regardless of the country that issues them.
Still Looking for Rock Bottom in Markets Hong Kong container traffic slumped 28 per cent in January, car sales across Europe fell by 27 per cent, these are critical trade depression indicators. Equity markets have weakened but not retested the lows of late last year, while gold is on the way up yet not above $1,000 an ounce. Oil prices touched the low 30s last week. Talk of US house prices bottoming out by the end of the year excited some comment. But really the problem is that we can not see light at the end of this tunnel. That is what you might expect to see, or not to see, at the moment of maximum pessimism - the proverbial dark before the dawn. And yet the spark of optimism about the future is still missing.
Money As Debt (5 of 5)
Ratio Reversal: Re-thinking Fractional Banking Bill Gross of PIMCO makes the argument in his most recent "Investment Outlook" that the government needs to support asset prices to stop the hemorrhaging of the global economy. He argues that the TARP funds, while successfully instigating lending among large financial institutions on a limited basis, have not slowed the continued deleveraging by what he calls the "Shadow Banking System" continues to drag asset prices down. The reason, he says, is because government assistance cannot be diverted to the institutions in this class (hedge funds, investment banks and structured financial conduits) because they are invisible, and therefore such rescues would not pass public scrutiny.
How the Crash Will Reshape America MY FATHER WAS a child of the Great Depression. Born in Newark, New Jersey, in 1921 to Italian immigrant parents, he experienced the economic crisis head-on. He took a job working in an eyeglass factory in the city's Ironbound section in 1934, at age 13, combining his wages with those of his father, mother, and six siblings to make a single-family income. When I was growing up, he spoke often of his memories of bread lines, tent cities, and government-issued clothing. At Christmas, he would tell my brother and me how his parents, unable to afford new toys, had wrapped the same toy steam shovel, year after year, and placed it for him under the tree. In my extended family, my uncles occupied a pecking order based on who had grown up in the roughest economic circumstances. My Uncle Walter, who went on to earn a master's degree in chemical engineering and eventually became a senior executive at Colgate-Palmolive, came out on top-not because of his academic or career achievements, but because he grew up with the hardest lot.
Wall Street Execs Knew Madoff Was a Fraud Years Ago But Kept Silent There is no way that the top execs on Wall Street did not know Bernie Madoff was running a scam. No way. Why? Because once they heard he was pulling down those kinds of returns in all types of markets they would have had their own whiz kids climbing up his company's investment portfolio looking to see how he did it. They would want to do it too. It took Markopolos how many minutes to figure out it wasn't legitimate? But now you know why so few Wall Street firms lost any money with Madoff despite his 'superior returns.' Why did they keep quiet? Professional courtesy amongst scumbags is not likely, because there isn't any. More likely Bernie knew about some of their frauds, and that made him untouchable.
Madoff Wall of Silence KEPT MUM ON FEARS Senior executives at some of Wall Street's biggest firms were convinced Bernard Madoff was a fraud as early as 2005 - yet none alerted authorities, documents filed with the Securities and Exchange Commission reveal. Leon Gross, the former managing director in charge of worldwide equity derivatives research for Citigroup, told friends and colleagues on Wall Street in 2005 that he thought Madoff was being less than honest about the returns he could make for investors but did nothing to prevent the fraud. Likewise, Joanne Hill, Goldman Sachs' global head of equity derivatives research, believed there was something wrong with Madoff's investment scheme because the returns he boasted in marketing materials seemed too good to be true.
That Perk in the Sky Has Defenders on Land THERE are bad economic times. Then there are bad economic times made even worse by a furious public and political fallout against high-end spending. The luxury hotel industry, as I've said, was the first to feel this effect. It started with understandable public outrage last fall when the insurer American International Group ran up a hotel bill of $443,343.71 for an incentive junket for its salespeople at a fancy Southern California resort five days after accepting a big emergency federal bailout loan. The ensuing furor caused many corporate travel managers across the country to abandon the use of luxury hotels, partly for the sake of appearances.
Economy Strains Under Weight of Unsold Items The unsold cars and trucks piling up at dealerships and assembly lines as consumers cut back and auto companies scramble for federal aid are just one sign of a major problem hurting the economy and only likely to get worse. The world is suddenly awash in almost everything: flat-panel televisions, bulldozers, Barbie dolls, strip malls, Burberry stores. Japan yesterday said its economy shrank at an 12.7 percent annual pace in the last three months of 2008 as global demand evaporated for Japanese cars and electronics. Business everywhere are scrambling to bring supply in line with demand.
Fed's Duke: housing woes show tough rules needed PHOENIX (Reuters) - Federal Reserve Governor Elizabeth Duke said on Monday the crisis in housing highlights the need for vigorous enforcement of bank rules and questioned the wisdom of letting banks affiliate with commercial firms. In a speech to the American Bankers Association (ABA), Duke said bankers "have a responsibility to act in a safe and sound manner" and urged them to do more to help slow the pace of home foreclosures. She said that letting banks and commercial firms affiliate "threatens the ability of banks to continue to serve as effective and objective intermediaries of credit" by exposing them to risks that commercial affiliates take.
Why your home's value will keep falling The market is forecasting a further 14.5% drop in home values, and so far the feds haven't helped. Investors can dabble, but home sellers and potential buyers still have it rough. The housing collapse led the stock market and the economy into the cellar. And this crucial sector is headed deeper still, along with the value of your home. How low? One measure suggests a further 14.5% drop. "The problem we have right now is that our animal spirits are beaten down, and this is a fundamental problem," says economist Robert Shiller, the foremost expert on the U.S. housing market. And, he adds, the feds aren't helping. "The (Obama stimulus plan) has a good chance of not fixing that," he says. Though it's the largest such government initiative since the Great Depression, the announced stimulus certainly hasn't changed the psychological tone on Wall Street. Confidence in the Troubled Asset Relief Program and its ability to save banks from bad mortgage assets may be even lower.News circulated last week of proposed relief for some homeowners in default, but it would have little benefit for the majority of creditworthy Americans. And psychology is going to play the determining role in ending the housing crisis, as well as everything that has flowed from it.
California, Almost Broke, Nears Brink LOS ANGELES — The state of California — its deficits ballooning, its lawmakers intransigent and its governor apparently bereft of allies or influence — appears headed off the fiscal rails. Since the fall, when lawmakers began trying to attack the gaps in the $143 billion budget that their earlier plan had not addressed, the state has fallen into deeper financial straits, with more bad news coming daily from Sacramento. The state, nearly out of cash, has laid off scores of workers and put hundreds more on unpaid furloughs. It has stopped paying counties and issuing income tax refunds and halted thousands of infrastructure projects. Twenty-thousand layoff notices will go out on Tuesday morning, Matt David, the communications director for Gov. Arnold Schwarzenegger, said Monday night. “In the absence of a budget we need to realize this savings and the process takes six months,” Mr. David said.
The Next Slum? The subprime crisis is just the tip of the iceberg. Fundamental changes in American life may turn today's McMansions into tomorrow's tenements. Strange days are upon the residents of many a suburban cul-de-sac. Once-tidy yards have become overgrown, as the houses they front have gone vacant. Signs of physical and social disorder are spreading. At Windy Ridge, a recently built starter-home development seven miles northwest of Charlotte, North Carolina, 81 of the community's 132 small, vinyl-sided houses were in foreclosure as of late last year. Vandals have kicked in doors and stripped the copper wire from vacant houses; drug users and homeless people have furtively moved in. In December, after a stray bullet blasted through her son's bedroom and into her own, Laurie Talbot, who'd moved to Windy Ridge from New York in 2005, told The Charlotte Observer, "I thought I'd bought a home in Pleasantville. I never imagined in my wildest dreams that stuff like this would happen."
Dead End in Detroit For all the ups and downs, and more downs, that white-collar workers here have lived through, they have always managed to put on a brave face, assuring one another that the American auto industry will come back stronger than ever. But now that resolve has given way to grim resignation, as General Motors, Ford Motor and Chrysler have announced wave upon wave of job cuts. After closing plants and shrinking their blue-collar work force, Detroit's troubled Big Three are cutting white-collar jobs in their hometown at an unprecedented pace - more than 15,000 in the last year, with more to come.
Circuit City gets OK to auction off or break leases At a hearing in Richmond, Va., U.S. Bankruptcy Judge Kevin Huennekens gave Circuit City permission to begin the auction process for its 567 U.S. stores. Circuit City Stores Inc. received approval Friday to auction leases or break them for its remaining properties, including 567 U.S. stores, its corporate headquarters and various distribution centers. At a hearing in Richmond, Va., U.S. Bankruptcy Judge Kevin Huennekens gave Circuit City permission to begin the auction process. The retailer is shuttering eight stores in New York state, including its Gunhill Road location in the Bronx, Flatbush location in Brooklyn and 86th Street store in Manhattan. Circuit City also announced plans ot close two stores in New Jersey and one in Connecticut.
GM to get $4 billion aide tranche Tuesday The U.S. government will release $4 billion in additional aid to General Motors Corp (GM.N) on Tuesday as planned, a White House aide said on Monday, ahead of the deadline for the automaker to submit a new survival plan. The aide said GM's smaller rival Chrysler LLC's request for additional aid would be treated as a new request and dealt with separately. GM is seeking concessions from the United Auto Workers union and creditors under the terms of its $13.4 billion federal bailout. It must submit a restructuring plan to U.S. officials on Tuesday showing how it can cut costs and pay back the loans.
GM Said to Be Considering Sale, Closure of Four European Plants General Motors Corp. is considering shutting or selling as many as four European plants as it tries to meet the terms of a U.S. government bailout, a person familiar with the plans said. Factories run by GM's Opel division in Antwerp, Belgium, and Bochum, Germany, could be closed and an Eisenach, Germany, factory may be sold, as GM seeks about $1.5 billion of savings, said the person, who requested anonymity because the plans aren't public. The sale or closure of GM's Trollhaettan, Sweden-based Saab division would also eliminate a plant, the person added.
G.M. Presses Union for Cuts in Health Care With its access to a government lifeline possibly at risk, General Motors executives were locked in intense negotiations Monday with leaders of the United Automobile Workers over ways to cut its vast bills for retiree health care. G.M. will file what is expected to be the largest restructuring plan of its 100-year history on Tuesday, a step it must take to justify its use of a $13.4 billion loan package from the federal government. The plan will outline in considerable detail, over as many as 900 pages, how G.M. will further cut its work force, shutter more factories in North America and reduce its lineup of brands to just four, from eight, according to executives knowledgeable about its contents. The remaining core brands will be Chevrolet, Cadillac, GMC and Buick.
Plea for aid as BMW gives 850 workers one hour's notice and puts the Mini in mothballs The Bank of England will come under pressure today to help the ailing car industry after BMW's decision to cut 850 jobs at its Mini plant near Oxford. Lord Davies of Abersoch, the new Trade Minister and former banker, will try to broker a deal to allow the car makers' finance arms to access the Bank's £50 billion liquidity scheme. Mervyn King, the Governor of the Bank of England, is opposed to the idea of finance companies getting credit direct from the Bank. His argument is that the companies are not banks because they do not take deposits from savers and therefore cannot be treated in the same way. Ministers are sympathetic to his views but do not want them to stand in the way of a viable scheme. The industry is desperate for car finance deals because showrooms and factories are full of unsold vehicles, crushing the need for fresh production.
Crude Oil Falls Below $37 on Slowing Global Demand for Fuels Crude oil fell below $37 a barrel in New York on speculation a deepening recession in Europe and Asia will stifle demand for fuels. Brent crude, a benchmark for European, Africa and Russian grades, slumped to a three-week low yesterday after U.K. bank stocks dropped and the Bank of England said the economy's first quarter contraction may match last quarter's 1.5 percent decline. Japan, the world's third-largest oil consumer, yesterday said its economy shrank the most since 1974 in the fourth quarter. "The market data from the U.S. and the other major economies is not painting a picture of an imminent recovery," said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. "The Japanese data was pretty bad."
Kan. suspends income tax refunds, may miss payroll TOPEKA - Income tax refunds and state employee paychecks could be late after Republican leaders and the Democratic governor clashed Monday over how to solve a cash-flow problem. Payments to Medicaid providers and schools also could be delayed. "We are out of cash, in essence," state budget director Duane Goossen said. The move places state taxpayers, workers and schoolchildren in the middle of a political battle over budget cuts. Republicans, who hold majorities in both chambers, blocked Gov. Kathleen Sebelius' proposal to borrow $225 million from healthy state funds to cover shortages in accounts used to meet the state's payroll and issue tax refunds. GOP leaders said they won't approve the IOUs until Sebelius either cuts the current budget herself or signs the bill they passed last week slashing $326 million - including $32 million for education - to balance the budget.
Officially "Out of Control" Now for some news from Europe The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached an acute danger point. If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off Round 2 of our financial Gotterdammerung. Austria's finance minister Josef Proll made frantic efforts last week to put together a E150 billion rescue for the ex-Soviet bloc. Well he might. His banks have lent E230 billion to the region, equal to 70 percent of Austria's GDP. "A failure rate of 10 percent would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.
ARE WE READY FOR THE ONE WORLD ORDER? By Attorney Constance Cumbey The New Agers shifted their focus from 1982 to a 25 year campaign for the Earth that opened in 1987 and they hoped would culminate in 2012. They shifted their expectations for having their "messiah" in the Holy Land for his staged fake second coming from the 1980s to the conclusion of a 42 year period that they claim opened with the end of the Six Day War in 1967 until 2009.[1] Curiously enough, 2009 was also the year that the greatly focused on the Middle East, Javier Solana, the only constant figure in all the various Mitchell Commission and Quartet for Peace in the Middle East configurations, said was IMPERATIVE that the new machinery be in place. Are we there?
Ireland 'could default on debt' FEARS are mounting that Ireland could default on its soaring national debt pile, amid continuing worries about its troubled banking sector. The cost of buying insurance against Irish government bonds rose to record highs on Friday, having almost tripled in a week. Debt-market investors now rank Ireland as the most troubled economy in Europe. Simon Johnson, the former chief economist of the International Monetary Fund, called for this weekend's meeting of G7 finance ministers to put Ireland's troubles at the top of the agenda. Johnson said: "Don't, please, tell me more about the basic principles of financial reform unless and until you have addressed the Irish problem. And don't tell me the Irish have to sort this out for themselves. Eventually, the world always comes to help; check your notes on Iceland.
Israeli election muddies Obama's waters United States President Barack Obama's Middle East project took two impressive steps forward during the week, but eventually got pushed back by almost one. Obama made his most pronounced overture so far to Iran in his press conference on Monday, and Tehran promptly grasped it within hours. But former Iranian president Mohammad Khatami's decision to jump into the fray in the forthcoming presidential election in June introduces complications in the highly accident-prone US-Iranian enterprise.
Israel cautions anew against a nuclear-armed Iran Israeli Defense Minister Ehud Barak told a forum of military chiefs on Monday that Israel would regard a nuclear-armed Iran as an "existential threat" that would speed up a regional arms race. Israel's military spokesman released Barak's comments after the United Nation's nuclear watchdog chief said global nuclear disarmament work was being hampered by Arab perceptions Israel wasn't abiding by a non-proliferation treaty. Barak told a closed forum of military chiefs at a strategy session that if Iran obtained atomic weapons it would pose a "central threat to world order," the statement said.
Obama promises Palestinians he'll protect 'biblical heartland' President pledges to protest Jewish housing developments JERUSALEM - The Obama administration has pledged to the Palestinian Authority it will closely monitor Jewish construction in the West Bank and will protest any new housing developments in the biblical territory, a top PA negotiator told WND. "They told us the White House will watch for any Jewish construction," said the PA negotiator, speaking on condition of anonymity. "Obama knows that if [Likud Chairman Benjamin] Netanyahu is the next prime minister, he will try to expand the settlements. They pledged to us this will be strongly protested," the negotiator said. Although Foreign Minister Tzipi Livni's Kadima party captured one more seat that Likud in last week's elections, Netanyahu is considered most likely to form the next government, since he is reportedly able to forge the most stable coalition with other parties in the 120-seat Knesset.
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Federal obligations exceed world GDP Does $65.5 trillion terrify anyone yet? As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world. The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account. The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the "2008 Financial Report of the United States Government" as released by the U.S. Department of Treasury. The difference between the $455 billion "official" budget deficit numbers and the $5.1 trillion budget deficit cited by "2008 Financial Report of the United States Government" is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.
Gold is Starting to Believe the Obama Administration Despite making loud headlines about stimulating the economy, the US government has been unable to raise the level of optimism among the general public, while the stock market seemed to drop into a deep state of apathy. Last week we received the long-awaited economic stimulus packet as well as the so-called plan for the rescue of the US financial system. We have already voiced our skepticism regarding the structure of the stimulus and its potential effect on the economy in a prior article. As far as the size of the $787 billion package, it is clear that it is too small and too spread out into 2010 and beyond to be called a stimulus. $787 billion is just 5.6% of the GDP and when spread over two years will account for just 2.8% at a time when many industrial economies around the world are contracting by 5-10% per year. It can only be called a life support package, not a stimulus.
Platinum Declines in Asia on Auto Industry Woes; Gold Advances Platinum dropped in Asia as a slumping automotive industry may curb demand as carmakers slash profit forecasts, output and jobs. Gold gained. Nissan Motor Co., Japan's third-largest automaker, today said it will stop output at three plants for as much as 13 days after demand plunged. General Motors Corp., racing to complete a report asking the U.S. to increase a $13.4 billion aid package, may close or sell as many as four plants under a spending-reduction drive in Europe.
Obama's Opening Salvo There is nearly universal agreement that the opening salvo of the Obama Administration's campaign to restore health to the financial system, delivered this week by new Treasury Secretary Geithner, fell with a loud and ugly thud. The most common criticism is that the announcement was short on detail. What is abundantly clear, however, is that the new Administration intends to push spending back up to pre-crash levels and to fill the entire credit void that has disappeared into the black hole of the American financial system. Whether or not the prior levels of spending and lending were justified by market conditions then, or now, appears to be largely unexamined.
Ron Paul Discusses Stimulus on CNN American Morning 02/16/2009
How the stimulus bill affects you The $787 billion package might cut your taxes, make your health insurance cheaper, fix the roads you drive on and keep the best teachers in your children's schools. And that's just for starters. Here's an examination of how the economic stimulus plan will affect Americans. Taxes. The recovery package has tax breaks for families that send a child to college, purchase a new car, buy a first home or make the one they own more energy efficient. Millions of workers can expect to see about $13 extra in their weekly paychecks, starting around June, from a new $400 tax credit to be doled out through the rest of the year. Couples would get up to $800. In 2010, the credit would be about $7.70 a week, if it is spread over the entire year. A $1,000 child tax credit would be extended to more low-income families that don't make enough money to pay income taxes, and poor families with three or more children will get an expanded earned income tax credit. Middle-income and wealthy taxpayers will be spared from paying the alternative minimum tax, which was designed 40 years ago to make sure wealthy taxpayers paid at least some tax but was never indexed for inflation. Congress fixes it each year, usually in the fall.
Big-City Leaders Call Stimulus a Fine Start But Advocates Hope Funding Measure Is Just Down Payment on Broader Plan New York City Mayor Michael R. Bloomberg (I) has said the federal money from the economic stimulus plan could save 14,000 teacher jobs and 1,000 police officer positions he had planned to cut. The money could expand the subway system, avert hospital closures and create a new urban economy surrounding energy retrofitting, according to other officials. Across the country, urban leaders and advocates say the stimulus plan that President Obama is to sign Tuesday will create jobs in cities and blunt the impact of the economic crash. But they hope the funding package only begins to hint at the ambitious urban policy agenda Obama has articulated. "It's a down payment," said Trenton Mayor Douglas H. Palmer (D), the past president of the U.S. Conference of Mayors. "But we're certainly on the right track."
Late Change in Course Hobbled Rollout of Geithner's Bank Plan Just days before Treasury Secretary Timothy F. Geithner was scheduled to lay out his much-anticipated plan to deal with the toxic assets imperiling the financial system, he and his team made a sudden about-face. According to several sources involved in the deliberations, Geithner had come to the conclusion that the strategies he and his team had spent weeks working on were too expensive, too complex and too risky for taxpayers. They needed an alternative and found it in a previously considered initiative to pair private investments and public loans to try to buy the risky assets and take them off the books of banks. There was one problem: They didn't have enough time to work out many details or consult with others before the plan was supposed to be unveiled.
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No excuses if Obama can't fix 'his' recession If, like John Maynard Keynes, you believe that spending, any spending, will revive a flagging economy, the freshly minted, 1,000-page American Recovery and Reinvestment Act of 2009, calling for $504 billion in deficit-financed spending, is for you. Well, not quite. It seems that most of the money will not be spent very soon. About 30% won't hit the economy until 2011, and the balance is likely to be tied up in the procurement processes of the federal and state governments until well into 2010, and beyond. Besides, much of the spending will end up boosting other economies - subsidies for wind machines will benefit workers in the other countries in which such machines are manufactured, not our very own horny-handed toilers. And much of the spending will not create jobs for the unemployed: laid-off car workers do not have the skills to design the software to manage the "smart grid" that is the apple of the greens' eye.
Mirror, Mirror on the Wall... We have been fortunate enough to make some important calls over the past ten years. The top of the stock market in early April of 2000; the beginning of the gold bull market in June 2000; 9/11 in November ten months before it happened; the Iraq and Afghanistan Wars; the beginning of the real estate bubble; the top of that market in June of 2005; the beginning of the subprime fiasco in 2006 and the beginning of the commercial real estate freeze. We also forecast the terrible financial conditions facing states and the freezing up of insurance and the municipal bond market. We called the recession in February 2007 and told readers to get out of the market at 14,000. That's with the exception of gold and silver and oil shares. The recession was right on schedule. The depression that began two weeks ago happened quicker than we had anticipated, but it is here and now.
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Obama May Press Banks to Cut Mortgage Payments President Obama's plan to reduce the flood of home foreclosures will include a mix of government inducements and new pressure on lenders to reduce monthly payments for borrowers at risk of losing their houses, according to people knowledgeable about the administration's thinking. The plan, to be announced Wednesday, is expected to include government subsidies for reducing a borrower's interest rate, which a lender would have to match with its own money. But officials cautioned that subsidies for lower interest rates would not in themselves help many troubled homeowners, because lenders were still likely to view many of those borrowers as bad risks and refuse to restructure their loans. As a result, they have been casting about for sticks as well as carrots to persuade the lenders to take part.
Diluted to Oblivion, Dead Banks A hard time came when deciding upon a title today. "Dead Banks Walking" or "Insolvent & Motionless Yet Standing" or "Much Ado About No Credit" or "The Bank Vampires" or "The Primary Dark Syndicates" made sense. But what came to mind when a comment made by the Jackass in June 2008 on the Vancouver stage at a Cambridge House Metals & Mining Conference. My words to close a panel discussion on the banks were "Just wait, in several months you will see the entire US banking system go insolvent, its stock prices dwindle to nothing, as it will be diluted into oblivion!" It happened. The response by the USGovt, the USFed, Wall Street banks, and the USCongress will result in very little remedy since their first objective is to keep in place the cover-up to their gigantic fraud, much of which still eludes the financial press. By the time conditions worsen, rescues will not be the primary objective any longer. Rather, prevention of collapse will become the urgent priority. Desperate official actions will result in turning the corner on inflation, from the so-called deflation toward hyper-inflation. The gold & silver price will find release. Already, their prices are disconnected from the USDollar.
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President's day A creepy feeling ushers in President's Day this year as the suspicion grows that nobody in charge of anything knows what what to do next. The usual yin-yang consensus has solidified in congress along party lines, both equally idiotic. In the White House, Mr. Obama is under excruciating pressure to "do something" as systems unravel and economies augur into darkness. Amid all the anxiety and raging cluelessness, one thing is clear: we're doing everything possible to evade reality.
Greatest Wealth Transfer since Joseph was in Egypt We are on the threshold of a major move in gold equities, which would probably lead the Gold index on the JSE (Johannesburg Stock Exchange) to all time highs of 7000 plus within the next 2 to three years. With GOLD on 2732 on 12 Feb 2009, this is where I want to invest my savings when I am not putting it in real money (by now most readers should know what is real money). GOLD has just broken out of a down trend that started in 2006, and this breakout also, just about, almost signals a full recovery of gold equities from their fall that started in March 2008. I hope you know by now that gold is in a bull market that could still run many years; therefore the 7000 estimate could be too low. It therefore follows naturally that your successful gold miners will follow the success of gold.
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2009 Outlook, Part 3 Currencies: Policies of INSOLVENCY, aka Dominoes! In 2008, the currency markets offered some of the greatest opportunities of all markets. Every currency had substantial moves 'up and down' and many times BOTH ways, as deleveraging and stampedes of panic swept through the markets at different times. 2009 will be no different, only now we are going to look for sharp differences in two in particular. Those that exist in REAL MONEY will skyrocket and pretenders to that moniker will decline regardless of the country that issues them.
Still Looking for Rock Bottom in Markets Hong Kong container traffic slumped 28 per cent in January, car sales across Europe fell by 27 per cent, these are critical trade depression indicators. Equity markets have weakened but not retested the lows of late last year, while gold is on the way up yet not above $1,000 an ounce. Oil prices touched the low 30s last week. Talk of US house prices bottoming out by the end of the year excited some comment. But really the problem is that we can not see light at the end of this tunnel. That is what you might expect to see, or not to see, at the moment of maximum pessimism - the proverbial dark before the dawn. And yet the spark of optimism about the future is still missing.
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Ratio Reversal: Re-thinking Fractional Banking Bill Gross of PIMCO makes the argument in his most recent "Investment Outlook" that the government needs to support asset prices to stop the hemorrhaging of the global economy. He argues that the TARP funds, while successfully instigating lending among large financial institutions on a limited basis, have not slowed the continued deleveraging by what he calls the "Shadow Banking System" continues to drag asset prices down. The reason, he says, is because government assistance cannot be diverted to the institutions in this class (hedge funds, investment banks and structured financial conduits) because they are invisible, and therefore such rescues would not pass public scrutiny.
How the Crash Will Reshape America MY FATHER WAS a child of the Great Depression. Born in Newark, New Jersey, in 1921 to Italian immigrant parents, he experienced the economic crisis head-on. He took a job working in an eyeglass factory in the city's Ironbound section in 1934, at age 13, combining his wages with those of his father, mother, and six siblings to make a single-family income. When I was growing up, he spoke often of his memories of bread lines, tent cities, and government-issued clothing. At Christmas, he would tell my brother and me how his parents, unable to afford new toys, had wrapped the same toy steam shovel, year after year, and placed it for him under the tree. In my extended family, my uncles occupied a pecking order based on who had grown up in the roughest economic circumstances. My Uncle Walter, who went on to earn a master's degree in chemical engineering and eventually became a senior executive at Colgate-Palmolive, came out on top-not because of his academic or career achievements, but because he grew up with the hardest lot.
That Perk in the Sky Has Defenders on Land THERE are bad economic times. Then there are bad economic times made even worse by a furious public and political fallout against high-end spending. The luxury hotel industry, as I've said, was the first to feel this effect. It started with understandable public outrage last fall when the insurer American International Group ran up a hotel bill of $443,343.71 for an incentive junket for its salespeople at a fancy Southern California resort five days after accepting a big emergency federal bailout loan. The ensuing furor caused many corporate travel managers across the country to abandon the use of luxury hotels, partly for the sake of appearances.
Economy Strains Under Weight of Unsold Items The unsold cars and trucks piling up at dealerships and assembly lines as consumers cut back and auto companies scramble for federal aid are just one sign of a major problem hurting the economy and only likely to get worse. The world is suddenly awash in almost everything: flat-panel televisions, bulldozers, Barbie dolls, strip malls, Burberry stores. Japan yesterday said its economy shrank at an 12.7 percent annual pace in the last three months of 2008 as global demand evaporated for Japanese cars and electronics. Business everywhere are scrambling to bring supply in line with demand.
Fed's Duke: housing woes show tough rules needed PHOENIX (Reuters) - Federal Reserve Governor Elizabeth Duke said on Monday the crisis in housing highlights the need for vigorous enforcement of bank rules and questioned the wisdom of letting banks affiliate with commercial firms. In a speech to the American Bankers Association (ABA), Duke said bankers "have a responsibility to act in a safe and sound manner" and urged them to do more to help slow the pace of home foreclosures. She said that letting banks and commercial firms affiliate "threatens the ability of banks to continue to serve as effective and objective intermediaries of credit" by exposing them to risks that commercial affiliates take.
Why your home's value will keep falling The market is forecasting a further 14.5% drop in home values, and so far the feds haven't helped. Investors can dabble, but home sellers and potential buyers still have it rough. The housing collapse led the stock market and the economy into the cellar. And this crucial sector is headed deeper still, along with the value of your home. How low? One measure suggests a further 14.5% drop. "The problem we have right now is that our animal spirits are beaten down, and this is a fundamental problem," says economist Robert Shiller, the foremost expert on the U.S. housing market. And, he adds, the feds aren't helping. "The (Obama stimulus plan) has a good chance of not fixing that," he says. Though it's the largest such government initiative since the Great Depression, the announced stimulus certainly hasn't changed the psychological tone on Wall Street. Confidence in the Troubled Asset Relief Program and its ability to save banks from bad mortgage assets may be even lower.News circulated last week of proposed relief for some homeowners in default, but it would have little benefit for the majority of creditworthy Americans. And psychology is going to play the determining role in ending the housing crisis, as well as everything that has flowed from it.
The Next Slum? The subprime crisis is just the tip of the iceberg. Fundamental changes in American life may turn today's McMansions into tomorrow's tenements. Strange days are upon the residents of many a suburban cul-de-sac. Once-tidy yards have become overgrown, as the houses they front have gone vacant. Signs of physical and social disorder are spreading. At Windy Ridge, a recently built starter-home development seven miles northwest of Charlotte, North Carolina, 81 of the community's 132 small, vinyl-sided houses were in foreclosure as of late last year. Vandals have kicked in doors and stripped the copper wire from vacant houses; drug users and homeless people have furtively moved in. In December, after a stray bullet blasted through her son's bedroom and into her own, Laurie Talbot, who'd moved to Windy Ridge from New York in 2005, told The Charlotte Observer, "I thought I'd bought a home in Pleasantville. I never imagined in my wildest dreams that stuff like this would happen."
Dead End in Detroit For all the ups and downs, and more downs, that white-collar workers here have lived through, they have always managed to put on a brave face, assuring one another that the American auto industry will come back stronger than ever. But now that resolve has given way to grim resignation, as General Motors, Ford Motor and Chrysler have announced wave upon wave of job cuts. After closing plants and shrinking their blue-collar work force, Detroit's troubled Big Three are cutting white-collar jobs in their hometown at an unprecedented pace - more than 15,000 in the last year, with more to come.
GM to get $4 billion aide tranche Tuesday The U.S. government will release $4 billion in additional aid to General Motors Corp (GM.N) on Tuesday as planned, a White House aide said on Monday, ahead of the deadline for the automaker to submit a new survival plan. The aide said GM's smaller rival Chrysler LLC's request for additional aid would be treated as a new request and dealt with separately. GM is seeking concessions from the United Auto Workers union and creditors under the terms of its $13.4 billion federal bailout. It must submit a restructuring plan to U.S. officials on Tuesday showing how it can cut costs and pay back the loans.
GM Said to Be Considering Sale, Closure of Four European Plants General Motors Corp. is considering shutting or selling as many as four European plants as it tries to meet the terms of a U.S. government bailout, a person familiar with the plans said. Factories run by GM's Opel division in Antwerp, Belgium, and Bochum, Germany, could be closed and an Eisenach, Germany, factory may be sold, as GM seeks about $1.5 billion of savings, said the person, who requested anonymity because the plans aren't public. The sale or closure of GM's Trollhaettan, Sweden-based Saab division would also eliminate a plant, the person added.
G.M. Presses Union for Cuts in Health Care With its access to a government lifeline possibly at risk, General Motors executives were locked in intense negotiations Monday with leaders of the United Automobile Workers over ways to cut its vast bills for retiree health care. G.M. will file what is expected to be the largest restructuring plan of its 100-year history on Tuesday, a step it must take to justify its use of a $13.4 billion loan package from the federal government. The plan will outline in considerable detail, over as many as 900 pages, how G.M. will further cut its work force, shutter more factories in North America and reduce its lineup of brands to just four, from eight, according to executives knowledgeable about its contents. The remaining core brands will be Chevrolet, Cadillac, GMC and Buick.
Plea for aid as BMW gives 850 workers one hour's notice and puts the Mini in mothballs The Bank of England will come under pressure today to help the ailing car industry after BMW's decision to cut 850 jobs at its Mini plant near Oxford. Lord Davies of Abersoch, the new Trade Minister and former banker, will try to broker a deal to allow the car makers' finance arms to access the Bank's £50 billion liquidity scheme. Mervyn King, the Governor of the Bank of England, is opposed to the idea of finance companies getting credit direct from the Bank. His argument is that the companies are not banks because they do not take deposits from savers and therefore cannot be treated in the same way. Ministers are sympathetic to his views but do not want them to stand in the way of a viable scheme. The industry is desperate for car finance deals because showrooms and factories are full of unsold vehicles, crushing the need for fresh production.
Crude Oil Falls Below $37 on Slowing Global Demand for Fuels Crude oil fell below $37 a barrel in New York on speculation a deepening recession in Europe and Asia will stifle demand for fuels. Brent crude, a benchmark for European, Africa and Russian grades, slumped to a three-week low yesterday after U.K. bank stocks dropped and the Bank of England said the economy's first quarter contraction may match last quarter's 1.5 percent decline. Japan, the world's third-largest oil consumer, yesterday said its economy shrank the most since 1974 in the fourth quarter. "The market data from the U.S. and the other major economies is not painting a picture of an imminent recovery," said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. "The Japanese data was pretty bad."
Kan. suspends income tax refunds, may miss payroll TOPEKA - Income tax refunds and state employee paychecks could be late after Republican leaders and the Democratic governor clashed Monday over how to solve a cash-flow problem. Payments to Medicaid providers and schools also could be delayed. "We are out of cash, in essence," state budget director Duane Goossen said. The move places state taxpayers, workers and schoolchildren in the middle of a political battle over budget cuts. Republicans, who hold majorities in both chambers, blocked Gov. Kathleen Sebelius' proposal to borrow $225 million from healthy state funds to cover shortages in accounts used to meet the state's payroll and issue tax refunds. GOP leaders said they won't approve the IOUs until Sebelius either cuts the current budget herself or signs the bill they passed last week slashing $326 million - including $32 million for education - to balance the budget.
Officially "Out of Control" Now for some news from Europe The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached an acute danger point. If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off Round 2 of our financial Gotterdammerung. Austria's finance minister Josef Proll made frantic efforts last week to put together a E150 billion rescue for the ex-Soviet bloc. Well he might. His banks have lent E230 billion to the region, equal to 70 percent of Austria's GDP. "A failure rate of 10 percent would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.
Ireland 'could default on debt' FEARS are mounting that Ireland could default on its soaring national debt pile, amid continuing worries about its troubled banking sector. The cost of buying insurance against Irish government bonds rose to record highs on Friday, having almost tripled in a week. Debt-market investors now rank Ireland as the most troubled economy in Europe. Simon Johnson, the former chief economist of the International Monetary Fund, called for this weekend's meeting of G7 finance ministers to put Ireland's troubles at the top of the agenda. Johnson said: "Don't, please, tell me more about the basic principles of financial reform unless and until you have addressed the Irish problem. And don't tell me the Irish have to sort this out for themselves. Eventually, the world always comes to help; check your notes on Iceland.
Israeli election muddies Obama's waters United States President Barack Obama's Middle East project took two impressive steps forward during the week, but eventually got pushed back by almost one. Obama made his most pronounced overture so far to Iran in his press conference on Monday, and Tehran promptly grasped it within hours. But former Iranian president Mohammad Khatami's decision to jump into the fray in the forthcoming presidential election in June introduces complications in the highly accident-prone US-Iranian enterprise.
Israel cautions anew against a nuclear-armed Iran Israeli Defense Minister Ehud Barak told a forum of military chiefs on Monday that Israel would regard a nuclear-armed Iran as an "existential threat" that would speed up a regional arms race. Israel's military spokesman released Barak's comments after the United Nation's nuclear watchdog chief said global nuclear disarmament work was being hampered by Arab perceptions Israel wasn't abiding by a non-proliferation treaty. Barak told a closed forum of military chiefs at a strategy session that if Iran obtained atomic weapons it would pose a "central threat to world order," the statement said.
Obama promises Palestinians he'll protect 'biblical heartland' President pledges to protest Jewish housing developments JERUSALEM - The Obama administration has pledged to the Palestinian Authority it will closely monitor Jewish construction in the West Bank and will protest any new housing developments in the biblical territory, a top PA negotiator told WND. "They told us the White House will watch for any Jewish construction," said the PA negotiator, speaking on condition of anonymity. "Obama knows that if [Likud Chairman Benjamin] Netanyahu is the next prime minister, he will try to expand the settlements. They pledged to us this will be strongly protested," the negotiator said. Although Foreign Minister Tzipi Livni's Kadima party captured one more seat that Likud in last week's elections, Netanyahu is considered most likely to form the next government, since he is reportedly able to forge the most stable coalition with other parties in the 120-seat Knesset.
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Presidents' Day - PTG is CLOSED Monday, Feb 16, 2009 No new radio show today; we'll be back tomorrow.
Geithner Pressed By G-7 to Push Ahead With Bank Bailout Plan Finance chiefs from the Group of Seven nations joined the chorus of U.S. investors and lawmakers pushing Treasury Secretary Timothy Geithner to move faster to fix the banking system. Stung by domestic criticism for failing to provide details last week on just how he plans to clean up banks' toxic assets and revive lending, Geithner was told by foreign policy makers at weekend talks in Rome that speed was of the essence.
G-7 Takes 'Back Seat' as Crisis Pushes G-20 to Fore The Group of Seven, whose finance chiefs convene this weekend in Rome, is ceding its traditional power to rebuild the world economy to a broader body of governments that now wield greater sway over global growth. As U.S. Treasury Secretary Timothy Geithner and European Central Bank President Jean-Claude Trichet join their G-7 counterparts, it's the Group of 20 that occupies the vanguard responding to the financial crisis. The shift in influence to the group, whose membership ranges from the U.S. to China to Saudi Arabia, reflects the fact that industrial nations lack the resources to fix the world's economic woes alone. That curbs the G-7's scope to deliver new initiatives this week, say economists and former officials.
Ron Paul - Legislative Update - Government Stimulus Bill
Congressional disconnect on banks and bailouts Midway through the seven-hour grilling of bank executives by the House Financial Services Committee on Wednesday, a voice off camera suggests it is going to make good material for a "Saturday Night Live" skit. The quip came during a strange interlude when a committee member was asking the eight chief executive officers to raise their hands if they could ascertain whether their banks had increased lending since receiving money from the Troubled Asset Relief Plan or TARP. The question caused confusion because half of the CEOs don't run traditional banks. Hands kept popping up and down as the House member repeatedly rephrased the question and the bankers struggled to understand it.
The Worst Misstep: Geithner Added to the Doubt TIMOTHY GEITHNER, the brand new Treasury secretary, was panned last week for how he unveiled the Obama administration's plan to rescue the financial system from the bankers who broke it. Mr. Geithner was not especially articulate, his critics said, and he provided only an outline of an outline, not the detailed blueprint people anticipated and wanted. To a degree, one of Mr. Geithner's biggest problems was not of his own making. His boss, President Obama, had fanned expectations for his debut as Mr. Fix-It, leaving the impression that it would be boffo. It wasn't.
Allowing Banks To Fail Bob Schieffer spoke with Sen. Richard Shelby and Rep. Barney Frank about the stimulus bill President Obama will sign and whether bailing out banks is the right move to heal the economy.
White House dampens stimulus expectations President Barack Obama's aides warned Americans on Sunday not to expect instant miracles from the $787 billion economic stimulus bill he will sign this week, but said it would help eventually. Obama is due to sign the bill passed last week by Congress in Denver on Tuesday. It was the first major legislative victory of his young presidency, which could rise or fall with its success or failure. "There will be signs of activity very quickly," David Axelrod, the White House senior adviser, said on "Fox News Sunday." "But it's going to take time for that to show up in the statistics. The president has said it's likely to get worse before it gets better."
Ailing Banks May Require More Aid to Keep Solvent Some of the nation's large banks, according to economists and other finance experts, are like dead men walking. A sober assessment of the growing mountain of losses from bad bets, measured in today's marketplace, would overwhelm the value of the banks' assets, they say. The banks, in their view, are insolvent. None of the experts' research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.
Joseph Stiglitz: Bad Bank is 'Cash for Trash' Joseph Stiglitz criticizes the creation of a "bad bank" to deal with untradeable assets left over from the U.S. financial crisis, and compares the bad bank solution to garbage collection. "You shouldn't chase good money after bad money," says Stiglitz.. Stiglitz points out that for the amount of money we've poured into bad banks, the social security system could have been made secure for the next 100 years (bad trade-off for seniors).
Opportunities and Dangers in Stimulus and Bailout Shockers! "We are no better off today than we were three months ago." --- Representative Paul Kanjorshi (D - PA) Capital Markets Subcommittee Chair, January 28, 2008 In order to identify Opportunities in today's Markets, it is critical to first have a Realistic Overview of the Dangers. Clearly the Bailout Bill (inter alia) of the Fall 2008 neither got credit Flowing again, nor saved The Financial System, as its proponents claimed it would do. Considering the major provisions of the Stimulus Bill, which recently passed the House and Senate, we can conclude that it contains one Fatal (and several serious) Flaws which will render it ineffective or likely worse.
Senator 'Appalled' At Bailout Senate banking committee member Richard Shelby, R-Ala., tells Harry Smith on "The Early Show" the White House should have waited before announcing its bailout plans.
G7 sets sights on new world economic order The world's richest nations have called for urgent reform of global finance to save the world from the economic devastation that is dragging more and more countries into recession. Italy's finance minister called for a "new world economic order" as he wrapped up the crisis meeting of finance leaders from the Group of Seven leading economies over which he presided here. In a joint declaration, the G7 called for "urgent reforms" of the international financial system. Tremonti said a so-called set of "legal standards" discussed in Rome would be presented at a meeting of 20 key advanced and emerging economies (G20) in London in April and a summit of the Group of Eight (G8) world powers in July.
Government Won't Bailout BankUnited In a story citing "people familiar with the matter," the paper said the government declined to provide assistance to a bid by investors W.L. Ross and Carlyle Group to buy BankUnited, the largest Florida-based bank. The BankUnited thrift had $291.9 million in total risk-based capital on Dec. 31, which left it nearly $1.14 billion short of meeting the capital ratio the OTS's required. In a phone interview Friday, BankUnited CEO Ramiro Ortiz said he wouldn't comment on the Wall Street Journal report, which he called rumor and speculation. "We continue to remain actively involved in negotiations with different private equity firms," Ortiz said. "This is an incredible franchise, which has an incredible franchise value. This is a bank that is important to the community. How could I not step up to the challenge?"
Chairman Tom Price with 1,073-page Non-Stimulus Text Republican Study Committee Chairman Tom Price discusses the big-government handout that Democrats are going to push through Congress. The final version of the bill even has hand written notes that allow for more irresponsible spending. Democrats made the bill available at 11 p.m. on Thursday night. At 9 a.m. Friday morning, the House begins debate on the bill. If members of Congress actually took the time to read the bill, they would have to read through the night at a rate of 626 words per minute before heading to the House floor. What are the odds of that happening?
Chairman Price Speaks Out Against the Stimulus on the House Floor
Wall St eyes influence over rescue plan Wall Street is to lobby the Obama administration to relax its plans for stringent reviews of banks' financial health and capital injections that could leave the government as a large shareholder in many of those institutions. People close to the situation say financial groups were frustrated by the administration's decision not to hold detailed talks with the industry before last week's release of its $2,000bn financial rescue plan. Administration officials said the announcement was always intended to be a framework rather than a final plan and stressed that input would be sought from industry "stakeholders" as details were fleshed out. "We're going to get opinions from across the industry ... to help shape the final plan," said one official.
Ackerman to CEOs: What Did You Do with Bailout Money? Rep. Gary Ackerman (D-NY), House Financial Services Committee hearing with major banking CEOs, February 11, 2008
Obama wants public to track stimulus As he prepared to sign the massive economic stimulus bill, President Obama called Saturday for the public to become watchdogs on where the $787 billion in the bill goes. "Ultimately, this is your money, and you deserve to know where it's going and how it's spent," Mr. Obama said in his weekly radio address, promising to help with the most ambitious spending-scrutiny project the government has ever undertaken. Mr. Obama called on "every American" to use 'recovery.gov' - a Web site that will be up and running once the money begins to be spent - to track where the money is being spent and to "weigh in with comments and questions."
Obama's Rhetoric Is the Real 'Catastrophe' In 1932, automobile production shriveled by 90%. President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. First, he did so to win votes in the November election. He has done so again recently to sway congressional votes for his stimulus package. In his remarks, every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today's economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.
Congressman Shadegg discusses healthcare rationing and the stimulus.
Capitalism Needs a Sound-Money Foundation Let's give the Fed some competition. Abolish legal tender laws and see whose money people trust. Let's go back to the gold standard. If the very idea seems at odds with what is currently happening in our country -- with Congress preparing to pass a massive economic stimulus bill that will push the fiscal deficit to triple the size of last year's record budget gap -- it's because a gold standard stands in the way of runaway government spending. Under a gold standard, if people think the paper money printed by government is losing value, they have the right to switch to gold. Fiat money -- i.e., currency with no intrinsic worth that government has decreed legal tender -- loses its value when government creates more than can be absorbed by the productive real economy. Too much fiat money results in inflation -- which pools in certain sectors at first, such as housing or financial assets, but ultimately raises prices in general.
Committee on Doubt and Uncertainty A day in the life of House Financial Services. Anyone trying to understand why the credit mess keeps getting messier needs only to have sat through Wednesday's hearing of the House Financial Services Committee. The eight bank CEOs were mere props. The stars were the politicians, who managed to demand more loans for consumers while simultaneously giving lenders new cause to wonder if they'll ever be repaid. This gathering of the esteemed Committee on Doubt and Uncertainty occurred as markets desperately need less of both. Chairman Barney Frank's hearing was intended to flay the CEOs for not lending enough. It fell flat as political theater because banks have actually increased their lending in recent months. The people who aren't lending more are investors in nonbank financing such as asset-backed securities.
Arnold Kling, Why The Stimulus Won't Work Conference Economist Arnold Kling speaks at The Heritage Foundation & Club For Growth Conference on Why the Stimulus Won't Work
As US economy tanks, no limits to make ends meet Americans are selling everything from the hair on their heads to what's coursing though their veins to make ends meet, as the US economy continues to tank. Websites offering advice on selling plasma, sperm, or locks of hair have seen huge upticks in traffic, as have the individuals and businesses that will buy the highly personal items which are now being used by desperate Americans for their own personal bail-out. "I'm having problems paying rent, food, car insurance, bills. Ten, 20 or 40 dollars is a little help I'm glad to accept. I wouldn't have thought I would go this low... but I'm trapped," a woman named only as Emily said in a message sent to Phil Maher, founder of the bloodbanker.com website.
Mint Sells $948 Million in Bullion Coins Just out is the 2008 Annual Report of the Director of the Mint, a 70-page breath of fresh air that at once pays homage to the state quarters program and simultaneously is a valedictory address of Edmund Moy, who became Mint director in 2006. Over the past dozen or so years, the annual report read more like an advertising brochure than the annual accounting of an entity that, if found in the private sector, could qualify as number 700 in the "Fortune 1,000" listing of American corporations. It had the graphics and sizzle, but lacked substance and core information.
The Oracle with Max Keiser - 13 February 2009 (1 of 3) Guests: Peter Schiff and Pierre Briancon. Topics: Dubai, Abu Dhabi and Middle East sovereign wealth funds should buy gold miners and oil producers.
The Oracle with Max Keiser - 13 February 2009 (2 of 3)
The Oracle with Max Keiser - 13 February 2009 (3 of 3)
Deluge of Financial Calamities Looming by Mid-March As horrible as the financial news for currencies and paper assets has been since mid-2007, it looks like the worst is yet to come - perhaps as early as next month. Over the weekend the Managing Director of the International Monetary Fund (IMF), Dominique Strauss-Kahn, told a gathering of Southeast Asian central bankers that the world's advanced economies are already in a depression and that the financial crisis may deepen unless the banking system is fixed. On Febr. 4, Paul Wolfowitz, the former president of the World Bank, said the IMF and similar institutions are incapable of coping with the global financial crisis because they do not have enough resources.
Economic And Financial Systems Deliberately Destabilized Several months ago we said the relationship between the dollar and gold was over. The days of a lower dollar and a higher gold price are no longer connected in the same way. Gold is now trading on its own as the best of all currencies. The world is headed for zero interest rates and massive increases in money and credit. The rally in the dollar versus other currencies over the past eight months ended a month ago as we forecast. December was the watershed month for gold as it began its present rally, which will soon take it to new highs. There isn't a word to describe the tremendous amount of financial creation the US government will need. For that matter many other governments as well. That is why we are seeing competitive devaluations. Nation's are carrying 64.5% of their foreign reserves in US dollars. It is no wonder they are manipulating their currencies.
Gerald Celente Was Right !
Gold May Climb for Second Week on Demand for Haven, Survey Says Gold may gain for the second straight week as the banking crisis and recession deepen, boosting the metal's appeal as a store of value. Twenty-six of 32 traders, investors and analysts surveyed from Tokyo to Chicago on Feb. 12 and Feb. 13 advised buying gold, which rose 3.1 percent last week to $942.20 an ounce in New York. Five survey respondents said to sell, and one was neutral.
Gold forecast for return to bull trend Gold shone this week as investors looked for a haven amid weak economic data and uncertainty about revamped plans from the US Treasury to rescue the financial sector. Over the week, gold rose 2.7 per cent to $935 a troy ounce after reaching a near seven-month high at $953.30 on Wednesday. Stephen Briggs, at RBS, described this week's inflows into gold exchange traded funds, which reached a record 3.54m ounces, as "astonishing", noting that they were equal to 5 per cent of global gold mine output.
In case you missed this last Wednesday when we posted the full version . . . Peter Schiff Tells the Saudis How to Crash the US Dollar
US Mint Bullion Coin Sales Back in late 1985, the US Congress authorized the Gold Bullion Coin Act of 1985 which President Ronald Reagan promptly signed into law. It ordered the US Treasury, through its US Mint branch, to start producing gold bullion coins. This law outlined very specific requirements for these new coins, including that they be produced from gold mined in the United States. This legislation, partially in response to the soaring popularity of foreign national coins like the famous South African Krugerrand in the early 1980s, ushered in the modern era of American bullion coins. The American Gold Eagles and American Silver Eagles that emerged out of this program have since grown very popular among investors worldwide for several reasons.
Burris denies affidavit contradicts testimony Illinois' freshman U.S. senator says he never misled anyone when he testified before an impeachment committee last month. Senator Roland Burris is fielded questions about a major omission from his testimony after he released an affidavit Saturday that appeared to contradict statements he made to a state House committee investigating former Gov. Rod Blagojevich's impeachment. The affidavit indicates Blagojevich's brother asked Burris to host a fundraiser for the governor before Burris was appointed to the Senate seat vacated by Barack Obama.
Pelosi's mouse slated for $30M slice of cheese Talk about a pet project. A tiny mouse with the longtime backing of a political giant may soon reap the benefits of the economic-stimulus package. Lawmakers and administration officials divulged Wednesday that the $789 billion economic stimulus bill being finalized behind closed doors in Congress includes $30 million for wetlands restoration that the Obama administration intends to spend in the San Francisco Bay Area to protect, among other things, the endangered salt marsh harvest mouse. House Speaker Nancy Pelosi represents the city of San Francisco and has previously championed preserving the mouse's habitat in the Bay Area.
Paul Krugman Supports Stimulus, Warns No Quick Fix
Charlotte in same predicament as Wall Street Banktown Charlotte feeling the sting as economic downturn hits Wall Street South CHARLOTTE, North Carolina (AP) -- The financial collapse has hit hard in the city known as Wall Street South. For years, Bank of America Corp. and Wachovia Corp. helped turn Charlotte into a financial powerhouse. Now, the big banks have thrust it into the same predicament as the real Wall Street -- the city is losing thousands of jobs and an unquantifiable amount of prestige. Residents who invested heavily in the banks have seen their wealth dissipate and lifestyles change radically. "It's kind of sad, disheartening because the banks have been the backbone of Charlotte for so long," said Carl Clayton, a 55-year-old retired school teacher. The loss of so many bank jobs is causing upheaval in other industries. Consumers who have been laid off or fear being out of work are curtailing their spending, forcing restaurants and retailers to close -- among them Morton's, a high-end steakhouse, and a 15-month-old Home Depot Design Center. Even some of the Charlotte's lively night clubs have shuttered their doors.
Average net worth declines 22.7% The recession has cut many Americans' net worth by more than 20 percent as the values of homes, stock portfolios and businesses have plummeted, the Federal Reserve said Thursday. The Fed said the average net worth of American households plunged 22.7 percent since the recession began in December 2007 through October 2008, when the report was prepared. The median net worth, or the midpoint between the wealthiest and poorest, fell 17.8 percent. The impact has disproportionately fallen on the wealthiest households and those between the ages of 55 and 64, a Federal Reserve economist said. Net worth tends to peak in that age bracket, as retired Americans begin to spend down their savings.
Dr Ron Paul 02 10 2009 Educates Ben Bernanke on free market
Dr Ron Paul on Fox-business by phone02 14 2009 - 1 of 2
Dr. Ron Paul 02 - 14 - 2009 by phone 2/2
Punctual Payers Face Higher Rates From Card Companies Mel Brandt said he got a Citibank Home Depot MasterCard for its rewards program. His reward for paying on time was an interest rate increase to 19 percent from 12 percent. "If I didn't opt out and close the account, I'm afraid the interest payments would snowball and I would default," said Brandt, 52, a self-employed house painter in St. Louis, who relies on credit cards to fund his painting business. Lenders came under fire yesterday in a U.S. Senate Banking Committee hearing for raising interest rates, adding fees and cutting credit lines, even for consumers perceived to be low- risk with high credit scores. Connecticut Democrat Christopher Dodd, the chairman, called the practices "gouging."
Mortgage Rescues Fail as Price Drops Spur Defaults The Obama Administration wants banks to offer loans with easier terms to more than 2 million borrowers in danger of defaulting on their mortgages, twice as many as 2008. That won't stem the foreclosure crisis if prices keep falling. A third of owners will walk away when the value of their homes drops 20 percent or more below what they owe, even if they can afford the payments, a situation known as "rational default," said Norm Miller, director of real estate programs at the University of San Diego School of Business Administration.
More drivers are uninsured as recession grows deeper DES MOINES, Iowa | Chances are increasing that the next fender bender you're involved in could be with someone without car insurance. As the recession leaves millions of workers unemployed and pressures family budgets, one place many are cutting is their insurance coverage. The Insurance Research Council (IRC) estimates that by next year nearly one in six motorists may be driving without insurance. That's 3 million more uninsured drivers than just five years ago. "We can't explain why people drive uninsured. We just know that a certain percentage of people do, and it does change with economic conditions like unemployment," said IRC Vice President David Corum.
Matt Kibbe Addresses Press Club on Economic Stimulus FreedomWorks President, Matt Kibbe, addresses the National Press Club regarding the implications of the near trillion dollar stimulus package.
Union-GM talks break down DETROIT | Negotiators for the United Auto Workers walked out of concession talks with General Motors Corp. on Friday night in a dispute over payments to a union-administered retiree health care fund, a person briefed on the talks told the Associated Press on Saturday. The breakdown comes at a critical time as GM races against a Tuesday deadline to submit a plan to the government that is supposed to show how it can become viable. The Detroit-based auto giant is living on $9.4 billion in government loans, and the Treasury Department must approve its viability plan for GM to get $4 billion more.
Auto industry must restructure President Obama's senior adviser said Sunday that any plan to shore up the auto industry will need to require sacrifice by all involved, from auto workers and industry executives to shareholders and creditors. His statement came just before negotiations about such concessions were set to resume Sunday between General Motors Corp. and the United Auto Workers, according to a person briefed on the talks. Bargaining broke off Friday night in a dispute over payments into a union-run trust fund that will take on retiree health care costs next year. GM and Chrysler LLC are expected to submit plans to the government by a Tuesday deadline to show how they can repay billions in loans and become viable in spite of a drop in auto sales not seen for a generation.
Deere in the crosshairs as recession hits farmers Before the first biker ever tattooed a Harley-Davidson logo on his arm, before Apple ever inspired the first MacHead to swear she would never -- ever -- marry a Windows user, Deere & Co (DE.N) was creating one of the enduring corporate cults. For 172 years now, the company's products -- with their leaping deer logo and distinctive green and yellow iron -- have stirred something like love in the farmer's breast. Generations have come to count on Deere's plows, planters, tractors and harvesters to make their jobs a little easier. Today, especially during the summer months, it is common to see small convoys of vintage Deere tractors, lovingly restored by retired farmers, popping and wheezing down rural roads in rallies that are rolling reminders of the brand's appeal.
Job Losses Pose a Threat to Stability Worldwide From lawyers in Paris to factory workers in China and bodyguards in Colombia, the ranks of the jobless are swelling rapidly across the globe. Worldwide job losses from the recession that started in the United States in December 2007 could hit a staggering 50 million by the end of 2009, according to the International Labor Organization, a United Nations agency. The slowdown has already claimed 3.6 million American jobs. High unemployment rates, especially among young workers, have led to protests in countries as varied as Latvia, Chile, Greece, Bulgaria and Iceland and contributed to strikes in Britain and France
Jim Rogers abolish the WB and the IMF 13 Feb 09
Failure to save East Europe will lead to worldwide meltdown The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point. If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung. Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP. "A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen. The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.
Japan's economy shrinks 3.3% Japan's economy contracted 3.3 per cent in the three months to December compared with the previous quarter, its worst performance in more than 30 years. On an annualised basis, gross domestic product declined at a rate of 12.7 per cent, underlining the depth and severity of a slump that has dispelled early hopes that the world's second largest economy might be able to shrug off the effects of the global financial crisis.
Learning From Japan's Gaffes The U.S. is not the only nation to face a crippling recession. As Barry Peterson reports, Japan suffered an economic crisis during the 1990's, and there were setbacks with their version of a stimulus.
Japanese economy in free fall Tokyo's GDP faces steepest drop since '74 Japan, the world's second-biggest economy, will likely report on Monday that its fourth-quarter output plunged at an annual rate of nearly 12 percent, according to a survey of economic forecasters. As world demand for imported goods collapses, the export-dependent economy of Japan has been hammered. The survey forecast that Japan's gross domestic product plummeted 11.7 percent during the October-December period. That would be three times steeper than the decline experienced in the United States during the fourth quarter.
Clinton Says Seeks End to North Korea Nuclear Program Secretary of State Hillary Clinton said she will use her initial trip as the top U.S. diplomat to discuss how to eliminate North Korea's nuclear weapons program, and seek cooperation in combating the global financial crisis. Clinton today said she will also use the week-long trip to East Asia to reassure Japan and South Korea, each host to tens of thousands of U.S. troops, of the American commitment to their security and to diplomacy in ensuring an end to North Korea's development of atomic weapons.
Politics pays well, indeed. . . . Please check this out, while it is still available on the Web. . . . same article has been removed from several sites. If link is no good, try this PDF.
Gerald Celente on Jeff Rense 12 Feb 2009 pt 1/4
Gerald Celente on Jeff Rense 12 Feb 2009 pt 2/4 Info on health care monitoring slipped into the Stimulus Bill (which nobody had time to read). This provision from Tom Daschle, will affect every person in the US. Feds will track medical care for ALL AMERICANS. More on state controlled capitalism (fascism) that is being put in place.
Gerald Celente on Jeff Rense 12 Feb 2009 pt 3/4
Gerald Celente on Jeff Rense 12 Feb 2009 pt 4/4
Gerald Celente with Jim Puplava The Collapse Begins pt 1/4
Gerald Celente with Jim Puplava The Collapse Begins pt 2/4
Gerald Celente with Jim Puplava The Collapse Begins pt 3/4
Gerald Celente with Jim Puplava The Collapse Begins pt 4/4
Congress sets final votes on stimulus for Friday Democratic leaders in the U.S. Senate and House of Representatives on Thursday wrapped up a last minute tax cut and spending details in the $789 billion economic stimulus bill, setting votes for Friday by both chambers. The House is scheduled to vote Friday morning and the Senate plans to follow in the evening, but that vote could take a few hours to accommodate a Democratic senator who has to return home after the death of a family member.
Obama's Stimulus Not Enough to Avert Biggest GDP Drop Since 1946 President Barack Obama's stimulus plan will be insufficient to avert the biggest U.S. economic decline since 1946 as consumer spending posts its longest slide on record, according to a monthly Bloomberg News survey. The world's largest economy will contract 2 percent this year, half a percentage point more than last month's forecast, according to the median of 50 projections in the survey taken Feb. 2 to Feb. 10. Even as Obama aims to create 3.5 million jobs with a stimulus plan, economists foresee an unemployment rate exceeding 8 percent through next year.
How the World Almost Came to an End on September 18, 2008 LiveLeak has caught a scary moment of previously undisclosed insight by Paul Kanjorski where he reveals some facts that have not been captured by the media previously. At 2 minutes and 20 seconds in the video below, Democratic Representative Kanjorski explains how the Federal Reserve told Congress members about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occurred over the period of an hour or two. And it gets worse. Kanjorski paraphrases the following disclosure by Bernanke and Paulson (emphasis added): On Thursday (Sept 18), at 11 in the morning the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn't be further panic out there.
Excellent!CSPAN Rep Paul Kanjorski Reviews the Bailout Situation
For Insight on Stimulus Battle, Look to the '30s For Left and Right, Issue Rekindles New Deal Debate Underlying the partisan division over President Obama's stimulus bill is a dispute over history -- a decades-old debate between liberals and conservatives over the impact the New Deal had in bringing the country out of the Great Depression. Senate Minority Leader Mitch McConnell (R-Ky.) said flatly last week that "the big-spending programs of the New Deal did not work." Sen. Richard Shelby (R-Ala.) said, "If we look back, even to the New Deal, it's not going to help employment." And two economists argued in the Wall Street Journal that "there was even less work on average during the New Deal than before FDR took office."
Chinese Are Diversifying into Gold Over U.S. Concerns Gold surged Tuesday (up 2.4% and silver was up 2.3%) as stock markets fell sharply with investors increasingly frustrated and nervous with the lack of details about the US government's latest $2,000 billion bank bailout plan. There is resistance at $930/oz and further consolidation may be necessary at these levels prior to closing above this level but gold is looking very strong both technically and fundamentally. Once the technical level of $930/oz is breached we should move quickly to the psychological level of $1,000/oz once again.
Gold……ready to rumble! Part Three 2008 was one of the worst years for suffering the market has ever thrown investors. Will 2009 be any better? Well I'm not optimistic but I don't rule out the occasional mini rally that sucks investors into believing everything is back on track. I do not think the market crash that started last year is over. Unemployment numbers are horrible, earnings for almost all sectors are in the red and looking to get worse. Obama's stimulus plan stinks to high heaven of rotten pork with very little of the total package actually going to where he promised during his election campaign. Our economic ship hit an ice burg last year and it was devastating, the borrowing bubble met the credit crunch safety pin. Credit markets locked up, corporations showed massive losses and everybody who overbought a house, or two or three, using the greater fool theory to justify, are now looking at values cut by a third or more and with refinancing being almost impossible, they must surely be wondering "what in hell were we thinking?"
Geithner Defends Slow Rollout of Rescue Details Regulator Asks Lenders to Suspend Foreclosures As senior senators demanded more details yesterday about how the government's new financial rescue package will work, Treasury Secretary Timothy F. Geithner told them that the time he is taking to work out the specifics will make for a better plan and prevent missteps. In the meantime, however, a federal banking regulator urged yesterday that financial firms under its purview suspend mortgage foreclosures until the Obama administration offers specifics of its program to help struggling homeowners. Treasury Department officials said this proposed initiative would be detailed within several weeks.
Large Banks on the Edge of Insolvency Some of the nation’s large banks, according to economists and other finance experts, are like dead men walking. A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent. None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.
Will the U.S. Dollar Be Falling Soon? Calling currency turns is so difficult it is sometimes surprising that analysts even attempt to predict currency movements. And yet so much rides on the rise and fall of the yen, euro, sterling or U.S. dollar. So we all have to try, and if we do not then the market does it for us. For apart from gold and silver there is no avoiding currency, and even precious metals are quoted in U.S. dollars as non-dollar holders have discovered to their advantage over recent months. Dollar is collapsing right now, as is the euro, as is the yen, against GOLD and SILVER (02/12/09) John Rubino wrote together with James Turk a book referring to the coming dollar collapse and how to make money in that environment. Gold investment is the answer. This is an interview on Howestreet.com
Will IMF gold sale hit bullion market? With the International Monetary Fund (IMF), the third largest official holder of gold, all set to sell around 400 tonnes of gold to fund changes to its financing base, the bullion market is set to witness a flurry of activities in the coming months. Even though there were speculations about IMF’s going ahead with the plan, this week the fund clarified that it does not intend to alter plans to sell over 400 tonnes of gold. According to IMF, a recent surge in IMF lending to countries facing balance of payments crises related to the global economic slowdown and financial turmoil has led analysts to question whether the Washington-based institution will proceed with the plan.
Why Markets Dissed the Geithner Plan One of the cool things about being Treasury Secretary is that you get your signature on dollar bills, giving them authority, defending their honor. Timothy Geithner's plan to save the struggling banking system probably does the opposite, throwing good money after bad to a banking system struggling under the weight of its own mistakes. The markets don't like it. The Dow dropped 382 points while bonds rallied as a port in a continuing storm.Politics will kill a nationalized bank. So spin them out immediately. Send out those shares of each bank to taxpayers. They (will have) paid for the recapitalization Mr. Geithner announced a three-point plan Tuesday to "clean up and strengthen the nation's banks," and made a vague declaration to use "the full resources of the government to help bring down mortgage payments and to help reduce mortgage interest rates." Unfortunately, those are conflicting plans. Hence the markets' skepticism.
Four Myths About the Obama / Geithner Plan o far, it's an epic disappointment. Treasury Secretary Tim Geithner has pledged to harness the "full force of the U.S. government" to stabilize the financial system and set the stage for an economic recovery. The ultimate cost could be $2.5 trillion, a number so big that many Americans couldn't tell you how many zeroes it entails. Yet Wall Street hissed, the press piled on, and critics groaned that the still-evolving plan is far too sketchy to inspire any confidence. If they had it to do over, no doubt Obama and Geithner would wait till they could offer more specifics instead of staging the faux-dramatic show of governmental force that they've managed so far. But a big reason the Obama bailout plan has landed with such a thud is that we've been expecting way too much of it. Excessive expectations always breed disappointment, which is why smart leaders learn to underpromise and overdeliver. Here are some of the myths about the Obama bailout plan that we've been clinging to:
Geithner's Folly: The Bank Rescue Plan Is a Disaster in the Making The new Treasury secretary's bailout could waste hundreds of billions of dollars and still not fix the financial sector. . . . . toxic mortgage-backed securities are now stinking up our financial system and Geithner seems to be willing to pay a premium to just get rid of them. A key part of the plan he unveiled is to have the government create a public-private investment fund that will use government dollars to insure private investors against losses they could suffer from purchasing those bad assets if the economy keeps heading south. Geithner says that letting private investors bid on these assets -- with government guarantees against large losses -- will allow the market to define concrete prices for them and thus "avoid a program that has government overpaying for a bunch of financial assets." The trouble with this, of course, is that many of these assets will never be worth what the banks will accept for them. Economist Dean Baker, co-director of the Center for Economic and Policy Research, told me that the worst of these assets "have lost value because they rest primarily on underwater mortgages."
America Is Rome on Fire As America points a “squirt gun” at its forest fire, no one is asking the burning question: Who is going to pay for this? We face catastrophic consequences if we fail to pass the economic stimulus bill, President Barack Obama warns. President Obama is absolutely correct! But his solution is also absolutely wrong! The United States faces catastrophic collapse no matter what President Obama does. The scale of America’s problems goes far beyond what an ever increasing number of trillions of dollars can patch over. There is nothing any person can do to stop the meltdown. And President Obama’s plan may actually make matters much worse. Here is the sad fact: U.S. taxpayers have committed $8.7 trillion to fixing the system, and we haven’t even made a noticeable dent! Take a few seconds to reflect on what $8.7 trillion means, and see if you can really make the case that this crisis is survivable.
In Japan’s Stagnant Decade, Cautionary Tales for America TOKYO — The Obama administration is committing huge sums of money to rescuing banks, but the veterans of Japan’s banking crisis have three words for the Americans: more money, faster. The Japanese have been here before. They endured a “lost decade” of economic stagnation in the 1990s as their banks labored under crippling debt, and successive governments wasted trillions of yen on half-measures. Only in 2003 did the government finally take the actions that helped lead to a recovery: forcing major banks to submit to merciless audits and declare bad debts; spending two trillion yen to effectively nationalize a major bank, wiping out its shareholders; and allowing weaker banks to fail.
European bank bail-out could push EU into crisis A bail-out of the toxic assets held by European banks' could plunge the European Union into crisis, according to a confidential Brussels document. “Estimates of total expected asset write-downs suggest that the budgetary costs – actual and contingent - of asset relief could be very large both in absolute terms and relative to GDP in member states,” the EC document, seen by The Daily Telegraph, cautioned. "It is essential that government support through asset relief should not be on a scale that raises concern about over-indebtedness or financing problems.” The secret 17-page paper was discussed by finance ministers, including the Chancellor Alistair Darling on Tuesday.
China's Three No's to the U.S.: Is Washington Listening? hina’s leadership likes to communicate by brief but loaded signals, both to its own population and beyond. They are less inclined – have less need - to posture than politicians in the West. That is, they mean what they signal. Whilst China is reliant on the U.S. as its biggest market and for the investments it has made there, the U.S. is reliant on China for ongoing cheap credit and goods. Given this inter-dependency, what is China signalling about its intent amidst current market turmoil? The signals are clear but don’t seem to have been well picked up by the media. I suggest that there are three loud “No”s to be found in what China has been saying on the international stage, as well as some quieter “Yes”s.
China Looking For Guarantees On Debt This is a bad story for the US economy. China now realizes that the US strategy is getting a little bit out of control. Inflating our way out of the mess is a good strategy as long as China is willing to loan us the money. This story is one of the first indications that China is starting to get a bit antsy with US antics. Geitner had words over the Yuan, but that seemed to have gone away.
'Toxic' EU bank assets total £16.3 ($22 USD) trillion It is not surprising that European Union finance ministers looked ashen faced in Brussels on Tuesday. The breakfast meeting discussed how EU governments should deal with, in other words pay for, the "toxic" banking assets that triggered the economic crisis. The figures, contained in a secret European Commission paper, are startling. The dodgy financial packages are estimated to total £16.3 trillion in banks across the EU. The "impaired assets" may amount to an astonishing 44 per cent of EU bank balance sheets. It is a deep ditch the bankers, regulators and their friends in government have dug us into.
Bail-out bankers will get bonuses after all he Government today gave up its bid to stop bailed-out Royal Bank of Scotland paying out bonuses to the dealers who brought it to its knees. Ministers admitted privately that they were powerless to punish bankers who had contracts guaranteeing them payouts even though the bank is now 70% owned by the taxpayer. Some are set to get five-figure sums. The embarrassing retreat follows a week in which senior ministers joined in a chorus of criticism of RBS for intending to pay bonuses totalling a billion pounds just months after it was forced to take £20bn in bailouts. One Whitehall official said: 'There is only so much we can do.' It was even being speculated that bonuses will go ahead next year as well.
Peter Schiff 2/11/09 on Ron Paul, Paul Krugman & ending the Fed/FDIC
Fed Calls Gain in Family Wealth a Mirage The leap in wealth that Americans thought they were enjoying over the last several years has already turned out to be a mirage, according to new estimates by the Federal Reserve. In its triennial survey of consumer finances, released Thursday, the Fed found that the median net worth of American households increased by a seemingly healthy 17 percent between the end of 2004 and the end of 2007. But the gains were wiped out by the collapse in housing and stock prices last year. Adjusting for those declines, Fed officials estimated that the median family was 3.2 percent poorer as of October 2008 than it was at the end of 2004. The new survey offers one of the first glimpses of how American families were positioned financially as the roof fell in on the economy, and it provides some sense of how much wealth has been destroyed since then. Indeed, the destruction of wealth is still in full swing: housing prices are still falling, more than two years after the bubble peaked.
FIREWALL - In Defense of Nation State(A MUST SEE !!!) The history of the current financial crisis and what MUST be done to avert doom... Excellent historical explanation of what happened in Germany before WWII regarding hyperinflation, later hyper-deflation, and political consequences when London and Wall Street insured the election of Hitler. Also goes into the manipulation of the BabyBoomers and creation of the corporate structure and reshaping the financial structure (private money running public policy) that lead to the debt bubble - cause of today's crisis. History that explains what's going on today including the use of debt to control. And history repeats itself. We are swallowing the pill of Mussolini style corporatism disguised as public/private partnerships where private capital takes over public (tax payer funded) entities, and will make money charging the taxpayers again, for the use of privately run infrastructure.
Republican governors at odds on stimulus cash For many Republican governors, the $789 billion U.S. economic stimulus package is the equivalent of cod liver oil: they'll take it, but don't expect them to like it. While almost every Republican in Congress has firmly opposed the huge spending bill, the nation's 22 Republican governors, including many possible presidential candidates, have struggled to reconcile their party's small-government philosophy with their need to patch shredded state budgets.
World economic crisis is top security threat: U.S. The global economic crisis has become the biggest near-term U.S. security concern, sowing instability in a quarter of the world's countries and threatening destructive trade wars, U.S. intelligence agencies reported on Thursday. The director of national intelligence's annual threat assessment also said al Qaeda's leadership had been weakened over the last year. But security in Afghanistan had deteriorated and Pakistan had to gain control over its border areas before the situation could improve. "The financial crisis and global recession are likely to produce a wave of economic crises in emerging market nations over the next year," said the report. A wave of "destructive protectionism" was possible as countries find they cannot export their way out of the slump.
Obama eyes home loan subsidies in rescue plan The Obama administration is hammering out a program to subsidize mortgages in a new front to fight the credit crisis, sources familiar with the plan told Reuters on Thursday, boosting financial markets. In a major break from existing aid programs, the plan under consideration would seek to help homeowners before they fall into arrears on their loans. Current programs only assist borrowers that are already delinquent. Wall Street stock indexes quickly retraced earlier losses on the report, with the blue-chip Dow Jones industrial average jumping 245 points, or 3.0 percent, to close just 6 points lower on the day. Earlier in the session, stock prices had been testing lows seen last November on investor worries about the economy.
Peter Schiff 2/11/09 on Bernanke, Obama, Goldman Sachs and China
2009: Another Year of Shock and Awe The $1.1 Trillion Budget Deficit My reaction is that the people in the government are totally out of control. A poker player would say the government is "on tilt," placing wild, desperate bets in the hope of getting rescued by good luck. The things they're doing are not only unproductive, they're the exact opposite of what should be done. The country got into this mess by living beyond its means for more than a generation. That's the message from the debt that's burdening so many individuals; debt is proof that you're living above your means. The solution is for people to significantly reduce their standard of living for a while and start building capital. That's what saving is about, producing more than you consume. The government creating funny money - money out of nothing - doesn't fix anything. All it does is prolong the problem and make it worse by destroying the currency.
Wealth Does Not Pass Three Generations Microsoft Chief Executive Steve Ballmer likens economy to depressions of 1837, 1873, and 1929 Microsoft Chief Executive Steve Ballmer sketched a dire portrait of the world economy on Friday, likening it to market conditions in 1837, 1873, and 1929, each of which involved bank failures, high unemployment, and a depression. "This is a once-in-a-lifetime economic crisis," Ballmer told a retreat of House Democrats in Williamsburg, Va. "There is a lot of history around that, and frankly if you stop and think about it, 1837, 1873, 1929, 2008, it's almost exactly a whole lifetime between each of the major economic difficulties that we face." Ballmer said that economic growth in the last 25 years was fueled by innovation, globalization, and debt--and that the current levels of debt were unsustainable. "In 1929, for example, just before the stock market crash, the private debt-to-GDP ratio was 160 percent," he said. "Last year, private sector debt as a percentage of the GDP: 300 percent, far more leverage."
Risk of Ruin The Silver Bullet Band Groping in the dark for the golden gun with silver bullets, should they get their hands on it- the Fed, Treasury, and the political bodies at large, may soon discover they have been on their knee's pleading to engage in a willfully ignorant round of Russian roulette with a fully loaded revolver. Inevitably, we envision this high-level failure of leadership bringing about an unprecedented opportunity for the US to raise the white flag on its irreparable financial system, and place disciplines from the Austrian school of economics to task in rebuilding its financial markets. In the interim, it is our hope (or fantasy) that the real (peoples) economy is somehow able to survive with vim and vigor while old school Wall Street deservedly crumbles amid a period of historic restoration. The Great Awakening: Boomers, Your Crisis Has Arrived (Part 1 of 3) "There is a mysterious cycle in human events. To some generations, much is given. Of other generations, much is expected. This Generation has a rendezvous with destiny." - Franklin Roosevelt – 1936 President Roosevelt was correct. The generation he was speaking to was already dealing with the worst financial crisis in the history of the United States, the Great Depression. By 1945, over 400,000 of this generation had lost their lives. Another 600,000 men were wounded. Much was expected and much was sacrificed. Every generation has a rendezvous with destiny. The generation that won World War II passed the ultimate test and proceeded to produce the next generation, the Baby Boom Generation. Their rendezvous with destiny is underway. Will it be a rendezvous with history that results in World War III, the collapse of the Great American Republic, dictatorship, or a return to the original Constitutional principles upon which this country was founded? Many of you are probably thinking the idea of WW III, collapse or dictatorship is crazy. I’d respond with the wisdom of Kramer from the classic Seinfeld show.
Third Obama cabinet nominee withdraws name Republican Senator Judd Gregg withdrew his nomination as Commerce secretary on Thursday in an embarrassing setback to President Barack Obama's efforts to bridge party differences in his fight against recession. Gregg said he pulled out because of "irresolvable" differences over policy issues, including the $789 billion economic stimulus package that has so far drawn support from only a handful of Republican lawmakers.
Protections for credit card holders weighed Swiping your credit card would come with dramatic new protections under regulations considered by congressional lawmakers Thursday. Among the industry practices criticized at the Senate Banking, Housing, and Urban Affairs Committee's hearing was the piling on of hidden fees on consumers. Fees can be incurred for telephone payments, balance transfers, replacing lost cards and cash advances. Card issuers can also hike interest rates for a variety of reasons. "The list of questionable actions credit card companies are engaged in is lengthy and disturbing," said Sen. Christopher J. Dodd, chairman of the banking committee.
Conservatives Say Gov't. Health Care Will Literally Kill You Once the Obama Administration completes their goal of passing an enormous spending bill with the promise of stimulating the US economy, they will set their sights on passing legislation to control the health care system throughout the nation, according to a conservative congressman who held a press conference for news reporters, Internet journalists and bloggers earlier this month. The Democrats, they said, are seeking to replicate the socialized medicine systems of other industrialized nations such as Britain, Canada and Japan.
Personal bankruptcies ballooned in Mass. last year The number of personal bankruptcy filings in Massachusetts rose 41 percent in 2008 as the economy slumped, layoffs increased, and home equity loans became more difficult to obtain, said the Warren Group, a Boston firm that tracks such data and publishes Banker & Tradesman. "There were 11,638 filings under Chapter 7 of the US bankruptcy code last year, up from 8,245 in 2007 and more than double the number in 2006 when there were 4,698 filings," the Warren Group said in a press release. "Nearly all of the filings, or 98 percent, were by individuals."
Out of Work and Challenged on Benefits, Too In Record Numbers, Employers Move to Block Unemployment Payouts More than a quarter of people applying for such claims have their rights to the benefit challenged as employers increasingly act to block payouts to former workers. The proportion of claims disputed by former employers and state agencies has reached record levels in recent years, according to the Labor Department numbers tallied by the Urban Institute. Under state and federal laws, employees who are fired for misbehavior or quit voluntarily are ineligible for unemployment compensation. When jobless claims are blocked, employers save money because their unemployment insurance rates are based on the amount of the benefits their workers collect.
Rescue Plan for Housing in the Works The Obama administration is trying to come up with a standardized approach for using taxpayer money to modify the mortgages of people in danger of losing their homes, officials said on Thursday. Lawmakers and economists acknowledge that the ailing housing market is at the center of the economy’s troubles and that coming to its aid is a top priority. But there is much debate over whom should benefit. President Obama’s top economic advisers have already vowed to spend at least $50 billion on reducing foreclosures, and officials are hoping to unveil a plan within two weeks. Administration officials cautioned that they were still evaluating options, but one possibility is to subsidize lower monthly payments for troubled borrowers after doing a standardized reappraisal of the value and affordability of their homes.
Credit-Card Issuers: Buy Something or Else! One of the biggest causes of the financial crisis was that Americans were borrowing (and spending) more money than they could afford to pay back. So how are credit-card issuers reacting to consumers' attempts to live a more financially responsible lifestyle? They're threatening to cut their credit cards off if they don't spend enough. Loretta Maxwell of Troy, Mich., thought her credit score of 790 buffered her against most of the fallout of the credit crunch. When Chase (JPM) closed her $6,000-limit card in December without warning after two years of inactivity, she called to fight it. She was unsuccessful. "If you're not using it, they entice you to do so, and then the moment you don't spend enough, they cut your limit," she says. (Chase says it is standard practice is to review inactive accounts. "Inactive cards with large open credit lines present a real risk of fraudulent use and large potential liabilities for Chase," says spokeswoman Stephanie Jacobson.)
Stocks Are Doomed, Only Cash or Precious Metals May Survive President Obama, his administration, and the Democratically controlled Congress are working as quickly as possible to spend as much money as possible on their constituent base, to consolidate their stranglehold on power. There is still no bank rescue plan, nothing in the "stimulus" bill to create or even slow job losses, and seemingly no understanding about the enormous amount of bad debt that is rapidly losing value and destroying the financial system from the inside out. Home foreclosures are accelerating. We await a tidal wave of personal and corporate bankruptcies and the implosion of the commercial real estate market that will trigger more massive losses in the banking system.
House To Bankers: Time To Make Sacrifices Bank CEOs Appear Before Skeptical Congress, Acknowledge Need To Regain Country's Trust Facing a disgusted public and Congress, bank CEOs agreed with demands for greater accountability Wednesday in the first testimony on how they're spending money from the taxpayer-funded $700 billion bailout. "Both our firm and our industry have far to go to regain the trust of taxpayers, investors and public officials," John J. Mack, head of Morgan Stanley, told the House Financial Institutions Committee. Added JP Morgan Chase & Co.'s Jamie Dimon: "We stand ready to do our part going forward." In general, the eight top bankers appearing before the panel were contrite and conceded they have work to do to win over a bitter public and an exasperated Congress. They had little choice but to acknowledge as much, given intense anger and anxiety as the troubled financial system continues to spiral downward in an ever-worsening recession.
Obama ‘Stimulates’ His Political Buddies President Obama says the “stimulus” package is designed to save the economy. He says the “stimulus” package contains no earmarks. He says “government is the only entity left with the resources to jolt our economy back into life.” He’s lying. This “stimulus” package and Tim Geithner’s associated bailout scheme aren’t aimed at helping private industry recover. They’re aimed at putting cash in his friends’ pockets and shaping a new big government majority for decades to come. Obama’s basic economic philosophy seems to be distrust of private business. He characterizes tax cuts as “government spending,” as though allowing people to keep their own money were an act of government largesse. And according to Obama, tax cuts aren’t just “government spending”—tax cuts actually “helped lead us to the crisis we face right now.”
Obama's use of fear card may backfire President Barack Obama may think words like "catastrophe," "crisis" and "disaster" will help sell his economic rescue plans, but US history has shown that scare tactics can backfire. Having campaigned on a promise of hope and run against what he called President George Bush's "politics of fear", Obama may be taking a big political risk -- for himself and his policies -- by resorting to the same tactic. In pressing Congress and the public to back expensive proposals, Obama has used the well-worn political rhetoric of fear to paint dire scenarios, hoping to persuade skeptics of the need for quick action. It may work, and it may not. "That end-of-the-world type of rhetoric is not good for business confidence," said Chris Edwards, director of tax policy studies at the Cato Institute.
Asian shares fall after President Obama says US faces 'full-blown' crisis Asian stocks fell for a second day, led by materials and consumer companies, after President Barack Obama said the US economy faces a “full-blown crisis.” Rio Tinto, the world’s third-largest mining company, dropped 0.9pc in Sydney, while Samsung, the world’s largest maker of computer-memory chips, fell 1.3pc in Seoul. Orix, Japan’s biggest non-bank financial company, tumbled 8.9pc on a lower profit forecast. Nissan, Japan’s No. 3 carmaker, jumped 7.3pc after saying it will cut 20,000 jobs to help restore profit. “It’s certainly going to help the companies if they cut costs but it’s not going to do anything to affect demand for their products,” said Ben Pedley, Hong Kong-based managing director of LGT Investment Management, whose parent manages more than $18bn. “It’s going to take a lot of money and a lot of time for the U.S. economy to emerge from these depression-like conditions.”
Business bullet: Pound basher
Greenspan Says He Was Mystified by Subprime Market Alan Greenspan, the former chairman of the Federal Reserve, told CNBC in a documentary to be shown Thursday night that he did not fully understand the scope of the subprime mortgage market until well into 2005 and could not make sense of the complex derivative products created out of mortgages. “So everybody in retrospect now knows that that boom was developing under the markets for quite a period of time, but nobody knew it,” Mr. Greenspan told CNBC’s David Faber. “In 2004, there was just no credible information on that. It wasn’t until we got well into 2005 that the first inklings that that was developing was emerging,” he said. Mr. Greenspan’s critics have argued that the former Fed chairman expanded the money supply well beyond the growth in the nation’s gross domestic product by keeping interest rates too low for too long.
Obama Hadn’t ‘Specified’ Whether National Health Care Provisions Needed to Be in Final Stimulus Package, White House Says President Barack Obama had not “specified” whether he would insist that two controversial national health care provisions be included in the final economic stimulus bill, White House Deputy Press Secretary Jennifer Psaki said yesterday before the elements of the final deal were released. The provisions, included in both the House and Senate versions of the bill, would allocate at least $3 billion toward the “the utilization of an electronic health record (EHR) for each person in the United States by 2014.” In addition, another $1.1 billion would be allocated to establish a Federal Coordinating Council for Comparative Effectiveness Research. This council would serve as an umbrella group for all federal health programs, including Medicare, Medicaid, S-CHIP, and veterans’ care, with 15 members from various federal agencies making determinations and recommendations to the secretary of Health and Human Services about health care needs and cost-effective treatments.
Part-Timers Treated Like Second-Class Employees Part-time workers deserve to be full participants in the work benefits and protections that sustain American families and bolster our economy. As almost 11.1 million people look for work nationwide, including 400,000 men and women in Georgia, many take on part-time positions when no full-time jobs are available. Nationally, more than one out of every five workers in the United States works part time. Still, part-time workers are often treated like second-class employees, discriminated against because of the number of hours they work. Part-timers are often paid lower hourly wages than their full-time counterparts. And, typically, they get few or no employer benefits. According to the Economic Policy Institute, only 17 percent of part-timers receive employer-provided health care coverage, in contrast to 69 percent of full-timers. Just 20 percent of part-time workers get a pension plan from their employers, compared to two-thirds of full-time workers. Most part-timers also miss out on vacation, personal and paid sick days.
Keep Your Hands Off the 2010 Census, Republicans Tell the White House House Republicans will defend the integrity of the U.S. Census at a Capitol Hill press conference on Thursday. On Wednesday, they sent a letter to President Barack Obama, expressing “grave concerns” about the administration’s plan to transfer control of the 2010 Census to White House staffers. Doing so would result in “the unprecedented politicization of the Census and open the door to massive waste and abuse in the expenditure of taxpayer funds, billions of which are distributed on the basis of Census data,” Republicans wrote. Republicans note that an estimated $300 billion in taxpayer funding is distributed by the federal government annually, based on the constitutionally mandated population count. The Census head count determines how many congressional seats are apportioned to the various states.
An Effort to Upgrade a Court Archive System to Free and Easy Americans have grown accustomed to finding just about anything they want online fast, and free. But for those searching for federal court decisions, briefs and other legal papers, there is no Google. Instead, there is Pacer, the government-run Public Access to Court Electronic Records system designed in the bygone days of screechy telephone modems. Cumbersome, arcane and not free, it is everything that Google is not. Recently, however, a small group of dedicated open-government activists teamed up to push the court records system into the 21st century — by simply grabbing enormous chunks of the database and giving the documents away, to the great annoyance of the government. “Pacer is just so awful,” said Carl Malamud, the leader of the effort and founder of a nonprofit group, Public.Resource.org. “The system is 15 to 20 years out of date.”
GM Bankruptcy In Bondholders' Hands Report: Bondholders Want More Money In Exchange For Forgiving Automaker's Debt We forgave billions in debt, now give us more money. This is the message General Motors bondholders have sent to the flailing automaker along with the threat of pushing the company into bankruptcy, according to a newspaper report. All week, GM has been in negotiations with bondholders, who want the automaker to give them 50 cents on the dollar, instead of the 30-cent return currently offered in an effort to cut the company's unsecured debt to $9.2 billion, part of its requirement for accepting a $13.4 billion federal loan package, sources tell the Detroit News.
Ark. House OKs bill allowing guns in churches The Arkansas House on Wednesday approved a bill allowing concealed handguns in churches, despite hearing arguments that lawmakers should put their faith in God, not guns. The bill, which passed on a 57-42 vote and now heads to the Senate, removes churches and other houses of worship from the list of places where concealed handguns are banned. Currently, the only private entities where concealed weapons are banned are churches and bars. The bill's sponsor, Rep. Beverly Pyle, R-Cedarville, said she introduced the measure after a series of church shootings across the country. She said it would be up to each individual church whether to allow the concealed guns. "It is time we changed our concealed-handgun law to allow law-abiding citizens of the state of Arkansas the right to defend themselves and others should a situation happen in one of our churches," she said.
The Growing Army of Angry Men Whose Lives Have Been Destroyed by the Federal Government One of the hardest things to deal with in the current economic depression is the disgusting hypocrisy of the U.S. congress, the new president, and the members of the Federal Reserve System. It is one thing to be told, as we all are, that we must hand over fat wads of our hard-earned money to these warmongering and thieving snakes or face jail terms, but one feels a whole new level of revulsion when these people make statements to the effect that they, and they alone, are in a position to "save the economy" by "creating jobs." These statements are made by people who have done virtually everything in their power to destroy the American economy over the last few decades, but who have now proclaimed themselves to be our saviors. Only the most naïve and unlearned among us could possibly be falling for the idea that a bunch of self-serving politicians, bureaucrats and bankers are going to "save" us from problems they have caused.
Will Obama Exploit the Unemployed as Recruits for a Ramped Up War in Afghanistan? The jobless rate is a depression-level 18 percent. Americans might sign up to kill abroad rather than be homeless and hungry at home. Is there intelligent life in Washington, D.C.? Not a speck of it. The U.S. economy is imploding, and President Barack Obama is being led by his government of neoconservatives and Israeli agents into a quagmire in Afghanistan that will bring the U.S. into confrontation with Russia, and possibly China, America's largest creditor. The January payroll job figures reveal that last month, 20,000 Americans lost their jobs every day. In addition, December's job losses were revised up by 53,000 from 524,000 to 577,000. The revision brings the two-month job loss to 1,175,000. If this keeps up, Obama's promised 3 million new jobs will be wiped out by job losses.
Army Suicides in January Outnumbered Combat Deaths The NIMH is spending $50 million on research to figure out why. Doesn't common sense tell us enough? The U.S. Army recently reported that for the month of January in 2009, the number of soldiers who committed suicide surpassed the number of soldiers who were killed in combat in Iraq and Afghanistan. While there were 16 U.S. combat deaths, the Army believes that there were 24 suicides (the Army has confirmed seven suicides, and it believes that investigators will confirm an additional 17 other deaths as suicides). The number of suicides in January 2009 is more than five times as many as the total in January 2008. Overall in 2008, suicides in the Army rose for the fourth straight year. Army statistics, which include the Army Reserve and National Guard, confirm 128 suicides (with 15 more deaths under investigation). Suicides for the Marines also have been increasing, with 41 in 2008, up from 33 in 2007 and 25 in 2006.
Militarizing Police Depts. With Your Bailout Money George Orwell, call your office ! If prostitution is the world’s oldest profession, then city mayors follow a very close second. In fact, it occurs to me they may be the spiritual offspring of the aforementioned liaisons. Whenever there is loose change or unclaimed dollar bills laying around, mayors can smell them a mile away and if a Sugar Daddy offers free cash, they never stop to question what the vigorish might be. The urban emperors, suburban commissars, the hack and the highbrow, the Republican and Democrat, the apolitical and amoral, the exurban apparatchiks all assemble to line dance down Pennsylvania Avenue like ladies of the evening on the way to a golden score with Big Daddy. ( see PDF http://www.usmayors.org/mainstreeteconomicrecovery/documents/mser-report-200901.pdf - Mainstreet Economic Recovery "Ready to Go")
Inside source reveals FEMA & DHS preparing for mass graves and martial law near Chicago An Indiana county municipal official in the vicinity of Chicago reveals the contents of his meetings with FEMA and the Department of Homeland Security. The initial requests seem reasonable enough when FEMA asks the county officials to prepare a Hazard Mitigation Plan to deal with flooding, fires, high winds and tornadoes. But as the required meetings and calls with FEMA and DHS continue over a two year period their request become more unusual, raising suspicions of county officials
KOA's Newman compared Obama order on foreign abortion funds to "eugenics" practiced by "Third Reich," called president a "sick freak" Summary: Criticizing President Obama's executive order lifting a ban on federal funds for international groups providing abortions overseas, "Gunny" Bob Newman of KOA compared the policy to "eugenics" as practiced by "the Third Reich, today's People's Republic of China" and "Herod the Great." Newman labeled Obama a "sick freak" and a "Marxist," and stated that it "would not surprise" him if the president and "others on the radical left" were to fund "voluntary sterilization programs" in Third World nations.
North Korea assembling longest-range missile North Korea has been assembling its longest-range missile at an east coast launch base and could test-fire the rocket by the end of this month at the earliest, a leading South Korean daily reported on Friday. South Korean and U.S. officials have warned prickly North Korea not to launch its Taepodong-2 missile, which is supposed to eventually be able to hit Alaska but has never successfully flown. It blew apart seconds after it was last tested in 2006. North Korea recently transported the first and second stage of the Taepodong-2 to its missile base on a special train and has been assembling the pieces at an indoor facility to prevent spy satellites from watching, the Chosun Ilbo newspaper reported intelligence sources as saying.
US-IRAN WALL OF MISTRUST, Part 1 Obama's Persian double On Tuesday, Iran celebrated the 30th anniversary of the Islamic Revolution. In this year of celebrations galore - from the 20th anniversary of the fall of the Berlin wall to the 50th anniversary of the Cuban revolution - why not also dream of a year zero? It's September 2009. Barack Obama is the United States president. Mohammad "dialogue of civilizations" Khatami is the Iranian president. Khatami flies to New York for the United Nations General Assembly. He bumps into Obama in the corridors of the UN. With fists unclenched, they exchange pleasantries - and retire to a room for some real "face-to-face". The 30-year - some would say 56-year - wall of mistrust between the US and Iran finally comes tumbling down.
US-IRAN WALL OF MISTRUST, Part 2 Will Obama say 'we're sorry'? If United States President Barack Obama is really serious about "unclenched fists" in a new US-Iran relationship, he's got to take a serious, unbiased look at the US record. Former US secretary of state Cordell Hull's classic comment about Dominican Republic dictator Rafael Trujillo - "He's a son-of-a-bitch, but he's our son-of-a-bitch" - has been the norm for decades. From the Somozas in Nicaragua to Saddam Hussein in Iraq, from Indonesia's Suharto to the shah of Iran, US foreign policy over the past decades has enshrined a hefty SOB gallery. This gallery symbolizes the official Washington policy of US neo-colonialism - always indirect and non-ostensive, contrary to historical examples of European colonialism. Iranian President Mahmud Ahmadinejad has demanded apologies from the US as essential for smashing the wall of mistrust between Iran and the US.
Israel govt must restart peace talks: Solana European Union foreign policy chief Javier Solana said on Wednesday the next Israeli government must restart serious peace negotiations with the Palestinians. "I think if we continue in a crisis management mode, if we don't enter into a conflict resolution mode it will be going back and back again," Solana told Reuters in an interview. "It will have to be a government ready to continue to restart a very serious process of negotiation," Solana said after talks in Moscow with Russian officials. Following Tuesday's elections in Israel, Benjamin Netanyahu's right-wing Likud party and Tzipi Livni's centrist Kadima party both claimed victory. It was not clear who would be able to form a government.
------- something worth watching over the weekend ---------
This one - just to feel GOOD . . .
When Challenger Flies
RON PAUL BACK IN '88 TALKING ABOUT THE CRISIS PART 1 OF 5 The Mainstream media has already accepted the fact that Ron Paul has been right about the economic crisis, but they never talk about how long he's been saying this. He's been talking about these problems not just for years, but for decades
RON PAUL BACK IN '88 TALKING ABOUT THE CRISIS PART 2 OF 5
RON PAUL BACK IN '88 TALKING ABOUT THE CRISIS PART 3 OF 5
RON PAUL BACK IN '88 TALKING ABOUT THE CRISIS PART 4 OF 5
RON PAUL BACK IN '88 TALKING ABOUT THE CRISIS PART 5 OF 5
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American Time Bomb Pt 1 David Walker, the former comptroller general at the US General Accounting Office, believes that his country is about to drown in an ocean of debt. He is so concerned that he left his job in order to raise public awareness on the issue. He believes this film to be the financial equivalent of former vice-president Al Gore's warning about the environment - An Inconvenient Truth. The statistics are staggering, with the US government debt running at more than $10 trillion - much of it to China. David Walker believes it is set to rise and rise unless policy changes. And with many people urging President-elect Barack Obama to spend his way out of recession, it may be that the underlying weakness of the American economy can only get worse. An American Time Bomb is an updated and edited version of the 2008 Oscar nominated documentary I.O.U.S.A.
American Time Bomb Pt 2
BBC REPORT! American Time Bomb! Part 3 Notice: Part 3 of this series blocked by NBC Universal.
Three US banks 'own' gold futures at Comex! The collapse of US banking giant Lehman Brothers few months ago was the beginning of this decade's severest global economic meltdown. Falling stocks markets, rising commodities prices and volatile currencies have made several nations to cut interest rates and people are these days running after gold saying that the yellow metal is the safest investment during recession times. But do you know that some large American banks are dominating the gold market in the world? Or some of the same banks that helped spawn the current global financial crisis, have the largest positioning in gold and silver futures at Comex, a division of Nymex?
Gold hits seven-month high on safe-haven buying Gold futures extended gains Wednesday, climbing above $940 an ounce to their highest level in nearly seven months, as investors continued to buy the metal amid doubts on new economic rescue plans unveiled in the U.S. Gold for February delivery ended up $30.10, or 3.3%, at $943.80 an ounce on the Comex division of the New York Mercantile Exchange, the loftiest closing level for a front-month gold future since July. Trading more actively, the April contract rose 3.3% to $944.50 an ounce. Gold gained more than 2% in the previous session after Treasury Secretary Timothy Geithner introduced a new plan to rescue the ailing banking sector. The Senate also passed an $838 billion stimulus package Tuesday by a 61-37 vote.
Buy Gold! Tonight's report is going to deal specifically with gold, silver, and maybe even a gold stock or two. I am extremely bullish gold and have been for almost two months. Hell, I've been extremely bullish gold since 2001 if the truth were known! I don't know but I've always had a fascination with gold and silver coins. I am old enough to remember when folks would still pay with silver dollars back in the late 50's. My dad owned a hotel and I would fish them out of the cash register and put in quarters, dimes, and nickels in their place. Don't ask me why; I guess I just liked the way they felt. You had something "tangible" in your hand. One of the things I like about gold and silver is that it's been around for four thousand years. Just about every culture in the world can recognize it and every language has a word for it. None of that holds true for fiat currency. You can't find one that's survived a century and that's because man can't resist the temptation to create more when a need arises. They pass laws, like the US Constitution, and then repeal them or just plain ignore them. You can't create gold out of nothing. If you want more you have to go deep down into the bowels of the earth and find it. I know something about mining because I built tunnels; it's dangerous and expensive work.
A day after Geithner, it's the bankers turn Eight CEOs will face a Congressional grilling Wednesday, including a battery of questions about how they have used more than $160 billion in taxpayers' money. If Treasury Secretary Timothy Geithner could get an earful of skepticism over the government's financial bailout plans, the nation's top bankers can expect no less when they make their maiden voyage to Congress as recipients of the widely criticized funds. Eight chief executives will slip behind a witness table in the Rayburn House Office Building on Wednesday morning to face a battery of questions about how they have used more than $160 billion in taxpayers' money.
Obama Paints America's Choice as His Plan or Nothing President Obama likes to portray the battle over the economic stimulus package that passed the Senate on Tuesday as a stark choice between his approach and that of those who would "do nothing." "Nothing is not an option. You didn't send me to Washington to do nothing," Obama told a gathering of 1,500 here on Tuesday, bringing the crowd to its feet as he campaigned for passage of the more than $800 billion package. The president used the same language Monday in his first prime-time news conference, suggesting that lawmakers who opposed his prescription want the government to ignore the deepening economic crisis.
Barack Obama’s Savior-Based Economy By Michelle Malkin President Obama is back in messianic campaign mode. It is unbecoming. When he’s not snarling at conservative opponents of his endless spending programs, he’s pandering to supporters as the nation’s community organizer-in-chief. At a stimulus rally in Ft. Myers, Fla., on Tuesday, a woman named Henrietta Hughes stood up to decry the mortgage crisis and ask Obama for his personal help. Choking back tears, she implored: “I have an urgent need. … We need a home, our own kitchen, our own bathroom.”
Jim Rogers Says Geithner Caused Crisis, Must Let Banks Fail, Feb. 11, 2009
Geithner Plan Lacks Freshness And Clarity Paulson's Criticized Path Is Followed In rolling out his overhaul of the financial rescue yesterday, Treasury Secretary Timothy F. Geithner lambasted the Bush administration's response to the crisis over the past year. "Policy was always behind the curve, always chasing the escalating crisis," Geithner said, criticizing his predecessor, Henry M. Paulson Jr. "The emergency actions meant to provide confidence and reassurance too often added to public anxiety and to investor uncertainty." But yesterday, Geithner seemed to be following the Hank Paulson playbook, according to a wide consensus on Wall Street, in Washington, and beyond.
Congress Reaches Deal on Stimulus Plan Senate and House leaders announced Wednesday evening that they had reached agreement on a $789 billion economic stimulus bill, clearing the way for final Congressional action and President Obama's signature, perhaps by the end of the week. "The differences between the House and Senate versions, we've resolved," Senator Harry Reid of Nevada, the Democratic majority leader, said in a Capitol news conference. The differences were resolved by a lot of intense "give and take," Mr. Reid said, "and if you don't mind my saying so, that's an understatement."
Hill negotiators agree on $789 billion stimulus Senate and House negotiators Wednesday announced a deal on a $789 billion package of spending hikes and tax cuts that is the centerpiece of President Obama's economic rescue plan. The agreement represents a lower overall figure than the versions approved by the Senate and House earlier and could be ready for Mr. Obama's signature by the end of the week. The deal still must be formally ratified in a House-Senate conference and approved by both chambers. Three Republican senators who provided the key votes for passage of the Senate bill endorsed the compromise measure Wednesday, virtually ensuring it will pass the chamber. No House Republicans voted for the original bill.
Geithner Is Pressed for Bailout Details Treasury Secretary Timothy F. Geithner's second day of testimony before Congress on Wednesday was a chance to rebut critics who said that the bank bailout plan he announced a day earlier was troublingly vague. But despite a spirited defense of the Obama administration's plan, he found it difficult to overcome the doubts among lawmakers and struggled to explain why help for distressed homeowners was still weeks away. As Mr. Geithner testified before the Senate Budget Committee, whose members clearly were sobered by the magnitude of the crisis and of the administration's proposed response, its chairman suggested that the Treasury Department might have to return to Congress for an additional $300 billion to $500 billion to help stabilize the financial sector. "I don't think the right answer is zero for the housing crisis and the financial sector," said the chairman, Senator Kent Conrad of North Dakota.
Wilbur Ross: Possibly a Thousand Banks Will Close In an exclusive interview with CNBC.com, Wilbur Ross, chairman and CEO of WL Ross & Co., says he sees possibly as many as a thousand bank closures in the coming months. And this will create opportunities for investors. "I do think a lot of the regional ones will (close), just as they did in the last savings and loan crisis in the 1990s," Ross said. Ross says he will be looking to pick up smaller distressed institutions. "There will be opportunities, but we will need federal assistance in them, because what we're mainly looking for is stable sources of deposits, not so much the loan portfolio."
Gerald Celente on Glenn Beck 10 Feb 09 Economic Apocalypse
Washington Hopes ‘Vulture’ Investors Will Buy Bad Assets Howard S. Marks is the sort of financier who Washington hopes will help fix the nation’s tumbledown banks. Trouble is, he is not quite sure he wants the job. Mr. Marks is a former banker who became a pioneer in the graveyard of Wall Street. He is one of the biggest players in distressed investing — putting money into risky investments that few others will touch. But he and other potential investors are wary of the risk in this case. With its plan to shore up banks that was announced on Tuesday, the Obama administration hopes to entice investors like Mr. Marks, who has $55 billion at his command, to buy troubled assets from the nation’s banks and enable them to make the loans needed to jump-start the economy. The administration hopes, in short, to counterbalance some of the fear gripping the financial world with a bit of old-fashioned greed.
Bankers challenged to reform system -- quickly House lawmakers challenge banking industry CEOS to reform, change troublesome lending practice The top members of a key House panel told banking leaders Wednesday they must win over a disgusted public and work harder to right the deeply troubled financial system. "I urge you going forward to be ungrudgingly cooperative," said Rep. Barney Frank, the Democratic chairman of the House Financial Services Committee. "There has to be a sense of the American people that you understand their anger ... and that you're willing to make some sacrifices to get this working." Frank also asked banks to impose a moratorium on mortgage foreclosures until Treasury Secretary Timothy Geithner comes up with a system wide mortgage modification. The panel's top Republican, Spencer Bachus of Alabama, said the bankers and Congress will have to do their part to sway people by "winning back their trust and their confidence."
The race to the bottom in currencies Of six central banks voting on interest rates last week, only the European Central Bank in Frankfurt failed to reduce its cost of money to either record or multi-year lows, holding rates steady at 2.0%. The market's reaction? Forex traders trashed the euro vs. those currencies now paying way less than inflation.
Stimulus Bill Raises Concerns Over Government Rationing of Health Care Two provisions in President Barack Obama's economic stimulus plan could give the federal government the authority to oversee the medical decisions made between doctors and patients, critics warn, which could result in the rationing of health care. The plan to make all health records electronic and establish an effectiveness board to review health care costs was part of the $838 billion economic stimulus bill that passed the Senate Tuesday. The bill provides $3 billion to computerize health records, a measure intended to cut costs and reduce medical errors. Language in the stimulus bill calls for "the utilization of an electronic health record (EHR) for each person in the United States by 2014."
Marc Faber Says U.S. Stimulus May Lead to Dire Consequences
Stress-Testing the New Administration It's big, it's bold, but it's also vague. And that's the problem. Treasury Secretary Timothy Geithner yesterday explained the new new plan to solve the financial crisis that ails America. Alas, as articulated yesterday, the plan is short on solution details and long on general notions of what needs to be done. The challenge is figuring out how the latest effort will work and, more importantly, deciding if it'll fare any better than its misguided predecessors. At the moment, that's a challenge with no immediate answer. As the David Byrne and Brian Eno audio montage intones, "America is waiting for a message of some sort or another."
Obama: Civil War Disguised as Politics? When I ran for the U.S. Senate against Barack Obama I did my best to speak the truth. I knew when I accepted the invitation of the Illinois Republicans that I stood little or no chance of victory. With few exceptions, everyone I consulted advised against it. Most thought it political suicide. But the facts convinced me that Obama is a dangerous left-wing extremist. When confronted with the proven depravity of his moral views, my faith and conscience convicted me as well. After years of telling audiences that we had to stand for right and truth no matter what the cost, I felt that the Lord would hold me accountable if I refused to walk the talk. Sometimes we are not called to victory, but to witness for truth, as Jesus did, even unto death.
Lawmakers Challenge Bankers on Bailout James D'Agostino craned his neck to get a view of the Morgan Stanley chief executive John J. Mack in the hope that the Wall Street titan would be subjected to a firestorm of criticism in a reckoning before Congress. After participating in a protest last weekend at Mr. Mack's home in Rye, N.Y., Mr. D'Agostino said he was eager to see lawmakers "go after him. And the others, too." But inside the House chamber where Mr. Mack sat shoulder to shoulder with Vikram S. Pandit, Kenneth D. Lewis, and the heads of five other too-big-to-fail banks leaning on government support, lawmakers instead delivered the equivalent of a slow burn.
Marc Faber recessions are necessary pt 1/2
Bankers defend bailout record The expected grilling amounted to a light toasting Tuesday as executives of some of the nation's biggest banks came before a House panel angry over the results to date from the government's $700 billion Wall Street bailout. Top officers of Goldman Sachs Groups, Citigroup, Bank of America and other top financial firms faced some uncomfortable moments but staunchly defended the way they used the over $165 billion in taxpayer money they received from the Treasury Department's Troubled Asset Relief Program, or TARP. "We didn't do everything right, far from it," John J. Mack, chairman and chief executive officer of Morgan Stanley, told a packed hearing of the House Financial Services Committee.
Wall St. CEOs berated by lawmakers Wall Street bank executives squirmed under a public scolding in the U.S. Congress on Wednesday over how they used $176 billion in bailout money without noticeably improving the battered economy. "America doesn't trust you anymore," Massachusetts Democratic Rep. Michael Capuano told eight bank chief executives during six hours of congressional questioning on the troubled bank bailout plan. The lawmakers reflected public outrage over the failure so far of a $700 billion financial bailout program to stop the economic free fall and growing taxpayer fatigue as the price tag for rescuing the economy grows.
Bailing Out the Red Light District With the federal government ladling out billions in bailout money to the financial and auto industries, a number of businesses now have their hands out. Home builders, retailers and commercial real-estate developers all want a piece of the bailout pie. Not like there is an existing warm pie cooling on the window sill waiting to be cut and served. No, this money pie is created out of nowhere, to be paid for in higher prices as the inflation is forced upon the unwitting public.
Monetary Policy and the U.S. Dollar One of the chief mandates of the U.S. Federal Reserve is to manage the nation's monetary stock. This essay analyzes the historic growth of the American monetary stock (or aggregates) since 1960 and looks at some recent developments revealing a marked adjustment in policy. These changes are a direct response to the on-going worldwide financial crisis that escalated in September 2008 following the collapse of Lehman Brothers.
Marc Faber recessions are necessary pt 2/2
Protesters 'Storm' Banking CEOs Homes! Lets take a trip to a place in America known as "the Gold Coast". A fairy tale of a place portrayed numerous times in popular culture as a wealthy bastion of conformity, immorality, or anomie, most notably in The Stepford Wives. Monday, Feb. 9, a group of 350 to 400 at-risk homeowners, organized by the Neighborhood Assistance Corp. of America , staged a series of protests outside the mansions of wealthy bankers in a moneyed Connecticut neighborhood. Stamford and Greenwich became the stomping grounds of a grassroots campaign against corporate greed Sunday as part of a three day homeowners' workshop sponsored by the Neighborhood Assistance Corporation of America. Between 350 and 400 people, most of them members, staff or volunteers for the Boston-based nonprofit organization, converged outside the Greenwich home of William Frey, manager of Greenwich Financial Services...
Bankers yield to foreclosure demands US banking chiefs on Wednesday yielded to demands by angry members of Congress and agreed to suspend mortgage foreclosures for at least three weeks to give the US government time to finalise its financial rescue plans. The move, which will freeze repossessions on 1m US homes, came as eight Wall Street leaders came face-to-face with the public outrage over their banks' role in the financial crisis. Members of Congress attacked their bonuses, lending practices and perks at a tense hearing in Washington. Vikram Pandit, chief executive of Citigroup, responded to the criticism by saying he would slash his salary, which totalled $1m last year, to $1 and forgo bonuses until the troubled financial services group returns to profitability.
Bank Test May Expand U.S. Regulators' Role Nearly 100 federal banking regulators descended on Citigroup in New York Wednesday morning. Dozens more fanned out through Bank of America, JPMorgan Chase and other big banks across the nation. It was just another workday. For years, regulators have embedded themselves inside the nation's major banks to monitor their financial health. But now these regulators could become the arbiters of American finance. Treasury Secretary Timothy F. Geithner is empowering them to decide which banks are strong enough to survive on their own - and which must be compelled to accept new bailouts from Washington, along with any strings that might be attached to them.
Regulator Calls for Lenders to Stop Foreclosures The Office of Thrift Supervision today called for the mortgage lenders it regulates to halt foreclosures until the Obama administration puts in place a program to help struggling homeowners. After presenting a plan to boost the financial sector yesterday, Treasury Secretary Timothy F. Geithner said that a $50 billion initiative to help homeowners facing foreclosure is not expected for at least a week. The delay and the price tag -- it was the low end of expectations -- disappointed consumer advocates and lawmakers anticipating the announcement. OTS is joining consumer advocates and some in Congress, including Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, who have called for lenders to institute a moratorium on foreclosures in the meantime. This adds to the pressure facing the administration as it finalizes details of the plan amid growing frustration about the ineffectiveness of government and industry efforts to stem foreclosures.
Cuomo Finds Big Bonuses for Many at Merrill For nearly 700 lucky Merrill Lynch employees, 2008 was a million-dollar year, even though the brokerage firm lost $27 billion. On a day the chief executives of eight large banks were questioned about their industry's excesses on Capitol Hill, Andrew M. Cuomo, the attorney general of New York State, raised hackles by disclosing how Merrill Lynch distributed its 2008 bonus pool. The payments, made just before Merrill Lynch was sold to Bank of America in December, have already stirred anger for being paid earlier than usual. And Mr. Cuomo made it clear that the bulk of the bonuses were paid to a small portion of Merrill Lynch's 39,000 employees. "Merrill chose to make millionaires out of a select group of 700 employees," Mr. Cuomo wrote in the letter, which was sent to the House Financial Services Committee on Tuesday night. The disclosure again puts Wall Street's compensation system, which has long rewarded select individuals with handsome bonuses, under the microscope.
Almost 700 Merrill executives paid $1m-plus bonuses Nearly 700 Merrill Lynch executives had cash bonuses of more than $1m each for last year, New York's top law enforcement official disclosed on Wednesday. Andrew Cuomo, New York's attorney-general, called the bank's decision to bring forward nearly $4bn of pay-outs a "surprising fit of corporate irresponsibility" that raised "serious and disturbing questions". Mr Cuomo said the bonuses for 2008 were "disproportionately distributed to a small number of individuals", with the top four recipients taking in a combined $121m.
California's Pain Is Only Beginning Cuts to Parks, Schools and Roads Hint at What's to Come Under Any Budget Deal BIG SUR, Calif. -- As Sacramento squabbles over the state's $42 billion deficit, Californians are getting a bitter taste of what's to come after the steep budget cuts that are inevitable when legislators and Gov. Arnold Schwarzenegger finally hammer out a deal. Some world-famous parks like Pfeiffer Big Sur State Park may not open this year. After-school programs in low-income areas are being scuttled, putting high-risk teens on the street just as police forces are being cut. Schools are closing classrooms, and some highway projects have ground to a halt. The state may not be able to monitor some sex offenders as required under law. A budget deal may restore some of the missing funds. But everyone knows that not all monies will flow again after a deal, and Californians increasingly fear they are seeing a hint of their future.
GM Slashing 10,000 Jobs White-Collar Workers Also Face Pay Cuts Up to 10 Percent With its federal restructuring deadline looming, General Motors said yesterday it would cut 10,000 white-collar jobs. The job reductions will trim GM's salaried workforce to 63,000 from 73,000 worldwide this year. In the United States, about 3,400 of GM' s 29,500 salaried employees will be let go. Many of the reductions will take place by May 1. At the same time, the base pay of higher-level U.S. executives will be lowered by 10 percent, while other salaried employees will face cuts of between 3 and 7 percent. "These are extremely challenging times for the global auto industry and for General Motors -- certainly the toughest I have seen in my 30-plus years with the company," GM chief executive G. Richard Wagoner Jr. said in an e-mail to U.S. executives. "In response, we are taking a number of necessary actions to position the company for long-term viability and success. Our viability plan is very aggressive and requires significant sacrifices -- from all GM stakeholders, including management, employees, unions, suppliers, dealers, investors and debt holders."
GM Offers Retirement Incentives to 22,000 Union Members Targeted as Company Prepares Viability Plan to Meet Tuesday Deadline General Motors Corp. is offering retirement incentives to 22,000 of its 62,000 United Auto Workers union members as part of a turnaround plan it must present to the U.S. government by Tuesday. The company would be pleased to see half of them take the offer, said a person familiar with GM's thinking. The move is the latest cost-cutting effort by GM in connection with the $13.4 billion in bailout loans it won in December. On Tuesday, it said it would eliminate 10,000 white-collar jobs. GM and union negotiators are gearing up to talk through the weekend on other ways to lower labor costs, including possible reductions in supplemental pay for workers who have been laid off, and loosening of union work rules, a person close to the discussions said. Those cost cuts would require changes to a labor contract signed in 2007.
Wife Withdrew Millions Before Madoff's Arrest On Dec. 10, the day before Bernard L. Madoff was arrested, his wife, Ruth, withdrew $10 million from a brokerage firm partly owned by her husband, according a state regulatory complaint filed in Boston. It was her second withdrawal in less than three weeks - the first one, on Nov. 25, had been for $5.5 million, the complaint said. Federal prosecutors have cited Dec. 10 as the day that Mr. Madoff confessed to his sons that he had been running a huge Ponzi scheme whose losses could approach $50 billion. After that midday conversation, the sons alerted law enforcement and Mr. Madoff was arrested the next morning.
Cheney warns of new attacks Former Vice President Dick Cheney warned that there is a "high probability" that terrorists will attempt a catastrophic nuclear or biological attack in coming years, and said he fears the Obama administration's policies will make it more likely the attempt will succeed. In an interview Tuesday with Politico, Cheney unyieldingly defended the Bush administration's support for the Guantanamo Bay prison and coercive interrogation of terrorism suspects. And he asserted that President Obama will either backtrack on his stated intentions to end those policies or put the country at risk in ways more severe than most Americans - and, he charged, many members of Obama's own team - understand.
Hillary's Incredibly Shrinking Role Secretary of State Hillary Rodham Clinton is finding that her job description is dissolving under her feet, leaving her with only a vestige of the power she must have thought she acquired when she signed on to be President Obama's chief Cabinet officer. Since her designation:
Vice President Biden has moved vigorously to stake out foreign policy as his turf. . .
Richard Holbrooke, the former Balkan negotiator and U.N. ambassador, has been named special envoy to Afghanistan and Pakistan. . .
Former Sen. George Mitchell (D-Maine), negotiator of the Irish Peace Accords, was appointed to be the administration's point man on Arab-Israeli negotiations. . .
Samantha Powers, Obama's former campaign aide, who once called Hillary a "monster," has been appointed to the National Security Council (NSC) as director of "multilateral affairs.
Gen. James L. Jones, Obama's new national security adviser, has announced an expansion of the membership and role of the NSC. . .
Susan Rice, Obama's new United Nations ambassador, insisted upon and got Cabinet rank for her portfolio, . . .
So where does all this leave Secretary of State Clinton?
Metal price crash hits South Africa hard South Africa, one of the major source of metals in the world, is gearing up for the worst case scenario. The country is now expecting a major crash in metals prices and this is bound to hit the economy badly. Metal price downturn had hurt the country’s exports and the economy, leading to loss of jobs and investment, but the government was trying to mitigate the crisis through measures recommended by a government-led task team. The metal price downturn is a major theme at Africa’s biggest mining conference being held in Cape Town, which itself has seen a 25% downturn in attendance to 4,000 participants after several cancellations.
U.S. fails to track Afghan weapons The U.S. has been shoveling weapons into the hands of Afghan troops but doesn't have a firm system in place to ensure they don't wind up in the hands of Taliban fighters, according to an independent study. The report, obtained by The Associated Press, comes as Kabul recovers from a devastating attack Wednesday by heavily armed militants. The fighters stormed three government buildings of the heavily fortified capital, killing 20 people and wounding 57 others. Afghanistan officials said the eight attackers - armed with Kalashnikov rifles, grenades and explosive vests - died in the assault, bringing the death toll to 28.
U.S., Russian satellites collide in space A privately owned U.S. communications satellite collided with a defunct Russian satellite in the first such mishap in space, a U.S. military spokesman said on Wednesday. The crash, which took place on Tuesday in low-earth orbit, involved a spacecraft of Iridium Satellite LLC and a Russian communications satellite, said Air Force Colonel Les Kodlick of the U.S. Strategic Command. "We believe it's the first time that two satellites have collided in orbit," he said, adding the debris was potentially a problem for space operations. The command's Joint Space Operations Center was tracking 500 to 600 new bits of debris, some as small as 10 centimeters (3.9 inches) across, in addition to the 18,000 or so other man-made objects it has catalogued in space, Kodlick said.
Israel faces gridlock, peace prospects dim Israel headed for political gridlock on Wednesday with both sides declaring victory in an election that left the prospect of Israel and the Palestinians making peace as distant as ever. Foreign Minister Tzipi Livni's centrist Kadima party won the most votes but had little chance of building enough support for a resilient coalition government. Right-wing opposition leader Benjamin Netanyahu can get the backing in parliament, but analysts said the likely alliance would prove dysfunctional.
China's exports suffer sharpest fall in 13 years China's exports dropped by 17.5pc in value in January, compared to January last year. Although the timing of the Chinese New Year holiday meant there were five fewer working days in January, the statistics were far worse than feared. In terms of value, exports have nearly halved since last year. Imports into China fell by a record 43.1pc in value, although the price of oil and other commodities may explain part of the drop. Since China imports many of the raw materials it needs to manufacture goods, the drop in imports suggests months of weakness ahead. However, the fact that China is running a near-record $39.1bn trade surplus could lead to further tensions as the spectre of protectionism looms worldwide. "'The numbers are terrible. The environment is awful,'' said Ken Peng, an economist at Citigroup.
China to stick with US bonds China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such investments remain its "only option" in a perilous world, a senior Chinese banking regulator said on Wednesday. China has used the dollars it accumulates selling manufactured goods to US consumers to accumulate the world's largest holding of Treasuries. However, the increasing US budget deficit and its potential impact on the dollar have raised questions about the future Chinese appetite for US debt. Luo Ping, a director-general at the China Banking Regulatory Commission, said after a speech in New York on Wednesday that China would continue to buy Treasuries in spite of its misgivings about US finances.
From Alex, one of our listeners . . . "Citi Corp has apparently instituted more stringent standards on harrassing their customers. It's the 8th and my pmt was due the 1st. I usually pay just before the 15h (avoid late fees). They've called me every day since the 2nd. This is what you can expect from banksters and a Nationalized Banking System (soon to come), which will have the IRS behind them to garnish wages on debt. These guys take 100's of billions of dollars or trillions and do nothing for the economy. However, they have the balls to call me when I am 7 days beyond their due date"
* * * * * * * * * * * * * * Find out what's new in the globalists' game plan
Rev. Lindsay Williams on Alex Jones (2-9-09) 1/4 Dubai on its way to being a ghost town, according to plan. Baaken oil deposit may solve US debt problem.
Obama bank plan skids on Wall Street No specifics drops Dow 382 points The Obama administration unveiled its long-awaited bank rescue plan Tuesday but did not spell out how it would resolve the most critical issue on Wall Street - how to dispose of unsellable debts - provoking widespread disappointment that sent the Dow Jones Industrial Average plummeting nearly 400 points. The goal of the program is to dramatically widen aid for banks and credit markets, using $300 billion from the Treasury's remaining bank bailout funds to try to leverage as much as $2 trillion in funding from private markets and the Federal Reserve as the way to return the financial system to health.
Geithner Lays Out Stimulus Plan - Bloomberg Treasury Secretary Timothy Geithner Speaks [FULL CLIP - 19:13]
Geithner Hands Over All Mortgages to JP Morgan Once again, we have to talk about Jekyll Island and JP Morgan and how this whole Federal Reserve thing came into being. The Feds are giving JP Morgan and Goldman Sachs our entire mortgage market! You heard me right: they are now the custodians of almost ALL of our mortgages! And what are they? The owners of the Federal Reserve! Time to dig into this, as usual. It is so tiresome and utterly necessary if we want to fix things. And do not despair! These frantic efforts of the criminal class are falling apart! We must be read for the next stage: when even the average American is fed up and full of fear.
Freedom From Government by Ron Paul President Obama signed an executive order last week continuing the faith-based initiatives program created by former President Bush. When the program was created, I warned that giving taxpayer money to private religious organizations would eventually lead to political control and manipulation of them. This week has provided some evidence that this was a justified concern. The logic behind funding faith-based initiatives seemed reasonable to some. Private organizations are much more effective in charitable endeavors than government programs and bureaucracies. Therefore, why not "outsource" some of the government's welfare-state activities to these worthy organizations? This appealed to many conservatives, especially after the follow-up executive order exempting recipients from discriminatory hiring laws, which assured many that taking federal funds would not jeopardize their control over their own operations. But beware the government program started under an administration you like, for it may look a lot different under the one you don't. Exemptions that Bush gave, Obama can take away.
Bailout Plan: $2.5 Trillion and a Strong U.S. Hand The White House plan to rescue the nation's financial system, announced on Tuesday by Timothy F. Geithner, the Treasury secretary, is far bigger than anyone predicted and envisions a far greater government role in markets and banks than at any time since the 1930s. Administration officials committed to flood the financial system with as much as $2.5 trillion - $350 billion of that coming from the bailout fund and the rest from private investors and the Federal Reserve, making use of its ability to print money.
Inside Look - The State of the Economy Interview with PIMCO Managing Director Bill Gross: Says Economy Will Slump into a "Mini-Depression" [FULL CLIP - 18:40]
$3 trillion! -- Senate, Fed, Treasury attack crisis Senate, Fed, Obama administration team for unprecedented $3 trillion attack on recession On a single day filled with staggering sums, the Obama administration, Federal Reserve and Senate attacked the deepening economic crisis Monday with actions that could throw as much as $3 trillion more in government and private funds into the fight against frozen credit markets and rising joblessness. "It's gone deep. It's gotten worse," President Barack Obama said of the recession at a campaign-style appearance in Ft. Myers, Fla., where unemployment has reached double digits. "The situation we face could not be more serious." If any more emphasis were needed, Wall Street investors sent stocks plunging, objecting that new rescue details from the government were too sparse despite the huge numbers. The Dow Jones industrials dropped 382 points.
The $9.7 Trillion Pledged to Fix the Financial Mess Could Have Paid off 90% of America’s Mortgages As Senate Republicans and Democrats continue to bicker over the details of President Barack Obama’s stimulus plan, Treasury Secretary Timothy Geithner waits in the wings ready to unveil yet another bank bailout bill. But almost forgotten in the headlong rush to devise measures to create jobs and save the financial system is the total cost of the government’s commitment to solving the economic crisis. Bloomberg News reported yesterday (Monday) that the tally of U.S. government spending could reach as much as $9.7 trillion - enough to pay off more than 90% of the nation’s home mortgages.
Pelosi Stimulus Casts Shadow Over Obama, America, World In a sign that may reveal much about the current deal-making environment in Washington, House speaker Nancy Pelosi has outmaneuvered the Obama Administration in the design of the massive $827 billion so-called Economic Stimulus Package. With the collusion of three moderate Republican Senators - Collins, Snowe and Specter - Pelosi may succeed in steering President Obama into supporting a package with which he may secretly disagree. Despite the Presidential rhetoric of change, the Pelosi plan is Washington at its most habitual. Her version is a massive, pork-laden monster. Tilted heavily towards consumption, only 10 percent of the bill is allocated toward the infrastructure spending that the President talked about so frequently during the campaign. President Obama initially favored a middle-way. It was to be based on massive public spending, but specifically on infrastructure.
Stocks plunge as Timothy Geithner fudges detail of economic rescue Financial stocks plummeted tonight as the markets reacted with horror to the Obama Administration's economic rescue plans. Even as the Senate passed the $838 billion economic stimulus bill by 61-37 votes in favour, New York financial stocks fell by more than 5.75 per cent and the Dow Jones Industrial Average dropped 4.62 per cent to close at 7,888.88 points. The Nasdaq fell 4.2 per cent and the S&P 500 4.91 per cent, as investors expressed their scepticism that the White House can revive the banking system. The collapse in confidence came after Timothy Geithner, the US Treasury Secretary, spoke about the long-awaited second phase of America’s financial bailout.
Stocks Decline, Treasuries Gain on Skepticism Over Bank Rescue U.S. stocks fell, sending the Standard & Poor’s 500 Index to its biggest drop since Barack Obama’s inauguration, while Treasuries rallied on skepticism that the government’s bank rescue will work. The dollar and gold rose. Bank of America Corp. and Citigroup Inc. slipped more than 15 percent after Treasury Secretary Timothy Geithner said he’s still “exploring a range of different structures” to bail out lenders. Principal Financial Group Inc. plunged 30 percent on concern the life insurer needs more capital. Alcoa Inc. slumped 10 percent after S&P cut the aluminum producer’s credit rating to the lowest investment grade. Nine S&P 500 stocks rallied. All Dow Jones Industrial Average companies fell at least 2.8 percent.
Bank bailout: What's in the plan Treasury Secretary Tim Geithner unveiled Tuesday the eagerly-awaited details of the TARP overhaul. Here's what you need to know. The federal government's bank bailout just got a lot more complicated. Treasury Secretary Tim Geithner, 143 days after his predecessor unveiled the first financial sector rescue plan, detailed his plan on Tuesday to rescue the financial sector. In a speech in Washington, Geithner said the government's previous efforts were "inadequate," and the government needed to "fundamentally reshap[e] the government's program to repair the financial system." The Treasury Department and Federal Reserve took the bold step of committing more than $1 trillion in financing for loan purchases, and unveiled a sweeping reform to previous programs.
Niall Ferguson: Don't Trust Democrats to Fix Economy
Taking Apart the $819 billion Stimulus Package The centerpiece of President Obama's domestic agenda is an $819 billion economic stimulus plan. The Senate will consider the measure this week, with an eye toward the amount of tax cuts and spending. Republicans and Democrats spar over what to consider a tax cut. An analysis by the nonpartisan Congressional Budget Office tallies the tax-cut portion to be significantly less than the one-third Democrats claim it to be.
Obama Administration Must Revive “Shadow Financial System” to Revive U.S. Banks To ease the ongoing credit crisis and get banks lending again, the Obama administration realizes that it first has to resuscitate the “shadow financial system” that’s dominated by hedge funds and other large-scale private investors. Surprisingly, two key ingredients of this turnaround formula will be structured investments, such as asset-backed securities, and leverage - the combination and poorly policed use of which acted as the accelerants that helped fuel the financial inferno that’s now sweeping the globe in wildfire fashion. But the reality is that new U.S. Treasury Secretary Timothy F. Geithner probably realizes that he has little choice.
Reaction to Geithner Speech - Bloomberg
Geithner on the defensive in his big debut The first question that new Treasury Secretary Timothy Geithner faced on Tuesday after delivering his plan for fixing the banking system was whether his neck was on the line. Two weeks into his tenure, Geithner already finds himself on the defensive as he tries to convince the world that he is up to the challenge of repairing the U.S. economy without squandering public money or enriching bankers.
Geithner Channels His Inner Paulson - Unfortunately The New York Times this morning described how the Treasury's new bailout plan is shaping up to be a complete sellout to Wall Street, a kind of Paulson Lite with absolutely zero requirements for banks to lend and zero restrictions on executive pay. Kind of makes sense. The Washington P0st reported today that Geithner walked away from the New York Fed with more than $500K in severance, unused vacation time and other goodies. I guess he'd have a hard time talking about stuff like executive comp with a straight face when he's getting a nice little golden parachute himself. No, strike that. In his speech he did talk about executive comp with a straight face. He's just not going to do anything about it, according to the Times.
How CNBC Squandered Roubini and Taleb CNBC had what could have been phenomenal business television yesterday when they managed to get Nouriel Roubini and Nassim Nicolas Taleb on for a double segment. They billed it as Dr. Doom and Black Swan. Unfortunately it was mostly squandered. Whatever you think of either one of them, they have contributed a stream of consciousness to the current crisis (Roubini more economic, Taleb more philosophical). To the extent they have been useful to anyone, we are at a certain point between the beginning and the end of the crisis and the greatest benefit now comes from their assessment of where things are now, along with some investment philosophy. That is these guys' A-game.
Roubini and Taleb discuss the crisis Nouriel Roubini and Nassim Taleb ("Dr Doom and the Black Swan") discuss the crisis --and what to do about it. The CNBC journalists seemed to be asking them for stock tips but Roubini and Taleb only discussed fundamental solutions.
Why institutional funds are chasing gold It looks like the rush to buy gold is really getting started, as Julian D. W. Phillips of GoldForecaster.com reports that "the combined gold holdings of the World Gold Council gold Exchange Traded Funds and Barclays Gold Trust" has grown to "1079.83 tonnes, a growth of almost 70 tonnes in two weeks." And this is just part of the good news, as "There are many other gold bullion-holding funds in the developed world from Canada to Switzerland that are not included in this total. If they were the total would be approaching 1200+ tonnes. Clearly we are seeing a stampede of institutional fund management into gold at present!"
Precious Metals Regaining Monetary Status Loose in the head. As opposed to Hank Paulson, that's what traders now think of Geithner since he angered China before even getting in the door. They think he's loose in the head. So, delayed as the reaction was since he uttered the words Thursday, the trade bought gold, sold bonds, and who knows, maybe even reversed the dollar ($) despite the fact stocks look set to plunge. In this respect, Geithner's fumble, which is the only way to read that considering China is the US's biggest creditor, is the kind of thing that can cause trend changes, where we will find out soon if this is the case with respect to gold and the $. For me, now that traders appear poised to press the point in markets, whether Geithner is appointed Treasury Secretary of not, gold should still be able to extend further gains if it can get through $900. If he is appointed however, initially gold might take a hit because it will be assumed a mountain of paper sell orders is about to placed in the Treasury accounts, whether true or not. After this however, assuming China remains angered with Geithner, they will likely continue to buy gold, sell Treasuries, and the $ given he will have effectively severed the close economic ties forged under Paulson, which undoubtedly accounted for a great deal of the friendly candor between the two countries.
Peter Schiff talks Gold in Saudi Arabia on January 2009 Peter Schiff speaks to some audience members after his Jan 2009 speech in Saudi Arabia. He tells them to "buy gold with both hands" and that if Saudi Arabia were really smart they would buy all the shares of the largest gold mining companies and say that all the gold that gets mind will go directly into the nation's vaults. Then the Saudi currency would go through the roof. Only problem is, Uncle Sam would never allow that so you can shoot that idea down.
Top Senate Democrats Mum on How Many Jobs a Successful Stimulus Must Create Top Senate Democrats refused to say how many jobs the nearly $800 billion stimulus spending bill would have to create in order to justify spending an unprecedented amount of taxpayers’ money. CNSNews.com asked the question Monday of senators who plan to vote for the bill. “I’m supporting it,” Senate Finance Committee Chairman Sen. Max Baucus (D-Mont.) told CNSNews.com. “I just think it’s needed.” But when pressed to provide a jobs figure, Baucus said only that such a figure was elusive – adding that the bill had passed economic scrutiny. “That’s very hard to get nailed down, of course,” he said, “but it certainly passes the smell test.”
Bernanke Begins ‘Thorough Review’ of Fed Disclosure Federal Reserve Chairman Ben S. Bernanke initiated a review of the information it provides the public after lawmakers criticized the central bank’s disclosure policies during the unprecedented expansion of its holdings. “We at the Fed have begun a thorough review of our disclosure policies and the effectiveness of our communication,” Bernanke said today in remarks prepared for testimony before the House Financial Services Committee. Board Vice Chairman Donald Kohn will lead a panel for the review. Bernanke has invoked emergency authority and more than doubled the size of the Fed’s balance sheet to $1.8 trillion to combat the worst credit crisis in seven decades. His moves have prompted concern that the central bank is encouraging excessive risk-taking, distorting pricing in financial markets and jeopardizing the Fed’s independence. The Fed hasn’t disclosed many of the assets and participants in its programs.
Bernanke grilled by Congress Lawmakers questioned whether the central bank should continue to have broad unchecked powers to intervene in the economy. Federal Reserve chairman Ben Bernanke was questioned by lawmakers from both parties Tuesday about whether the Fed should continue to have as much broad powers over the economy. Bernanke, appearing before the House Financial Services Committee, was scheduled to talk about the moves the Fed has taken to deal with the credit crunch and recession. But Barney Frank, D-Mass., chairman of the committee, said in opening remarks that it did not seem "healthy" for the Fed to have as much power with "very few restrictions." Frank said he was not criticizing any specific steps that Bernanke has taken to address the financial crisis in recent months, nor did he suggest there should be any immediate change.
Goldman, UBS Raise Gold Forecasts
Sen. Specter Responds to Health Care Scare in Stimulus Bill “We are not going to let the federal government monitor what doctors do,” Sen. Arlen Specter told Fox News on Tuesday. Specter, one of only three Republicans to support the Democrats’ stimulus/spending bill, was responding to growing concerns over health care provisions buried deep in the bill. One provision creates a National Coordinator of Health Information Technology, “designed to monitor your treatments, to make sure your doctor is doing what the federal government deems appropriate and cost effective,” as a commentary on the Bloomberg news wire reported on Monday.
What 8 Bailout CEOs Need to Explain Finally. After handing out more than $350 billion to wayward companies, Congress has finally rediscovered its oversight role and summoned some of the Bailout CEOs to Washington. Let's hope that these poobahs of finance explain why they deserve money from the "Troubled Assets Relief Program," and how they'll spend it in a way that benefits the American public. Here are some other questions for Bailout CEOs:
Vikram Pandit, CEO, Citigroup
Ken Lewis, CEO, Bank of America
Jamie Dimon, CEO, JPMorganChase
Lloyd Blankfein, CEO, Goldman Sachs
John Mack, CEO, Morgan Stanley
John Stumpf, CEO, Wells Fargo
Stanley O'Neal former CEO, Merrill Lynch
Charles Prince, former CEO, Citigroup
The (Zimbabwean) Dollar - The Point of No Return Last week, Zimbabwe slashed 12 zeros from its currency as hyperinflation continued to erode its value, the country's central bank announced in late January. The government instituted price cuts to arrest inflation. As time went by, it became apparent the forced price cuts cause bare shelves in shops and many businesses closing . "Even in the face of current economic and political challenges confronting the economy, the Zimbabwe dollar ought to and must remain the nation's currency, so as to safeguard our national identity and sovereignty... Our national currency is a fundamental economic pillar of our sovereignty," said Gideon Gono, governor of the Reserve Bank of Zimbabwe.
Jim Rogers: Currency Crisis is Coming this Year (05.02.09)
Marc Faber Where Next for Dollar-Yen ? Ahead of the release of U.S. jobs data, Thomas Harr, senior FX strategist from Standard Chartered & Marc Faber, editor & publisher of The Gloom, Boom & Doom Report examine the impact on the dollar-yen cross with Martin Soong.
Downturn worst for 100 years, says Ed Balls The economic downturn is so severe that it would surpass even the Great Depression of the 1930s, Ed Balls said yesterday. In an extradorinary admission about the extent of the financial crisis, the Schools Secretary and a close ally of the Prime Minister, declared that the downturn was the most serious global recession for "over 100 years". He said: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years as it will turn out." He added: "I think this is a financial crisis more extreme and more serious than that of the 1930s."
JPMorgan Cuts Unused Credit as Banks Free Up Capital JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp., the three biggest U.S. lenders, are among banks cutting back on $1.6 trillion of credit lines as they face increased demand for loans that threaten to drain capital. Banks used loan negotiations with retailers Rite Aid Corp. and Ethan Allen Interiors Inc., and with homebuilder Ryland Group Inc. in the past month to reduce credit limits and raise interest rates. After more than $1 trillion of writedowns and credit losses, lenders are moving to lessen the chance that troubled companies will withdraw funds.
Jim Rogers I do not trust any Bankers ! Feb. 9 2009 - Jim Rogers on Future Banking "It's not the first time in the world that investment banks and commercial banks have gone bankrupt, this has been going on for hundreds of years," Jim Rogers, CEO of Rogers Holdings, told CNBC Tuesday.
U.S. Wholesale Inventories, Sales Fell in December Inventories at U.S. wholesalers fell twice as much as forecast in December as businesses tried to keep up with plummeting sales. The 1.4 percent decline in the value of stockpiles followed a revised 0.9 percent decrease in the prior month, the Commerce Department said today in Washington. It was the fourth straight monthly drop, the longest such stretch in almost seven years. Sales fell 3.6 percent after a 7.3 percent decline. Wholesalers had enough goods on hand to last 1.27 months at the current sales pace, the highest level since 2002. Sliding demand in the U.S. and abroad signals a further pullback in production as companies try to work through their stocks of unsold goods at warehouses, worsening the recession.
US sugarcoats its tough line on Iran The administration of United States President Barack Obama may be reviewing its policy toward Iran, but already it has settled on key aspects of predecessor George W Bush's Iran policy and, to a lesser extent, Bush's demonization of Tehran, thus setting itself up for another round of failed US foreign policy. This much can be surmised by scrutinizing the major foreign policy speech delivered by US Vice President Joseph Biden at the 45th Munich Security Conference over the weekend, dominated by the issues of Russia, Iran, energy security, proliferation and disarmament, (although the latter was hardly mentioned throughout the conference).
800 Billion Reasons To Be Worried The Senate stimulus bill should only stimulate taxpayer anger How bad is the stimulus bill just passed by the Senate? Well, at least as bad as the one passed last week by the House of Representatives, but probably not as bad as the final bill that will land on President Barack Obama's desk, possibly as soon as the end of this week. Don't take my word for it. In a report to Sen. Judd Gregg (R-N.H.), the nonpartisan Congressional Budget Office (CBO) laid out in plain English-well, economic language-that the Senate bill would eventually cause not a stimulus but a recession in "the longer run."
Asia: The coming fury As goods pile up in wharves from Bangkok to Shanghai, and workers are laid off in record numbers, people in East Asia are beginning to realize they aren't only experiencing an economic downturn but living through the end of an era. For over 40 years, the cutting edge of the region's economy has been export-oriented industrialization (EOI). Taiwan and South Korea first adopted this strategy of growth in the mid-1960s, with Korean dictator Park Chung-Hee coaxing his country's entrepreneurs to export. He did this by, among other measures, cutting off electricity to their factories if they refused to comply.
Dr. Marc Faber (aka Dr. Doom) - Bloomberg Interview
Obama's Wealth Destruction President Obama is under the impression that history owes him $1 trillion right now to spend on whatever he wants. His language is strident and full of irritation that anyone would question his right to live out his personal dream of being Franklin Roosevelt to George Bush's Hoover. This, he says, is what the election was all about. The arrogance reminds me of George Bush after 9-11, who similarly believed that history owed him a gargantuan war in the tradition of FDR. And look how that arrogance led to disgrace and loss, as he unwittingly presided over the destruction of American prosperity while searching for bugbears abroad.
Insanity Prevails The Obama administration's new plan to bail out the nation's banks was fashioned after a spirited internal debate that pitted the Treasury secretary, Timothy F. Geithner, against some of the president's top political hands. In the end, Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials.
Treasury widens aid for banks, credit markets The Obama administration unveiled its long-awaited bank rescue plan Tuesday but it did not spell out how it would resolve the most critical issue on Wall Street - how to dispose of unsellable debts - and provoked widespread disappointment that sent the Dow Jones Industrial Average plummeting nearly 400 points. The goal of the program was to dramatically widen aid for banks and credit markets, using $300 billion from the Treasury's remaining bank bailout funds to try to leverage as much as $2 trillion in funding from private markets and the Federal Reserve as the way to return the financial system to health.
Roubini: Inside Look - How Long Will the Recession Last? Interview with Nouriel Roubini, Economics Professor at NYU Stern School of Business (On the Economy)
The Coming Great Depression In our 3rd December 2008 commentary we explained that the probability of an imminent great depression was uncomfortably high. Our reasoning, in a nutshell, was that the recent credit bubble was much bigger than any previous credit bubble of the past century and that the policymakers of today were blundering much more rapidly and on a much grander scale than their counterparts of the 1930s. We can't over-emphasise that the Great Depression did not become "great" due to the economic problems signaled by the 1929 stock market crash, but, instead, due to government policies undertaken to counteract the economic problems. The policy errors we are referring to do NOT include the Fed's so-called failure to prevent the money supply from shrinking, but do include government actions designed to boost prices, expand credit, create employment, and re-distribute wealth.
The Coming Great Depression Why Government Is Powerless It is frustrating to read so many comparisons of our current situation with 1929 while watching policy be set-in-motion to create spending on infrastructure. Everyone has their hand out looking for a bailout like a bunch of street burns pleading for money so they can get drunk or stay drunk. Almost nothing of what I have read is close to being accurate. The scary part is depressions are inevitably caused by politicians who may be paving the road with good intentions, but are relying upon analysis so biased, we do not stand a chance.
Jim Rogers on "Russia Today" 09 FEB 2009
The Reality Behind Real Estate Much has been written lately about the beginnings of a recovery in the real estate market. Just last week housing bugs (investment "bugs" are not exclusive to those who only love gold) were cheering the latest data point which they claimed as evidence the market is making a comeback. The Pending home sales index rose 6.3%, to 87.7 from 82.5 in November. That figure was also 2.1% higher than that of December 2007 when it registered 85.9. Helping to drive the increase in pending home sales are three major factors: lower home prices, lower new home construction rates and lower mortgage rates.
Obama blocks offshore drilling Cheaper gas gives president wiggle room Facing gas prices near $4 a gallon and a pivotal national election, congressional Democrats allowed a ban on offshore drilling to lapse in September. But times change, and on Tuesday, the Obama administration - with gas prices roughly half what they were and many Democrats' having been swept into office - blocked offshore drilling plans put in place at the last minute by the Bush administration, including plans to open the national outer continental shelf for drilling.
Madoff, SEC settle in civil fraud case Criminal prosecution ongoing The Securities and Exchange Commission on Monday announced an agreement with disgraced money manager Bernard Madoff that could eventually force him to pay a civil fine and return money raised from investors. The partial judgment, which renders permanent a preliminary injunction that froze Mr. Madoff's assets after his arrest in December, must be approved by the judge overseeing the case in federal court in Manhattan.
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Tues 02.10.2009
Gold recovers US$900 level as US offers US$1.5 trillion of fresh financial aid The spot price of wholesale gold jumped 1.2% lunchtime on Tuesday in London, rising back above US$900 an ounce as world equities ticked lower and the European single currency bounced sharply on the forex market. Crude oil recovered the US$41 per barrel mark. Government bonds rose across the board. "The metal looks determined to march higher," says precious-metals dealer Mitsui in its latest Gold Investment analysis, "and while the strength in the US Dollar will act to tame rallies, it is difficult to fight this trend. "However, the near feverish level of market commentary [the level of press space that gold achieved in the weekend papers in the UK is a good barometer] should temper our bullish outlook to some degree. "Risk appetite may return to financial markets this week once President Obama's stimulus plan gets the green light. This could act to reverse some of gold's gains."
Administration unveiling bailout overhaul Administration unveiling aggressive effort for banking crisis; support could top $1 trillion The Obama administration is promising an aggressive effort to combat the worst financial crisis in seven decades, unveiling a program that could mobilize well over $1 trillion in public and private support to get the frozen credit markets functioning again. Treasury Secretary Timothy Geithner said Tuesday the new plan would bring the full force of the federal government to bear in a partnership with the private sector. "Right now critical parts of our financial system are damaged," Geithner said in unveiling the new plan. "Instead of catalyzing recovery, the financial system is working against recovery and that's the dangerous dynamic we need to change."
Geithner Says ‘Comprehensive’ Bailout to Be Costly Treasury Secretary Timothy Geithner laid out what he described as a “comprehensive” attack on the financial crisis, warning that administration’s strategy will “cost money, involve risk and take time.” “The financial system is working against recovery, and that’s the dangerous dynamic we need to change,” Geithner said in excerpts of his prepared remarks for delivery today in Washington. “Without credit, economies cannot grow, and right now, critical parts of our financial system are damaged.”
Obama Frames the Argument As Those Who Want to Do Something vs. Those Who Want to Do Nothing In his prime-time news conference Monday night, President Barack Obama several times described the current battle in Washington as a struggle between those who want to save the economy and those who want to “do nothing.” Not true, say Republicans, who agree on the need for government action – but differ on how the stimulus plan should work. Republicans say the only way to quickly stimulate the economy is to lower tax rates for individuals and small businesses. But on Monday night, Obama would have none of it: “[A]s we've learned very clearly and conclusively over the last eight years, tax cuts alone can't solve all of our economic problems, especially tax cuts that are targeted to the wealthiest few Americans,” Obama said. “We have tried that strategy time and time again, and it's only helped lead us to the crisis we face right now.”
Obama Says Republicans Can’t Criticize Stimulus President Barack Obama looked comfortable enough at his first White House news conference, but he sounded like a man fed up with one thing: Republicans lecturing him about his $820 billion economic stimulus plan. Obama repeatedly reminded a national television audience that federal spending and deficits soared under George W. Bush's presidency. He used the point to undermine GOP lawmakers opposing his plan and calling it too costly and wasteful. "It's a little hard for me to take criticism from folks about this recovery package after they've presided over a doubling of the national debt," Obama said. "I'm not sure they have a lot of credibility when it comes to fiscal responsibility."
Obama Says Failing to Act Could Lead to a 'Catastrophe' President Obama took his case for his $800 billion economic recovery package to the American people on Monday, as the Senate cleared the way for passage of the bill and the White House prepared for its next major hurdle: selling Congress and the public on a fresh plan to bail out the nation’s banks. Warning that a failure to act ‘’could turn a crisis into a catastrophe,” Mr. Obama used his presidential platform — a prime-time news conference, the first of his presidency, in the grand setting of the White House East Room — to address head on the concerns about his approach, which has by and large failed to win the Republican support he sought.
By Slim Margin, Senate Advances Stimulus Bill Senate Democrats on Monday advanced the $838 billion economic stimulus bill, clearing a major procedural hurdle by a razor-thin margin with the help of just three Republicans. Final passage of the bill is expected Tuesday. The Senate vote, 61 to 36, which closed debate on the stimulus, symbolized the partisanship that still grips Congress despite President Obama's call for new cooperation. It also highlighted the rising power of the centrist Republicans who cast the critical votes. Under Senate rules, it takes 60 votes to end debate on a controversial bill.
Stimulus bill passes crucial Senate test Hours after President Obama took the case for his economic rescue package to the Indiana heartland, the Senate on Monday turned back a Republican effort to block the bill, brushing aside criticism the $838 billion plan misspends billions of dollars on items ranging from fighting Mexican gun-runners to buying golf carts for federal workers. In a critical victory for Mr. Obama, the Senate voted 61-36 to cut off further debate on the bill, with three Republicans - Sens. Susan M. Collins and Olympia J. Snowe of Maine and Pennsylvania's Sen. Arlen Specter - joining 56 Democrats and two independents to provide the three-fifths supermajority needed to push the bill forward.
Dr. Paul on the Senate Stimulus "Compromise"
Bullion sales hit record in rush to safety Investors are buying record amounts of gold bars and coins, shunning risky assets for the relative safety of bullion amid renewed fears about the health of the global financial system. The US Mint sold 92,000 ounces of its popular American Eagle coin last month, almost four times that which it sold a year ago and more than it shipped during the whole of the first half of 2007. Other countries' mints have also reported strong sales. "Large purchases of coins are perhaps the ultimate sign of safe-haven gold buying," said John Reade, a precious metals strategist at UBS.
Private capital: The bailout wildcard A key priority for Tim Geithner's financial cleanup plan is getting private investors to help pick up the tab. Here's how he might be able to do that. Fixing the banks is only the start. Treasury Secretary Tim Geithner is scheduled to announce his financial sector stabilization plan in a speech Tuesday morning. Geithner is expected to announce multiple programs, including government guarantees of losses on some assets and greater assistance for troubled homeowners. But with legislators up in arms about the cost of the fiscal stimulus bill, stabilizing the banks is no simple matter. Geithner will have to try to restore the functioning of troubled credit markets - while holding down the cost for taxpayers.
In Stimulus Bills, A Windfall for Agency Budgets he economic stimulus packages under consideration on Capitol Hill represent a massive financial windfall for agencies across the federal government. Taken together, they could lead to more spending for "green" initiatives, the upgrading of federal buildings and facilities, and improved health-care services. But for many of those agencies, the amount they receive will depend heavily on whether the House or Senate's preferred spending plan prevails. While both measures would cost roughly the same, the $820 billion version passed last month by the House includes considerably more spending on federal agencies and programs than the $827 billion version that awaits a final vote by the Senate today.
Obama Administration Expanding Mortgage Modification Plan The Obama administration has developed the broad outlines of a plan to stem the soaring rate of foreclosures by adding incentives for borrowers and lenders to agree to modify home loans that have fallen behind, perhaps by as little as a single month. The plan is a "more aggressive" version of an initiative launched by mortgage financiers Fannie Mae and Freddie Mac late last year, James Lockhart, director of the Federal Housing Finance Agency, said in an interview here. The administration has said it will spend between $50 billion and $100 billion from the financial bailout package to help struggling homeowners. Senior officials are still hammering out the initiative and are not expected to provide the details tomorrow when they unveil their rescue plan for the financial system, two sources familiar with the matter said. The foreclosure strategy could be announced at the end of this week or next week, they said.
Ship of Fools there intelligent life in Washington, DC? Not a speck of it. The US economy is imploding, and Obama is being led by his government of neconservatives and Israeli agents into a quagmire in Afghanistan that will bring the US into confrontation with Russia, and possibly China, American's largest creditor. The January payroll job figures reveal that last month 20,000 Americans lost their jobs every day. In addition, December's job losses were revised up by 53,000 jobs from 524,000 to 577,000. The revision brings the two-month job loss to 1,175,000. If this keeps up, Obama's promised three million new jobs will be wiped out by job losses.
Ron Paul on FOX: Obama Is Confused 01/16/2009
Technology's Fingerprints on the Stimulus Bill To rally support for his administration's economic recovery bill last week, President Obama invited about a dozen chief executives, seven of them from technology and energy companies, to the Oval Office. Some of their industries' top lobbyists, meanwhile, gathered in another office where Jason Furman, a top White House economic adviser, delivered a private briefing for groups expected to benefit most from the stimulus bill. While much of the sprawling $800 billion legislation consists of tax cuts and broad spending increases for existing programs, like $27 billion on highways and $8.4 billion on public transit, the biggest outlay on new initiatives is essentially a technology industry wish list: in the Senate version, about $7 billion for expanding high-speed Internet access, some $20 billion for building a so-called smart grid power network and $20 billion for digitizing health records.
When bad banks buy worse banks The FDIC has sold several failed banks to institutions that are also losing money. Should this be a cause for concern? Nine banks have failed so far this year. That's not good news, particularly since 25 failed last year. Fortunately, customers of these banks have had little to worry about. In most cases, the FDIC immediately found a buyer for the failed banks, so depositors simply found a new name on their bank the Monday after the takeover. What's more, the FDIC now insures up to $250,000 in individual accounts. But none of that means everything is A-OK. In several cases, failed banks have been taken over by banks that are also struggling.
Plan will buy some of US banks' bad assets Official: US bailout overhaul likely to include private-public partnership to buy bank assets An administration official said Monday the overhaul of the government's $700 billion financial rescue program is likely to include a partnership with the private sector to buy troubled assets. The official said the plan would use government money to support private sector purchases of bad assets that are weighing on banks' balance sheets and keeping them from resuming more normal lending. The official spoke on condition of anonymity in advance of the proposal being released. A Treasury Department spokeswoman said the revamped program was basically done with only "minor tweaks" occurring on Monday.
US Treasury plans to set up 'aggregator bank' to buy toxic assets The Obama administration hopes to strike up a partnership with the private sector in buying toxic assets from distressed banks in a new effort to stabilise Wall Street institutions and to kick-start lending by reluctant financial institutions. As Congress nears a deal on a contentious $827bn economic stimulus package, the US treasury secretary Timothy Geithner will tomorrow outline plans to provide government support to hedge funds, private equity funds and other niche players in purchasing banks' troubled assets. Although details are still being thrashed out, the Treasury will offer some form of guarantee against a further slump in the value of the complex technical assets which include mortgage-backed securities, bundled loans and other credit-linked derivatives.
Bond market calls Fed's bluff as global economy falls apart Global bond markets are calling the bluff of the US Federal Reserve. The yield on 10-year US Treasury bonds - the world's benchmark cost of capital - has jumped from 2pc to 3pc since Christmas despite efforts to talk the rate down. This level will asphyxiate the US economy if allowed to persist, as Fed chair Ben Bernanke must know. The US is already in deflation. Core prices - stripping out energy - fell at an annual rate of 2pc in the fourth quarter. Wages are following. IBM, Chrysler, General Motors, and YRC, have all begun to cut pay. The "real" cost of capital is rising as the slump deepens. This is textbook debt deflation. It was not supposed to happen. The Bernanke doctrine assumes that the Fed can bring down the whole structure of interest costs, first by slashing the Fed Funds rate to zero, and then by making a "credible threat" to buy Treasuries outright with printed money. Mr Bernanke has been repeating this threat since early December. But talk is cheap. As the Fed hesitates, real yields climb ever higher. Plainly, the markets do not regard Fed rhetoric as "credible" at all.
Pimco's Gross on the Current Financial Crisis (See video from 2.09.2009) The shift in economic growth has most of the world's connected economies and their citizens in shock, says William Gross, Pimco co-chief investment officer/founder
Geithner Said to Have Prevailed on the Bailout The Obama administration’s new plan to bail out the nation’s banks was fashioned after a spirited internal debate that pitted the Treasury secretary, Timothy F. Geithner, against some of the president’s top political hands. In the end, Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials.
Geithner Seeks Private Investment for Toxic Assets Treasury Secretary Timothy Geithner is seeking to draw investors into the U.S. financial-rescue program, aiming to add private funding as a new component of proposals to address the toxic debt clogging banks' balance sheets. Aides worked through the weekend to complete the package that Geithner will announce tomorrow in Washington, which was delayed by a day. Aspects of the plan that have been settled include a new round of injections of taxpayer funds into banks, targeted at those identified by regulators as most in need of new capital, people briefed on the matter said.
Tim Geithner vs. The American Banking Elite There comes a time in every economic crisis or, more specifically, in every struggle to recover from a crisis, when someone steps up to the podium to promise the policies that - they say - will deliver you back to growth. The person has political support, a strong track record, and every incentive to enter the history books. But one nagging question remains. Can this person, your new economic strategist, really break with the vested elites that got you into this much trouble? The form of these vested interests, of course, varies substantially across situations, but they are always still strong, despite the downward spiral which they did so much to bring about. And fully escaping the grip of crisis really means breaking their power.
FACT CHECK: Obama has it both ways on pork WASHINGTON -- At least Route 31 is a road to somewhere. President Barack Obama had it both ways Monday when he promoted his stimulus plan in Indiana and later at a prime-time news conference. He bragged in Indiana about getting Congress to produce a package with no pork, yet boasted it will do good things for a Hoosier highway and a downtown overpass, just the kind of local projects lawmakers lard into big spending bills. Obama's sales pitch on the enormous package he wants Congress to make law has sizzle as well as steak. He's projecting job creation numbers that may be impossible to verify and glossing over some ethical problems that bedeviled his team.
Fed's Fisher says Fed independence must be ensured Dallas Federal Reserve Bank President Richard Fisher said on Monday it was "vitally important" not to compromise the independence of the U.S. central bank as officials seek to boost growth and end a year-long recession. "It is more important than ever that we maintain the independence of our central bank, keeping it free from being overridden by political considerations," Fisher said at an energy conference in Houston. "I believe it vitally important that the Federal Reserve must be left alone to independently craft policies...to achieve financial stability and conduct monetary policy aimed at maximizing sustainable job creation without upsetting price stability," said Fisher.
Gerald Celente on the Financial Sense Newshour - 2/7/09 pt1/2 See part 2 below.
'Bama Knows Best I find myself in the unusual position of agreeing with Vlad Putin and disagreeing with our current president. There is just something wrong when my economic views are aligned with a former communist and against the head of the free world. This last week it was reported that Vlad Putin said he will not prop up failing institutions in Russia with bailout money. Furthermore he plans to slash government spending. Over here in the free world 'Bama (who knows best) is trying to bully his latest bailout package through congress with the threat of total meltdown if we do not dutifully fall into line behind his plan. No discussion is allowed (we don't have time) we are supposed to just trust him and pass the largest spending bill in the history of the world. (Until the next one in 2010.) Why? Just because 'Bama knows best.
What's Going to Replace the Dollar? Recently, I've devoted most of my writing to a narrow range of topics, including the current unprecedented rate of inflationary activity by the Fed, and the looming failure of the dollar. The issues have brought a lot of debate from those who agree, as well as from those who think I'm crazy. Yet despite support or opposition, three questions seem to come up more than any others:
Will the collapse be an absolute failure of the dollar and the U.S. economy, or will the dollar retain some value?
Regardless of the answer to the last question, will some other form of currency compete with, or even replace the dollar completely?
What am I doing to prepare for the events I predict? Am I shorting the dollar, or is there a better way to capitalize on the move?
Gerald Celente on the Financial Sense Newshour - 2/7/09 pt 2/2
FDIC chair takes on Wall Street, Washington giants The Wall Street crowd that packed into the ballroom of the fancy Times Square hotel didn't see it coming. As the bankers and analysts sliced into their grilled beef tenderloin and chicken, Sheila C. Bair stepped up to the microphone and told them off. Too many people couldn't make their mortgage payments, she said. The mortgage industry was sitting on a ticking time bomb and just didn't get it. Pick up the phone, she said, and talk to borrowers.
Fed Lacks Consensus on Treasuries as Yields Rise Federal Reserve officials have failed to resolve an internal debate over whether to purchase long-term Treasuries, even as rising yields on the securities threaten to undermine the central bank's objective of cutting borrowing costs for consumers and businesses. Policy makers are instead focusing on a program to purchase $200 billion in consumer and small-business loans and on a plan to buy $600 billion in home-finance debt, according to people familiar with the deliberations.
Losing Our Religion Do more than light a candle for the patron saint of capitalism Before he ran for president, Rudy Giuliani gave a couple hundred speeches a year all over the world, to all sorts of groups-business, philanthropic, political. He would often include a riff about how capitalism has improved more lives and done more to lift people out of poverty than any other economic system. The line was usually greeted by polite nods or even raised eyebrows, especially in Western Europe and the bluer precincts of the United States. But when I saw him deliver it in Poland and Russia, it killed. In those former Communist countries, people burst into furious applause as their translators uncoded Rudy's ode to free markets. Having lived under centralized economies, they get it. We don't.
The world is heading into a severe slump, with declining output in the near term and no clear turnaround in sight.
Consumers in the US and the nonfinancial corporate sector everywhere are trying to "rebuild their balance sheets," which means they want to save more and spend less.
Governments have only a limited ability to offset this increase in desired private sector savings through dissaving (i.e., increased budget deficits that result from fiscal stimulus).
The forthcoming (due this week) attempt to deal with banking system problems in the US will be insufficiently forceful.
Compounding these problems is a serious test for the Eurozone: financial market pressure on Greece, Ireland and Italy is mounting; Portugal and Spain are also likely to be affected.
At the same time, the situation in emerging markets is moving sharply towards near-crisis, particularly as global trade contracts and there are immediate effects on both corporates and the financial system. Currency collapse and debt default will be averted only by fiscal austerity.
The global situation is analogous to the problem of Japan in the 1990s, in which corporates attempted to repair their balance sheets while consumers continued to save as before and fiscal stimulus repeatedly proved insufficient.
A rapid return to growth requires more expansionary monetary policy, and in all likelihood this needs to be led by the United States.
The push to re-regulate, which is the focus of the G20 intergovernmental process (with the next summit set for April 2), could lead to a potentially dangerous procyclical set of policies that can exacerbate the downturn and prolong the recovery.
The most likely outcome is not a V-shaped recovery (which is the current official consensus) or a U-shaped recovery (which is closer to the private sector consensus), but rather an L, in which there is a steep fall and then a struggle to recover.
Europe ambushes Germany on debt bail-out The European Union has called an emergency summit of national leaders this month to halt the drift towards protectionism and stem the risks of a debt crisis as the slump deepens. EU finance ministers are to discuss proposals over breakfast in Brussels today for some form of "debt-agency" or mechanism for the EU to raise bonds, a move seen by diplomats as a ploy to ambush Germany into accepting shared responsibility for EU debts - anathema to Berlin. Concern is mounting over the dramatic deterioration of public finances across the EU.
Will PIMCO Be Needing a Bailout Soon? Treasury selloff continues. As equities are poised to hit ridiculously high fwd P/E ratios, someone is making sure that Bernanke and Bill Gross hit the Prozac handout line. Hold on, wasn't the Fed buying treasuries? What about the world's biggest bond fund?
The Destructive Center What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care and nutrition, undermines schools, but offers a $15,000 bonus to affluent people who flip their houses? A proud centrist. For that is what the senators who ended up calling the tune on the stimulus bill just accomplished. Even if the original Obama plan — around $800 billion in stimulus, with a substantial fraction of that total given over to ineffective tax cuts — had been enacted, it wouldn’t have been enough to fill the looming hole in the U.S. economy, which the Congressional Budget Office estimates will amount to $2.9 trillion over the next three years.
U.S. life insurers dragged down by soured investments U.S. life insurers Principal Financial, Lincoln National and Genworth on Monday posted fourth-quarter losses, hurt by soured investments. Insurers, already battered by the declining value of investments in the third quarter, are increasingly being hit by charges to boost reserves for variable annuity equity market guarantees, a popular retirement product. Principal Financial swung to a quarterly loss of $7.5 million, after net realized capital losses of $188.9 million, largely from impairments on fixed maturity securities and declining equity values. Principal's investment losses were larger than expected, said Morningstar analyst Alan Rambaldini. "But none of the (insurers') operating results were good," he added. Shares of Des Moines, Iowa-based Principal fell 24 percent in post-market trading.
‘Buy American’—or Bye-Bye America “British jobs for British workers!” thundered Gordon Brown, as he emerged from the shadow of Tony Blair to become prime minister. His populist sloganeering has now come back to bite him. Across Britain, thousands laid down tools in wildcat strikes in solidarity with a walkout from a French-owned oil refinery in North Killinghome—to protest a $300 million contract to an Italian company that plans to bring in 400 Italian and Portuguese workers to fulfill it. As Brown pleaded from the World Economic Forum in Davos, Switzerland, that Britain must not retreat into “protectionism,” strikes spread to Scotland, Wales and Ulster. Britain’s commitment to let foreigners buy up its utilities and industries and bring in foreign workers to run them has backfired. Brown’s own Labor Party is now angrily demanding that he live up to his pledge: British jobs for British workers. “The Return of Economic Nationalism,” wails the alarmed cover of The Economist. And understandably so.
Alt-A loans: New fear for middle-class subprime We can't say we haven't been warned. The doom-mongers reckon America's property market is on the verge of a new crisis as big as the subprime disaster that began in 2007. The fear is that borrowers with better credit histories, who took out Alt-A mortgages, are defaulting on a similar scale. Global exposure to American Alt-A (it stands for Alternative-A) is estimated at $600bn - the same as subprime. Bearish observers think losses could hit $150bn. 'the performance of Alt-A is clearly deteriorating rapidly, and we believe that 2009 will see such mortgages worsen further,' says David Watts, an analyst at CreditSights in London.
Counties brace for missed payments from state California's budget woes will sweep over the state's 58 counties this week when they get promises instead of checks for $89 million in anticipated payments for welfare, food stamps and other services. The move will be a devastating blow to the counties, which must serve more and more people looking for government help as the economy craters and jobs disappear, said Paul McIntosh, executive director of the California Association of Counties. With local governments every bit as battered as the state, little cash is available to cover the deficit. "It's a huge concern," McIntosh said. "There are counties that only have a couple weeks of cash on hand and could have trouble meeting payroll."
GM to cut 10,000 salaried jobs GM cutting 10,000 salaried jobs, cutting pay of other salaried workers General Motors Corp. said Tuesday it will cut 10,000 salaried jobs, citing the need to restructure itself with a government deadline looming and amid some of the worst sales in the auto industry's history. The Detroit-based automaker said it will reduce its total number of salaried workers to 63,000 from 73,000 this year. About 3,400 of GM's 29,500 salaried U.S. jobs are expected to be eliminated.
China monthly auto sales overtake US for 1st time China's monthly auto sales overtake US for 1st time in January, helped by shrinking US market China's monthly vehicle sales surpassed those in the United States for the first time in January, moving this country closer to becoming the world's biggest auto market, data released Tuesday showed. With its growing middle class and vast potential as a consumer market, China is vital for General Motors, Volkswagen and Toyota as they count on demand here to offset weakness in the U.S. and elsewhere. But China's ascent in the global auto market has been hastened by the plunge in U.S. auto sales, which tumbled 37 percent in January to a 26-year low of 656,976 units.
Countrywide, Colorado settle on mortgage practices Countrywide Financial Corp has agreed to provide about $7.7 million to settle allegations by Colorado that it improperly marketed subprime and other high-risk mortgages in the state. Colorado had accused Countrywide of deceptively putting borrowers into high-risk, high-cost loans that quickly became unaffordable once low introductory rates expired and monthly payments increased dramatically. John Suthers, the state's attorney general, in a statement said the settlement will allow about 6,800 borrowers to benefit from loan modifications, including by lowering their interest rates to as low as 3.5 percent for five years.
Job losses at small companies could reach 2 million by 2010 On an upbeat note, California decides to pay small companies on time despite the state's cash crunch. As the recession bores deeper into the economy, small and medium-size businesses are showing the effects by shedding workers at a rapid pace. That indicates, employment experts say, how the downturn is spreading well beyond the manufacturing and housing sectors. On a more upbeat note, California officials have decided not to stiff the smallest businesses even though the budget mess has left the state unable to pay many of its bills.
Housing tax credit little benefit for many The Senate's proposed $15,000 tax credit for homebuyers would boost the ailing housing market but do little to help low-income people who need it most, experts say. The measure, which is part of the $827-billion economic stimulus plan that the Senate will vote on Tuesday, would offer the credit to anyone who buys a primary residence. But to take full advantage of the credit, buyers would have to earn enough to use it and spend at least $150,000 on a home. As many as 1 million home sales could result from the tax credit, according to Mary Trupo of the National Assn. of Realtors.
Kaptur: Donate food to help the hungry
GM, Chrysler May Face Bankruptcy to Protect U.S. Debt General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them. U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury's Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.
GM fights to avoid bankruptcy protection General Motors is working to convince key stakeholders to help it avoid the need to seek bankruptcy protection but, because such an effort would probably require more government money, its most critical task will be addressing the US Treasury's concerns over the terms of its investment. GM must present a plan proving its long-term viability to Congress by next Tuesday as a condition of the $13.4bn emergency bridge loan it was granted in December. Several sets of negotiations are taking place simultaneously. They revolve around GM's proposal to swap up to two-thirds of its debt for equity, and fresh concessions from the United Auto Workers, including the financing of a new union-administered healthcare fund. Only advisers to the various parties are currently involved in the talks, which are expected to centre on due diligence issues for the next day or two, one person familiar with the negotiations said.
Even elderly are facing eviction Complaints on rise of nursing homes forcing out residents For two years, Irene Henderer lived at the West Woods boarding home in Olympia, where she was known for her lively stories and sharp wit. But in November 2007, the home gave Henderer an eviction notice, along with 20 other Medicaid residents. Henderer, 89, grew depressed and refused to leave her room for meals. As her move approached, she quietly asked her guardian: "Why can't I just die here?" Three days after moving out, Henderer's congestive heart failure worsened. A month later, she died.
Top Enforcer At the S.E.C. Steps Down Signaling that it is time for a new cop to walk the Wall Street beat, the Securities and Exchange Commission accepted the resignation Monday of its top enforcement officer amid blistering criticism that the commission had failed to protect investors in recent years. Linda Chatman Thomsen, the embattled director who had led the agency's enforcement division since 2005, tendered her resignation to Mary L. Schapiro, the commission's new chairwoman. A replacement for Ms. Thomsen, 54, has not been named. Critics say her unit failed to detect and prosecute improprieties among mortgage companies, the nation's brokerage firms and powerful investment advisers and hedge funds that led to the financial crisis.
Madoff In Partial Settlement With S.E.C. Days before a deadline in his criminal case, Bernard L. Madoff has agreed to a partial settlement of civil accusations that he ran a $50 billion Ponzi scheme. The settlement with the Securities and Exchange Commission, disclosed at midday Monday, does not affect the criminal securities fraud charges that were also filed against Mr. Madoff on Dec. 11. But Wednesday is the latest deadline for federal prosecutors either to file a formal indictment against Mr. Madoff or submit to a court hearing to explain why he was arrested. The first deadline was extended last month at the request of the prosecutors, who notified the court that progress was then being made toward a "resolution" of the case.
Russia Companies Asked by Banks to Hold Debt Talks International banks proposed restructuring talks with Russian companies that owe $400 billion of foreign debt due in the next four years, according to the Russian Association of Regional Banks. “Several western banks asked about holding discussions,” Anatoly Aksakov, head of the association, whose 450 members include Citigroup Inc.’s Russia unit, Alfa Bank and VTB Group, said in an interview. “It was their initiative to have talks on this topic to look at restructuring the debts of several companies, so that everyone can be calm.”
Jim Rogers talks dissolution of Russia
Chorus call for New World Order In economic and financial desperation, leaders around the globe are openly calling for the creation of a "New World Order," including prominent "old guard" members of the Trilateral Commission. Is the baby about to be born? The return of the Trilateral undead It's not accidental that so many of the original members of the Trilateral Commission, all of whom are now well into their 80's, have returned to dance in the limelight once again. TC Members like Henry Kissinger, Zbigniew Brzezinski, Paul Volker and Brent Scowcroft, for instance. On January 5, 2009, Henry Kissinger was interviewed by CNBC on the floor of the New York Stock Exchange. His voice still raspy and spoken with a thick accent, he responded to a question about President-elect Obama's first actions as President: "he can give new impetus to American foreign policy ... I think that his task will be to develop an overall strategy for America in this period, when really a 'new world order' can be created. It's a great opportunity. It isn't such a crisis." While the rest of the country slips into depression and financial collapse, to Kissinger "it isn't such a crisis." And, of course it isn't -- for him.
The Taliban in Pakistan Are Raising U.S. Fears Even as C.I.A. drone aircraft pound Al Qaeda in Pakistan’s tribal region, there is growing concern among American military and intelligence officials about different militants’ havens in Pakistan that they fear could thwart American military efforts in Afghanistan this year. American officials are increasingly focusing on the Pakistani city of Quetta, where Taliban leaders are believed to play a significant role in stirring violence in southern Afghanistan.
Israeli elections: Be afraid. Be very afraid Donald Macintyre reports from Jerusalem on an election campaign that is still too close to call, but one with ominous portents Israel's Foreign Minister, Tzipi Livni, last night launched a concerted final effort to become her nation's first woman leader since Golda Meir, despite the rightwards shift in public opinion that has threatened to propel Benjamin Netanyahu back into the premiership. The leader of the centrist Kadima party, who began the closing stages of her campaign with a rally for Druze Arab voters in Galilee last night, issued a direct personal challenge to Mr Netanyahu to agree to the television debate which he has consistently refused. As polls showing the lead of Mr Netanyahu's right-wing Likud party has narrowed to only two seats ahead of Kadima, Ms Livni's campaign team believes she can overtake her rival by the time Israel goes to the polls on Tuesday. Mr Netanyahu has emphasised the threats from Hamas and a nuclear Iran in his campaign.
China Passing U.S. as World’s Largest Auto Market China likely outpaced the United States in auto sales for the first time ever last month - the beginning of what could be a lasting trend. Official data for China’s January auto sales is scheduled for release tomorrow (Friday). However, preliminary estimates indicate that about 800,000 vehicles or more were sold in China last month. That would easily top the 656,976 vehicles sold in the United States.
Nissan to Cut 20,000 Jobs HONG KONG — Nissan Motor on Monday joined Toyota, Mazda and Mitsubishi in forecasting a loss for the current financial year, and announced it was cutting 20,000 workers in one of the most aggressive cutbacks so far by a Japanese company since the start of the global downturn. The announcement reflected a growing urgency among Japanese manufacturers as it becomes clear that the downturn and the strength of the yen is hitting Japan more severely than thought.
America's New Asian Quagmire Graveyard of Empires With the situation on the ground rapidly deteriorating, U.S. imperialism's South Asian adventure is going off the rails. The New York Times reported February 4 that supplies "intended for NATO forces in Afghanistan were suspended Tuesday after Taliban militants blew up a highway bridge in the Khyber Pass region, a lawless northwestern tribal area straddling the border with Afghanistan." The 30-yard-long iron bridge, located 15 miles northwest of Pakistan's Northwest Frontier Province (NWFP) provincial capital, Peshawar, a thriving metropolis of several million people, was a major supply route ferrying some 80 percent of NATO supplies into Afghanistan.
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Gold eases on profit taking SINGAPORE : Gold prices edged down in early Asian trade Monday as investors took profits from earlier gains ahead of a massive US economic stimulus package The bullion fell $7.1 or 0.9% to $904.60 an ounce, off the $930.40 peak touched on Jan. 30, the highest since mid-October. Analysts said investors would be looking not only at the details of the final package but also at how Obama handles the situation as the United States responds to its worst financial crisis in 70 years.
U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages. The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.
Fears on Gold: Declining Supply, Increasing Demand old remains firm as there is increasing nervousness about the global economy and indeed nervousness about the global monetary system, leading to continuing strong investment demand. Gold remains at or near record highs in nearly all major currencies ($914.00) and looks set to regain its nominal record high of $1,030/oz in the coming weeks. UBS joined Goldman Sachs and Merrill Lynch in drastically increasing their gold price forecasts Thursday. UBS has increased its 2009 average gold price forecast to $1,000 an ounce from $700 as investors seek a safe haven from the financial turmoil. There is a gradual realization that slashing interest rates to zero and close to zero is not the magic wand, quick fix to our global economic ills. This is especially so as one of the continuing major challenges is the availability of credit and money rather than the price of credit and money.
Gold proves itself as only true alternative for the dollar
Confidence in currencies shaken to the core
Gulf countries are keen to break away from the link with the US dollar
Chinese appetite for US debt in decline
Former Bank of England official expects dollar collapse
Investors fleeing into gold as US prints trillions
HSBC, Citigroup, Merril Lynch, Goldman Sachs all turning bullish on gold
Senior gold shares ready to move higher after impressive 100% bull run since October 2008
Junior gold shares waking up - bottomed out in December 2008
Peter Schiff Lays it Down Again 2/05 "Production is made possible by savings", "Gold will not be below $1000 for long
Crisis: This is Just the Beginning by Peter Schiff The intense scrutiny recently paid to my investment strategy in the immediate wake of the financial crisis of the last six months has unfortunately obscured the central element of my larger economic forecast. The standard line has been that although I was able to predict the crash, in the form of the housing collapse and the credit crunch, my expected fallout of a weaker dollar and global decoupling has been proven false. However, this assumes that the crash has fully played out. In reality, all we have heard thus far is the overture. In 2008, the bubble economy that I had meticulously described years ago finally hit the pin that I knew was out there. The corporate losses, frozen credit markets and plunging home prices were the opening salvo in the unfolding economic crisis. However, the vast majority of air has yet to leak out of the bubble. As it does, the U.S. economic crisis will kick into a much higher gear. I have positioned my clients to withstand the full fury of the gale, and when it finally comes, the question "was Peter Schiff right?" will finally be answered.
Bailouts, Inflation and a Golden Future Why Can't Common Sense Be Applied to Bailouts? We welcome President Obama's "basic common sense" announcement of a $500k salary cap for top executives at companies receiving substantial bailout funds. It's a bit of welcome good news. And the President's definitely right on the money when he states that the average person isn't at all pleased when executives apply for public money "hat in hand ... even as they paid themselves customary lavish bonuses." In fact, these "executives being rewarded for failure" is the theme we harped upon last week. We had to laugh at this apparent government revelation, though: the authorities are finally realizing that there's a consensus among ordinary Americans. According to commentators, seems Joe Average believes he's bearing a greater financial burden from the disaster than the guys who helped create the mess in the first place. Well, who would have guessed? It must have taken a genius to figure that one out.
Will banks get $1 trn to clean up books? First there was 2008's $152 stimulus package (remember those rebate checks?) Then there was last fall's $700 billion Troubled Asset Relief Program. Now Congress is considering another economic stimulus of upwards of $800 billion. And the American people ain't seen nothing yet. That's because some experts believe that in order for the banks to clean up their balance sheets, they will need at least $1 trillion or more. That's $1 trillion more in additional money beyond the TARP program with the money being used to infuse needed cash into the banks and to remove so-called toxic assets from their books, all to give banks the maneuver room they need to start making loans again. Experts say that until banks are recapitalized in this way, the credit needed by both consumers and businesses won't start flowing again and that any economic stimulus is doomed to failure.
84% of cities in money trouble More than eight in ten cities are in financial trouble, up from 64% six months ago, according to a survey released Wednesday. The recession is straining cities' ability to meet their financial needs, according to the National League of Cities. Some 84% of cities reported facing fiscal difficulties, the highest percentage since the group starting doing surveys in 1985. The nation's cities are counting on billions of dollars from the economic stimulus package now being debated in the Senate. 2009 not looking better Things will remain tough in 2009. Some 92% of the cities surveyed expected to have trouble meeting their city needs during this year. To cope, they are implementing hiring freezes and layoffs, delaying capital expenditures and instituting service cuts. Some 69% have instituted hiring freezes or layoffs, while 42% are delaying or canceling infrastructure projects. Another 22% have instituted across the board cuts.
A Golden Investment in 2009 and Beyond When previously writing about where I would invest $50,000 in the year ahead, I had discounted gold as an investment because in essence it is a speculative commodity with little utilitarian purpose beyond that of jewelry. I may have been wrong as gold was one of the few "investments" that held up amid all the economic turmoil. But will the trend continue in 2009 and beyond? In 2008, with markets and real estate collapsing around the world, gold on a per ounce basis posted a near 5% gain (the Dow was down by over 30% in comparison). If it wasn't for the unexpected appreciation in the US dollar, as global investors flocked to the safety of US treasuries, gold could have performed even more strongly. So far this year, gold is up about 2% to around $900 an ounce.
Obama faces tough week; stimulus, bailout on tap Stimulus package, bailout plan have Obama confronting economy on two fronts President Barack Obama plunges into a difficult test of his leadership this week, struggling to get a divided Congress to agree on his economic recovery package while pitching a new plan to ease loans to consumers and businesses. The Senate's $827 billion stimulus legislation seems assured narrow passage by Tuesday. Harder work for Obama and the Democrats comes in the days ahead, when the House and Senate attempt to reconcile differences in their two versions. Obama and Democratic Party leaders had hoped to have a bill ready for the president's signature by Feb. 16 -- a deadline that grows more challenging by the day.
Marc Faber about Zimbabwe School of Economics 2009.02.06 Marc Faber on 2009.02.06 said, that there are now different schools of economy: austrian school, monatarist, etc. but the most popular one now, the new zimbabwe school of economy.
Bond market calls Fed's bluff as global economy falls apart Global bond markets are calling the bluff of the US Federal Reserve. The yield on 10-year US Treasury bonds - the world's benchmark cost of capital - has jumped from 2pc to 3pc since Christmas despite efforts to talk the rate down. This level will asphyxiate the US economy if allowed to persist, as Fed chair Ben Bernanke must know. The US is already in deflation. Core prices - stripping out energy - fell at an annual rate of 2pc in the fourth quarter. Wages are following. IBM, Chrysler, General Motors, and YRC, have all begun to cut pay. The "real" cost of capital is rising as the slump deepens. This is textbook debt deflation. It was not supposed to happen. The Bernanke doctrine assumes that the Fed can bring down the whole structure of interest costs, first by slashing the Fed Funds rate to zero, and then by making a "credible threat" to buy Treasuries outright with printed money.
US Treasury to pump billions more into banks TIMOTHY GEITHNER, the US Treasury secretary, will tomorrow set out the American government’s plan to inject billions of dollars into the country’s troubled banks and ringfence their toxic assets. The announcement is seen in the markets as key to steering the global economy out of its deepest postwar recession, along with President Barack Obama’s $820 billion (£555 billion) fiscal-stimulus plan. It follows gloomy news, including a 598,000 drop in non-farm payroll employment on Friday, a figure described by analysts as “horrific”. The US Treasury plan for the banks, a revamp of the original $700 billion bailout plan agreed with Congress by the Bush administration’s Treasury secretary, Henry Paulson, is expected to involve a wide range of measures but will stop short of creating a so-called “bad bank”.
Barack Obama may be forced to protect to stay at the top The desire by Congress to include “buy American” provisions in the stimulus package has set off alarm bells in the free-trade community. The World Trade Organisation is so alarmed by the move and by other countries’ lurch to protectionism that it is convening an international meeting tomorrow to attempt to defuse the protectionist time bomb. With reason. During his presidential campaign Barack Obama made it clear he is unhappy with the way the world trading system works – draining factories and jobs from America. And not because American workers are inefficient or lazy.
Bank Rescues Raise Threat of Financial Protectionism Bank rescues in developed economies may lead to financial protectionism, hurting developing nations, should governments buckle to political pressure, Joseph Yam, chief executive of the Hong Kong Monetary Authority, said today. Pressure “to include protectionist measures in rescue packages for troubled banking systems in the developed economies” is possible, Yam said in a speech in Kuala Lumpur today. “No less than trade protectionism, such a trend would deepen the hardship of developing economies, many of which rely heavily on international finance.”
The Oracle with Max Keiser - 06 February 2009 - (1 of 4) Max Keiser and Stacy Herbert in the Oracle discussing banker bonuses. Guests in this segment include economist, James K. Galbraith and private equity operating partner, Richard Stephenson, also of Yudu.com
It's No Time for Protectionism WHAT approach will the Obama administration and the Democratic majority in Congress take on international economic policy? It is too early to say for sure, but the signs so far are worrying. Just before his confirmation as Treasury secretary, Timothy F. Geithner turned up the heat on the Chinese regarding the dollar-yuan exchange rate. President Obama, he said, "believes that China is manipulating its currency. Countries like China cannot continue to get a free pass for undermining fair-trade principles." Like many economists, I cringe whenever I hear the term "fair trade." It is not that I am against fairness - who is? - but the word "fair" is so amorphous in this context as to defy definition. Most often, the slogan "fair trade" is little more than a rallying cry for protectionism.
Obama rolls out his big guns on economy Faced by persistent opposition and delay, the Obama administration stepped up its urgent pleas over the weekend for quick congressional action on the economy, even as some economists warned that the latest steps and a major new initiative might produce only a stuttering recovery that requires further major intervention. Lawrence Summers, director of President Barack Obama's National Economic Council, on Sunday urged the Senate to pass the administration's $827 billion stimulus bill, and called on both chambers of Congress to reconcile their differences "as quickly as possible, to contain what is a very damaging and potentially deflationary spiral."
The Oracle with Max Keiser - 06 February 2009 (2 of 4) Guests for this segment include James K Galbraith and Richard Stephenson of yudu.com Topics include bankers bonuses and deglobalization.
IMF Says Advanced Economies Already in Depression Advanced economies are already in a "depression" and the financial crisis may deepen unless the banking system is fixed, International Monetary Fund Managing Director Dominique Strauss-Kahn said. “The worst cannot be ruled out,” Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia. “There’s a lot of downside risk.” Ten days ago, the IMF cut its world-growth estimate for this year to 0.5 percent, the weakest pace since World War II. Stimulus packages alone won’t succeed in dragging the global economy out of recession unless confidence is restored in the banking system, Strauss-Kahn said today. “All this will work if, and only if, the different countries are likely to do what they have to do in terms of restructuring the banking sector,” he said. “And today it’s not done.”
The Road to Bank Nationalization This week, seven major corporations announced major layoffs, adding 72,000 to the unemployed. At the same time, lending by the big banks fell. With falling demand for loans, it is little wonder that President Obama described the national economic situation as worsening day by day. Clearly, we are heading into a deepening and severe recession that is spreading worldwide.
U.S. Bank Bailout to Rely in Part on Private Money Wall Street helped produce the global financial and economic crisis. Now, as the Obama administration prepares to unveil a revised bailout plan for the banking system, policy makers hope Wall Street can be part of the solution. Administration officials said the plan to be announced Tuesday was likely to depend in part on the willingness of private investors other than banks - like hedge funds, private equity funds and perhaps even insurance companies - to buy the contaminating assets that wiped out the capital of many banks. The officials say they are counting on the profit motive to create a market for those assets. The government would guarantee a floor value, officials say, as a way to overcome investors' reluctance to buy them.
The Oracle with Max Keiser - 06 February 2009 (3 of 4) Guest joining us for this section is Alison Smale of the International Herald Tribune. Still with us is Richard Stephenson of Yudu.com Topic is Lula, the World Social Forum and oxygen futures.
A Tricky Third Way: Saving Banks Without Nationalization Citigroup still has shareholders, a chief executive and a board of directors, but the New York company's major decisions now are subject to Washington's approval. The federal government, Citigroup's largest investor, has forced the company to slash its dividend, pursue the sale of units including its Smith Barney retail brokerage and modify mortgage loans according to a government formula. A corporate jet was sold at the urging of federal banking regulators, and the company's chairman was replaced. The bank must issue public reports on its use of government money. But senior officials in the Obama administration insist that Citigroup has not been nationalized.
Congress split over differing stimulus bills House and Senate lawmakers - who will hammer out the details of a more than $800 billion stimulus package this week - dug in along partisan lines Sunday morning and staked out positions on a new financial bailout plan that could reach up to $500 billion. Republican congressmen attacked the stimulus plan, which ranges between $820 billion and $827 billion, as wasteful spending that will not help the nation's troubled economy.
Economists Agree Time Is of the Essence for Stimulus With Congress moving closer to adopting a $820 billion stimulus package and the Obama administration poised to unveil a new bank bailout plan, economists say that the federal government is taking its biggest role in the economy in a generation. States that once aspired to blaze trails independent from Washington are turning to it for money, banks and businesses that once decried regulation now are seeking federal capital, grants or tax cuts and individuals are looking for tax relief.
The Oracle with Max Keiser - 06 February 2009 (4 of 4) The guest for this section is comedian, Dean Obeidallah. Flying while Muslim, is it the new driving while black?
Geithner to show bailout plan Tuesday A Treasury Department official said Sunday that Treasury Secretary Timothy F. Geithner will unveil the Obama administration's new framework to aid the financial sector on Tuesday. Mr. Geithner had been scheduled to announce the plan Monday. Treasury spokesman Isaac Baker said that the administration wants to spend Monday focused on the Senate's effort to pass an economic recovery package.
In Geithner's Overhaul, Aggressive Use of All Available Tools Expected The nation's top economic policymakers were putting the finishing touches yesterday on a financial rescue plan that will deploy hundreds of billions of dollars to spur the flow of credit to consumers and businesses. The Obama administration aims to ease the financial crisis through a series of steps -- including a program to insure banks against extreme losses on mortgages and other loans, a new round of investments in banks, help for homeowners at risk of foreclosure and the broadening of a Federal Reserve program to prop up lending. It could also purchase toxic assets from banks, possibly with financing from the private sector.
Economic Fascism and the Bailout Economy Gary North I have lived through three monumental historical events. I remember only two of them. I do not remember the dropping of the two atomic bombs in August of 1945. As symbols of scientific world transformation, this constituted the most momentous event of the 20th century. This breakthrough, so far, has not led to nuclear war, even though on several occasions, it looked as though nuclear war was a distinct possibility. Nevertheless, the arrival of the nuclear age heralded a transformation of the modern world. We have not yet seen the end of that transformation.
Commercial Real Estate Bubble Is Set to Burst During the work day I usually keep CNBC on to see if the talking heads are doing something entertaining on any given day. Usually I keep the volume low or muted until a story or person of interest pops up. As the latter hours of the morning were coming to a close the CNBC "Real Estate Task Force" with Re/Max CEO Margaret Kelly and Charles Cohen from Cohen Brothers Realty popped up. I figured on my way out to lunch I would at least give this motley crew a few seconds of my time. I didn't listen to the whole thing when I started to realize that lending a few seconds of my time was turning into destroying a few points of my IQ. Lucky for us it didn't take long into the segment before Diana Olick began to spew pure comical economic ignorance out of her mouth. Olick was quoted as saying, "We thought that commercial [real estate] was going to do far better because the theory was that commercial didn't overbuild the way that residential real estate did."
State of the Real Estate Markets [see video] Discussing the current state of the economy and the real estate market, with Margaret Kelly, Re/Max CEO; Charles Cohen, Cohen Brothers Realty and CNBC's Diana Olick
Fed Calls Consultants to Treat AIG, Stricken Markets Every Sunday night, New York bankruptcy lawyer Marshall Huebner spends a 13-hour shift on call as an emergency medical technician. His day job involves work on another sort of rescue: The government's $152.5 billion bailout of American International Group Inc. "There's a stronger parallel than you would think," Huebner, a partner at Davis Polk & Wardwell, said in an interview. Helping resuscitate the insurance giant takes "a lot of the same qualities that I think stand you in very good stead with emergency medicine -- the ability to remain calm in almost any situation, and the ability to assess, triage and treat, even in a crisis."
"Dr. Doom," Nouriel Roubini about banking nationalisation and moral hazard
Instead of stimulus, do nothing - seriously Stimulus is unconstitutional. And history shows that the economy can recover strongly on its own, if politicians stay out of the way. As we wait to see how the politicians in Washington will alter the stimulus package the Obama administration is pushing, many questions are being raised about the measure's contents and efficacy. Should it include money for the National Endowment for the Arts, Amtrak, and child care? Is it big enough to get the economy moving again? Does it spend money fast enough? Hardly anyone, however, is asking the most important question: Should the federal government be doing any of this?
There's no shortcut to recovery Now that quick routes to prosperity -- via stocks and real estate -- have backfired, we're trying to print our way out of trouble. We need to stop deceiving ourselves. It was back in May 2004, at a speech at a conference, that I introduced "the next time down.". . . . The next time down bears down on jobs Those excesses resulted in the near meltdown of our financial system and the consequences we see all around. Hundreds of thousands of workers in a variety of industries have lost their jobs as a direct function of this next time down.
Are We Already in a Depression? It has been bounced around a bit of late, but there has probably been no serious talk of this turning into a Depression. It seems unthinkable with all we know today that it could happen. A few Doom-and-Gloomers have made passing reference to the possibility, and a few heretics have proclaimed we are on the verge or in one, but there have been few if any credible sources to say we are there or almost there. That is why this piece got my attention. When the managing director of the IMF says that advanced economies are already in "D" territory, plus a lot of downside risk, it deserves some attention.
Banks still standing amid credit collapse Banks have become the only game in town for most businesses and consumers looking for loans, and that's why the government is gearing up for what could be the most expensive bank bailout ever. Entire trillion-dollar markets for securitized loans have frozen or collapsed in the past 18 months, including parts of the corporate debt market known as commercial paper, private mortgages, auto loans, student loans and credit cards. The result: Banks are often the only lenders still able to satisfy critical credit needs.
Beware Cash4Gold and other gold-buying ripoffs I don't watch much broadcast TV, and when I do I skip as many commercials as possible, but even I have seen the incessant televised advertisements for a company called Cash4Gold, and I'm sure most of you have, too (they even had a Super Bowl ad). The company is being heavily promoted online as well. The sell sounds great on the surface: You pack up all your old jewelry that you'll never wear again into an envelope and send it, insured, to Cash4Gold. They melt it down and cut you a check for the value of the gold. End of process. It sounds better than going to a pawn shop -- the process is simple and requires no personal interaction with an appraiser -- so what could go wrong?
In Florida, Despair and Foreclosures Desperation has moved into this once-middle-class exurb of Fort Myers, where hammers used to pound. ts straight-ahead stare was hidden amid the chatter of 221 families waiting for free bread at Faith Lutheran Church on a recent Friday morning; and it appeared a block away a few days earlier, as laid-off construction workers in flannel shirts scavenged through trash bags at a home foreclosure, grabbing wires, CDs, anything that could be sold. "I knew it was coming," said Gloria Chilson, 56, the former owner of the house, as she watched strangers pick through her belongings. "You take what you can; you try not to care."
Obama Issues 4th Union-Friendly Executive Order President Barack Obama has issued an executive order backing the use of union labor for large-scale federal construction projects. The order encourages federal agencies to have construction contractors enter project labor agreements. Those agreements require contractors to negotiate with union officials, recognize union wages and benefits and abide by collective bargaining agreements. Obama's order restores a Clinton administration rule that was rescinded by President George W. Bush. It is the fourth union-friendly executive order that Obama has signed since he's been in office.
Ford May Add $4 Billion to Pensions, Spurring Aid Bid Ford Motor Co. may have to contribute $4 billion to its pension plan after a 2008 shortfall, a cash drain that risks dragging the second-largest U.S. automaker closer to a federal bailout. The collapsing stock market left the fund with a $4.1 billion deficit for its projected obligations, after 2007's $3 billion surplus, Ford said in its fourth-quarter financial results. That may force an infusion of money starting next year, according to the viability plan filed with Congress in December.
Price of gas up 6 cents across U.S. The average national price of gasoline rose 6.4 cents in the past two weeks, according to a national survey released Sunday. Oil industry analyst Trilby Lundberg says the average price of regular gasoline Friday was $1.92 a gallon. The price of mid-grade was $2.04 a gallon and the price of premium was $2.16 a gallon. Despite the increase, the price of regular gasoline is $1.02 below its year-ago level of $2.94 a gallon.
College loans in 'crisis' Families fear schools will cut aid to students amid recession Finding financial aid for college this year promises to be tougher than any final exam. The quest for money that begins for students and parents every January has taken on new urgency in 2009 amid fears that loans and grants will be scarcer than in the past because of the recession. "The financing system for college is in real crisis," said Barmak Nassirian, associate executive director of the American Association of College Registrars and Admissions Officers. "Every one of the participants in the system is experiencing hardship - higher education institutions, states, aid donors and families all are cash-strapped."
Billions to colleges and students WHO GETS WHAT: stimulus would give colleges and students unprecedented influx of aid The stimulus plan emerging in Washington could offer an unprecedented, multibillion-dollar boost in financial help for college students trying to pursue a degree while they ride out the recession. It could also hand out billions to the states to kick-start idled campus construction projects and help prevent tuition increases at a time when families can least afford them.
Jim Rogers in Russia : No Future for the Rubble , I buy only Yen 05 FEB 2009
Jim Rogers Russia will continue to disintegrate !
WTO chief warns of looming political unrest The global economic crisis could trigger political unrest equal to that seen during the 1930s, the head of the World Trade Organization (WTO) said in a German newspaper interview Saturday. "The crisis today is spreading even faster (than the Great Depression) and affects more countries at the same time," Pascal Lamy told the Die Welt newspaper. Questioned about the risks of political instability, Lamy -- who wraps up his four-year term as WTO director-general in September -- responded that that was "the main danger". "This crisis weighs heavily on politics and puts peace in danger," he said.
Revolt brews in counties Counties in California say they've had enough - and they aren't going to take it anymore. In what amounts to a Boston Tea Party-style revolt against the state Capitol, they're threatening to withhold money. Los Angeles is considering such an option. And Colusa County supervisors said they authorized payment delays for February. "We didn't vote on it, because I don't think anybody wants to go to jail," Colusa County Supervisor Kim Vann said. Closer to home, Sacramento County is planning to file a lawsuit this week against the state and Controller John Chiang for withholding millions of dollars - much of it for social service programs.
Driven down by debt, Dubai expats give new meaning to long-stay car park For many expatriate workers in Dubai it was the ultimate symbol of their tax-free wealth: a luxurious car that few could have afforded on the money they earned at home. Now, faced with crippling debts as a result of their high living and Dubai’s fading fortunes, many expatriates are abandoning their cars at the airport and fleeing home rather than risk jail for defaulting on loans. Police have found more than 3,000 cars outside Dubai’s international airport in recent months. Most of the cars – four-wheel drives, saloons and “a few” Mercedes – had keys left in the ignition. Some had used-to-the-limit credit cards in the glove box. Others had notes of apology attached to the windscreen.
Japan’s Big-Works Stimulus Is Lesson HAMADA, Japan — The Hamada Marine Bridge soars majestically over this small fishing harbor, so much larger than the squid boats anchored below that it seems out of place. And it is not just the bridge. Two decades of generous public works spending have showered this city of 61,000 mostly graying residents with a highway, a two-lane bypass, a university, a prison, a children’s art museum, the Sun Village Hamada sports center, a bright red welcome center, a ski resort and an aquarium featuring three ring-blowing Beluga whales. Nor is this remote port in western Japan unusual. Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s.
Gaza naval blockade to be tested; missiles found on Iranian ship Cypriot divers armed with sensors and infrared gear began exploring the Cypriot-flagged Iranian arms ship docked at Limassol, on orders from the UN Security Council Sanctions Committee, DEBKAfile's military sources report. A Cypriot source said the ship appears to be carrying banned weapon-related material from Iran prohibited under UN resolutions. The Cypriot official said sending the shipment back is not an "available option." This would be the first time an Iranian arms ship has been detained and its freight confiscated. US and British marine experts have joined the search of Monchegorsk which was renamed Iran Hedayt.
U.S. Officials Offer Dismal Review of War in Afghanistan National Security Team Says More Troops From NATO Allies Are Necessary President Obama's national security team gave a dire assessment Sunday of the war in Afghanistan, with one member calling it a challenge "much tougher than Iraq" and others hinting that it could take years to turn around. U.S. officials said more troops were urgently needed, both from the United States and its NATO allies, to counter the increasing strength of the Taliban and other warlords opposed to the central government in Kabul. But they also said new approaches were needed to untangle an inefficient and conflicting array of civilian-aid programs that have wasted billions of dollars.
SEC Official Claims Executive Privilege In Refusing to Answer Madoff Questions
Madoff Family Secrets "Only On The Web:" Palm Beach, Fla. attorney John Pankauski speaks out about the alleged corruption of notorious alleged Ponzi scheme financier Bernie Madoff and certain members of his family.
Executive: SEC Ignored Warnings About Madoff Harry Markopolos says the Securities and Exchange Commission ignored his warnings about financier Bernard Madoff for years. Markopolos says he warned SEC staffers in Boston, New York and Washington.
Gold Disconnects from US Dollar The gold price has finally disconnected from its nemesis, the USDollar. This news should be read as the coming of spring after months of wintry torment, or as the sighting of land after 30 days adrift at sea in a derelict vessel. From 2002 to very early 2008, the gold price had risen from the massive speculative fervor that swept the United States and Europe, whose economies had been supplied largely by Asian factories. The mines from Latin America to South Africa to Australia greatly aided the process. The very paradoxical event of the USDollar rising this past autumn amidst truly horrendous news, one disaster after another, one major bank failure after another, one nationalization of a large financial institution after another, makes the disconnect all the sweeter for gold investors. That set the stage for a powerful gold price move.
Gold slides on profit taking Gold prices eased in Asia mainly on profit taking by speculators despite record high exchange-traded fund holdings underlined strong investor interest amid continuing turmoil in the financial sector. Gold was trading at $910.40 an ounce, down $3.35 from New York's notional close on Thursday, when it hit a session high of $924 an ounce.
The Action Americans Need By Barack Obama Washington Post Thursday, February 5, 2009; Page A17 By now, it's clear to everyone that we have inherited an economic crisis as deep and dire as any since the days of the Great Depression. Millions of jobs that Americans relied on just a year ago are gone; millions more of the nest eggs families worked so hard to build have vanished. People everywhere are worried about what tomorrow will bring. What Americans expect from Washington is action that matches the urgency they feel in their daily lives -- action that's swift, bold and wise enough for us to climb out of this crisis. Because each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings and their homes. And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.
Obama must pare-down stimulus Bill Kristol's RESPONSE to Obama's OpEd piece in Washington Times (above) The Republicans' Opportunity “This plan is more than a prescription for short-term spending -- it's a strategy for America's long-term growth and opportunity in areas such as renewable energy, health care and education.” -- Barack Obama With this key sentence from his op-ed in the Washington Post today, President Obama has given Republicans a golden opportunity: Insist on splitting the legislation being debated on the Senate floor into a true short-term stimulus, which can pass quickly, and long-term policy proposals, which require serious debate. Republicans should stop trying to improve the unimproveable with small-bore amendments to the current legislative package. Instead, they can point out that Obama is supporting under the guise of emergency legislation a bloated catch-all of stimulus, pork and (often bad) policy. They can make clear that Republicans will support a real short-term stimulus (pro-growth tax cuts, housing measures and a few targeted spending provisions unemployment and COBRA extensions) that meets Larry Summers’s criteria of being targeted, timely and temporary. They should introduce such a measure as a substitute -- "The Emergency Economic Growth Bill of 2009” -- and trumpet their vigorous support of it. And they should insist that all the "energy, health care and education" proposals be debated in an orderly and serious way in the regular legislative process -- not jammed through as part of an emergency “stimulus."
White House Now Plans Limited Bank Aid Package The Obama administration has decided on a new package of aid measures for the financial services industry, including a bad bank component, and is expected to announce them next Monday, according to a source familiar with the planning. The plan will be "smaller" than originally expected, said the industry source, and centered around government guarantees and insurance of troubled assets, what's called a "ring fence" concept. "Eveybody seems to like that," said the source. "There's a lot of internal conflict about whether this [the bad bank] makes sense ... they realize they have to do something with the bad bank." The latest round of discussions also appear to have addressed the most controversial aspect of the big bank concept: Pricing.
Obama Warns of 'Catastrophe:' What Happened to 'Hope' and 'Change?' Barack Obama's cap on executive pay for bailout recipients yesterday overshadowed his comments about the stimulus bill, which deserve greater scrutiny. "A failure to act, and act now [on the bill], will turn crisis into a catastrophe," Obama said, sounding a lot more like his predecessor than the candidate of hope and change. Even as he sees the potential for a near-term rally, Todd Harrison, CEO of Minyanville.com, says Obama is understandably worried about the risk of Congressional inaction. "He's right there's potential for this [economy] to get much worse and manifest itself not only financially, but through societal unrest," he says.
Geithner plans to unveil bailout plan Monday Treasury Secretary Timothy Geithner to unveil plan to overhaul $700 billion bailout on Monday Treasury Secretary Timothy Geithner and other top officials are putting the finishing touches on a plan to overhaul the government's $700 billion financial rescue program. A Treasury official said Geithner will deliver a speech on Monday outlining the new plan. But Treasury officials would not comment on reports Thursday that changes were being considered to the current accounting standard that requires banks to carry assets such as mortgage-backed securities on their books at fair value, a process known as "mark to market." Critics of this process contend that it has made the current financial crisis worse by forcing banks to slash the value of assets that are currently depressed because of market conditions. Treasury officials said the administration's plan was not yet complete and would be revealed in Geithner's speech in Washington next week.
Bernanke thinks he can use inflation to lower unemployment By all accounts Bernanke is a thoroughly decent man and a smart one to boot. But I fear what most of his circle would call smart others would biting call "book smart", a disparaging term for someone who has mastered the requisite texts but not the art of thinking. This melancholy conclusion was delivered by the revelation that he still clings to the discredited Phillips curve.
In-Depth Look - Central Bank Interest Rate Decisions
Infighting begins within Obama’s team We are barely two weeks into Barack Obama’s tenure and reports are surfacing everywhere that his “team of rivals” is at each other’s throat. President Obama had said just after the election that he was looking to pull together the best and the brightest. However, this strategy comes with a cost as the outsized egos assembled in his team are starting to jockey for political position. A well-informed reader alerted me to the latest and most depressing story, which involves former Harvard President and Treasury Secretary Larry Summers shunting aside legendary ex-Fed Chairman Paul Volcker. Summers is trying to exclude Volcker, who is legendary for righting the U.S. economy after the stagflation of the 1970s. If he succeeds in sidelining Volcker, we will be the worse for it.
Volcker accuses Obama’s National Economic Council Director - and consummate financial insider - Lawrence Summers for slowing down the effort to organize a panel of outside advisers on the crisis
Warren has discovered that Paulson overpaid by $78 billion dollars for toxic assets purchased from financial institutions
And Stiglitz writes: "Perhaps the entire strategy is flawed? Perhaps what is needed is a fundamental rethinking. The Paulson-Bernanke-Geithner strategy was ... based on a failure to grasp some of the fundamental changes in our financial sector since the Great Depression, and even in the last two decades."
Regulator Says Bailout Fund Is Misleading the Public Watchdogs monitoring the government's bank bailout called for an overhaul Thursday, with one accusing those running it of misleading the public, while senators slammed the program as chaotic and poorly managed. Under the $700 billion program meant to stabilize the financial system, the Treasury Department has so far spent nearly $300 billion to bolster financial institutions and automakers in exchange for preferred shares and warrants. But in buying those securities, Henry M. Paulson Jr., then the Treasury secretary, misled the public about how it was going to price them, said Elizabeth Warren, a Harvard law professor and head of an oversight panel for the bailout, known as the Troubled Asset Relief Program, or TARP.
Ron Paul's Statement on Federal Reserve Board Abolition Act Madame Speaker, I rise to introduce legislation to restore financial stability to America's economy by abolishing the Federal Reserve. Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people.
H.R.833 : To abolish the Board of Governors of the Federal Reserve System and the Federal reserve banks, to repeal the Federal Reserve Act, and for other purposes. Sponsor: Rep Paul, Ron [TX-14] (introduced 2/3/2009)
Peter Schiff: Stimulus Bill Will Lead to "Unmitigated Disaster" The fiscal stimulus bill being debated in Congress not only won't help the economy, it will make the recession much worse, says Peter Schiff, president of Euro Pacific Capital. Schiff scoffs at the notion the economic decline is starting to level off and concedes no government action means a "terrible" recession. But the path of increased government intervention will lead to "unmitigated disaster," says Schiff, who gained notoriety in 2007-08 for his prescient calls on the housing bubble and U.S. stocks. The problem, he says, is the government is trying to perpetuate a "phony economy" based on borrowing and spending. With the U.S. consumer tapped out, the government is "now taking on the mantle" of consumer of last resort, he continues, predicting the bond bubble will soon burst - if it hasn't already - ultimately leading to a collapse of the dollar and an "inflationary depression worse than anything any of us have ever seen."
Stimulus package gets hard sell President Obama and the Democrats are toughening their tone as public doubts grow over the economic stimulus plan, aggressively attacking Republicans in local ads and warning of the dire consequences if it fails. As Democratic leaders were struggling to whittle the Senate's $885 billion version, Vice President Joseph R. Biden Jr. was reminding Republicans what "the American people voted for" in an effort to boost support for the administration's plan and break the legislative impasse.
Obama Stresses Energy Independence in New Plan
Democrats push vote on huge stimulus plan U.S. Senate Majority Leader Harry Reid abruptly halted debate on a $937 billion rescue bill late on Thursday, but said lawmakers would resume work Friday and remained upbeat they would pass the measure demanded by President Barack Obama to combat a deepening recession. "I would hope that we could complete this legislation tomorrow (and) I'm cautiously optimistic," Reid told colleagues after a third day of considering amendments to the measure. Obama urged members of the Senate as well as the House of Representatives to resolve their differences and get a final bill to him within the next week or so. "If we do not move swiftly to sign the American Recovery and Reinvestment Act into law, an economy that is already in crisis will be faced with catastrophe," Obama said during a meeting with House Democrats in Williamsburg, Virginia.
GE Capital’s looming time bomb (see video) I do not think General Electric is AAA company — far from it. Their finance arm GE Capital is at the center of the private equity and asset-backed security time bombs that have yet to explode. And this makes the cash flow expected from GE Capital vulnerable because they are under-reserving. Translation: their financial results are artificially goosed by not reserving for likely losses.
Treasury overpaid for bank stocks Oversight panel chair says Treasury paid billions over market value . . . government watchdog group says the federal government overpaid for stocks and other assets from financial institutions under its $700 billion rescue program. The chairwoman of the Congressional Oversight Panel for the bailout funds told the Senate Banking committee Thursday that Treasury in 2008 paid $254 billion and received assets worth about $176 billion.
Bad news means bad news Frank Holmes at USFunds.com writes, "When it comes to the global economy, there's a huge surplus of bad news and there's a good chance that more is coming" - so much so that "Positive indicators are in short supply", which he qualifies by saying, "but there's a good chance that more of these are coming, too." One of these positives, he says, is that the current recession is now 13 months old, whereas the worst recessions since the Great Depression lasted only 16 months (and there were two of them: 1973-75 and 1981-82). Well, this is just the kind of technical-analysis thing that drives me crazy, and I was just getting ready to try and grab a little of the limelight and ream this guy out for using such technical-trading crap, when he obviously sees me coming down towards the podium.
The Jobs Number for January Could be Quite Bad, Much Worse than Expected The non-seasonally adjusted number could come in around -3,400,000 jobs. Luckily for the BLS January is the worst month for actuals, and therefore has the largest seasonality factor. The 'imaginary jobs' number will not be a significant factor, since January is also the month in which they adjust out many of the imaginary jobs they added in the last six months that are obviously non-existent.
Gold, diamond sales crash by 40% in Russia Even as diamond traders in Mumbai and Surat are struggling to keep their business afloat, the situation in Antwerp and Russia is not different. Antwerp, world headquarters of diamond rough trade, is feeling the pinch now with demand falling to unimaginable levels. Russia’s diamond trade is also suffering huge losses and there are not takers for diamonds now. It is a clear hint that during the time of crisis people have decided to say bye to luxuries. But, gold has still managed to stay afloat because of its investment safe haven tag. According to media reports, Russia is registering the biggest fall in diamond production in the world.
Dubai gold jewelry sales crash by 60 percent DUBAI: Dwindling property prices, daily reports of thousands of job losses and decline in tourist arrivals have adversely hit the gold sales in Dubai. Retail sales of gold and gold jewelry have crashed by as high as 60% in January despite the ongoing Dubai Shopping Festival. A sharp decline in the sales of gold has been reported by leading gold chains in Dubai, known as the City of Gold. Gold retailers such as Joy Alukkas, Damas, Pure Gold and Atlas Jewellery have launched several innovative promotions schemes and prizes to lift the sagging gold sales in Dubai.
Peter Schiff - Client is Pissed! - Friends down 30% - 50%
Trying to Help Financially Troubled Homeowners People seem to pass certain milestones on the road of financial desperation. First the unpaid bills pile up. Then the bank forecloses. Finally, they reach the end of the line: bankruptcy court. But now policy makers are talking about redrawing this map by putting the bankruptcy court before foreclosure to give people a chance to keep their homes. It has been done before, on a relatively small scale and with some success. In the midst of the farm crisis during the 1980s, Congress gave bankruptcy judges the power to reduce onerous farm loans to reflect a steep drop in land prices. The Obama administration and Congressional Democrats are pushing a similar idea to stem the swelling tide of home foreclosure. Yet a close look at the farm experience raises questions about how widespread any relief would be.
The Road to Bank Nationalization This week, seven major corporations announced major layoffs, adding 72,000 to the unemployed. At the same time, lending by the big banks fell. With falling demand for loans, it is little wonder that President Obama described the national economic situation as "worsening day by day." Clearly, we are heading into a deepening and severe recession that is spreading worldwide. As the reckless speculation of the major money center banks became clear in the second half of 2008, there was resistance to rescue efforts. However, the perceived wisdom was that these banks were too large to fail. Congress approved the $700 billion TARP to rescue them and the financial system. Now, there is growing demand by politicians for the banks to lend, in the face of falling loan demand. Clearly, a Democrat Congress is intent upon using Wall Street to dispense taxpayer funds to Main Street. This is socialism and strikes at the very heart of the 'American Way' of free enterprise.
Obama labor secretary-nominee faces tax questions U.S. President Barack Obama's pick for Labor secretary faced questions over her husband's unpaid business taxes on Thursday, the latest in a string of embarrassing tax revelations that have hampered Obama's efforts to seat a cabinet. A U.S. Senate panel delayed its vote on Labor Secretary-designate Hilda Solis after the newspaper USA Today reported that her husband paid about $6,400 on Wednesday to settle tax liens that had been outstanding against his business for as long as 16 years. The Senate Labor Committee's Democratic chairman and its top Republican made no mention of the USA Today report but said the vote was indefinitely delayed to "allow members additional time to review documentation submitted in support" of Solis, a Democratic member of the House of Representatives from California.
Parallels With the Great Depression What began early last year as a "credit crunch" and an "economic downturn" is now being characterized as a "long, severe recession." Once upon a time, such a crisis was known as a "depression" before Americans became squeamish about such stark language. As with our reluctant semantic retreat from "credit crunch" to "recession," the reality of another Great Depression will probably not be acknowledged until years after the fact. But America and the rest of the modern world, by doggedly pursuing the same mistaken policies of the 1920s and '30s, have made a full-blown depression - lasting years, not months, and featuring catastrophic failures in entire economic sectors along with chronic double-digit unemployment and monetary malaise - all but inevitable. In fact, the parallels between the run-up to the Great Depression and today's economic havoc are stunning.
Feds Release National Gang Threat Assessment According to the 2009 National Gang Threat Assessment released by the National Gang Intelligence Center (NGIC) and the National Drug Intelligence Center (NDIC), approximately one million gang members belonging to more than 20,000 gangs were criminally active in the U.S. as of September 2008. The assessment was developed through analysis of available federal, state, and local law enforcement information; 2008 NDIC National Drug Threat Survey (NDTS) data; and verified open source information such as material provided by the National Association of Chiefs of Police and the Fraternal Order of Police. "Gangs have long posed a threat to public safety, but as this study shows, gang activity is no longer merely a problem for urban areas. Gang members are increasingly moving to suburban America, bringing with them the potential for increased crime and violence," said Assistant Director Kenneth W. Kaiser, FBI Criminal Investigative Division.
THERE'S NOT ENOUGH GLOBAL INVESTMENTS President Barack Obama is stuck between a rock and a hard place on America's financial crisis, not to mention what used to be called the "Global War on Terror, beginning with Iraq and Afghanistan. Both are equal priorities for the U.S. Government and America's taxpayers. Obama already has gotten rid of the term "Global War on Terror." That changes nothing. We're still stuck with terrorists willing to blow up America the moment they get the green light from Osama bin Laden, who was responsible for the destruction of the symbolic World Trade Center twin towers on 9/11/01. These attacks on America cost our country several trillion dollars. That was the beginning. Where is the end? Vice President Joe Biden announced last year that the Obama Administration better be ready for another attack on America because President Obama is seen as a "weak" President when it comes to national defense. Obama already is dismantling the Defense Department. So much for protecting America's citizens and economic system!
Economy Shed 598,000 Jobs in January The United States lost almost 600,000 jobs last month and the unemployment rate rose to 7.6 percent, its highest level in more than 16 years, the Labor Department said Friday. It was the biggest monthly job loss since the economy tipped into a recession more than a year ago, and it was even worse than most forecasters had been predicting. In addition, the government revised the estimates for previous months to include another 400,000 job losses. For December, the government revised the job loss to 577,000 compared with an initial reading of 524,000. Over all, it said, the nation has lost 3.6 million jobs since it slipped into a recession in December 2007.
Pink slips stack up as recession drags on Worn down by a drawn-out recession, cost-cutting employers are laying off workers at an alarming clip and there's no end in sight. The Labor Department releases a report Friday expected to show that January was another cruel month for workers and companies. With employers in no mood to hire, the unemployment rate is expected to jump to 7.5 percent in January from 7.2 percent in December, according to economists' forecasts. If they are right, that would mark the highest jobless rate in 17 years. And after suffering heavy job losses last year, the country probably lost another 524,000 jobs month, getting the new year off to a rotten start. Some think the number of jobs reductions in January will be higher - 600,000 or 700,000.
Jobless claims hit '82 levels amid gloomy data Markets defy reports; Dow ends up 106 after early losses The number of Americans filing for jobless benefits for the first time surged unexpectedly to a seasonally adjusted 626,000 last week, the Labor Department reported Thursday - the highest level since October 1982. A separate labor report showed productivity rose at an annual rate of 3.2 percent in the final three months of last year, far above the 1.1 percent rise that economists had expected, reflecting the massive wave of layoffs that occurred during the fourth quarter. The Commerce Department said factory orders fell by 3.9 percent in December, a record fifth straight drop. And retailers reported another month of slumping sales in January.
Rising unemployment hits 98 percent of metro areas Metropolitan areas across the Southeast and Midwest are seeing some of the steepest increases in joblessness, stung by their dependence on factories serving the struggling housing and auto sectors. That is one of the key trends that emerges from a Labor Department report released Wednesday showing December unemployment rates rose in 98 percent of the country's largest metropolitan areas, compared with a year earlier. More than 100,000 job cuts have been announced since then by a wide range of industries, sparing few communities. The government's next monthly snapshot of nationwide unemployment is expected to show the January rate climbed to a 17-year high. "It used to be they'd at least take your application. They don't even do that any more," said Heather Allen of Elkhart, Ind., an area that had the biggest annual gain in its unemployment rate. "Places just aren't hiring."
Retail sales drop again in January Shoppers grappling with rising layoffs and shrinking retirement accounts dug deep into survival mode last month, leading to sharp January sales declines for many retailers. The poor results raised more concerns about the financial health of the industry. The malaise crossed the spectrum of retailing, from department stores to teen chains. Gap Inc., luxury retailer Saks Inc. and Children's Place Retail Stores Inc. were among those posting deeper-than-expected sales declines.
Factory Orders Fall Again With No Clear End in Sight Orders to factories fell for a record fifth month in December, closing out the worst year for American manufacturers since 2002. Analysts say the deepening recession will mean further weakness in coming months. The Commerce Department said Thursday that orders dropped by 3.9 percent in December, an even bigger decline than the 3 percent that economists had been expecting. The weakness was widespread with a range of industries, including autos, heavy machinery and computers, reporting big declines in demand. For all of 2008, factory orders rose 0.4 percent, the weakest showing since orders actually fell by 1.8 percent in 2002. Analysts are forecasting that manufacturers will continue to face hard times this year because of a deepening recession and weakness that has spread worldwide, cutting sharply into demand for exports.
Ford Said to Be in Talks to Sell Volvo Unit to Geely Ford Motor Co., seeking to raise cash to avoid a federal bailout, is in talks to sell its Volvo Car unit to China's Geely Automobile Holdings Ltd., according to three people familiar with the discussions. Ford probably will get less than the $6.4 billion it paid for Sweden-based Volvo in 1999, said one of the people, who declined to be identified because the preliminary talks are confidential. Ford has also approached China's Chery Automobile Co. and Chongqing Changan Automobile Co., the people said. Dearborn, Michigan-based Ford lost a record $14.6 billion last year and is trying to avoid asking for government loans to survive as U.S. auto sales plunge to the lowest level in almost 27 years. Geely founder Li Shufu, 45, may want to buy Ford's last European luxury brand after the addition of sedans to the Chinese automaker's range of low-cost compacts helped boost profit "significantly" last year.
Pay attention to this Legislation in the works! (2nd Amendment issue - read Text of H.R. 1022) Gun Law Update by Alan Korwin, Author Gun Laws of America Jan. 5, 2008 Gun-ban list proposed Slipping below the radar (or under the short-term memory cap), the Democrats have already leaked a gun-ban list, even under the Bush administration when they knew full well it had no chance of passage (HR 1022, 110th Congress). It serves as a framework for the new list the Brady's plan to introduce shortly. " http://www.govtrack.us/congress/billtext.xpd?bill=h110-1022
HOUSE MEMBER SAYS RESOLUTION ON 10TH AMENDMENT ISN’T ABOUT PARTISANSHIP An Oklahoma lawmaker wants to put the federal government on notice to stop doing things that he says are abusing its authority over the state. With a Republican-controlled Legislature set to convene next month for the first time in state history, chances are good the measure will pass, said Rep. Charles Key. A similar resolution failed to advance last year. Key, R-Oklahoma City, said he thinks many federal laws violate the 10th Amendment of the U.S. Constitution, which states the powers not delegated to the federal government “are reserved to the states respectively, or to the people.” The Constitution lists about 20 duties required of the federal government.
Oklahoma Declares Sovereignty Under Tenth Amendment A Joint Resolution claiming sovereignty under the Tenth Amendment to the Constitution of the United States over certain powers; serving notice to the federal government to cease and desist certain mandates; and directing distribution.
Tenth Amendment United States Constitution Tenth Amendment states that any power not granted to the federal government belongs to the states or to the people.
The Tenth Amendment is being exercised in New Hampshire and Arizona state legislatures. 10th Amendment — The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
AZ HCR 2024 A CONCURRENT RESOLUTION CLAIMING SOVEREIGNTY UNDER THE TENTH AMENDMENT TO THE CONSTITUTION OF THE UNITED STATES OVER CERTAIN POWERS, SERVING NOTICE TO THE FEDERAL GOVERNMENT TO CEASE AND DESIST CERTAIN MANDATES AND PROVIDING THAT CERTAIN FEDERAL LEGISLATION BE PROHIBITED OR REPEALED. . . .
From our friends down under . . . Wanted: A new economic theory Now that Prime Minister Kevin Rudd has hailed in his "Monthly' essay a new political era of ''social capitalism'' and embarked on another stimulus package it merely remains to find an economic theory to accompany it. Economics has failed manifestly to see the global financial crisis coming. Only those once derided as doomsayers and crackpots were anywhere near the mark. An entire generation of richly-remunerated experts got it wrong, once again. Even now there is a reluctance to accept that the Global Financial Crisis is, as much as anything, just one big bad property bust. When the economy was veering towards its last meaningful recession in this country in 1991 - another property bust - the pundits were collectively predicting growth of 2%-plus. The IMF, OECD, market economists, government forecasters, you name it. They were 2% too high. There was recession. Le plus ca change. Capitalism has always had a single point of failure: the interaction of real estate markets and finance.
Japan Says Clinton's Visit Shows Country's Importance to U.S. Secretary of State Hillary Clinton's visit to Tokyo as her first stop on a four-nation tour this month shows the importance the U.S. places on ties with Asia's biggest economy, Japan's top government spokesman said. In her first trip abroad as President Barack Obama's top diplomat, Clinton will spend a week going to Tokyo, Jakarta, Seoul and Beijing beginning Feb. 15. The agenda will focus on efforts to halt North Korea's nuclear-arms program, the global financial crisis, security and climate change, State Department spokesman Robert Wood said in Washington yesterday. "Making Japan the first overseas destination is meaningful and a concrete demonstration of the importance that President Obama and the secretary attach to the Japan-U.S. alliance," Chief Cabinet Secretary Takeo Kawamura said today in Tokyo.
Japan on the brink of the abyss? The economic outlook in Japan is very grim, as brief overviews below [1] indicate. Right now, Japan has the worst growth outlook in Asia. That is a surprising fact, if one recalls that this is a country presumably dusting itself off from the collapse of its own bubble nearly two decades ago. After such a long period of economic crisis, Japan should be renovated and ready to thrive. Instead, it may be in worse shape than even the United States (though clearly not Iceland and much of Eastern Europe). Exports plunged a record 35% annually in December, while the industrial production figures for November revealed a record 8.9% month-over-month drop.
Obama admin. seeks treaty to cut US, Russia nukes The Obama administration, reversing the Bush administration's limited interest in nuclear disarmament, is gearing up for early negotiations with Russia on a new treaty that would sharply reduce stockpiles of nuclear warheads. Secretary of State Hillary Rodham Clinton has notified Congress and her staff that she intends to get started quickly on talks with the Russians, who have voiced interest in recent weeks in settling on a new treaty calling for cutbacks in arsenals on both sides. The 1991 Strategic Arms Reduction Treaty expires at the end of the year. It limited the United States and Russia to 6,000 nuclear warheads each. The American stockpile is believed to be about 2,300 warheads, and the Russians' even lower.
MOSCOW REACTS TO US BUILDUP IN AFGHANISTAN Moscow has correctly assessed that the announced Obama troop buildup in Afghanistan has no relevance to the stated aim of combatting the 'Taliban', but rather with a new attempt by the Pentagon strategists to encircle both Russia and China on Eurasia in order to retain US global military dominance. It is not waiting for a new policy from Washington. Rather Russia is acting to secure its perimeter in Central Asia through a series of calculated geopolitical moves reminiscent of the famous Great Game of more than a Century ago. The stakes in this geopolitical power game could not be higher-the issue of world war or peace in the coming decade. Secretary of Defense Robert Gates and Joint Chiefs of Staff chairman Admiral Mike Mullen are asking Obama to double US troop presence in Afghanistan. Both Gates and Mullen said that while they're thinking about the war in Afghanistan in terms of a 3-5 year time frame, their immediate goals are 'unclear.'
The escalating war of the summits Earlier this week, nine Arab foreign ministers met in Abu Dhabi. In attendance were the representatives of the UAE, Egypt, Saudi Arabia, Morocco, the (West Bank) Palestinian Authority, Jordan, Yemen, Bahrain and Tunisia. The gathering was officially held to support Egyptian efforts to broker a cease-fire between Israel and Hamas-controlled Gaza. Its underlying, more significant focus was to bring together Arab states concerned at Iran's growing attempts to gain influence in the Arab world. The gathering and some of the remarks made at it offered the latest evidence of the emergence of a new Middle East Cold War as the defining local strategic pattern. This emergence is of real significance, though it neither constitutes nor heralds a deep change in the prevailing political culture of the region.
The contest for global domination A long succession of post-World War II United States presidents, starting with Harry S Truman and ending with George W Bush, has presided over the strategic interests of the West in an epic match for domination of the globe, a grand contest pitting the forces of US-style liberal capitalism and liberal democracy against the post-World War II scourges of totalitarianism and communism, and now, in the post-Soviet era, against authoritarianism ("sovereign democracy") and Eastern-style statism ("managed capitalism"). Until the collapse of the Soviet Union circa 1989-1991, the contest was mostly a draw, with neither side emerging in the undisputed lead. When the West did emerge in the clear lead in 1991, it was wrongly assumed that the epic match was over - it most certainly wasn't. Global developments, especially since George W Bush took office in 2001, proved the epic match over global domination continued to be played out between the forces of East and West, with the weakened and fractured East obliged to regroup, and to radically adapt its approach to its much stronger Western opponent, and to refine and modify its fundamental strategies in the enduring quest for global domination.
US dilemma as Iran's nuclear file reopens Amid growing momentum for direct United States-Iran dialogue, the new US administration of President Barack Obama is poised to press ahead with the multilateral approach as well in light of the meeting of the "Iran Six" nations that was due to begin in Frankfurt, Germany, on Wednesday, to discuss the Iranian nuclear standoff. At the same time, Iranian Foreign Minister Manouchehr Mottaki, in an exclusive interview with the Japanese television network NHK, has stated that Iran needs "greater details regarding American intentions". By all indications, Iran is not alone and the US's European allies in particular, some of whom are nervous about a separate US-Iran deal, are also in dire need of better education about Washington's "new strategy" toward Iran and the broader Middle East.
Moscow, Tehran force the US's hand It may seem there could be nothing in common between the blowing up of a bridge in the Khyber, the usage of an air base nestling in the foothills of the Pamirs and the launch of a 60-pound (37.2 kilogram) satellite into the night sky that will circle the Earth 14 times a day. But band them together and they trigger the political and diplomatic equivalent of what is known in the game of chess as zwischenzug, which means an intermediate move that improves a player's position. Persians, who invented chess, would have mastery over zwischenzug. Iranian Foreign Ministry spokesman Hassan Qashqavi said in Tehran on Wednesday, "Iran has no plans to stop its nuclear activity. At its forthcoming meeting, the 'Iran Six' should draw up a logical approach and accept the fact that Iran is a nuclear state." The Taliban don't play chess
GE head warns against salary caps, protectionism GE head knocks salary caps for heads of banks that take taxpayer money, "Buy American" drive General Electric Co.'s chief executive warned Thursday that capping the salaries of bank executives whose companies take taxpayer bailout money undermines the government rescue effort. Jeff Immelt, who has run the financial services, media and infrastructure conglomerate since 2001, also said "Buy America" provisions in the nearly $1 trillion federal stimulus bill jeopardizes U.S. exports. "We're against the 'Buy America' clause," he said at a breakfast meeting. "It hurts trade and General Electric is a big net exporter. There is a danger of protectionism in this cycle." Immelt's warning against executive salary caps came just hours after the administration issued a rule requiring banks that receive "exceptional assistance" from the government to cap salaries, including cash bonuses, at $500,000 for senior executives.
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Thurs 02.05.2009
Merrill Lynch Kisses Up to Gold, Predicts It Will Hit $1,500 thought investment banks were supposed to hate gold, but on Tuesday we had the CIO of Merrill Lynch telling the world that the price of gold is going up and going up fast. They quote him as fearing that the price could reach $1,500 within the next 12-15 months as people seek a safe haven asset. He further states that gold is still affordable at current levels, especially considering declining production and supply levels.
Make It or Break It Week for Gold The U.S. dollar's developed some spine this week and, not so coincidentally, seems to have blunted gold's advance. Not that the dollar is the only roadblock in gold's path, mind you. The yellow metal, in fact, is at a technical crossroads now. Gold's medium-term trend - that is, the arc scribed on the monthly and weekly charts - is down since the peak reached in March 2008. The near-term chart, however, shows a rather nicely developing rally from gold's October lows. The rally, however, could stall if the nearby COMEX contract can't close out the week above $931. Even then, there's resistance at $939.60 to overcome.
The Long-Run Value of Gold, Part II "Gold-backed money retained its real value for 350 years in the United States and Great Britain. It's only just clawed back to that level for investors today..." BY THE TIME the War of the Spanish Succession was finished in 1715, the French King - who admitted that he "loved war too much" - owed the equivalent of £300 million. Across the Channel, Great Britain owed only £49 million. Which might have looked a little like financial victory. But then, the United Kingdom's population was only one-third the size of the French. And those debts - priced in "hard money" weights of gold or silver, both in even tighter supply than they are today - were almost 20 times the sum England had defaulted on four decades before. But hey, that's inflation for you! Or more properly, that's inflation as it's commonly understood - an absolute rise in the price level. In this case, the cost of running the state and murdering Frenchmen.
Gold is a Safe-Haven amid Global Depression "If you want to continue to be the slaves of bankers, and pay the cost of your own slavery, then let bankers continue to create money and control credit," warned Sir Josiah Stamp, former chief of the Bank of England in 1927. Indeed, the world economy is now held hostage by an elite banking cartel, whose reckless pursuit of speculation and bloated profits, has precipitated a breakdown of the global financial system, and is plunging the world towards a "Great Depression."
The $4 Trillion Hallucination Driving Gold This morning, the United States Treasury Department issued a press release that constituted the Treasury Borrowing Advisory Committee's (TBAC) report to the Secretary of the Treasury. TBAC membership is derived from senior members of the Securities Industry and Financial Markets Association. These would be the proverbial foxes advising the chickens - a favorite Midas Letter theme. This group forms the consulting connection between the U.S. Treasury and the investment industry who is tasked with finding investors for U.S. debt so that the behemoth debt machine can continue its primary function of maintaining the United States standard of living at the expense of foreign treasuries.
Ron Paul: "We Can No Longer Afford This Monsterous Government!"
Gold Steadies from "Healthy Correction" as World Stock Markets Shrug Off Worsening Data POT GOLD-BULLION PRICES traded in a tight $9 range early Wednesday in London, holding steady for US investors even as the Dollar rose once again vs. the European single currency. World stock markets rose while crude oil pushed above $41 per barrel. US Treasuries also gained, erasing this week's losses so far and pushing yields on the 10-year back down to 2.83%. New data showed private-sector US payrolls shrinking by 522,000 last month. Official job-loss figures are due Friday. Tomorrow will bring widely-expected interest-rate cuts from the Bank of England and European Central Bank (ECB). "Gold tested the upside during London hours yesterday," says today's note from Mitsui, the London metals dealer, "but it only saw liquidation once New York came in. "Support was found at $890. The major technical support lies at $880 and it seems physical support should also pick up at this level."
Treasury in plans for record debt sale The US Treasury on Wednesday opened the floodgates of government bond issuance, revealing plans for a record debt sale in February and more frequent auctions in the months to come. The announcement came amid growing fears about US government deficits and sent the yield on the benchmark 10-year Treasury note rising to 2.95 per cent, up from just over 2 per cent at the end of December. The rise in Treasury yields has been pushing mortgage rates higher, complicating efforts to revive the economy. The US Federal Reserve said last week it was "prepared to" buy Treasuries if that would be a "particularly effective" way of reducing private borrowing costs. "The Fed has to be troubled by the fact that mortgage rates have been rising and the buying of Treasuries by the Fed may come sooner than the market expects," said William O'Donnell, UBS strategist.
The Federal Reserve's Self-Imposed Dilemma The Federal Reserve System faces a dilemma of its own creation: the doubling of the monetary base. You can see it here. The only thing that is keeping this from creating mass inflation is the decision of commercial bankers to deposit the bulk of this increase with the Federal Reserve. The banks are not lending out this money. Neither is the FED. This money does not legally belong to the FED. President Obama has said that banks that receive money from the Federal government as part of the bailout operation are going to be required to lend money. As to how this is going to be enforced, he did not say. Rep. Barney Frank insists that there will be specific legislation mandating that banks lend money to the public.
Max Keiser about the Dollar; Bank nationalization based upon cronyism - Feb 4, 2009 ..hot on the heels of economic statistics around the world indicated an international financial catastrophe.
Goldman Sachs wants out of TARP It's hard for Wall Street's masters of the universe to take orders from Washington policymakers since you're not really a master of the universe if someone else can tell you what to do, especially if some politician can dictate the size of your bonus. So Goldman Sachs evidently aims to repay the TARP bailout money it received, according to the Wall Street Journal. Doing that, coincidentally, would let Goldman pay its executives whatever it wants.
Bank of America tumbles on nationalization worries Bank of America Corp shares fell below $5 for the first time since 1990 on speculation that spiraling losses at newly acquired Merrill Lynch & Co might lead to government control of the largest U.S. bank, wiping out shareholders. Shares fell more than 11 percent, marking the fifth straight decline, as rumors persisted that mounting losses on mortgages and corporate loans might lead to the nationalization of the Charlotte, North Carolina, lender, or even the ouster of Chief Executive Kenneth Lewis. Bank of America and Merrill Lynch ended 2008 with $2.49 trillion of assets. "Until we get some clarity that even the largest banks will remain in shareholder hands, this downward spiral is just going to continue," said Nancy Bush, an analyst with NAB Research.
Volcker Suggests Ways to Refine Bank Regulations Paul A. Volcker, the former Federal Reserve chairman who is leading President Obama's Economic Recovery Advisory Board, called Wednesday for fundamental changes in the regulation of financial instruments and institutions, especially of those firms whose collapse can put the financial system at risk. In testimony before the Senate Banking committee, Mr. Volcker called for the end of the mortgage lending giants Fannie Mae and Freddie Mac as hybrid public-private enterprises, saying instead that Washington should assist borrowers through "clearly designated government agencies." He also called for the registration of hedge and equity funds of any substantial size, as well as periodic reporting and disclosure from such firms.
Extent of the Economic Crisis - Stephen Roach Stephen S. Roach, Managing Director and Chief Economist for Morgan Stanley, summarizes the grim status of the worldwide economy. "This will most likely be the first year since the end of WWII when world GDP actually contracts," he cautions. Expects a Japanese-like adjustment and we're only 20% into the crisis
2009's House of Pain: Consumer Loans and Credit Card Debt JPMorgan's CEO, Jamie Dimon is not too optimistic about 2009 - and, understandably so. He's right in the middle of the financial tsunami. After a year of re-shaping the industry, there is more pain ahead for financial institutions, as consumer loans start to kick the financial landscape's collective butt. . . . This is clearly not good news for institutions who have been trying to weather the year-long storm. They've faced waves of a credit crisis, subprime, and leverage. Now, a whole new tidal wave is about to hit their shores: consumer loans. The economic malaise that has plagued Wall Street for some time now has also been hitting Main Street. Consumers are not only defaulting on their mortgages, but also on their car loans and credit cards.
Signs of the Apocalypse in Markets? Macro Man is back in the saddle this morning and somewhat bemused to see that the world has gone China-recovery mad. Both the comment section of yesterday's post and his email inbox this morning are crammed full of observations about the bottoming of Chinese equities and the manufacturing PMI. While it is factually true that both have bounced, Macro Man is withholding judgment. After all, the Shanghai composite is closer to its recent lows than the US homebuilders index, and he doesn't see anyone falling over themselves to call a recovery in that industry. More importantly, we should all remember that things don't move in a straight line forever, and China has cranked up a large infrastructure stimulus. Indeed, there will be a period of improved growth in the US this year...just as there was last year.
Joseph Stiglitz - "Market Fundamentalism Is Dead" Nobel Prize-winning economist Joseph Stiglitz criticizes American financial leadership in the run-up to the current economic crisis, and declares free-market fundamentalism "dead" as a guiding principle of the U.S. economy.
Gordon Brown suggests world heading for a 'depression' Gordon Brown appeared to acknowledge for the first time today that the world economy was heading for a 1930s-style “depression”. Mr Brown stumbled slightly over his words at Commons question time, just a week after admitting that Britain was facing a “deep” recession. As the financial gloom deepens, he told the Tory leader David Cameron today: “We should agree, as a world, on a monetary and fiscal stimulus that will take the world out of depression.”
A Modest Proposal from Joe Stiglitz "..."The government should allow every distressed bank to go bankrupt and set up a fresh banking system under temporary state control rather than cripple the country by propping up a corrupt edifice." -- Joseph Stiglitz, the Nobel Prize-winning economist This is the procedure, that is what we do with insolvent banks. That is what the FDIC is for. We don't prop up the bad banks. The regulators help them become solvent through a resolution and restructuring of their bad debt, and then either sell them, sell their assets independently, or allow them to re-emerge as good banks once they are solvent
McCain on Stimulus: ‘No Bill Is Better Than This Bill’ Former Republican presidential candidate Sen. John McCain (R-Ariz.) said Wednesday that the president’s economic stimulus bill is unacceptable to Senate Republicans. “’No bill’ is better than this bill,” McCain told CNSNews.com just outside the Senate chamber. When asked if refundable tax credits – in which every worker would receive a $500 (individual) check from the government – could be removed from the bill as it moves through the Senate, McCain said he was not sure. “I don’t know,” the former GOP presidential nominee said. “We think payroll tax cuts, according to our economists, are the most important way to go. We think that a combination of payroll tax cuts, appreciation, and other job creation tax cuts, are the most valuable.”
Obama’s Top Economic Adviser Conceded ‘Considerable Uncertainty’ About Stimulus Jobs Claims The largest selling point to President Barack Obama’s economic stimulus bill is the claim that it will create or save at least 3 million jobs. But the source for that number is a report produced by Obama’s top economic adviser during the transition period in early January, which repeatedly stated that the jobs estimate carried “considerable uncertainty.” The estimate for the number of jobs the stimulus would create, the report said, is based on the “rule of thumb that a 1 percent increase in GDP (gross domestic product) corresponds to an increase in employment of approximately 1 million jobs or about three-quarters of a percent.”
Joseph Stiglitz - Problems with GDP as an Economic Barometer Joseph Stiglitz proposes alternatives to Gross Domestic Product (GDP) as a measurement of national economic success.
Demanding 'American' in stimulus gets tricky What makes a product American? Last week the U.S. House of Representatives voted to require that public works projects financed by the more-than-$800 billion stimulus bill use only American iron and steel, but the Senate approved an amendment late on Wednesday that such provisions should be "applied in a manner consistent with U.S. obligations under international agreements. Much of the material needed to overhaul U.S. infrastructure or develop alternative energy is produced by foreign-owned companies in American factories, and many foreign companies are planning to increase their production in the United States. Despite the rapidly increasing chatter about the threat of trade protectionism, many non-U.S. businesses are gearing up to take a piece of the administration's huge stimulus investment. Some are hiring more workers in the United States. Others - from Germany, France, Japan and South Korea - are building new U.S. factories to make solar cells, lithium batteries, turbines or subway trains.
Has Obama shut down the party on Wall Street? The party may finally be over for Wall Street CEOs. After years of increasingly bloated pay packages, top executives could soon see their lavish lifestyles crimped as Barack Obama, the U.S. President, unveiled plans Wednesday to crack down on compensation. Critics were quick to slam his suggestions, arguing enforced pay cuts would lead to an exodus of capable executives and make it tough for companies to recruit and retain top talent. "No one goes into Wall Street to save the world," Meredith Whitney, a bank industry analyst for Oppenheimer & Co., told Bloomberg Television. "Compensation is the motivating factor." Top executives at companies receiving "exceptional" bailout funds from the U.S. government will have salaries capped at US$500,000, under the new rules outlined by Mr. Obama and Timothy Geithner, the Treasury Secretary.
'Failed' Wall Street Forces Biggest Rewrite of Rules Camden Fine's nightmare is a Bank of America or Citibank branch on every corner. "Do we really want to create more cycloptic monsters stomping around the country ruining people's lives?" asks Fine, president of the Independent Community Bankers of America. He says he fears new U.S. financial regulation might include a merger of agencies favoring big banks over his 5,000 members. Robert Greifeld, on the other hand, sees his Nasdaq OMX Group benefiting if a restructuring of Wall Street's rules steers more business to the exchange's clearinghouse for interest-rate swaps. That would also reduce profits for private derivative traders, said Greifeld, the group's chief executive officer.
Financial Crisis, US Economy & New Administration (2hrs 04min) James K. Galbraith discusses the history leading up to the recent economic collapse, and suggests how the American government can get back on its feet. Then, a panel of leading experts headed by Joseph Stiglitz tackles the issue, and discuss the challenges facing the Obama administration in managing the financial crisis. They argue that its implications run well beyond the US economy to concerns about international security.
Stimulus Bill Gets Housing Tax Perk GOP Senators Sought Provision Seeking to jump-start the housing market, the Senate added new tax relief for home buyers to its $900 billion economic stimulus bill yesterday as the legislation moved toward a final vote. The amendment, offered by Sen. Johnny Isakson (R-Ga.), represents a significant victory for Republicans. GOP lawmakers have complained that the package includes few of their priorities for easing the economic crisis, including more help for the housing sector, which has been devastated by foreclosures and the frozen credit market.
U.S. Senate approves tax break for homebuyers he Senate on Wednesday voted to expand the economic stimulus package with a tax credit for homebuyers of up to $15,000, a provision championed by Republicans as addressing a root cause of the recession. The vote to add the tax credit, at a cost of about $18.5 billion, came as Senate leaders seemed to be finalizing their negotiations, with moderate lawmakers in both parties pushing to reduce the overall cost of the $900 billion stimulus measure and to focus it more tightly on provisions that will quickly spur spending and create jobs. The vote came as President Barack Obama met with centrist lawmakers to address concerns about the package.
Recession: glimmers of hope? The first glimmers of hope are starting to emerge across the world. The pace of economic decline is slowing. Housing sales are picking up, even if prices are falling. Credit markets have begun to thaw. This is the time-honoured pattern expected to be seen when the downward spiral burns itself out and the cycle starts, very slowly, to turn, helped this time by an unprecedented global monetary and fiscal blitz. But it may equally be a false dawn. The Baltic Dry Index measuring freight rates for iron ore and other bulk goods has been creeping up for two months after crashing 94pc in the worst fall in shipping history. Copper prices are also edging up after plunging by two-thirds from their June peak. So are lumber prices.
Pelosi: '500 million Americans' losing jobs House speaker makes big goof on how bad economy really is The economy may be bad, but if you listen to House Speaker Nancy Pelosi, it's worse than is even statistically possible. While answering a recent question about the speed of passing an economic recovery package, the California Democrat stated, "500 million Americans lose their jobs. I don't think we can go fast enough to stop that." Obviously, Pelosi misspoke, as the total population of the United States is only about 305 million.
Nancy Pelosi: Huh? . . . how many job losses?? Nancy claims that we lose 500 million American jobs each month we don't pass her $1 trillion pork barrel spending boondoggle.
Credit card delinquencies at record high US credit card delinquencies hit a record high in January, and further deterioration is likely as the economy slows down and unemployment rises, Fitch Ratings says. Payments at least 60 days late rose almost half a percentage point last month to a record 3.75 per cent, said Fitch. Credit card lenders also wrote off loans to delinquent borrowers at close to record levels, and such "charge-offs" were expected to breach records in the coming months. Michael Dean, managing director at Fitch, said: "US consumers continue to struggle in the face of mounting pressures on multiple fronts from employment to housing to net worth." Late payments on credit cards crept higher throughout 2008, said Fitch, but signs of borrower stress rose in the fourth quarter as late payments surged by 18 per cent. Charge-off rates in January were 40 per cent higher than a year ago at 7.5 per cent and were expected to approach 9 per cent during the second half of 2009.
Michigan Sheriff Halts Foreclosure Sales In recent months, 300 to 400 foreclosed homes come up for sale each week in Michigan’s Wayne County. And as of Monday, that will no longer be the case. “Today I will be stopping all mortgage foreclosure sales in Wayne County, beginning with the sale that was scheduled for this Wednesday,” said Wayne County Sheriff Warren Evans in a statement earlier this week. While some experts question Evans’ authority to enact such a measure, the sheriff argued that he has the power and obligation, under the Troubled Asset Relief Program — which according to Evans, trumps state law — to halt foreclosure sales until “efforts to modify the mortgages of homes covered by TARP have been exhausted.” Because once a foreclosure sale is complete, homeowners lose their rights to the property. Tricia Raymond, a foreclosure expert and buyer’s agent in Troy, Mich., told the Detroit Free Press that she doubted the effectiveness of the sheriff’s proposal given the high unemployment rate in Michigan. “It’s one thing to work something out with someone, but if they don’t have a job there’s not anything to work out,” Raymond said.
Joseph Stiglitz - Bail Out Homeowners, Not Banks Economist Joseph Stiglitz argues that the U.S. government should address the mortgage crisis by providing aid directly to homeowners, rather than to the financial institutions holding their mortgages.
Full version - 51min 45 sec.
Bailed-Out Bank of America Sells Company Airplanes Bank of America Corp. said Wednesday it is selling some of its corporate aircraft as the bank looks to scale back costs. The move comes as many financial firms are giving up private jet travel as scrutiny mounts over lavish spending after the companies received billions of dollars in rescue funds. Since October, Charlotte-based Bank of America has received $45 billion in government assistance, including a $20 billion injection last month to help with its troubled Merrill Lynch & Co. acquisition. "As part of an ongoing cost reduction effort we have been scaling back on our use of corporate aircraft including selling three aircraft we own and the Merrill Lynch helicopter," Bank of America spokesman Scott Silvestri said.
House Passes Kids' Health Insurance Bill The House overwhelmingly approved a bill extending health coverage to 4 million uninsured children, giving President Barack Obama a much-needed win on health care and taking a first step toward his promise of universal coverage. The Democratic-controlled House passed the bill 290-135 on Wednesday, with 40 Republicans backing it. Obama plans to sign it into law later in the day. The bill calls for spending an additional $32.8 billion on the State Children's Health Insurance Program. Lawmakers generated that revenue through a much higher federal tobacco tax. "Unemployment keeps rising and people are going from worried to scared," Rep. Rosa DeLauro, D-Conn., said during House debate on the legislation. "At such a time, it is our most basic economic and moral responsibility to provide health care to the most vulnerable among us."
Marc Faber: on global economic slump and collapse in credit and asset markets; recovery will take years.
Hudson's Bay Company to cut 1,000 jobs Department store chain Hudson's Bay Co. is laying off 1,000 employees in the latest sign that a North American retail slowdown is taking a firmer hold in Canada. The job cuts, equivalent to 5% of the veteran retailer's full-time work force, will affect employees in accounting, IT and logistics and will result in a reduction of $150-million in operating expenses in 2009, the retailer said yesterday. The move is partly a response to the troubled economy and also relates to a corporate restructuring announced last month aimed at eliminating duplication in the back offices of its banners, said Jeff Sherman, chief Hudson's Bay Trading Co., which includes the Canadian chains the Bay, Zellers, Home Outfitters and Fields and U.S. department store Lord & Taylor. With more than 600 stores across the country, HBC employs 60,000 workers in Canada.
Hit Hard, Panasonic To Cut 15,000 Jobs (5% of Workforce) Panasonic said on Wednesday that it was shedding 15,000 jobs, the second significant layoff in Japan’s electronics industry in less than a week. It was the latest example of how Japanese companies, exporters in particular, were scrambling to cut costs as demand evaporates. Panasonic, along with Mitsubishi Motors and Mazda, also joined the rapidly lengthening list of companies to sharply revise their full-year outlooks Wednesday, with Panasonic now projecting a net loss of 380 billion yen or $4.2 billion for the year ending March 31, rather than the 30 billion yen profit it forecast on Nov. 27. Mitsubishi expects a net loss of 60 billion yen and Mazda 13 billion.
Ford Said to Be in Talks to Sell Volvo Unit to China's Geely Ford Motor Co., seeking to raise cash to avoid a federal bailout, is in preliminary talks to sell its Volvo Cars unit to Geely Automobile Holdings Ltd., according to three people familiar with the discussions. Ford will likely get less than the $6.4 billion it paid for Volvo in 1999, said one of the people, who declined to be identified because the talks are ongoing. Ford has also approached Chery Automobile Co. and Chongqing Changan Automobile Co., the people said. Dearborn, Michigan-based Ford lost a record $14.6 billion last year and is trying to avoid asking for government loans to survive as U.S. auto sales plunge to the lowest level in almost 27 years. A purchase of Ford's last European luxury brand would help Geely's founder Li Shufu meet his ambition of overseas expansion, even as the Swedish unit's sales plummet.
Clean-Coal Debate Pits Al Gore's Group Against Obama, Peabody Former U.S. Vice President Al Gore and his Alliance for Climate Protection say clean-coal technology is a fantasy. Peabody Energy Corp., the biggest U.S. coal producer, says another prominent Democrat has pledged to make the technology a reality: President Barack Obama. The Gore-Obama split illustrates a growing debate in the U.S. as the new president attempts to deliver on his promise to reduce carbon dioxide emissions in the country 80 percent by 2050. Depending on who's speaking, coal is either the villain or part of the solution.
Is there sinister plot to squelch talk radio? GOP lawmaker thrashes 'Fairness Doctrine' as 'government control over political views' Despite the absence of any action pending to re-enact the so-called "Fairness Doctrine," congressional Republicans have nonetheless introduced legislation to prevent its passage, insisting that Democrats are advancing a quiet agenda to silence conservative talk radio. Whether Americans realize it or not, say Republican lawmakers, "Free speech is under attack." For their part, several Democrats have denied there's any attempt underway to reestablish the "Fairness Doctine," insisting the GOP is trumping up paranoia that amounts to "much ado about nothing." So which is it? In 1949 the Federal Communications Commission adopted a policy that required broadcasters to devote airtime to the public interest and to air opposing viewpoints when discussing controversial and political issues. The FCC abandoned the policy in 1987, paving the way for talk radio to explode from fewer than 150 stations nationwide to more than 3,000.
Just in case you're not yet disturbed with the news, this will make you feel a just little more than uncomfortable, but if it proves to be true, pay attention . . . . The First Time I Heard Of Barack . . . . . "You Americans always like to think that you have the perfect government and your people are always so perfect. Well then, why haven't you had a woman president by now? You had a chance to vote for a woman vice-president and you didn't do it." . . . . "What if I told you that you will have a black president very soon and he will be a Communist?" . . . . So, what does this conversation from 1992 prove? Well, it's definitely anecdotal. It doesn't prove that Obama has had Soviet Communist training nor that he was groomed to be the first black American president, but it does show one thing that I think is very important. It shows that Soviet Russian Communists knew of Barack from a very early date. It also shows that they truly believed among themselves that he was raised and groomed Communist to pave the way for their future. This report on Barack came personally to me from one of them long before America knew he existed. [Companion article by Constance Cumbey, author and attorney ]
Kenyan Ambassador admits Obama was born there Birthplace "Already Well Known"
Watching Our Rulers Destroy Our World Our rulers are destroying the economy. Not little by little, as they usually do, but in huge swaths. Each great assault on the free market, whether it be denominated a bailout, a stimulus, or some other species of purported salvation, brings us visibly closer to the complete ruin of an economic order that required centuries to build. Awestruck, as if we were observing a tsunami sweep across an island, we can only watch the rulers' devastating actions, for which, strange to say, they expect the public to be grateful?and, truth be told, most people are grateful, and clamor for more of the same. We listen to the kingpins' lunatic ravings as they describe their perceptions of the current situation and solemnly declare their determination to "do something" to restore the prosperity that they themselves have demolished by previously "doing something" of the very same kind.
Kyrgyzstan to close key US military airbase Republic caves into Russian pressure to shut staging post for coalition troops in Afghanistan US attempts to supply coalition troops fighting the Taliban in Afghanistan suffered a major setback today after Kyrgyzstan announced it was closing down a key US military base. The central Asian republic confirmed it was shutting the US military facility near its capital, Bishkek. The Manas airbase, home to 1,000 US army personnel since 2001, is a key staging post for coalition forces fighting in nearby Afghanistan. US and Nato commanders had previously expressed dismay at the possible closure. It comes at a time when Nato is trying to expand its supply routes to Afghanistan through the northern countries of central Asia after a series of devastating attacks on truck convoys from Pakistan.
Closure of US base in Kyrgyzstan could alter Afghanistan strategy Russia has been pressuring Kyrgyzstan amid unease at the US's growing footprint in central Asia US attempts to supply coalition troops fighting the Taliban in Afghanistan were in danger of suffering a major setback today after Kyrgyzstan signalled it was considering shutting down a key US military base. The central Asian republic is contemplating closing down the US military facility near its capital Bishkek. The Manas airbase - home to 1,000 US army personnel since 2001 - is a key staging post for coalition forces fighting in nearby Afghanistan. Both US and Nato commanders have expressed dismay at the possible closure. It comes at a time when Nato is desperately trying to expand its supply routes to Afghanistan via the northern countries of central Asia following a series of devastating attacks on truck convoys from Pakistan.
Obama will fail in Kabul: Afshin Rattansi talks to Karzai's Fmr. Adviser Mohammad Siddiq Chakari, the former adviser to President Hamid Karzai of Afghanistan talks about why Obama will fail as news of more children being killed by NATO comes in.
Devaluation threat to rouble: Russia props up banks with $40 billion Russia’s Government yesterday threw a $40 billion lifeline to its banks as the rouble suffered another pounding, prompting further speculation that the country would be forced into a formal devaluation. In London, Alexei Kudrin, Russia’s Finance Minister, hinted at budget cuts as his country grapples with high inflation, a depreciating currency and the collapse in value of oil and gas, Russia’s main exports. The dollar value of the Russian currency fell to within a few kopecks of 41 roubles, the floor at which the central bank is committed to defend the currency by selling dollars. The rouble has plunged by almost 40 per cent in six months, despite the expense of hundreds of billions of dollars in foreign currency in its defence.
Iran says US must accept nuclear programme A senior adviser to Iran's president says dialogue with the US will succeed only if the Obama administration accepts Tehran's right to have a nuclear programme. Mojtaba Samareh-Hashemi, right-hand man to Mahmoud Ahmadi-Nejad, the fundamentalist president, said, in an interview with the Financial Times, Tehran was studying its options, just as the new US administration was reviewing its Iran policy. The US hopes to engage with Iran and persuade the country to halt its uranium enrichment activities, the most sensitive part of the nuclear programme, and withdraw its support for militant groups in the region. The launch of a homemade Iranian satellite on Tuesday further raised concerns among western powers that Iran was accelerating its development of ballistic missile technology.
Take a break on this one . . . and just grin a big one!
So You Think 2008 Was Bad? Welcome to 2009 By all accounts thus far, it's already been a pretty bad year... and we're only three weeks into it! If you will recall, 2008 was a pretty bad year for the banking sector. For example, the shares of Citigroup, Bank of America, and the Royal Bank of Scotland fell 77%, 66%, and 92%, respectively, in 2008. So far this year (remember, this is only three weeks) the same stocks are already down 50%, 55%, and 74%, respectively. Like we said, 2009 has already been a pretty bad year! For as bad as 2008 was, 2009 promises to be a whole lot worse. The problem isn't just the banking system anymore. The problem is the banking system and everything else.
U.S. dollar devaluation on its way In 1992, I was given what became my favorite hotel bill keepsake when I stayed in Mexico City and was charged one million for a brief business stay. It wasn’t a mistake. That was one million pesos and the Mexican peso was becoming worthless. By 1993, then-President Carlos Salinas de Gortari stripped three zeros from the currency and renamed it the Nuevo (or New) Peso. The transition from worthless to one Nuevo Peso to one U.S. dollar was done in three years from January 1, 1993 to January 1, 1996. The word "nuevo" was removed from the currency and it returned to be called "peso". Now it is 2009 and what appears to be looming, according to one authoritative press report this weekend, is a massive pre-emptive devaluation of the U.S. dollar as Team Obama readies itself to announce the “Big Bang” – a gigantic bailout of the frozen U.S. economy involving trillions of dollars. So far, Washington has allocated US$750 billion for banking rescues and another US$825 billion for job creation projects. But that’s nothing.
Geithner's Secret Plan To Screw You, Explained How will Treasury Secretary Tim Geithner secretly hose you as he bails out Wall Street executives, shareholders, and debtholders in his new banking-system fix? He'll use your money to buy crap assets from banks for more than they are worth, thus secretly recapitalizing the banks at your expense. . . . The same crap asset that the government will buy on your behalf has four different values:
The carrying value:$0.97.
A third-party assessment of value:$0.87.
A conservative third-party assessment of value:$0.53.
The market's objective assessment of value:$0.38.
So what price will the goverment's "Bad Bank" pay for that crap asset on your behalf? The details have yet to be announced, but the signs aren't encouraging.
Sprott Says U.S. Depression Will Boost Gold Price Eric Sprott, the Canadian money manager who last year predicted banking stocks would collapse, said the U.S. is at the beginning of an economic depression that will help gold prices more than double. Bullion may top $2,000 an ounce in coming years amid a series of financial catastrophes, the chairman and founder of Toronto-based Sprott Asset Management Inc. said yesterday in an interview. Banks will battle to replenish capital, Treasury auctions stand the risk of failing and the moribund economy will create a dire operating outlook for many companies, he said.
OBAMA's economic plan and it's CHANGE effect on gold price Max Keiser talks with Stacy Herbert about Obama's economic reforms and it's effect on the price of gold. there is now a hedge fund in UK that is priced in gold (basis). Fiat currencies around the world are collapsing. Derivatives in debts (Bank of International Settlements) is about 500 Trillion dollars. Black hole of debt (deflation) is expanding will result in government sponsored INFLATION. If price of gold was priced in derivatives, it would be $30,000 per oz.- . . . . from Jan 31st, 2009
U.S. Debt Default, Dollar Collapse The prospect of the United States defaulting on its debt is not just likely. Its inevitable, and imminent. The regulatory black holes into which sanity and reason disappear on a daily basis are soon to collapse under the mass of their sheer size. The circle jerk going on among G7 governments has to end - the steady advance of gold, even in the face of a managed price, exposes the real value of the U.S. dollar, as opposed to its apparent value expressed in the dollar index. Is 2009 the year that the United States formally defaults? And with that, will the dollar collapse an be rolled back ten for one or more?
Bailout Failout U.S. and foreign central banks and markets are hyped and primed for the biggie announcement mid-month by the Obama administration detailing their quick repairs of our economic and monetary woes created by reckless bankers. The first congressionally approved version was a monster load of porky pig fat containing every stupid spendthrift idea on the planet casting billions in new bread upon the waters of welfare-socialism. We've seen estimates of $243,000 to over $600,000 to be spent by TARP II for each so-called alleged new job. One wag said, "why not just give everybody a $25,000 check as they'll immediately spend it." That would produce a jolt all right but not the kind this phony program is supposed to instigate. While the spillover from throwing hundreds of billions in cash at these problems could produce a few new jobs, the majority of these funds will be not only be wasted but will exaggerate government debt throwing more of an imponderable load upon taxpayers.
Obama: 'I screwed up' Daschle nomination gone Barack Obama on Tuesday abandoned his nomination fight for Tom Daschle and a second high-profile appointee who failed to pay all their taxes, fearing ugly confirmation battles that would undercut his claims to ethical high ground and cripple his presidency in just its second week. "I screwed up," Obama declared. "It's important for this administration to send a message that there aren't two sets of rules -- you know, one for prominent people and one for ordinary folks who have to pay their taxes," Obama said in one of a series of interviews with TV anchors.
Obama Pledge to Clean Up Washington Trips on Nominees' Tax Woes President Barack Obama, who has wavered on his pledge to block lobbyists from working in his administration, is finding his Cabinet nominees’ violations of tax laws more difficult to overlook. The withdrawals yesterday of former Senate Majority Leader Tom Daschle to be Health and Human Services Secretary and Nancy Killefer to be his chief oversight officer, were Obama’s biggest setbacks as president. In both cases, the nominations were scuttled after the candidates admitted tax mistakes. "Did I screw up in this situation? Absolutely," Obama, 47, said of Daschle’s withdrawal in an interview on NBC yesterday. The failed nominations, while "an embarrassment," shouldn’t detract from his agenda, he said.
Daschle Withdraws as Cabinet Nominee Tom Daschle withdrew his name on Tuesday as President Obama's nominee to lead the Health and Human Services Department, a startling decision that came only hours after the withdrawal of another candidate for a high White House office. Mr. Daschle withdrew a day after Mr. Obama unequivocally declared that he would stand behind him as his problems over income tax arrears were scrutinized on Capitol Hill. The nominee's tax issues had developed into a troublesome distraction for the president, who entered the White House pledging to hold his people to the highest ethical standards. The president said he accepted Mr. Daschle's sudden withdrawal "with sadness and regret."
Another One: Obama's 'Performance Czar' Withdraws Nomination Nancy Killefer, who failed for a year and a half to pay employment taxes on household help, has withdrawn her candidacy to be the first chief performance officer for the federal government, the White House said Tuesday. Killefer was the second major Obama administration nominee to withdraw and the third to have tax problems complicate their nomination after President Barack Obama announced their selection. "Nancy Killefer has decided to withdraw her nomination, and we accepted her withdrawal," Tommy Vietor, a White House spokesman, said Tuesday. The 55-year-old executive with consulting giant McKinsey & Co., was expected to explain her reasons for pulling out later in the day.
Gingrich slams Obama's efforts on economy Former House Speaker Newt Gingrich on Monday said the U.S. economy is headed "off a cliff" and that President Obama has failed to bring fresh and original thinking to the problem so far. Mr. Gingrich, 65, said top financial officials used a nightmare scenario to persuade President Bush to agree to the $700 billion bailout last fall. "At the time, I flinched. ... Probably I would have voted yes," Mr. Gingrich said of the bailout, "just because if you have the secretary of the Treasury and the Federal Reserve chairman saying to you, 'Vote yes or we're all going to go off a cliff.' "Well, the fact is, we're all going to go off a cliff. That's what's happening. This is a much more profound problem than people think," said Mr. Gingrich, a Republican from Georgia, during a breakfast with reporters and columnists organized by the Christian Science Monitor. Mr. Gingrich, who has earned a reputation for irascibility, slammed the Obama administration's economic efforts.
America's 'Bad Bank' Team The origins of our altered financial landscape can be traced back to 2003, following the tech crash of the years prior. Alan Greenspan cut the federal funds rate to 1%, holding them steady for an extended period. The purpose of the rate cuts, similar to today, was to stimulate economic growth (via liquidity). Unique to the policy in 2003, however, was an increased focus on cheaper access to credit for those borrowers traditionally unable to obtain financing for housing. Fannie Mae’s affordable housing and home improvement lending programs created a new market of Alt-A and subprime mortgage originations.
Fox News - $13 Trillion in Toxic Assets for Top 25 U.S. Banks!!!
U.S. Debt Default, Dollar Collapse Altogether Likely The prospect of the United States defaulting on its debt is not just likely. It's inevitable, and imminent. The regulatory black holes into which sanity and reason disappear on a daily basis are soon to collapse under the mass of their sheer size. The circle jerk going on among G7 governments has to end – the steady advance of gold, even in the face of a managed price, exposes the real value of the U.S. dollar, as opposed to its apparent value expressed in the dollar index. Is 2009 the year that the United States formally defaults? And with that, will the dollar collapse be rolled back ten for one or more? There are a lot of reasons to support that theory. To Wall Street economists, such an event is heresy and therefore unthinkable. Yet Wall Street is the very La-la-land that bred the idea of a perpetually indebted nation in the first place. Number one among the indicators favoring this scenario is what is happening in the U.S. Treasuries auction market.
Insurers’ Corporate-Bond Losses May Exceed Subprime Corporate debt defaults may cost U.S. life insurers “substantially” more than losses on securities linked to subprime, Alt-A and commercial mortgages, said Eric Berg, an analyst at Barclays Plc. Corporate defaults are poised for a "significant" increase this year as the recession deepens, Berg, based in New York, said in a research note yesterday. The American Council of Life Insurers estimated the industry, led by MetLife Inc. and Prudential Financial Inc., holds $1 trillion in corporate debt. "None of the life insurers we studied appear to be doing a particularly good job" of picking bonds backed by companies, Berg said. "Understandably, investors are concerned."
Life Insurance Companies Braced for Heavy Losses The easy times, the extended bull market in equities and corporate profits, with a disinflation and an easy money policy, created a lot of very wealthy people who managed other people's money by riding the incoming tide of the Greenspan era and a willingness to use the world's reserve currency to run up incredible levels of debt. The disparity of wealth in the US from the wealthiest few to the less fortunate many has never been greater since the start of the Great Depression. And if history repeats there will be a tremendous effort to make the public pay for most of it. Privatize the gains, but socialize the losses. Having the public bad bank buy the bad assets of the big money center banks and financial ponzi schemes and take all the losses is a thinly disguised act of theft and injustice on an almost incomprehensible scale.
Record 19 Million U.S. Homes Stood Vacant in 2008 A record 19 million U.S. houses stood empty at the end of 2008 as banks seized homes faster than they could sell them and prices continued to fall. Vacant homes in the fourth quarter increased by 6.7 percent from the same period a year ago, the U.S. Census Bureau said in a report today. The vacancy rate, the share of empty homes for sale, rose to 2.9 percent in the quarter, the most in data that goes back to 1956. The worst U.S. housing slump since the Great Depression is deepening as foreclosures drain value from neighboring homes and make it more likely owners will walk away from properties worth less than their mortgages. About a third of owners whose home values drop 20 percent or more below their loan principal will "hand the keys back to the bank," said Norm Miller, director of real estate programs for the School of Business Administration at the University of San Diego.
Obama Foreclosure-Relief Plan May Guarantee Rewritten Loans The Obama administration is considering government guarantees for home loans modified by their servicers, seeking to stem the record surge of foreclosures that’s hammering U.S. property values. The proposal, which may also have the taxpayer share in the cost of reducing mortgage payments, is aimed at shielding lenders from default after they loosen loan terms for struggling borrowers. Comptroller of the Currency John Dugan, who regulates national banks, said yesterday that “working out the details of it is still something that’s ongoing.”
FDIC needs bigger credit line The Federal Deposit Insurance Corp is seeking to more than triple its credit line with the U.S. Treasury Department to $100 billion, a move to give it more financial power to handle U.S. bank failures, the agency said on Monday. The FDIC and Congress are working to boost the agency’s current $30 billion borrowing power in legislation being crafted by U.S. Rep. Barney Frank, chairman of the House Financial Services Committee.
Sheila Bair May Get Her Wish It looks like FDIC chief Sheila Bair, who's advocated the most aggressive form of government assistance to homeowners, may get to see her vision. See the stimulus bill is one of just at least three legs to the economic recovery stool. One other is a plan for the banks, and then there will be a plan to "fix" housing. Houses aren't broken, but we like to keep our housing expensive in this country, especially when so many people have placed bets on home price appreciation. Anyway, it sounds like Obama's plan will be the Bair plan:
THE BIG BANG The Well-Timed Strategy for Week Ending February 6th This week, we can all look forward to the "Big Bang." This is the eagerly anticipated range of measures the Obama administration is going to announce to solve the credit crisis and provide relief to homeowners facing foreclosure. Whether the term "Big Bang" is ultimately going to refer to the creation of a new more healthy financial universe or something done dirtily in the dark to taxpayers remains to be seen. Regardless, I do expect a market rally on the policy news that should be propelled by the financial sector and perhaps even homebuilders. Watch any Big Bang rally that may materialize very carefully. If the rally holds, it could mark a turning point in the economy by signaling appropriate policies are now in place. However, if my forecast rally fails, we are likely to be in for an exceedingly long haul down the recessionary road.
United States of Argentina How inflation turned a rising power into a pauper . . . . For Americans, the Argentine experience offers multiple warnings, not just about how dreadfully things can go wrong but how a nation can reach a point of no return. Not only did Argentina squander its many blessings, it created a situation from which the society could never recover. Argentines still suffer from the blunders and hubris of their grandparents without any serious likelihood that even their most strenuous efforts will make a difference. A nation can get into such a situation easily enough, but getting out is a different matter. A corrupted economy can’t be cured without being wiped out and started over.
Peter Schiff is Right again, Schiff vs. Smith on FBN 2 Feb 2009
Can Countries Really Go Bankrupt? (part 1) The bailout packages aimed at shoring up financial markets in Europe are getting increasingly expensive. A creeping depreciation of currency is inevitable and state bankruptcies can no longer be ruled out. Could the euro zone also fall victim to the global financial crisis? "There's a rumor going around that states cannot go bankrupt," German Chancellor Angela Merkel said recently at a private bank event in Frankfurt. "This rumor is not true." Of course she's right. Countries can go bankrupt if they allow their deficit spending to spin out of control and are no longer able to service their interest payments. Merkel's comments can be read as a warning that countries need to keep their deficit spending in check. The message is: If governments go too far in trying to bail out companies and the economy, they could face insolvency themselves.
Can Countries Really Go Bankrupt? Part 2: The Euro Safety Net Prior to their adoption of the euro, countries like Italy, Greece or Spain simply devalued their currencies in troublesome times and lowered their interest rates to increase the export opportunities for their economies. As members of the euro zone today, however, this option is no longer available because of stringent budget rules in place to ensure the common currency's stability.
Can Countries Really Go Bankrupt? Part 3: Nothing Is Unimaginable Anymore In most cases the country's coffers were wiped out by war. But in each case, the countries managed to bring themselves back from ruin. They proved to be incredibly resourceful in using their connections to banks, companies and, especially, the people. The simplest solution was for states to just outright refuse to pay back their debts. In 1557, Spain's King Philipp II refused to pay his country's debts after its expensive military battles against the Dutch and the Ottomans. It was a decision that seriously damaged lender banks in Augsburg, Germany, and they never fully recovered. Even after the Revolution, France's new regents had an even more extreme answer. They expropriated property from churches, major landowners and executed some lenders.
We’ve All Been Had As world leaders gathered over this past week for their annual wine-and-cheese ski-fest in Davos, Switzerland – perhaps we, the little people, should all take-stock [or a forensic account, perhaps?] of the cards we’ve been dealt. Dim-Witted Deflationists Kirbyanalytics subscribers are already schooled on the inflation / deflation debate from a discussion and analysis laid out in the subscriber only version of Questions Begging Answers; but the following is a fuller discussion of the issue: The reason most mainstream market pundits are misreading ‘where we are headed’ is exactly because they have not acknowledged or accepted where we are and how we got here!
Bailouts A Complete Fraud Against the American Worker A recent Associated Press news release exposed U.S. banks accepting billions in bailout money along with major corporations. Banks defraud American taxpayers by hiring thousands of foreign workers in place of our citizens… The report said, “The figures are significant because they show that the bailed-out banks, being kept afloat with U.S. taxpayer money, actively sought to hire foreign workers instead of American workers. As the economic collapse worsened last year with huge numbers of bank employees laid off—the numbers of visas sought by the dozen banks in AP’s analysis increased by nearly one-third, from 3,258 in fiscal 2007 to 4,163 in fiscal 2008. The AP reviewed visa applications the banks filed with the Labor Department under the H-1B visa program, which allows temporary employment of foreign workers in specialized-skill and advanced-degree positions. Over 100,000 U.S. citizens suffered layoffs from the banks that enjoyed $150 billion during 2008."
Peter Schiff underestimated the wall street crooks Max Keiser talks to Stacy Herbert about the inflation deflation debate between Peter Schiff Jim Rogers Marc Faber and how Peter Schiff underestimated the level of damage the wall street crooks would inflict to foreign investors
Spending declines for record 6th month Manufacturing also shrinks Consumer spending fell for a record sixth month in a row in December, as mass layoffs, plunging home prices and dwindling retirement accounts made workers feel much poorer. As credit tightened for homebuyers and commercial builders, construction spending also plunged. That further weakened household incomes as the construction industry shed more than 600,000 jobs last year. Meanwhile, in one of the first monthly economic indicators of 2009, manufacturing, which shed nearly 800,000 jobs last year, continued to shrink in January, the Institute for Supply Management reported. The slump in consumer spending and construction will likely continue into 2009 as the yearlong recession promises to worsen, economists said.
Layoffs continue to mount Layoffs are spiking as the recession rips through the country, with retailers, banks, factories and others cutting costs ever deeper this week. It's inflicting a painful toll on workers, and there's little relief in sight. The latest round of pink slips and cost-cutting measures came Tuesday on the heels of tens of thousands of layoffs ordered by a slew of companies last week alone. PNC Financial Services Group said it plans to cut 5,800 jobs. Airplane maker Hawker Beechcraft Corp. said 2,300 employees will lose their jobs before the end of the year and warned more layoffs may be coming. Liz Claiborne Inc. will eliminate 725 jobs, or 8 percent of its work force, one day after Macy's Inc. said it was axing 7,000 jobs, or 4 percent of its work force. King Pharmaceuticals Inc. will get rid of 520 jobs.
Hawker Beechcraft to eliminate 2,300 positions Hawker Beechcraft will eliminate 2,300 positions, the company said in a memo today. The layoffs will be throughout the year, but the majority will receive 60-day notices on Friday. The company warned employees in early January of the upcoming cuts and that they would affect all areas and levels. The step is "extremely painful, but one that is absolutely necessary," Hawker Beechraft chairman and chief executive Jim Schuster said in the memo. "While I wish I could commit to you that this will be our final action, I cannot do so at the time given the extreme volatility in the marketplace." Hawker Beechcraft eliminated 5 percent of its work force, about 490 jobs, in early November. Hawker Beechcraft had 7,700 employees in Wichita before the first round of cuts. Hawker Beechcraft memo
GM, Chrysler Look to Cut Workforce Auto Giants to Offer Incentives for U.S. Employees to Give Up Jobs Nearing a deadline to present viability plans to the Treasury Department, General Motors and Chrysler plan to offer a new round of incentives to encourage U.S. workers to give up their jobs in order to shrink labor costs, according to people familiar with the matter. The two automakers, buoyed by $13.4 billion in federal loans, have begun discussing plans with the United Auto Workers union to cut their blue-collar workforce as they try to weather a sharp slide in sales. GM and Chrysler must submit viability plans, demonstrating significant cuts and labor concessions, to Congress by Feb. 17.
Closing Dealers Stun Buyers With Liens On Trade-In The national wave of auto dealership closures has come crashing down on thousands of people who are on the hook for used-car loans that dealers were supposed to absolve. When a car buyer still owes money on a vehicle he is trading in, the dealer promises to pay off the outstanding loan, then resells the vehicle. But as more dealers go out of business, some are sticking consumers with the bill. Lenders can then go after the previous owner who thought the debt was paid, or repossess the car from the new owner who assumed it came with clear title. "It's devastating for people when it happens because they have two car payments and they can't afford them," said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a Sacramento-based nonprofit that lobbies on behalf of vehicle owners. "Their credit is destroyed for no fault of their own because the dealer defaulted."
Money? What Money? I’ve been reading this morning that frugal Americans are hurting the economic recovery efforts by saving our money instead of spending it. Last time I checked, Americans were holding the line on spending because we don’t have nearly as much (if any) discretionary spending ability as before. Money is tight and times are hard… What are we supposed to do? Shall I take the cash I’m holding for my next house payment and by a new Nintendo? Shall I skip the water bill in favor of a couple of 12-packs of Miller Lite? Here’s an idea: If the government and the various economic “experts” around the country think I need to go blow some money on consumer goods, then take that so-called stimulus money – from $800 to $900 billion depending on who you listen to - and send us all a nice tidy check. That’d get things rolling again a lot faster than spending $150 million on honeybee insurance or $650 million on government employees’ cars or $650 million for TV converter boxes.
The Comex did NOT default in December 2008 Max Keiser talks to Bob Dacy about gold investment recorded on January 30th 2009
A RESOLUTION affirming States’ rights based on Jeffersonian principles...
...That any Act by the Congress of the United States, Executive Order of the President of the United States of America or Judicial Order by the Judicatories of the United States of America which assumes a power not delegated to the government of United States of America by the Constitution for the United States of America and which serves to diminish the liberty of the any of the several States or their citizens shall constitute a nullification of the Constitution for the United States of America by the government of the United States of America. Acts which would cause such a nullification include, but are not limited to:
I. Establishing martial law or a state of emergency within one of the States comprising the United States of America without the consent of the legislature of that State.
II. Requiring involuntary servitude, or governmental service other than a draft during a declared war, or pursuant to, or as an alternative to, incarceration after due process of law.
III. Requiring involuntary servitude or governmental service of persons under the age of 18 other than pursuant to, or as an alternative to, incarceration after due process of law.
IV. Surrendering any power delegated or not delegated to any corporation or foreign government.
V. Any act regarding religion; further limitations on freedom of political speech; or further limitations on freedom of the press.
VI. Further infringements on the right to keep and bear arms including prohibitions of type or quantity of arms or ammunition; and
That should any such act of Congress become law or Executive Order or Judicial Order be put into force, all powers previously delegated to the United States of America by the Constitution for the United States shall revert to the several States individually. Any future government of the United States of America shall require ratification of three quarters of the States seeking to form a government of the United States of America and shall not be binding upon any State not seeking to form such a government...
The Reality Of FEMA Camps And The Martial Law Apparatus There is no doubt that the government is preparing a nationwide system of detention facilities under the guise of emergency management that could be used to house large quantities of Americans during a time of civil strife. Many think that it is a conspiracy theory, but it is not. It is a fact that the federal government has many facilities right now that can be used to house large numbers of political dissidents if the need arises. During World War II, the U.S. government through an executive order by FDR forced many Japanese-Americans to move into internment camps. In 2006, George W. Bush signed legislation to preserve these camps. Why would he do this unless there was a chance that they would be used in the future? In addition, KBR the engineering and construction arm of Halliburton was recently awarded a $385 million contract to build detention facilities under the guise that they would be used to house illegal immigrants. This news broke at a time in which outrage against illegal immigration was at an all-time high and covered extensively in the media which in essence made the announcement less controversial. [Or . . .with 19 million homes vacant, and millions out of work, are there enough homeless families who will Volunteer to go to government facilities for a roof over their heads and food to eat? This could be the government pool of labor, as well. When times get desperate, they won't have to force anyone to go.]
Dissent beginning to spread across Russia as crisis bites Thousands protest at Putin's handling of economy while rift with Medvedev grows The Kremlin's rule is beginning to look much shakier than at any time since Vladimir Putin came to power, after a series of protests in cities across its vast landmass this weekend by Russians disgruntled about the economy. And as the country starts to feel the effects of the global credit crunch, there are also signs of a growing rift between Prime Minister Putin, and his hand-picked successor as President, Dmitry Medvedev.
Obama Administration Faces Grim Specifics on Afghan Policy As President Obama prepares to formally authorize the April deployment of two additional combat brigades to Afghanistan, perhaps as early as this week, no issue other than the U.S. economy appears as bleak to his administration as the seven-year Afghan war and the regional challenges that surround it. A flurry of post-inauguration activity -- presidential meetings with top diplomatic and military officials, the appointment of a high-level Afghanistan-Pakistan envoy and the start of a White House-led strategic review -- was designed to show forward motion and resolve, senior administration officials said. But newly installed officials describe a situation on the ground that is far more precarious than they had anticipated, along with U.S. government departments that are poorly organized to implement the strategic outline that Obama presented last week to his National Security Council and the Joint Chiefs of Staff.
With Obama in White House, North Korea Steps Up Big Talk Stinging insults, sudden cancellations of military agreements and dark warnings of "unavoidable" war are spilling out of North Korea almost daily. On Tuesday, media reports here and in Japan said North Korea is preparing to test-launch a long-range missile capable of carrying a nuclear warhead. The target for much of this bluster and saber-rattling is the government of South Korea, which has stopped giving its heavily armed communist neighbor unconditional aid. Last year, the new South Korean president, Lee Myung-bak, ended his predecessors' "Sunshine Policy" toward the isolated North. For nearly a decade, that policy had soothed nerves on the Korean Peninsula by giving the truculent-but-poor government of Kim Jong Il large amounts of food, fertilizer and trade concessions, all without conditions and without asking questions about nuclear weapons, missile proliferation or human-rights abuses.
Iran Launches Satellite in a Challenge for Obama Iran said Tuesday that it had launched its first domestically produced satellite, a move that has prompted concerns in the United States and other nations about Iran's nuclear ambitions and its ability to deploy long-range ballistic missiles. The launch on Monday, coinciding with celebrations marking the 30th anniversary of the Islamic revolution, also creates an early challenge for President Obama, who has sought to strike a conciliatory tone toward Iran by conditionally offering dialogue after years of tensions. The United States and other nations believe Tehran wants to develop nuclear weapons, a charge that Iran's leaders deny.
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Tues 02.03.2009
"Allow me to control the issue and the nation's money and I care not who makes its laws!"- Amshell Rothschild
Banks holding the controlling stock in the Federal Reserve Corporation: Rothschild Banks of London and Berlin, Lazard Brothers Bank of Paris, Israel Moses Sieff Banks of Italy, Warburg Bank of Hamburg and Amsterdam, Lehman Brothers Bank of New York, Kuhn Loeb Bank of New York, Chase Manhattan Bank of New York, Goldman Sachs Bank of New York.
Beyond the age of leverage: new banks must arise By Niall Ferguson Call it the Great Repression. The reality being repressed is that the western world is suffering a crisis of excessive indebtedness. Many governments are too highly leveraged, as are many corporations. More importantly, households are groaning under unprecedented debt burdens. Worst of all are the banks. The best evidence that we are in denial about this is the widespread belief that the crisis can be overcome by creating yet more debt. The US could end up running a deficit of more than 10 per cent of gross domestic product this year (adding the cost of the stimulus package to the Congressional Budget Office's optimistic 8.3 per cent forecast). Today's born-again Keynesians seem to have forgotten that their prescription of a deficit-financed fiscal stimulus stood the best chance of working in a more or less closed economy. But this is a globalised world, where unco-ordinated profligacy by national governments is more likely to generate bond market and currency market volatility than a return to growth.
CBC Our world The great recession with Niall Ferguson 1/3 "An economic crisis of historic proportions." That's what President Elect Barack Obama calls this global financial crisis. Others go futher, warning that another world-wide Depression is still possible. The crisis is especially worrying because even leading economists are struggling to understand its unprecedented complexity. But our guest today, historian Niall Ferguson, suggests we take the long view. The economic system in undergoing a Darwinian style struggle which is killing off failed ecomomic practices. Two years ago he started writing a book that chronicles the financial history of the world, showing how societies rise and fall on their financial fortuntes. He predicted at the time that our current economic system was dangerously unstable; too dependent on credit and buried under unsustainable debt. Well, now he has been proven right, and his book "The Ascent of Money" could not be more timely. This Harvard and Oxford based professor has been called "one of the 100 most influential voices in the world" by Time Magazine. Brian met with Niall Ferguson recently.We present their conversation.
CBC Our world The great recession with Niall Ferguson 2/3
CBC Our world The great recession with Niall Ferguson 3/3
How the Obama-Bernanke Monetary Scheme Could Wreck the US Economy In a recent talk he gave at the London School of Economics Bernanke basically laid out the thinking behind his monetary strategy with the statement: "Put out the fire first and then think about the fire code." This is code for flood the US economy with dollars and then worry about the inflationary consequences for the country. No wonder he saw nothing wrong with letting the monetary base explode by 107 per cent (from just under one trillion dollars to nearly three trillion dollars) from 8 August last year to 9 January. It appears that Obama1 thinks that Bernanke is a genius who will save his economic bacon by underwriting his irresponsible spending schemes. According to this story line the banks will start running down their excess reserves, the economy will begin to recover and unemployment will fall: revenues will rise and Obama's reckless spending binge -- funded in part by severe cuts to the nation's defence's -- will be kept afloat.
Gold Manipulation and How Deflation Creates Hyperinflation As world leaders gathered over this past week for their annual wine-and-cheese ski-fest in Davos, Switzerland - perhaps we, the little people, should all take-stock [or a forensic account, perhaps?] of the cards we've been dealt. . . . . . What too many ignorant, compromised, or would-be-economists refuse to grapple with is the notion that ALL fiat money systems - like table cream - have "shelf lives". As Chris Martenson so eloquently sums it up, "…there are over 3,800 past examples of paper currencies that no longer exist. There are numerous examples from the United States, which may have some collector value but no longer possess any monetary value. Of course, I could just as easily display beautiful but no longer functional examples from Argentina, Bolivia, and Columbia, and a hundred other places." Our current system has, arguably, already passed its expiration date. Derivatives have been used to obscure-the-curdles [rig markets]; but they cannot hide the rancid odor emanating from the rotting carcass of the fiat corpse of the Federal Reserve.
The Next Catastrophe Think Fannie Mae and Freddie Mac were a politicized financial disaster? Just wait until pension funds implode. Funds worth trillions of dollars start to plummet in value. Political pressure to be "socially responsible" distorts the market decisions of government-related enterprises, leading to risky investments. Investors who once considered their retirements safely protected wake up to a sinking feeling of uncertainty and gloom. Sound like the great mortgage-fueled financial crisis of 2008? Sure. But it also describes a calamity likely to hit as soon as 2009. State, local, and private pension plans covering millions of government employees and union workers with "defined benefit" accounts are teetering on the brink of implosion, victims of both a sinking stock market and investment strategies influenced by political considerations.
Daschle Apologizes for Income Tax Errors [PTG note: That makes TWO tax evaders to populate Obama's cabinet! So much for ETHICS in the Obama administration!!] Thomas A. Daschle, fighting to defend his nomination to be secretary of health and human services, apologized today for mistakes in his personal income tax returns after meeting with members of the Senate Finance Committee to explain the problems that led to $146,000 in back payments. Acknowledging that Americans "have high expectations" for government officials and their taxes, Daschle told reporters in the hallway after the committee meeting, "All of my life I have assiduously tried to pay my taxes in full and on time. My failure to recognize the that use of a car was income and not a gift from a good friend was a mistake."
Fed Says Most U.S. Banks Tightened Terms on Loans A majority of U.S. banks made it tougher for consumers and businesses to get credit in the past three months even as lenders received infusions of taxpayer funds, a Federal Reserve report showed today. "About 65 percent of domestic banks reported having tightened lending standards on commercial and industrial loans to large and middle-market firms," the Fed said in its quarterly Senior Loan Officer survey. "Large fractions of domestic banks continued to report a tightening of policies on both credit-card and other consumer loans." Today's report may underscore concern among Obama administration officials and some U.S. lawmakers that banks that have received more than $200 billion of taxpayer funds are failing to lend that on to customers. Treasury Secretary Timothy Geithner plans to unveil an overhaul of the government's financial-bailout program next week, an administration aide said.
End the Fed Presented by Ron Paul at "Our Enemy, Inflation," the Mises Circle in Houston, sponsored by Jeremy S. Davis. Recorded Saturday, 24 January 2009.
Money Allocation in a Time of Crisis I can't respond to all I have been asked for individual situations, but here are some general principles you can use as guidelines. Defensive Strategies
We are temporarily in a deflationary period, which means that dollars will become more valuable for a while, so you should be out of debt. Build up your cash reserves ready to be deployed in the coming hyper-inflation.
Commodity Storage:
Reduce Spending.
Real Estate.
Offensive Strategies Strangely enough the ultimate result of this deflation will be inflation. As the government fights deflation with trillions of newly created dollars, and the money begins circulating in the economy, it will bare its inflationary fangs. It is not too soon to start preparing for inflation this time, so some of that excess cash flow you have after reducing your debts should be steadily put into inflation hedges while you wait patiently.
Precious Metals
Oil Income Trusts.
Deception in Quest of Remedy What an interesting time we live in! By now, anyone who feels burned by the establishment, whether the Wall Street banksters (fraud kings) or USCongressional representatives (paid lobbyist clients), or USCongress banking committees (bribed Wall Street tools), or a private hedge fund conman (protected by regulators), or financial markets (victims of naked shorting), or an employer (from foreign plant & equipment investments), beware. More deception and betrayal and smokescreens and outright lies lie directly ahead. The next TARP disbursal will be much better disguised, more of the same welfare for the elite. The next stimulus plan will be loaded down by pork, earmarks, and clever disguises to enable continued bank aid with unenforceable clauses to protect the public, and namby pamby thin oversight. The tragedy is that Jack Daniels cannot take a handoff in any reconstruction from a strawman dressed as John Maynard Keynes. The other tragedy is that the US does not have adequate labor workforce to do reconstruction, nor does the US have factory capacity to fill orders on reconstruction.
Freedom isn't free. Not in Arizona, not anywhere. 46 Of 50 States Could File Bankruptcy In 2009-2010 There is a high chance a majority of the States within the United States of America could file for Chapter 9 bankruptcy. There are currently 46 states with high budget deficits, Arizona being one of them. In fact, Jan Brewer, the newly appointed Governor of Arizona has a major crisis on her hands, one that Arizona and national media isn't covering. The alarming news is the State of Arizona has 90 to 120 days before they completely run out of money. After that, all bills and tax refunds owed to the citizens will go unpaid.
State Budget Troubles Worsen States are facing a great fiscal crisis. At least 46 states faced or are facing shortfalls in their budgets for this and/or next year, and severe fiscal problems are highly likely to continue into the following year as well. Combined budget gaps for the remainder of this fiscal year and state fiscal years 2010 and 2011 are estimated to total more than $350 billion. States are currently at the mid-point of fiscal year 2009 — which started July 1 in most states — and are in the process of preparing their budgets for the next year. Over half the states had already cut spending, used reserves, or raised revenues in order to adopt a balanced budget for the current fiscal year — which started July 1 in most states. Now, their budgets have fallen out of balance again. New gaps of $46 billion (over 9% of state budgets) have opened up in the budgets of at least 42 states plus the District of Columbia. These budget gaps are in addition to the $48 billion shortfalls that these and other states faced as they adopted their budgets for the current fiscal year, bringing total gaps for the year to over 14 percent of budgets.
Proponents of Estate Tax Repeal Resurrecting Old Misconceptions With Congress expected to debate permanent changes in the estate tax in coming months, some proponents of repealing the tax or weakening it beyond its current form are resurrecting old misconceptions about the tax. For example, a recent Wall Street Journal editorial claimed that repealing the estate tax would increase national saving and that U.S. estate taxes are high relative to those of other developed countries. The evidence supports neither claim. Repealing the estate tax would decrease rather than increase national saving, and U.S. estate tax burdens measured as a share of the economy are comparable to similar taxes in other developed countries.
Obama predicts more bank failures Barack Obama said the nation's banks were in a very vulnerable position US President Barack Obama has warned that more US banks are likely to fail, as the full extent of their losses in the economic crisis becomes clear. Speaking to NBC News, Mr Obama said "some banks won't make it" but stressed that people's deposits would be safe. He has asked Treasury Secretary Timothy Geithner to draw up guidelines for banks receiving taxpayers' money. Meanwhile, he warned of a "difficult next few days" as the Senate begins to debate his $800bn rescue plan.
The Risks of Life Insurance Anxiety About Industry Complicates Consumer Choices It was a head-spinning week for anyone with a life insurance policy. First, the industry lobby argued that some insurers are in such dire shape that they need immediate relief from requirements meant to keep them solvent. Then, when regulators denied the relief, the industry lobby was quick to issue a more soothing message: Don't worry, there is plenty of money to pay claims. The mixed messages may have left you hoping you never need life insurance. But if you already have a policy or need to buy one to protect your spouse and children, how nervous should you be? The hard truth is . . . it's hard to know. But we do know this: there's a safety net that could protect you if your insurer fails. However, there are limits to the benefits it covers, and the safety net has distinct vulnerabilities of its own.
Hyperinflation will begin in China and 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".
Downturn causes 20m job losses in China More than 20m rural migrant workers in China have lost their jobs and returned to their home villages or towns as a result of the global economic crisis, government figures revealed on Monday. By the start of the Chinese new year festival on January 25, 15.3 per cent of China’s 130m migrant workers had lost their jobs and left coastal manufacturing centres to return home, said officials quoting a survey from the agriculture ministry. The job losses were a direct result of the global economic crisis and its impact on export-oriented manufacturers, said Chen Xiwen, director of the Office of Central Rural Work Leading Group. He warned that the flood of unemployed migrants would pose challenges to social stability in the countryside.
The American Economy is Not Coming Back The Ugly Truth President Barack Obama and his economic team are being careful to couch all their talk about economic stimulus programs and bank bailout programs in warnings that the economic downturn is serious and that it will take considerable time to bounce back. . . . . Over the last 20 years, America has degenerated into a nation of consumers, with 72 percent of Gross Domestic Product (sic) now being accounted for by consumer spending-most of it going for things that are produced overseas and shipped here. That is not an economic model that is sustainable, and it is a model that has just suffered what is certainly a mortal blow.
A Severe Global Economic Contraction January 27, 2009 Blooomberg Interview with Nouriel Roubini of NYU Stern School of Business
Roubini: U.S. Banks, Recession, Risks Bloomberg: Jan. 29 (Bloomberg) -- Nouriel Roubini, a professor at New York University, and Robert J. Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, talk with Bloomberg's Francine Lacqua and Erik Schatzker about the outlook for the U.S. banking system and the global economy. They speak at the World Economic Forum meeting in Davos, Switzerland.
What Cooked the World's Economy? - It wasn't your overdue mortgage. It's 2009. You're laid off, furloughed, foreclosed on, or you know someone who is.... You wonder where you'll fit into the grim new semi-socialistic post-post-industrial economy colloquially known as "this mess." You're astonished and possibly ashamed that mutant financial instruments dreamed up in your great country have spawned worldwide misery. You can't comprehend, much less trim, the amount of bailout money parachuting into the laps of incompetents, hoarders, and miscreants. It's been a tough century so far: 9/11, Iraq, and now this. At least we have a bright new president. He'll give you a job painting a bridge. You may need it to keep body and soul together.
BANKS And Lenders Nationwide shutting off CREDIT! 2 TRILLION to be CANCELLED! Comment: The damage to businesses will be huge. Many are using their line of credit to buy goods and keep the doors open. These credit companies are taking the bailout funds and investing it into other countries because of the risk here. (You will be hearing about these money movements in the future guaranteed!) Banks and other lenders nationwide, seeking to reduce their debt exposure, are shutting off and limiting consumer credit card lines, even for many customers who carry low balances and pay on time.
What does the end of Central Bank gold sales signify? The Central Bank Gold Agreement expires on 26 September 2009...SOME DAY this crisis will come to an end, writes Dan Denning at The Daily Reckoning Australia. And when it does, people can go about their lives again in what passes for normal fashion. But before that, some drama has to play out. Much of it will be unpleasant. But not all of it – not if you're standing ready to buy gold. The big driver of the Gold Price this year will be, as always, weakness in the US Dollar, we believe. Granted, gold is rising against other currencies too (notably the Euro and the British Pound). But it's the large increase in the supply of US dollars that will ultimately catapult the yellow metal higher for everyone, we think.
How "Brilliant" Men Crashed the Economy What to Do About Wall Street By Ralph Nader Soon after the passage in 1999 of the Clinton-Rubin-Summers-P. Graham deregulation of the financial industry, I boarded a US Air flight to Boston and discovered none other than then-Secretary of the Treasury Lawrence Summers a few seats away. He was speaking loudly and constantly on his cell phone. When the plane took off he invited me to sit by him and talk. After reviewing the contents of this Citibank-friendly new law called the Financial Modernization Act? I asked him: "Do you think the big banks have too much power?"
"Buy American" shouldn't sell Protectionism/US stimulus: "Buy American" sounds like a good rallying cry. A focus on domestic US economic woes along with a dose of nationalism have helped protectionist measures creep into President Barack Obama's latest stimulus plan. But the World Trade Organization and even some US companies have questioned such moves. The $800bn-plus stimulus package that passed the House of Representatives includes a requirement for federally-funded building projects to use only US-made steel. That could, for one thing, make the projects more expensive than they need to be. The same could follow from rules that limit flexibility on the labour used.
Ron Paul: Gold Standard 1/30/09 Fox Business
Obama says differences shouldn't delay stimulus Obama says differences with GOP shouldn't delay passage of stimulus bill President Barack Obama said Monday that "very modest differences" over a massive package to revive the economy should not delay its swift passage, a fresh appeal to Congress as the nation dealt with another dose of dire financial news. Obama teamed up with Vermont Gov. Jim Douglas, the Republican vice chairman of the National Governors Association, as he sought bipartisan backing for the stimulus legislation. An $819 billion version passed the House last week, without a single Republican vote. The Senate took up their $900 billion version on Monday.
It's A Bailout World! If anyone had any doubt about the enormity of the financial crisis gripping the world, look no further than at the amazing conversion of Canadian Prime Minister Stephan Harper and his Finance Minister Jim Flaherty from small c, small government, fiscal conservatives to big spending, big government, deficit hawks. This is not a comment on the actual merits of the budget; merely a note that Harper and Flaherty have joined the bailout world, even if it seems to be with some reluctance.
On second thought, never mind about that bailout A small but growing number of community banks are backing out of the government's bailout, which they see as fraught with hidden strings and government interference. About 20 banks so far that applied for or had been approved to receive about $1 billion combined in taxpayer money have reversed course in the past month and refused to take the money. That's just a fraction of the hundreds of billions of dollars the government already has spent, but it shows that taxpayers aren't the only ones anxious about the financial bailout. "The government's going to own a good portion of these banks," said David Heintzman, president of Stock Yards Bank & Trust in Louisville, Ky. The bank recently turned down $43 million in approved bailout money.
Protectionism is "Crack Cocaine" of Economics, Says Fed's Fisher Protectionism is the "crack cocaine of economics," said Dallas Fed President Richard Fisher in an interview with C-Span on Monday. Lashing out at recent protectionist proposals made by the U.S. government in recent weeks, Fisher added that such measures would spell death for the U.S. economy. In particular, the 2008 FOMC voting member targeted the so called "buy America" provision which dictates that infrastructure projects embedded in the upcoming U.S. fiscal spending plan must be completed using U.S.-made products.
Financial Crisis "Has Destroyed 40 Percent of World Wealth" At the World Economic Forum in Davos, it was revealed that Forty Percent of the World's Wealth has been destroyed by the financial crisis so far. As writers like Mish have repeatedly pointed out, even though the forces which could create hyperinflation (printing gzillions of dollars) are gigantic, the deflationary forces are - at present - even more enormous.
How Abolishing the Fed Would Change Everything Recorded at the Mises Institute Supporters Summit, 1 November 2008; Auburn, Alabama. Includes a brief introduction by Mark Thornton. Lew Rockwell is the founder and president of the Ludwig von Mises Institute.
Calif. Taxpayers Due Refunds May Get IOUs If you expect you'll be getting a refund from California when you file your 2008 state income tax return, be prepared: you may instead receive a "registered warrant." Translation: an IOU. California is rapidly running out of money. Blame it on the state budget deficit that continues to bleed billions of dollars from California's reserves. Facing inadequate credit to make up the difference, California's Controller John Chiang warns that by the end of February, the nation's most populous state may not be able to pay some of its debts, and instead be reduced to issuing those creditors IOUs.
California Crisis Deepens - Are Other States To Follow? Today is the day Californians begin to personally feel the pain of the state's massive budget gap. As Gov. Arnold Schwarzenegger and top legislative leaders continue to meet behind closed doors to hammer out a plan covering the current $16 billion gap-projected to grow to $42 billion by June, 2010-the state controller is delaying $3.5 billion in payments to conserve cash. A self-imposed deadline for coming up with a budget deal by this weekend came and went, with no word on how close all sides are. Democrats, who control the legislature, have proposed a package of massive cuts and massive tax hikes. Republicans, which have enough votes to torpedo any budget deal, will only agree to the tax hikes if there is a hard spending cap to prevent future crises. And the governor wants to make sure the resulting package has enough stimulus programs to spur jobs creation projects. This includes easing some environmental review requirements, which Democrats have balked at.
Why Be a Nation of Mortgage Slaves? Preventing foreclosures has become a top priority of politicians, economists and regulators. In fact, allowing foreclosures to happen has merit as a free-market solution to the crisis. If the intent is to help homeowners, then foreclosure is undoubtedly the best solution. Household balance sheets have been destroyed by taking on too much debt via the purchase of inflated assets. With so little savings, a household with negative equity almost implies negative net worth. Walking away from the mortgage immediately repairs the balance sheet. Credit may be damaged, but homeowners can rebuild it. And by renting something they can afford, instead of the McMansion they cannot, homeowners are most likely to have some money left over each month that they can save toward a down payment on a house they can eventually afford.
Should the Government Encourage Foreclosures? In the government's laudable attempt to keep families in their homes, is it just creating a "nation of mortgage slaves?" That was the contention of a Sunday Wall Street Journal opinion piece and my guest, investor and Infectious Greed blogger Paul Kedrosky, agrees. Clearly, a foreclosure is no picnic, but neither is staying in a house you can't afford.
Public mood sour: 80 percent unhappy Don't let President Barack Obama's job approval - 66 percent in the latest Gallup polling - give you the wrong impression about how Americans feel about the way things are going. Only 17 percent of Americans surveyed are satisfied with the way things are going in the country, Gallup's tracking from Jan. 27-29 found - and 80 percent are dissatisfied. That's a notch higher than the 13 percent who said they were happy with the way things are going just before the presidential election in November, and also at the start of January.
Macy's cuts 7,000 jobs, slashes dividend Macy's Inc said on Monday it would slash about 7,000 jobs and cut its quarterly dividend as it forecast earnings for fiscal 2009 that fell far below Wall Street expectations, sending its shares down 4 percent. The department store operator said it took the steps to counter what it expects will be a very tough retail market this year, and that it would plan conservatively despite efforts by the U.S. government to build an economic stimulus package.
The IT job market is tanking — but not for everyone . . . . Some companies are still hiring tech workers, although the total number of IT jobs is shrinking The overall trend is clear, and not encouraging: The number of IT jobs in the U.S. is shrinking. From November to December, IT employment declined by nearly 50,000 jobs, to a total of 3.85 million positions, based on an analysis of U.S. Bureau of Labor Statistics data by the National Association of Computer Consultant Businesses in Alexandria, Va. That followed a loss of almost 34,000 jobs from October to November, according to the NACCB.
As unemployment rises, Uncle Sam has jobs Private companies, state, local government cut jobs, but the number of federal workers grows The economic downturn has forced private industry and state and local government to shed jobs, but one major employer in the country is hiring: The federal government. While the nation's 11 million unemployed and the millions more who fear losing their jobs may feel Washington should streamline too, economists say a strong federal work force is key to economic recovery. Were President Barack Obama to put any of the nearly 2 million federal civil servants out in the street in the middle of the worst economic downturn since the Great Depression, the consequences could be dire.
The New Poor Tax Congress's latest money grab will leave you fuming. Congress is moving so fast and furious that it's impossible to keep up. But we didn't want to miss telling you about the tax increase on the poor and middle class that Congress is about to pass without a whit of media attention. We mean the tax increase on smokers that is part of the new children's health-care subsidy bill. To finance this $73 billion entitlement expansion over 10 years, the bill imposes an additional federal tax of 61 cents per cigarette pack, from 39 cents today. According to the Bureau of Economic Analysis, 96% of America's 25 million smokers make less than $150,000 a year. The Tax Foundation estimates that 99% of the smokers who will pay the new tax make less than $250,000, which is the income below which President Obama promised would see no tax increase.
U.S. Bankruptcies Soar 33% in 2008 More than 1.1 million Americans filed for bankruptcy in 2008, a 32% increase from the year before and the largest annual total since 2005, according to Automated Access to Court Electronic Records (AACER). Filings for companies were up 50% to 64,318, while individual filings were up 1.03 million.
Consumer spending, incomes fall Consumer spending fell for a record sixth straight month in December as recession-battered households, worried about surging layoffs, boosted their savings rates to the highest level since May. Economists expect consumer spending, which accounts for the largest portion of total economic activity, to remain weak this year, prolonging an already painful recession. The Commerce Department reported Monday that personal consumption spending dropped by 1 percent in December. That was slightly worse than the 0.9 percent decline economists expected.
Victims of massive Internet Ponzi scheme sue Bank of America Bank officials should have spotted signs of fraudulent activity, the lawsuit charges The victims of a massive Internet Ponzi scheme have sued Bank of America (BofA) for helping the fraud occur by continuing to do business with the alleged perpetrators despite numerous signs of illegal activity. In a suit filed in the U.S. District Court for the District of Columbia earlier this month, fraud victims claimed that BofA's role as the financial institution of the company behind the alleged Ponzi scheme lent the operation an air of misplaced legitimacy. The bank's failure to follow industry standards for compliance with money laundering laws and banking regulations, "aided and abetted" those behind the scheme, the lawsuit claimed.
U.S. Economy: Manufacturing Shrinks, Spending Falls Manufacturing in the U.S. shrank again last month and consumer spending recorded an unprecedented sixth monthly decline in December, offering no sign the economy has hit bottom. The Institute for Supply Management's factory index was 35.6 in January; readings less than 50 signal a contraction and the measure has been below that level since February 2008. The Commerce Department said personal spending fell 1 percent in December, and reported a third monthly drop in construction. Factories are likely to cut back further as the slump in household purchases leaves companies with stockpiles of unsold goods. General Motors Corp. plans to slash production at 15 plants through June in an effort to work off the surplus inventory, and Chrysler LLC, Ford Motor Co. and Toyota Motor Corp. are also cutting back.
Allstate's Catastrophe Bonds Face 'Imminent' Default A catastrophe bond sold by Allstate Corp. faces "imminent" default following the collapse of Lehman Brothers Holdings Inc., Standard & Poor's said. It would be only the second such security to fail in a decade. New York-based S&P downgraded $250 million of debt sold by Allstate's Willow Re Ltd. to D, the lowest grade, from CC, according to a Jan. 30 statement. Northbrook, Illinois-based Allstate set up Willow Re as a means of selling the bonds in 2007 to protect against claims from hurricanes, and investment losses by Willow Re aren't tied to Allstate's own portfolio.
Help Me, Obama-wan-Kenobi, You're Our Newspapers' Only Hope! What did I tell you people? I told you people "Mark my words: This will not be the last time you hear about newspaper bailouts. Not if journalists have anything to say about it." Cue Providence Journal layoffee David Scharfenberg, and his Boston Globe-published proposal "to preserve the sort of journalism that keeps our democracy afloat": Congress, intent on jump-starting the economy, should set aside $100 million - well under 1 percent of the stimulus approved by the House of Representatives and pending in the Senate - for a national journalism fund. The cash would seed low-cost, Internet-based news operations in cities large and small - combining vigorous, professional reporting with blogging, video posts, citizen journalism, and aggregation of stories from other sources.
The SEC should leave Steve Jobs alone. The Securities and Exchange Commission is investigating whether Apple committed securities fraud by failing to inform the public about CEO Steve Jobs's health. This investigation exemplifies how the agency has run amok. Mr. Jobs has been synonymous with Apple since he revived the struggling company in 1997. A technical, design and marketing genius, Mr. Jobs and his team performed one of the most fabled turnarounds in corporate history. To the horror of his cohorts and Apple's investors, Mr. Jobs was diagnosed with pancreatic cancer in 2004. Despite heavy odds, his surgery appeared successful, and he returned to his post after just two months of recovery.
Congress Approves Broadband to Nowhere Why the U.S. lags in Internet speed. In Japan, wireless technology works so well that teenagers draft novels on their cellphones. People in Hong Kong take it for granted that they can check their BlackBerrys from underground in the city's subway cars. Even in France, consumers have more choices for broadband service than in the U.S. The Internet may have been developed in the U.S., but the country now ranks 15th in the world for broadband penetration. For those who do have access to broadband, the average speed is a crawl, moving bits at a speed roughly one-tenth that of top-ranked Japan. This means a movie that can be downloaded in a couple of seconds in Japan takes half an hour in the U.S. The BMW 7 series comes equipped with Internet access in Germany, but not in the U.S.
The Death of American Leadership Vast numbers of people in the United States and abroad are hoping that President Obama will end America's illegal wars, halt America's support for Israel's massacre of Lebanese and Palestinians, and punish, instead of reward, the shyster banksters whose fraudulent financial instruments have destroyed economics and imposed massive sufferings on people all over the world. If Obama's appointments are an indication, all of these hopeful people are going to be disappointed. Obama chose as his Treasury Secretary Timothy Geithner, the man who helped Bush's Treasury Secretary, Hank Paulson, engineer the $700 billion dollar rip off of the US taxpayer, money that was gifted to the banksters who destroyed Americans' pensions, jobs and health care coverage. These banksters, and the negligent federal regulators that enabled them, should be put in prison, not handed hundreds of billions of dollars.
Obama's Moralizing Tone May Not Wear Well How often do Americans want to hear how misguided they were before his arrival? Two days into his presidency, Barack Obama delivered on his most celebrated and ardently pledged campaign promise -- the imposition of stringent limitations on the ways in which U.S. agents can question terror suspects, an executive order mandating the closure of the Guantanamo Bay detention facility, and the freezing of all detainee prosecutions. That last request brought an eloquent reply from Col. James Pohl, Guantanamo's chief military judge, who promptly said no. He declared the directive to freeze all trials "not reasonable" -- a description that could as well apply to the whole of the administration's program for our moral cleansing and reformation in intelligence gathering. Col. Pohl refused, specifically, to delay the Feb. 9 arraignment of Abd al-Rahim al-Nashiri -- accused Saudi master-planner of the USS Cole bombing that killed 17 American sailors and a cause célèbre for the American Civil Liberties Union. In its characteristically nuanced style, the ACLU declared, through executive director Anthony Romero, that the judge's ruling was the work of "Bush hangers-on in the Defense Department."
North Korea preparing for ballistic missile launch North Korea appears to be preparing to test-launch its longest range ballistic missile, media reports said on Tuesday, stoking tensions just days after the reclusive state warned that the Korean peninsula was on the brink of war. North Korea, which typically carries out missile tests in times of political friction, last week said it was scrapping all agreements with South Korea in a move analysts said was aimed at pressuring Seoul and grabbing the attention of new U.S. President Barack Obama.
The destruction of American sovereignty A business agenda by the corporate elite -- a stealth agenda for a New World Order' a straightforward assault by the elitists of this country
Troubling talk from Obama By Oliver North Mr. Obama also spoke wistfully of the "respect and partnership that America had with the Muslim world as recently as 20 or 30 years ago" and added, "There's no reason why we can't restore that." Some will say it isn't fair to make our new commander in chief stick to the facts. That's the trouble with television interviews. They are on tape and stay around for years. If you are going to do them, it helps to know the facts. Let's see, 30 years ago ---- 1979 ---- the year that Ayatollah Ruhollah Khomeini returned to Iran, the "Islamic Revolution" was proclaimed, the U.S. was first described as "the Great Satan," our embassy in Tehran, Iran, was sacked, and 53 Americans were held hostage for 444 days. That's probably not the kind of "respect" Mr. Obama had in mind.
Generals Move to Obstruct Obama's Iraq Withdrawal Orders CENTCOM commander Gen. David Petraeus, supported by Defence Secretary Robert Gates, tried to convince President Barack Obama that he had to back down from his campaign pledge to withdraw all U.S. combat troops from Iraq within 18 months at an Oval Office meeting Jan. 21. But Obama informed Gates, Petraeus and Joint Chiefs Chairman Adm. Mike Mullen that he wasn't convinced and that he wanted Gates and the military leaders to come back quickly with a detailed 16-month plan, according to two sources who have talked with participants in the meeting. Obama's decision to override Petraeus's recommendation has not ended the conflict between the president and senior military officers over troop withdrawal, however. There are indications that Petraeus and his allies in the military and the Pentagon, including Gen. Ray Odierno, now the top commander in Iraq, have already begun to try to pressure Obama to change his withdrawal policy.
Zimbabwe Slashes 12 Zeros from its Currency as Hyperinflation Looms Zimbabwe's central bank announced today it revalued its currency by removing 12 zeros, as the country continues to struggle with hyperinflation. As a result of the announcement, 1 trillion Zimbabwe dollars will be worth one new dollar. This follows a similar move last July when the currency was revalued at a rate of Z$1 to Z$1,000. At last estimation, the country's inflation rate was roughly 231 million per cent - the highest in the world.
Smackdown In Davos. Fear stalks the halls of the World Economic Forum in 2009. The tone is negative and the attitude is nasty, what with all the finger-pointing, nation-bashing, and fear-mongering going on in the public sessions and in private conversations. Globalization is taking a hit, the US is getting mauled, bankers are being eviscerated, politicians are being criticized, free market capitalism is being jeered, and business people are getting more and more paranoid as they exchange personal stories of revenues in free-fall across the globe.
North American union after the economy collapse RFID Chips; NWO; NAU; Amero; loss of American sovereignty; culminating in a one-world government
A New World Order: Barack Obama, Henry Kissinger, Geo H.W. Bush, & Bill Clinton's Vision of The Future Obama's Chief of Staff, Rham-bo, never wants a serious crisis to go to waste!
Gold May Rise for Third Week on Demand for Cash Alternative Gold may rise for a third straight week on speculation that demand for an alterative to cash will spark purchases of the precious metal. Twenty-two of 31 traders, investors and analysts surveyed from Mumbai to Chicago on Jan. 29 and Jan. 30 advised buying gold, which rose 3.4 percent last week to $928.40 an ounce in New York. Eight said to sell, and one was neutral.
Treasury Real Yields at 16-Month High as Deflation Bets Die For the first time since 2007, Treasury investors are betting that inflation will accelerate. The yield on 10-year notes exceeds the consumer price index by 2.74 percentage points, the most since December 2006. The gap between two- and 10-year rates widened at the fastest pace in a year last month as traders demanded more compensation for longer-term debt. Treasury Inflation Protected Securities that signaled falling prices as recently as Nov. 20 show they will increase in the U.S. this year.
Fed Monetizes Debt, Investors Buy Gold In January gold rose significantly against all major world currencies. In most currencies except in the US dollar and the Japanese yen, gold actually made an all-time-high. The governments around the world are trying to take initiative while private capital is sitting on the sidelines, preferring the safety of government bonds and precious metals. Investors typically do not trust the governments to implement any effective economic solutions. Moreover, this lack of faith in central planning continues to grow since the US government has no other plan of action than to save the old, compromised and untrustworthy financial system.
Banks sought foreign workers Bailed-out banks sought to hire 21,800 foreign workers in past 6 years SANTA CLARA, Calif. (AP) -- Major U.S. banks sought government permission to bring thousands of foreign workers into the country for high-paying jobs even as the system was melting down last year and Americans were getting laid off, according to an Associated Press review of visa applications. The dozen banks now receiving the biggest rescue packages, totaling more than $150 billion, requested visas for more than 21,800 foreign workers over the past six years for positions that included senior vice presidents, corporate lawyers, junior investment analysts and human resources specialists. The average annual salary for those jobs was $90,721, nearly twice the median income for all American households.
Marcy Kaptur: "Wall street just robbed the biggest bank of them all - the PUBLIC TREASURY"
Risks Are Vast in Revaluation of Assets As the Obama administration prepares its strategy to rescue the nation's banks by buying or guaranteeing troubled assets on their books, it confronts one central problem: How should they be valued? Not just billions, but hundreds of billions of taxpayer dollars are at stake. The Treasury secretary, Timothy F. Geithner, is expected to announce details of the new plan within weeks. Administration and Congressional officials say it will give the government flexibility to buy some bad assets and guarantee others in an effort to have a broad impact but still tailor the aid for different institutions.
Fox News - $13 Trillion in Toxic Assets for Top 25 U.S. Banks!!! Toxic Assets (Level 3 Assets) = Those things owned that may have a lower value than the original purchase, but it difficult to put a value on. According to the report, the top 5 Big Banks estimated $ of Toxic Assets:
Citigroup $157 Billion
J Morgan Chase $140 Billion
Morgan Stanley $78 Billion
Goldman Sachs $69 Billion
Bk of America $60 Billion ---- Total $505 Billion!
Top 25 Banks = ~$13 Trillion Toxic Assets!!
Bonds Slump in January, Hedge Funds Buy Gold This January was one of the worst on record for financial markets. US Treasuries crashed after enjoying a recession-beating run in 2008. Gold and silver were the only major asset class to end the month higher. Hedge funds that previously ignored precious metals have become converts, with hedge fund star Greenlight Capital buying the yellow metal for the first time. Another money manager Osmium Capital Management is offering a hedge fund priced in ounces of gold to protect it from exchange rate fluctuations. Subscriptions are in dollars, euros or pounds and then converted into gold.
GOLD - INVESTMENT DEMAND STAMPEDES On December 17th 2008 the combined gold holdings of the World Gold Council gold Exchange Traded Funds and Barclays Gold Trust stood at 985.59 tonnes. By the 16th January 2009 this had risen to 1009.92. By 30th January early in London time they had grown to 1079.83 a growth of almost 70 tonnes in two weeks. To give one perspective, the Central Bank Gold Agreement signatories [European central banks only] sold only 3.5 tonnes in the last two weeks. There are many other gold bullion-holding funds in the developed world from Canada to Switzerland that are not included in this total. If they were the total would be approaching 1200+ tonnes. Clearly we are seeing a stampede of institutional fund management into gold at present!
Peak Gold (and Silver) Like all commodities, there is only a finite supply in the world. We will never "run out" of gold, or oil for that matter, but given the difficulty of finding inexpensive sources, it will take significantly more money to materially increase supply, and in turn significantly higher gold prices. Aside from the fact that new sources tend to be deeper in the ground (South Africa is the best example), in more remote regions, and in more politically unstable countries, the costs of drilling equipment and personnel continue to rise due to a combination of tight supply and the ongoing ravages of inflation.
US set for 'big bang' financial clean-up The Obama administration is gearing up for a "big bang" announcement within the next two weeks that will combine a bank clean-up with measures to reduce home foreclosures and probably steps to kick-start credit markets. The plan will involve an overhaul of the troubled asset relief programme - the $700bn bail-out fund - including strict curbs on compensation at banks receiving public aid. The Tarp overhaul is intended to restore public confidence in what is a deeply unpopular programme and ensure that taxpayer money is not used to fund excessive pay, bonuses and dividends to shareholders.
US financial rescue plan delayed a week The announcement of President Barack Obama's financial rescue plan will be pushed back a week to the second week of February, media reported on Saturday, citing administration sources. "Administration aides are saying that they want to get the details right, that there are a lot of moving pieces, and so it's going to take an extra week," a news channel said. Administration officials are weighing elements to include in the plan, including whether to restrict executive compensation, how to get credit markets flowing and how to deal with the foreclosure crisis, channel said.
ECONOMIC STIMULUS PACKAGE: Why are Republicans Even in the Room? (Part 1 of 2)
ECONOMIC STIMULUS PACKAGE: Why are Republicans Even in the Room? (Part 2 of 2) What is the cost of political aesthetics?
Keynesian bomb is ticking Keynesian spending that is being unleashed upon an unsuspecting world takes the role of a stereotypical Hitchcock moment: after first beguiling audiences into believing that danger lurks around the corner, the master movie maker usually displays an anticlimactic result such as a harmless mewing cat; but before the comic relief can fully set in he reveals a nasty turn as the real villain enters from the other side of the screen. For all the sounds and fury associated with the current meltdown in the global economy, the outburst of Keynesian spending will likely create a far worse result, namely hyperinflation that could well take hold before the year is over. There are a number of factors leading up to this, on both the supply and demand sides of the equation.
Wen looks at fresh Chinese stimulus China has pledged to take all necessary measures to stimulate its economy and fuel consumer spending, but has rejected as "ridiculous" suggestions that its huge pool of domestic savings has been partly to blame for the global financial crisis. In a rare interview, Wen Jiabao, China's premier, said in London on Sunday that Beijing was considering fresh measures to boost its economy beyond its Rmb4,000bn ($585bn, €458bn, £404bn) fiscal package launched late last year. He told the Financial Times: "We may take further new, timely and decisive measures. All these measures have to be taken pre-emptively before an economic retreat."
Tough rhetoric is no way to sway Beijing The Chinese government is well aware of the dangers of a new US president. The Clinton administration began with a flurry of anti-Chinese rhetoric. This was reversed as both countries prospered, ushering in the golden age of US-China relations. In 2001, soon after George W. Bush became president, an American aircraft was forced down over Hainan island, promoting policy discussions of China as a military threat. This approach vanished after the September 11 attacks as US military attention was diverted to the Middle East.
Dollars, Gold, and soon - Intelligent Life Advanced life forms on other planets are reportedly rolling on the ground laughing at the willfully delusional condition of humanity today. In a state of complete denial as to the meaning and root causes of the rapid decline in civilization now underway, both are ignored and perpetuated. Foremost among the symptoms of the collective insanity is the inverse relationship between T-Bonds/ US dollars and gold/silver. T-Bonds, or more broadly, all securities issued by the United States Treasury,(treasuries) are the units of value that enable the issuance of dollars from the U.S. Federal Reserve. If nobody bought treasuries, the fed could not issue any money. Inflation would be theoretically over.
The Oracle with Max Keiser - pt 1 - January 30, 2009 The first half of The Oracle with Max Keiser. Guest is Paul Walker, CEO of GFMS. We discuss Davos and the financial crisis. Gold market signaling deeper crisis to unfold. Walker forecasts gold at well over $1000 per ounce for 2009.
The Oracle with Max Keiser, pt2 - 30 January 2009 The top half of the second half of the Oracle with Max Keiser. Guests include Paul Walker, Philip Golub and Nobel economist, Joseph Stiglitz, talking to Max about prediction market manipulation.
The Oracle with Max Keiser, pt3 - 30 January 2009 This is the third and final part of the Oracle with Max Keiser that aired on BBC World on 30 January 2009 Features interview with fashion icon, Jean Paul Gaultier
Let banks fail, says Nobel economist Joseph Stiglitz The Government should allow every distressed bank to go bankrupt and set up a fresh banking system under temporary state control rather than cripple the country by propping up a corrupt edifice, according to Joseph Stiglitz, the Nobel Prize-winning economist. Professor Stiglitz, the former chair of the White House Council of Economic Advisers, told The Daily Telegraph that Britain should let the banks default on their vast foreign operations and start afresh with new set of healthy banks. "The UK has been hit hard because the banks took on enormously large liabilities in foreign currencies. Should the British taxpayers have to lower their standard of living for 20 years to pay off mistakes that benefited a small elite?" he said. "There is an argument for letting the banks go bust. It may cause turmoil but it will be a cheaper way to deal with this in the end. The British Parliament never offered a blanket guarantee for all liabilities and derivative positions of these banks," he said.
Stiglitz Criticizes Bad Bank Plan as Swapping 'Cash for Trash' Nobel laureate Joseph Stiglitz said any decision by President Barack Obama to establish a so-called bad bank to rid financial companies of toxic assets risks swelling the national debt. Obama’s administration is moving closer to buying the illiquid assets currently clogging bank’s balance sheets and preventing them from boosting lending, people familiar with the matter said this week. That amounts to swapping taxpayers' "cash for trash," Stiglitz said yesterday in a panel discussion at the World Economic Forum in Davos, Switzerland. "You shouldn’t chase good money after bad. We’re talking about a national debt that’s very hard to manage."
The Banks Are Making an Offer They Think that the People Cannot Refuse Better we tie off the bleeding wound now, nationalize the banks, and start again with an honest financial system, than pay one more cent of blackmail tribute to this den of thieves. They would use our own money to buy us.
February Blues After the Worst of Januarys As investors tallied their losses at the end of 2008, they comforted themselves with the thought that at least things could not get much worse. But yes, they can. And have. After tumbling by more than a third last year, stock markets managed to fall even further last month, posting their worst January ever. The economy has deteriorated even faster than many economists had feared, and employers are slashing jobs by the thousands. Gold prices are back up, volatility is rising and some economists worry that even a huge stimulus package will not pack enough oomph to quickly turn around the struggling economy. The ineffable whisper of optimism that rang in the new year is in full retreat, and investors are beginning to ask: If this is how the year starts, where do we go from here?
Deficit Spending and the Credit You Rode In On The AP news service reports that "The federal government already has run up a record deficit of $485.2 billion in just the first three months of the current budget year", which is "more than four times the $108.8 billion in red ink recorded during the year-ago period." In fact, things are looking so bad that "economists say the imbalance for the full year could easily top $1 trillion." I say, "Well, it sure might!" as the AP goes on, "The Treasury Department reported Tuesday that the deficit for December totaled $83.6 billion" which when multiplied by 12 months in a year comes to a staggering $1.003 trillion!
REP. MARCY KAPTUR, (D) OHIO: So I say to the American people, you be squatters in your own homes; don’t you leave! There is seething anger tonight at the federal government’s utter failure to help homeowners in danger of losing their homes, even as the government is spending literally trillions of dollars to help out banks, investment companies. There were more than three million foreclosure filings last year, a million people foreclosed upon. Now, one lawmaker, Congresswoman Marcy Kaptur says it’s time for homeowners to fight back, exercising squatter’s rights.
Dead Banks Must Be Allowed to Die So, your banking sector is basically insolvent, and your economy is teetering on the brink. No question, that's a rough situation. Never fear, Interfluidity is here. With the help of this uncredentialed blogger, you can turn your banking system around, save civilization as we know it, and still have time to do the laundry.
Nationalizing Bank Losses Tyler Cowen has a new argument against nationalization: Say that banks are in the red by $2 trillion for ever and all eternity. Taking over the banks simply means that the government picks up these losses as owner. Government ownership makes it less likely, not more likely, that bank creditors will "take a haircut." There's a certain amount of truth to this: nationalizing banks means nationalizing their net losses. But on the other hand, overpaying for their toxic assets means nationalizing their gross losses. The problem with Tyler's argument is that he's dealing in extremely small probabilities -- specifically, the chances that the creditors of too-big-to-fail banks will end up taking a haircut. And I'm not even sure his statement is true.
Stimulus projects draw ire, become trading chips? President Barack Obama may yet win skeptical Republicans in the U.S. Congress over to his economic stimulus plan if he and fellow Democrats abandon some pet projects. Obama would like to signal he is working for all Americans with a show of bipartisan unity when the Senate votes later this month. No Republican backed the plan that passed the House of Representatives last Wednesday.
Stimulus plan seems too unfocused to straighten out mess . . . . From dentists' offices to economists' desks, from farmers' fields to factory floors, all have experienced the worst economic conditions in generations and are struggling to understand what comes next. Friday's big economic news that gross domestic product fell at the steepest rate in 26 years actually elicited a sigh of relief from some economists who had feared the 3.8 percent annual rate of decline in economic activity in last year's fourth quarter might have been steeper. Even so, there is a broad fear the worst is yet to come.
We have a bunch of idiots on Wall Street $20B paid out Bonus from TARP - SURPRISED - I'M NOT! Sen. Claire McCaskill is outraged by reports that Wall Street executives received $18 billion in bonuses after receiving federal bailout money. McCaskill responded by introducing legislation that would cap executive pay at $400,000 a year for companies getting bailout money. McCaskill made her feelings known in front of her Senate colleagues. "We have a bunch of idiots on Wall Street that are kicking sand in the face of [the] American taxpayer," said McCaskill."Once the taxpayers aren't footing the bill, then it's not as much our business what they get paid. But right now they are on the hook to us and they owe us something other than a fancy waste basket and a $50 million jet." McCaskill also said executives getting bailout money should not be making more money than the president of the United States.
Senators work to scrub $819B stimulus bill Sen. Ben Nelson, D-Nebraska, and Sen. Susan Collins, R-Maine, want to slash 'wasteful spending' from the rescue package. Two senators spending the weekend trying to hammer out a stimulus bill free of unnecessary spending said Sunday they are hopeful they can develop legislation that's both bipartisan and effective. Sen. Ben Nelson, D-Nebraska, and Sen. Susan Collins, R-Maine, oppose the proposal in its current form and want to slash what they call wasteful spending from the bill, so moderate Republicans and conservative Democrats will be more likely to vote for it.
2009 Outlook, Part 2: Bonds As economic activity and PONZI finance fall off the face of the earth, we enter the stretch run of the CON game known as the Bond and FIAT currency markets. Although both are headed for their ultimate demise, the path will be quite different. In 2009, these challenges will be headed your way. Prepare properly and thrive, or fail to do so and fall to your demise. Never before in history have so many investors made decisions based on PHONY data and false headlines. Most in the alternative information arena are fully aware and have reported extensively on the POLITICALLY correct but practically incorrect economic data emanating from G7 governments. This is nothing but PR for public consumption as the real numbers would spawn RIOTS in the streets. So the public are NEVER told the true story as it is too horrible to acknowledge. The public is fed FALSE data.
Thomas Donaldson and John Browne Thomas Donaldson, Professor of Legal Studies and Business Ethics at the Wharton School of Business and John Browne, Senior Market Strategist at Euro Pacific Capital discuss the market meltdown
Street Braces for Rush of Corporate, Economic Data Wall Street is bracing for yet more reminders this week that the economy is in rotten shape. Companies from networking-gear maker Cisco Systems Inc. to media giant Time Warner Inc. are set to report quarterly results, while a steady stream of economic readings is also due. The most recent numbers from companies and the government haven't been roundly awful, but most have. That is stirring fears the economy's slide isn't slowing. On Friday, Wall Street learned that the economy posted its steepest slowdown in a quarter-century during the final three months of 2008. The 3.8 percent decline in the nation's gross domestic product wasn't as bad as Wall Street had forecast but investors grew worried that the numbers will only worsen.
Why the bank bailouts are doomed It's tempting to believe that more money will fix the messes of our financial institutions. But simple math tells us the system is insolvent, and the solutions are unpalatable. In the past 12 months, taxpayers, sovereign wealth funds and private investors have sunk $1 trillion into failing U.S. and British financial institutions, while central banks have slashed their cost of funds to nothing and their collateral standards even lower. Yet major banks continue to collapse. Why? It's tempting to suggest that fixes so far were too late, too small and too clumsily applied. Yet new evidence suggests a much more uncomfortable answer: Perhaps the hole at the bottom of bank vaults is simply too big to fill even by governments that can mass-produce money with the press of a button. And therefore the only cure may be the most precious commodity of all, and that is time.
"Height of Irresponsibility - It is Shameful" Obama on Wall Street Bonuses President Obama branded Wall Street bankers shameful on Thursday for giving themselves nearly $20 billion in bonuses as the economy was deteriorating and the government was spending billions to bail out some of the nations most prominent financial institutions.
Obama Seen Unveiling Bank TARP Rules First he Obama administration is expected to first unveil rules for banks receiving U.S. government help, including clarifications on lending and executive compensation, a source with knowledge of the government's thinking said on Sunday. Those rules are expected to be announced as early as this week and the administration's plan to bolster the country's banking industry is expected about a week later, the source said. President Barack Obama's finance team is working on the second stage of a $700 billion financial services rescue package, which was enacted last year to prevent the financial system from collapsing.
Frank Says Obama to Force Banks in TARP to Lend More House Financial Services Committee Chairman Barney Frank said President Barack Obama will require banks receiving government aid to lend more to businesses and consumers, saying the Bush administration "made a mistake" by not setting stricter rules for institutions getting funds from the $700 billion financial-rescue package. "I think you're going to see the Obama administration, having learned from that, push for much more lending," Frank said today on ABC's This Week. "There are going to be some real rules in there."
Compound Errors It is alleged that when Albert Einstein was asked to name the greatest invention in human history, he gave the following reply: "Compound interest." On page 1,664 of Italian economist Vilfredo Pareto's masterwork, The Mind and Society, we read: "A centime placed on compound interest at the rate of 4 per cent at the time of the birth of Christ would yield by the year 1900 a fabulous amount in francs…." The exact number would be 23,085 followed by 26 zeros. In Pareto's day the planet earth would have to be made of solid gold in order to make up 3 percent of the sum.
A Stimulus Plan With Dual Goals: Reform and Recovery As President Obama and Congress barrel toward the latest emergency program to resuscitate the American economy, one question is looming over their search for a cure: Can the government fashion a fast and efficient economic stimulus while also seizing the moment to remake America? For now, Mr. Obama and his aides are insisting they can accomplish both goals, following their mantra of using the urgency of the economic crisis to accomplish larger - and long-delayed - reforms that never garnered sufficient votes in ordinary times.
Geithner picks Goldman Sachs Lobbyist! Gibbs drilled on lobbyist in WH! Transparency? On the same day he announced rules aimed at reducing the role of lobbyists in agency decisions, Geithner named Mark Patterson as his chief of staff at the agency overseeing the federal government's $700 billion bailout initiative, from which Goldman Sachs received $10 billion, USA Today reported. Patterson "brings significant expertise to the job," Treasury spokeswoman Stephanie Cutter said. Patterson, who left the investment bank in April, signed the administration's ethics pledge that requires him to recuse himself from issues that "directly and substantially" relate to his former employer, Cutter said.
Nightmare on Main Street BATTERED by layoffs and debts and with a dread of worse to come, American shoppers clutched ever tighter to their wallets in the final three months of last year and thrust the economy into its worst downhill slide in 25 years. Americans cut spending on everything from cars to computers, and it's only getting worse so far in the new year. The US economy staggered backward at 3.8 per cent at the end of last year, the Government said. And the tailspin could well accelerate in the current quarter to a rate of 5 per cent or more as the recession churns into a second year and consumers and businesses buckle under a relentless crush of negative forces.
Regulators close 3 more small U.S. banks U.S. bank regulators closed small banks in Utah, Florida and Maryland on Friday, bringing the total of U.S. bank failures this year to six. The Federal Deposit Insurance Corp said it became receiver of MagnetBank in Utah because it could not find a buyer for the banking operations. MagnetBank had assets of $292.9 million and deposits of $282.8 million, the FDIC said. Regulators also closed Ocala National Bank in Ocala, Florida. Its deposits were assumed by CenterState Bank of Florida Inc (CSFL.O) and its four locations will reopen on Monday as branches of CenterState. Ocala National Bank had assets of $223.5 million and deposits of $205.2 million. The third bank failure was Suburban Federal Savings Bank in Crofton, Maryland, the FDIC said. Its deposits were assumed by Bank of Essex in Tappahannock, Virginia, and its seven offices will reopen on Saturday as branches of Bank of Essex.
Federal, state regulators issue cease-and-desist orders to 2 Illinois banks West Suburban lacks Bank Secrecy Act compliance; Corn Belt cited for inadequate capital level, board Federal and state banking regulators filed cease-and-desist orders against Corn Belt Bank & Trust Co. of Pittsfield, Ill., and West Suburban Bank of Lombard. West Suburban's issues include a board that has failed to adequately supervise the bank's management and ineffective internal controls to ensure compliance with the Bank Secrecy Act, according to a 21-page order from the Federal Deposit Insurance Corp. and Illinois Department of Financial and Professional Regulation that was released Friday.
The Financial Crisis Is Driving Hordes of Americans to Suicide Pushed past their breaking points, people are robbing banks to pay the rent, setting homes on fire -- even taking their own lives. The body count is still rising. For months on end, marked by bankruptcies, foreclosures, evictions, and layoffs, the economic meltdown has taken a heavy toll on Americans. In response, a range of extreme acts including suicide, self-inflicted injury, murder, and arson have hit the local news. By October 2008, an analysis of press reports nationwide indicated that an epidemic of tragedies spurred by the financial crisis had already spread from Pasadena, California, to Taunton, Massachusetts, from Roseville, Minnesota, to Ocala, Florida.
New Ponzi Scheme Unravels Agape - Nicholas Cosmo arrested for $400m fraud
Americans save just when economy needs their money Americans start saving again -- when the economy needs them to spend Americans are hunkering down and saving more. For a recession-battered economy, it couldn't be happening at a worse time. Economists call it the "paradox of thrift." What's good for individuals -- spending less, saving more -- is bad for the economy when everyone does it. On Friday, the government reported Americans' savings rate, rose to 2.9 percent in the last three months of 2008. That's up sharply from 1.2 percent in the third quarter and less than 1 percent a year ago. Like a teeter-totter, when the savings rate rises, spending falls. The latter accounts for about 70 percent of economic activity. When consumers refuse to spend, companies cut back, layoffs rise, people pinch pennies even more and the recession deepens.
How realistic is a North American currency? Commentary: Uniting U.S., Canada, Mexico money could result from crisis 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.
Oil rises near $42 on strike threats Oil futures rose near $42 a barrel on Monday, buoyed by threats of major strikes by refinery workers in the United States and Britain, but the gains were tempered by concerns of sagging global energy demand. Signs from OPEC late last week that it may deepen its record output cuts to stem the over $100 collapse in oil prices, and an abrupt end to a ceasefire in Nigeria's oil rich Niger-Delta also supported oil prices, analysts said.
Banks Sitting On An Inventory Time Bomb An interesting little factoid from RealtyTrac, the online foreclosure sale site that tracks all kinds of foreclosure data. Apparently about 70 percent of foreclosures in its database have not yet been listed on the MLS. I'm wondering why? Why are the banks sitting on all these properties instead of listing them for sale?
Regarding Housing Price Decline, You Ain't Seen Nothing Yet The NYC metro area has the highest aggregate price index in the country and has declined the least. Many sales people in the area have preached (up until a few quarters ago) that NYC was somehow immune to the laws of economics. Well, BoomBustBloggers are smarter than that. NYC metro has also experienced the largest price decrease on record in the month of 11/2008, and that was before a serious wave of firings and layoffs.
Congresswoman Kaptur Points Out The Revolving Door Between Wall Street & The White House - homeowners' mortgage holders cannot be identified!!
Mortgage crisis spreads to more affluent areas of Silicon Valley In almost every neighborhood in Santa Clara County, homeowners are increasingly falling behind on their mortgage payments - even in areas that were relatively untouched by the foreclosure crisis as recently as late 2007, according to a Mercury News analysis. The late-payment problem is creeping across the valley into areas such as Willow Glen, Campbell and Sunnyvale. Experts say it's likely that foreclosures will hit these more affluent areas as layoffs mount, home values drop and adjustable-rate loans reset.
Housing Bust Hits Hard in Small NC Factory Town WEST JEFFERSON, N.C. -- When this Appalachian town's light-switch plant went dark, fortunes dimmed for Jeff and Amanda Ruegsegger, and hundreds of their neighbors. No more Sunday lunches at the Mexican restaurant between morning and evening church: they now pack sandwiches. No more saving for retirement: they tapped Jeff's 401(k) to pay down a home-equity line of credit. The health insurance is gone, too, replaced by prayers that the Ruegsegger's and their two teenage children stay healthy. "There's a feeling of worthlessness," said Jeff, a former tool-and-die maker. A severance package is helping, but the lack of jobs could force the family to move. In small towns like West Jefferson across the country, factories and families had thrived on the back of the housing boom. Now, employers are fighting for survival and laid-off workers are conserving cash.
Out of Gaps In Treaties, First Salvos Of Trade War The world may be on the brink of a gentler kind of trade war. In 1930, Congress fired the first shot in a protectionist battle that prolonged and deepened the Great Depression. After passing a bill aimed at saving American jobs by effectively barring 20,000 imported goods, including French dresses and Argentine butter, other nations retaliated by raising their own barriers on U.S. products, effectively bringing global commerce to a halt.
Rio Tinto in talks on $9 bln from China-report Rio Tinto is in talks to raise up to $9 billion from Chinalco, the state-owned Chinese aluminium company which already holds an 11 percent stake in the miner, The Sunday Times reported without citing sources. The capital injection was intended to address growing concerns about the company's debt, the newspaper said, adding that the Chinese company was planning to buy minority stakes in Rio's mining assets.
New Iceland government promises to fight crisis Iceland named an interim center-left government on Sunday which promised to rebuild its shattered economy while cushioning its people from the worst of the crisis. Johanna Sigurdardottir of the Social Democratic Alliance will become Iceland's new prime minister after center-right Geir Haarde stepped down last week following months of protests, the first leader to become a casualty of the global economic crisis.
Obama's secret nuke talks with Iran exposed Even before election, president began 'open fist' negotiations The Obama administration has quietly initiated previously undisclosed back-channel negotiations with both Iran and Syria, according to an Agence France-Presse report. Even before winning the November 4 election, Obama initiated "two track" discussions with Iran and Syria, using top-level experts to begin talks, according to Jeffrey Boutwell, the executive director for the U.S. branch of the Pugwash Group, an international organization of scientists who champion international nuclear disarmament.
Israel Bombs Gaza After Vowing Harsh Response to Rocket Attacks Israel bombed areas of the Gaza Strip after vowing a "harsh" response to Palestinians who fired at least nine rockets and mortars into southern Israel yesterday. The raids targeted six suspected weapons-smuggling tunnels and an outpost of the Hamas group, the Israel Defense Forces said in an e-mailed statement early today. Missiles struck an unmanned police station in central Gaza, according to Palestinian witnesses.
U.S. partner, not Hamas, firing rockets into Israel While terrorists promise cease-fire, American 'allies' provoke violence HERZLIYA, Israel - With Hamas signaling it is willing to enter a cease-fire with Israel, it was the U.S.-backed Fatah party of Palestinian Authority President Mahmoud Abbas whose so-called military wing took responsibility for a barrage of rockets and mortars fired from the Gaza Strip today. Fatah's Al Aqsa Martyrs Brigades called WND and also released an official pamphlet to take credit for firing at least five rockets and four mortars today, lightly wounding two Israeli soldiers and one civilian. Also taking responsibility was a cell claiming it was working on behalf of the Iranian-backed, Hamas-allied Islamic Jihad terrorist organization.
Israel bombs Gaza tunnels in series of air raids Israel launched a series of air strikes in the Gaza Strip Sunday, targeting a Hamas security complex and tunnels used to smuggle weapons after vowing a "disproportionate" response to cross-border fire. The aircraft carried out half a dozen strikes after three Israelis were injured by a mortar salvo, including two soldiers and the first Israeli civilian hurt since a January 18 truce ended Israel's 22-day offensive in the coastal enclave.
North Korea says two Koreas on path toward war North Korea warned on Sunday that the downward spiral of relations with the South has pushed the peninsula to the brink of war, two days after it said it was scrapping all pacts with its rich capitalist neighbor. Analysts say the rhetorical volleys are aimed at changing the hardline policies of the South's president and are meant to grab the attention of new U.S. President Barack Obama.
"No later than January 1, 2011, all non-coded ammunition for the calibers listed in this act, whether owned by private citizens or retail outlets, shall be disposed."
Will the Ammunition Accountability Act require all ammunition to be encoded by the manufacturer and tracked via a database? . . . . Remember how Obama said that he wasn't going to take your guns? Well, it seems that his minions and allies in the anti-gun world have no problem with taking your ammo! The bill that is being pushed in 18 states (including Illinois and Indiana) requires all ammunition to be encoded by the manufacture a data base of all ammunition sales. So they will know how much you buy and what calibers. Nobody can sell any ammunition after June 30, 2009 unless the ammunition is coded.
Police find huge weapons cache in Glouco New Jersey state police say they discovered a massive arsenal of weapons and ammunition at the Gloucester County home of a former police officer who allegedly pulled a gun on two troopers. Brian Hinkle, 59, was arrested Monday on charges of aggravated assault after officers went to his home in Franklin Township to investigate a burglary in the area. When they asked him to go to the police station for questioning, authorities said, Hinkle ran into his house and brandished a gun. Police who over the next three days searched Hinkle's house and other buildings on his property say they found 259 firearms and nearly a half-million rounds of ammunition.
Bill creates detention camps in U.S. for 'emergencies' Sweeping, undefined purpose raises worries about military police state Rep. Alcee L. Hastings, D-Fla., has introduced to the House of Representatives a new bill, H.R. 645, calling for the secretary of homeland security to establish no fewer than six national emergency centers for corralling civilians on military installations. The proposed bill, which has received little mainstream media attention, appears designed to create the type of detention center that those concerned about use of the military in domestic affairs fear could be used as concentration camps for political dissidents, such as occurred in Nazi Germany.
DAVOS . . . .
'Grimmest' Davos Ever Brings Anger, Finger-Pointing at Bankers The theme of the World Economic Forum's annual meeting was "Shaping the Post-Crisis World." Unfortunately, the assembled executives, policy makers and do-gooders were stuck in the here and now. The search for scapegoats and the worst economic prospects since World War II resulted in a gathering marked by fear, anger and bitterness, a far cry from the usual search for consensus. Turkish Prime Minister Recep Tayyip Erdogan stormed out of a panel discussion and Russian Prime Minister Vladimir Putin hectored the U.S. as the font of the world's economic woes. Almost everyone blamed the few bankers who showed up for the near-collapse of the financial system.
World Leaders Wary of U.S. Economic Measures DAVOS, Switzerland - This was supposed to be the year the United States came in from the cold at the annual gathering of world leaders here. But instead of receiving a warm embrace, American policies were rebuked again and again in rhetoric that recalled the anger of the Bush years - mainly aimed at what the world views as the new threat of protectionism by the United States. Certainly, there is a deep reservoir of good will for President Obama and the change in direction he represents. But despite the pledges to encourage international trade and economic cooperation that accompanied the closing sessions of the gathering, the World Economic Forum, on Sunday, there were clear signs that deep divisions between the United States and the rest of the world remained.
In Davos, protectionism is a dirty word The beggar-thy-neighbour phase has begun in earnest. "Buy American" legislation has advanced from a barely credible threat to imminent reality on Capitol Hill in just weeks. The House has voted for a bill that prohibits the use of foreign steel in most infrastructure projects funded by Barack Obama's $820bn (£563bn) rescue package. The Senate is drawing up plans to widen that to all manufactured goods. This is what happens when a country loses half a million jobs a month, and when the state becomes spender-of-last-resort. Taxpayers are tribal. They do not want precious stimulus to feed the foreigner. Even so, this Dutch auction has the disorderly feel of the Smoot-Hawley Tariff debacle in 1930, though this time the collapse of commerce - if allowed to happen - will have very different consequences for the global balance of power. Mr Obama can veto the law, should he wish to pick a fight with Capitol Hill from day one. The world watches and waits in horror, especially in Davos.
Davos loses its confidence DAVOS, Switzerland (MarketWatch) - Confidence - or rather the lack of it - was the watchword in Davos this year. The credit crunch had cast a cloud over the annual gathering of top CEOs, financiers and business leaders last year. But it took the near-collapse of the global financial system last fall and what's shaping up to be the worst economic downturn since the Great Depression to transform the atmosphere at the annual meeting of the World Economic Forum from one often dominated by self-congratulatory wonder at the power of free markets. This year, much of the event, which consists of panel discussions, workshops, and speeches, was marked by finger pointing and dire warnings over the potential for rising unemployment, protectionist pressures, social unrest and political upheaval.
Turkey's prime minister Recep Tayyip Erdogan clashes with Shimon Peres at Davos 2009
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