Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Wed 04.01.2009
Taliban threatens attack in D.C. FBI issues alert nationwide U.S. counterterrorism specialists are taking seriously a threat Tuesday by Pakistani Taliban leader Baitullah Mehsud to attack the White House and "amaze" the world. Mehsud, who has a $5 million bounty on his head and has taken responsibility for a string of terrorist attacks in Pakistan - including a bold assault on a police training center in Lahore on Monday that killed more than 30 people - has made similar threats before. In recent years, however, Mehsud has gained strength and territory. In February, he united with two other Pakistani Taliban groups and pledged allegiance to Afghan Taliban leader Mullah Mohammed Omar. The U.S. has tried repeatedly to kill Mehsud with drone attacks. Mehsud, in phone calls to foreign and local news agencies on Tuesday, said his attacks against the Pakistani government were in response to the drone strikes on Pakistan's lawless borderlands, where Mehsud is thought to be hiding.
Gold beats stocks and bonds worldwide in first-quarter The spot price of gold bullion held inside a US$15 range Tuesday in London and New York, heading into March's close around US$920 an ounce as world stock markets rose and the US Dollar have back half of its recent gains. For the three months starting 1 January, the price of gold was on track for a 4.7% gain. The MSCI index of global equities meantime headed for its best monthly rise since the Dot.Com Crash bottomed in Oct. 2002, but it still gave its worst first-quarter performance since 2001. US Treasury bonds today compounded their worst start to a year since 1996, delivering a total 1.7% loss since New Year's Eve according to Merrill Lynch.
GOLD THOUGHTS The world does not need a New World Money backed by government IOUs. We already have an ideal One World Money in the form of Gold. It satisfies fully all the requirements of money. And most important, it has clearly demonstrated durability as a store of value. Gold, however, has one failing that prevents it from it being adopted by the nations of the world as the One World Money. Politicians cannot "print" more of it with which to buy votes. Can anyone imagine a U.S. Congress denying itself the right to spend money?
NYSE Runs Out of Gold Bars: What Happens Next? In the first Great Depression, the government tried, for several years, between 1929 and 1933, to maintain a fiction that the U.S. dollar was still convertible and as “good as gold”, in spite of having irresponsibly printed more dollars than they had gold to back them. Back in the 1920s, just like during the last 22 years, the Federal Reserve had run its printing press overtime, and, as a result, it couldn’t deliver. The U.S. Treasury eventually ran out of the gold, in the face of overwhelming public demand, resulting in the infamous gold confiscation order, by President Franklin Roosevelt, in 1933. History may be repeating itself, except that the government no longer makes any pretension to maintaining a gold standard, or any standards at all. Instead, nowadays, the futures exchanges offer to trade gold for a floating number of dollars, and, it appears, they have printed more paper contracts than they can redeem, at least when it comes to 1 kilogram bars.
Chris Powell, Secretary/Treasurer, Gold Anti-Trust Action Committee Inc. GATA Interview on Fort Knox Gold
U.S., China face-off looms at G-20 Obama also to meet Medvedev LONDON | No longer content to be the patient listener, China goes into this week´s Group of 20 summit armed with $2 trillion in foreign exchange reserves and intent on challenging the United States and demanding a greater role in managing the global financial system. In advance of the summit Thursday, Presidents Obama and Hu Jintao hold their first face-to-face session. Given the clout and interdependence of the two economies, the encounter Wednesday between the leaders of what has been dubbed the "G-2" may overshadow the larger meeting. Mr. Obama, who arrived in London on Tuesday, is also to meet with Russian President Dmitry Medvedev for the first time amid indications that the two will issue a major communique. U.S. officials declined to discuss the specifics before the document's release on Wednesday but said it would deal with key issues between the two countries and on the global agenda.
Sarkozy and Merkel Try to Shape European Unity PARIS - They are an extremely odd couple - he is short and hyperactive, she is dour and shy. He believes in the power of the state and big interventions; she believes in a softer role for the state, guiding and prodding the market. Nicolas Sarkozy and Angela Merkel don't even get along very well, aides to both leaders say. He has made fun of her accent in private meetings, the aides say, and she says he is self-centered and impetuous. ut the French president and the German chancellor find themselves in a forced marriage in these days of economic crisis. Responsible for the two largest economies among nations that use the euro, known as the euro zone, they are trying to shape European unity in the days before the Group of 20 economic summit meeting this week.
Nicolas Sarkozy’s threat to walk out of global summit Anglo-Saxon gibe strains relations with Obama President Sarkozy yesterday threatened to wreck the London summit if France’s demands for tougher financial regulation are not met. France will not accept a G20 that produces a “false success with language that sounds good but contains no commitments”, his advisers said. Asked if this meant a possible walk-out, Xavier Musca, Mr Sarkozy’s deputy chief of staff for economic affairs, said: “A basic rule with nuclear deterrence is that you do not say at what point you will use the weapon.”
Financial Rescue Nears GDP as Pledges Top $12.8 Trillion The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s. New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation's gross domestic product was $14.2 trillion in 2008. President Barack Obama and Treasury Secretary Timothy Geithner met with the chief executives of the nation's 12 biggest banks on March 27 at the White House to enlist their support to thaw a 20-month freeze in bank lending.
Total Bailout Bill: $12.8 Trillion Every so often, Bloomberg likes to run the numbers on the total cost of the economic recovery. Back in February, the total bill stood at $9.7 trillion. But that wasn't anything. The new tab: $12.8 trillion, which as Bloomberg notes is basically the size of the entire economy. We're spending everything we've produced in the last year to try to get things back on track. Now if, perhaps, you have a hard time conceptualizing $12.8 trillion, you can think about it in two ways. One is that picture on the right, which is an image of what a man would look like standing next to a pile of $1 trillion worth of $100s. Picture that 12.8 times. Or remember that $1 trillion is about what the US collects in taxes in a year. So to pay for this recovery, the government would have to raise our taxes nearly 13x. Either that or pass it onto future generations.
Stocks Will Drop; Banks Will Go Belly Up - Roubini The stock market will drop as major banks go belly up says Nouriel Roubini, the NYU economist that successfully predicted the current economic collapse. Below is the text from an interview Mr. Roubini gave today on Bloomberg TV. U.S. stocks will fall and the government will nationalize more banks as the economy contracts through the end of 2009, said Nouriel Roubini, the New York University professor who predicted last year's economic crisis. "The stock market is a bit ahead of the real macroeconomic and financial news," Roubini, a professor at NYU's Stern School of Business and the chairman of consulting firm Roubini Global Economics, said in an interview with Bloomberg Television in London today. "We'll have some major banks going belly up that will need to be taken over."
Nassim Taleb On CNBC Among his messages: We need to see more executions of public figures, a la Wagoner. The people who got us into this mess need to go.
According to Timmy . . . . ‘Robust and stable’ system is goal of US The US and Europe are united in their desire for far-reaching regulatory reform to strengthen the global financial system, Tim Geithner, the US Treasury secretary, has told the Financial Times. Mr Geithner said ahead of the G20 summit that the “US has a huge interest in acting quickly and comprehensively to use this opportunity to develop an international consensus on how to make the system more robust and stable”. He rejected the notion that the US is only interested in fiscal stimulus while continental Europeans want regulatory reform. He said all G20 nations agreed on the need for a strong regulatory response to the crisis and on the broad shape it should take. “Relative to where we were in 1998 during the Asian crisis, there is a much stronger degree of consensus,” he said. "The gap between where the French are, where the Germans are, where the Americans are, where the Chinese are – it is a very small gap."
Geithner's "Nuclear Option" Should Scare Bejesus Out Of Bondholders From the beginning of the bailouts, we've been appalled by the willingness of Messrs. Paulson and Geithner to protect most financial-firm bondholders to the tune of 100 cents on the dollar while socking it to taxpayers. Geithner suggests--we think disingenuously--that this is because the government lacks the legal authority to ding the bondholders (the real reason is presumably that he's scared of triggering another Lehman Brothers). But in any event, Geithner has now requested access to this "nuclear option": The ability to seize and restructure any financial institution that the government deems insolvent.
Economical Eminent Domain "Turbo Timmy" has been all over Washington of late, sounding off about the Obama "Ready, Shoot, Aim" strategy of economical collectivism. It is probably a difficult script to stick with when the "boss" himself habitually muddies things whenever he stumbles away from the script/teleprompter… Just a short time ago, on March 12th, Obama said that the economic crisis is "not as bad as we think".. If things aren’t as "bad as we think", why would the ridiculous measures being suggested need to be suggested? I apologize for attempting to infuse logic into the baffling bouillabaisse of liberal lunacy... In the FT article entitled, “US reveals sweeping regulatory overhaul”, Timmy took on the House Financial Services Committee. There were so many bunkum buzzwords being bandied about that it sounded not unlike the hum surrounding a Bolshevik beehive.
Bank plan a cure-all? Don't bet on it The Treasury's trillion-dollar program to relieve banks of their 'toxic' assets probably won't do much for the economic crisis. Skepticism (but not dogmatism) is in order. No shortage of ink has been spilled on the PPIP, the Treasury's $1 trillion Public-Private Investment Program. With this week's Contrarian column being the first since the plan was announced, let me add my view to the debate. I believe it will be difficult for the Treasury to make its plan work. But I don't want to be dogmatic and state that the proposal cannot work. Why? Because it's not impossible to think that the government (the Treasury or the Federal Deposit Insurance Corp.) may coerce reluctant institutions -- as, say, part of upcoming stress tests of bank solvency -- into selling some portion of their troubled assets.
AIG crisis could be the tip of an insurance iceberg The company's situation reflects problems throughout the life insurance industry as investments suffer. Further strain could bring about a second financial crisis. When insurance giant American International Group Inc. imploded last fall, the firm's problems were quickly blamed not on its core insurance business but on an obscure operation that traded exotic mortgage securities. But as the economic crisis deepens, it has become clear that AIG's problems extend across most of its business lines, including its massive life insurance and retirement services operations, which reported a staggering $18-billion quarterly loss this month. The company's situation is emblematic of problems across the life insurance industry, which is suffering deep losses on investments that underlie policies for millions of American families.
Bailout Economics: The patchwork of attempts to prop up the financial system has taken on a life of its own - we call it bailout economics. At every step, Adam Smith's "invisible hand" to guide the economy has become less evident. Back in the 18th century, the economist coined the term as a metaphor for the self-regulating nature of free markets. Economic booms and busts are as old as mankind, but each time a crisis occurs, policy makers want to ensure that the same disaster will never happen again. Most of the time, instead of fixing crises, policy makers place the seeds for even greater problems down the road. Others argue the government must not do anything and let the free market take care of things entirely; however, it is important to note that we don't start with a vacuum: we have a complex set of regulations and taxes that influence market behavior. If we are going to change the rules, we must ensure we don't throw out the baby with the bathwater to preserve the benefits of capitalism.
Geither Plan Good for Some Banks, Says Roubini Others Are Toast Tim Geither's plan to get toxic assets off bank balance sheets should help strengthen SOLVENT financial institutions, Nouriel Roubini of RGE Monitor says. But banks that fail stress tests (a.k.a., insolvent ones) should be seized, restructured, and sold. In most bank bailouts so far, bondhonders have been spared losses, with taxpayers footing the bill. If future seizures are conducted properly, Roubini says, the bondholders won't be protected. Instead, they'll have to take their lumps along with everyone else.
Obama's Summit With Hu Follows Catalog of Trade Complaints President Barack Obama took aim at Chinese barriers to U.S. exports and investment, making good on a campaign pledge to take a tougher line on trade enforcement while risking increased tensions with the Asian nation. A day before Obama's meeting with President Hu Jintao to urge joint efforts to ease the global recession, the U.S. Trade Representative's office produced a 55-page catalog of Chinese subsides, tax policies and regulations that it said discriminate against American companies.
Obama arrives in Britain ahead of G20 as consensus may be emerging US President Barack Obama has arrived in the United Kingdom for his first major foreign trip since taking office in January. "The stakes for this summit are very high," Mike Froman, Obama's deputy national security adviser for economic affairs, told reporters in London. "They are magnified by the fact that much has happened since the last G-20 summit in November." Froman said there is a consensus "to expand the scope of regulation to any institution, market or product that's systemically important to the international financial system and that could include hedge funds." He said the G-20 countries want to "encourage" off-shore financial or tax havens to sign on to global accounting and transparency rules.
Obama, in Europe, Faces Big Challenges to Agenda LONDON - For nearly 30 years, American presidents have arrived at economic summit meetings with nearly identical talking points: the solution to most ailments lies in more economic integration, unleashing free markets and using a light touch to tame capitalism. As President Obama landed here Tuesday night to attend the Group of 20 summit meeting, almost every one of those principles appeared up for debate. Economic integration is in retreat. Some countries have tried to wall themselves off from the troubles sweeping the world, noting that those less tied to the global economy have suffered less. Heavy regulation is back, this time with Washington's agreement. On Tuesday the French hinted they would walk out of the Thursday Group of 20 summit meeting if other nations did not agree to set up a robust international financial regulatory agency.
Obama Said to Conclude Bankruptcy Best Option for GM, Chrysler President Barack Obama has determined that a prepackaged bankruptcy is the best way for General Motors Corp. to restructure and become a competitive automaker, people familiar with the matter said. Obama also is prepared to let Chrysler LLC go bankrupt and be sold off piecemeal if the third-largest U.S. automaker can't form an alliance with Fiat SpA, said members of Congress who have been briefed on the subject and two other people familiar with the administration's deliberations.
World trade 'in free fall', says OECD World trade is in free fall and should decline by 13.2% in 2009 as the economic crisis cuts demand across the globe, the Organization for Economic Co-operation and Development said on Tuesday. In its latest set of forecasts for global economic growth, the OECD issued a stark outlook for 2009, issuing a warning that was even more severe than the World Trade Organization's already dramatic estimate of a 9% fall. "International trade in free fall," the report said. "After steady annual growth at around 8% over the past half decade, world trade growth started to weaken in early 2008 and collapsed in the last quarter," it said. "This contraction of world trade is broad-based, and affects all regions and is the worst since comparable data exist."
OECD sees bleaker future for U.S. The U.S. economy will contract this year much more sharply than the Obama administration has forecast, and next year's U.S. unemployment rate will reach double digits, far higher than the White House has predicted, according to a report issued Tuesday by a group representing the world's most advanced economies. The U.S. recession "has deepened sharply, with output contracting at an alarming pace and the labor market weakening rapidly. Since December 2007, nearly 4.5 million jobs have been lost," the Paris-based Organization for Economic Cooperation and Development said in its report. "The financial system remains fragile and some parts of the banking sector are under considerable stress." The OECD, founded in 1948, is an international economic forecasting organization made up of representatives from 30 of the world's most highly developed free-market democracies.
Bankrupting the world The so-called Public Private Partnership Investment Program (PPPIP) introduced last Monday, by Treasury Secretary Timothy Geithner not only stands to bankrupt America but the global financial system as well. This is the worst yet of the bailouts, a swindle if ever there was one, which will cause President Obamas approval rating to plummet. In fact, count me among those coming to the presidents aid. I really don't think he understands what this means. Consider Geithner as the face, the voice though not the brain, for this program which advocates turning over the keys to the banking system to a bunch of hedge fund sharks, and all at taxpayers expense. The cost could more likely end up being $6 trillion than the $1 trillion in starter money. In fact, its more likely that the dastardly plan was launched like a missile from jolly old London, which is in line to lose big if their offshore hedge fund empire is shut down.
Jim Rogers welcome to the economic meltdown
Obamas attack on the upper middle class Obama and his public relations team have made it appear that his trillion dollars in higher taxes will fall only on the rich. Obama stresses that his tax increase is only for the richest 5 percent of Americans while the other 95 percent receive a tax cut. The fact of the matter is that the income differences within the top 5 percent are far wider than the differences between the lower tax brackets and the rich Americans in the 96th percentile. For Obama, being rich begins with $250,000 in annual income, the bottom rung of the top 5 percent. Compare this rich income to that of, for example, Hank Paulson, President George W. Bushs Treasury Secretary when he was the head of Goldman Sachs. In 2005, Paulson was paid $38.3 million in salary, stock and options. That is 153 times the annual income of the rich $250,000 person.
Nestlé chief warns of long-term hazards of stimulus plans Increased government spending through stimulus plans risks plunging the world into a new crisis and has already sparked a return of inflation, according to the chairman of Nestlé. Peter Brabeck, one of Europe’s leading businessmen with his role as vice-chairman of Credit Suisse and L’Oréal, told the Financial Times in a video interview that the current recession would be “very deep” and “relatively long”. He added that the deficits being created by many governments meant “this crisis will go on for a long period”. “I’m more worried about what we are doing today in some countries might be the basis for a new crisis …The stimulus projects that are being put into place now means that the printing machine will start to work and this is clearly the start of inflation,” he said.
Wall Street Bets Obama Will Fire Bank CEOs Next Network's NYSE floor staffer Bob Pisani: 'Several' bank executives are to be pushed out next. After General Motors Chairman and CEO Rick Wagoner was forced out by President Barack Obama, Wall Street is betting bank CEO firings will be the next shoe to drop. CNBC’s New York Stock Exchange floor reporter Bob Pisani told viewers of CNBC’s March 30 "Street Signs" the market’s actions, with the Dow Jones Industrial Average dropping as much as 300 points, are reflect, in part,that the government is going to force bank CEOs out as they did with Wagoner. "Look, the main concern here today is Geithner’s comments that some banks are going to need a lot more capital," Pisani said. "And for everybody who says why haven’t they fired anymore bank CEOs yet – why hasn’t the government done it, wait – they’re going to."
8 CEOs on the Hot Seat The forced resignation of General Motors (GM) Chief Executive Rick Wagoner as a condition for the struggling auto maker to receive more federal aid is unlikely to make the heads of U.S. car and financial companies sleep better at night. Indeed, if there were any questions that government funds comes with ropes and not just strings attached, well, the Wagoner reckoning should put them to rest.
America's Eyes Wide Shut! False Hope Trumps Good Sense As each day of the new administration passes, the American taxpayer is driven deeper in debt, American savings, investment and retirement accounts lose more value, Washington DC leftists seize more control over private industries and private assets, and today, the Obama administration is directly engaged in the day to day management of multiple private corporations and industries. Still, the average American has allowed a false sense of hope to trump simple common sense, which is clearly no longer common in America… Obamanation Now Running GM, Chrysler and Banks
Potential GM bankruptcy plan includes company split A possible bankruptcy plan being discussed for General Motors includes quickly forming a new company of the automaker's most profitable parts, while a group of other units would remain under bankruptcy protection for a longer period, a source familiar with the plans told Reuters on Tuesday. GM also would seek to have a new deal in place with the United Auto Workers union prior to any bankruptcy filing, the source said. GM warned earlier on Tuesday that there is a rising chance it could file for bankruptcy by June, as the company has 60 days to reach deeper concessions with bondholders and unions after its previous restructuring plan was rejected by the U.S. government as insufficient.
Unusual Bankruptcy in Store for G.M. Industries like airlines, railroads and steel have all been remade through bankruptcy. But the Obama administration is trying to reshape General Motors in a truly novel way. A troubled company like G.M. usually seeks to line up creditors, employees and other stakeholders for a plan of reorganization before a bankruptcy filing. Failure to achieve this agreement, often called a prepackaged bankruptcy, can create a prolonged and messy court process as the company battles its creditors while its business and financing rapidly deteriorate. In G.M.'s case, the government is seeking to ease the carmaker into what it calls a "controlled" bankruptcy, somewhere between a prepackaged bankruptcy and court chaos, by persuading at least some creditors to agree to a reorganization plan, one that would cleave the company into two smaller pieces.
Pushing Out Wagoner Out Won’t Save GM Of course Rick Wagoner needed to go. But investors hoping that having the government order the ouster of the CEO of General Motors might want to look at what happened at AIG. Last September, the Treasury forced the resignation of AIG CEO Mike Sullivan, replacing him with Ed Liddy. No one expected this to be a panacea for AIG. But taking out the head of AIG might actually have some serious unanticipated costs. Now the danger is that the same thing could happen at GM. One of the most serious costs of removing AIG’s head was that it largely allowed the AIG management to escape accountability. The ruin of AIG was not a product of Sullivan alone but those under him - including the risk management team at AIG - have largely escaped unscathed.
G.M. Vows to Restructure, in or Out of Court The new chief executive of General Motors, Frederick A. Henderson, said Tuesday that bankruptcy was "more probable" than ever for the automaker but that he still hoped to successfully restructure the company out of court. “We will get the job done," Mr. Henderson said in his first news conference since succeeding Rick Wagoner, who resigned at the request of the Obama administration over the weekend. "We will either do it out of court or we will do it in court," Mr. Henderson said, "but we will get the job done in terms of recreating and reinventing General Motors as a competitive enterprise, one that wins in the marketplace."
Ron Paul On Auto Bailouts - " too little, too late" "We Need The Markets, Need To Believe In Freedom" - 3/31/2009
GM's new CEO says bankruptcy is 'more probable' GM CEO Henderson says bankruptcy 'more probable,' more plants could close in restructuring General Motors Corp.'s new chief executive said Tuesday that more of the automaker's plants could close and bankruptcy is "more probable" as GM works to meet new, tougher requirements for government aid. In his first news conference as CEO, Fritz Henderson said he expects the company would "need to take further measures" beyond the five plants the company said it would shutter when it submitted a restructuring plan to the government last month. GM also is likely to offer another buyout program to workers as it looks to cut labor costs, Henderson said. President Barack Obama said Monday that GM's initial plans to become viable didn't go far enough. He gave the company 60 days to make more cuts and get more concessions from bondholders and unions or it won't get any more government help.
[taxpayers will now fund car payments!] GM to make payments for customers who lose jobs New GM CEO says automaker to take over car payments for some customers who lose their jobs General Motors says it will make car payments for some customers who lose their jobs. The automaker's new CEO Fritz Henderson says under GM's new "Total Confidence" program, the company will make up to nine car payments of $500 each for customers who have lost their jobs through no fault of their own. Customers must qualify for state unemployment to be eligible for the program. The program starts April 1 and runs until April 30. The news comes hours after rival Ford Motor Co. said it would take over customers' payments of up $700 for a year in the event of job loss. Henderson, formerly chief operating officer of General Motors Corp., replaced Rick Wagoner who stepped down Monday at the government's request as the Detroit automaker seeks more federal aid.
GM Teaches The Fed A Lesson Following the government's rejection of its turnaround plan, GM (GM) is holding a press conference to announce its new "Total Confidence Program." You know, it's one of these deals where they promise support to customers that run into financial hardship. Introducing the program, GM VP Mark LaNeve said: Traditional levers like 0% financing no longer work. Got that Ben Bernanke? You can cut and slash and quantitative ease all you like, but financing costs aren't the issue. When people are looking to delever their balance sheets, even free debt isn't appealing.
Cerberus Tries to Salvage What It Can From Chrysler For Stephen A. Feinberg, the long road back from the most disastrous investment of his career - Chrysler L.L.C. - began last week around a polished wood table inside the Treasury Department. It was not the road he had envisioned when his private investment firm, Cerberus Capital Management, bought Chrysler in the summer of 2007. Back then, Mr. Feinberg was hailed as a hero - the Wall Street financier who just might save the American car industry. Instead, he lost billions for his investors and co-investors. And last week it became clear that he would lose Chrysler's auto operations, as well.
Consumer confidence in US still near record lows, as more jobs are lost Confidence among US consumers stayed near a record low in March, held back by job losses and fears of further hardship. The Conference Board's index increased to 26.0 this month from a revised 25.3 in February, the lowest reading since data began in 1967. A separate report showed home values plunged by a record in January. Three straight months of 600,000 or more job losses and shrinking household wealth indicate that recent gains in consumer purchases may not be enough to keep the recession from lasting through much of the year. The lack of confidence could also limit the impact of tax cuts and incentives in President Barack Obama's stimulus plan.
Sun-Times Files for Bankruptcy The owner of The Chicago Sun-Times filed for bankruptcy protection on Tuesday, saying that it expects advertising revenue to plummet 30 percent this year and joining a growing list of newspaper companies that have taken that step. Sun-Times Media Group is in a different position from the other publishers that have filed for bankruptcy - companies that made money on operations last year, but cannot make payments on the large sums they owe to banks and bondholders. Sun-Times has no such debt, but it has enormous operating losses and faces a major bill for back taxes. In December, the Tribune Company, which owns The Chicago Tribune, The Los Angeles Times and several other major papers, filed for bankruptcy. Since then, Star Tribune Holdings of Minneapolis; Philadelphia Newspapers, publisher of that city's two major papers; and the Journal Register Company, owner of The New Haven Register and many smaller papers, have done the same.
Congress eyes credit card fees Issuers balk at any changes Democrats in Congress are taking a swipe at credit card issuers and their increasingly creative reasons for raising fees on strapped consumers, setting up a well-financed duel over how to crack down on purported abuses. Striking the right balance between getting credit moving again and protecting consumers who depend on it is a long and complex process and nowhere near complete. But lawmakers were hoping to advance consumer-friendly legislation before they head home for Easter at the end of the week and face their constituents - 12.5 million of whom are out of work.
Philip Morris's Support Casts Shadow Over a Bill to Limit Tobacco Here comes the tobacco regulation that Philip Morris can live with. On Wednesday, the House is expected to pass a bill that would give the Food and Drug Administration authority to regulate the tobacco industry for the first time, including the power to block or approve new products. The Senate, which passed a similar measure in 2004, is expected to take it up later this year, with support from President Obama. Passage, if it comes, may be politically impossible without the negotiated support of Philip Morris, whose Marlboro brand helps make it the American tobacco industry's biggest player. The company's central role, in fact, is a reason that some antismoking activists worry that the bill is a deal with the devil. Philip Morris's support is also why other major tobacco companies - none of which back the legislation - see a cunning ploy by Marlboro's maker to seal the company's dominant position.
HHS Nominee Admits Tax Errors Sebelius Says She Paid Nearly $8,000 to Correct Problems Health and Human Services nominee Kathleen Sebelius has corrected three years' worth of tax returns after finding "unintentional errors." Sebelius (D), the governor of Kansas, alerted senators to the changes in a letter yesterday. She said the changes involved charitable contributions, the sale of a home and business expenses. She and her husband paid a total of $7,040 in back taxes and $878 in interest from 2005 to 2007. It is the latest tax issue to hit an Obama administration nominee. The president's first pick to head the Department of Health and Human Services, former Senate majority leader Thomas A. Daschle (D-S.D.), withdrew because of major tax problems.
California sales tax rises to almost 9 percent Californians will start feeling the pain of the recently negotiated state budget fix on Wednesday, when a 1-percent increase in the state sales tax will force consumers to pay more for goods such as cars, furniture, laptops and toys. Starting Wednesday, California's sales tax will rise to 6 percent, bringing the average local sales tax rate to almost 9 percent _ one of the highest in the nation. Businesses and manufacturers are worried that the temporary tax increase could prolong the worst recession in recent memory and further dampen retail sales. In the coming months, Californians will also see an increase in personal income taxes and higher fees to license their vehicles.
Close encounters of the nuclear kind Thomas Kuhn, the influential scholar who introduced the concept of paradigm change, wrote that the work of scientists is usually predicated on the assumption that they know what the world is like. In the end, however, they're often shown to have been seriously mistaken, though many are never quite able to accept this fact. The same could be said of historians. The so-called newspapers of record faithfully report events as government sources dictate, while turning a blind eye to anyone who fundamentally challenges the official line. Historians, in turn, base their narratives on these biased accounts, often buttressing their work with selectively released government documents, many carefully contrived for calculated impact. Historians, like scientists, are too often unable to imagine or accept that they have missed something of enormous significance.
New Worries on Insurgency as U.S. Readies Exit From Iraq BAGHDAD - As the American military prepares to withdraw from Iraqi cities, Iraqi and American security officials say that jihadi and Baath militants are rejoining the fight in areas that are largely quiet now, regrouping as a smaller but still lethal insurgency. There is much debate as to whether any new insurgency, at a time of relative calm in most of Iraq, could ever produce the same levels of violence as existed at the height of the fighting here. A recent series of attacks, however, like bubbles that indicate fish beneath still water, suggest the potential danger, all the more perilous now because the American troops that helped to pacify Iraq are leaving.
U.S., Iran break ice with high-level meeting First significant contact in eight years THE HAGUE | The U.S. and Iran held their highest-level meeting in eight years Tuesday on the sidelines of a conference on Afghanistan and raised the issue of missing and jailed Americans, signaling that the Obama administration is dispensing with intermediaries to deal with a longtime adversary. Secretary of State Hillary Rodham Clinton said more direct contacts are to come as part of a major outreach to Tehran promised by President Obama during the presidential campaign. "In the course of the conference today, our special representative for Afghanistan and Pakistan, Richard C. Holbrooke, had a brief and cordial exchange with the head of the Iranian delegation," Mrs. Clinton told reporters at the end of the one-day event, adding, "They agreed to stay in touch."
Bernard Madoff to be on Topps trading card The Topps Company says Bernard Madoff will be featured in a new set of trading cards dubbed the "world's biggest hoaxes, hoodwinks and bamboozles." Jailed financier Bernard Madoff is getting some unusual recognition for his crimes. The Topps Company says Madoff will be featured in a new set of trading cards dubbed the "world's biggest hoaxes, hoodwinks and bamboozles." The company says the cards will feature an array of scoundrels, fakes and villains such as Charles Ponzi. Mr. Ponzi was a notorious swindler who ran what is now know as a Ponzi scheme, the same scheme Mr. Madoff pulled off for years until authorities busted him.
US home price drops set records in Jan. Index shows housing prices falling by record annual amount in January Home prices sank by the sharpest annual rate on record in January, and the pace continues to accelerate, but there were a handful battered metro areas where price declines slowed, according to data released Tuesday. The Standard & Poor's/Case-Shiller index of home prices in 20 major cities tumbled by a record 19 percent from January 2008. It was the largest decline since the index started in 2000. The 10-city index dropped 19.4 percent, also a new record. All 20 cities in the report showed monthly and annual price declines, with 13 posting new annual records. Prices dropped by more than 10 percent in 14 cities. Faring better were Dallas, Denver and Cleveland, with annual price declines of around 5 percent.
State officials ban tea from Tea Party Via Snapped Shot and STACLU comes news that Iowa state officials have banned the use of tea by Tea Party protesters holding an event tomorrow in Cedar Rapids. The tea violates environmental standards because it will discolor the water: A Cedar Rapids group will do a symbolic tea dumping into the Cedar River on Saturday because state officials won’t let them use the real thing. An anti-tax group wanted to pitch in real tea like the Bostonian revolutionaries opposed to England’s tea taxes. Tea, although natural and quite tasty, is considered a pollutant that can’t go into a body of water without a permit, said Mike Wade, a senior environmental specialist at the DNR’s Manchester field office.
Who will raise kids: Mom, Dad or state? Parental rights: 67 in Congress pushing to amend Constitution Though efforts to pass a constitutional amendment protecting parental rights have failed in the past, two U.S. legislators are preparing to reintroduce the idea this week; and this time, they say, the effort is backed by more than 60 congressional members. Rep. Peter Hoekstra, R-Mich., who introduced a parental rights amendment by himself last year, told the Agence France-Presse that he will be joined by Sen. Jim DeMint, R-S.C., on Tuesday as they renew the fight. According to a statement released to AFP by Hoekstra's office, the amendment "would clearly outline in the U.S. Constitution that parents, not government or any other organization, have a fundamental right to raise their children as they see fit."
Is Fascism Returning to Italy? The lights are beginning to go out all over Europe. In Austria, nearly one third of voters supported pro-Nazi parties during federal elections last year. In Italy, a party founded by the political heirs of Benito Mussolini merged with the conservative party of Prime Minister Silvio Berlusconi earlier this week. These shocking developments are causing many to fear a fascist resurgence across Europe. The post-fascist National Alliance political party officially fused with Berlusconi’s People of Freedom bloc on March 22. National Alliance leader Gianfranco Fini is now, in effect, Berlusconi’s heir-apparent. Despite claims to the contrary, this merger does not mean that fascist ideals have disappeared from the Italian political scene. Rather, this merger means that pro-fascist politicians are now being accepted into mainstream Italian politics. Last September, Italian defense minister and National Alliance member Ignazio la Russa paid homage to Italian troops who fought alongside the Germans against the Allies during the Second World War.
Japan outlines new stimulus move Taro Aso on Tuesday instructed his ministers to compile a new economic stimulus package “as soon as possible before mid-April” in addition to a longer-term programme for growth. “The Japanese economy is still in a critical situation,” Mr Aso said. “I would like to make utmost efforts (to stimulate the economy) based on bold thinking,” he said. The new stimulus package, which came just ahead of Mr Aso’s departure to join world leaders at the G20 summit in London on Wednesday, will have three main priorities: to ensure that the Japanese economy does not deteriorate further, to maintain jobs and boost Japan’s future growth potential, Mr Aso said.
China, Argentina sign 70b yuan currency swap deal China inked a 70 billion yuan ($10.25 billion) currency swap agreement with Argentina on Sunday, the largest financial deal between China and a Latin American country, Xinhua News Agency reported. The deal was jointly signed by People's Bank of China Governor Zhou Xiaochuan and Central Bank of Argentina Governor Martin Redrado on the sideline of the 50th annual meeting of the Inter-American Development Bank, which aims to stabilize regional currency, shun financial risk and stem the ripple effect of the ongoing financial crisis. Under such a framework, Argentina importers could use renminbi, instead of the US dollar, to settle deals with Chinese exporters, Xinhua reported. Argentina is the fifth country after South Korea, Malaysia, Belarus and Indonesia to sign such a currency swap deal with China.
Hugo Chavez to Seek Arab Support for ‘Petro-Currency’ Doha, Qatar - Venezuelan President Hugo Chavez sought Arab support Tuesday for a proposed oil-backed currency to challenge the U.S. dollar in his latest swipe at Washington's dominance in global financial affairs. It's highly unlikely Chavez will gain any serious momentum for his "petro-currency" proposal at a summit of South American and Arab League leaders, but it represented another attempt to undercut the dollar's standing as the world's leading commercial currency. China has struck deals -- most recently this week with Argentina -- to conduct trade in currencies other than the dollar. Iran has proposed replacing the dollar with the euro or other currencies to set worldwide oil prices.
Missile Collaboration Between North Korea and Iran Goes Back Years Iran has denied reports that Iranian missile experts are cooperating with North Korea as it prepares for its anticipated long-range missile flight, but the two regimes are known to have a long record of collaborating in the missile field. Pyongyang’s announcement that it intends to send a communications satellite into orbit during a five-day window beginning on Saturday has ratcheted up tensions in the region. Japan, whose main island of Honshu lies under the projected flight path, is deploying missile defense systems and two U.S. warships with missile-interception capabilities are also in the area.
[Don't miss this series of videos - Faber & Rogers sized up the crisis 4 years ago] Jim Rogers Hosts Marc Faber discuss world economy - 2005 pt 1/5
Jim Rogers Hosts Marc Faber discuss world economy - 2005 pt 2/5
Jim Rogers Hosts Marc Faber discuss world economy - 2005 pt 3/5
Jim Rogers Hosts Marc Faber discuss world economy - 2005 pt 4/5
Jim Rogers Hosts Marc Faber discuss world economy - 2005 pt 5/5
Russia backs return to Gold Standard to solve financial crisis Russia has become the first major country to call for a partial restoration of the Gold Standard to uphold discipline in the world financial system. Arkady Dvorkevich, the Kremlin's chief economic adviser, said Russia would favour the inclusion of gold bullion in the basket-weighting of a new world currency based on Special Drawing Rights issued by the International Monetary Fund. Chinese and Russian leaders both plan to open debate on an SDR-based reserve currency as an alternative to the US dollar at the G20 summit in London this week, although the world may not yet be ready for such a radical proposal. Mr Dvorkevich said it was "logical" that the new currency should include the rouble and the yuan, adding that "we could also think about more effective use of gold in this system"
The Dollar's Days are Numbered The dollar’s days are numbered. We are beginning to feel sorry for it…as we do all lost causes. Trouble is, we don’t know whether it’s a big number or a little number that marks the dollar’s last days. Last week, a decimal point seemed to move to the left. A UN advisory panel had suggested that maybe it was time to figure it out a better way to run the world’s monetary system. Better, that is, than using the U.S. dollar as the reference currency for the whole world. As you’ll recall, almost every price on the planet ultimately relates to dollars. You can buy an orange here in Granada for euros. But the global market in oranges is priced in dollars. So when people figure out how much something is worth – in global terms – they typically refer to dollars. And when countries want to make sure they have enough money on hand to settle up their debts with other countries…or enough money to buy Florida oranges…or enough to purchase oil to run their factories – they lay in a supply of dollars.
Peter Schiff The Dollar is Gonna Drop Like a Stone
Silver and Gold ARE Money (PART 1/2) While gold trades as a currency (or "medium of exchange") and also is a "store of value," and even a "unit of account" for some, and very little is actually consumed. Economically speaking, gold trades even in the modern world as money. Gold is a luxury good with insignificant industrial usage. Its major market as a luxury good is Indian women's jewelry, but to these women gold is their money or insurance if their mate leaves, dies, or is disabled so the metal is not consumed – it can be easily recovered.
Will the world run out of gold? Heard about the recent Fed Reserve’s decision to buy back toxic debts worth $300 billion? If you are wondering where is the money coming from to pump in so much dollars into the economy, the answer is the US Fed is just printing it. In fact the printing press of the US treasury is working overtime now. So, even as the Fed is churning out dollar notes without proper support of gold stock, investors across the globe are now getting jittery. Because, they have now started wondering whether the gold which they are trading in the Futures market really exists. If you go by the details and the trade volumes, it is just a fiction and the game of a piece of paper called contracts.
Gold: Ambrose Evans-Pritchard
Silver Is Quietly Flashing a Buy Signal, But Buyer Beware Anyone who follows the silver market knows that the fundamentals of silver are incredibly strong, long term. Since most silver is mined as a byproduct of base metal mining, and base metal prices are currently depressed by the global recession, inventories of base metals are high, and silver supply is shrinking. Many less profitable mines are closing down. Silver recently went into backwardation, which could indicate delivery problems are imminent in the physical silver market. The US government currently holds no silver bullion at all, down from five billion ounces immediately after WWII. Above ground silver supplies are currently estimated to be one billion ounces, compared to five billion ounces of gold. This includes silver in tableware, jewelry, and other sources that will never be available on the open market.
Zhou Xiaochuan: We Need An International Currency China wants to divorce the dollar. Good move. The dollar is on the brink of considerable depreciation. Premier Wen Jiabao is concerned looming inflationary pressures will sharply decrease the value of American debt held in Chinese banks. In order to encourage create greater monetary stability, Zhou Xiaochuan wants to create an international currency unit that can be used in trade as well as a standard against which other currencies can be pegged. Zhou, an economist who is currently the Governor of the Peoples Bank of China, is absolutely right. We do have a global economy. To facilitate trade, we need an international currency. I mean, how can we have a global economy unless we also have a global currency? The dollar, which used to provide the functions of a reserve currency, has been decimated by Congressional ineptitude, administrative failure, and ideological ignorance. Few believe it will recover any time soon.
Contango's Gold Standard Investors in commodity exchange-traded funds have been dealing with the vexation of the oil market's contango for months. You know about contango, right? If you can get your oil, your gold or any other storable commodity immediately delivered for less than it costs to wait a month or more, you've got yourself a contango. Now, why should something you must wait for cost more? After all, in retail transactions, purchasers often pay a premium for express, rather than regular, shipment. Futures are a different kettle of fish (or oil, or gold). Once you've contracted to take possession of the commodity - as you do in a futures contract - you pick up the carrying costs until its actual delivery. That includes financing, storage and insurance charges.
Gold Remains Resilient Despite Sell-Off in Commodities Growing negative sentiment is causing investors to move out of commodity markets, which is also helping to drag down gold prices. Gold prices are modestly weaker Monday afternoon, trading in the mid-$951 per ounce level. There was an increase in volatility early in the North American session. Prices dropped to session lows of $908.60 just ahead of the open. Following the open, prices spiked higher to $932.50. However, the gains were short lived as risk aversion sentiment dragged prices into negative territory. According to some commodity strategists, grim news from the U.S. auto sector is helping to weaken all commodity prices, including those for gold.
G20 Could Surprise Currency, Gold and Bond Markets Don't write off the London G20 meeting. It could lay the foundations for fundamental global change, impacting currencies, gold and bond markets. Understandably, most commentators are cynical about the April 2 meeting in London achieving anything major and British newspapers mostly enjoy mocking Gordon Brown‚s hopes for the meeting. But take two of the expected outcomes from the meeting and then look at some other developments afoot and we could be facing a momentous shift. The two expected outcomes to note are:
Beefing up the IMF, with more funds and extra seats on the board for developing economies, notably China.
Agreement to regulate global financial markets and institutions more closely.
Not exactly Bretton Woods II (the original 1948 Bretton Woods conference gave birth to the post WWII financial system) but these two outcomes are building blocks.
Jim Rogers: Britain is Bankrupt
G-20 Targets Hedge Funds as Leaders Near Consensus Leaders of advanced and emerging economies are closing ranks behind plans for tougher rules on financial markets to prevent another collapse like the one that wiped out much of Wall Street. A global approach to regulation has been gaining momentum ahead of the Group of 20 summit April 2 in London. U.S. President Barack Obama, U.K. Prime Minister Gordon Brown and their G-20 counterparts aim to merge their national blueprints for strengthened regulation into a united front to rein in hedge funds, derivatives trading, executive pay and excessive risk- taking by financial firms.
Gold Falls, Dollar Gains on G20 Jitters; Investment Demand "Overwhelmed" by Asian Scrap Supplies THE PRICE OF GOLD fell hard Monday lunchtime in London, dropping nearly 2% against the US Dollar to hit an 8-session low as world stock markets tumbled and the "risk averse" US Dollar and Japanese Yen both rose on the forex market. Crude oil fell hard towards $50 per barrel - down 7% from last week's four-month high - while government bonds rose sharply but stayed on track for their worst Jan. to March performance since 1996. The move in Gold Prices also wiped out an earlier 1.6% gain for UK and European investors. "Trying to call the bottom for the [stock] market is impossible," said one Edinburgh fund manager to Bloomberg as the MSCI index lost 1.7% ahead of the US opening.
Merkel Is Set to Greet, and Then Resist, Obama Chancellor Angela Merkel of Germany, an avowed friend of the United States and the leader of the European Union's biggest economy, is diplomatic about the coming visit by President Obama. But she is clear that she is not about to give ground on new stimulus spending, stressing the need to maintain fiscal discipline even as she professes to want to work closely with the new American president. Speaking in her modern concrete-and-glass Chancellery building last week, she underscored the points of drama that may well delineate the three summit meetings during Mr. Obama's first trans-Atlantic trip since he was elected.
Rising Powers Challenge U.S. on Role in I.M.F. Barely six months ago, the International Monetary Fund emerged from years of declining relevance, hurriedly cobbling together emergency loans for countries from Iceland to Pakistan, as the first wave of the financial crisis hit. Now, with world leaders gathering this week in London to plot a response to the gravest global economic downturn since World War II, the fund is becoming a chip in a contest to reshape the postcrisis landscape.
Cash is Trash You have probably been taught that the responsible way to handle your economic affairs was to work hard, be thrifty and invest safely. This is what the old timers did, and it worked for them. When they reached 65, they were able to retire. However, the old timers lived in a country on the gold standard. They went to work at age 16, saved 15% of their income each year and put it in the local savings bank at 5% interest per year. Let us do a little 8th grade math. Assume an average wage of 30 oz. of gold per year. Saving 15% of that means saving 4? oz. per year. At the end of a 49-year working lifetime, you have saved 220? oz. of gold.
Global Meltdown Part 3 This is the point at which the global economy falls the rest of the way off of the cliff. The false hope raised by the illusion of decisive action on the part of the Obama administration is giving way to Democratic party in-fighting and an increasing public perception that Obama and Geithner are out of their league. A number of events on the macro economic and political fronts threaten to converge simultaneously to force another major contraction in global markets.
TURBO TIMMY'S SNEAKY SCAM On close inspection, there are only two possibilities for the Geithner “Rescue Plan”: It’s an honest effort doomed to fail... or a blatant scam that just might work. Treasury Secretary Geithner,, we hereby dub thee “Turbo Timmy.” As a number of you have informed me, the “turbo” moniker - as in, “doesn’t know how to use Turbo Tax” - has been around for a while now. With my many sources and ears on the street, I’m surprised I hadn’t heard it prior. (Or maybe it just went in one ear and out the other.) Other honorable mentions in the SecTreas nickname contest include:
“Tycoon Tim” (for serving his rich masters)
“Torpedo Tim” (for threatening to sink the economy)
“Little Timmy Geithner” (after a hapless cartoon character with wish-granting fairy godparents)
“Lollypop Guild” Geithner (after the obscure Wizard of Oz character)
Tim “The Beaver” Geithner (because his earnest, goofy manner has a “Leave It to Beaver” feel)
The Boys From Brazil As postured on these pages for some time now, seasonal inversions in trading patterns of markets tend to occur in mature markets due to sentiment / structural irregularities. In the case of the US stock market, what has essentially occurred is because the general investing population has been dumbed down‚ due to excessively good economic conditions over an extended period, along with powerful mind-numbing corporate propaganda, their aversion to risk has been dangerously tempered. This has caused them to adopt a casual attitude towards risk, and explains why such a large percentage of small speculators, who have proven themselves to be the dumb money‚ once again by increasing long exposures to historic extremes set against falling prices, remain stubbornly bullish to this day. In essence then, they are simply too dumb to respect risk evidenced in their persistence to game the market, which is why stocks have fallen in correspondingly record fashion as well. As Mark Lundeen points out in his latest, only the crash of 1929 to 1932 saw greater volatility than the present sequence. As he goes on to point out however, this of course does not mean total losses in stocks will not match the extremes witnessed in the 30's, which is supported in knowing just how complacent investors are in the face of stark reality.
Under a Flourescent Moon Mr. Obama heads to Europe now where official hostility is rising against the Anglo-American method of pounding monetary sand down the rat-holes of “non-performing” debt, bankrupt enterprise, and bubble-levitated bonds. Our poised and charming Prez may escape personal obloquy from the quaint old-world street folk, but most of the other G-20 policy playerz take a dim view of the shell-and-pea games being played by the custodians of the world’s reserve currency, including front-end-loader bank bail-outs, the shuffling of worthless securities under TARPS and TARFS, the desperate efforts to prevent the sane re-pricing of real estate, the cannibalizing of treasuries by the Federal Reserve, the now-notorious hijacking of public “liquidity” injections by third parties like Goldman Sachs, and most generally the perceived sacrifice of everybody else’s greater good for the sake of maintaining Lloyd Blankfein’s cappuccino machine.
Peter Schiff 3/25/09 - MSNBC Morning Joe
$100+ Oil, Not “If” But “When”? While it seems like ages ago, it was a just a year or so ago when oil was rising sharply and experts were knocking one another over to be the first to scream for $100, $150 even $200 oil around the corner. The public outcry grew with each rise in gas prices. The crowd in Washington, who has been passing the buck for years rather than address the growing energy crisis, hauled the oil industry executives in front of Congress for the cameras in hopes of the public not realizing they had already kicked the can down the road versus having to actually do something about it.
Mr. Roach, is an ‘Economic Armageddon’ still on the Horizon? . . . . . The world stopped in 2008 – and it was a full stop for the era of excess. Belatedly, the authorities have been extraordinarily aggressive in coming to the rescue of a system in crisis. But as in the case of Humpty Dumpty, they will not be able to put all the pieces back together again. The next era will be very different from the one we have just left behind. Up until recently there had been a symbiotic relationship between China (the saver and producer) and America (the borrower and consumer) with a belief that these disparities could be finessed indefinitely, as could record debt burdens and currency misalignments. Some day, went the argument, the world would have to face up to its imbalances, but the day of reckoning was always assumed to be some far-off, distant future. That was the fatal mistake made by the world in denial. But that game is now over. Our unbalanced world is now in the midst of a painful but necessary rebalancing what with the U.S. consumer most likely in the early stages of a multi-year contraction and the fact that there is no other consumer group to fill the void. As such, a post crisis global economy is likely to struggle for years to come.
Paul Revere & Gold .... And gold where art thou? ......... How bad are things going to get? It seems now to be up to the United States government. Can the government create enough money before the US and global economies plummet off the horizon? Unemployment is predicted by many analysts to reach double digits. These days are worse than the days of FDR. The only master plan seems to be the creation of trillions of more paper dollars. Will capitalism survive ten years from now? Certainly more inflation is in the works as this new money enters the system. Where are all the jobs today? In the service sector. The government and health system primarily. And what maintains the service sectors? Without productivity and manufacturing the service sector has no legs to stand on. All eyes are on the US dollar. If the rest of the world begins to lose faith in our paper dollars then the financial world sinks period.
Geithner’s ‘Dirty Little Secret’ US Treasury Secretary Tim Geithner has unveiled his long-awaited plan to put the US banking system back in order. In doing so, he has refused to tell the ‘dirty little secret’ of the present financial crisis. By refusing to do so, he is trying to save de facto bankrupt US banks that threaten to bring the entire global system down in a new more devastating phase of wealth destruction. The Geithner Plan, his so-called Public-Private Partnership Investment Program or PPPIP, as we have noted previously (Obamas Rettungsplan für die Banken: keine Lösung, sondern legaler Diebstahl), is designed not to restore a healthy lending system which would funnel credit to business and consumers. Rather it is yet another intricate scheme to pour even more hundreds of billions directly to the leading banks and Wall Street firms responsible for the current mess in world credit markets without demanding they change their business model. Yet, one might say, won’t this eventually help the problem by getting the banks back to health?
Geithner Says Free Market Will Not Solve Current Economic Problems Treasury Secretary Timothy Geithner defended his approach to fixing the country's economic mess Sunday, saying "the market will not solve this" while disclosing a bailout fund for battered banks has $135 billion left and might need more. Geithner used his first Sunday talk show appearances to promote President Barack Obama's massive government spending plan to ease credit, help borrowers and inject billions of dollars into the financial sector. Long kept behind the scenes, the treasury secretary has emerged as the administration's champion of a plan that fueled an uptick in Wall Street markets.
George Soros, the man who broke the Bank, sees a global meltdown George Soros was 13 when the Nazis invaded his homeland of Hungary. As a Jew, he was forced to adopt a false identity and live separately from his parents in Budapest. Instead of being traumatised by the experience, though, he found the danger exhilarating. “It was high adventure,” he says, “like living through Raiders of the Lost Ark.” Sixty-five years later, he still thrives on danger. He famously made $1 billion on Black Wednesday by shorting the pound, earning him the label of “the man who broke the Bank of England”. Last year, as the world tipped into financial chaos, Mr Soros pocketed another $1.1 billion by correctly predicting the downturn. “I’m an expert in crises,” he says.
Experts On Third World Banana Republics: The U.S. has Become a Third World Banana Republic Who are the leading experts on third world banana republics? Probably those at the International Monetary Fund with years of experience lending money to corrupt regimes after their excess became so out of hand that they needed emergency assistance. Today, two top IMF officials said that the U.S. has become a third world banana republic. First, Simon Johnson, former chief economist of the IMF, says recovery will fail unless we break the financial oligarchy that is blocking essential reform, and calls the U.S. a banana republic. In his essay "The Quiet Coup" (which includes sections like "Becoming a Banana Republic"), Johnson writes: Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Russia grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise. . . . The downward spiral that follows is remarkably steep. Enormous companies teeter on the brink of default, and the local banks that have lent to them collapse....
Conservative "Talkers" Will Soon Be Gone! Democrat/Socialists going after “Talk Radio” with a vengeance Speaking as an old, veteran broadcaster, I can tell you, I see the handwriting on the wall. Forget what the socialists in Congress are telling you as well as the press. The Socialists intend to pass a law that will force radio stations to get those conservatives talkers off the air, or lose their licenses to operate their stations… and, if I am correct, those stations’ licenses will be up for grabs. The truth is, as I see it, minorities filing for those licenses will get preferential treatment by the FCC and eventually be awarded those same licenses…........Look, for those who don’t know …........the Federal Communications Commission is GOD in the broadcasting Industry. They have the power of life and death for a broadcast station in America. You probably don’t know this (unless you are a broadcaster) but broadcasting is one of the most highly regulated industries in the country. The government has its nose into every cussed thing you do as a broadcaster. Oh, the FCC will play humble and swear they don’t involve themselves in the daily grind of broadcast stations but that is unadulterated bovine scatology! Every broadcaster knows they do. Max Keiser on Bankers' Bonuses - 27 March 2009 (1 of 2) Part one of Max Keiser on France 24's Face Off talking about Bankers Bonuses.
The Bubble That Must Burst The bubble that must burst is a very, very large bubble. It is worldwide. It is co-existent with most nations of the world. Like all bubbles, for a time it appears rational. It even seems to work. The bubble seems to bring all gains and no losses, and all at very low cost. The returns seem very high and never-ending. They attract the resources and allegiance of many because the yield seems so high. But like all bubbles it cannot go on forever, because it is based on greed and gain extracted from other persons against their wills. It is a bubble based on extrapolative expectations that eventually cannot be sustained by reality. What is this bubble? It is the bubble of constitutional and representative democracies that lack the consent of all of those being governed. It is the bubble of states that promise more and more social gains and cannot deliver upon these promises. It is a bubble of governments that are chain letters and Ponzi schemes. It is a bubble built upon robbing some to pay others.
How Bailouts Can Butcher Capitalism We have a new F word: failure. One unhappy hallmark of the Great Recession is a dramatic spike in financial distress. Moody's predicts that the default rate on corporate debt--which helps foretell bankruptcies--will be three times higher this year than in 2008. Home foreclosures are already at record highs, and going higher. Defaults on credit cards and other consumer debt will crest right behind mortgages. The Obama administration is on the case, bailing out banks and homeowners and aiding dozens of industries either directly, through a financial-rescue scheme that could top $2 trillion, or indirectly, through the $787 billion stimulus bill. Automakers, furniture companies, real estate developers, and even porn magnates have their hands out.
Housing slump frays economy of 'carpet capital' DALTON, Ga. Inside a cavernous factory, massive machines that churn out carpeting for Home Depot and Lowe's were idled on a recent Friday as workers took a forced day off without pay. Across Dalton, the self-proclaimed "Carpet Capital of the World," storefronts stood vacant, once bustling restaurants were virtually empty and police battled a rising methamphetamine problem. This city in the foothills of the Appalachians, which makes nearly 75 percent of the country's floor coverings, has felt a mountain of economic troubles since the country's real estate boom went bust. Plummeting demand for flooring has led to a near doubling of Dalton's unemployment rate. Foreclosures are on the rise. And there are signs that the population may be shrinking. There are doubts that Dalton's economy will ever look the same again _ even after the nation's financial crisis ends.
Max Keiser on Bankers' Bonuses - 27 March 2009 (2 of 2) Second half of Face Off with guest Max Keiser. Discussion concludes with agreement that there should be a return to gold standard to avoid a repeat of counterfeiting operations of Central Banks.
THE MARGINAL PRODUCTIVITY OF DEBT Why Obama's Stimulus Package Is Doomed to Failure The paper mill on the Potomac is furiously spewing up new money. According to the manager of the mill, as indeed according to the Quantity Theory of Money, this should stop prices from falling and the economy from contracting. In this article I present an argument why this conclusion is not valid. On the contrary, I shall show that new money created on the strength of a flood of new debt, is tantamount to pouring gasoline on the fire, making prices fall and the economy contract even more. The Obama administration has missed its historic opportunity to stop the deflation and depression inherited from the Bush administration because it entrusted the same people with the task of damage-control who had caused the disaster in the first place: the Keynesian and Friedmanite money doctors in the Fed and the Treasury.
Brown snubbed over tax Germans wreck ‘global new deal’ GORDON BROWN’S carefully laid plans for a G20 deal on worldwide tax cuts have been scuppered by an eve-of-summit ambush by European leaders. Angela Merkel, the German chancellor, last night led the assault on the prime minister’s “global new deal” for a $2 trillion-plus fiscal stimulus to end the recession. “I will not let anyone tell me that we must spend more money,” she said. The Spanish finance minister, Pedro Solbes, also dismissed new cash being pledged at Thursday’s London summit. “In these conditions I and the rest of my colleagues from the eurozone believe there is no room for new fiscal stimulus plans,” he said.
Obama Issues Ultimatum to Carmakers President Obama announced what amounts to a do-or-die ultimatum for the struggling automobile industry on Monday, laying out strict standards that the carmakers must meet to get more government aid and declaring that the industry must survive because it is “like no other, an emblem of the American spirit.”
U.S. Lays Down Terms for Auto Bailout The White House on Sunday pushed out the chairman of General Motors and instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid. The decision to ask G.M.’s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration’s determination to keep a tight rein on the companies it is bailing out - a level of government involvement in business perhaps not seen since the Great Depression.
Chrysler agrees on framework of alliance with Fiat Chrysler LLC has reached an agreement on a framework of a global alliance with Italian automaker Fiat SpA that has the support of the U.S. Treasury, Chrysler's CEO Bob Nardelli said on Monday. "We appreciate the willingness of the (autos) Task Force, along with industry and financial experts, to consult closely with us in order to achieve this significant step," Nardelli said in a statement. Chrysler, owned by private equity Cerberus Capital Management, was deemed by the task force to be not viable as a stand-alone company and was given 30 days to complete an alliance with Fiat or be cut off from U.S. government funding. If Chrysler can complete an alliance with Fiat and cost-saving arrangements with creditors and its major union, the U.S. Treasury would consider investing up to another $6 billion.
The Obama Deception Extras: Interviews with, George Humphrey, Gerald Celente, Webster Tarpley
White House Mends Fences With Wall Street President Barack Obama convened a “who’s who” of executives from the nation’s largest banks Friday to mend fences with Wall Street and drum up support for his plans to stabilize the financial system. The meeting appeared to clear the air as bankers said afterward they knew their companies are vital to a potential economic recovery and they want to work with the government. “The basic message is we’re all in this together,” John Stumpf, the Chief Executive Officer of Wells Fargo & Co. (WFC), told reporters outside the White House after meeting with Obama. “We’re trying to do the right thing for America.”
[They are moving very quickly; when will Americans wake up?] Now They're Coming For Your KIDS! The so-called Mandatory Youth Service Bill, or GIVE ACT, is nothing more than Obama’s troops ordering your children to go into training to become good little socialist boys and girls. For those of us who got an education even in the public education system in America… before the unions took over… the very thought of a mandatory youth service act, of any kind, sends shivers up our spines. We remember, all too well, the youth movements in Germany, especially the Hitler Youth and the Brownshirts.
Homestead, Fla., once leveled by Hurricane Andrew, now struck by foreclosures Seventeen years after Hurricane Andrew leveled much of southern Miami-Dade County, a different kind of storm is devastating households here: foreclosures. In certain ZIP codes in places like Homestead and Florida City, around 25 percent of the homes are in one stage of foreclosure or another. Countless others were built by developers and sit vacant in ghostly subdivisions, with not a buyer in sight. In the days after Andrew, then-Dade County Emergency Management Director Kate Hale famously said on national TV: "Where the hell is the cavalry on this one?" The same could be asked now, in this new disaster. People in south Miami-Dade - just like people in foreclosure-strewn cities across the nation - are wondering: How did we get here?
Insurers shun those taking certain meds How health insurers secretly blacklist those with certain ailments. Trying to buy health insurance on your own and have gallstones? You'll automatically be denied coverage. Rheumatoid arthritis? Automatic denial. Severe acne? Probably denied. Do you take metformin, a popular drug for diabetes? Denied. Use the anti-clotting drug Plavix or Seroquel, prescribed for anti-psychotic or sleep problems? Forget about it. This confidential information on some insurers' practices is available on the Web -- if you know where to look. What's more, you can discover that if you lie to an insurer about your medical history and drug use, you will be rejected because data-mining companies sell information to insurers about your health, including detailed usage of prescription drugs. These issues are moving to the forefront as the Obama administration and Congress gear up for discussions about how to reform the healthcare system so that Americans won't be rejected for insurance.
More senior citizens forced to declare bankruptcy Hit hard by the slumping economy and surviving on fixed incomes, senior citizens have experienced the sharpest increase in bankruptcy filings. Jose Abrahantes has been working for about half a century -- in construction, landscaping, even as a janitor cleaning offices on the night shift. He figured he would eventually enjoy a relaxing retirement. But at 66, with medical bills piling up after an emergency surgery, Abrahantes has filed for bankruptcy. Retirement isn't even in the picture. Instead, he's working part-time at a Publix bakery. ''I had no choice,'' said Abrahantes, who rents a modest Little Havana apartment with his wife, Carmen. "If I'm making $8 an hour and trying to live off that, there's no way I'm going to pay down all my bills.''
Skype, the Web Phone Giant, Brings Cheap Calls to Cellular Skype, the Internet calling service that has more than 400 million users around the world, is aggressively moving onto mobile phones. The Luxembourg-based company, a division of eBay, plans to announce on Tuesday that it will make its free software available immediately for Apple's iPhone and iPod Touch and, beginning in May, for various BlackBerry phones, made by Research in Motion. Other companies have already made software for those phones that works with Skype, but it does not offer all of the service‚s features. As with Skype on the computer, users of Skype on mobile phones can make calls and send instant messages to other Skype users free, and they pay lower rates than the phone companies would charge when they use Skype to call landlines or other mobile phones.
CRUDE OIL IN ISRAEL !!! light sweet high quality crude oil with the color of HONEY !!!
World Bank Sees Slump in Russia Worsening The World Bank released a grim report on Russia on Monday, projecting a 4.5 percent contraction in the economy in 2009 and warning that the financial crisis would push 5.8 million Russians into poverty unless the government shifted more spending to poor families. The report was a sharp revision of the World Bank's November forecast, which predicted an increase of 3 percent in gross domestic product in 2009. World Bank analysts also took a more pessimistic view than the Russian government, whose experts are predicting a 2.2 percent contraction. The report praised the government‚s $85 billion anticrisis program, which stabilized Russia's banks and prevented financial panic. But it said too little had gone to households - a hazard in a society where 37 million people, a quarter of the population, lives near the poverty line.
Mexico's Version of La Cosa Nostra Spreads Like Wildfire The Castorena Family Organization is a large-scale criminal organization with more than 100 key members who oversee cells of 10 to 20 individuals in cities across the United States, according to public court documents filed by the US government in Colorado and in other judicial districts around the country… Several of the senior leaders of the organization are believed to be based in Mexico, although they enter the US occasionally to oversee the operations of lieutenants of the crime family. The organization is alleged to be involved in the manufacture and distribution of high-quality counterfeit identity documents, including social security cards, birth certificates, marriage certificates, US and Mexican driver licenses, Matricula Consular ID cards, resident alien cards, work authorization documents, proof of vehicle insurance cards, temporary vehicle registration documents, and utility bills (many states require driver license applicants to show utility bills as proof of residence).
Chinese find opportunity in U.S. real estate slump BEIJING -- Amid a downturn in real estate prices, some wealthy Chinese are signing up for home-buying tours to the U.S., and Chinese media tout the trend as another sign of the strength of what's now the world's third-largest economy behind the U.S. and Japan. "The real estate prices in America have gone down drastically," said Yin Guohua, a partner in a law firm who recently returned from an 11-day U.S. tour with a group of Chinese elite. "It's a good option for Chinese people who want to buy for investment." In prime time last week, China Central Television's popular Oriental Horizon program dedicated half an hour to the topic of house-hunting tours to the U.S. The tours also have been the subject of numerous newspaper articles, some of them suggesting that the buying power of newly rich Chinese might help salvage U.S. real estate woes.
China Cracks Down in Muslim West An overseas rights activist said Monday that authorities in China's predominantly Muslim far west are closing unregistered Islamic schools and conducting house-to-house searches in a new security crackdown in the restive region. The campaign under way for five weeks in the city of Hotan underscores Beijing's persisting concerns about separatist movements in its Central Asian border province of Xinjiang. While anti-government protests and a security clampdown in Tibetan areas have grabbed attention over the past year, China has also been battling unrest in Xinjiang, with a flare-up in violence last year that killed 33 people. Like the Tibetans, many of Xinjiang's ethnic minority Uighurs have chafed under Beijing's rule and restrictions on the practice of religion.
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Global Currency Risks, Market Worries All Point to Gold Gold and silver rose ($939.80 up $4.40 - Silver $13.65 up 18 cents) Thursday on deepening concerns about the dollar and fears that its reserve currency status is threatened. This week could see sharp moves in financial markets as the dollar's dominance in the international monetary system is set to be questioned at the G20 Summit (Thursday, April 2nd). The US creditors in China and Russia are proposing creating a new supra-national reserve currency, thereby lessening dependence on the dollar. Treasury Secretary Tim Geithner let slip on Wednesday that Washington was "open" to the idea. It is not just large holders of US debt who have voiced concerns about US economic, monetary and fiscal policies. The holder of the EU presidency, the Czech Republic's prime minister, Mirek Topolanek, condemned American remedies for the global recession as "the road to hell".
Obama denies bailout funds for automakers White House: GM, Chrysler fail to submit restructuring plan that will get them more money The White House says neither GM nor Chrysler submitted acceptable plans to receive more bailout money, setting the stage for a crisis in Detroit and putting in motion what could be the final two months of two American auto giants. President Barack Obama and his top advisers have determined that neither company is viable and that taxpayers will not spend untold billions more to keep the pair of automakers open forever. In a last-ditch effort, the administration gave each company a brief deadline to try one last time to convince Washington it is worth saving, said senior administration officials who spoke on the condition of anonymity to more bluntly discuss the decision.
White House questions viability of GM, Chrysler White House sets tough deadline to force overhaul of ailing US carmakers President Barack Obama is sending a blunt message to Detroit automakers: To survive -- and win more government help -- they must remake themselves top to bottom. Driving home the point, the White House ousted the General Motors chairman as it rejected GM and Chrysler's restructuring plans. Obama is set to elaborate on that message Monday when he announces what his White House told reporters over the weekend: Neither GM nor Chrysler submitted acceptable plans to receive additional federal bailout money.
[A taste of socialism??? . . . . more to come] Unveiling the Government Car Warranty Good news, American auto owners! If you’ve been eyeballing a Lexus or a CRV because you want to own a car whose maker will be around long enough to honor the warranty, take another look at Detroit. Instead of handling their own warranties, Uncle Barack and his dog Spot will handle your warranty — along with a hefty new bureaucracy:
China questions the dollar's value - 26 Mar 09 - Part 1 Days before the G20 financial summit in London, Zhou Xiaochuan, the governor of the People's Bank of China, called for a new currency to eventually replace the US dollar. The dollar, which was made the reserve currency after World War II, has come under increased pressure of late. Barak Obama, the US president, cast doubt upon calls by senior Chinese authorities for the creation of a new global currency to replace the dollar as the standard bearer for the world.
No Givens As Obama Steps Onto World Stage After 69 days in which international issues have taken a back seat to attempts to rescue the economy at home, President Obama takes the world stage this week as a wildly popular figure among the people of Europe, but one who faces a difficult task in selling his plans to the continent's leaders. The president plans to push for a new approach to the war in Afghanistan, aggressive action to stop the proliferation of weapons and a more united European effort to combat the global recession. But if the U.S. president thought his popularity would cause foreign governments to fall quickly into line behind a new American leadership, experts warn, he could be in for a rude awakening.
G-20 Targets Hedge Funds as Leaders Near Consensus Leaders of advanced and emerging economies are closing ranks behind plans for tougher rules on financial markets to prevent another collapse like the one that wiped out much of Wall Street. A global approach to regulation has been gaining momentum ahead of the Group of 20 summit April 2 in London. U.S. President Barack Obama, U.K. Prime Minister Gordon Brown and their G-20 counterparts aim to merge their national blueprints for strengthened regulation into a united front to rein in hedge funds, derivatives trading, executive pay and excessive risk- taking by financial firms.
Obama calls for G20 ‘unity’ President Barack Obama is voicing optimism that this week’s crucial G20 summit will set the framework for recovery, saying that world leaders know they must “deliver a strong message of unity” for the sake of the global economy. Speaking to the Financial Times on the eve of what some believe will be the most fateful economic summit in decades – but which others dismiss as a talking shop that will do little to halt further global contraction – Mr Obama played down talk of a split between the US and the leading continental European economies, notably Germany and France.
China questions the dollar's value - 26 Mar 09 - Part 2
Obama interview: Full text FT: Let’s talk about the G-20. What will be your benchmarks for success? Obama: The most important task for all of us is to deliver a strong message of unity in the face of crisis. There’s some constituent parts to that. Number one, all the participating countries recognise that in the face a severe global contraction we have to each take steps to promote economic growth and trade; that means a robust approach to stimulus, fighting off protectionism.
Geithner Says Some Banks Need ‘Large Amounts’ of Assistance U.S. Treasury Secretary Timothy Geithner said some financial institutions will need substantial government aid, while warning against any attempt to tax investors who join a federal program to buy tainted assets from banks. “Some banks are going to need some large amounts of assistance,” Geithner said yesterday on the ABC News program “This Week.” The terms of a $500 billion public-private program to aid banks “cannot change” for investors or they’ll lose confidence in the plan, he said on NBC’s “Meet the Press.”
President Obama On His Goals For The G20 Summit
On eve of G20 summit, new blow to Gordon Brown Senior cabinet members dampen expectations of global spending deal Ministers were struggling to maintain momentum for the G20 summit last night after it emerged that any spending decisions would be deferred to a later meeting, further narrowing the scope of this week's London talks, which have been plagued by divisions between European leaders and Gordon Brown. Yesterday, Kevin Rudd, the Australian prime minister who will hold pre-summit talks with Brown tomorrow, said it was now up to the International Monetary Fund to determine how much additional support the world economy would need next year, and that there had never been any expectation that the decisions on that package would be taken in London. "That was never the intention," he said. "A mechanism has been established for us to reflect on for what we need for the future. There will be a further summit, well in time for 2010, I assume, which will actually look at what metrics, what numbers, will be needed then."
Only a united front at the London G20 can save the world from ruin Industrial production is collapsing faster than during the Great Depression. Social and political devastation will not be far behind, unless the G20 can heal global divisions, writes Ambrose Evans-Pritchard. By the time world leaders gathered to vent their spleens at the London Economic Conference in June 1933, the Slump had already done its worst. Catastrophic policy errors – tight money – had caused the 1930-31 recession to metastasize into debt deflation. Hitler had been let into government with three cabinet seats, enough to give him the Prussian police and Reich interior ministry. It was all he needed.
New reserve currency idea needs work-German minister Proposals for creating a new global reserve currency to replace the U.S. dollar are gathering momentum but need further examination, Germany's development minister said on Friday. Heidemarie Wieczorek-Zeul, Germany's minister for economic cooperation and development, is a member of a panel of experts established by U.N. General Assembly President Miguel d'Escoto Brockmann to analyze the global financial crisis and recommend reforms. One of the recommendations in an 18-page report the panel issued this week is to create a new reserve currency system based on the International Monetary Fund's Special Drawing Rights, or SDRs, to replace the U.S. dollar as the top reserve unit, an idea China supports.
Calls for new global currency
A world currency moves nearer after Tim Geithner's slip US Treasury Secretary Tim Geithner confessed on Wednesday that he had not read the plans by China's central bank governor for a "super-sovereign reserve currency" run by the International Monetary Fund, but nevertheless let slip that Washington was "open" to the idea. Whoops. This is how matters quickly escalate in geo-finance. China's suggestion – backed by Russia, Brazil, and India, and clearly aimed at breaking US dollar hegemony – is making its way onto the agenda of the G20 Summit next week. 'Dollar-dämmerung' no longer looks so far-fetched. China's paper, by Governor Zhou Xiaochuan, is couched in understated language – more a 'thought experiment' than a declaration of monetary war. His ideas could be mistaken for the musings of an academic theorist. Nobody should be fooled by decorum.
Struggle Over I.M.F. Becomes Focus as Crisis Summit Nears Barely six months ago, the International Monetary Fund emerged from years of declining relevance, hurriedly cobbling together emergency loans for countries from Iceland to Pakistan, as the first wave of the financial crisis hit. Now, with world leaders gathering this week in London to plot a response to the gravest global economic downturn since World War II, the fund is becoming a chip in a contest to reshape the postcrisis landscape. The Obama administration has made fortifying the I.M.F. one of its primary goals for the meeting of the Group of 20, which includes leading industrial and developing countries and the European Union. But China, India and other rising powers seem to believe that the made-in-America crisis has curtailed the ability of the United States to set the agenda. They view the Western-dominated fund as a place to begin staking their claim to a greater voice in global economic affairs.
Printing Money Can't Make More Money TGR: Will gold retain its value if we move into an inflationary environment? JT: Yes, I’m convinced it will. Let’s distinguish between an inflationary period and a period of global growth. We’ve had a lot of global growth until recently and gold was not a very good place to be. We can inflate the monetary system but we can’t really get the global banking system to inflate or to expand as it did in Bob Hoy’s six examples of the last 300 years. In fact, it’s really tough getting the banks to lend money now, for two reasons. One, they’re not lending money to people because loans portfolios look like a black hole. In terms of loan losses, no one knows where bottom is. Because they can’t figure that out, they’re trying to shore up their capital base and trying to make sure their equity is intact. . . .
The Fault Lines Emerge For a few fleeting, horrifying moments this past week the fault lines that underlie the global economic crisis erupted into plain view. With deft and quick effort leaders in Washington, Europe and Asia papered over the fissures and fears largely subsided. But the shock of plain truths which resulted in violent currency movements are the latest reminder that the 21st century economic order will bear little resemblance to the world we now know. The tremors began in Beijing, where a essay from the governor of the People's Bank of China seemed to favor the creation of an IMF currency to replace the U.S. dollar as the world's reserve. In Europe, the rotating president of the European Union, outgoing Czech Prime Minister Mirek Topolanek, characterized America's plan to combat the widening global recession as the "road to hell." At same time, British Member of the European Parliament Daniel Hannan made headlines the world over with his stinging rebuke of the inflationary and debt-focused policies of the current UK government.
U.S. Eases Its Stance on Global Stimulus A Move to Dispel Conflict in Europe Ahead of Summit LONDON, March 29 -- The Obama administration on Saturday moved to quell a public war of words with European leaders over the need to boost government spending to combat the financial crisis, making clear it has no desire to dictate spending targets for other countries. The diplomatic effort comes as President Obama prepares to make his first trip across the Atlantic this week for a series of meetings, including Thursday's economic summit in London. In recent days, European leaders have sharply criticized the United States, which they said was pushing them for more global stimulus.
G-20 summit - Gordon Brown "we need a global new deal"
What the G20 has to do in London The meeting of the heads of government of the Group of 20 leading high-income and emerging countries in London is a defining moment. At a time of economic crisis, the leaders of countries that generate the vast bulk of global economic activity must point the way towards shared solutions. If they do achieve this, the summit may not be regarded as the beginning of the end of this crisis, but it will surely be the end of the beginning. The very fact that the G20 is seen as the right body to address this challenge is significant. No longer is it possible for a small number of western countries – together with Japan – to resolve the world’s economic challenges. While the G20 is too large a grouping, it contains all the world’s important economies. Here, above all, the rising powers do not feel they are mere guests, as at meetings of the Group of Eight leading high-income countries. This, then, is indeed the right group. Its first summit was in Washington last November. The London summit should be the second in a series.
Anglo-American Capitalism on Trial LONDON — Sitting in a gilded upper room at 10 Downing Street last week listening to Prime Minister Gordon Brown outline his ambitions for reforming the world economy had something of an out-of-this-world feeling. With Mr. Brown seated beneath a 16th-century oil painting of Queen Elizabeth I, it was tempting to imagine for a moment that Britain was again rising grandly to the challenges of the age, in the way of Good Queen Bess. The occasion was a briefing for reporters on the Group of 20 summit meeting to be held Thursday at a conference center in the London docklands, close to the historic City of London, Britain’s financial hub. Mr. Brown was intense, and prolific with facts. He was also visibly exhausted, hours before leaving on a five-day, 20,000-mile trip to Europe, the United States and Latin America before the conference.
Obama Will Face a Defiant World on Foreign Visit President Obama is facing challenges to American power on multiple fronts as he prepares for his first trip overseas since taking office, with the nation’s economic woes emboldening allies and adversaries alike. Despite his immense popularity around the world, Mr. Obama will confront resentment over American-style capitalism and resistance to his economic prescriptions when he lands in London on Tuesday for the Group of 20 summit meeting of industrial and emerging market nations plus the European Union. The president will not even try to overcome NATO’s unwillingness to provide more troops in Afghanistan when he goes on later in the week to meet with the military alliance.
The Federal Reserve Has Failed Its Economic Mission Mission statements have been around for many years and define the purpose of a company and its goals. Now the U.S. Treasury and the Federal Reserve have jointly issued a mission statement for their cooperation during this economic crisis. The key elements are:
Since the Treasury does not have enough tools in this crisis, the Fed will use theirs (of course in close cooperation with the Treasury) to make credit flow, to prevent any systemic failures to the financial system, and fix what is wrong.
Federal Reserve is the lender of last resort. They are to do whatever is necessary to make credit flow in all areas.
The Federal Reserve needs more power and will go to Congress to get more.
The Treasury will take the Maiden Lane assets (the toxic Bear Stearns “assets”) from the Fed. I thought toxic assets were profitable if you would hold to maturity (satire).
TALEB, ROUBINI !!! BERNAKE TAKING DOWN ECONOMY !!!
The Financial Crisis Is Escalating Out of Control The current financial crisis we are in is escalating out of control. I question whether the current administration has anyone who understands what is happening, why it is happening, and is operating without some vested interest; never mind whether they have the correct answers as to how to solve it. The creation of a new entity "The Public-Private Investment Corporation" to purchase toxic debt funded by some $1 Trillion of taxpayer money is going to buy up mortgages, car loans, credit cards loans and other toxic debt off balance sheets for banks and other lenders... If these assets are sold to large investor groups, hedge funds and other such entities at 5 cents on the dollar, then it is an open admission that the tax payer will never see any return on his investment and those in power will have scratched the backs of many who put us in this position in the first place. This is the definitive version of the AIG bonuses being paid and we will unwittingly agree to this, not that we have any say, because of the language and structures used to deceive us.
A new plan needed as the cycle grows vicious So you think you can see the green shoots of recovery? You draw comfort from the recent stabilisation of forward-looking indicators such as new home sales in the US? Or you think the stock market rally marks the end of the crisis? Of course, economic growth rates are bound to improve soon for technical reasons. Otherwise, not much would be left of the global economy by the end of the year. Even if a recovery were to start early in 2010, as some optimistic forecasters believe, most of the pain of the recession is still ahead of us: unemployment and default rates will rise sharply everywhere. Most of the pain in the financial sector is also still ahead of us. This will feel like a depression long after it has ceased to be one.
Is Business Cycle Broken This Time? The U.S. national debt soared in the 1980’s on the record deficit spending of the Reagan Administration to get the country out of the panic of the 1970’s recessions and stagflation. There was no way to escape the consequences. Economists competed with each other with dire forecasts of how this time was different and the nation was headed inevitably into bankruptcy. Remember that huge electronic clock set up somewhere that they’d periodically show us on TV, as it kept track of the millions that were being added to the national debt every minute - or was it every second?
Sweden to America; Slow Down on the Socialism. It doesn't Work. Even France Knows. Glenn Beck
White Collar Crime Pays in America The Savings & Loan Crisis had Michael Milken. The dotcom charade had Bernie Ebbers, Kenneth Lay, and Jeffrey Skilling. These men have been selected as the scapegoats to distract the public away from the real criminals that caused each crisis. And now, the world’s largest real estate and banking crisis – much larger than all previous heists combined – has Bernie Madoff. He will serve the same purpose. Michael Milken was certainly involved in the S&L crisis, but he wasn’t the only villain. After only serving a couple of years (for good behavior) at Club Fed, he returned to society a very wealthy man. What other type of behavior besides “good” is possible at Club Fed? While he was most definitely involved, Milken served as the scapegoat of the S&L crisis. He is like many scapegoats from white collar crimes who manage to get off easy. One reason is because they have big money to buy their way out. But another reason is because white-collar crime is deemed to be relatively benign in America. This mentality must change now. Americans must demand it.
Dark Clouds Hover Over US Economy Any criticism of Obama's economic illiteracy -- no matter how accurate -- is in danger of being met with a storm of abuse from his cultist followers. Even Bill Clinton supporters weren't this bad: and I do speak from experience. But facts are facts and economic laws are what they are. Pointing to the Dow as evidence of Obama's success only reveals a complete ignorance of economics and economic history. It is true that I said that I would not be surprised to see the Dow drop to 3000 -- and I still wouldn't. But my point was not that the Dow will collapse -- I never said it would -- or that a 1930s-type depression is on the way -- I have stated emphatically that this is not the case -- but that conditions are so erratic today that at this stage of the game it is not possible to really know whether we are seeing extreme fluctuations around an upward trend or a bear rally.
Overhaul Targets Money Market Plan Also Limits Hedge Funds The broad regulatory overhaul outlined by Treasury Secretary Timothy F. Geithner last week is aimed at restoring confidence in the financial system, reducing the chances that people unknowingly invest in high-risk securities and boosting investors' protections from scam artists like Bernard L. Madoff. The effectiveness of the measures will probably depend on their final wording after Congress, regulators and the industry get through hashing out the details. For individual investors, a few features are discernible based on the details released so far. Money-market mutual funds are likely to be better protected against runs and panics.
Glenn Beck, Ron Paul, George Soros - Global New Deal New Monetary Scheme - New World Order - from Feb 24, 2009.
Move Your Money Out of the Country… and Soon We are patriots. We have proudly served in our country's military, have extended a helping hand to its public sector, and have plowed our entrepreneurial enterprise into its once fertile soil. We love America, but these days, America does not love us back. It takes without giving and squelches free enterprise. These days, America is no longer the land of the free, especially when it comes to the market. Just look at the headlines, seemingly ripped from the pages of Atlas Shrugged: Unconscionably large bank bailouts. Punishing regulations and tax requirements. An arctic business climate. Government money bombs. Riots and protests. Slowing trade. Protectionist rhetoric. Demonized corporate executives. Even pirates hijacking cargo ships. One can guess what will happen next. We predict the next several years will usher in larger, more obtrusive governments, resulting in a decline of personal liberty and financial privacy. The world will become increasingly polarized between two groups: those who consider government intervention a great idea, and the rest of us who happen to be sane.
'Perfect storm' puts all types in financial peril The current financial crisis is all-inclusive; our path to prosperity or even simple financial stability seemingly obliterated. With every furlough, layoff or stock market drop, Americans of all ages and backgrounds are seeing their incomes dwindle, bills pile up and financial options disappear. The number who are suffering has increased by 3 million the past year, according to a recent Gallup-Healthways survey. Some 37% of us said we were worried about money last week. Last year, 3.2 million consumers contacted the National Foundation for Credit Counseling, up from 2.2 million in 2007 and 1.4 million in 2006.
Geithner won't say if more bailout money needed U.S. Treasury Secretary Timothy Geithner said on Sunday the government will have about $135 billion left after banks give back some bailout money and declined to say whether he will ask Congress for more. Treasury expects the banks this year to return about $25 billion of money that they received from the government, because they were able to replace it with private capital or decided that they do not want money with strings attached. "We have roughly $135 billion left of uncommitted resources. The rest is out the door," Geithner said on ABC-TV's "This Week with George Stephanopoulos" program. That means some $565 billion out of $700 billion approved by lawmakers last October already has been deployed and Geithner said banks still need help.
Jim Rogers Geithner does not know what he is doing ...
Bank bailout funds mostly spent The federal government has spent all but $135 billion of the Wall Street bailout fund established by Congress last year, Treasury Secretary Timothy F. Geithner said Sunday. And while downplaying speculation that he and the Obama administration would ask Congress for more money to help failed banks, Mr. Geithner didn't dismiss the possibility either. "The important thing is that we are going to work with the Congress to make sure that we have the resources needed to do this right," he said on ABC's "This Week With George Stephanopoulos." "The lesson of financial crises is governments tend to do too little. They wait too long to escalate."
Double-digit unemployment looms, OECD tells G8 The global economic crisis will hit jobs hard, with unemployment set to reach double digits in many developing and advanced countries, the Organization for Economic Cooperation and Development (OECD) said on Sunday. "By the end of 2010 the unemployment rate could be approaching double digit figures in all G8 countries with the sole exception of Japan, as well as in the OECD area as a whole," the OECD forecast in a background paper to G8 labor and employment ministers gathering in Rome.
Geithner: The Regulatory War Ahead Fresh off his hit performance with the bank-rescue plan, Treasury Secretary Timothy Geithner seems to be on a roll. His broad proposal to overhaul regulation of whole swaths of the financial sector drew applause from most quarters on Mar. 26. Investors didn't seem at all unsettled by the prospect of intensified government oversight, as the Standard & Poor's 500-stock index rose 2.3% and Wall Street closed in on a second straight week of strong gains. But the plan offered few specifics in many of the areas it addressed, from tougher regulation of complex financial derivatives to new rules for money-market funds. And Geithner steered well clear of some of the most contentious questions facing policymakers -- the questions that are sure to turn agreement about broad principles into a pitched, possibly months-long political battle that pits financial interests against consumer advocates and one another.
Debt: The next big American crisis? Instead of accumulating wealth, many falling further behind on payments The economy is in freefall and no one's sure where rock bottom is. And as the mortgage crisis and mounting job losses melt away the American dream, another fundamental economic problem is being exposed: America's debt epidemic. Elizabeth Warren: Middle class America is under attack.
GM's Wagoner out at Obama's request The White House has asked General Motors CEO Rick Wagoner to resign, and the head of the auto giant will do so immediately as President Obama prepares Monday to lay out details of his proposed path forward for the U.S. auto industry. A White House official, speaking Sunday on condition of anonymity before Mr. Obama's announcement, said Mr. Wagoner "was asked to and agreed to step down." General Motors and Chrysler LLC received a combined $17.4 billion in loans from the federal government last year, and since have asked for a further $21.6 billion -- $16.6 billion for GM, $5 for Chrysler.
Is California Going Bust? There has been many a time in California's history when it seemed to outsiders to be barreling toward a cliff and to insiders as a place for unbounded optimism. A favorite Silicon Valley bumper sticker says, "Dear God, one more bubble before I die." That optimism is being sorely tested. Statewide unemployment, at 10.1%, is well above the national average of 8%. Per capita income growth, which used to be above average, is now lagging. In the last year home prices fell 35% in San Francisco, 30% in San Jose and 27% in San Diego, according to Radar Logic, a New York real estate derivatives firm. Half of the home sales in Los Angeles are from banks dumping foreclosed properties at steep discounts.
Warren Buffet The Economy is falling off the cliff
More Support for Health-Care Fix But Funding Coverage Still Sticking Point The fault lines are emerging in the upcoming battle over health-care reform. Recent movement on Capitol Hill and by major health-care players suggests that consensus is growing for action this year, but deep rifts remain over how to pay for expanded coverage and whether a new government-sponsored program should be offered to people who have trouble buying private insurance. A coalition of hospitals, insurers, employers, physicians, drug makers and consumers released a report yesterday endorsing a set of policy changes that could cut in half the number of uninsured Americans.
N. Korea launch threatens to undo talks SEOUL (AP) -- North Korea's plans to launch a rocket as early as this week in defiance of warnings threatens to undo years of fitful negotiations toward dismantling the regime's nuclear program. The United States, South Korea and Japan have told the North that any rocket launch -- whether it's a satellite or a long-range missile -- would violate a 2006 U.N. Security Council Resolution prohibiting Pyongyang from any ballistic activity, and could draw sanctions. North Korea said sanctions would violate the spirit of disarmament agreements, and said it would treat the pacts as null and void if punished for exercising its sovereign right to send a satellite into space.
Changes in D.C. prompt run on guns and ammo ‘Manufacturers are going full-bore’ to produce amid fear of new regulations CHEYENNE, Wyo. - Concern that the Obama administration could impose a new ban on some semiautomatic weapons is driving worried gun owners to stockpile ammunition and cartridge reloading components at such a rate that manufacturers can't meet demand. Attorney General Eric Holder last month suggested that the Obama Administration favors reinstituting a U.S. ban on the sale of assault weapons. President Bill Clinton first signed such a ban into law in 1994, generally blocking some military-style guns with magazines that hold many cartridges. President George Bush had allowed the ban to expire.
Russia to create Arctic armed forces Russia wants to set up a military force in the Arctic to protect its national interests. However, officials say this is not a plan to militarize the region. By 2020 Russia believes the region will become its main source for oil and gas.
Americans Largely Silent as Their Nation is Systematically Destroyed After trillions in taxpayer debt has been foolishly poured into the bottomless black hole of leftist wealth redistribution programs, under the guise of economic “stimulus” or “stabilization” legislation, the new “ONE World” government running Washington DC announces; Geithner, Bernanke Call for New Wind-Down Powers After AIG… and the people still sit silent as they watch Obamanation grow in unbridled power. Geithner Asks Congress for even Broader Power to Seize private Firms as the average American stumbles through their daily routine as if nothing is happening. Canada Free Press managing editor Judi McLeod writes No cheerleader for propping up greenback at G20 summit asking, “Is the table being set for One World Government rather than speeding the recovery of the worldwide recession at next week’s G20 London summit?”
Glenn Beck, Ron Paul - Changes may be forthcoming at G-20; Global New Deal - New Monetary Scheme - New World Order
Stock Rally Means Tim Geithner Survives It straddled the line all day, but the tech-heavy NASDAQ is now up on the year after closing up a whopping 3.8%. At 1587, it's about 10 points above its December 31 close. The other big winner is Tim Geithner. Last week we had him on deathwatch, but we're going to upgrade him to stable-but-critical. Even CNBC noted that the market no longer reflexively tanks every time the Treausury Secretary speaks. And now that he's actually delivered his plan -- flawed as it is -- there's no reason for him to quit or for Obama to drop the Ax.
Geithner Deals Wall Street a Can’t-Lose Hand I feel like Rush Limbaugh now, because I really want certain people to fail: George W. Bush’s former economic adviser, Lawrence Lindsey, Nobel Prize-winning economists Paul Krugman and Columbia University Professor Joseph Stiglitz. All of them say the U.S. Treasury’s plan to buy troubled bank assets will lead to wrack and ruin. And when the trillion dollars to pay for it is gone, we won’t be able to afford the printing press to make more. These are smart people who must be proved abject failures at economic forecasting or else the future is as bleak as that tent city of unemployed men and women pitched atop a landfill in Sacramento, California. The once-Golden State, the world’s seventh-largest economy, governed by a movie star who’s married to a Kennedy, has more than 10 percent unemployment. Bankruptcy isn’t out of the question. There’s an old saying that everything that happens, happens first in California.
Geithner’s Plan Is Way Too Ambitious The biggest news today - other than AIG’s last minute rescue of it’s French bank—was clearly Tim Geithner’s Capitol Hill testimony. The instant feedback has been decidedly mixed. Everyone agrees that we need to reform our system of financial regulation but lots of people are skeptical that Geithner’s plan is the right way to go. Over at Scratch Pad, the new blog from the people who do public radio’s Marketplace, Scott Jagow levels a host of criticisms of Geithner’s reform agenda.
It’s too vague
Centralization is dangerous
Globalization isn’t likely
One Small Problem With Geithner's Plan: It Will Bankrupt The Banks The big problem with Tim Geithner's plan to fix the banks is the same as it ever was: The gap between what banks say their assets are worth and what the market says they are worth. When a bank says an asset is worth 60 cents and the market says it's worth 30 cents, someone has to cover that spread. The genius of Geithner's plan is that it pawns most of the cost (and most of the risk) off on the taxpayer without the taxpayer noticing.
"US Financial Institutions Essentially Insolvent" Nouriel Roubini Mar 9, 2009 Nouriel Roubini talks about the US Financial System and why it should be temporarily fully nationalized.
Roubini: Sorry, Bank Nationalization Still Inevitable Even with the new bank bailout, Nouriel Roubini still thinks bank nationalization is the inevitable and proper course of action. This is coming from someone who actually likes the Geithner plan. Bloomberg: Roubini, 50, echoed criticism from Nobel laureate Paul Krugman that the proposal will not be enough for those banks that are insolvent and predicted that ultimately the government will have to take over more of them. He didn’t name which companies he thought would need to be rescued. “Some banks are going to have to be nationalized and for them the plan doesn’t apply,” Roubini said in an interview with Bloomberg Television in London today. A lot of folks are coming to the same conclusion after doing the back-of-the-napkin math.
Roubini Says Geithner Plan Won’t Prevent Bank Nationalizations U.S. Treasury Secretary Timothy Geithner’s new plan to remove toxic assets from the books of the nation’s banks won’t stop some financial companies from having to be nationalized, said Nouriel Roubini, the New York University professor who predicted the financial crisis. Geithner’s plan, unveiled three days ago, is aimed at financing as much as $1 trillion in purchases of illiquid real- estate assets, using $75 billion to $100 billion of the Treasury’s remaining bank-rescue funds.
Bank Regulator on Leave Pending Inquiry Inspector General Says OTS Allowed False Statements One of the nation's chief bank regulators has been placed on leave pending the results of an investigation into his agency's role in allowing several banks to falsify financial statements. The Office of Thrift Supervision announced the sudden replacement of Scott Polakoff as acting director yesterday evening. The agency is a unit of the Treasury Department that regulates banks focused on mortgage lending.
The New California Gold Rush Modern-day gold diggers party like it's 1849 Within an hour of downtown Los Angeles, people are seeking that one sure commodity. "I'm here to find gold," said Kevin Brown. "I'm a studio lighting technician in Hollywood, between the writers strike that happened last year, and the Screen Actors Guild, whatever they want to call it. Lately I've had to turn to having to do it for extra cash." Geologists estimate that during the gold rush of 1849 in California, about 80 percent of the gold was never found. Today, with the price of gold soaring and the economy falling, the idea of panning, digging or diving for precious metal has become serious business. "There's definitely gold nuggets down in the bottom here," Brown said. "Just a matter of getting 30 feet down lower than any old timer or modern prospector has done." And, for people willing to put in the effort, it's paying off.
Dumping the Dollar Glen Beck talks about on his radio show about why the G20 wants to dump the dollar and a push for a world currency. I remember listing to Lindsey Williams on the Alex Jones Channel saying that they were trying to skip setting up the North American Union (NAU) and going straight to a world Currency.
Gold set for 'decisive move' Johannesburg - Gold is poised for a decisive move upwards, the SA Gold Coin Exchange (SAGCE) said in a statement on Thursday. The SAGCE said the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund had identified a chart pattern showing that gold's short-term downtrend was about to clash with its intermediate-term uptrend. The clash pointed to a decisive near-term price move - either up or down. "We’ve noticed a similar picture on our charts," said Alan Demby, executive chairman of the SAGCE. He added that it was his prediction that the gold price would move up.
Gold price holds its own Gold has risen for a second straight day on speculation the dollar will slide, boosting demand for the precious metal as an alternative asset. The dollar is down 4.6pc this month against a basket of six major currencies. Gold and the dollar, which have moved in tandem for most of 2009 as investors sought a haven from financial turmoil, have returned to an inverse correlation. Analysts said spending by governments to ease the recession may spark inflation, curbing the greenback’s appeal. “The dollar is still under some pressure,” said Stephen Platt, a commodity analyst at Archer Financial Services in Chicago. “There’s growing concern that the US monetary base is expanding. That’s helping foster renewed buying interest in gold.”
Geithner calls for new risk watchdog The Treasury Secretary tells Congress there should be a single supervisor for finance firms that are too big to fail. Treasury Secretary Tim Geithner called for new rules Thursday that would allow regulators to police the darkest corners of the financial markets, including big hedge funds and derivatives trading. The U.S. also needs a single regulator to oversee the biggest financial firms, Geithner told the House Financial Services Committee in prepared testimony. The comments came as Geithner testified before the congressional panel on the need for a sweeping overhaul of financial regulation in the wake of the deepest financial crisis since the Great Depression.
Geithner Reaffirms the Dollar’s Role in the World Treasury Secretary Timothy F. Geithner reaffirmed on Wednesday the dollar’s role in the global financial system, clarifying earlier remarks that had sent the currency tumbling. “The dollar remains the world’s dominant reserve currency,” Mr. Geithner said after a speech in Midtown Manhattan to the Council on Foreign Relations. “I think that’s likely to continue for a long period of time.” Mr. Geithner’s comments came in response to a question regarding a proposal by Zhou Xiaochuan, the governor of the People’s Bank of China, that suggested a possible replacement for the dollar as a global reserve currency. The proposal called on the International Monetary Fund to increase the use of Special Drawing Rights — a basket of currencies made up of the euro, yen, pound and dollar that has served as a reserve asset.
Ron Paul questions Ben Bernanke 24th March 2009
Europe fetches the monetary helicopters, at long last Rejoice. After much pious posturing – and criminal wastage of time – the European Central Bank at last seems ready join the Anglo-Saxons, Japanese, Swiss, and Isrealis in printing money to fend off disaster. Two key governors tipped us off today that the bank is ready to buy assets outright on the open market, including mortgage debt. This is a huge development, exactly what is required to help restore the animal spirits of global investors. Until now the ECB has offered unlimited liquidity in exchange for collateral from banks. That is not the same thing at all. It is sterilized stimulus. The bank has adamantly refused to cross the Rubicon by scattering money through the economy in real blast of QE. (quantitative easing)
Geithner's derivatives plan welcomed as overdue The U.S. Treasury's plan to tighten its grip on derivatives such as credit default swaps, effectively throwing its weight behind a shift that is well under way among exchanges and financial players, was applauded as long overdue on Thursday by industry observers. Treasury Secretary Timothy Geithner, testifying to Congress on Thursday, said a comprehensive framework was needed to protect markets from risky derivatives, arguing more of them should be funneled through clearinghouses and exchanges. He highlighted CDS as products that should no longer pose a threat to the stability of global markets simply because a handful of big institutions made reckless bets.
Are Geithner's New Regulations Deepening The Depression? There is a nearly universal consensus that financial regulation needs to be reformed. But is now a good time to be discussing the reforms? Judge Richard Posner says no. In fact, we may be hindering our economic recovery by proposing new regulations during the economic downturn. "But the most important point I would make is that there should be no new regulatory measures until the depression reaches bottom and recovery begins (not that there can be certainty about when that point has been reached--there were several false bottoms in the 1930s depression)," Posner wrote earlier this month.
Financial Crisis Debate Opening Remarks by Niall Ferguson
What Else Are the Banks Hiding? The amount of credit risk that the banks have hiding in off-balance-sheet vehicles was a fairly big deal at the onset of the credit crisis. I haven’t seen much about it recently and assumed, mistakenly, that it had become a non-issue. Bloomberg has an article Thursday that suggests that isn’t the case at all. David Reilly contends that the banks have a mountain of hidden assets that have to be accounted for sooner or later.
How Tim Geithner Is Robbing You Blind Another on-the-money critique of the Geithner plan. Jeffrey Sachs, FT: The Geithner-Summers plan...is a thinly veiled attempt to transfer up to hundreds of billions of dollars of US taxpayer funds to the commercial banks, by buying toxic assets from the banks at far above their market value. It is dressed up as a market transaction but that is a fig-leaf, since the government will put in 90 per cent or more of the funds and the “price discovery” process is not genuine. It is no surprise that stock market capitalisation of the banks has risen about 50 per cent from the lows of two weeks ago. Taxpayers are the losers, even as they stand on the sidelines cheering the rise of the stock market. It is their money fuelling the rally, yet the banks are the beneficiaries.
OUR LAND - COLLATERAL FOR THE NATIONAL DEBT I consider Wayne Hage one of the most intelligent men I ever met. On our very first visit he was explaining the World Bank, the International Monetary fund and how the world bankers planned on collateralizing the world debt with land. Not just the U.S. national debt, but the “WORLD” debt. A listener sent me a copy of a report of the FOURTH WORLD WILDERNESS CONGRESS, which was held in Denver in 1987. Over 1500 people from sixty countries were told that wilderness lands were to protect the reindeer, the spotted owl and other endangered species. Ninety percent of the group consisted of conservationists, ecologists, government and United Nations bureaucrats. The other ten percent were world banking heavyweights, such as David Rockefeller of Chase Manhattan Bank, London banker Edmund de Rothschild and the Secretary of the U.S. Treasury, James Baker, who gave the keynote address. George W. Hunt, an investment councilor, served as official host and sat in on all the meetings. It was George Hunt that wrote the report from which I have gleaned much of my information.
‘Payback time’ called on US financial groups Payback time. That is how a senior banker described the US government’s plans for tougher oversight of large financial institutions. After showering banks and other financial groups with billions of dollars in taxpayers’ money to keep them afloat during the crisis, the federal authorities are cashing in their chips and demanding more powers over the sector. As Timothy Geithner, the US Treasury secretary, told Congress on Thursday: “Financial institutions?.?.?.?that could pose serious risks to the stability of the financial system need to be subject to strong oversight by the government.” Hedge funds reacted frostily to Mr Geithner’s remarks before the House Financial Services Committee, expressing concern at being categorised alongside banks and insurance companies in terms of the systemic risk they pose.
Transatlantic Friction Ahead of G-20 Summit Europe and the United States do not see eye to eye on the financial crisis. Ahead of the G-20 meeting next week, Czech Prime Minister Mirek Topolanek, who holds the European Union’s rotating presidency, said America’s stimulus plan is “the road to hell.” Although many in Europe have condemned Topolanek’s remarks, they highlight major differences in Europe’s and America’s views on the global economic crisis. “All of these steps, these combinations and permanency is the road to hell,” said Topolanek. “We need to read the history books and the lessons of history and the biggest success of the (EU) is the refusal to go this way.” “Americans will need liquidity to finance all their measures and they will balance this with the sale of their bonds,” he continued, “but this will undermine the liquidity of the global financial market.”
Congresswoman Bachmann Questions Geithner & Bernanke About A Global CurrencyShe really NAILS THEM BOTH on question of constitutional authority - because there is NONE
Fed's Plosser: Economic outlook "pretty ugly" The Federal Reserve must be careful about taking on credit risks as it broadens its new consumer lending program, even though a "pretty ugly" economic outlook warrants aggressive action, a top Fed official said on Thursday. Philadelphia Federal Reserve Bank President Charles Plosser told Reuters the U.S. central bank needs to expand its balance sheet to combat the recession, but he said it was hard to tell how much money policy-makers should pump into the economy.
Obama Wants to Increase Tax Revenues by $300 Billion Per Year The Obama administration is planning a tax reform that it believes will increase government revenue by at least $300 billion a year. That is the amount of the “tax gap,” which is what the government is supposed to collect in taxes but does not because of tax evasion or loopholes in the code. A reform task force, chaired by former Federal Reserve Chairman Paul Volcker and including members of the President’s Economic Recovery Advisory Board, will study the problem and make recommendations to President Obama by the end of the year.
I.R.S. to Offer Deal to Tax Evaders The Internal Revenue Service, under pressure to bring in money to the faltering economy, plans to give offshore tax evaders a big break. The agency has drafted a plan that significantly lowers a penalty that applies to wealthy Americans who hide money overseas in secret accounts, a person briefed on the matter said Thursday. The plan is intended to lure out of hiding scores of wealthy people who must come forward and declare their accounts in order to take advantage of the lower penalty. The plan was developed amid a widening investigation into wealthy American clients of UBS but will apply to clients of other banks as well. Under the plan, according to the person briefed on the issue, the I.R.S. will cut an onerous penalty for not filing a Report of Foreign Bank and Financial Account, known as an Fbar — something offshore tax evaders have not done.
SDRs Should Be Poison to Gold Think Again. I'm sure I'm not the only blogger who noticed what gold did (or didn't do, I should say) when Tim Geithner committed his now infamous (for a few hours at least) faux pas. Mr. Geithner said he was "open to exploring a Chinese proposal to reduce reliance on the US dollar as the world’s reserve currency" which caused the dollar to crash. Not much, not for long, but still. Gold, on the other hand, went up. Not much, but still. Why is this significant? Many people think gold's rise has much to do with all the currency debasement (quantitative easing anyone?) going on around the world and with the fact that gold has become, for some investors, if not the new reserve currency, some kind of default currency. If that were the whole story then the news that the world at large is considering building a brand new reserve currency based on the International Monetary Fund's Special Drawing Rights (SDRs) should be poison to gold. Indeed, should this project come to fruition, gold would become just another precious metal and the sizable "currency premium" built in its price should evaporate. But that's not what happened. Gold went up. And that, my friends - gold haters have been warned - is very bullish for gold.
Ron Paul questions Bernanke on Capitalism 03/24/2009
Greenspan says banks should not become too big Former U.S. Federal Reserve Chairman Alan Greenspan recommends graduated capital requirements for banks to cut back their size. "New regulatory challenges arise because of the recently proven fact that some financial institutions have become too big to fail as their failure would raise systemic concerns," he writes in Friday's Financial Times. "The solution is to have graduated regulatory capital requirements to discourage them from becoming too big and to offset their competitive advantage."
Roubini Says Stocks Will Drop as Banks Go ‘Belly Up’ U.S. stocks will fall and the government will nationalize more banks as the economy contracts through the end of 2009, said Nouriel Roubini, the New York University professor who predicted last year’s economic crisis. “The stock market is a bit ahead of the real macroeconomic and financial news,” Roubini, a professor at NYU’s Stern School of Business and the chairman of consulting firm Roubini Global Economics, said in an interview with Bloomberg Television in London today. “We’ll have some major banks going belly up that will need to be taken over.”
Nouriel Roubini - Financial Crisis Debate - (6 of 13)
Poor Treasury Auction Results Rattle Investor On the heels of Britain’s failed debt auction yesterday, our Treasury had its own trouble selling bonds. WSJ: The indirect bid — demand from domestic and foreign institutions, including foreign central banks — for the $34 billion five-year Treasury note auction was 30%, compared to 48.9% from the previous auction in February and an average of 30.1% for the last 10 auctions. The 10-year note declined 18/32, pushing its yield back up to 2.77%. The yield had fallen to around 2.50% last week after the Federal Reserve unveiled its plan to buy longer-term government debt. Bloomberg noted the following: U.S. securities dropped even after the Federal Reserve today bought $7.5 billion of Treasury notes, its first targeted purchases of U.S. securities since the early 1960s. The five- year auction drew a yield of 1.849 percent. “This caught a lot of people unaware,” said Bulent Baygun, head of interest-rate strategy in New York at BNP Paribas Securities Corp., one of the 16 primary dealers that are required to bid at Treasury auctions. “Prior to the auction the Fed conducted its purchases of Treasuries, which may have compressed interest rates below where they would have been otherwise.”
Soros Says Commercial Property Values Will Fall 30% Billionaire investor George Soros said U.S. commercial real estate will probably drop at least 30 percent in value, causing further strains on banks. “Commercial real estate has not yet fallen in value,” Soros, speaking at a forum in Washington, said. “It is inevitable, it is written, everybody knows it, there are already some transactions which reflect and anticipate it, so we know, they will drop at least 30 percent.” U.S. commercial real estate values have fallen 30 percent from the 2007 peak as cheap financing disappeared and the recession reduced occupancies, RREFF, the real estate investment unit of Deutsche Bank AG, said yesterday in its 2009 forecast. Total returns in a commercial property index used by pension funds may decline as much as 11 percent this year, the group said.
Worst in 26 years The nation's gross domestic product declined by 6.3% in the fourth quarter -- the biggest drop since 1982. The government confirmed Thursday that the U.S. economy suffered its largest drop in 26 years during the fourth quarter. The nation's gross domestic product, the broadest measure of economic activity, fell at an annual rate of 6.3% during the final three months of 2008. That's slightly worse than the government's previous estimate of a 6.2% drop in the period. Economists surveyed by Briefing.com had forecast that GDP would fall at a 6.6% rate in the latest reading. The drop is the biggest one-quarter decline in this key measure since the first three months of 1982.
Nobel Prize Winners Clash on Geithner Plan Prospects Treasury Secretary Timothy Geithner has a good chance of succeeding with his plan to cleanse banks of toxic assets, says A. Michael Spence, co-winner of the 2001 Nobel Prize in economics. Paul Krugman, the newest laureate, is so sure Geithner will fail that he’s full of “despair.” Even winners of the highest awards in economics can’t always be right. Which prediction proves correct depends in part on whether private investors can be enticed to bid on as much as $1 trillion of illiquid loans and securities that banks are now stuck with.
7,500 G.M. Workers Accept Latest Buyout DETROIT — More than 14,000 retirement-eligible hourly workers have elected to stay at the financially troubled automaker General Motors rather than leave with a buyout package worth up to $45,000. G.M. on Thursday said in a statement more than 7,500 members of the United Automobile Workers union who work in its factories accepted the offers by this week’s deadline. Most of the workers will leave by April 1. The number is more than double the projection of one analyst but illustrates the difficulty G.M. faces in trying to persuade workers to give up their job during a recession, even at a company perilously close to bankruptcy and after the U.A.W. agreed to reduced job-security provisions.
IBM Cuts Jobs as It Seeks Stimulus Money A plan to send more work abroad as the company angles for pieces of the high-speed rail and health-care handouts is stirring controversy Reports of deep job cuts at International Business Machines (IBM) come at a potentially delicate time for the company—just as it is hoping to secure money from the federal stimulus package. The company will lay off as many as 5,000 U.S. workers in its Global Business Services unit, transferring some of the work they performed to India, according to media reports. IBM spokesman Mike Fay declined to confirm or to comment on any job-cut plans, which were reported on Mar. 25 by The Wall Street Journal (NWS) and Bloomberg News. The cuts will affect mainly information technology and consulting work in such areas as customer relations management and supply chain management, says Lee Conrad, national coordinator of Alliance@IBM, a group that is seeking union representation at IBM and is allied with the Communications Workers of America Local 1701.
Obama says to help U.S. automakers President Barack Obama said on Thursday that his administration would unveil in the coming days the next part of its plan to help the troubled U.S. auto industry, provided the companies push ahead with sweeping restructurings. The signal of additional federal support prompted a rally in General Motors Corp shares and came as the embattled automaker announced that 12 percent of its U.S. hourly workers had accepted buyouts. Auto sector shares rallied across the board and GM jumped more than 14 percent as Obama's comments bolstered expectations that while U.S. officials would demand tough concessions from creditors and shareholders, they would not force GM and its smaller U.S. rival Chrysler LLC into bankruptcy.
States consider drug tests for welfare recipients Want government assistance? Just say no to drugs. Lawmakers in at least eight states want recipients of food stamps, unemployment benefits or welfare to submit to random drug testing. The effort comes as more Americans turn to these safety nets to ride out the recession. Poverty and civil liberties advocates fear the strategy could backfire, discouraging some people from seeking financial aid and making already desperate situations worse. Those in favor of the drug tests say they are motivated out of a concern for their constituents' health and ability to put themselves on more solid financial footing once the economy rebounds. But proponents concede they also want to send a message: you don't get something for nothing.
HOPE prevents 1 foreclosure HOPE for Homeowners has been a failure. But Congress thinks some tweaks will revive it. If HOPE for Homeowners, the foreclosure-prevention plan passed last summer, was a soft drink, it would be New Coke. If it was an automobile, it would be an Edsel. A movie? Howard the Duck. In the five months since it has been in effect, HOPE has helped exactly one homeowner to avoid foreclosure. This despite Congress having made $300 billion available to back these loans and estimating that the program would benefit as many as 400,000 families. "As it stands now, we've only gotten 752 applications," said Federal Housing Authority spokesman Brian Sullivan. "And only insured one loan. Needless to say, the program isn't working terribly well."
Off-the-cuff suggestion prompts discussion on what to do with abandoned neighborhoods in Flint FLINT, Michigan -- Look in any direction from Bianca Bates' north Flint home, and you'll see graffiti-covered siding, boarded-up windows and overgrown lots. About half of the homes on her block are burned out or vacant magnets for drug dealers and squatters. It isn't where she thought she'd end up, but it's all she can afford to rent. "It's a dangerous place to live," said Bates, 21, who lives on East Russell Avenue. "Everywhere you look, these houses are empty around here." Property abandonment is getting so bad in Flint that some in government are talking about an extreme measure that was once unthinkable -- shutting down portions of the city, officially abandoning them and cutting off police and fire service.
Economy Shrinks As Job Losses Continue to Mount Downturn Severe Despite Some Stabilizing The economy shrank even faster than thought at the end of last year, and job losses are continuing at a stunning pace, according to government data released yesterday, reminders of the severity of the downturn even as the economy shows hints of stabilizing. There have been some mildly optimistic signs for the economy in recent weeks, particularly a surprising jump in orders for durable goods reported Wednesday. But yesterday's data was evidence that even if those signs of improvement continue, the outlook for American workers is likely to remain bad for many months to come, and the recession is likely to be recorded as one of the most severe since the 1930s.
Jobless claims top 5.5 million The number of Americans filing continuing claims for unemployment benefits rises to a fresh record as another 8,000 file first-time claims last week. The number of people filing initial claims for unemployment benefits rose last week, while those filing continuing claims hit an all-time high for the ninth straight week, according to a government report released Thursday. In the week ended March 21, a total of 652,000 people filed initial jobless claims, up 8,000 from the previous week's revised figure of 644,000, the Labor Department reported. Economists had expected new claims to rise to 650,000, according to a survey by Briefing.com.
The North American Union Is REAL
IBM cutting 5,000 jobs in US, shifting them to India International Business Machines (IBM) Corp. plans to lay off about 5,000 US employees, with many of the jobs being transferred to India, a media report said Thursday. The technology giant has been steadily building its work force in India and other locations while reducing the number of workers based in the US, The Wall Street Journal said citing people familiar with the situation. Foreign workers accounted for 71 percent of Big Blue's nearly 400,000 employees at the start of the year, up from about 65 percent in 2006. Noting that outsourcing to India has long been a hot-button topic for IT employees in the US, the Journal said as US employers have shed millions of jobs in recent months, workers and politicians have stepped up their criticisms of the practice with little impact.
Doctors Raise Doubts on Digital Health Data Now that the federal government plans to spend $19 billion to spur the use of computerized patient records, the challenge of adopting the technology widely and wisely is becoming increasingly apparent. Two articles, to be published on Thursday in the New England Journal of Medicine, point to the formidable obstacles to achieving the policy goal of not only installing electronic health records, but also using them to improve care and curb costs. One article reports that only 9 percent of the nation’s hospitals have electronic health records, based on a survey of nearly 3,000 hospitals. The study, financed by the federal government and the Robert Wood Johnson Foundation, is the most definitive measure to date of the use of computerized patient records by hospitals. The government-backed study found a far lower level of use than some earlier, less rigorous surveys.
Inflation or Deflation: Choose Your Poison On September 18th, 2008 I wrote a letter to the Fed asking them to study and seriously consider the actions taken by the Swedish Riksbank in 1992. In effect, I was asking them to act swiftly. Why? Because I have studied credit crises and I know they are akin to the Black Plague - if you squash it quickly there is a good chance you can contain it, however, once you let it spread - well, we all know what happens next. Of course, Japan chose a path very similar to the one we have chosen and the results are well known. Sweden, however, pounced on their problems. I am growing increasingly concerned that we have not squashed this bout of plague quickly enough. The main reason why the Swedish Model worked so well is due to four primary factors:
The Swedes were transparent and obtained the full faith of the public before implementing their plan.
They were PROACTIVE rather than REACTIVE.
They guaranteed the banks, i.e., they dropped trust, rather than dollars, from helicopters.
They limited moral hazard.
I fear that we are doing none of the above. Our government has not been transparent with the rescue plan (although I applaud President Obama for his efforts). Many of the people who got us into this mess are now the ones devising the plan to get us out (Hank Paulson, Tim Geithner, Barney Frank, etc). And most importantly, it appears as though the public is now losing faith in the government's reaction (God save us if the Treasury tries to hit up the Congress for another bailout package).
Why Bernanke and Geithner Are Flying the Plane into the Ground I got it - that's why Bernake (and Geithner) are flying the plane into the ground. The most common cause of air crashes is when pilots fly planes into the ground. The reason they do that is that they get confused about where they are. 23rd March 2009 Chairman Bernanke said that if a couple of trillion hadn't been thrown into the fire, then Plumber Joe (and sweet Mary Lou) would have lost 70% of their 401K by now not 40%; (and presumably their house too). Pity he didn't get around to that conclusion in early 2007 and cut rates to zero then, rather than hanging on for ages telling everyone that everything was under control "so as to instill 'confidence'", I quote from his presentation to Congress in May 2007: " At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained”. I'm not trying to score points; all I'm trying to say is that although the Chairman might be great pilot, he doesn't have a great reputation for "navigation".
Farmers Want Obama to Make Carbon a Cash Crop Under Climate Law Rex Woollen grows corn and soybeans. In 2007, the Wilcox, Nebraska, farmer started cultivating a new commodity: carbon. By not tilling his 800 acres, Woollen by some estimates keeps 470 tons of carbon per year in the ground and out of the atmosphere. Because of that, Woollen gets carbon credits he can sell on the Chicago Climate Exchange. At first, neighboring farmers were skeptical. “They called me a tree-hugger,” Woollen said. “Then I showed them my first check.” Woollen gets about $3,000 a year from the climate exchange’s carbon-trading pilot program. While it isn’t much, to Woollen it hints at bigger potential profit as Congress considers mandatory, nationwide greenhouse-gas limits.
Sen. Reid Willing to Fast-Track Health Care Overhaul; Republicans Cry Foul Senate Majority Leader Harry Reid indicated Wednesday he is willing to move sweeping health care legislation through the Senate with a procedural maneuver that would block a GOP filibuster. The prospect of the controversial tactic has already ignited Republicans' ire, and key Senate Democratic chairmen have said they don't want to do it. Reid, D-Nev., took a different position on a conference call with reporters. "I think it's something we need to consider," Reid said.
The Globalization of Natural Gas A quite interesting story via the New York Times; a lot of people toss "crude oil" and "natural gas" into the same "energy" hamper, but they actually have quite different constructs in terms of demand/supply dynamics. It can most simply be described as the difference between an easily transportable, global commodity (crude oil) versus one that is not (natural gas). Hence the latter's supply/demand dynamics have been historically more focused on the localized economy. Put another way, in periods different from now when the entire globe is contracting - natural gas could be holding up in one part of the world, whereas it would be struggling much more in other parts. Versus crude oil which can be shipped quite promptly to wherever shortages are. This is also why Russia has Europe's cajones in an iron grip - since Europe is so dependent on Russian natural gas; and cannot turn to a "global supply" like they could with oil.
G20 Security
Clinton in Mexico, but Focus on Another Diplomat MONTERREY, Mexico — Secretary of State Hillary Rodham Clinton, continuing her show of solidarity with Mexicans in their struggle against drug trafficking, toured a high-tech police base in Mexico City on Thursday and greeted diplomats from the American Consulate in this northern city, which was sprayed with gunfire last fall by a suspected drug gang member. But Mrs. Clinton was nearly upstaged by reports that the United States planned to nominate a Cuban-born American diplomat who has written extensively about “failed states” as the next ambassador to Mexico. The State Department declined to comment on reports that the diplomat, Carlos Pascual, a former ambassador to Ukraine who is currently the director of foreign policy at the Brookings Institution, would be nominated.
Merkel Makes Like Obama With German Stimulus Excluding Europe It’s a late winter morning at MAN AG’s truck manufacturing plant outside Munich, and 1,700 production line workers face a deadline just 6 minutes and 21 seconds away. As a countdown clock ticks above their heads, an eight-man team assembles a truck’s undercarriage. Farther along the conveyor belt, other colleagues have the same amount of time to attach wheels, install gearshifts and fit windshields to meet the day’s target of 132 vehicles. All of them easily beat the clock, because they are used to working harder.
China: Partner, Adversary, Rebel A crisis of global confidence in the USDollar is upon us. Foreigners have begun to lose respect for USGovt approach to problem solving, for US bank administration, and for USDollar custodial management. Foreigner creditors have suffered deep losses from fraudulent bond export, continue to sit atop mountains of US$-based debt securities, and watch current events in horror. The heap of moldy paper includes both USTreasury Bonds and USAgency Mortgage Bonds. Foreigner creditors see the USDollar valuation propped up by liquidation forces rather than USEconomic strength. Foreigner creditors see the USTBond yields forced down by liquidation forces rather than USGovt debt integrity. Foreigners are aghast at four new trends. They lose respect when the financial market rules change periodically, obviously to favor the insiders, elite, and connected. They lose respect when the approach taken by the Obama Admin is marred by lack of consistency, coordination, or even thorough research. They lose respect at the flow of $trillion$ in rescues and redemptions for failed institutions, most of which are responsible for the global crisis. They lose respect at the prospect of $trillion$ in ongoing federal budget deficits as far as the eye can see. They lose respect at the prospect of $trillion$ in monetized US$-based bonds, with the prospect of repeated announcements.
North Korea readies missile, makes new threat North Korea said on Thursday that if the international community punishes it for next month's planned missile launch it will restart a nuclear plant that makes weapons grade plutonium. The secretive state this week put a long-range missile in place for a launch the United States warned would violate U.N. sanctions imposed on Pyongyang for past weapons tests. The planned launch, seen by some countries as a disguised military exercise, is the first big test for U.S. President Barack Obama in dealing with the prickly North, whose efforts to build a nuclear arsenal have long plagued ties with Washington.
U.S. destroyers on move as N. Korea prepares rocket launch U.S. Navy ships capable of shooting down ballistic missiles are being moved to the Sea of Japan, a Navy spokesman said. The move came as North Korea was preparing for an expected rocket launch next month. Later Thursday, Japan announced it was ready to fire on the rocket if any part of it enters Japanese airspace. Defense Minister Yasukazu Hamada's order was to destroy debris from the North Korean rocket if its launch fails and fragments fall in Japanese territory, said defense ministry spokesman Yuichi Akiyoshi.
Pakistani and Afghan Taliban Unify in Face of U.S. Influx ISLAMABAD, Pakistan - After agreeing to bury their differences and unite forces, Taliban leaders based in Pakistan have closed ranks with their Afghan comrades to ready a new offensive in Afghanistan as the United States prepares to send 17,000 more troops there this year. In interviews, several Taliban fighters based in the border region said preparations for the anticipated influx of American troops were already being made. A number of new, younger commanders have been preparing to step up a campaign of roadside bombings and suicide attacks to greet the Americans, the fighters said. The refortified alliance was forged after the reclusive Afghan Taliban leader, Mullah Muhammad Omar, sent emissaries to persuade Pakistani Taliban leaders to join forces and turn their attention to Afghanistan, Pakistani officials and Taliban members said.
Obama to send 4,000 more troops to Afghanistan, officials say President Obama plans to send another 4,000 troops to Afghanistan along with hundreds of civilian specialists in an effort to confront what he considers "the central challenge facing [that] country," senior administration officials said Thursday. The president also will call on Congress to pass a bill that triples U.S. aid to Pakistan to $1.5 billion a year over five years, the officials said. Obama is expected to announce new strategies for both countries Friday. The troops, which are in addition to the 17,000 the president announced earlier would be sent to Afghanistan, will be charged with training and building the Afghan army and police force. The plans include doubling the army's ranks to 135,000 and the police force to 80,000 by 2011, the officials said.
A Letter From Inside AIG: "The Entire US System Is Committing Suicide" Dear Family, Friends and Colleagues, As most of you know I work at AIG, specifically in the division known as Financial Products which is often cited as the "root of the problem" at AIG. It seems to me that given the media circus, political hypocrisy and witch-hunting going on in the US right now, I should try to set a few facts out and make a few points that, while they are appearing in the press, are being drowned out in the populist frenzy. First of all, what happened at AIG? AIG has been destroyed by a systemic failure of management that started when Hank Greenberg was booted out. I have facts that prove that had Greenberg not been removed, AIG would be in fine form today, but he does need to accept the blame for the weak overall structure of the place. Now what I mean by systemic failure is this:
Administration unveils financial system overhaul Administration proposes financial system overhaul, will impose tougher rules on big players Obama administration on Thursday unveiled a sweeping overhaul of the financial system designed to impose greater regulation on major players like hedge funds. Treasury Secretary Timothy Geithner told lawmakers that the changes are needed to fix the flaws exposed by the current financial crisis, the worst to hit the country in seven decades. The goal is to repair a system that has proven "too unstable and fragile," he said
Gold hits record against euro on fear of Zimbabwean-style response to bank crisisGold has surged to an all-time high against the euro, sterling, and a string of Asian currencies on mounting concerns that global authorities are embarking on a "Zimbabwe-style" debasement of the international monetary system. "This gold rally is driven by safe-haven fears and has a very different feel from the bull market we've had for the last eight years," said John Reade, chief metals strategist at UBS. "Investors are seeing articles in the press saying governments should deliberately stoke inflation, and they are reacting to it." Gold jumped to multiple records on Tuesday, triggered by fears that East Europe's banking crisis could set off debt defaults and lead to contagion within the eurozone. It touched €762 an ounce against the euro, £675 against sterling, and 47,783 against India's rupee.
US backing for world currency stuns markets US Treasury Secretary Tim Geithner shocked global markets by revealing that Washington is "quite open" to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund. The dollar plunged instantly against the euro, yen, and sterling as the comments flashed across trading screens. David Bloom, currency chief at HSBC, said the apparent policy shift amounts to an earthquake in geo-finance. "The mere fact that the US Treasury Secretary is even entertaining thoughts that the dollar may cease being the anchor of the global monetary system has caused consternation," he said. Mr Geithner later qualified his remarks, insisting that the dollar would remain the "world's dominant reserve currency ... for a long period of time" but the seeds of doubt have been sown. The markets appear baffled by the confused statements emanating from Washington. President Barack Obama told a new conference hours earlier that there was no threat to the reserve status of the dollar.
Tim Geitner Lies : Flip Flops On New World Currency
Geithner gaffe roils markets 'Open' view to world currency recanted An unguarded comment by Treasury Secretary Timothy F. Geithner on Wednesday set off a sudden drop in the dollar and contributed to a chain of market-rocking events that included a setback in the stock market and a sharp uptick in interest rates. Mr. Geithner appeared to lend his support to a proposal by China's central bank governor to replace the dollar as the world's reserve currency with a basket of currencies that would be managed by the International Monetary Fund. In an appearance before the Council on Foreign Relations in New York on Wednesday morning, Mr. Geithner raised eyebrows by saying that "we're actually quite open to that," only a day after both he and President Obama had vehemently rejected the idea and affirmed their strong support for the U.S. currency.
Ron Paul On Fox Business News 03/25/09 Part 1
Ron Paul On Fox Business News 03/25/09 Part 2
Geithner Clarifies His Remarks After Dollar Tumbles Treasury Secretary Timothy F. Geithner on Wednesday said that the dollar would remain the world's dominant reserve currency for some time to come, clarifying earlier remarks that sent the dollar tumbling. "The dollar remains the world's dominant reserve currency," Mr. Geithner said after a speech in Midtown Manhattan to the Council on Foreign Relations. "I think that's likely to continue for a long period of time. Mr. Geithner's comments came in response to a question regarding a proposal by Zhou Xiaochuan, the governor of the People's Bank of China, that suggested a possible replacement for the dollar as a global reserve currency. The proposal called on the International Monetary Fund to increase the use of "Special Drawing Rights" - a basket of currencies made up of the euro, yen, pound and dollar that has served as a reserve asset.
China not fooling in call for review of dollar's status China's calls for a new international reserve currency to replace the U.S. dollar are more than mere bluster and could likely lead the debate over the future of the global foreign-exchange system, analysts say. "By proposing such a sweeping reform, China is demonstrating its growing influence in reshaping the global monetary system, and is now on offensive in the debate of who is responsible for the global imbalances," Deutsche Bank's chief economist for Greater China Jun Ma said in a note to clients Wednesday. The comments by People's Bank of China Gov. Zhou Xiaochuan are setting a framework for talks on how to resolve the huge trade imbalances between China and the U.S., analysts said. In the past, China has been blamed for its large trade surplus by officials in the U.S. and elsewhere, who see the yuan as undervalued.
China wants influence and has money to buy it This is the year when once-rich countries realised they needed China's money. But it will extract a high price. It will change the character of the International Monetary Fund, and other old institutions - if it agrees to help them out at all. Gordon Brown has made much of wanting to rebuild the IMF at next week's G20 meeting. It won't be a quick conversation. China, India, Russia and Brazil want more voting rights over how the IMF spends its money, to reflect their rising share of the world's economy. How much will they put in? There is a danger in expecting much. From China's point of view, it may win more influence by investing directly in troubled countries, rather than in one of the creaking institutions built after the Second World War.
China 'Super Currency' Call May Signal Dollar Concern China's call for the creation of a new international reserve currency may signal its concern at the dollar's weakness and ambitions for a leadership role at next week's Group of 20 summit, economists said. Central bank Governor Zhou Xiaochuan this week urged the International Monetary Fund to expand the use of so-called Special Drawing Rights and move toward a "super-sovereign reserve currency." The dollar weakened after the Federal Reserve said that it would buy Treasuries and the U.S. government outlined plans to buy illiquid bank assets.
U.S. Vows To Sustain Dollar's Dominance Geithner Defends Currency's Role Treasury Secretary Timothy F. Geithner said Wednesday that the United States would do whatever it takes to make sure the dollar would remain the world's dominant reserve currency, clarifying comments he had made earlier in the day that had caused the greenback to fall against major currencies. "I think the dollar remains the world's dominant reserve currency," Geithner said during a question-and-answer session at the Council on Foreign Relations here. "I think that's likely to continue for a long period of time. And as a country, we will do what's necessary to make sure we're sustaining confidence in our financial markets, and in the productive capacity of this economy and in our long-term fundamentals."
Taxpayers Will Get Hosed By The Collapse Of AIG's Insurance Business AIG was once an ultra-reputable insurance company. But its fantastic losses have now more or less ruined the company and the brand. Already there are rumors that AIG's insurance customers are fleeing. And now CEI's insurance expert says AIG may be the next Enron.
What's Missing from Geithner's Plan? Public Participation Earlier this week, Timothy Geithner unveiled his plan to rehabilitate the banking system. The program, in summary, is more than forty pages in length and contains proposal to deal with both bad loans and toxic mortgage backed securities. It addresses many of the concerns that have been voiced about further government intervention but is still lacking on a few key points. One of tenets of Geithner's proposal is the investment of private equity (alongside equal government equity) with leverage provided by an FDIC-backed program. While we applaud Mr. Geithner for what appears to be a reasonable attempt to ensure the rationale pricing of assets, as the government will not be responsible for pricing them, and reasonably sharing of any upside, as the government will participate equally in the equity, we can't help but point out two major issues with the program.
Jim Lacamp (Canada) on U.S. solvency crisis
Geithner to Seek Power Over Large U.S. Hedge Funds, Derivatives Treasury Secretary Timothy Geithner will ask Congress to bring large hedge funds, private- equity firms and derivatives markets under federal supervision for the first time as part of a revamp of U.S. financial rules. The Treasury chief will present his proposed framework at a House Financial Services Committee hearing in Washington tomorrow. Under the new so-called rules of the road, the government would get powers to seize and wind down any financial company big enough to destabilize the banking system.
A Growing Chorus on the Hill Questions the Fed's Decisions Lawmakers Could Delay Expansion of Bank's Powers The Federal Reserve, which for the past year has drawn mostly praise from Congress for its aggressive response to the financial crisis, is increasingly on the hot seat. In recent weeks, members of Congress have criticized the central bank -- publicly and vociferously -- for failing to stop the payment of bonuses at American International Group, for not disclosing the names of companies that benefit from its massive lending programs and for acting without lawmakers' explicit approval in deploying vast sums of taxpayer dollars. While the attacks are loudest from junior members of Congress, even some senior legislators are expressing growing wariness over how much power the Fed has amassed in its bid to contain the financial crisis. That has put an institution whose leaders traditionally keep their distance from politics on the defensive.
Extensive regulatory overhaul planned Obama admin. proposing regulation overhaul in areas blamed for financial crisis The Obama administration is proposing an extensive overhaul of financial regulations to increase oversight of such exotic instruments as credit default swaps that have been blamed for contributing to the worst financial crisis to hit the country in seven decades. Officials said Wednesday that the administration will seek to regulate the market for credit default swaps and other types of derivatives and require hedge funds to register with the Securities and Exchange Commission.
When Bernanke Says All Is Well, It's Time to Duck and Cover "We've averted" the risk of a depression, Federal Reserve Chairman Ben Bernanke said this week. "Now the problem is to get the thing working properly again." Appearing on CBS network's 60 Minutes, Bernanke told correspondent Scott Pelley that concerted efforts by the government likely averted a depression similar to the 1930s. He also stated the nation's largest banks are solvent and that he doesn't expect any of them to fail; and that the U.S. recession will come to an end "probably this year." Is this finally the light at the end of the tunnel for the U.S. economy? We don't want to appear as perpetual gloom-and-doomers, but fact is, when Bernanke tries to predict the future, he's usually wrong.
Ron Paul: "I see no Purpose for the Federal Reserve..." 03-17-09
Ron Paul's HR 1207 Update Ron Paul gives an update on HR 1207, the Federal Reserve Transparency Act, which would thoroughly audit the Federal Reserve System.
Economy warrants bold policy moves Inflation fears 'overdone,' with greater risks of disinflation, deflation Federal Reserve Bank of San Francisco President Janet Yellen on Wednesday said the central bank would use all available tools to combat the recession, while expressing doubts an economic recovery would begin before 2010. "I share the guarded optimism of most professional forecasters that the economy may begin to grow again within the next several quarters. But I must admit that I see considerable downside risk, and my confidence in this outlook is greatly diminished by the nearly unprecedented set of circumstances we face," Yellen told the Forecasters Club of New York. Yellen also downplayed worries that the Fed's moves to stem the recession would spark inflation, saying deflation continues to be her greater worry.
Who foots the bill? Who is going to pay? Most of the world's major economies are trying to spend their way out of the sudden collapse in financial activity using borrowed money. While contentious, there are ample defences for this policy. But working out who pays is a harder question, which will be aired when the G20 heads of state meet in London next week. The air is thick with verbal barbs - from the Chinese central bank's interest in a new reserve currency, to the Czech prime minister's anger with the US deficit. Wednesday showed that the market is listening.
Commercial Real Estate Collapse Picking Up Steam Even if banks were being completely honest about their marks -- which we know they're not -- the accelerating collapse of the commercial real estate market would mean billions more in writedowns. WSJ: The delinquency rate on about $700 billion in securitized loans backed by office buildings, hotels, stores and other investment property has more than doubled since September to 1.8% this month, according to data provided to The Wall Street Journal by Deutsche Bank AG. While that's low compared with the home-mortgage delinquency rate, it's just short of the highest rate during the last downturn early this decade.
Gordon Brown brings Britain to the edge of bankruptcy Iain Martin says the Prime Minister hasn't 'saved the world' and now faces disgrace in the history books They don't know what they're doing, do they? With every step taken by the Government as it tries frantically to prop up the British banking system, this central truth becomes ever more obvious. Yesterday marked a new low for all involved, even by the standards of this crisis. Britons woke to news of the enormity of the fresh horrors in store. Despite all the sophistry and outdated boom-era terminology from experts, I think a far greater number of people than is imagined grasp at root what is happening here. The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic.
Don't miss this one from across the pond! Daniel Hannan MEP: The devalued Prime Minister of a devalued Government
E.U. President Calls U.S. Stimulus the 'Way to Hell' BRUSSELS - Transatlantic tension over the handling of the global economic crisis intensified Wednesday when the prime minister of the Czech Republic, which holds the European Union presidency, described the President Obama's stimulus measures as the "way to hell." Addressing the European Parliament in Strasbourg, France, Prime Minister Mirek Topolanek argued that the Obama administration's fiscal package and financial bailout "will undermine the stability of the global financial market." Mr. Topolanek's comments, only a day after he offered his government's resignation following a no confidence vote, took European officials by surprise. The rotating European Union presidency lasts for six months and the country that holds it is supposed to speak on behalf of the entire 27-nation bloc.
IMF rescues Romania with €20bn aid while Serbia handed €4bn Romania has joined the long list of countries in Eastern Europe to tap emergency aid from the International Monetary Fund (IMF), securing a €20bn (£18.7bn) package to help cover an avalanche of foreign debts due this year. The IMF-led rescue includes €5bn from the European Union's bail-out fund as well as project aid from the World Bank and the European Bank for Reconstruction and Development. Romania is the seventh country in the region to need IMF help along with Hungary, Ukraine, Latvia, and Belarus. Serbia on Wednesday secured a €4bn bail-out and Bosnia said it was starting rescue talks. The latest trio of supplicants come as the IMF introduces a new lending system aimed at giving countries longer to sort out problems and avoid the wrenching - and often self-defeating - adjustments forced on East Asia's tigers in 1997 and 1998. The Romania package aims to smooth the downturn as the economy struggles with collapsing steel prices and a fall in demand for car exports. The Fund said the country faced a "financing gap" as foreign loans come due in a hostile global market.
G20 summit: London prepares for lockdown The G20 conference will lead to a London "lockdown" next week, with parks, roads and businesses closed to keep world leaders safe, Government officials are warning. Protesters with armed with buckets and spades are among several thousand people who are planning to bring chaos to the heart of central London. Last night it emerged that City workers were being advised to "dress down" next week to avoid drawing attention to themselves. More than 1,000 officials and diplomats are expected in the capital, including the leaders of the International Monetary Fund and the World Bank, for the G20 London Summit Senior Whitehall sources warned yesterday to expect "widespread disruption" with parks and roads likely to be closed for most of the week.
G20 to be most expensive police operation in British history The most expensive police operation in British history has been launched to secure the G20 summit in London, The Daily Telegraph can disclose, at an estimated cost of up to £8 million. Three police forces are combining under Scotland Yard's command to protect world leaders at the summit and cope with thousands of demonstrators who will attempt to paralyse central London. A "huge" security operation is already underway in preparation for the three-day gathering of heads of state, including US President Barack Obama, and security has been stepped up amid fears that violent protesters will find out where they are staying.
Czech Republic joins East Europe's falling dominoes The economic crisis sweeping Central and Eastern Europe has claimed a third victim in a month after the Czech government lost a vote of no confidence on Tuesday night in a drama that risks setting off a fresh round of investor flight from the region Latvia's government fell last month following violent street protests. Hungary's premier Ferenc Gyurcsany resigned last week after struggling to impose austerity measures required under the terms of a $25bn (£17bn) bail-out from the International Monetary Fund. But the Czech crisis has unnerved investors even more because the country has been seen as a rock of stability. It kept a tight rein on credit and avoided the stampede into euro and Swiss franc mortgages that occurred in other parts of Eastern Europe. The fate of premier Mirek Topolanek - toppled in the middle of the Czech Republic's EU presidency - shows how fast the crisis is moving from finance into the core economy. Czech industrial output fell 23pc in January as car plants moth-balled production lines.
Geithner to lay out new risk, consumer rules Geithner details plan for 'too big to fail' companies Treasury Secretary Timothy Geithner on Wednesday said he will soon outline proposals for new, tougher requirements on major financial firms to protect the financial system and new rules to prevent financial fraud and abuse against consumers and investors. Geithner, speaking to the Council on Foreign Relations in New York, said he would on Thursday unveil a framework for dealing with the kind of systemic risk that bailed-out insurer American International Group posed.
Yes, Geithner Still Believes In The Dollar CNBC just debunked this, but in case there was any doubt, Tim Geithner is still a strong believer in the dollar. Apparently there was a wire report referring to a Q&A he was giving at the Council on Foreign Relations, and was asked about a Chinese economist's call for expanded use of the IMF's Special Drawing Rights, perhaps as an alternative to the Dollar. . . . . . . . .Geithner follows up by saying that the future of the dollar in the international system is really a function of long-range U.S. fiscal policies. Wants to keep U.S. debt-to-GDP ratio stable, and asserts that there is now a consensus in Washington about fiscal rectitude. This is juuuust a little strange to hear given this year's fiscal balance sheet.
Central Bank Efforts Will See Fiat Currencies Fall Against Gold . . . . Macroeconomic, systemic and monetary risk has seen the dollar, the euro and more particularly sterling fall versus gold in recent months. Gold would have likely risen by much more were it not for likely central bank and bullion bank gold sales which have artificially capped the price. International quantitative easing, zero percent interest rates and competitive currency devaluations will see other fiat currencies come under pressure in the coming months. So called "save haven" currencies such as the yen and the Swiss franc have fallen in recent weeks and are also likely to come under serious pressure in the coming months. The Swiss have in recent weeks been devaluing the Swiss franc by intervening in currency markets and selling millions of Swiss francs and buying euro. The global financial and economic meltdown is leading to central banks internationally attempting to devalue their currencies and this has profound implications for investors and savers as it will lead to significant inflation in the coming months.
Reflation: Déjà Vu All Over Again? It is possible we are experiencing a Yogi Berra (former Yankee catcher) moment reminiscent of his observation, "This is like déjà vu all over again." We all know the government is trying to reinflate asset prices with money printing, leverage, and bailouts. While stocks may not be out of the woods yet, yesterday's move through 806 on the S&P 500 sends a signal the markets are paying attention to all the "liquidity facilities". Since all of the gains from the 2002-2007 bull market were fully retraced, you can make a simplistic argument the entire bull market (2002-2007) was largely based on easy credit and asset inflation. The fundamentals did not support a bottom in stocks in October of 2002, but the Fed was able to inflate asset prices with easy credit and leverage. Since the Fed is using a page from their 2002 playbook, we can reference 2002 to help us better understand the possible effectiveness of the current money printing extravaganza.
Why the Price of Gold Is Not Yet Soaring Gold has been one of the best investments in what is increasingly looking like a "lost decade" for most asset classes. Yet, despite its steady, workmanlike gains - average annual increases of 16 percent since 2001 - many gold investors are extremely disappointed with its recent performance. By many accounts, its stature as a safe haven asset has been diminished since it failed to better its early 2008 high when the wheels fell off the global financial system last fall. . . . . . . . . So, why is gold still under $1,000? Lost in a typical discussion about why the yellow metal does not fetch a substantially higher number of dollars are important factors about supply and demand. As exchange traded funds and mints all around the world take hundreds of tonnes of the metal off the market for investors, similar size adjustments are occurring elsewhere in the supply-demand equation.
Obama Plans to Name Task Force to Overhaul Tax Code President Barack Obama plans to name a task force to review and overhaul the U.S. tax code, a spokesman for the Office of Management and Budget said today. Obama will ask the Economic Recovery Advisory Board, led by former Federal Reserve Board Chairman Paul Volcker, for a top- to-bottom review of the 96-year-old law in an effort to "rebalance the federal tax code," spokesman Tom Gavin said in an interview.
Battle begins over federal budget The fight on Capitol Hill over next year's federal budget begins in earnest on Wednesday, when the Senate and House Budget Committees will debate just how much they want to spend and tax in 2010. Those meetings are the second formal step in a months-long process that started in February when President Obama put forth his own proposed budget outline -- a fuller version of which will be delivered to the Hill in April.The president's proposed $3.6 trillion budget will frame the debate, as will the Congressional Budget Office's analysis of his budget proposals. The CBO's estimates of how much the president's plan would increase the long-term deficit are notably higher than those of the administration and lawmakers must use the CBO numbers as their reference point.
Geithner, Bernanke Seek to Plug Gaps in Finance Rules The Obama administration is preparing an overhaul of U.S. banking rules that would force financial companies to keep more cash on hand in case their trading bets go wrong. Treasury Secretary Timothy Geithner told lawmakers yesterday that changes will include "strong oversight, including appropriate constraints on risk-taking." Federal Reserve Chairman Ben S. Bernanke said the case of American International Group Inc. showed the "intense problem" of trading with insufficient capital to guard against losses.
U.S. Dollar in the Crosshairs Ahead of G-20 Summit In the run-up to next week's G-20 summit in London, developing countries led by China and Russia are stepping up calls for the U.S. dollar to be pushed aside as the main global reserve currency. China's central bank governor, Zhou Xiaochuan, suggested this week that reforms to the international monetary system include the long-term goal of an international reserve currency not connected to an individual nation. China is the biggest holder of U.S. dollar assets and is concerned about the currency's volatility.
Obama Pressed On New Global Currency
Welcome to Fuffland! In the unfolding global financial collapse, it is not just our accounts and balance sheets that come up short, but our language as well. What do you call a bunch of liar loans packaged into toxic assets and placed on the balance sheet of the Federal Reserve as collateral for rescue loans? J,K. Galbraith has proposed the term "Bezzle," taking it to mean the eternal ebb and flow of questionable transactions within an economic cycle. Rational actors cut corners during easy times when they know no-one is looking, and then play nice again when the times change and someone starts paying attention again. But I believe that the phenomenon we are observing is something different: we need a word that describes the artifacts generated in response to irrational actors who demand to be fooled. As the old saying goes, "A fool and his money are soon parted" - at the fool's own insistence, no less! If the deer comes out of the forest and walks up to the hunter, it is not proper hunting, and this is not proper con artistry or grift or embezzlement or any other term we use to describe proper works of evil. If the victim, at the sight of the economic predator, goes into doggie submission, we must stop discussing the phenomenon in terms of conflict and consider whether what we are observing might be some strange instance of symbiosis.
American Home Fires Back, Sues Hedge Fund for Racketeering After finding itself dragged into court by hedge fund manager Bruce Rose of Greenwich-based Carrington Capital, Irving, Tex.-based mortgage servicer American Home Mortgage Servicing, Inc. fired its own volley back at both Rose and Carrington on Thursday, suing for alleged acts of racketeering and a scheme to profit illegally from holding REO hostage at the servicing firm. American Home is owned by legendary investor Wilbur Ross' WL Ross & Co., and is the nation's largest independent residential mortgage servicer. The allegations made in the complaint by AHMSI against Rose and Carrington show just how complex relations between servicers and investors can be, amid increasing pressure from lawmakers and regulators to find solutions to the nation's housing mess.
Postal chief says post office running out of money Postmaster general says post office in dire financial straits, promotes cutting back delivery The post office will run out of money this year unless it gets help, Postmaster General John Potter told Congress on Wednesday as he sought permission to cut delivery to five days a week. "We are facing losses of historic proportion. Our situation is critical," Potter told a House panel. The agency lost $2.8 billion last year and is looking at much larger losses this year. Reducing mail delivery from six days to five days a week could save $3.5 billion annually, Potter said. Potter also urged changes in how the post office pre-pays for retiree health care to cut its annual costs by $2 billion. If the Postal Service does run out of money, the lingering question, Potter told the House Oversight post office subcommittee, is which bills will be paid and which will not. Ensuring the payment of workers' salaries comes first, he said, but other bills may have to wait.
More companies check credit before job offers With thousands of newly unemployed people looking for jobs, employers have found a new way to do background checks on applicants. More employers are running credit checks on potential workers. "They're using credit (ratings) to determine character," said Charisma Jones, a credit counselor. Jones says employers used to run checks only on people applying to work in certain fields, particularly those handling money. Now, some would-be employers are using your credit history to make a judgment on what type of person you are. If you're paying your bills on time, Jones said, the credit check's a good thing.
Hill defends actions on N. Korea Brownback determined to block nomination Christopher Hill, President Obama's nominee to be ambassador to Iraq, had an easy Senate confirmation hearing Wednesday, but may still be blocked by a Republican senator who claims Mr. Hill in a prior post broke his word to raise human rights issues with North Korea. Sen. Sam Brownback, Kansas Republican, told The Washington Times last week that he intended to put a hold on Mr. Hill's nomination, because he did not fulfill his promise to include the George W. Bush administration's envoy for human rights in North Korea in negotiations with the communist state.
U.K. Bond Auction Fails for First Time Since 2002 The U.K. failed to find enough buyers for 1.75 billion pounds ($2.55 billion) of bonds for the first time in almost seven years as debt investors repudiated Prime Minister Gordon Brown's plan to stem the worst economic crisis in three decades. Gilts slumped after the London-based Debt Management Office, which manages bond auctions on behalf of the Treasury, said investors bid for 1.63 billion pounds of the 40-year securities. The last time the U.K. government was unable to attract enough investors was in 2002 when it tried to sell 30- year inflation-protected bonds. The yield on the 4.5 percent gilt due 2049 rose 10 basis points to 4.55 percent.
Canadian Bank Wants To Move To US To Get TARP One popular critique of immigration is that foreigners come here to mooch on our generous welfare benefits and are a drain on taxpayers. We're not particularly convinced by this, but it apparently applies very well to banks.
Free Speech Advocates Launch Campaign for 'International First Amendment' Troubled by attacks on free expression by groups wanting to shield Islam from criticism or scrutiny, free speech advocates are preparing to unveil a campaign for an "international First Amendment." The initiative will be launched by the International Free Press Society (IFPS) at an event in Washington, D.C., on Friday. Attending will be Geert Wilders, the Dutch lawmaker whose views on Islam have stoked controversy worldwide.
United Nations Wants To Regulate Free Speech Of Every Nation
Borrowing Costs for Small Gold Miners Triples Borrowing costs for small gold mining companies have almost tripled in the past year as the credit crunch forces banks to demand a premium for political and security risks, the World Bank's private financing unit said. Banks are asking for as high as 800 basis points above the London interbank offered rate, or Libor, for a typical $400 million loan maturing in six years, said William Bulmer, associate director at International Finance Corp., the private lending arm of the World Bank. That compares with a 300-basis point premium last year, he said.
Obama's EPA Puts Thousands of Mining Jobs at Risk Expressing "serious concerns" about the environment, President Barack Obama's Environmental Protection Agency on Tuesday announced it was putting mountaintop mining permits on hold - a move that could kill jobs, the industry warned. Environmental activists cheered the decision, but the National Mining Association (NMA) warned that the EPA's action may eliminate high-paying jobs in a relatively poor area of the country. "Jeopardizing coal mining activity throughout Appalachia will put more than 77,000 high-wage mining jobs at risk at a time when our nation is already battered by a deepening recession," said NMA President and CEO Hal Quinn. "This action is incomprehensible at a time when the country is losing 600,000 jobs every month and households are struggling just to meet basic needs."
House to Take Up Stalled Wilderness Bill After several false starts, the House is expected to take up a long-delayed bill to set aside more than 2 million acres in nine states as protected wilderness. . . . . . . . Critics, including Sen. Tom Coburn (R-Okla.), say the bill is an "anti-stimulus" measure "that will erect new barriers to energy exploration and squander billions of taxpayer dollars on low-priority parochial programs and frivolous earmarks."
JPMorgan sues Washington Mutual over $13 billion case JPMorgan Chase & Co has sued the Washington Mutual Inc holding company and urged a federal bankruptcy court not to interfere with its September purchase of the thrift's banking operations. The lawsuit was filed Tuesday with the U.S. bankruptcy court in Delaware, three days after Washington Mutual sued the Federal Deposit Insurance Corp for well over $13 billion in connection with the purchase. Washington Mutual accused the regulator of agreeing to an unreasonably low $1.9 billion price in arranging the sale of its banking operations to JPMorgan last September 25.
California Home Prices Decline 41% on Foreclosures California home prices dropped 41 percent last month from a year earlier, more than double the U.S. decline, as surging foreclosures drove down values, the state Association of Realtors said today. The median price for an existing, single-family detached home in California sank to $247,590 in February from $418,260 a year earlier, the Los Angeles-based group said in a statement. The U.S. median price fell 16 percent during the same period, the second-biggest drop on record, according to the National Association of Realtors.
Exxon, Chevron Count Every Dollar to Protect $40 Billion Hoard Exxon Mobil Corp. and Chevron Corp., their coffers swollen by last year's record oil prices, are maneuvering to preserve a combined $40 billion in cash amid a global financial crisis that roiled the banking system. Exxon Mobil Chief Executive Officer Rex Tillerson says he checks in every night with Treasurer Don Humphreys to make sure the money is still there. The largest U.S. oil producers won't say where they're putting cash, even as both acknowledge going to greater lengths than in the past to protect their funds.
Buffett's Berkshire may lose "AAA" S&P rating Warren Buffett's Berkshire Hathaway Inc may lose its "AAA" credit rating from Standard & Poor's within a year if the insurance and investment company's capital levels or value of its equity holdings face more downward pressure. S&P late Tuesday revised its rating outlook for Berkshire to "negative" from "stable." It said any downgrade would probably be only one notch, to "AA-plus."
Congressman Warns Mexico More Dangerous than Iraq, Could Become Failed State At a House of Representatives hearing on federal law enforcement's response to the violence along the border between the United States and Mexico, Rep. John Culberson (R-Texas) said there is more danger in that region than in the Middle East. "Mexico is more dangerous than Iraq," Culberson said. "There were more deaths in Mexico than there were in Iraq."
Clinton: U.S. Drug Policies Failed, Fueled Mexico's Drug War Secretary of State Hillary Rodham Clinton traveled to Mexico on Wednesday with a blunt mea culpa, saying that decades of U.S. anti-narcotics policies have been a failure and have contributed to the explosion of drug violence south of the border. "Clearly what we've been doing has not worked," Clinton told reporters on her plane at the start of her two-day trip, saying that U.S. policies on curbing drug use, narcotics shipments and the flow of guns have been ineffective. "Our insatiable demand for illegal drugs fuels the drug trade," she added. "Our inability to prevent weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police, of soldiers and civilians."
Mexico will cause the collapse of America - Glenn Beck
Beijing boosts cyberwarfare China is continuing a large-scale military buildup of high-tech forces that includes "disruptive" anti-satellite missiles, new strategic forces, and computer attack weapons, the Pentagon's annual report to Congress on the Chinese military says. "China has made steady progress in recent years in developing offensive nuclear, space, and cyber warfare capabilities -- the only aspects of China's armed forces that, today, have the potential to be truly global," says the report entitled "Military Power of the People's Republic of China (PRC)" that was released Wednesday.
N. Korea loads rocket for launch North Korea is loading a Taepodong rocket on its east coast launch pad in anticipation of the launch of a communications satellite early next month, U.S. officials say. U.S. counterproliferation and intelligence officials have confirmed Japanese news reports of the expected launch between April 4 and 8. North Korea announced its intention to launch the satellite in February. Regional powers worry the claim is a cover for the launch of a long-range missile capable of reaching Alaska. National Intelligence Director Dennis Blair said earlier this month that all indications suggest North Korea will in fact launch a satellite. North Korea faked a satellite launch in 1998 to cloak a missile development test. In 2006, it launched a Taepodong-2 that blew up less than a minute into flight.
North Korea Affirms It Plans 'Peaceful' Launch of Satellite North Korea affirmed it plans to launch a satellite as part of a "peaceful" space program as the U.S. said it will go to the United Nations in the event the communist country test-fires a missile. "The production and launch of the satellite is the amalgamation of modern science and technology," the official Korea Central News Agency said today, citing the Minjoo Choson newspaper. It accused South Korea and its allies of "harping on" about countermeasures to any missile launch. The U.S. will raise the issue at the UN if a missile is fired, Secretary of State Hillary Clinton said yesterday in Mexico City. A rocket launch would be a "provocation," South Korea's Defense Ministry said today in Seoul.
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Wed 03.25.2009
Fed Buys $7.5 Billion in Treasuries to Lower Borrowing Costs The Federal Reserve said it bought $7.5 billion of Treasuries in the first outright purchase of U.S. government debt by the central bank to keep consumer borrowing costs low since the 1960s. The Fed bought 13 of the 19 securities it listed for possible purchase. The notes mature from February 2016 to February 2019, the Federal Reserve Bank of New York said in a statement today. It is the first step in a six-month program to buy up to $300 billion in Treasuries.
EU President Says US Stimulus Is The "Way To Ruin" This is kind of rich, coming at the same time his home country is teetering on the brink, but EU President Vaclav Klaus says US economic measures are the "way to ruin." It's not clear from the brief AP report what, exactly, the context was that Klaus made the remarks. But they're not exactly surprising, given Klaus' hard free-market bent. The remarks come out at the same time the Czech Republic -- which has adopted many of Klaus' ideals -- had its Prime Minister suffer a no-confidence vote amidst political and economic turmoil.
WHEN AMERICA RULED THE WORLD America has squandered the human sacrifice, blood, sweat and tears of two generations in less than seventy years. We have been an independent country for 226 years. From 1783 until 1946 was an unrelenting upward trajectory for the beacon of the free world. With the end of World War II, America was the last country standing. Germany and Japan were in shambles. Russia had lost millions of citizens, with Stalin about to murder millions more. Great Britain was a shell of its former self. The American Empire had been born. We were the manufacturer to the world. We rebuilt Europe and Japan. Our military was dominant. We made the best automobiles. We built 41,000 miles of national highway over two decades. In 1946, one in three U.S. workers was employed in the manufacturing industry. Today, less than one in ten workers makes something.
Bank crisis spawns new kind of gold rush In 1897, at the height of a major U.S. recession and banking crisis, a gold discovery on the Klondike River in Yukon Territory triggered one of the biggest gold rushes ever seen. Now, more than a century later, history is - sort of - repeating itself. No, the world's downtrodden aren't beating a frenzied path to a harsh, remote swath of the Canadian north this time around. But the 2009 recession and banking crisis has set off a rush to invest in gold and other precious metals at unprecedented levels - a move that has tightened the global supply/demand picture and helped push prices to record highs. And increasingly, they are opting for the tangible comfort of physical gold - actual gold bars and coins that they can cling to in troubled times. "When the banking crisis hit [last fall], we saw an avalanche of demand," said James DiGeorgia, a Florida-based coin and precious metals dealer and editor of the Gold & Energy Advisor newsletter. "People are scared to death that all this debt [being taken on by governments] is going to debase the [U.S.] dollar and other currencies around the world."
Gold Climbs for First Day in Four in Asia on Global Equity Drop Gold gained for the first day in four in Asia as a decline in global equities increased investor demand for the precious metal as a haven investment. Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, rose to a record 1,124.99 metric tons yesterday, according to figures on the company's Web site. Investment demand for gold will rise 21 percent to an all-time high of 52.3 million ounces this year, commodity-researcher CPM Group said yesterday in its annual outlook report. "Gold has fallen in the past few days because equities really shot up," said Tetsuya Yoshii, vice president for derivative products at Mizuho Corporate Bank Ltd. "But with all the money being pumped into the system everywhere in the world, inflation is going to be a problem in the future and that's what will keep gold stable in its current $850 to $950 range."
Obama Tries to Rally Nation to His Agenda President Obama tried to rally the nation behind his ambitious agenda Tuesday night, hoping to channel outrage at Wall Street excess into support for changes in tax, health care and energy policy that face skepticism even within his own party in Congress. Even as balky Democrats began carving some of the signature proposals out of his budget, Mr. Obama suggested he could compromise in the short term on a middle-class tax cut and a cap on carbon emissions. But he indicated that he would stand firm on four top priorities, insisting that Congress make progress in those areas.
Selling the plan or shoving it down our throats? Obama Unleashes Supporters to Sell Banker Plan Over the weekend, Obamas zombie canvassers Were knocking at doors. The Pledge Project Canvass is an unprecedented effort by a president to reach beyond Congress and tap grassroots supporters for help. Volunteers recruited online by Obamas Organizing for America, a post-election group, will ask citizens to sign a pledge in support of the presidents policies on energy, health care and education, reports the San Francisco Chronicle.
Obama Urges Patience on Economy, Promotes His Budget President Barack Obama said the U.S. is beginning to see signs of progress on the economy "but it will take time, it will take patience" to fully recover, as he made an appeal for his economic strategy in a nationally televised news conference. The president said his efforts to revive the economy are starting to take hold and that his fiscal 2010 budget will build a foundation for future growth. He said the dollar is "extraordinarily strong" because investors are confident that the U.S. will lead a global economic recovery.
Full Commanding Denial If central casting called for a poised, straight-talking, and capable-seeming president, it would be hard to come up with someone better than the Barack Obama who walked and talked around the White House grounds with Steve Croft on "60-Minutes" Sunday night. He may perfectly represent the majority who elected him, though, because he also appears to be in full commanding denial of the realities overtaking our American experience. Those realities include the fact that we can't possibly return to the easy credit and no money down "consumer" economy no matter how many nominal dollars get shoveled into the fiery furnaces of banks too-big-to-fail. As Treasury Secretary Geithner's underling, Stephanie Cutter, said last week, "Our singular focus is on increasing lending to support economic recovery. Everything we do to stabilize the financial system is done with that goal in mind."
Paul Krugman: The Problem Is Toxic Banks Not Just Toxic Assets Paul Krugman & Donald Marron discuss Geithner's plan, Part 1 of 2
No Return to Normal Why the economic crisis, and its solution, are bigger than you think. Barack Obama’s presidency began in hope and goodwill, but its test will be its success or failure on the economics. Did the president and his team correctly diagnose the problem? Did they act with sufficient imagination and force? And did they prevail against the political obstacles—and not only that, but also against the procedures and the habits of thought to which official Washington is addicted? The president has an economic program. But there is, so far, no clear statement of the thinking behind that program, and there may not be one, until the first report of the new Council of Economic Advisers appears next year. We therefore resort to what we know about the economists: the chair of the National Economic Council, Lawrence Summers; the CEA chair, Christina Romer; the budget director, Peter Orszag; and their titular head, Treasury Secretary Timothy Geithner. This is plainly a capable, close-knit group, acting with energy and commitment. Deficiencies of their program cannot, therefore, be blamed on incompetence. Rather, if deficiencies exist, they probably result from their shared background and creed - in short, from the limitations of their ideas.
What a Week! The Federal Reserve shocked the markets this week by taking new dramatic actions to end the recession. They announced they'll be buying more than $1 trillion in U.S. Treasury bonds and mortgage backed securities guaranteed by Fannie Mae and Freddie Mac. This means the Fed will be creating even more money to buy this debt, and that immediately affected all of the markets. The U.S. dollar plunged, falling the most against the euro in nearly nine years. This was due to concerns that these actions will fuel inflation and devalue the dollar. As a result, gold rose strongly. Stocks surged too, continuing the rise that started last week, as interest rates fell. Overall, this looks like the trigger that'll drive the rebound rises we've been anticipating in these oversold markets.
Paul Krugman & Donald Marron discuss Geithner's plan, Part 2 of 2
This Time It's Different Lyndon Johnson's Un-Great Society and Roosevelt's depression era social programs did not solve the problems they purported to address. Rather, they extended the pain and suffering of their programs' victims and worst of all taught them to belly-up to the taxpayer trough forever. We are saddled with generations of uneducated losers, who have sunk their collective psyche into a myriad of social problems passed down repeatedly from indigent lazy parents who learned from their parents. The latest version of this socialism-destruction designed and being implemented by the Obama team of adult children, will in our view multiply the current criminally inspired disaster, extending it for years.
THE RALLY OF FALSE HOPES Quantitative easing is the word or a euphemism for monetization or the printing of money, to buy U.S. Treasuries or debt by the Federal Reserve. Why this attempt at debasing the dollar would be deemed as a reason to buy stocks is beyond me. Once again the herd mentality is well and alive-- jump on the bandwagon and buy because everyone else is buying. This rally will fail and meet the same fate as its predecessors.
Banana Ben Bernanke Helicopter Ben Bernanke has earned the new moniker of Banana Ben. He has earned the new name because of his desire to make the United States resemble a banana republic instead of embracing the policies that made the U.S. the greatest nation on earth. It is now abundantly clear to all that not only the Fed Chairman but also this administration will do everything in their power to create inflation. Their efforts are derived from the mistaken belief that inflation can solve everything.
Fired Doctor of Derivatives Waits to Cry as Finance Jobs Vanish Raj and Nita Godhania are drinking Nescafe in their one-bedroom apartment in Princeton, New Jersey. Valentine cards are taped to otherwise bare walls, and a stack of blue Rubbermaid boxes towers over the TV. Their daughters, 12 and 7, have been helping pack. Merrill Lynch fired Raj on Jan. 22 after he'd worked on the bank's technology systems for 10 years. He got a promotion in 2006, sold his house in London, gave away the dog and moved his family to the U.S. Now, he's scrambling to leave before his nine weeks of severance runs out and his L-1 work visa -- his right to be in the country -- is void because he's out of a job.
Max Keiser & Afshin Rattansi - On the latest trillion dollar plan in summer of 2007, banks were missing 60 trillion or more, on balance sheets
Wilbur Ross Defies Bruce Rose in Battle Over Housing Villains Understanding President Barack Obama's predicament in reversing the worst housing slump since the Great Depression may come down to a court fight between hedge fund manager Bruce Rose and billionaire Wilbur Ross over who's responsible for driving down prices. Ross's American Home Mortgage Servicing Inc. and Rose's Carrington Capital Management LLC are accusing each other of worsening the recession by devaluing homes and the mortgage bonds that sparked it. In a Stamford, Connecticut, lawsuit, Carrington says American Home hurt its hedge funds' clients by dumping foreclosed homes tied to its subprime bonds at "fire sale" prices. American Home, which countersued on March 20, says Carrington wants to grab bondholders' money by blighting communities with vacant homes.
Eat-What-You-Kill Bond Traders Rise From Wreckage Wall Street bond trading is heading back to the 1980s, when private partnerships and independent firms dominated the market. Jon Bass, who traded debt five seats from Salomon Brothers Inc. Chairman John Gutfreund and later helped run fixed income at UBS AG, joined equity broker BTIG LLC to help start its credit operation last month. BTIG, with a pool table and gym adjoining its seventh-floor midtown Manhattan trading room, is one of more than 50 credit dealers seeking to take advantage of the widening gap at which securities are bought and sold. Smaller firms are emerging from the wreckage of the world's largest financial companies, which are conserving capital following more than $1.2 trillion of writedowns and credit losses since the start of 2007. They're luring traders with a shot at $500,000 commissions for two days' work as banks that accepted federal bailouts retrench and slash bonuses.
US Bond bubble ready to explode: Chinese getting worried Recent dialogue has disclosed the building worry about the value of US Treasury Debt being sold around the world. The Chinese are opening questioning the declining value of their massive US debt holdings. A CNBC guest comments on the Obama Administration claim that there is nothing worry about regarding the value of US Debt
A Russian-Chinese Axis at the G-20? Earlier this week, Russia issued a radical call for the eventual replacement of the dollar as an international reserve currency, and its replacement by a new, fiat currency to be created by a global regulator. The prospects for agreement on this at the G-20 summit in April, to put it politely, did not look promising. But now another voice has been heard from: China. And their reaction has been surprising. With their vast holdings in dollar-denominated securities, you would think they would oppose anything that would weaken the dollar. But Reuters is now reporting: China and other emerging nations back Russia’s call for a discussion on how to replace the dollar as the world’s primary reserve currency And China’s ideas are slightly clearer than Russia’s vague proposal. The Chinese envisage: the International Monetary Fund’s Special Drawing Rights (SDRs) being first assigned a role of a clearing currency on some transactions and then gradually becoming the main global reserve currency
China challenges power of the dollar as it flexes its economic muscles China yesterday threw down a challenge to America’s 50-year dominance of the global economy as it proposed replacing the dollar as the world’s main reserve currency with a new global system under the control of the International Monetary Fund. In a muscle-flexing move that will be seen as an attempt to exploit the big shifts in economic power created by the recession sweeping the West, Beijing said that the dollar’s role could eventually be taken over by the IMF’s so-called Special Drawing Right (SDR), a quasi-currency that was created in 1969. The audacious proposal emerged in a speech by Zhou Xiaochuan, Governor of the People’s Bank of China, published on the central bank’s website. Unusually, the remarks were released in English as well as Chinese, emphasising China’s dissatisfaction with the global primacy of the dollar.
China’s call for a new international financial system China’s shift toward Treasuries clearly is a reaction to a legacy of a series of bets that China’s government made back in 2006, 2007 and 2008 that went bad. China hoped to offset the dollar’s depreciation against the RMB with higher returns on its dollar assets. But in general, taking more risk produced lower not higher returns — as Chinese investors bought risky US assets at the wrong time. China also seems to have concluded that its huge Agency bet was a mistake. Scaling down that bet also has meant buying Treasuries in huge quantities. But China is now — some might argue belatedly — worried about the scale of its resulting exposure to low-yielding dollar assets. Plan A, taking on more credit and equity market risk to offset the dollar’s decline while continuing to add massive quantities of dollars to its reserves, didn’t work. The end result has been more Treasury exposure than China really feels comfortable with; if nothing changes, China soon really will have a $1 trillion Treasury portfolio.* It already has over trillion dollars of Treasuries and Agencies. China consequently does seem to be looking seriously for a Plan B.
China must buy US Debt- Steven Roach Steven Roach with Morgan Stanley says that China has no choice but to buy US Treasuries until the country increases internal demand.
G-20: International Cooperation Can Go Only So Far to End the Recession Those with high hopes for this week-end's meeting of finance ministers from the G-20 might want to rethink their enthusiasm for such an international confab. The many words produced in the next several days, some fine and some silly, are likely to have little ultimate impact on the economic situation. Writing in Friday's Wall Street Journal, the G-20 meeting's host, U.K. Chancellor of the Exchequer Alistair Darling, paints a rosy picture of international cooperation: major countries working in partnership to restore global financial health. There is certainly nothing wrong with international cooperation or partnership, but each part of Darling's proposed scenario for coordinated action raises questions and has the potential for harm as well as good.
Emerging Markets Seek to Dump the Dollar as World’s Main Reserve Currency Emerging markets, led by China and Russia, plan to jointly challenge the U.S. dollar’s role as the world’s sole benchmark currency at the April 2 meeting of the Group 20 nations - a move that underscores the currency’s weakness and fading support around the world. The creation of a new reserve currency to be issued by international financial institutions was one of the measures Russia proposed to the G20 on March 16, ahead of the group’s summit next week.
China May Press G-20 to Guard Its U.S. Assets China's leaders may press at the Group of 20 summit for specific steps to protect its more than $1 trillion of dollar assets as U.S. fiscal policies risk sparking a "currency war," a senior Chinese researcher said. The dollar weakened after the Federal Reserve said March 18 it would buy as much as $300 billion of Treasuries and the U.S. this week outlined plans to buy as much as $1 trillion of illiquid bank assets. U.S. purchases of Treasuries are "irresponsible" because they may weaken the dollar, Li Xiangyang, of the government- backed Chinese Academy of Social Sciences, told a forum in Beijing today. "Chinese leaders are likely to articulate their concern to their U.S. counterparts strongly and ask for specific measures."
U.N. Panel Says World Should Ditch Dollar
More Musings on Geithner Plan Is it legal?? There have been plenty of takedowns on the plan. Nevertheless, I thought I'd add a few further thoughts Aside from being busy, I didn't weigh in because I don't see that much has changed (obviously, Mr. Stock Market disagrees vehemently, but bonds didn't move much today). Yes, we have numbers now. and we now know how the program for loans differs from the program for securities. Clusterstock is of the view the complexity is deliberate, to confuse the chump taxpayer. Agreed completely. For loans, the structure is clearly an option for the investor. The fact that the authorities are pretending that options are priced the same as cash bids is, as usual, another way to fleece the taxpayer (ie, somehow pretending that the auction bids are reflective of cash market values. Consider out of the money options).
Why Europe and the US Disagree on Stimulus Big, US-style cash infusions wouldn't help many European countries, says European Central Bank President Trichet -- but they could weaken fiscal discipline and revive inflation. As the G-20 club of the world's wealthiest nations prepares to meet in London on Apr. 2, observers have focused increasingly on an alleged clash between the US and Europe about how to deal with the global financial crisis. The US's putative solution is to spray the economy with liquidity, while Europeans are seen as more cautious, resisting gigantic stimulus plans beyond what they've already committed to. That's leading to accusations that the Old World is dithering. Once chastised for their bloated public sectors, European leaders ironically now find themselves under attack for failing to run the euro printing presses fast enough.
Gorbachev Bids Goodbye to Unrestrained Capitalism The former Soviet President sees financial collapse and escalating violence in Afghanistan as a deserved blowback against the United States. Former Soviet President Mikhail Gorbachev says the U.S. is getting a double dose of comeuppance with the swirling financial crisis and escalating violence in Afghanistan. Although such former Warsaw Pact nations as Hungary and Latvia are in serious financial trouble, Gorbachev rejected concerns that one or more of them could be forced to drop out of the European Union. He also denied a claim by former U.S. Secretary of State James Baker that the U.S. never vowed not to expand NATO into Eastern Europe. The 78-year-old Gorbachev made the remarks in an interview at a "Reconciliation Forum" hosted in Washington by the American Business Council, which also was to feature Archbishop Desmond Tutu. This year coincidentally marks the 20th anniversary of the first irreparable cracks in the Soviet Bloc, symbolized by the November 1989 fall of the Berlin Wall. Gorbachev himself stepped down in December 1991, just as the Soviet Union itself ceased to exist.
A Tale of Two Meltdowns Two quite different books on the economic crisis share the same one-word title: Meltdown. The first is a collection of articles from The Nation -- "America's leading progressive weekly." The second was written by Ludwig von Mises Institute senior fellow Thomas E. Woods Jr., and includes a foreword by libertarian Rep. Ron Paul of Texas.
Treasury Chief Seeks Wider Power to Seize Troubled Firms The crisis surrounding the American International Group was a near-tragedy that underlines the need for broad new government authority to regulate or even take control of financial institutions other than banks, the government’s top fiscal officials told lawmakers on Tuesday. Treasury Secretary Timothy F. Geithner said financial crises like those caused by the recklessness of A.I.G. “contain a basic and tragic unfairness — that those who were prudent and responsible in their personal and professional judgments are harmed by the actions of those who were less careful and less prudent.” Federal Reserve Chairman Ben S. Bernanke agreed with the need for new government powers, telling members of the House Financial Services Committee that if the government had had such authority in September, when the depth of A.I.G.’s troubles became obvious, the company could have been put into receivership and regulators would have been able to “unwind it slowly, protect policyholders” and take other prudent measures.
Proof that Chris Dodd and Tim Geitner are lying about AIG Bonuses Sean Hannity proves conclusively that Senator Christopher Dodd and Treasury Secretary Tim Geitner are lying about what they knew and when they knew about the AIG Bonuses. I wonder of they are covering up for Barack Obama!
'The Bonus Debate Is a Convenient Distraction' The US debate over corporate bonuses is quickly growing into a first-rate scandal for the administration of President Barack Obama. German commentators, though, think it is little more than a populist distraction. The scandal in Washington over millions of dollars in corporate bonuses paid last week on Wall Street refuses to go away. President Barack Obama's recent show of anger over bonuses paid at insurance company AIG was undermined over the weekend by a revelation that his own treasury secretary was ultimately responsible for the mysterious disappearance of a clause that would have limited corporate bonuses.
Prophet and Loss Brooksley Born warned that unchecked trading in the credit market could lead to disaster, but power brokers in Washington ignored her. Now we're all paying the price The influential Greenspan was an ardent proponent of unfettered markets. Born was a powerful Washington lawyer with a track record for activist causes. Over lunch, in his private dining room at the stately headquarters of the Fed in Washington, Greenspan probed their differences. “Well, Brooksley, I guess you and I will never agree about fraud,” Born, in a recent interview, remembers Greenspan saying. “What is there not to agree on?” Born says she replied. “Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud,” she recalls. Greenspan, Born says, believed the market would take care of itself. For the incoming regulator, the meeting was a wake-up call. “That underscored to me how absolutist Alan was in his opposition to any regulation,” she said in the interview. Over the next three years, Born, ’61, JD ’64, would learn first-hand the potency of those absolutist views, confronting Greenspan and other powerful figures in the capital over how to regulate Wall Street.
2009 will be the year of Total decline for US Jim Rogers Interview - December, 2008
Wall Street falters on energy shares and profit taking Stocks fell on Tuesday, with financial shares giving up some of the previous day's surge as investors assessed government plans to shore up the economy and resource shares fell alongside commodity prices. The energy sector led the way down as U.S. crude futures retreated from a run-up in the previous session and fell below $53 a barrel while the dollar strengthened.
Job-saving nonsense Bloomberg.com had Alan Greenspan, disastrous former chairman of the Federal Reserve - who is the one person directly responsible for all of our economic woes with his bizarre monetary insanity Every Freaking Day (EFD) during his demented Fed leadership from 1987 to 2006 - being indignant that he should be blamed for anything, and insists that nothing is his fault, except for maybe having too much faith and trust in his fellow man, which would explain the complete lack of regulatory scrutiny, or even a minimal due diligence attention, to any of the glaring excesses in the banking system, for which he was responsible. He is reported to have said, "Given the decoupling of monetary policy from long-term mortgage rates, accelerating the path of monetary tightening that the Fed pursued in 2004-2005, could not have prevented the housing bubble."
Christian socialism: an oxymoronic doctrine As one would expect, Obama received overwhelming support from so-called progressive Christians, those self-righteous folk who think Jesus was social worker and the New Testament was written and published by the Democratic National Committee. The one thing missing from their fantasy is a sense of the Divine, not to mention any sense of humility. Christian socialists, like all lefty intellectuals, argue that poverty is a product of an unjust ordering of society. From there it is only a short step to seeking out the culprit and (you've guessed it) the guilty party is the ideology of "neo-liberalism". More than 60 years ago the prescient Schumpeter wrote that "capitalism (the free market) stands its trial before judges who have the sentence of death in their pockets". (Capitalism, Socialism and Democracy, George Allen and Unwin LTD, 1957, p. 144). But their case against the market is based on a vicious socialist caricature of the real nature of market economics.
Jaguar owner warns on survival without bailout Ratan Tata, head of the Tata Indian conglomerate that owns Jaguar Land Rover, gave his starkest warning yet on the future of the British operation, saying that it can’t survive without government assistance. In an interview with Sky News, Mr Tata criticised the UK Government for not providing a £500 million loan to Jaguar Land Rover as the luxury brands battle against the slump in car markets. He said: “If the attitude is to see who blinks first then the damage is going to be quite devastating. We are not coming for a bailout.” Jaguar Land Rover, which has seen an enormous slide in the sales of Land Rover, had originally asked for a £1 billion loan over two years. But the Government said that Tata should put more money into the business it bought from Ford just a year ago.
Public Interest Law Firm Sues AIG for Promoting Islam The AIG bailout has plenty of people upset and paying attention to the machinations of the treasury under the Obama administration. We the People possibly do not know some of worst provisions of the bailout… The Thomas More Law Center has been involved with bringing suit challenging the bailout. A motion to dismiss was filed by the Obama administration‘s Department of Justice on behalf of Treasury Secretary Geithner and the Federal Reserve Board. Geithner is under increasing pressure to present a plan of action to the nation to ameliorate the bailouts’ repercussions. In a report dated March 19, 2009, Richard Thompson, President and Chief Counsel of the Thomas More Law Center, commented: “Although widespread public anger has rightfully focused on bonuses AIG paid to top executives using taxpayers’ money, that anger would be at an even higher pitch if the public knew that our tax dollars were being used by AIG to promote Islam and Shariah Law, which provides support for terrorist activities aimed at killing Americans and destroying America”.
Goldman may sell stake in Chinese bank Goldman Sachs Group Inc. is considering selling part of its minority stake in Industrial & Commercial Bank of China Ltd., according to a Wall Street Journal report Monday. A sale of part of its stake in the Chinese bank, which Goldman acquired in 2006, could raise more than $1 billion, the Journal said. Discussions about a possible sale began late last year and could lead Goldman to sell 15% to 20% of its stake, the paper said, citing people familiar with the discussions. A spokesman at Goldman Sachs declined to comment on the report. During the fiscal fourth quarter, Goldman lost $631 million from its investment in the bank as ICBC's share price fell.
Gerald Celente Predicts Economic Armageddon by 2012
Will Congress Wipe Out Home Gardens, Growers Markets? The Internet’s buzzing about a bill in Congress its sponsor and supporters say is vital for protecting consumers from food-borne illnesses, but critics claim would place all U.S. food production “from farm to fork” under control of federal bureaucrats, effectively destroying family farms and farmers markets in the process and hijacking the burgeoning organic food movement. “This bill will not just sweep up commercial food operations,” warns Tom DeWeese, who heads the American Policy Center in Virginia, in a Sledgehammer Alert, “[It] will subject hobby gardeners, home canners, anyone with a few chickens, or anyone who ‘holds, stores, or transports food’ … to registration, extensive management, and inspection by a huge new bureaucracy, the Food Safety Administration, even if the food items will only be consumed personally.” “The truly chilling language lays out civil and criminal penalties of up to $1 million per day, per infraction, and imprisonment of five or 10 years, or both, depending how serious the violation(s),” De Weese adds, characterizing the bill as “over-the-top in its overreach.”
Nafta’s Promise, Unfulfilled Mexico’s former president, Carlos Salinas, used to promise that free trade and foreign investment would jump-start this country’s development, empowering a richer and more prosperous Mexico “to export goods, not people.” Fifteen years after the North American Free Trade Agreement took effect, only the first part of that promise has been realized. Mexico’s exports have exploded under Nafta, quintupling to $292 billion last year, but Mexico is still exporting people too, almost half a million each year, seeking opportunities in the United States that they do not have at home. Secretary of State Hillary Rodham Clinton will arrive in Mexico on Wednesday and President Obama will visit next month. Both are expected to emphasize the successes of American-Mexican economic cooperation, but it will be hard to ignore how much in Mexico has not changed under Nafta.
Buy a house, get citizenship?! Yes, it’s true From Bulgaria: Investment in real estate in US guarantees a green card The purchase of a piece of property in America, a single-family house, a PUD (planned unit development) or a condo (flat within a condominium) will guarantee you and your family a green card. This is one of the extreme measures implemented to help stall the meteoric fall of the United States economy in light of the economic crisis, Bulgarian weekly Stroitelstvo Gradut reported on January 15. . . . . . The US government has allocated 10 000 such visas nation-wide for potential investors in real estate, under a programme approved by the US Congress. Florida’s is the first such programme that has actively been given the green light to commence.
Warning of impending famine, or advocating euthanasia?? UK population must fall to 30m, says Porritt JONATHON PORRITT, one of Gordon Brown’s leading green advisers, is to warn that Britain must drastically reduce its population if it is to build a sustainable society. Porritt’s call will come at this week’s annual conference of the Optimum Population Trust (OPT), of which he is patron. The trust will release research suggesting UK population must be cut to 30m if the country wants to feed itself sustainably. Porritt said: “Population growth, plus economic growth, is putting the world under terrible pressure.
YouTube Being Blocked in China, Google Says Google said Tuesday that its YouTube video sharing Web site was being blocked in China. The company said it first noticed traffic from China had decreased dramatically late Monday. By early Tuesday, it had dropped to nearly zero, the company said. “We don’t know the reason for the block,” a YouTube spokesman, Scott Rubin, said. “Our government relations people are trying to resolve it.” China routinely filters Internet content and blocks material that is critical of its policies. It selectively blocks videos from YouTube. According to Reuters, Chinese government officials said Tuesday that they did not know about YouTube being blocked, but said that China was not afraid of the Internet.
United Nations Wants To Regulate Free Speech Of Every Nation
Obama puts immigration reform on docket Obama Wants “Path to Citizenship” for Illegal Aliens According to the White House account of yesterday’s one-hour closed session, it was “a robust and strategic meeting” in which Obama announced he will go to Mexico next month to meet President Calderón and discuss, among other issues, effective, comprehensive immigration reform.
What Senators didn't hear about Somali-American jihadists Since 1991, Somalia has been an ungoverned, lawless state. In recent weeks, things have gotten worse as the al-Qaeda-allied group al-Shabaab (”The Youth”) tightens its grip on the country. Earlier this week the cabinet of “president” Sheikh Sherif Ahmed endorsed a plan to institute Sharia law in areas it controls. In a Senate Armed Services Committee hearing on Tuesday, Defense Intelligence Agency Director Lt. Gen. Michael Maples testified that analysts expect that al-Shabaab will officially merge with al-Qaeda in the very near future. Events in Somalia are not so distant. Since this past summer, as many as 40 Somali-American men have left the U.S. to join up with al-Shabaab and train in their terrorist camps in Somalia. And one of those men, Shirwa Ahmed, a graduate of the University of Minnesota, launched a suicide attack in northern Somalia on October 28 that killed at least 30 civilians — the first recorded case of an American suicide bomber. And earlier this week it was reported that a federal grand jury has been impaneled to investigate the escalating issue of Somali-American jihadists and Somali terrorist groups operating in the Minneapolis area, which adds to the list of ongoing investigations in Columbus, OH; Washington, DC; San Diego, CA; Boston, MA; Atlanta, GA; Seattle, WA; and Portland, ME.
Mexican border-drug crackdown launched The Obama administration this morning unveiled an ambitious multi-agency plan to help Mexico attack the growing trans-national problems created by powerful Mexican drug cartels, vowing to surge U.S. money, manpower and technology to the southwestern border as soon as possible. The plan, to be funded with $700 million from Congress and a lot of reshuffling of existing monies, will bolster existing efforts by Washington and Mexico's Calderon administration to fight violent trafficking in drugs and humans into the United States. It will also tackle the southbound flow of laundered money and precursor chemicals from the United States that for years have allowed the narco-traffickers to flourish, and created tensions between the two countries. The plan has been in the works since even before Obama took office, and reflects the growing U.S. concern over the increasing power of the cartels and the possibility of more spillover violence and corruption on the U.S. side of the border.
Israel's chief of staff comes home early after doors close in Obama's Washington WASHINGTON — Israeli Chief of Staff Lt. Gen. Gabi Ashkenazi cut short his visit to Washington after getting an extraordinarily cool reception from the new U.S. administration. Last year, Israeli Chief of Staff Lt. Gen. Gabi Ashkenazi had no problem setting up meetings with top officials in the U.S. government. On his current trip to Washington, Ashkenazi sought to meet the administration of President Barack Obama, but most officials were unavailable.
Obama about to betray Israel, says former intel official A former top US intelligence official warns that the Obama Administration is about to break America's long ties of friendship with Israel, and maybe even take steps toward the dissolution of the Jewish state. Speaking on condition of anonymity to Douglas Hagmann of the Northeast Intelligence Network, the source said: "I have every reason to believe, based on what I’ve seen at my level of [security] clearance especially over the last several years, that Israel will soon be completely on their own… or worse." He went on to note that the betrayal likely won't happen in one dramatic moment, but rather subtly, behind the scenes, and over the course of several years.
Important! Commander confirms Netanyahu war plans Israel is preparing for all-out war on multiple fronts that include Iran, Syria and Lebanon, a senior military commander claims. Israeli army Home Front Command Major General Yair Golan said Sunday that Tel Aviv is preparing for "all possible scenarios", indicating that one such scenario would be to fight a simultaneous war against Iran, Syria and Lebanon. The confirmation comes as US President Barack Obama seeks "new beginnings" with its arch-rival Iran. The US offer has been met with world praise but with fury in Tel Aviv.
Our enemies sense weakness Retrenchments are perceived as exploitable openings President Obama's stewardship of the national security portfolio to date amounts to a wrecking operation, a set of policies he must understand will not only weaken the United States but embolden our foes. After all, the communist agitator Saul Alinsky, a formative influence in Mr. Obama's early years as a “community organizer,” made the following Rule No. 1 in his 1971 book “Rules for Radicals” — “Power is not only what you have but what the enemy thinks you have.” According to this logic, the various steps Mr. Obama is taking with respect to the armed forces, the foreign battlefields in which they are engaged, our allies as well as our adversaries will not only diminish our power. They will encourage our enemies to perceive us as less powerful - with ominous implications. Consider some illustrative examples:
As if Pakistan didn't have enough problems, it has now become a top U.S. priority There is an old bitter-sweet joke about relations with the U.S. among the smaller Asian countries’ diplomatic corps: God help you if you do get the attention of the U.S.! That is, no one — friend or foe — in the business of international relations has any illusions about the importance of a country’s bilateral relations with what the French used to call “the hyperpower”. But when you move up to the top of Washington’s list of those countries wherein the Americans think they have a peculiarly important and urgent interest, all sorts of things happen. It may be to the profit of the smaller country, but it also sure makes life extremely difficult. That’s where Pakistan is now.
Petraeus hands over a 'political hot potato' United States special operations forces in Afghanistan, whose commando raids and airstrikes against suspected Taliban targets have caused large numbers of civilian casualties that have angered Afghans, have quietly been put under the "tactical control" of the commander of US and North Atlantic Treaty Organization (NATO) forces in Afghanistan, General David McKiernan, for the first time. An order issued last Tuesday at the direction of Central Command (CENTCOM) chief General David Petraeus gives McKiernan authority over all operations by special operations units stationed in the country, as Colonel Gregory Julian, McKiernan's spokesperson, confirmed in an e-mail to Inter Press Service (IPS). The order, which has not been made public, modifies previous command arrangements which had excluded US special operations forces from McKiernan's command authority.
Why the US can't bully Iran For better or worse, Iranians are a proud people. This characteristic has roots in Iran's long history, its long-lasting geopolitical influence, and - for a good part of history - its dominance in the region, which could even be considered extreme. At the same time, Iranian culture is very hospitable towards Westerners, American included. As long as they feel they are not being ridiculed, humiliated or looked down on, Iranians extend royal treatment to foreigners.
US warships head for South China Sea after standoff A potential conflict was brewing last night in the South China Sea after President Obama dispatched heavily armed American destroyers to the scene of a naval standoff between the US and China at the weekend. Mr Obama’s decision to send an armed escort for US surveillance ships in the area follows the aggressive and co-ordinated manoeuvres of five Chinese boats on Sunday. They harassed and nearly collided with an unarmed American vessel. Washington accused the Chinese ships of moving directly in front of the US Navy surveillance ship Impeccable, forcing its crew to take emergency action, and to deploy a high-pressure water hose to deter the Chinese ships. Formal protests were lodged with Beijing after the incident.
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Tues 03.24.2009
Bailouts Of Bondholders Will Sock Taxpayers With $10-$14 Trillion Loss The outrage of all outrages in the last 18 months is the complete protection of bank and corporate bondholders at taxpayer expense. These bondholders lent money to reckless banks and corporations who bet the farm on the premise that house prices would always go up. And they lost. Now, thanks to bailout nation, taxpayers are on the hook for trillions. Bondholders, meanwhile--the folks who loaned the banks the trillions they have since vaporized--have lost next to nothing. Today's Treasury plan is just more of the same: A byzantine public-private partnership that will put $1 trillion of taxpayer money on the line so bondholders won't lose a dime.
Inside Look - Treasury Toxic Asset Plan March 23, 2009 - Bloomberg Exclusive Interview with National Economic Council Director Larry Summers
Added Debt Won't Rescue the Great American Ponzi Scheme Policy-makers not only misunderstand the economic crisis, they continue to underestimate it. Consequently, solutions to date have not only failed to “fix” anything, they have made the problem worse. The problem isn’t falling asset prices, it’s not rising foreclosures, it’s too much debt. With an assist from mark-to-market accounting,* too much debt inflated the asset bubble in the first place. Yves Smith has it exactly right that the only “solution” to this crisis is price discovery, to allow asset prices to fall to whatever level they need to in order for markets to clear. This is bad news for over-levered balance sheets, but there’s nothing else to be done.
Treasury Bank Plan Much Riskier For Taxpayers Than It Looks Observers are praising the apparent lack of risk to the taxpayer in Tim Geithner's banking plan. To wit: The FDIC will only lend private investors $6 of taxpayer money for every $1 of crap assets the investors buy, for a 6X to 1 leverage ratio. Given the rate at which debt "assets" are depreciating these days, 6X actually isn't wildly conservative. If an asset leveraged at 6X falls 17% in price, the equity is wiped out. And in reality, unfortunately, the leverage ratio will be far higher than 6X. Why? Because the Treasury will be providing half of the equity. So the taxpayer's money is really leveraged 12X to 1.
Bankruptcy is Economic Stimulus The distraction on Capitol Hill this week has to do with the jackpot bonuses that executives at AIG recently received. The argument is over a relative drop in the bucket. The total amount of bonuses given out was $165 million. The government has put $170 billion into AIG so far. Many now are demanding we get this money back. We ought to be spending our time and effort doing something more worthwhile, like figuring out how the Federal Reserve is handling the trillions of dollars they are creating and pumping into the economy, and how that is affecting the purchasing power of dollars in your pocket.
PIMCO to participate in U.S. toxic asset plan Bill Gross, the influential manager of the world's largest bond fund, gave the Obama administration's financial stability effort a much-needed endorsement on Monday, saying PIMCO will participate in the public-private plan. "This is perhaps the first win-win-win policy to be put on the table and it should be welcomed enthusiastically," the founder and co-chief investment officer of PIMCO told Reuters. Gross' Pacific Investment Management Co oversees roughly $800 billion. He manages PIMCO's flagship Total Return fund, which currently has $139 billion in assets. "We intend to participate and do our part to serve clients as well as promote economic recovery," he said, adding PIMCO will both buy toxic assets and manage some of them.
Pimco's Bill Gross More Perspective - Treasury's Toxic Asset Plan
The $ 100,000 Trazillion Gaquillion Plan President Barack Obama called on Congress to quickly pass a new fiscal stimulus package that would provide nearly $100,000 trazillion gaquillion frijillion in an effort to revive the U.S. economy, which some experts believe has entered a recession. "Every economist I've ever heard of agrees what we need now is significantly more government investment to offset the negative effects of whatever it is that is happening," Obama said at his Monday press conference. "Accordingly, I and my team of advisors have developed a comprehensive plan that will shore up our financial institutions, put jobless Americans back to work, allow everyone in a house to keep it no matter what, rescue any failing bank or business, provide a hot meal to anyone who is hungry, improve the well being of all citizens, and give a puppy or kitten to every child who wants one.
U.S. Markets Soar on Treasury's Plan for Banks A last-minute surge sent stock markets up about 7 percent today following the Treasury Department's announcement of a new plan to help banks cleanse their balance sheets of toxic assets. The blue-chip Dow Jones industrial average was up 6.8 percent, or 497 points, to 7776, while the broader Standard & Poor's 500-stock index rose 7.1 percent, or 54 points, to 823. The tech-heavy Nasdaq jumped 6.8 percent, or 99 points, to 1556. The gains amount to a vote of confidence by investors in the program to purchase toxic assets, known as the Public Private Investment Plan. It calls for the government to partner with private investors to buy between $500 billion and $1 trillion in troubled real estate-related loans and securities that have poisoned financial institutions and destroyed investor confidence. Those assets will then be auctioned to the highest bidder, removing them from banks' balance sheets.
Ron Paul: Believer in small government predicts 15-year depression Pension trustees and insurance company portfolio managers look away now. Your increased commitment to government bond holdings in recent times is about to blow up spectacularly. At least, that is the view of Ron Paul, the US congressman who ran against John McCain in last year's Republican Party presidential nomination. His is a minority view. Yields on government bonds worldwide have been falling fast over the past few months and in the UK, the commencement of "quantitative easing" this month sent bond prices soaring. But the credibility of both western governments and their currencies is waning, and has been ever since the gold standard was abandoned in 1971, says Mr. Paul. And that means even "safe" investments are far from safe, he claims.
Got gold? You're right on the money The bubbles have burst, and the US is (predictably) firing up the printing presses. This desperate move means the value of the dollar is destined to disintegrate. I'd like to take a few moments to talk about the Federal Reserve's latest act of irresponsibility in a continuing series of irresponsible actions (i.e., buying $300 billion in longer-term Treasurys, an additional $750 billion in mortgage-backed securities and -- just for grins -- $100 billion of government-sponsored-enterprise debt). As a friend noted, Wednesday was the functional equivalent of Pearl Harbor for the U.S. dollar and fiat currencies in general. He said -- referencing that people might pay less for their mortgages -- that they'll pay much, much more for everything else. I would certainly agree.
The Geithner Giveaway, Explained Tim Geithner may finally have done it. Done what, you ask? Figure out how to transfer hundreds of billions of taxpayer dollars to insolvent banks and Wall Street without the taxpayer screaming bloody murder about it. (Geithner has been trying to figure out how to do this since last fall with no success, so it's no mean feat.) What do we mean? Doesn't the Geithner plan use the private market to set the prices at which investors will buy crap assets from banks, thus ensuring that the banks don't get overpaid and taxpayers don't get screwed?
Ron Paul: I Think It's Gonna Take The Collapses Of The Dollar! To Get A New Mentality
Bair Says U.S. Toxic Asset Plan Will Help Most Banks Federal Deposit Insurance Corp. Chairman Sheila Bair said the U.S. plan to buy toxic real-estate assets should help most banks, and may be too late to prevent some lenders from failing. “I do think there may be some banks beyond help,” Bair said on a conference call with reporters today. “There are others that with this program, giving them the vehicle to cleanse their balance sheet and raise some fresh capital, I think we will help them.” Treasury Secretary Timothy Geithner unveiled a program that may generate as much a $1 trillion in financing to buy illiquid assets using $75 billion to $100 billion from the U.S. bank rescue fund. The effort relies on a Federal Reserve partnership with private investors to buy the securities and FDIC guarantees to entice buyers, the government said.
Here’s Why The Geithner Plan Is So Complex If you think you understand how Tim Geithner’s public-private partnership plan will work, you are probably mistaken. It’s a horrendously complicated program with a range of confusing treatments of various types of capital, including equity matching, loans from the government and guarantees of loans from banks. If we were more cynical, we’d say that the entire point of this complexity was to promote public ignorance. Complexity is an ally of bureaucracy because anything that the public cannot figure out is effectively autonomous and removed from public scrutiny. But let’s not jump to the conclusion that the regulators have set out to confuse us.
Fed should focus on monetary policy: Fed, Treasury statement Despite the recent wave of unconventional moves to help stabilize the U.S. economy, the Federal Reserve must maintain its independence and focus on the stability of the economy as a whole, rather than specific sectors or types of institutions, the Fed and the U.S. Treasury said in an unusual joint statement on Monday. "Actions that the Federal Reserve takes, during this period of unusual and exigent circumstances, in the pursuit of financial stability, such as loans of securities purchases that influence the size of its balance sheet, must not constrain the exercise of monetary policy as needed to foster maximum sustainable employment and price stability," the two-page statement said.
Sector to Watch - Commodities Bloomberg - March 23, 2009 Commodities Slump May Be Over - Oscar Gruss & Son Analyst Michael Aronstein Turns Bullish on Oil and Metals; Dennis Gartman Seeing a Bottom in Commodities; Inflows into Commodities Amounted to $2.6 Billion This Year
A Date That Shall Live In Infamy Mark it on your calendar folks – Wednesday, March 18, 2009, the demarcation point - the date that the U.S. Federal Reserve publicly acknowledged that they will monetize the nation’s debt. While we suspect that the Fed has been doing so for quite some time – on the ‘Pirates of the Caribbean sly’ – the public disclosure that the Fed is resorting to quantitative easing [aka the printing press] has signaled a clear shift to the long predicted hyper inflationary end-game gyrations which historically have manifested themselves in virtually ALL irredeemable fiat money systems.
Explosion On Wednesday, March 18, 2009, the Federal Reserve announced that it would “inject” (meaning print) over $1 trillion into the “economy” (meaning the banks who made irresponsible loans) over the coming year. Since last Sept., the Fed has already created just about $1 trillion, thus doubling its balance sheet. Now it is threatening to add another $trillion, which would triple its balance sheet. The money that the Fed creates in this way flows into the monetary base and then, with the aid of the private banks, flows into the money supply. So, allowing a few years for the banks to do their thing the Fed’s decision of March 18 will lead to a tripling of the U.S. money supply. Once the money supply has tripled, the average price level in the U.S. will triple as well. This is a basic application of the law of supply and demand which was proven by Adam Smith at the very beginning of the science of economics.
Fed Planning 15-Fold Increase In US Monetary Base The fed is planning moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion. Whether expressing approval or concern over the fed’s intentions, most commentators fail to understand the real magnitude of the projected expansion of the US monetary base because they don’t take into account the amount of dollars circulating abroad. At least 70 percent of all US currency is held outside the country, and this means the US monetary base is considerably smaller than the fed’s overall balance sheet. Take, for example, the true US domestic money supply at the beginning of September 2008, before the fed started its quantitative easing.
Gregg: Deficits could bring bankruptcy One of President Obama's top economic advisers said massive increases in domestic spending can't wait - even as federal spending continues to mount, with new plans to spend $1 trillion to buy toxic bank assets and an independent report that the White House undershot the nation's debt by $2.3 trillion. But Republican lawmakers have become increasingly skeptical of Democratic spending plans, presenting some of their most dire forecasts Sunday.
Ron Paul on Glenn Beck Radio 03/23/2009
The Greatest Heist In History Private investors will fund a tiny portion of the wealth-transfer. Bank debt holders, needless to say, are not losing a dime. There’s currently an idea to fix the financial system that’s getting quite a bit of traction: an RTC-type program whereby the government would buy $1 trillion of troubled assets from struggling U.S. banks, with the goal of restoring them to health so they can begin lending again, leading to an economic recovery. The problem with this idea (let’s call it “New RTC”) is that either the government will pay market prices for the toxic assets - in which case, it will simply accelerate the collapse of our financial system - or pay above-market prices, in which case taxpayers will likely suffer big losses.
The Collapse of ’09 The "Panic of ’08" will be followed by "The Collapse of ’09." In 2008, when the world’s largest financial firms and equity markets crumbled, Wall Street’s woes preoccupied the media. In 2009, the focus will broaden to include a range of calamities that will leave no sector unscathed. Next in line is retail, which accounts for some 70 percent of consumer spending, 26 percent of which is holiday sales. After the numbers are tallied to reveal a dismal retail Christmas, more big chain bankruptcies will follow. Besides leaving masses unemployed, defunct retailers will leave behind thousands of empty stores. Who will rent them? Nobody!
Geithner and Obama Destroying Confidence The ability of the United States Federal Reserve and the United States Department of the Treasury to administer the national currency and bank account is being severely undermined by policy moves that erode the faith of international holders of U.S. debt. The situation is exacerbated by the disingenuous attempts by these same offices to obscure the severity of the dilutive effects of unbridled money fabrication in press release language that is blatantly dissembling. George Orwell should be slapping himself on the back in congratulations for the foresight with which he predicted the advent of DoubleSpeak, whereby the government pretends that negatives are positives. Assisted in large part by broadcast media, who lend the appearance of legitimacy by debating the pros and cons of the sundry policy machinations in all seriousness, the rest of the world is not so easily fooled.
Geithner's Five Big Misconceptions Tim Geithner has finally revealed his plan to fix the banking system and economy. Paul Krugman, James Galbraith, and others have already trashed it. Why? In short, because the plan is yet another massive, ineffective gift to banks and Wall Street. Taxpayers, of course, will take the hit. Why does Tim Geithner keep repackaging the same trash-asset-removal plan that he has been trying to get approved since last fall?
Peter Schiff The Crisis Just Begun
How big a deal is the loss of the dollar's reserve status? With the US monetary base expanding at a breathtaking pace and nations around the world worrying about the value of their US holdings, the dollar looks virtually guaranteed to lose its status as the international reserve currency. This begs the question: how big a deal is the loss of the dollar’s reserve status? . . . . . As the dollar loses its reserves status, at least half of the world’s $5,385 billion dollar reserves will be sold off and replaced with other currencies (yuan, euro, khaleeji, gold, rand, etc…). The US, with its $71 foreign reserves, will not be able to do anything to counteract this mass exodus from the dollar. With outflows of this magnitude, the dollar’s value will collapse to a fraction of where it is now.
China promotes overhaul of global monetary system China on Monday proposed a sweeping overhaul of the global monetary system, outlining how the dollar could eventually be replaced as the world's main reserve currency by the International Monetary Fund's Special Drawing Right. The S.D.R. is an international reserve asset created by the I.M.F. in 1969 that has the potential to act as a super-sovereign reserve currency, Zhou Xiaochuan, governor of the People's Bank of China, said in remarks published on the central bank's Web site. "The role of the S.D.R. has not been put into full play due to limitations on its allocation and the scope of its uses. However, it serves as the light in the tunnel for the reform of the international monetary system," he said.
China pushes SDR as global super-currency China on Monday proposed a sweeping overhaul of the global monetary system, outlining how the dollar could eventually be replaced as the world's main reserve currency by the IMF's Special Drawing Right. The SDR is an international reserve asset created by the International Monetary Fund in 1969 that has the potential to act as a super-sovereign reserve currency, Zhou Xiaochuan, governor of the People's Bank of China, said in remarks published on the central bank's website, www.pbc.gov.cn. "The role of the SDR has not been put into full play due to limitations on its allocation and the scope of its uses. However, it serves as the light in the tunnel for the reform of the international monetary system," he said. Zhou diplomatically did not refer explicitly to the dollar.
Jim Rogers the Dollar is Doomed 23 Mar 2009
The Big Takeover The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution It's over - we're officially, royally f***'d. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline - a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
The Political Risks Of Geithner's Public-Private Partnerships The private-public partnership scheme announced by Treasury Secretary Tim Geithner this morning would seem to offer the big hedge fund and institutional investors allowed to invest in it a great deal. They can borrow at low cost from the government up to 97 percent of the money used to buy assets from banks. If the values go up, they can pay off the loans and profit from the upside. If the values keep dropping, they can walk away from their debt. But will that deal stick?
In-Depth Look - Public-Private Partnership?
Fears of record hedge fund withdrawals Hedge fund investors believe the industry will see even bigger withdrawals this year than last, when record levels of cash were pulled from the sector. A survey of investors by Deutsche Bank found a third expect more than $200bn to be withdrawn, after a net $155bn was taken out last year, according to calculations by Chicago consultancy Hedge Fund Research. Only a quarter of investors expect net inflows into the industry, and 82 per cent of the 1,000 surveyed said redemptions were the biggest issue hedge fund managers face. Deutsche found that most investors expected more than a fifth of hedge funds to go out of business this year, following a record year for closures last year, when performance was its worst on record.
Moody’s strips GE of triple-A rating General Electric’s financial health came under renewed focus on Monday as Moody’s stripped the conglomerate of the triple-A rating it had held for 42 years and challenged its executives’ pledge that its finance arm would be profitable this year. A downgrade by Moody’s was expected following this month’s decision by its rival Standard & Poor’s to lower its rating by one notch to AA-plus. However, Moody’s went a step further, cutting GE’s rating by two notches from triple A to Aa2, saying the financial crisis had increased the risks associated with GE Capital. The credit rating agency, which has rated GE as triple A since 1967, also warned that further writedowns on GE Capital’s large portfolio of real estate and consumer loans could tip the unit into the red during 2009.
BlackRock, Carlyle Support Geithner’s Toxic Debt Plan The U.S. plan to relieve banks of real estate debt won initial support from investors, who set aside for now questions about asset pricing and whether they will be demonized for profiting from the financial crisis. “This is not a panacea; it is not a silver bullet,” Laurence Fink, chairman of BlackRock Inc., the largest publicly traded U.S. asset manager, said today in an interview. “But this will take some of the overhang out of the marketplace. It is incrementally a really good thing.” The Obama administration said today it’s counting on investors such as New York-based BlackRock, hedge funds and private-equity firms to buy devalued real estate loans and mortgage-backed securities from banks so they can raise capital and resume lending. The government aims to spur as much as $1 trillion in purchases by providing $100 billion in capital, as well as financing from the Federal Reserve and Federal Deposit Insurance Corp.
AIG employees hand over bonuses Fifteen of 20 American International Group leading bonus recipients have agreed to give them back in full, said New York's top legal officer who is probing into $165 million in executive pay at the troubled company bailed out by the U.S. government. New York Attorney General Andrew Cuomo told reporters on a conference call on Monday that he hopes to recoup $80 million of bonus payments made to Americans, or about half of the $165 million paid by the giant insurer on March 15.
Marc Faber Total Collapse in the second half of the year
Will oil and gold prices rise further with the Fed printing money? Last week’s surprise move by the Federal Reserve to buy $300 billion in long-dated bonds and effectively start printing money brought a sharp fall in the US dollar, and a strong bounce in oil and gold prices. Is this the story of things to come? Pimco CEO Bill Gross, the bond king says the Fed may need to expand its balance sheet from a projected $2-3 trillion to $5-6 trillion to get the economy moving again. This is a slow motion process. The more immediate impact, apart from lowering the cost of borrowing, is a lower dollar. Then by 2011 or so Mr. Gross sees the return of inflation, and is buying inflation-protected bonds called TIPS - which also jumped in price last week.
Hello Nano The world's cheapest car is set to go on sale THE Nano, the car that Tata Motors hopes will make car ownership a reality for millions of Indians, was named both for its tiny size and association with revolutionary technology. But in many respects the vehicle, due to be launched officially in Mumbai on Monday March 23rd, is short on both attributes. Although small, the Nano has four doors and five seats. And although the makers have registered at least 35 patents associated with the vehicle, the price, which is genuinely miniature, has been achieved by boiling down trusted technology to its bare bones.
4 Michigan Papers to Cut Back on Print Daily newspapers will become a thing of the past for readers in four Michigan markets, with issues being printed only three days a week in Flint, Saginaw and Bay City, and twice weekly in Ann Arbor. Advance Publications said it would shut down the 174-year-old Ann Arbor News in late July, and replace it with a primarily Web-based operation, AnnArbor.com. All of the jobs at The News, which has weekday circulation of 45,000, will be eliminated, and the number of new jobs created by AnnArbor.com, while still undetermined, will be much smaller, executives said. The new operation will have some original reporting, and an emphasis on reader input and community forums. Steve Newhouse, chairman of Advance.net, the Internet arm of the company, said, “This will be a new company built from the ground up.”
London ready for G-20 unrest Groups warn of mass chaos Police are poised to send thousands of riot officers into London's streets next week to protect President Obama and leaders of 19 other nations, amid stark warnings that masses of protesters plan to attack the Group of 20 summit in the British capital. Authorities cite intelligence information that an alliance of anarchists, anti-globalization groups and environmentalists intend to bring London to a standstill through stunts ranging from building giant sand pits in the streets to scaling skyscrapers in the city's financial district.
Sweden Says No to Saving Saab TROLLHATTAN, Sweden — Saab Automobile may be just another crisis-ridden car company in an industry full of them. But just as the fortunes of Flint, Mich., are permanently entangled with General Motors, so it is impossible to find anyone in this city in southwest Sweden who is not somehow connected to Saab. Which makes it all the more wrenching that the Swedish government has responded to Saab’s desperate financial situation by saying, essentially, tough luck. Or, as the enterprise minister, Maud Olofsson, put it recently, “The Swedish state is not prepared to own car factories.”
US fears Pakistan’s growing problems Washington has told its Nato allies that it is more concerned about the future of Pakistan than Afghanistan and suggested the US will change its approach on Afghan drug policy. Richard Holbrooke, US special representative for Afghanistan and Pakistan, told Nato ambassadors in Brussels that both countries’ problems had to be tackled by working with neighbouring nations, including Iran and China. President Barack Obama’s administration favoured roughly doubling the size of the Afghan army and national police. Mr Holbrooke’s briefing came ahead of a US policy review, set to be concluded this week, which is expected to endorse continuing efforts to win over mid-level Taliban fighters from the ranks of the insurgents. He is understood to have depicted Pakistan as a bigger threat to the US than Afghanistan, adding it was in a much worse state. He underlined US concern over a Pakistani peace deal with insurgents in Swat – an accord Washington fears has given the Pakistani Taliban a free hand to operate close to the heartlands of the country.
NATO Says Top Taliban Leader Slain A senior Taliban leader responsible for numerous roadside bombings and suicide attacks against NATO forces has been killed along with nine other insurgent fighters, NATO said Monday. Maulawi Hassan, described as a well-known Taliban commander in southern Afghanistan, was killed in an attack on Saturday on his compound near Kajaki, in Helmand Province, according to a NATO statement. “He became known for his insurgent activities in the autumn of 2008 and was heavily involved in several illegal activities,” the statement said, noting that there had been no civilian casualties in the attack. The statement said Mr. Hassan had reported directly to Mullah Rahmatullah, the Taliban commander who directs insurgency efforts from outside Afghanistan.
US wants Afghanistan "exit strategy", meets NATO The United States said on Monday it had found an encouraging symmetry of views with its NATO and EU allies after outlining a strategy review meant to end a stalemate in Afghanistan. U.S. Special Representative for Afghanistan and Pakistan Richard Holbrooke discussed the review with Washington's NATO and EU allies after President Barack Obama said it would contain an exit strategy and greater emphasis on economic development. Holbrooke stressed the need for a regional approach to the Afghan problem, including Pakistan, and of stepping up both civilian and military efforts, a NATO spokesman said.
Paul Krugmanon $1 Trillion Geithner Plan to Buy Toxic Bank Assets (1\2)
Paul Krugman on $1 Trillion Geithner Plan to Buy Toxic Bank Assets (2\2)
Treasury's toxic asset plan could cost $1 trillion Administration rolling out plan to buy up to $1 trillion in toxic assets The Obama administration's latest attempt to tackle the banking crisis and get loans flowing to families and businesses will create a new government entity, the Public-Private Investment Program, to help purchase as much as $1 trillion in toxic assets on banks' books. The new effort, to be unveiled Monday, will be followed the next day with release of the administration's broad framework for overhauling the financial system to ensure that the current crisis -- the worst in seven decades -- is not repeated. A key part of that regulatory framework will give the government new resolution authority to take over troubled institutions that would pose a threat to the entire financial system if they failed.
New Gold Upleg After gold's breathtaking $38 surge in 15 minutes Wednesday, there is much renewed interest in the Ancient Metal of Kings. The Federal Reserve, which is clearly being run by lunatics, publicly announced it is going to create over a trillion dollars out of thin air to monetize US debt. This degree of pure monetary inflation is utterly unprecedented. Gold soared because it remains the best asset to own in inflationary times. Inflation is an immoral stealth tax levied on everyone. But it hits those of modest means the hardest, because rising everyday living expenses consume a higher proportion of their incomes. When the Fed injects fiat money into the economy, relatively more dollars chasing relatively fewer goods and services bid up prices on everything. But gold always stays ahead of the rising inflationary tide.
Gold May Rise on Demand for Dollar Alternative Gold may rise for a second straight week as the slumping dollar boosts demand for the precious metal as an alternative investment. Twenty-one of 28 traders, investors and analysts surveyed from Tokyo to Chicago on March 19 and March 20 advised buying gold, which rose 2.8 percent last week to $956.20 an ounce in New York. Five said to sell, and two were neutral.
Obama to Outline Regulation Changes to Avoid Crisis The Obama administration will this week outline regulatory changes aimed at avoiding a repeat of the financial crisis that's crippled the banking system and pushed the U.S. into the deepest recession since 1982. The proposals will address the risks that remain in financial regulation, an administration official said, including the need for an agency to have the power to resolve a breakdown at a major financial institution. Federal Reserve Chairman Ben S. Bernanke two weeks ago called for regulators to be given the authority to seize such firms, in the way the Federal Deposit Insurance Corp. already has for deposit-taking institutions.
Barack Obama appeals to the 'good guys' of Wall Street in $1 trillion rescue President turns the spotlight on financiers and reinforces support for Tim Geithner Barack Obama's Administration will announce its latest economic rescue plan today by offering private investors vast government-backed loans to buy as much as $1 trillion of toxic assets from America's stricken banks. The scheme, designed to help unfreeze the flow of credit for consumers, will be an important credibility test for Treasury Secretary Tim Geithner, who has cut an increasingly forlorn and embattled figure in recent weeks. It will also turn the spotlight once more on Wall Street financiers, repeatedly castigated for helping to create the crisis, but whose participation and expertise are now needed to make the plan work.
Sen. Gregg says Obama budget will bankrupt US The top Republican on the Senate Budget Committee says the Obama administration is on the right course to save the nation's financial system. But Sen. Judd Gregg of New Hampshire also says President Barack Obama's massive budget proposal will bankrupt the country.
GOP predicts doomsday if Obama budget passed GOP lawmakers: Bankrupt US, weak dollar await country if Congress approves Obama's budget Congressional Republicans on Sunday predicted a doomsday scenario of crushing debt and eventual federal bankruptcy if President Barack Obama's massive spending blueprint wins passage. But a White House adviser dismissed the negative assessments, saying she is "incredibly confident" that the president's policies will "do the job" for the economy. In a TV interview, Obama himself laughed when discussing the dire state of parts of the economy -- and ascribed his laughter to "gallows humor." White House Council of Economic Advisers chairwoman Christina Romer insisted that the nation's flailing economy will be rebounding by 2010.
Obama On 60 Minutes: Interview Highlights 60 Minutes' Steve Kroft Interviewed The President At The White House On March 20, 2009 On Friday, March 20, 2009, 60 Minutes correspondent Steve Kroft interviewed President Barack Obama at the White House. It was one of the longest interviews the president has granted since taking office.
Obama 60 Minutes Interview - part 1
Obama 60 Minutes Interview - part 2
Obama On AIG Anger, Recession, Challenges Also Tells 60 Minutes How He Is Adjusting To The Job, And His Family To The White House By most accounts, this past week was one of the most difficult in the young presidency of Barack Obama. At the heart of it all was the public upheaval over $165 million in bonuses paid to employees of AIG, a company largely responsible for bringing the world's financial system to its knees and now being propped up by U.S. taxpayers. The bonuses touched off a cultural war between Wall Street and Main Street, both of whose support the president needs to help stabilize the economy. After campaigning in California to drum up support for his $3.6 trillion budget, the president sat down with 60 Minutes in the Oval Office for a conversation about the AIG debacle, the economy, and getting the hang of the world's most difficult job.
Resistance grows to Obama's bigger government A public furor over big bonuses paid by firms bailed out with U.S. taxpayer money is fueling resistance to President Barack Obama's ambitious plans to extend government intervention in the U.S. private sector. Republican opponents say his commitment of huge sums to try to revive the ailing economy is driven by a philosophical belief in greater government intrusion in many areas, from healthcare to education, dubbing it socialism. Obama is pursuing these policies just 13 years after President Bill Clinton, a fellow Democrat, disarmed Republican opponents by declaring: "The era of big government is over."
Obama's toxic assets plan greeted with skepticism Skeptics worry that Obama's plan to buy up banks' toxic assets won't get credit flowing soon The Obama administration's latest plan to help banks get credit flowing again is drawing a tepid reaction from investors and academics, who say the proposal comes with too many strings attached and is unlikely to stimulate lending industrywide. And even if banks are willing to start lending more money, they wonder if many people will be able to take on more credit until the economy gets going again. "We went on a borrowing binge," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. "Debt levels, especially in households, are too high or unmanageable." The plan Treasury Secretary Timothy Geithner intends to announce Monday aims to create a new government entity -- the Public Investment Corp. -- to help buy up to $1 trillion in toxic assets on banks' books.
Treasury to detail toxic assets plan on Monday U.S. Treasury Secretary Timothy Geithner will announce details on Monday of the Obama administration's plans for removing so-called "toxic" assets from the banking system by enlisting private investors in the effort, the Treasury Department said on Sunday. Treasury said Geithner will hold a briefing at 8:45 a.m. EST on Monday to talk about wide-ranging efforts to stabilize the financial system through pumping cash into faltering banks and its other efforts to try to increase lending. "Tomorrow, Treasury will release details of the next component: the Public Private Investment Program, which will invest alongside private investors in funds that will provide a market for the legacy loans and securities that currently burden the financial system," Treasury said in a statement.
Toxic assets plan is big White House test The Obama administration faces its latest moment of truth on Monday when Tim Geithner, US Treasury secretary, unveils a plan to take hundreds of billions of dollars of toxic assets off banks' balance sheets. Monday's announcement, the success of which will help determine whether an increasingly besieged administration regains full credibility in its handling of the financial crisis, follows a weekend of frantic leaking, with both the Treasury and the White House denying being the sources. The build-up to Monday's plan, in which the Treasury will put $75bn to $100bn of troubled asset relief funds into a public private investment programme, resembles what happened before Mr Geithner's previous attempt last month, which was attacked in the markets for lacking detail.
Bank will need to act fast to prick inflation balloon Next week, for the first time since February 1960, all of 49 years ago, Britain's most-watched inflation measure will go negative. The retail prices index (RPI) is expected to be 0.5% down on a year earlier, so watch out for the flood of articles and reports it provokes on deflationary Britain. It will not end there. Negative RPI readings will be with us for the rest of this year, culminating in a deflation number of between 2.5% and 3% by September. This bout of deflation is due to various factors, including the unwinding of last year's record oil prices and sharply falling mortgage rates and house prices.
Barack Obama's $1 trillion 'detox' AMERICA will this week unveil plans to flush $1 trillion of toxic assets out of the country's financial system in President Barack Obama's latest attempt to kick-start the economy. Timothy Geithner, Obama's embattled Treasury secretary, will ask investors to form partnerships with the American government to buy the troubled mortgages and other bad loans from financial institutions. The ambitious plan is aimed at freeing up frozen credit markets. Low-interest loans are likely to be offered by the government to encourage investors, while an auction of the assets will attempt to fetch the highest price for taxpayers, who will be paying for the bulk of the plan.
U.S. Rounding Up Investors to Buy Bad Bank Assets Obama administration officials worked Sunday to persuade reluctant private investors to buy as much as $1 trillion in troubled mortgages and related assets from banks, with government help. The talks came a day before the Treasury secretary, Timothy F. Geithner, planned to unveil the details of the administration's long-awaited plan to purchase troubled assets, meant to remove them from the balance sheets of banks and, in turn, spur banks to lend more money to consumers and companies. The plan relies on private investors to team up with the government to relieve banks of assets tied to loans and mortgage-linked securities of unknown value. There have been virtually no buyers of these assets because of their uncertain risk.
The Geithner Plan FAQ Q: What is the Geithner Plan? A: The Geithner Plan is a trillion-dollar operation by which the U.S. acts as the world's largest hedge fund investor, committing its money to funds to buy up risky and distressed but probably fundamentally undervalued assets and, as patient capital, holding them either until maturity or until markets recover so that risk discounts are normal and it can sell them off--in either case at an immense profit. Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn't make back its money? A: Then we have worse things to worry about than government losses on TARP-program money--for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition. . . . .
Toxic Asset Plan Foresees Big Subsidies for Investors The Treasury Department is expected to unveil early next week its long-delayed plan to buy as much as $1 trillion in troubled mortgages and related assets from financial institutions, according to people close to the talks. The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks. To help protect taxpayers, who would pay for the bulk of the purchases, the plan calls for auctioning assets to the highest bidders.
Fed Adopts Quantitative Inflation The big story of the week was the U.S. Fed's head long fling over the cliff into Quantitative Easing by printing more than $1 trillion (electronically) , this is on top of the $800 billion already printed on the sly as the Fed buys toxic junk such as the weeks announcement of buying $1.25 trillion of Fannie Mae and Freddie Mac mortgage backed securities, as well as other junk bonds, on top of $300 billion of US Government bonds to help finance the ever growing budget deficit. The implications of this extra supply of dollars is inflationary that devalues the value of all dollars. I have already warned indepth of the consequences of Quantitative Inflation so won't repeat it here. Meanwhile the stealth bull markets spike higher left many analysts scrambling to cover their backs early week with analysis that typically suggested both that the Low 'could be in' and then again it 'could not be in'. Though the sell off late week again started to see a reversion towards the bearish mean.
U.S. Central Credit Union may form "bad bank" Two days after regulators seized the largest U.S. corporate credit union, the newly installed CEO said he is considering a variety of options, including setting up a "bad bank," to handle a mixture of troubled mortgage assets. Several options are on the table at the $34 billion-asset U.S. Central Federal Credit Union, said new CEO James Nance, who quit as chief administrative officer at Icap Capital Markets Llc in New Jersey to helm the Lenexa, Kansas-based institution at the request of regulators. In addition to setting up a separate entity, a so-called "bad bank," to take toxic assets off the books of U.S. Central, Nance told Reuters in an interview that he will look at options for securitizing the troubled assets in ways that would allow for them to be held for an extended periods, and he will explore the sale of certain assets to non-credit union buyers.
It Ain't Gonna Work III Back in October when that stimulus package was being discussed I wrote a couple of articles, which were posted here, stating that it "Ain't Gonna Work." This past Wednesday the Fed announced their latest intentions with a plan to buy $300 billion in long-term Treasuries and $750 billion of mortgage-backed securities. I'm now beginning to wonder if the powers that be are really in their minds trying to "fix" things or if they are actually trying to destroy the dollar, the free markets and perhaps even the nation. To be honest, the latter is starting to make more sense to me because surely there is enough intelligence in Washington to understand the potential consequences of these actions. In any event, in the wake of this news the equity markets surged, the dollar sold off and commodities rallied. Hip, Hip, Hurray. Hip, Hip, Hurray. It's 2007 all over again, or is it?
Systemic Failure By Patrick J. Buchanan As the U.S. financial crisis broadens and deepens, wiping out the wealth and savings of tens of millions, destroying hopes and dreams, it is hard not to see in all of this history's verdict upon this generation. We have been weighed in the balance and found wanting. For how did this befall us, save through decisions that brushed aside lessons that history and experience had taught our fathers? It all began with the corruption called sub-prime mortgages. The motivation was not wicked. Democrats wanted to raise home ownership among African-Americans from 50 percent to the 75 percent of white folks. Rove Republicans wanted to do the same for Hispanics.
Dollar Concerns Are Real Gold surged 8% Thursday (as is the norm, the far smaller market that is silver surged by even more and was up by 13.3%) as the shock Federal Reserve announcement led to concerns regarding the dollar and the inflationary implications of massive money printing and debasement of the currency. The dollar has fallen sharply against all currencies and particularly against the finite commodity and currency of gold which cannot be debased. In just two days the dollar has fallen from below 1.30 (EUR/USD) to over 1.37 (EUR/USD) despite concerns regarding the European economy. Concerns about the dollar are justified and real. This is likely no short term weakness in the dollar indeed the dollar's status as the reserve currency of the world is increasingly coming into question in an increasingly multipolar world.
Inflation: Making Sure "It" Happens Everywhere "Gold and the Euro just hooked up together again. But for how long depends on central-bank policy..." SO BEN BERNANKE SAYS (see next link) the United States has plunged into a deflationary depression. Really, that's what Wednesday's Fed announcement said, shouting it loud and shouting it proud. Because Bernanke's deflation-prevention policies have failed. So he's gone to applying the cure instead. "The US government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many US dollars as it wishes at essentially no cost."
Remarks by Governor Ben S. Bernanke Before the National Economists Club, Washington, D.C. November 21, 2002 Deflation: Making Sure "It" Doesn't Happen Here
Agenda on track despite worsening deficits President Barack Obama's budget would produce $9.3 trillion in deficits over the next decade, more than four times the deficits of Republican George W. Bush's presidency, congressional auditors said Friday. The new Congressional Budget Office figures offered a far more dire outlook for Obama's budget than the new administration predicted just last month - a deficit $2.3 trillion worse. It's a prospect even the president's own budget director called unsustainable. In his White House run, Obama assailed the economic policies of his predecessor, but the eye-popping deficit numbers threaten to swamp his ambitious agenda of overhauling health care, exploring new energy sources and enacting scores of domestic programs.
Worries Voiced Over Global Economy The global economy is on pace to shrink by 1 percent to 2 percent this year, the head of the World Bank said Saturday. Speaking at the Brussels Forum on geopolitical problems, the bank's president, Robert B. Zoellick, said that 2009 would be a "dangerous year" as the global economy wrestles with its first recession in more than 60 years. "We haven't seen a figure like that globally since World War II, which really means since the Great Depression," he said. Global trade is set to slide the most in 80 years as demand dries up, with East Asia being the hardest-hit region. The World Bank has forecast a 2.1 percent decline in global exports this year, which would be the first such drop since 1982.
UN panel calls for council to replace G20 The Group of 20 should be replaced by a new Global Economic Council, an advisory panel of senior international economists has said. Under the panel's proposals, the council, which would be a United Nations body, would become the main forum for setting the agenda for worldwide economic and financial policy. The proposal, made by an 18-member UN commission headed by Joseph Stiglitz, the Nobel-prizewinning economist, will be raised at next week's expanded G20 summit in London, at which heads of state will debate a global response to the world financial crisis. It is part of a draft 10-point plan put forward by the panel, appointed last October by the 192-member UN General Assembly, to study reform of international financial institutions, including the World Bank and International Monetary Fund. The team includes academics, central bank officials, and former and serving ministers from Japan, western Europe, Africa, Latin America and Asia.
The Mother of all Bells There is an old adage on Wall Street that no one rings a bell at major market tops or bottoms. That may be true in normal times, but as many have noticed, we are now completely through the looking glass. In this parallel reality, Ben Bernanke has just rung the loudest bell ever heard in the foreign exchange and government debt markets. Investors who ignore the clanging do so at their own peril. The bell's reverberations will be felt by everyday Americans, whose lives are about to change in ways few can imagine. While nearly every facet of America's economy has been devastated over the past six months, our national currency has thus far skipped through the carnage with nary a scratch. Ironically, the U.S dollar has been the beneficiary of the global economic crises which the United States set in motion. As a result, our economy has thus far been spared the full force of the storm.
Obama says would not accept Geithner resignation President Barack Obama on Saturday stepped up his weeklong defense of much-criticized Treasury Secretary Timothy Geithner, saying he would not accept his resignation even if it was tendered. It came ahead of a critical week for Geithner, who is expected to unveil his much-anticipated bank bailout plan and flesh out the administration's proposals for financial regulatory reform when he appears before the House of Representatives Financial Services Committee. Obama said in an interview with CBS television network's "60 Minutes" program that if Geithner tried to quit, he would tell him, "Sorry buddy, you've still got the job."
Ron Paul talks AIG Bonuses on CNN American Morning 03/20/2009
AIG bonus estimates grow $53 million Company paid $218 million, not $165 million, Conn. attorney general says The attorney general of Connecticut said Saturday that he is asking American International Group Inc. why documents appear to show the company paid $53 million more in bonuses to its financial products division than previously reported. Documents turned over late Friday show AIG paid $218 million in bonuses last weekend, higher than the $165 million that was previously disclosed, said the office of Attorney General Richard Blumenthal, who had issued a subpoena. Bonuses were "showered like confetti" on AIG employees, Blumenthal said.
Protesters visit AIG officials' lavish Conn. homes A busload of activists representing working- and middle-class families paid visits Saturday to the lavish homes of American International Group executives to protest the tens of millions of dollars in bonuses awarded by the struggling insurance company after it received a massive federal bailout. About 40 protesters sought to urge AIG executives who received a portion of the $165 million in bonuses to do more to help families. "We think $165 million could be used in a more appropriate way to keep people in their homes, create more jobs and health care," said Emeline Bravo-Blackport, a gardener.
Bailout discontent hits Boston streets Hub protest centers on actions by AIG, Bank of America Umbrella in hand, Heleodora Caraballo marched through the drizzle yesterday afternoon outside Bank of America's downtown Boston offices to protest what she called the misuse of taxpayer money by failing financial institutions. "There's a lot of workers being left without jobs and ways to support their families," Caraballo, a contracted janitor at Logan International Airport, said in Spanish. "The [bailout] money belongs to the public, the workers."
Congress looking at power to seize big firms Giving the government new powers to seize big troubled companies became the new focus of debate in Congress on Thursday as lawmakers and the administration begin efforts to overhaul the nation's financial rule book. The head of the Federal Deposit Insurance Corp. said the government's strategy in the financial crisis of bailing out huge institutions deemed "too big to fail" must be replaced. FDIC chairwoman Sheila Bair called for a new system of supervision that prevents institutions from taking on excessive risk and becoming so large their failure would threaten the financial system. A mechanism is needed to resolve troubled financial institutions similar to what the FDIC does with federally insured banks and thrifts, she said.
Anything But Decoupling . . . . Just two months ago, the IMF predicted world output would increase by 0.5%. But in its report drawn up for the G20 group of finance ministers, the IMF now says that the whole world economy will shrink, and predicts that the advanced economies will suffer a decline in output of between 3% and 3.5% in 2009, and barely grow in 2010, with growth of between 0% and 0.5%. The IMF says this will happen despite a big fiscal stimulus from many G20 countries designed to boost growth. It says that the G20 as a whole is adding 1.8% of GDP ($780bn) to boost growth this year - but that the EU is lagging behind with only 1%. And it warns that the UK is building up the biggest fiscal deficit amongst all the G20 countries, which will amount to 11% of GDP by 2010. Financial crisis unresolved
Obama Challenges the Law of Markets In the public mind, recessions are ascribed to insufficient consumption. Members of the public can hardly be held accountable for their erroneous thinking when we consider that every media outlet on the planet seems to regurgitate the same error, including vulgar Keynesians. However, more intelligent Keynesians will point an accusing finger at the "animal spirits" of businessmen, blaming them for investment being volatile. But this is just a flashier version of the underconsumption theory that argues that insufficient demand is what brings on recessions. If this be so then the solution is obvious: pump up demand. In plain English, increase the money supply.
2 corporate credit unions taken over by government Regulators take over 2 big wholesale credit unions, seek to stabilize corporate credit unions Federal regulators on Friday seized control of two large institutions that provide wholesale financing for U.S. credit unions, a move they say was needed to stabilize the credit union system. The National Credit Union Administration said it has taken over and put into conservatorship the two corporate credit unions, U.S. Central Federal Credit Union, based in Lenexa, Kan., and Western Corporate Federal Credit Union, in San Dimas, Calif. U.S. Central has about $34 billion in assets while Western Corporate, known as WesCorp, has an estimated $23 billion in assets. A conservatorship enables the government to operate a financial institution. Corporate credit unions provide financing and investment services to the much larger population of retail credit unions. Some of the 28 corporate credit unions in the U.S. have sustained steep losses on paper from the depressed value of the mortgage-linked securities they hold.
Washington Mutual sues FDIC for over $13 billion Washington Mutual Inc, the failed U.S. savings and loan, has sued the Federal Deposit Insurance Corp for well over $13 billion in connection with the loss of its banking operations, which was acquired by JPMorgan Chase & Co. In a complaint filed with the U.S. District Court for the District of Columbia, the thrift's former parent accused the FDIC of having on January 23 made a "cryptic disallowance" of its claims, prompting the lawsuit. It also accused the FDIC of agreeing to an unreasonably low price in arranging the a $1.9 billion sale of the banking business to JPMorgan on September 25, when regulators seized Washington Mutual and appointed the FDIC as receiver.
Warning over cuts in credit card lines Banks trying to reduce their exposure to losses on credit card loans are driving some borrowers deeper into trouble, say credit counsellors and analysts in the US. Major card issuers such as Bank of America, Citigroup and American Express have reacted to the economic crisis and rising credit card defaults by raising interest rates, closing inactive accounts and paring credit lines. When a bank cuts a borrower's credit line to lower its potential exposure, it can drive down the borrower's credit score, even if he or she has paid all their bills on time in the past. A lower credit score can prompt other lenders to cut the borrower's access to credit and to raise interest rates.
In credit drought, U.S. car dealers battle to survive Deep in the last stronghold of the struggling U.S. auto industry, Rosario Criscuolo says he owes the survival of his business to Toyota Motor Corp. "If it weren't for Toyota, I'd be gone," said the owner of Spartan Auto Group, which runs three auto dealerships selling Toyota, Lexus, Infiniti, Volkswagen and Mazda brand cars. "Without them I'd be selling papers on the corner." To fund the $25 million worth of gleaming new cars at his showrooms, including here in Michigan's capital, Criscuolo needs floorplan financing, or inventory loans.
Americans fear home price drop accelerating Americans fear home prices will drop more sharply in the coming year, despite government efforts to resuscitate the battered real estate sector, according to a poll released on Friday. U.S. homeowners surveyed by Reuters and University of Michigan predicted their home values would fall by 2.2 percent in the year ahead, the biggest anticipated decline in the past few years. This predicted decline in March was steeper than the expected average fall of 1.9 percent in February.
Trade Barriers Rise as the Recession's Grip Tightens After repeated pledges by world leaders to avoid erecting trade barriers, protectionism is on the march, provoking nasty trade disputes and undermining efforts to plot a coordinated response to the deepest global economic downturn since World War II. From a looming battle with China over tariffs on carbon-intensive goods to a spat over Mexican trucks using American roads, barriers are going up around the world. As the recession's grip tightens, these pressures are likely to intensify, several experts said. The surge in protectionism is casting a shadow over an economic summit meeting of world leaders scheduled for London on April 2. At the last such gathering, in Washington in November, former President George W. Bush persuaded the Group of 20 members to commit to protecting free trade - whatever the pressures caused by faltering economies and lost jobs. The members include industrialized and developing nations, and the European Union.
Office staff warned of confrontation as City braces for mass G20 protests Police forecast transport paralysis in capital as campaigners insist demonstrations against globalisation and climate change will be peaceful Office workers face chaos next week with swaths of London in security lockdown for the G20 summit and warnings that bankers will be targeted in a series of protests aimed at causing maximum disruption. Staff in the City are being advised to dress down and postpone non-essential meetings amid fears that they will be forced to run the gauntlet of protesters. Thousands of G20 Meltdown campaign posters show a mannequin wearing a suit being hanged, while an anarchist website has the slogan: "Burn a banker!"
Orlando 'Tea Party' rally draws more than 4,000 Singer Lloyd Marcus told the crowd assembled in Lake Eola Park on Saturday that he was going to give them his take on the first days of the Obama administration. Then he shrieked. That pretty much summed up the mood in the park Saturday afternoon, when more than 4,000 people attended the Orlando Tea Party, a conservative rally aimed at expressing discontent with Washington.
GM, Chrysler May Need More Aid Than Requested General Motors Corp. and Chrysler LLC may need "considerably" more than the $21.6 billion in aid they requested, which was based on optimistic recovery plans, said Steven Rattner, the Treasury's chief auto adviser. President Barack Obama's auto task force is assessing proposals from GM and Chrysler to decide whether to recommend U.S. assistance or tip the carmakers into bankruptcy. Rattner made the comments yesterday on Bloomberg Television's "Political Capital with Al Hunt," airing this weekend. The task force will give its "sense of direction" by March 31, Rattner said. The companies have received $17.4 billion since December and asked for the additional $21.6 billion in aid last month, an amount that depends on achieving turnaround plans that are "somewhat ambitious," Rattner said.
Daimler to Sell $2.7 Billion in New Stock to Abu Dhabi Daimler, the German maker of Mercedes-Benz cars, said Sunday that it would sell about 1.95 billion euros worth of new shares of stock to Abu Dhabi, making the emirate its largest shareholder at a time of extreme hardship for the global auto industry. Aabar Investments, the fund of the Abu Dhabi government, and Daimler said in a statement that the injection of cash was worth $2.7 billion and that it "further strengthens Daimler's sound capital base and offers additional flexibility to invest in new automotive technologies." Automakers worldwide are suffering their worst slump in decades. European sales fell 18.3 percent in February from a year earlier, despite an increase in Germany that resulted from a government tax incentive.
Venezuela's Chavez calls Obama "ignoramus" Venezuela's President Hugo Chavez said on Sunday his U.S. counterpart Barack Obama was at best an "ignoramus" for saying the socialist leader exported terrorism and obstructed progress in Latin America. "He goes and accuses me of exporting terrorism: the least I can say is that he's a poor ignoramus; he should read and study a little to understand reality," said Chavez, who heads a group of left-wing Latin American leaders opposed to the U.S. influence in the region. Chavez said Obama's comments had made him change his mind about sending a new ambassador to Washington, after he withdrew the previous envoy in a dispute last year with the Bush administration in which he also expelled the U.S. ambassador to Venezuela.
Russian planes again fly over U.S. Navy ships Russian military aircraft flew just 500 feet over two U.S. Navy ships this week as the ships participated in a joint military exercise with South Korea in the Sea of Japan, according to U.S. military officials. On Monday, two Russian Ilyushin IL-38 maritime patrol aircraft, known as "Mays," overflew the U.S. aircraft carrier Stennis while it was in international waters in the Sea of Japan. The Russian aircraft flew about 500 feet over the ship, lower than other flights the Russians have made over U.S. ships in the past year.
N. Korea Says It Is Holding Reporters North Korea confirmed Saturday that it had detained two American journalists on charges of "illegally intruding" into the North through its border with China. The journalists, Laura Ling, a Chinese-American, and Euna Lee, a Korean-American, both working for Current TV, were on a reporting trip along the border when they were detained by North Korean border guards, according to human rights activists and a South Korean news report. Their colleague, Mitch Koss, and their Chinese guide were reported to have been detained by Chinese border guards. "A competent organ is now investigating the case," the North's official news agency, KCNA, said. The terse dispatch, which gave no details, was the first confirmation by North Korea of the arrests. On Friday, Washington said that Secretary of State Hillary Rodham Clinton was trying to free the two journalists, who had traveled to the border area to report on North Korean refugees in China, according to Chun Ki-won, a Christian clergyman in Seoul who helped arrange their trip.
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Fri 03.20.2009
Gold, Platinum Head for First Weekly Gain in Four on Inflation Gold and platinum dropped in Asia, paring the week's gains, as some investors sold the metals to lock in profits following the recent rally on a weaker dollar and increased inflation concerns. Both metals are set for their first weekly gain in a month on investors' demand for a hedge against accelerating consumer prices after the Federal Reserve said it will buy as much as $1.15 trillion in bonds to cut borrowing costs. Gold is up 2.4 percent this week as the Dollar Index, which tracks the currency against those of six major U.S. trade partners, lost 4.9 percent.
What the Fed's Announcement Means for Gold The surprise move to quantitative easing by the Federal Reserve yesterday caught the market unaware. The $300 billion bond purchase sent gold prices jumping $50 an ounce and must have given a few gold bears a nasty awakening. Gold prices will surely now go higher as the market digests what the start of printing dollars means for the USA. The Bank of England started printing money a week earlier and its success in lowering yields perhaps encouraged the Fed to take this step into the abyss.
"Gold will go to astronomic numbers" Part 1 A modern day gold rush is under way as peoples confidence in currency is fading fast while the price of gold rises, says Adrian Douglas, financial analyst and the director of the Gold Anti-Trust Action Committee.
"Gold will go to astronomic numbers" Part 2
The unholy Fed-Gold nexus Do you know there is no official limit on the Federal Reserve of the United States for printing money. And, the result is disastrous at times. If you check the track record of the Federal Reserve, there is an unholy nexus between the Federal Reserve's decision to print money and the gold prices. In fact, several publications have written about it earlier also. In the beginning, in the original monetary system that was set up in the United States by the Founding Fathers had limits to how much money could be printed. And the US currency was backed by gold and silver, creating a gold standard.
Is this the end of America? U.S. law-making is riddled with slapdash, incompetence and gamesmanship Helicopter Ben Bernanke’s Federal Reserve is dropping trillions of fresh paper dollars on the world economy, the President of the United States is cracking jokes on late night comedy shows, his energy minister is threatening a trade war over carbon emissions, his treasury secretary is dithering over a banking reform program amid rising concerns over his competence and a monumentally dysfunctional U.S. Congress is launching another public jihad against corporations and bankers.
U.S. must fix 'Too big to fail’ problem, Bernanke says PHOENIX -- The United States needs a safer way to shut down large nonbank financial firms without destabilizing the entire financial system, Federal Reserve chairman Ben Bernanke said Friday. "We have such a regime for insured depository institutions, but it is clear we need something similar for systemically important nonbank financial entities," he said in prepared remarks to a community bankers convention in Phoenix.
13 firms receiving federal bailout owe back taxes At least 13 firms receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes, a key lawmaker said Thursday. Rep. John Lewis, D-Ga., chairman of a House subcommittee overseeing the federal bailout, said two firms owe more than $100 million apiece. "This is shameful. It is a disgrace," said Lewis. "We are going to get to the bottom of what is going on here." . . . . "If we looked at all 470 recipients, how much would they owe?" Lewis asked. Lewis said the panel plans to review tax records from other firms receiving federal money, but he was unsure if it would look at every firm. "We're not done," he said.
Unpaid tax by rescued firms adds to AIG furor Working furiously to respond to public outrage over Wall Street excesses, the House passed a bill Thursday that seeks to recoup much of the $165 million in bonuses paid to executives of American International Group. But lawmakers were having a hard time keeping pace with news that promised more headaches for Congress and President Barack Obama. On Thursday came the disclosure that 13 financial companies that received federal bailout money owe more than $220 million in unpaid taxes.
Spectre of inflation divides North Americans Consumer prices unexpectedly bounced higher for the first time in five months in February, allaying concerns that the recession-battered Canadian economy is descending down a deflationary spiral -- at least for now. In fact, combined with Wednesday's announcement from the U.S. Federal Reserve that it will flood the United States' money supply in an effort to boost the flow of credit through the purchase of treasuries and other means of quantitative easing, the spectre of inflation has once again reared its head, dividing both North American markets and opinion.
Dollar Heads for Record Weekly Loss Versus Euro as Supply Rises The dollar headed for a record weekly drop against the euro after the Federal Reserve ramped up supply of the currency by unexpectedly saying it will start buying Treasuries. The greenback traded near a two-month low versus the European currency and headed for a second weekly decline versus the yen as the Fed said March 18 its balance sheet will grow by as much as $1.15 trillion as it buys up to $300 billion of government debt and purchases more mortgage bonds. Australia and New Zealand's dollars gained, heading for a third weekly advance, as prices of commodities the South Pacific nations export surged.
Dollar Rally Crumbles as Fed Ramps Up Printing Press The rally that pushed the dollar to the highest levels since 2006 is in danger of crumbling as the Federal Reserve starts buying Treasuries and ramps up its purchases of mortgage debt, adding to a flood of greenbacks. "The implications of today's Fed decision are unambiguous," currency strategists at Citigroup Inc. wrote in a research report within a half hour of the Fed's decision yesterday. The dollar "should weaken," they said.
Fed Kills U.S. Dollar with Aggressive Move Following the two-day FOMC meeting, the U.S. Federal Reserve unleashed its most powerful economic package to date as it announced plans to spend a massive amount of money to revive the U.S. economy. The new plan includes purchasing up to $300 billion of long-term treasuries, expanding TALF to include the purchase of other assets, and buying more mortgage securities. When you add it all up, it approaches a staggering $1 trillion of taxpayer money. The tone of the Fed's announcement and the size of the plan demolished the U.S. Dollar against all major currencies and even versus emerging markets. In its official statement the Fed cited many reasons for its aggressive action. The number one reason is that the economy is still contracting. Jobs are being lost and equity and housing wealth is declining. Tight credit conditions are hurting consumer spending and sentiment. This is leading to lower sales for businesses which have also had a hard time obtaining credit. Consequently, fixed investments and inventories are down. In addition, businesses have stopped hiring.
Fed crosses rubicon and sets off firestorm New plan to buy Treasury debt 'a step in the dark' The Federal Reserve's decision Wednesday to buy $300 billion in longer-term Treasury securities has ignited a firestorm, with analysts saying it will either cause a currency crisis or jolt the economy out of the morgue. "We're in a car heading for a cliff and the Fed has just stepped on the gas," said Peter Schiff, the author of a best-selling book 'Crash-proof' and one of a handful of economists who worried about the economy long before it slipped into a severe recession. On the other hand, David Jones, chief executive of DMJ Advisors and a long-time Fed watcher, hailed Bernanke's decision as a "turning point" for the economy.
Very important speech; long, but worth listening Why the Meltdown Should Have Surprised No One Peter Schiff speaks on theory and practice in financial markets, probable hyperinflation ahead at the 2009 Henry Hazlitt Memorial Lecture. Recorded at the annual Austrian Scholars Conference, Ludwig von Mises Institute, 13 March 2009.
Gold rallies 8% as Fed move fuels inflation fears Gold futures rallied more than 8% Thursday to end near $960 an ounce, as the Federal Reserve's plans to purchase as much as $1.15 trillion in U.S. bonds and mortgage-backed securities sparked worries of inflation ahead, raising gold's appeal as a hedge against rising prices. "Looking ahead, we fear inflation. It may be that Dr. Bernankenstein has created a monster beyond his control," said Michael Farr, president of Farr, Miller & Washington, referring to Fed Chairman Ben Bernanke. The U.S. dollar's losses in the wake of the Fed's move also lifted gold prices, with a weaker greenback raising gold's investment appeal. Gold for April delivery surged $68.70, or 7.8%, to end at $958.80 an ounce on the Comex division of the New York Mercantile Exchange. It climbed to $963.5 earlier in the session, the highest level in nearly one month.
Why America fixed gold-silver ratio in 1792 When the world is riding a gold boom, there are questions about the fate of silver prices and investors who put money on silver. It is interesting to track the gold-silver relations during the past. If you check history, the price of silver has been notoriously volatile as it can fluctuate between industrial and store of value demands. At times this can cause wide ranging valuations in the market, creating volatility. Silver often tracks the gold price due to store of value demands, although the ratio can vary. The gold/silver ratio is often analysed by traders and investors and buyers. In 1792, the gold/silver ratio was fixed by law in the United States at 1:15, which meant that one troy ounce of gold would buy 15 ounces of silver; a ratio of 1:15.5 was enacted in France in 1803. The average gold/silver ratio during the 20th century, however, was 1:47.
More Debt: A Curious Solution To A Credit Crisis A nagging question haunts U.S. government efforts to revive a dormant financial system: Can a crisis that started because of excess credit be solved with more debt? The typical answer from economists is a qualified no. That is, "No, more credit will not make the problem go away. But yes, the government should do its best to restore bank lending to prevent an even worse economic outcome". Yet the refrain out of Washington places a lot of credence on the ability of debt to revive the country's economy.
The money is gone. now what? The losses from the worldwide financial implosion are only now being tallied up. Adjusting to the reality is proving hard. That difficulty is the unifying fact in much of the news these days - as well as in the mass public outrage over Bernard Madoff, a man who stole primarily from the well-off. Much of the anger is coming from people who did not lose a dime from his Ponzi scheme but who have lost plenty in the stock and real estate markets and would dearly love to find someone to blame.
Inconvenient Debt - Glenn Beck
Treasuries Head for Weekly Gain on Fed's Plan to Buy U.S. Debt Treasuries headed for a weekly advance after the Federal Reserve's plan to buy up to $300 billion in U.S. debt spurred the biggest one-day surge in more than four decades as investors bet yields will remain low. U.S. securities erased today's gain on speculation the rally that followed yesterday's Fed meeting was too big to be sustained. Central bank chairman Ben S. Bernanke yesterday signaled his determination to avoid a replay of the Great Depression by pumping cash into the economy.
Reflation, Housing Stabilization, And the Devaluation of the U.S. Dollar The Fed and other central banks seem intent on a competitive race to devalue their currency the fastest, lol. Currency markets recently were surprised when the Swiss, of all countries, announced they would intervene in the currency markets to depress the value of the Swiss Franc. Everyone wants a weak currency because everyone's exports have fallen off a cliff. A weak currency makes your goods cheaper to foreign buyers. The Fed stepped into the domestic fray today and announced hundreds of billions of dollars in purchases of "long term" US Treasuries and hundreds of billions of dollars of Mortgage Backed securities. Massive implications. The price of those Treasury bonds goes up, yield goes down, and the market for mortgage back securities is stabilized, prices for those securities also goes up, yields come down. Net effect is that interest rates for bonds and for MORTGAGES come down, allowing for refinancing and outright home purchases, thereby stabilizing the HOUSING MARKET.
Monetizing the Debt: Fed Will Buy Everything That's Not Nailed Down Word has probably spread around by now that the Federal Reserve is going to buy everything in America that's not nailed down, throwing another $1,150,000,000,000 lifeline at markets. (See what a trillion looks like. ) The Federal Open Market Committee (FOMC) yesterday informed the public that it will expand its dominating position in the MBS market, throwing an additional $750 billion there. The buying spree does not end there. Having arrived at zero interest rate policy 3 months earlier the Fed now hopes to control interest rates by monetizing US Treasuries equalling $300 billion. Stirring still more Bourbon in the punch bowl the Fed will also up its portfolio of agency debt by another $100 billion.
Dollar Heads for Record Weekly Loss Versus Euro as Supply Rises The dollar headed for a record weekly drop against the euro after the Federal Reserve ramped up supply of the currency by unexpectedly saying it will start buying Treasuries. The greenback traded near a two-month low versus the European currency and headed for a second weekly decline versus the yen as the Fed said March 18 its balance sheet will grow by as much as $1.15 trillion as it buys up to $300 billion of government debt and purchases more mortgage bonds. Australia and New Zealand's dollars gained, heading for a third weekly advance, as prices of commodities the South Pacific nations export surged.
Dollar Rally Crumbles as Fed Ramps Up Printing Press The rally that pushed the dollar to the highest levels since 2006 is in danger of crumbling as the Federal Reserve starts buying Treasuries and ramps up its purchases of mortgage debt, adding to a flood of greenbacks. "The implications of today's Fed decision are unambiguous," currency strategists at Citigroup Inc. wrote in a research report within a half hour of the Fed's decision yesterday. The dollar "should weaken," they said.
The Fed Moves to Monetize The Federal Reserve shocked the financial markets yesterday. The Fed released the results of its just-ended Federal Open Market Committee meeting and the response was immediate - stock market indices went up - and the value of the dollar went down! The reason - the Open Market Committee approved a plan to purchase up to $300 billion of longer-term Treasury securities over the next six months. This is in addition to a plan to increase the Fed's purchase of up to an additional $750 billion of agency mortgage-backed securities.
Bernanke's economic strategy: Trillions now, worry later The Federal Reserve made it clearer than ever Wednesday that it's willing to go for short-term gain at the risk of future pain. Chairman Ben S. Bernanke and his peers at the central bank stunned financial markets by announcing two huge steps aimed at driving down long-term interest rates, including mortgage rates: The Fed said it would buy up to $300 billion of longer-term Treasury securities for its own portfolio and that it would expand its purchases of mortgage-backed bonds to $1.25 trillion from the previously announced $500 billion.
Can Congress Write Any Laws It Wants? by Andrew P. Napolitano "Some men think the Earth is round, others think it flat… But, if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? … NO." When Robert Bolt wrote that truism in his play A Man For All Seasons, his protagonist, Thomas More, was attempting to persuade the jury at his trial for high treason that all governments have limitations, and that the statute he was accused of violating was beyond Parliament's lawful authority to enact. Sir Thomas was there appealing to the natural law as well as to the common sense of his jurors: The government can't change the laws of nature. As we know, he fared no better than those who today argue that Congress is not omnipotent, has natural, moral, and constitutional limitations on its power, and every day fails to abide them.
Stock rally fades as investors assess Fed moves Wall Street retreats as investors pause after big rally to assess Federal Reserve's actions Investors had a change of heart about the Federal Reserve's plans to buy Treasury bonds and doused Wall Street's two-week-old rally. Banking and other financial shares pulled the market lower Thursday as investors worried the the Fed's plan would hurt the dollar and revive inflation. But energy stocks rose, getting a lift from soaring crude oil prices. The retreat came a day after stocks surged in reaction to the Fed's aggressive plans to pump more than $1 trillion into the financial system by buying Treasury bonds and stepping up its purchases of other debt securities. The aim is to lower borrowing rates and stimulate lending.
EU summit considering more money for IMF EU leaders were set to back a doubling of the International Monetary Fund's resources to $500 billion at summit talks Friday, and were ready to pay up to a third of the increase to help the fund handle and prevent crises. The expected move by the 27 leaders comes ahead of a key meeting of the Group of 20 in London on April 2, which is meant to tackle the worsening global downturn. Czech Finance Minister Miroslav Kalousek said Thursday's EU summit talks agreed that "a considerable increase" was needed to bolster the IMF's role.
France braced for huge street protests over economic crisis Private and public sector workers in second general strike against Sarkozy cuts France is bracing for a wave of street protests in the second general strike over Nicolas Sarkozy's handling of the economic crisis. Traditional public sector strikers such as teachers, transport workers and hospital staff will join an unprecedented new protest movement by private sector workers from banks and supermarkets to multinationals. Together they are protesting against both Sarkozy's cuts to France's public sector and welfare state, and accusing him of failing to protect workers from the economic crisis. Most of those involved fear the dreaded French scourge: unemployment, which is now rising at the fastest rate in more than a decade.
Russia Says Debt 'Must Be Paid' as Banks Hoard Cash Russian companies need to work with domestic banks to solve their foreign debt problems and not rely on government bailouts, First Deputy Prime Minister Igor Shuvalov said. OAO Sberbank, VTB Group and other commercial banks have stockpiled more than $100 billion to help companies refinance foreign loans and the government will only offer direct aid in "extreme cases," Shuvalov said in an interview in his office at the government's headquarters in Moscow yesterday. Russian companies led by billionaire Oleg Deripaska's United Co. Rusal owe foreign banks about $100 billion this year, according to central bank data. The government in September set aside $50 billion to refinance foreign corporate debt through its bailout bank VEB. That program was shut down last month when liquidity returned to the banking system. Just $11 billion of the total was dispensed.
Economy PURPOSELY Destroyed By Globalists
Central Banks Are Buying Gold for Their Reserves Now! It is clear now that central banks are buying gold for their reserves. Here is a brief history leading to today and the present position of central banks as they turn to buying gold. Massive Gold Sales! From the early 1980's and for the next 20 years gold was under the threat of massive sales from the world's central banks. Many commentators reported that the overhang of gold above the 'open' market was so great that such sales would eventually lead to central bank reserves in the developed world having no gold at all. Central Banks had further worsened the situation by loaning gold to mining companies, through the bullion banks, allowing them to finance gold production to a far greater extent than warranted by the price of gold during that time. This acceleration in the production of gold allowed the gold price to be pressed down $850 to $275, the point at which Britain, at the instruction of the current Prime Minister Gordon Brown instructed that Britain sell the bulk of its gold reserves. From the turn of the millennium this perspective changed dramatically.
Central Banks unleash the Nuclear Option Desperate times call for desperate measures. As the global "credit crunch" has grown increasingly severe, central bankers are examining the Great Depression of the 1930's for possible parallels that are relevant to today's situation. Most worrisome, is the synchronized meltdown of the global stock markets, which had wiped-out $32-trillion of wealth, on top of another $10-trillion in losses in real estate.
US DOLLAR HAS 3RD BIGGEST ONE-DAY DECLINE EVER The US Dollar index had its third biggest one-day decline today since daily pricing begins back in 1970. After the Fed announced that they will be purchasing US Treasuries and other assets, the Dollar fell sharply and ended the day down 2.69%. As shown in the one-year chart below, the US Dollar index broke below its 50-day moving average today after breaking below its short-term uptrend a few days ago. The Dollar is still trading above its longer-term uptrend, but the technical damage done in recent days is not a good sign.
A.I.G. Sues U.S. for Return of $306 Million in Tax Payments While the American International Group comes under fire from Congress over executive bonuses, it is quietly fighting the federal government for the return of $306 million in tax payments, some related to deals that were conducted through offshore tax havens. A.I.G. sued the government last month in a bid to force it to return the payments, which stemmed in large part from its use of aggressive tax deals, some involving entities controlled by the company's financial products unit in the Cayman Islands, Ireland, the Dutch Antilles and other offshore havens. A.I.G. is effectively suing its majority owner, the government, which has an 80 percent stake and has poured nearly $200 billion into the insurer in a bid to avert its collapse and avoid troubling the global financial markets. The company is in effect asking for even more money, in the form of tax refunds. The suit also suggests that A.I.G. is spending taxpayer money to pursue its case, something it is legally entitled to do. Its initial claim was denied by the Internal Revenue Service last year.
In New Dilemma, Banks Cite Two Paths to Disaster Some bank executives warned yesterday that the government is forcing them toward a disastrous choice between accepting restrictions on compensation that could cripple their ability to compete with rivals, or returning billions in federal aid, which could retard lending and damage the economy. The possibility of a newly weakened banking industry also raised concerns among businesses in the wider economy that already are struggling to find financial firms willing to lend them needed money.
Is Obama Designing the End of Capitalism? Amid all of the mixed messages on the strength of the economy coming from the White House, one theme has emerged loudly, clearly, and unvaryingly: The American economic system is about to undergo a profound shift. "Never allow a crisis to go to waste," President Obama's chief of staff Rahm Emanuel famously stated. "Never waste a good crisis," concurred Secretary of State Hillary Clinton. Americans, said Obama, should "discover great opportunity in great crisis." What kind of opportunity? "Capitalism," Secretary of the Treasury Tim Geithner said last week, "will be different."
China backs talks on dollar as reserve China and other emerging nations back Russia's call for a discussion on how to replace the dollar as the world's primary reserve currency, a senior Russian government source said on Thursday. Russia has proposed the creation of a new reserve currency, to be issued by international financial institutions, among other measures in the text of its proposals to the April G20 summit published last Monday. Calls for a rethink of the dollar's status as world's sole benchmark currency come amid concerns about its long-term value as the U.S. Federal Reserve moved to pump more than a trillion dollars of new cash into the ailing economy late Wednesday.
Russia proposes creation of global super-reserve currency Russia suggests the G20 summit in London in April should start establishing a system of managing the process of globalization and consider the possibility of creating a supra-national reserve currency or a "super-reserve currency." The Russian Federation's proposals for ways out of the ongoing financial and economic crisis and for a post-crisis order of the world financial system have been published on the Kremlin's website. The proposals have been dispatched to the leadership of the G20 countries, the CIS and international organizations. "The current global economic crisis points to the need for discarding standard approaches and requires the adoption of collective decisions, agreed at the international level and geared to creating a system of globalization process management," the document says. Russia suggests "acting with the maximum resolution in order to restore sustainable economic development and also confidence and stability in the financial markets."
Global Currency & Global Governance - 3.17.2009
Fed plan may lower rates, but at what cost? Through its control of the printing press the Federal Reserve may be able to push down government bond yields as low as it wants, though it will eventually face a day of reckoning with inflation. The Federal Reserve said on Wednesday it would buy up to $300 billion in longer-term Treasuries, effectively printing money in order to lower yields and bring down borrowing costs throughout the economy, particularly in the troubled mortgage sector.
U.S. Could Use Crisis to Wage 'Financial Warfare' There's growing concern in defense and intelligence circles that the global recession has the potential to threaten America's national interests. But a small group of academics and Pentagon policy-makers believe that the U.S. could benefit from the financial havoc. With economies around the world on edge, they argue, a weakened-but-still-gargantuan USA has new opportunities to pressure adversaries through the strategic application of market trades and bank transfers. They call their theory "financial warfare."
Wilbur Ross sees more banking failures Investor Wilbur Ross, who made a fortune snapping up distressed companies, said on Thursday he expects as many as 800 more U.S. banks to fail in the next few years. Ross, on the sidelines of an insurance conference where he spoke, told Reuters he includes in his tally banks that have accepted funds as part of the federal government's bailout program. In total, he expects about 1,000 failures, including about 200 that have failed so far and 800 more in the next few years.
U.N. panel says world should ditch dollar A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar. Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.
The US Federal Reserve is increasing its balance sheet by another $1 trillion, including $300bn of Treasury bonds, the Federal Open Market Committee said on Wednesday. Yet the pace of US economic decline seems to be slowing, while deflation is nowhere visible. Fed policy is now high-risk, and resurgent inflation may strike sooner than expected. . . . The experience of the 1970s in both the United States and Britain demonstrates that the Fed's theory that inflation won't co-exist with economic slack is wrong. Thus an over-inflationary monetary or fiscal policy could quickly produce accelerating inflation even while recession persists. The Fed's proposed purchase of $300bn of long-term Treasury bonds, when combined with the Obama administration's record budget deficits, is particularly risky. Running large budget deficits and monetising them through central bank purchases of debt is a highly inflationary policy that has got plenty of emerging markets into trouble.
House votes to recoup bonuses from bailed-out firms Moving with unusual speed, the U.S. House of Representatives on Thursday passed a bill to tax bonuses to employees at companies getting federal bailout money and recoup most of the $165 million paid to American International Group Inc executives. AIG complied with a subpoena and provided details of bonus recipients to New York Attorney General Andrew Cuomo. But he said his office -- aware of threats made against AIG employees -- would conduct a risk assessment before releasing any names.
U.S. banks expand into commercial lending Give credit where credit is due. U.S. banks, criticized for prolonging the economic downturn by sitting on billions of dollars from the government bailout, are stepping up to the plate and gaining market share in the capital equipment financing space, according to new data from PayNet Inc. PayNet, which tracks trends in the commercial lending market, told Reuters on Thursday that banks originated 51 percent of all equipment financings in 2008, up from 43 percent in 2007. The banks accomplished that feat by effectively retreating from the market more slowly than their competitors.
Citigroup May Spend $10 Million for Executive Suite Citigroup Inc. plans to spend about $10 million on new offices for Chief Executive Officer Vikram Pandit and his lieutenants, after the U.S. government injected $45 billion of cash into the bank. Affidavits filed with New York's Department of Buildings show Citigroup expects to pay at least $3.2 million for basic construction such as wall removal, plumbing and fire safety. By the time architect's fees and expenses such as furniture are added, the tally for the offices at the bank's Park Avenue headquarters will be at least three times as high, according to a person familiar with the project who declined to be identified because he's not authorized to comment. Citigroup said the project will help it save money over time.
Americans fear losing their quality of life Americans are losing confidence in their ability to keep their current standard of living, a new national poll indicates. Thirty-nine percent of people questioned in a CNN/Opinion Research Corp. survey released Thursday morning said they're very confident they'll be able to maintain their standard of living over the next year. That's down 6 percentage points from last year. Half of all homeowners with a mortgage said they are very confident that they can continue to meet their mortgage payments, but that number is also down, by 8 percentage points, since last year. Americans' confidence in their ability to pay other debts, such as credit cards and car loans, also has dropped in the past year.
Tax Day tea parties expected to number more than 1,000 'We don't necessarily need mainstream media anymore' While WND has been tracking 170 individual tea parties across the nation, one group has announced it is planning rallies in 1,000 cities and towns on April 15. The American Family Association, or AFA, is coordinating 1,000 Taxed Enough Already, or TEA, parties to be held at 12 p.m. in front of city halls across the nation. The organization launched a Tea Party Day website just days ago so volunteer organizers may register their protests with AFA. The website also provides a list of other protests across the nation that are not organized by AFA.
American Tea Party Song by Lloyd Marcus
Credit bureau move creates 'secret' scores Credit bureau Experian's recent move means lenders can see FICO scores that you can't. That's just wrong, and the law needs to catch up with today's credit scoring practices. Experian wants to keep you in the dark. There's really no other way to characterize the credit bureau's decision to stop selling FICO credit scores to individuals as of Feb. 14. Experian pulled out of its agreement with myFICO.com, which had been the only place where consumers could buy their FICO scores from all three bureaus. Experian will continue to sell FICOs to lenders. That's big business, because the FICO is the leading credit scoring formula and the one used by most lenders. But to consumers, Experian is pretending the FICO is no big deal.
More car owners behind on auto loan Consumers straining to meet household expenses are taking longer and longer to make their car payments, increasing the risk they'll default on those loans and potentially making it harder and more expensive for everyone else to get car loans. Car loans that were 60 days past due - and likely to soon go into default - were up 17% in the fourth quarter, says Experian Automotive credit tracking. And the share of loans 60 days past due is expected to be up 40% by December, compared with the share in December 2007, TransUnion Credit says.
Auto suppliers to get $5 billion in aid The Treasury Department, trying to stabilize the battered auto industry, will provide up to $5 billion in financing to troubled auto parts suppliers who are linked to Detroit's carmakers, officials said Thursday. The funding would be made available from the government's Troubled Assets Relief Program, or TARP, said two congressional aides briefed on the plan. The administration will create a financial entity to provide money for auto parts that large suppliers have shipped to the Big Three automakers but have not yet been paid for. In a statement, Treasury Secretary Timothy Geithner said the "Supplier Support Program" would "help stabilize a critical component of the American auto industry during the difficult period of restructuring that lies ahead."
House passes bill taxing bonuses for AIG, others House passes bill to tax employee bonuses at AIG, other companies with big bailouts Denouncing a "squandering of the people's money," lawmakers voted decisively Thursday to impose a 90 percent tax on millions of dollars in employee bonuses paid by troubled insurance giant AIG and other bailed-out companies. The House vote was 328-93. Similar legislation has been introduced in the Senate and President Barack Obama quickly signaled general support for the concept. "I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated," the president said in a statement.
Congress Moves to Slap Heavy Tax on Bonuses 90% Levy for Biggest Payouts at Bailed-Out Firms Congress moved yesterday to levy punitive taxes on bonuses paid by financial firms receiving government aid, threatening to undermine federal efforts to rescue the financial system by driving away participants in the programs. A quickly assembled House bill was approved 328 to 93. It struck hard at Wall Street's compensation system, which has come under fire because of the $165 million in bonuses distributed last week by American International Group to executives of the troubled unit that helped lead the insurance giant to the brink of collapse. Under the legislation, those who received bonuses of more than $125,000 would surrender 90 percent of their payments to a special income tax.
Treasury urged no tax on bonuses Treasury Secretary Timothy F. Geithner on Thursday admitted that his staff encouraged lawmakers to take out a key provision in last month's stimulus that would have taxed executive compensation in an attempt to discourage companies such as AIG from handing out excessive bonuses while receiving billions of taxpayer dollars. "What we did is just express concern about the vulnerability of a specific part of this provision," Mr. Geithner said during an interview on CNN, confirming that his staff said retroactive penalties would spark lawsuits. Mr. Geithner continued to say that he did not know about AIG's planned $165 million in bonuses for top employees until March 10, but left room for the possibility that he had some inkling about the bonuses prior to that.
How the Fed Failed to Tell Obama About The Bonuses Federal Reserve officials knew for months about bonuses at American International Group but failed to tell the Obama administration, according to government and company officials, exposing problems in a relationship that is vital to addressing the financial crisis. As pressure mounted on AIG employees to return the bonuses, new details emerged yesterday about what the Fed, the Treasury Department and the White House knew regarding the payments and when. AIG executives said the Fed was informed three months ago by the company that it would pay $165 million by March 15 to employees working at its most troubled division. The Treasury and White House said they learned of the payments from Fed officials only days before they were due.
AIG unit sues Countrywide over loan losses AIG's United Guaranty unit alleges BofA's Countrywide misrepresented loans in Calif. lawsuit A unit of embattled insurer American International Group Inc. filed suit against mortgage lender Countrywide Financial Corp. in California federal court Thursday, alleging Countrywide misrepresented the health of loans that the company insured, resulting in massive losses. United Guaranty Mortgage Indemnity Co. filed suit in U.S. District Court, accusing Countrywide of breach of contract, fraud, negligence, and unfair competition and business practices.
Fannie, Freddie Decry Bill to Tax Bonuses Proposal Could Put Housing Recovery Programs at Risk if Employees Leave Legislation to severely tax bonuses at companies receiving government aid may imperil the Obama administration's housing recovery program by igniting an exodus of employees from Fannie Mae and Freddie Mac, employees at the companies said. The firms, which own or back half the nation's home loans, are the major players in the administration's efforts to lower mortgage rates and keep struggling borrowers in their homes by modifying distressed mortgages and preventing foreclosures. Both House and Senate versions of legislation to tax bonuses single out District-based Fannie Mae and McLean-based Freddie Mac by name. The companies, seized by the government last fall, have received about $50 billion in taxpayer assistance.
NY AG expects Merrill bonus names tonight NY attorney general expects list of Merrill bonus recipients from Bank of America tonight New York's attorney general expects to receive the names of Merrill Lynch employees who got millions in bonuses before Bank of America Corp. bought the brokerage. Alex Detrick, spokesman for New York Attorney General Andrew Cuomo, said Cuomo expected the names Thursday evening. Cuomo is investigating whether Charlotte, N.C.-based Bank of America and Merrill failed to provide proper disclosures to shareholders about the bonuses, which came just as Bank of America requested more federal aid to help it absorb losses linked to the investment bank.
Obama tells Leno he was stunned by AIG bonuses President Barack Obama told Jay Leno on Thurday that he was stunned when he learned of the bonuses that bailed-out insurance giant AIG was paying its employees. Obama told "The Tonight Show" host the payments raise moral and ethical problems - and vowed again to try to recoup the cash for taxpayers. "We're going to do everything we can to get these bonuses back", he declared. Leno asked Obama what he thought when his staff first advised him of the payments, many made to traders in the very division that brought American International Group to ruin. "'Stunned' is the word," Obama replied in a taped appearance on "Tonight." He said he found it hard to fathom how anyone would accept lavish payments in those circumstances. "People just had this sense of entitlement. We must be the best and the brightest."
Obama Received a $101,332 Bonus from AIG Senator Barack Obama received a $101,332 bonus from American International Group in the form of political contributions according to Opensecrets.org. The two biggest Congressional recipients of bonuses from the A.I.G. are - Senators Chris Dodd and Senator Barack Obama. The A.I.G. Financial Products affiliate of A.I.G. gave out $136,928, the most of any AIG affiliate, in the 2008 cycle. I would note that A.I.G.'s financial products division is the unit that wrote trillions of dollars' worth of credit-default swaps and "misjudged" the risk. The Washington Post reports a "mob effect" at A.I.G financial products division:
GM CEO says bankruptcy would cause liquidation If General Motors Corp. were forced into Chapter 11 bankruptcy protection, the company would end up being liquidated because a long bankruptcy would scare customers away, Chief Executive Rick Wagoner said Tuesday. Speaking at a breakfast in Washington, D.C., Wagoner said restructuring the company out of court would accomplish 99 percent of what could be achieved in bankruptcy, but without the risk of losing customers or the huge expense of Chapter 11.
Marc Faber We Prospered on Borrowed Money Mar-16-09 pt 1/4
Marc Faber We Prospered on Borrowed Money Mar-16-09 pt 2/4
Marc Faber We Prospered on Borrowed Money Mar-16-09 pt 3/4
Marc Faber We Prospered on Borrowed Money Mar-16-09 pt 4/4
U.S. jobless rolls swell to record 5.47 million The number of U.S. workers drawing state unemployment benefits hit another record high early this month and factory activity in the Mid-Atlantic region shrank again as the economy battles a severe downturn. The Labor Department said on Thursday that 5.47 million people stayed on the benefit rolls in the week ended March 7, up from 5.29 million the previous week and the highest on record.
As Dollar Shrinks, Oil Rises Above $50 The Federal Reserve's decision to fire up the printing presses and buy $1 trillion in debt continued to wash over world financial markets on Thursday, dragging down the value of the dollar and pushing the prices of oil and gold higher. But on Wall Street, stocks slid into negative terrain, a day after they bounced higher in response to the Fed's surprise announcement that it would purchase $750 billion in mortgage-backed securities and $300 billion in Treasury debt. Financial shares, which had pulled Wall Street higher on Wednesday, tugged markets in the opposite direction. Shares of Citigroup fell 15.6 percent, to $2.60, as the banking giant announced a reverse stock split. Bank of America, JPMorgan Chase and Wells Fargo were all lower.
The 9/11 Chronicles: Truth Rising
The Fight for States' Rights It might seem to some that our gathering today looks like an exercise in futility. Why should we bother to pay honor to an amendment that our courts, legislatures, and public administrators usually ignore or treat as mere decorative language? And why bother to remind the states, which now beg for federal grants and which run to conform to federal mandates, that the states under our founding document share with the federal branches a real right to govern? Certainly most of our states, the Commonwealth of Pennsylvania included, have no desire to take back those "powers not delegated to the United States by the Constitution nor prohibited to the States," because, put most plainly, our states have become cringingly subservient to Washington. I for one would be delighted if there were a level of government which would be willing to stand in the way of the expansion of federal power. That of course assumes that our states and their people still believed in our original constitutional principles.
Rapid Declines in Manufacturing Spread Global Anxiety Since it was founded by his great-grandfather in 1880, Carl Martin Welcker's company in Cologne, Germany, has mirrored the fortunes of manufacturing, not just in Europe but around the world. That is still true today. In a pattern familiar to industrial businesses in Europe, Asia and the United States, Mr. Welcker says his company, Schütte, which makes the machines that churn out 80 percent of the world's spark plugs, is facing "a tragedy." Orders are down 50 percent from a year ago, and Mr. Welcker is cutting costs and contemplating layoffs to prevent Schütte from falling into the red.
Union Push to Block Mexico Trucks Results in Mexican Tariffs on U.S. Product U.S. officials are assessing the cost of new Mexican tariffs that take effect Thursday in retaliation for a U.S. decision to cancel a cross-border program that gave Mexican truckers access to their northern neighbor's highways. The tariffs affect about $2.4 billion in annual trade and 89 U.S. products, ranging from fruit and wine to washing machines, according to the Mexican government. Assistant Economy Secretary Beatriz Leycegui warned the list could grow unless there is progress toward resolving the trucking dispute.
Veterans of U.S. Diplomacy Try to Revive Nuclear Arms Talks With Russia Three former American secretaries of state and a former secretary of defense were in Moscow on Thursday for informal meetings with top Russian officials in an attempt to pull relations between the United States and Russia out of a tailspin before the countries' presidents meet for the first time next month. The flurry of so-called track two diplomacy by figures outside government was another gesture of outreach to Russia. A month ago, the Obama administration sent a letter proposing a dialogue on curbing Iran's nuclear ambitions that could diminish American needs for a missile defense system in Eastern Europe. . . . Henry A. Kissinger, James A. Baker III, George P. Shultz, William Perry and Sam Nunn,
Obama reaches out to Iran, looks for engagement President Barack Obama told Iran's people and leaders that the United States wants to engage with their country and end decades of strained relationship, but not unless their officials stop making threats. Obama on Friday released a video message with Farsi subtitles that urged the two countries to resolve their long-standing differences. His video was timed to the festival of Nowruz (no-ROOZ), which means "new day." It marks the arrival of spring and is a major holiday in Iran.
Money, helicopters urged for Pakistan Civilian efforts to aid strategy against Islamists An Obama administration panel reviewing Afghanistan and Pakistan strategy will recommend "intense engagement" with Pakistan, including a massive, long-term increase in economic aid and more helicopters to fight Islamic militants, The Washington Times has learned. A participant in the 60-day review of U.S. policy said President Obama likely will announce the strategy before he leaves for Europe at the end of the month, a trip that will include a NATO summit. The participant spoke on the condition he not be named to avoid pre-empting the president. He said the strategy includes sending hundreds of additional civilians - diplomats and contractors - to aid in humanitarian and development efforts in Afghanistan. The U.S. also will ask its European allies to provide instructors for the Afghan police and will seek to expand the Afghan army from 70,000 troops at present to at least 200,000.
Homegrown Jihad 35 Terrorist training facilities in US and Pakistan protected by the US Constitution.
Bin Laden urges coup in Somalia Taped message rallies militants to oust leader Al Qaeda's chief Osama bin Laden urged Somali militants to overthrow the country's new president in a new Web posting Thursday, trying to torpedo a new push for peace in a lawless African nation where many fear al Qaeda is gaining a foothold. The 11 1/2-minute audiotape aimed to rally Islamic militants at a time when the new president, moderate Islamist Sheik Sharif Sheik Ahmed, is working to split their ranks and pull in some to support his government. For years, Islamic militant groups - including ones linked to al Qaeda - have battled the feeble U.N.-backed central government, which controls only a small part of the capital, Mogadishu.
North Korea guards detain U.S. journalist North Korean security officials have detained two Korean-American journalists who were filming across the Tumen River from the Chinese side of the border, South Korean media and diplomatic sources said on Thursday. The arrests come at a time of mounting tension on the Korean peninsula, with the North accusing the United States and South Korea of using joint military exercises which end on Friday as preparations to invade the isolated state.
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Thurs 03.19.2009
Fed to Buy $1 Trillion in Securities to Aid Economy he Federal Reserve sharply stepped up its efforts to bolster the economy on Wednesday, announcing that it would pump an extra $1 trillion into the financial system by purchasing Treasury bonds and mortgage securities. Having already reduced the key interest rate it controls nearly to zero, the central bank has increasingly turned to alternatives like buying securities as a way of getting more dollars into the economy, a tactic that amounts to creating vast new sums of money out of thin air. But the moves on Wednesday were its biggest yet, almost doubling all of the Fed’s measures in the last year.
Helicopter Ben Turns into Ballistic Missile Helicopter Ben is no longer the appropriate appellation for the Chairman of the Federal Reserve System. Under the tutelage of this former economics professor, Chairman Bernanke launched an ICBM into the market today and I will dub him ICBM Ben. The Committee voted to expand the balance sheet of the Fed by a whopping $1.150 trillion. The Fed will buy an additional $750 billion mortgages, an additional $100 billion agencies, and for the first time they have added $300 billion longer dated Treasuries to the list. The move in the market is huge, historical and hellacious.
What's Another $1.5 Trillion? The Federal Reserve announced today that they will join the central banks of England and Switzerland, printing money out of thin air to buy long-term government debt so as to keep interest rates low and boost lending in their ongoing attempt to revive an economy that is faltering badly due to an orgy of credit and debt a few years ago. Apparently the gold market and currency markets have heard the news . . . .
Sweet Revenge For Gold Bulls Gold bulls got sweet revenge yesterday when the Fed surprised everyone by announcing a shock-and-awe program to jolt the housing market back to life. Gold shot up $70, or about 8 percent, on the news after starting the day in a near free-fall. As bullish as we've been on gold, we'd anticipated this weakness the night before with the following real-time update sent out to subscribers: "In thin trading Tuesday night, by breaching the 913.90 Hidden Pivot midpoint of the pattern shown in the chart, the April contract has tripped a signal implying a fall to 886.70 is imminent." In the actual event, the futures exceeded the target by a few dollars before staging their amazing comeback.
Reflation Investing – Which Currencies Benefit? Reflation refers to policy makers’ attempts to “reflate” the economy, to prop up what many would consider a broken system. Federal Reserve (Fed) Chairman Ben Bernanke made it very clear in his March 15 interview on 60 Minutes that he will attempt to stem the tide of market forces:
Fed to buy up to $300B long-term Treasury bonds Fed will buy up to $300 billion of long-term government bonds; keeps key rate at record low The Federal Reserve announced Wednesday it will spend up to $300 billion over the next six months to buy long-term government bonds, a new step aimed at lifting the country out of recession by lowering rates on mortgages and other consumer debt. At the same time, the Fed left a key short-term bank lending rate at a record low of between zero and 0.25 percent. Economists predict the Fed will hold the rate in that zone for the rest of this year and for most -- if not all -- of next year. Fed purchases should boost Treasury prices and drive down their rates. That would ripple through and lower rates on other kinds of debt. The last time the Fed set out to influence long-term interest rates was during the 1960s.
‘Rambo Fed’ Pledges to Start Buying Treasuries to Combat Crisis By committing to buy Treasuries and double his purchases of mortgage debt, Federal Reserve Chairman Ben S. Bernanke signaled his determination to avoid a repeat of the Great Depression and his willingness to pump as much cash into the economy as needed to end the current crisis. U.S. central bankers decided yesterday to buy as much as $300 billion of long-term Treasuries and more than double mortgage-debt purchases to $1.45 trillion, aiming to lower home-loan and other interest rates. The Fed kept its main rate at almost zero and may keep it there for an “extended” time.
Bernanke Caps Treasury Yields to Cut Consumer Borrowing Rates Federal Reserve Chairman Ben S. Bernanke may have brought an end to the worst quarterly start for Treasuries since 1980 by establishing a ceiling on yields with plans to buy $300 billion in government debt. Treasuries lost 3.4 percent since December prior to yesterday’s announcement that the Fed would expand asset purchases to drive consumer borrowing rates lower, and were headed for their worst three-month period since the third quarter of 1980, when they fell 5.06 percent, Merrill Lynch & Co. index data show. Yesterday’s rally pared this year’s losses to 1.38 percent.
Treasury Secretary Facing a Defining Moment All three of President Obama’s top economic advisers were on message when they appeared Sunday on separate television talk shows. Treasury Secretary Timothy F. Geithner, they said, had concluded, based on lawyers’ advice, that he could not stop the $165 million in bonuses that the American International Group was even then doling out to hundreds of employees.
Did Geithner Lie? Time magazine is reporting that Treasury Secretary Tim Geithner may have misled Congress in his testimony about the AIG bonuses yesterday. Although Treasury Secretary Timothy Geithner told congressional leaders on Tuesday that he learned of AIG's impending $160 million bonus payments to members of its troubled financial-products unit on March 10, sources tell TIME that the New York Federal Reserve informed Treasury staff that the payments were imminent on Feb. 28. That is 10 days before Treasury staffers say they first learned "full details" of the bonus plan, and three days before the Administration launched a new $30 billion infusion of cash for AIG.
Geithner "Out Of The Loop," Resignation Talk Begins A week ago, we lost patience with Tim Geithner and called for him to be fired. He won't be fired, of course--throwing him under the bus only a month or so into his tenure would embarrass the Obama administration--but we have now heard the first public discussion of a possible resignation. Why might Tim Geithner resign? • He still has no coherent plan to fix the banking system • He has convinced no one that he's the right man to lead us out of this. • He helped design the past administration's failed bailouts • He was the architect of the original AIG bailout • He tacitly helped cover up the AIG "counterparty" bailout beneficiaries for 6 months • He approved the latest round of AIG bonuses last week (according to AIG)
Geithner's mistake NO BONUS restrictions before last bailout to AIG!! During a press conference Monday, White House spokesman Robert Gibbs said that the administration is looking into whether "taxpayer protection can be added" to rules regarding the drawing down of the latest $30 billion loan slated for AIG. Gibbs placed the blame on the Bush administration. He said Monday that the Obama administration is dealing with contractual obligations and responsibilities "we found when they gave us the key to the front door."
What if the government bailed out of the bailouts? Live or let die? What would happen if US pulled the plug on bailed-out companies What if the government got out of the bailout business? The idea certainly seemed all right with throngs of Americans who were outraged by news that American International Group paid out millions of dollars in executive bonuses after it was rescued with taxpayer cash. But would no bailout be even worse? Financial analysts and federal officials have warned that doing nothing to save AIG -- or banks or the auto industry -- would be a catastrophe, an economic domino effect of bank losses, stock market chaos and job cuts. No one -- at least no one in the government -- has the stomach for that. Here's what might happen if companies deemed "too big to fail" were allowed to do just that.
A Test of Wills Last weekend, Ben Bernanke took an unprecedented gamble for a sitting Fed Chairman: he granted a long-form interview to 60 Minutes, America's most watched news program. There can be no doubt that the interview came about as the result of a coordinated strategy between the Obama Administration and the Federal Reserve. But was the decision to offer the public a rare look at the inner workings of the central bank an act of resolution or desperation? In the interview, Bernanke stressed the importance of political will to end the current crisis. No doubt Bernanke himself hoped that his candor alone would serve as a representation of that will.
Is Obama Designing the End of Capitalism? Amid all of the mixed messages on the strength of the economy coming from the White House, one theme has emerged loudly, clearly, and unvaryingly: The American economic system is about to undergo a profound shift. “Never allow a crisis to go to waste,” President Obama’s chief of staff Rahm Emanuel famously stated. “Never waste a good crisis,” concurred Secretary of State Hillary Clinton. Americans, said Obama, should “discover great opportunity in great crisis.” What kind of opportunity? “Capitalism,” Secretary of the Treasury Tim Geithner said last week, “will be different.”
Obama's War on Recovery Obama came to power with the idea of repeating the storybook-view of FDR's presidency and how he saved us from the Great Depression. Had he and his friends read the history more carefully, he would have seen how FDR did nothing of the sort. His policies waged war on recovery, perpetuating the problem he said he was solving. And there is another respect in which the official history obscures the real history: it is believed that FDR unseated the capitalist class from their seats of power, and turned public policy toward the common man. In fact, the reality then looked like the reality now. The bailouts, the monetary inflation, the crazed spending, and the regulations ended up cartelizing the economy on behalf of powerful and well-connected industrial giants.
Consumer Prices in U.S. Increase More Than Forecast The cost of living in the U.S. rose more than forecast in February, easing concern that the inflation rate will fall below the Federal Reserve’s preferred level. The consumer price index rose 0.4 percent after a 0.3 percent increase in January, the Labor Department said today in Washington. Excluding food and fuel, the so-called core rate climbed 0.2 percent for a second month. Fuel, clothing and automobile costs led the advance last month. The gains last month pushed the annual inflation rate up to 1.8 percent, within the range that most Fed officials define as their objective. Some central bankers, including St. Louis Fed President James Bullard, have warned about the risk of deflation, a pattern of prolonged price declines that would hurt profits, make it harder to repay debt, and worsen the recession.
Federal Reserve says let's Twist again after 48 years The Federal Reserve on Wednesday flashed back almost 50 years to a campaign code-named "Operation Twist", as it announced the purchase of longer-dated Treasury securities to help end a deepening U.S. recession. In a decisive escalation in its campaign to restore growth, the Fed said it would buy up to $300 billion of longer-dated Treasuries over the next six months and buy another $850 billion of mortgage securities. Economists said the bold move was warranted by a worsening economic outlook, but also carried the risk of inflation in the future, unless the Fed was very careful.
Government Involvement Ruins Education & Health Care
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