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
Gold & Treasury Feeder System US TREASURY BONDS AS COMPETITOR FOR GOLD Dogs and cats are mortal enemies in the animal world. In the insect world, ants and termites are mortal enemies. In the financial world, gold and USTreasury Bonds are mortal enemies. They compete for the revered role of safe haven for funds. In today’s day and age, with numerous storms, some unprecedented, safe haven is especially valuable. One of the most important jobs for the USFederal Reserve, JPMorgan (its agent), and the USCongress is to create the impression that USTreasurys are indeed not only safe, but beyond reproach and free from any hint of default potential. In recent months, with a failure of many important US-based financial engines, and sharp economic decline, made more complex by mammoth commitments from the USGovt on rescues and stimulus, the pristine image of USTreasurys has suffered from severe tarnish.
Fed scopes out options with key rate near zero Federal Reserve scopes out options to revive economy with key rate near zero With a key interest rate already near zero, Federal Reserve policymakers are weighing what other tools they can use to jolt the country out of recession. Fed Chairman Ben Bernanke and his colleagues resume their two-day meeting Wednesday, and at its conclusion they are all but certain to leave a key bank lending rate at a record low to try to bolster the economy, which has been stuck in a recession since December 2007.
The Real AIG Scandal By Eliot Spitzer It's not the bonuses. It's that AIG's counterparties are getting paid back in full. Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars? For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold.
The Fix Is in at AIG “Stone him to death!” No kidding. Dilapidation may be coming back into style. That’s what one of Madoff’s victims proposed in front of the courthouse. We’re in the “anger” stage, writes John Authers in the Financial Times. No more denial…now, people want blood. After the South Sea Bubble blew up, in the 18th century, the Walpole government was faced with similar anger. It seized the property of the company’s directors and used it to pay off the victims. Then, a resolution was proposed in Parliament by which the bankers involved in the scandal would be tied up in sacks filled with snakes and tipped into the Thames River. So far, Congress has not proposed stoning Fannie Mae or sending AIG directors to the bottom of the Potomac. But it must be warming to the idea. “Congress is looking for heads to cut off,” says the French press. One member of Congress – Senator Grassley – retreated from his call for AIG executives to commit suicide. It would be all right with him if they just showed a little contrition, he says now.
Dodd to give back AIG contributions When it comes to donating to politicians and filling their coffers, bonus-and-bail-out embattled American International Group Inc.'s Financial Products unit in Wilton has a stimulus record of its own, providing Sen. Christopher Dodd's presidential campaign with more than $103,000 during the 2008 election cycle. AIG's contributions to Dodd outpace the financial firm's $101,000 contribution to President Barack Obama's election bid. Altogether, AIG executives raised $630,000 during the past election cycle, according to the Center for Responsive Politics, as the company was coming under fire. At least $120,000 of those contributions were made after September when Congress awarded AIG the first $85 billion of its federal bailout money.
AIG bonuses go to people that screwed this thing up Barney Frank told NBCs Meredith Vieira that he outraged by bonus that AIG will pay out to executives. These people may have a right to their bonuses, they don't have a right to their jobs forever. The federal government is now an 80% owner. one of the things we can do to make sure this doesn't happen again, he said. Weve got people who are so irresponsible. It does appear were rewarding incompetence. Forget about the legal matter. These bonuses are going to people who screwed this thing up enormously, who made terrible decisions, said Frank.
We’ve heard America ‘loudly and clearly’ Some AIG bonuses already repaid; Congress to vote on tax Under intense pressure from the Obama administration and Congress, the head of bailed-out insurance giant AIG declared Wednesday that some of the firm’s executives have begun returning all or part of bonuses totaling $165 million. Edward Liddy offered no details, and lawmakers were in no mood to wait. He was still fielding their questions when House Democratic leaders announced plans for a vote Thursday on legislation to tax away 90 percent of the extra pay for executives at AIG and many other bailed-out firms.
AIG Firestorm Raises Alarm For Other Firms The firestorm over bonuses paid by insurance giant American International Group has triggered alarm at other financial firms, threatening federal efforts to draw private investors into economic recovery programs. It is a critical juncture for the Obama administration. Officials at the Federal Reserve and the Treasury Department are increasingly worried that the controversy could discourage investors from joining a new government effort to revive consumer lending as well as a separate plan that relies on private money to buy toxic assets from banks, sources familiar with the matter said. Treasury officials planned to outline that second program as early as this week.
Buffett Is Unusually Silent on Rating Agencies Mr. Buffett, known as the Oracle of Omaha, owns a stake of roughly 20 percent in the Moody’s Corporation, parent of one of the three rating agencies that grade debt issued by corporations and banks looking to raise money. In recent months, Moody’s Investors Service and its rivals, Standard & Poor’s and Fitch Ratings, have been prominent in virtually every account of the What Went Wrong horror story that is the financial crisis. The agencies put their seals of approval on countless subprime mortgage-related securities now commonly described as toxic. The problem, critics contend, is that the agencies were paid by the corporations whose debt they were rating, earning billions in fees and giving the agencies a financial incentive to slap high marks on securities that did not deserve them. At least 10 of the big companies that failed or were bailed out in the last year had investment-grade ratings when they went belly up — like deathly ill patients bearing clean bills of health.
US current account deficit falls sharply in 2008 US current account deficit drops sharply in 2008 for second straight year The deficit in the broadest measure of U.S. trade fell sharply in 2008 for the second consecutive year, due partly to a larger surplus in services trade. The Commerce Department reported Wednesday that the current account deficit, which includes investment flows and other transfers as well as trade, dropped 7.9 percent to $673.3 billion in 2008 from $731.2 billion in 2007. Economists expect the improvement in the U.S. current account to continue this year, but mostly due to rapid falls in imports as the recession cuts into U.S. consumers' buying power. Exports are also falling as the global economy slows, eliminating what had been a crucial source of sales for U.S. manufacturers early last year.
Mortgage rates likely to sink on Fed actions Analysts expect rates will fall 0.25 to 0.5 percentage points this week If you've got a good job, solid credit and your home's value hasn't fallen dramatically, you're likely to benefit from the Federal Reserve's extraordinary action Wednesday to help drive mortgage rates to historic lows and revive the U.S. housing market. The Fed's plan to buy up to $300 billion of long-term government bonds and $750 billion in additional mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac, should benefit many - but not all - borrowers.
Madoff accountant charged with fraud David Friehling arrested, accused of helping Madoff defraud thousands Bernard Madoff's longtime accountant was arrested on fraud charges Wednesday, accused of aiding the man who has admitted cheating thousands of investors out of billions of dollars in the past two decades. The charges against David Friehling, 49, come as federal authorities turn their attention to those who they believe helped Madoff fool 4,800 investors into thinking that their longtime investments were growing comfortably each year. Friehling is the first person to be arrested since the Madoff scandal broke three months ago.
The Lurking China Money Deal The G20 needs a deal. It doesn’t make much sense to pull 20+ global leaders together on April 2nd unless you can announce an agreement with some bearing on the current worldwide slump. One more meaningless communique might not go down well with the markets. You can always trot out the same platitudes, but the world’s best journalists will be in attendance and it would be much better to have something concrete on display. Time is running out for the deal makers. There appear to be no grounds for the US and Europe coming together in a meaningful way on fiscal policy: the US wants everyone to commit to some (universal?) target; the Europeans either really don’t want that (Germany) or rightly feel they can’t afford it (most of the rest of the EU). Regulatory agendas intersect but only at the general level of, “we should do better” and ”it was your banks that got us here” - the AIG (AIG) counterparties list make it clear that already-regulated large institutions in both the US and Europe are the problem. And the US Administration is waiting for Congress on regulation - this will take 6 months or more to sort out.
Gold, Gossip & Russia's Tu-160 Bombers "Germany in 1944 could buy materials during the war only with gold. Fiat money in extremis is accepted by nobody..." - Sir Alan of Greenspan, May 1999 FOR A WORLD-LEADING CLEARER turning over $60 billion per day, London's wholesale gold market sure spooks easy sometimes. "I've just heard central banks have been selling. You hear anything?" asked one breathless contact of BullionVault on Wednesday...just before the Federal Reserve's $1.25 trillion shot in the arm gamed the gold price so hard, so fast, the perma-bulls at GATA should demand a Congressional hearing into Ben Bernanke's long Comex position. More often than not, however, professional dealers get all aflutter about rumors of central-bank buying, not selling. In late 2008, it was supposed to be the Saudis. Last month it was the Russians – or so gossip claimed. Gossip that the Kremlin was only too happy to buoy.
G-20 Russia put the ideas and now Russia must decide USA or Iran
Japan & “Where’s The Beef”? Clearly Japan and the yen meet the criteria for modern, major, and symbolic. How about the domestic purchasing power of its currency uncontrollably growing at a rapid rate over a sustained period, despite the best efforts of the nation to stop this rapid deflation? After all, that is the very heart of the deflationist case for the US: that collapsing availability of credit will shrink both the volume and velocity of money, creating a rapid, powerful deflation that the government will be powerless to fight. Is that what happened in Japan? (Or anywhere else, ever, with a symbolic currency?)
I.B.M. Said to Be in Talks to Buy Sun for $7 Billion I.B.M. is in talks to buy Sun Microsystems in a proposed deal valued at nearly $7 billion, a person with knowledge of the negotiations said on Wednesday. The merger, if completed, would mark a big consolidation step in the market for server computers used in corporate data centers — and one that could prompt an antitrust challenge. Together, the two companies would have about 65 percent of the market for server computers running the Unix operating system and 42 percent of the total server market. A combination of I.B.M., based in Armonk, N.Y., and Sun, based in Santa Clara, Calif., would bring together two companies with a large commitment to research and development spending and open software development. I.B.M.’s annual research and development budget is $6 billion, while Sun’s is $3 billion.
Obama Will Send Federal Agents to Combat Border Violence The Obama administration plans to send reinforcements to the Southwest border to help contain the rampant violence of the Mexican drug cartel wars. Thirty-seven agents from the Bureau of Alcohol, Tobacco and Firearms are being deployed to the region. An official familiar with the plan said the Immigration and Customs Enforcement Agency is considering reassignment of at least 90 officers to the border. The official requested anonymity because the plan has not yet been announced. The deployments are part of President Barack Obama's first moves to boost federal security sources on the U.S. side of the border.
Obama about to make a BIG mistake in Pakistan U.S. Weighs Taliban Strike Into Pakistan President Obama and his national security advisers are considering expanding the American covert war in Pakistan far beyond the unruly tribal areas to strike at a different center of Taliban power in Baluchistan, where top Taliban leaders are orchestrating attacks into southern Afghanistan. According to senior administration officials, two of the high-level reports on Pakistan and Afghanistan that have been forwarded to the White House in recent weeks have called for broadening the target area to include a major insurgent sanctuary in and around the city of Quetta. target="_blank" Obama Blasted for Diverting Money From Armed Pilots Program A Second Amendment group is blasting the Obama administration for quietly seeking to end the program that allows pilots – after special training -- to carry guns in the cockpit. The move will make air travel more vulnerable to terrorist attacks, something that should outrage travelers, said the Citizens Committee for the Right to Keep and Bear Arms (CCRKBA) said.
The Future With Obama Pt. 1
The Future With Obama Pt. 2
Kansas Lawmakers Approve Ultrasound-Before-Abortion Bill Kansas legislators approved a pro-life bill Tuesday that would ensure that women and girls seeking abortions are able to see ultrasound images or hear their fetus' heartbeat before the procedure. The bill now needs the approval of Gov. Kathleen Sebelius, who has repeatedly vetoed anti-abortion bills in the past. Anti-abortion groups are opposing her appointment by President Barack Obama to serve as U.S. secretary of health and human services, but the bill's backers are hopeful she'll sign it to ease her confirmation in the Senate. "I think there's an awfully good chance, for a variety of reasons, that she'll sign this bill," said Kathy Ostrowski, a lobbyist for the anti-abortion group Kansans for Life. "It's the right thing to do, but politically, it's probably very helpful to her to sign this bill."
Economic woes slow US migration to Sun Belt region Credit crunch, economic woes slow US migration to housing bubble magnets in South and West Strapped by the nation's economic crisis, fewer Americans are migrating to Sun Belt hot spots in Nevada, Arizona and Florida, instead staying put for now in traditional big cities. Census data released Thursday highlight a U.S. population somewhat locked in place by the severe housing downturn and economic recession, even before the impact of rippling job layoffs after last September's financial meltdown.
‘Stop-Loss’ Will All but End by 2011, Gates Says Defense Secretary Robert M. Gates said Wednesday that, over two years, he would all but eliminate an unpopular practice that has prevented tens of thousands of active-duty soldiers and reservists from leaving military service on time if they were scheduled to deploy to Iraq or Afghanistan. More than 13,000 soldiers remain unable to exit the military under the policy, known as stop-loss, which was put in effect after the attacks of Sept. 11, 2001, and then expanded in 2004 as the Army struggled to sustain two large war efforts.
After Gaza, Israel Grapples With Crisis of Isolation Israel, whose founding idea was branded as racism by the United Nations General Assembly in 1975 and which faced an Arab boycott for decades, is no stranger to isolation. But in the weeks since its Gaza war, and as it prepares to inaugurate a hawkish right-wing government, it is facing its worst diplomatic crisis in two decades. Examples abound. Its sports teams have met hostility and violent protests in Sweden, Spain and Turkey. Mauritania has closed Israel’s embassy. Relations with Turkey, an important Muslim ally, have suffered severely. A group of top international judges and human rights investigators recently called for an inquiry into Israel’s actions in Gaza. “Israel Apartheid Week” drew participants in 54 cities around the world this month, twice the number of last year, according to its organizers. And even in the American Jewish community, albeit in its liberal wing, there is a chill.
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Wed 03.18.2009
Gold Buying Opportunity Of A Lifetime . . . .The value of currencies is subject to speculators wagering enormous sums in foreign exchange markets, markets which exploded from negligible amounts in 1973 to trillions now bet daily on what paper money may or may not be worth. This is the one bet that bankers need to keep in play, the belief, however false it may be, that government coupons, printed in whatsoever denominations or amounts in whatever sizes and colors and not backed by anything of value, are actually money; an idea that becomes more and more absurd with each passing day and each new crisis. The need to maintain this charade in order to maintain the power of government and profits of bankers offers the one truly golden opportunity of this crisis - that of buying gold at below market prices. Gold prices are manipulated by central banks. As the value of paper assets and paper profits fall, the lure of gold threatens the ability of bankers to keep investors believing their paper currencies, paper assets and paper promises are worth more than the paper they are printed on.
Consumer prices rise 0.4 percent in February Consumer prices rise in Feb. by largest amount in 7 months as gasoline, clothing prices jump Consumer prices rose in February by the largest amount in seven months as gasoline prices surged again and clothing costs jumped the most in nearly two decades. But the increase appeared to ease many economists' concerns about dangerous price movements in either direction. The recession is expected to dampen any inflation pressures for at least the rest of this year, while the slight uptick in prices over the last two months also has made the possibility of deflation more remote.
Sending Your IRA Gold on an Overseas Vacation . . . . What about having your IRA hold gold offshore? It can be done, but before you go to the trouble, ask why. Your IRA would still be subject to U.S. law, and your IRA custodian would still be in the U.S., regardless of where the assets are. One possible reason is protection from future creditors, especially of the lawsuit variety. If your IRA exceeds a million dollars, or if you live in the wrong state, or if you inherited the IRA, it may be available to anyone who successfully sues you. There are some rather complex arrangements that can move IRA assets (gold or anything else) offshore and make them far more difficult for a creditor to reach. But if that's your motive, we'd think twice about the loss of control that such programs involve.
There’s No Place Like Gold I was captivated by the Wall Street Journal headline “Bearish Big Investors Catch Gold Bug” by Gregory Zuckerman, because I don’t ever expect to see anything favorable about gold in the WSJ since it is concerned primarily with providing information and news about stocks and bonds so that you will be motivated to constantly buy and sell stocks and bonds. So I was surprised to read where it starts out with, “Large investors, including some who anticipated deep troubles for the housing and financial sectors, have been buying gold, concerned that moves by governments world-wide to shovel money at problem areas could cripple leading currencies.” This is exactly true! That is exactly why I am buying gold, and why smart people are buying gold and why large investors are buying gold!
Gold, Dollar & Stock Market Update The something interesting going on continues, and recalls the old saying "The US dollar is as good as gold." Admittedly, this prevailed long after policymakers became corrupt, but as "sound as a dollar" could be coming back, as well. If so, it would be confounding to the evil ambitions of central bankers. As we wrote in 2007, the worst thing that could happen would be a stronger dollar. After all, the panacea of policymaking has been to depreciate the dollar. In the typical post-bubble condition, the senior currency becomes chronically strong relative to most currencies and most commodities, for most of the time.
Gold slips on Wall St. rally, U.S. housing data Gold fell on Tuesday as a rally on Wall Street and a surprise surge in U.S. housing starts reduced the precious metal's appeal as a safe haven investment. However, fresh flows into exchange-traded funds showed investors' appetite for bullion remained sharp and that should prevent further declines, traders said. Spot gold was at $916.00 an ounce at 2:19 p.m. EDT, down 0.7 percent from its last quote $922.55 in New York late Monday.
US$6,948 gold would support greenback Just how high could the price of gold go? Really high, according to analyst Daniel Brebner and others at UBS Securities. They plotted out a number of scenarios using various levels of strength for inflation and the U. S. dollar, and predicted that gold will not fall below US$500 an ounce between now and 2015, and could rise to US$2,500. To get there would require inflation at 1970s levels and a weak U.S. dollar, UBS said. The bottom end of the range would require static inflation and a strong U. S. dollar. There is one other possibility UBS raises: what if a new gold standard was adopted to support currencies, particularly the U. S. dollar? Using the current value of the U. S. monetary base and the country's reported gold holdings, UBS calculated gold would need to be at US$6,948 to support the value of the U. S. dollar.
Paulson Buys Stake in Gold Miner for $1.28 Billion The billionaire hedge fund manager John Paulson is bullish on gold. His investment firm, Paulson & Company, bought an 11.3 percent stake in the South Africa-based gold mining company AngloGold Ashanti from Anglo American for $1.28 billion. Anglo American said Tuesday that the Paulson funds paid $32 a share for its stake in AngloGold. . . . . “As the world deals with the global economic crisis, the value of gold as the only true ‘hard currency’ is coming to the fore as evidenced by the investment choices of some of the world’s most seasoned investors,’’ said Mark Cutifani, AngloGold’s chief executive.
Main Street vs. Wall Street: And the Winner Is… Last Sunday, Fed Chairman Ben Bernanke jumped into the Public Relations Politics foray when he appeared on 60 Minutes. The political marketers were out in full force on this one. They did everything from the visit of Bernanke’s childhood home (which is now in foreclosure) to the close up of “Main Street” sign to the conversation on the street side bench in rural South Carolina. It was the perfect image of “I’m like you” kind of PR the government decision-makers are looking for right now. They want to be trusted again. And they’re pulling out all the stops to get back into the public’s good graces after scaring everyone to get the $787 billion stimulus package pushed through. Then add to that the AIG bonus debacle.
Bernanke May Need to Ramp Up Fed’s Asset Purchases Chairman Ben S. Bernanke and Federal Reserve policy makers may have to ramp up their purchases of mortgage securities and other assets after the economy and job market deteriorated further since they last met. The Federal Open Market Committee, gathering today and tomorrow in Washington, needs to redouble its efforts after the central bank’s balance sheet shrank 17 percent from a $2.3 trillion December peak, Fed watchers said. The retreat came even as Bernanke acknowledged the chance that the unemployment rate will exceed 10 percent for the first time in a quarter century.
Earmarks Don't Add Up by Ron Paul Earmarks seem to be the hot topic this week, and as a fiscal conservative I am dismayed so many people deliberately distort the earmarking process and grandstand to make political points. It is an easy thing to do with earmarks. It takes a little more time and patience to grasp the reality of what earmarks really are. To be sure, if earmarks were the driving force behind explosive government spending as some have been led to believe, that would be a good reason for all the fuss. The misconception seems to be that members of Congress put together a bunch of requests for project funding, add them all together and come up with a budget. The truth is, it is not done that way. The total level of spending is determined by the Congressional leadership and the appropriators before any Member has a chance to offer any amendments. Members’ requests are simply recommendations to allocate parts of that spending for certain items in that members’ district or state. If funds are not designated, they revert to non-designated spending controlled by bureaucrats in the executive branch.
US tells China its bond investments are safe - 14 Mar 09 The White House has reassured China that its hundreds of billions of dollars in US bond investments are safe, despite the global economic crisis. Wen Jiabao, the Chinese prime minister, has called on Washington to ease worries about the security of those assets.
Market rally just misguided optimism Don't get excited about the past week's rally. The bear market's keys -- tumbling demand and the death of credit securitization -- aren't likely to improve soon. Stocks scorched the sky in impressive fashion last week, starting with a 379-point Dow rocket Tuesday and proceeding with the sort of jubilant, eat-my-shorts swagger that has characterized the start of many new bull markets of the past. Bravo, well done, and quite a relief. But enough to signal an end to the 17-month capital attack that has blown up $50 trillion in market value and blistered many investors' professional reputations? Not a chance, as well-armed bears in police uniforms are just itching to give out tickets to investors trying to break the laws of financial gravity.
Wall Street resumes rally following housing report Stocks regain momentum after better-than-expected housing report; Dow jumps 179 points You know things have changed on Wall Street when the housing industry saves the day. A surprise government report that home construction picked up in February caught traders off guard and injected a week-old stock market rally with new energy Tuesday. Stocks of homebuilders and banks jumped as bullish investors saw yet another sign that the deeply troubled economy was beginning to show signs of stabilizing.
After Bitter Winter, Brace for Spring Meltdown, Unpredictable Summer and Ferocious Fall . . . . First we sold-off, now we see the Obama Bounce underway. The bounce we expected a few of weeks ago did not occur quite on time but its beginnings are shining through. It’s been pretty bad. It’s been all selling, everything sinking. We’ve been waiting for that much-delayed rally to begin and perhaps last as long as two to eight weeks. The final duration is difficult to determine due to a number of other problems in the markets. But, then after a rally, which could continue from mid-March until early May, we are looking for a very large sell-off in most of the markets. . . . . . This sell-off includes office buildings and malls. Many of those loans are going bad. We’ll actually see giant shopping malls in America closing up. Three weeks ago, some 73,000 retail stores had closed so far this year; Howard Davidowitz, the retail analyst, is projecting another 273,000 more. That’s shocking. There’s no money.
Jim Rogers Expect Civil Unrests in the US and all around the World pt 1/4 Mar 17-09
Adding Up A.I.G.’s Backdoor Bailouts Of the $170 billion in government funds used to prop up American International Group, a large chunk has gone to buy soured securities — at full price — from big banks like Goldman Sachs. Though it was somewhat lost amid the public howls of protest over the $165 million in bonuses A.I.G. just paid to employees, A.I.G. also released previously confidential information about how some of its bailout money was used. Part of the cash went to buy securities from banks, which allowed A.I.G. to rip up derivative contracts that were threatening to bring down the firm. A.I.G., under the direction of the government, decided to purchase the toxic securities at par, or full value, instead of at current market prices. The difference — about $30 billion, according to the A.I.G. data — could be seen as a backdoor bailout for banks that held the securities. Without A.I.G as a backstop or other hedges in place, those financial institutions would presumably have had to write-down those securities on their books.
AIG Political Contributions by Subsidiaries Questioned in N.Y. Major corporations based in New York such as American International Group Inc. have legally contributed many times more than the corporate limit to political candidates who regulate their businesses, state and good-government officials said. In the case of AIG, the insurance giant is limited to giving $5,000 (euro3,951) to a candidate. But the parent company used 33 subsidiaries in recent years to give $335,000 (euro264,738) to three-term Republican Gov. George Pataki; $50,000 (euro39,513) to Attorney General Eliot Spitzer, the Democratic front-runner for governor; and $25,000 (euro19,757) to Democratic Comptroller Alan Hevesi, according to The New York Times.
Of Bailout and Bonuses, Scrutinizing AIG Spending - Financial reporter Gretchen Morgenson explains how AIG has spent its bailout money. Big banks, insured through AIG, are getting 100% reimbursement for toxic assets, with bailout funds funneled through AIG
Campaign Contribution to Congress by AIG Dodd, Christopher J (D-CT) - $104,300 Obama, Barack (D-IL) - $45,111 McCain, John (R-AZ) - $41,200 Clinton, Hillary (D-NY) - $36,831 Baucus, Max (D-MT) - $24,750 Biden, Joseph R Jr (D-DE) - $19,975 Romney, Mitt (R) - $19,950 Sununu, John E (R-NH) - $15,950
AIG bonuses: 73 top $1 million NY Attorney General Andrew Cuomo unveils details of AIG bonuses, including $6.4 million for the top recipient. No names revealed. Bailed-out insurer American International Group gave 73 of its employees bonuses of more than $1 million each, according to a letter that New York state Attorney General Andrew Cuomo sent Congress on Tuesday. In a letter to House Financial Services Committee Chairman Barney Frank, D-Mass., Cuomo said that the $160 million that AIG issued this year to its Financial Products employees included one bonus that was as high as $6.4 million. The financial products division wrote the insurance contracts on high-risk mortgage-backed securities that eventually brought AIG to its knees.
AIG Bonuses Unleash Political Pounding, Threats of Higher Taxes American International Group Inc. faced a rhetorical pummeling from lawmakers and a concrete threat of increased federal taxes over its payout of executive bonuses even as it took four taxpayer-funded bailouts. Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said today he may impose “the highest excise tax” sustainable in court on bonuses at New York-based AIG and other companies that receive federal aid. At least four other pieces of similar legislation were also announced.
AIG set aside $57 million in “retention” pay for employees who will be dismissed American International Group Inc. faced a rhetorical pummeling from lawmakers and a concrete threat of increased federal taxes over its payout of executive bonuses even as it took four taxpayer-funded bailouts. Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said today he may impose “the highest excise tax” sustainable in court on bonuses at New York-based AIG and other companies that receive federal aid. In the House of Representatives, Speaker Nancy Pelosi said she has directed committees there to draft similar legislation this week.
Outcry Builds in Washington for Recovery of A.I.G. Bonuses Senate Democratic leaders demanded on Tuesday that the insurance giant American International Group reverse the $165 million in bonuses that the firm had paid to executives after receiving more than $170 billion in bailout money. Alternatively, lawmakers said they would seek to reclaim the money by adopting new tax legislation. The demand by Senate leaders, made in a letter to the chief executive of A.I.G., Edward Liddy, came as lawmakers in both parties raged against the insurance company. There was angry finger-pointing across Washington on Tuesday, as Congress, the Obama administration and the Federal Reserve all sought to avoid blame.
‘Resign or Commit Suicide,’ Republican Senator Tells AIG Executives Iowa Sen. Charles Grassley suggested on Monday that AIG executives should take a Japanese approach toward accepting responsibility for the collapse of the insurance giant by resigning or killing themselves. The Republican lawmaker's harsh comments came during an interview with Cedar Rapids, Iowa, radio station WMT. They echo remarks he has made in the past about corporate executives and public apologies, but went further in suggesting suicide.
Jim Rogers Expect Civil Unrests in the US and all around the World pt 2/4 Mar 17-09
Will automatic annual pay raises for Congress continue? Pelosi Won't Say if She Supports Reid's Proposal to Repeal Automatic Annual Raises for Congress. House Speaker Nancy Pelosi (D.-Calif.) is not saying whether she supports a bill sponsored by Senate Majority Leader Harry Reid (D.-Nev.) that would repeal the law that gives members of Congress an automatic pay raise every year without the members having to cast a vote on it. Without Pelosi's support, and the willingness of House Democratic leaders to bring the bill up for a vote, automatic annual pay raises for Congress will continue.
Two major problems: Banking Crises and Big Recession in Progress
The U.S. Government has three major programs going that are all inflationary. Bank Bailouts, Stimulus Package, Bloated Budget Package.
All three programs are mostly inefficient, wasteful, and will require massive amounts of new money and credit injected into the economy. New estimates are now $4-5 trillion.
First four months U.S. Budget deficit was $569 billion.
Unemployment over 8%
All bailouts and taxpayer funded programs take money from people who would otherwise spend it themselves; therefore government programs (usually pet programs) are not needed and mostly inefficient. 8,000 plus earmarks on the budget and stimulus package alone.
New Deal economics was a huge blunder – similar programs today. Roosevelt raised taxes to 90%. AAA (Agriculture Adjustment Administration) paid farmers not to grow crops and by 1935 we were importing corn, wheat and cotton. Digging a hole and filling it up is work but not good economic policy - GDP increases from the wages but no real wealth is created. . . . .
Citi’s chief economist to join Treasury Lewis Alexander, Citigroup’s chief economist, is leaving the bank to join the US Treasury department, according to a memo Citibank sent out on Tuesday. Mr Alexander will work as an advisor to Timothy Geithner, US Treasury secretary, on domestic financial issues. Prior to joining Citigroup in 1999, Mr Alexander worked in the International Finance division of the Federal Reserve Board in Washington. Mr Alexander’s appointment comes as Wall Street and Washington have grown frustrated by the slow pace of appointments at the Treasury.
Bear's end? Wishing won't make it so Last week's rally tempted many to believe that the market has bottomed. Maybe some stocks have hit their lows, but there are many reasons to proceed with caution. No doubt, long-suffering bulls will proclaim the stock market's bravura March 10 performance as proof that the bottom is in. The bears will beg to differ, citing the insufficient capitulation in evidence. I seriously doubt that stocks have seen their final low. When we get to a really recognizable lowest point, I don't think we'll need to reach for a magnifying glass or devise a tricky way to analyze it. As market commentator Justin Mamis points out about the 1982 market low:
One set of rules Goldman risks TARP money to protect business model Goldman Sachs is risking Tarp rage to protect its business model. The bank is lending up to 1,000 cash-strapped employees money to meet their capital calls to its funds. Doing so after taking funds from the US government’s Troubled Asset Relief Programme, rather than using the largesse to increase lending, sounds like a recipe for a public relations disaster. But it may be essential if Goldman is to make sure that third parties in its funds follow through on their own commitments. Like investors everywhere, some of Goldman’s finance gurus are having money problems. Since Goldman and its employees’ investments typically make up to a third of the equity in a Goldman buyout fund, that’s a big problem. Having its own employees unable – or unwilling – to meet their commitments could set a precedent for outside investors who might like a justification for walking away.
The Real Ponzi Scheme – "Unreal Interest Rates" Recently, former chairman of the Federal Reserve – Alan Greenspan – penned an editorial, "The Fed Didn’t Cause the Housing Bubble". It was published in The Wall Street Journal March 11, 2009. In the article Mr. Greenspan attempts to blame today’s global financial crisis on "too-low mortgage rates" between 2002 and 2005 which led to a real estate bubble. . (see Greenspan quote online) . . Greenspan’s statement that the Federal Reserve only controls short term rates [Fed Funds Rate] is false. So is his claim that long term rates were determined by excess savings in foreign lands – beyond the purview of the Fed: . . .
Jim Rogers Expect Civil Unrests in the US and all around the World pt 3/4 Mar 17-09
Health care reform likely $1.5 trillion Guaranteeing health insurance for all Americans may cost about $1.5 trillion over the next decade, health experts say. That's more than double the $634 billion 'down payment' President Barack Obama set aside for health reform in his budget, raising the prospect of sticker shock at a time of record federal spending. Administration officials have pointedly avoided providing a ballpark estimate, saying it depends on details to be worked out with Congress. The White House had no immediate response to questions Tuesday.
Caterpillar jobs bulldozed Stimulus plan can't stop cuts at heavy equipment maker Caterpillar Inc. of Illinois on Tuesday announced nearly 2,400 layoffs despite President Obama using his home state's company as an example of a struggling manufacturer that would benefit from his economic stimulus plan and save jobs. The new round of job cuts will span five plants in Illinois, Indiana and Georgia, and follows the January news that Caterpillar, the world's largest maker of mining and construction equipment, would slash 22,000 people from its 112,000-person work force. Mr. Obama hosted an event in support of his stimulus plan at the company's Peoria, Ill., headquarters in mid-February, saying the $787 billion stimulus would be "a major step forward on our path to economic recovery."
Gas tax hike looks good to GM chief In a surprising turnabout, General Motors Chief Executive Rick Wagoner said Tuesday that increasing the federal gasoline tax to guarantee a minimum price of $4 a gallon is an idea "worthy of consideration." Few industries have been more vigorously opposed to hiking the gas tax than automakers. But GM, which is betting its future on high-priced, energy-efficient cars, has switched its historic view and is now open to the federal government setting a new, higher floor on fuel, which would act as an incentive for consumers to buy hybrid and electric cars. "It's great that smart people are talking about ideas to conserve energy," Mr. Wagoner told reporters on Tuesday. He was referring to recent comments by Michael Jackson, the chief executive of AutoNation, who recommended a huge increase in the gas tax to encourage American consumers to buy fuel-efficient vehicles.
Could Madoff Go Back to His Penthouse? Just a day after pleading guilty to 11 charges related to his vast Ponzi scheme, Bernard L. Madoff appealed the decision to revoke his $10 million bail and remand him into custody, a decision that could be the first step to him spending the rest of his life behind bars. Could the United States Court of Appeals for the Second Circuit release Mr. Madoff to return to his luxury Manhattan penthouse, at least for the short time until his sentencing? While Mr. Madoff bears the burden of proof on the matter, it is certainly plausible that the appeals court could grant his request, or at a minimum return the case to Federal District Court for reconsideration. The question of bail is one of the few issues a defendant can appeal before sentencing, because the harm cannot be redressed at a later point in the case.
I.R.S. Plans a Deduction for Madoff Victims The Internal Revenue Service will allow victims of Bernard L. Madoff’s investment fraud to claim a tax deduction related to the bulk of their losses, the I.R.S. commissioner told the Senate Finance Committee on Tuesday. The commissioner, Douglas H. Shulman, told lawmakers that the agency was offering guidelines for taxpayers who are victims of losses from Ponzi schemes like Mr. Madoff’s. The plan represents the first time that the I.R.S. has come forward with a policy regarding how it will treat Mr. Madoff’s victims, who include Elie Wiesel, the prominent Holocaust survivor and historian; Steven Spielberg, the Hollywood filmmaker and the actor John Malkovich, as well as scores of other investors. The issue has been a point of debate and anxiety for the victims and their accountants, given the lack of clarity in the tax code.
U.S. Economy: Housing Starts Unexpectedly Jumped U.S. housing starts in February unexpectedly snapped the longest streak of declines in 18 years, raising optimism the market may be finally finding a floor. Work began on 583,000 homes at an annual rate, a 22 percent increase from January that was propelled by a surge in condominiums, apartments and townhouses, Commerce Department figures in Washington showed today. A separate report showed gains in producer prices slowed, underscoring a lack of inflationary pressures with the economy in a recession. “It’s a bit too early to get too excited, but we are nearing the bottom in housing,” said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis, who had forecast an increase in starts.
Housing starts take surprising jump in Feb. But can gains continue amid all the housing industry's woes? When you've lost almost half your business, even a little hop in activity can look like a huge leap. The Commerce Department said Tuesday that construction of new homes and apartments jumped 22.2 percent in February compared with January, pushing total activity to a seasonally adjusted annual rate of 583,000 units. The larger-than-expected jump in housing starts was a rare bit of good news for the battered housing industry, but it comes as construction activity remains 47.3 percent below where it was a year ago.
Credit Card Defaults Hit 20 Year High Credit card defaults are soaring. In response, lenders are hiking rates and slashing credit lines. Meanwhile Obama wants to throw money at the problem by increasing small business loans. Let's take a look at how the above facts interrelate starting with U.S. credit card defaults rise to 20 year-high. U.S. credit card defaults rose in February to their highest level in at least 20 years, with losses particularly severe at American Express Co and Citigroup amid a deepening recession.
MGM Mirage, GM Lead Wave of Filing Delays as Valuations Plummet Casino owner MGM Mirage said it needed more time to complete its annual report to assess its finances. Newsprint maker AbitibiBowater Inc. attributed its delay to an impairment charge, and General Motors Corp. was slowed by debt refinancing. More companies are citing fluctuating asset values and mounting debt as reasons for late 10-K filings with the U.S. Securities and Exchange Commission. About 83 companies have postponed 2008 reports this year, based on filings compiled by Bloomberg as of yesterday’s market close.
UAW Was 'Solely' to Blame for Collapse of Auto Industry Bailout Negotiations, Says Sen. Coburn The United Auto Workers (UAW) union is “solely” to blame for the collapse of negotiations on a $14-billion auto bailout deal that stalled in the Senate Thursday, Sen. Tom Colburn (R-Okla.) told CNSNews.com on Friday. But UAW President Ron Gettelfinger in a press conference Friday morning blamed Republican senators, who he said resented his organization. The auto bailout bill, which passed the House in a 237-170 vote on Wednesday, was defeated in a 52-35 procedural vote in the Senate late Thursday night after negotiations between automakers, the UAW, and Sen. Bob Corker (R-Tenn.) fell apart.
Wagoner Says Ford’s UAW Trust Accord Won’t Work at GM General Motors Corp. Chief Executive Officer Rick Wagoner said Ford Motor Co.’s labor agreement with the United Auto Workers that cuts cash payments to a union-managed trust won’t work at his company. GM is asking the UAW to cut $20.4 billion in future retiree health-care obligations to $10.2 billion in exchange for equity as part of an agreement to keep $13.4 billion in U.S. loans and as it requests as much as $16.6 billion more. Wagoner spoke today in Washington, spokesman Greg Martin said in an interview. “The Ford program does not meet our needs at all,” Wagoner said, according to a copy of his comments recorded by GM. “We need to do something different and we’re working with the UAW on how we might do that.”
Obama Defends Health Care, Education Budget Plans President Barack Obama said he won't scale back his plans to revamp the health-care and education systems in his proposed $3.6 trillion budget and challenged Republican critics to do more than “just say no.” Obama, gearing up for a fight in Congress over his fiscal 2010 spending blueprint, met privately with the chairmen of the House and Senate budget committees before issuing a public rebuttal to Republicans who have criticized his plan as including too much spending at a time when deficits are ballooning.
Jim Rogers Expect Civil Unrests in the US and all around the World pt 4/4 Mar 17-09
Wheat Prices Rise to One-Month High as Kansas Crop Deteriorates Wheat prices rose to a one-month high on speculation that rains failed to relieve a drought in parts of the southern U.S. Great Plains, eroding prospects for winter plants emerging from dormancy. Crops in Kansas, the largest U.S. wheat-growing state, were rated 42 percent good or excellent as of March 12, down from 45 percent a week earlier, after the state got little precipitation, the Department of Agriculture said yesterday. "It looks like the dry weather is starting to catch some interest," said Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas. "Concern is increasing in the grain states."
Bush Speech In Canada Met With Protests In First Speech Since Leaving Office, Former President Declines To Criticize Obama Former President George W. Bush said on Tuesday that he won't criticize Barack Obama because the new U.S. president "deserves my silence," and said he plans to write a book about the 12 toughest decisions he made in office. Bush declined to critique the Obama administration in his first speech since leaving office in January. Former Vice President Dick Cheney has said that Obama's decisions threatened America's safety. "I'm not going to spend my time criticizing him. There are plenty of critics in the arena," Bush said. "He deserves my silence."
Doubly dangerous game Mexico/Nafta: Mexico’s tariffs on $2.4bn of US exports is both modest and permitted under the 1994 North American Free Trade Agreement. But they run two risks: that protectionists both sides of the border will use them to pick apart Nafta, and that resulting economic problems could further stoke Mexican anti-US feelings and harm relations. Mexico’s tariffs, likely to include levies on politically sensitive items such as farm products, were planned in 2001 after a panel of judges approved them in retaliation for US reluctance to open its roads fully to Mexican trucks, as Nafta requires. But Mexico held off on the tariffs after a 2007 pilot programme was agreed that allowed up to 500 Mexican trucks to operate in the US.
Mexican Banks 'Party' May End as Economy Shrinks Grupo Financiero Banamex SA, the Mexican unit of Citigroup Inc., contributed 11 percent to its parent’s total sales in 2008 after doubling profits the previous six years. The good times for Banamex and its Mexican rivals may be ending, according to Fitch Ratings. "The party for the Mexican banks is over," said Peter Shaw, an analyst at Fitch in New York. "Profit will not be the same as the last two or three years." Mexican lawmakers and bankers meet this week in Acapulco at an annual banking conference amid mounting speculation revenue from the local units of international lenders is set to tumble as Latin America’s second-largest economy shrinks.
New deal for Blackwater Days after the Baghdad government decided it no longer wanted the company then known as Blackwater in Iraq, the State Department signed a $22.2 million deal in February to keep the embattled contractor working there through most of the summer, contract records show. The decision keeps Blackwater - since renamed Xe - in Iraq months longer than anyone has suggested publicly, while raising questions about why the U.S. would pay a contractor for work in Iraq if it may not be able to operate there legally.
Audio recording: Osama bin Laden tape - 14 Mar 09 Translation of audio tape obtained by Al Jazeera, attributed to Osama bin Laden, the al-Qaeda leader, in which he says Arab leaders "plotted with Israel" in war on Gaza. The authenticity of the tape cannot be verified.
Russia announces major arms buildup Russia is planning a "comprehensive rearmament" of its military, President Dmitry Medvedev said Tuesday. The announcement comes amid concerns in Moscow over the performance of its forces during last year's invasion of Georgia, an expert on the Russian military told CNN. Christopher Langton, an analyst at the International Institute for Strategic Studies in London, said the campaign against the former Soviet republic had revealed significant weaknesses within Russia's armed forces.
Russia warns against dramatizing DPRK's satellite launch MOSCOW, March 17 (Xinhua) -- A senior Russian diplomat said on Tuesday that the upcoming launch of a Democratic People's Republic of Korea (DPRK) satellite should not be overdramatized. "The world community should carefully weigh all circumstances of the satellite launch due in early April and to refrain from fanning panic," Itar-Tass news agency quoted Russian Foreign Ministry's special envoy Grigory Loginov as saying. "It is not worth hurrying, but the situation is a no simple one," said Loginov, Russia's ambassador-at-large on the Korean Peninsula issue. Pyongyang said on Feb. 24 that it plans to launch a communications satellite as part of its peaceful space program. But the United States, Japan and the Republic of Korea (ROK) have voiced suspicions that it will be a cover for the test-firing of along-range ballistic missile.
Putin: Russia to boost ties with DPRK MOSCOW, March 17 (Xinhua) -- Russia will boost ties with the Democratic People's Republic of Korea (DPRK), said Prime Minister Vladimir Putin on Tuesday. Putin made the remarks in a congratulatory letter to his DPRK counterpart Kim Yong Il on the 60th anniversary of the signing of the agreement between Russia and the DPRK on economic and cultural cooperation, said the Russian government in a statement. "This is the first interstate document in the history of our bilateral relations putting a legal foundation for mutually advantageous and equal cooperation not only in the economic and cultural sector, but also in all other areas," it said.
U.S. suspends food aid to DPRK WASHINGTON, March 17 (Xinhua) -- The United States has decided to suspend its food aid to the Democratic People's Republic of Korea (DPRK) at Pyongyang's request, a spokesman for the State Department said on Tuesday. "Yes. North Korea (DPRK) has informed the United States that it does not wish to receive additional U.S. food assistance at this time," State Department spokesman Robert Wood said at a regular news briefing, responding to a question whether Pyongyang has said it does not want U.S. food aid. "We will work with U.S. NGOs and the North Korean counterparts to ensure that food that's already been in North Korea is distributed to the intended recipients," he added.
China’s Shot Across the Bow The U.S. government is sending heavily armed destroyers to the South China Sea after a standoff between five Chinese boats and a U.S. spy ship operating in the area. Before the destroyers have even arrived, however, the Chinese communist government has sent a shot across their bow, in the form of a not-so-subtle reminder that China is now one of the U.S. government’s principal creditors. As Chinese Premier Wen Jiabao put it, they’re “a little bit worried” about the safety of China’s investments in U.S. securities. “We lent such huge funds to the United States, and of course we’re concerned about the security of our assets.”
Gilani Says Government Will End Its Rule in Pakistan’s Punjab Pakistan’s Prime Minister Yousuf Raza Gilani said the government will end its control over Punjab province as he moves to defuse a power struggle between opposition leader Nawaz Sharif and President Asif Ali Zardari. Control by the central government “will end as soon as possible,” the official Associated Press of Pakistan cited Gilani as saying yesterday in the capital, Islamabad. “I am against the governor rule” in Punjab. Zardari appointed a governor to take over Punjab after the Supreme Court ruled in February that Sharif and his brother, Shahbaz, the province’s chief minister, were ineligible to hold office.
Inside Story-Pakistan's political crisis-16 March 09-Part 1 How will the reinstatement of the judges affect Zardari's presidency?Does the reinstatement mean a victory for the opposition? Will it prevent further turmoil in the country?
Inside Story-Pakistan's political crisis-16 March 09-Part 2
Witness Special - Red Oil - 15 March 09 - Part 1 An inside look at the financial engine behind Cavez's socialist government: The film follows the dramatic ups and downs of Venezuela's state oil company as Chavez takes control with the aim of using its profits to further socialistic goals.
Gold Trades Little Changed as Global Equity Rally Cuts Appeal Gold traded little changed in Asia as a rally in global equities reduced the appeal of the precious metal as an alternative investment. Asian stocks gained for a third day, led by financial and commodity companies, on optimism bank earnings will recover and as copper jumped. Equity indexes gained in Europe and the Standard & Poor’s 500 Index climbed as much as 2.4 percent yesterday to the highest intra-day level in almost three weeks. The euro is trading near a five-week high against the dollar. Bullion has fallen 2.2 percent this month as the benchmark MSCI Asia Pacific Index advanced 2.5 percent. “Gold hasn’t changed much in Asia as a stronger euro and gains in equities reduced the attraction of the metal as a safe- haven asset,” said Hwang Il Doo, general manager at the international marketing division of Korea Exchange Bank Futures Co. in Seoul. “Although the trend for gold is bullish in the longer term, it will remain weak and unstable in near term.”
Gold - Heading for $200 or $10.000? Gold came tumbling down last week (but rebounded sharply thereafter) prompting the deflationists to come out again with their predictable gold crash scenarios. Never mind they’ve done so ever since $320 gold (November 2002), never mind since they will be proven wrong again. Popular deflationist tunes circling the internet these days calling for $200 gold this year are likely to result in promoting the authors to the famous hall of shame in short order. This as a result of gold soaring towards new all time highs instead of $200 which could surprise even most of the gold bulls today. $10,000 gold before the year of 2015 is not unthinkable which of course doesn’t represent appreciating purchasing power of gold itself but rather a total confidence collapse in all paper currencies.
A Golden Lining in a Perfect Storm With the world in a tumult and the global financial system on the brink, there has been one relatively steady beacon in the storm: gold. The gold price ended up 5.5% for 2008 as stock markets plunged around the world and is currently up over 4% in 2009. The S&P 500 finished down 38.5% last year and is currently down 16.5% in 2009. As a safe haven, gold set all-time highs last fall in the Euro, British Sterling, the Australian dollar, the Indian Rupee and the Russian Ruble, among others. The US dollar has also been a safe haven asset, but the longer-term fundamentals of the dollar are no match for gold.
2009 American Eagle Gold Coins Suspended Proof and uncirculated 2009 American Eagle Gold Coins are temporarily suspended, the United States Mint is now announcing in the latest statement from its online store. The coins are struck for collectors and include the "W" mintmark, unlike the 2009 bullion versions intended for investors — although many coin collectors purchase them — and already available through the Mint’s authorized purchasers, coin dealers and precious metals sellers. The announcement comes just days after the 2009 silver eagles suspension, and before any of the coins were ever placed on sale. Just like the silver eagle statement found on the US Mint’s store, "unprecedented demand" was given as the reason, which has forced the Mint to focus on its mandated requirement to provide bullion coins.
Crunch Time for Silver ? It is one thing to analyze on a long-term basis, and quite another to make short-term predictions. There is no doubt in my mind that silver is a rock solid long-term investment opportunity, with an absolutely spectacular risk to reward ratio and value. It’s just a matter of time before silver is priced substantially higher. As I try to point out week after week, the rise in the price of silver is inevitable. That’s all that should matter to long-term investors. Silver is the ultimate buy and hold. Asked when this dramatic silver price rise will take place, I have always answered that the exact timing is impossible to know, even though prices have already climbed substantially over the past few years. The important point is that prices are still depressed, principally due to the manipulation, offering the long-term investor an attractive entry opportunity. Still, silver is a very interesting topic to many of us, and it is hard not to try to consider the short-term factors.
EXTRAORDINARY STRESS IN THE SILVER MARKET On the Comex, gold slipped into backwardation at the end of February and remained in that state briefly, reflecting the strong demand for physical gold. Silver is presently in backwardation as evidenced by the following table of Comex settlement prices. The March contract, which reflects the current spot price, is higher than all future prices up to July. . . . . One can only reasonably conclude that there is considerable stress in the market for physical silver. Backwardation means that people are increasingly demanding real, physical metal, and not paper promises. It also means that people are starting to doubt the promises of the silver shorts, namely, those banks that have promised to deliver silver at specified future dates. Finally, it means that these banks have made promises to deliver metal that in the aggregate are greater than the physical silver they actually hold. If that weren't true, these banks as well as other holders of physical silver would sell what they own in the spot market in exchange for a futures contract, profiting from the difference in this price disparity. In time, their transactions would eventually eliminate the backwardation. But the backwardation has not been eliminated. Thus, given that the backwardation has remained for 38 days, one can only conclude that there exists an acute shortage of physical silver.
Gaining Sheen: Silver ready to prove its mettle Silver, which in European folklore, is believed to have saved the lives of many people who were attacked by vampires and monsters, now has the power to give investors good returns. And going forward, it is expected to outperform gold in terms of price appreciation. In fact, silver had been beating gold till recently. Up to 2008, silver outperformed gold in terms of one, two and three-year compound annual growth rate (CAGR). Last year on March 11, silver registered a three-year CAGR of 131% against 106% CAGR posted by gold.
Nouriel Roubini 1
The Fate of Paper Money "Paper money eventually returns to its intrinsic value - zero."(Voltaire, 1694-1778) The first well-known widespread use of paper money was in China during the Tang (618-907 A.D.) dynasty around 800 A.D. Paper money spread to the city of Tabriz, Persia in 1294 and to parts of India and Japan between 1319 to 1331. However, its use was very short-lived in these regions. In Persia, the merchants refused to recognize the new money, thus bringing trade to a standstill. By 1455, after over 600 years, the Chinese abandoned paper money due to numerous problems of over issuance and hyperinflation.
DOLLAR CRISIS IN THE MAKING Increasingly ominous clouds are gathering in what could soon be the perfect storm against the United States dollar and against the present dollar-centric global financial order. This is not shaping up to be a storm that anyone is trying to initiate, not even those who are actively driving for a new global financial order that is no longer centered on the dollar. Instead, it will result from a correlation of forces arising out of the deepening global financial and economic crises, coupled with recurring and conspicuous miscalculation on the part of some of the world's political, financial and economic leaders. The storm has the potential to cause upheaval on a grand scale, opening the door to swift, and largely uncontrolled, fundamental transformation.
Unemployment is Americans' top economic concern A new national poll indicates that worries about unemployment have tripled over the past year. Thirty-six percent of people questioned in a CNN/Opinion Research Corp. survey released Monday morning said unemployment is the most important economic issue facing the country today, almost three times higher than the 13 percent who felt the same way last April. Inflation is second at 20 percent, followed by the mortgage crisis at 16 percent, the stock market at 14 percent and taxes at 11 percent. Last April, 47 percent of poll respondents said rising prices and the rate of inflation were the most important economic issues facing the country, putting that at the top of U.S. economic concerns. "Last spring, Americans were spooked by rising gas prices," said Keating Holland, the CNN polling director. "Now they're spooked by high unemployment figures and the growing concern that good jobs aren't available."
America faces new Depression misery as financial crisis worsens By the wide stretch of the American River in Sacramento, history is repeating itself. Here, during the Great Depression of the 1930s, men and women who had lost everything and despaired of finding work built rough shelters and huddled around fires. Now the spiral of job losses and house repossessions has left another wave of Americans homeless, and a new tent city is growing rapidly on lumpy, derelict land between the river and the railway tracks here in the capital of California. There are more than 300 people living in scattered encampments stretching a couple of miles along the river bank. As many as 50 more arrive each week. Unemployment in Sacramento reached 10.4 per cent in January and California is suffering some of the worst repossession rates in the country, with as many as 500 people losing their homes every day last year.
The FDIC: as Rock Solid as Social Security We all should be painfully aware by now that there is nothing held inside the Social Security and Medicare trust funds but a bunch of IOUs. Monies collected from payroll taxes are treated as general revenues and used in the “unified budget.” But how many of us are aware that the FDIC’s Deposit Insurance Fund works in a similar fashion? On March 2nd, FDIC Chairman Sheila Bair made some remarkable statements in defense of the Insurance Corporation’s decision to raise fees and increase revenues. She said in a letter sent to the over 8,300 insured banks that, “Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”
U.S. Bailouts Add to Risk of Global Depression, Jim Rogers Says The U.S. risks sending the world into a depression as its bailouts of failed companies rob healthy companies of capital, investor Jim Rogers said. “The U.S. is taking assets from competent people and giving them to incompetent people,” said Rogers, chairman of Singapore-based Rogers Holdings and the author of books including “Investment Biker” and “Adventure Capitalist.” He spoke in a Bloomberg Television interview. “That’s bad economics.” The U.S. government should let American International Group Inc. go bankrupt, Rogers said.
Push to audit Federal Reserve gains steam 28 lawmakers join call to examine nation's money controllers A bill calling for the comptroller general of the United States to audit the private Federal Reserve is gaining momentum in Washington, D.C., as more and more representatives add their names to its bipartisan support. As WND reported, U.S. Rep. Ron Paul, R-Texas, introduced last month H.R. 1207, the Federal Reserve Transparency Act of 2009, a bill requiring that an audit of both the Fed's Board of Governors and the Federal Reserve Banks be completed and reported to Congress before the end of 2010. Paul was joined at the time of introduction by 11 other Republican and Democratic co-sponsors. Since its introduction, 17 additional U.S. representatives have added their names as co-sponsors, bringing the total to 29 legislators seeking the audit.
Ron Paul - CPAC Speech Part 1 of 3
Ron Paul - CPAC Speech part 2of 3
Ron Paul - CPAC Speech part 3 of 3
Bazooka Boomerangs: Banks Return Bailout Funds In what any sensible person knew would eventually happen the moment the program was announced, Banks are now scrambling to return bailout funds. A growing number of healthy bank chains across the country are bailing out of the $700-billion federal banking bailout program, saying it has tarnished the reputation of banks that took the money and tangled them in unwieldy regulations. When the program began last fall, it was billed by then-Treasury Secretary Henry M. Paulson as an investment in strong banks to make them even stronger. But not long after the program began, it became clear that the bulk of early funding was going to a handful of financially crippled giants such as Bank of America Corp., Merrill Lynch & Co., American International Group Inc. and Citigroup Corp.
Bernanke: Recovery to begin next year Federal Reserve chairman says stabilizing the banking system will be key to a full economic recovery. Federal Reserve Chairman Ben Bernanke said on Sunday that government officials are laying the groundwork for an economic revival and that a "depression" can be avoided - acknowledging however that a full recovery will take time and that there are still obstacles. "We're working on it. And I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time," Bernanke said in a rare public interview airing on "60 Minutes," according to a transcript released by CBS.
Paul O'Neill: Banks must show U.S. the money Paul O'Neill, who was appointed treasury secretary in 2001 by President Bush, says the federal government is not doing enough to fix the U.S. financial system. O'Neill appeared on CNN's "Fareed Zakaria GPS" on Sunday to talk about his outlook on the recession and what the Treasury Department should demand of major financial institutions in order to get the U.S. economy back on track.
Haircut Time for Bondholders "The only function of economic forecasting is to make astrology look respectable."- John Kenneth Galbraith When George Soros recently said that the financial system had "effectively disintegrated", it caused quite a flap. But Soros was not exaggerating. The financial system has disintegrated. What we are experiencing now is just the fallout from that event. This is easier to understand by using an analogy. Imagine watching the demolition of a hundred-story skyscraper. After the explosives detonate and the building implodes, the chunks of debris and the shattered glass begin to fall to the ground below. That's where we are right now. The financial super-structure has already been blown to bits, but a thick shower of fragments keeps raining down on earth. Rising unemployment, falling consumer confidence, severe contraction of the economy, growing pessimism; these are all the knock-on effects of a full-blown system collapse.
Bonus rage closes in on AIG Officials turn up heat on troubled insurer: Obama says he wants to block $165 million in bonuses. New York AG vows to force firm to name execs. Anger over $165 million in bonuses doled out to American International Group senior employees reached a fevered pitch on Monday, prompting the Obama administration to vow to recoup the money and a New York prosecutor to subpoena the firm for recipients' names. President Obama said Monday that he has asked Treasury Secretary Tim Geithner to use the government's role as a majority owner of the troubled insurance company and "every legal avenue" to stop the bonuses. "It's hard to understand how derivative traders at AIG warranted any bonuses," Obama said. But the bonuses -- set out in contracts made before the government became so deeply involved in the company -- would be hard to reverse.
Rage at AIG Swells As Bonuses Go Out Fed Decided Payouts Couldn't Be Stopped A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all. "It's a mob effect," one senior executive said. "It's putting people's lives in danger." Politicians and the public spent yesterday demanding that AIG rescind payouts that they said rewarded recklessness and greed at a company being bailed out with $170 billion in taxpayer funds. But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products' complex trades and who are trying to dismantle the division before it further endangers the world's economy.
Nouriel Roubini 2
Obama tries to stop AIG bonuses: 'How do they justify this outrage?' President Obama said Monday he will attempt to block bonuses to executives at ailing insurance giant AIG, payments he described as an "outrage." "This is a corporation that finds itself in financial distress due to recklessness and greed," Obama told politicians and reporters in the Roosevelt Room of the White House, where he and Treasury Secretary Tim Geithner were unveiling a package to aid the nation's small businesses. The president expressed dismay and anger over the bonuses to executives at AIG, which has received $173 billion in U.S. government bailouts over the past six months.
FEAR RISING Warren Buffet has come under criticism lately for being early in his call to buy stocks and for the lack of performance of his own company Berkshire Hathaway Inc, which is down nearly 50% since the market toped in late 2007. It is not, however, fair to judge Buffet’s performance by simply focusing on the last two years and ignoring his phenomenal record over the decades. Warren Buffet is still the Oracle of Omaha, has been in the investment business for well over 50 years, and still knows a few things about economic cycles and human psychology. In a recent interview on CNBC, Buffet attributed the economic malaise to fear. Buffet stressed that, “Americans are in a cycle of fear, which leads to people not wanting to spend and not wanting to make investments, and that leads to more fear.” Indeed fear right now is the enemy, fear is leading to paralysis.
They Tried to Outsmart Wall Street Emanuel Derman expected to feel a letdown when he left particle physics for a job on Wall Street in 1985. After all, for almost 20 years, as a graduate student at Columbia and a postdoctoral fellow at institutions like Oxford and the University of Colorado, he had been a spear carrier in the quest to unify the forces of nature and establish the elusive and Einsteinian "theory of everything," hobnobbing with Nobel laureates and other distinguished thinkers. How could managing money compare? But the letdown never happened. Instead he fell in love with a corner of finance that dealt with stock options. "Options theory is kind of deep in some way. It was very elegant; it had the quality of physics," Dr. Derman explained recently with a tinge of wistfulness, sitting in his office at Columbia, where he is now a professor of finance and a risk management consultant with Prisma Capital Partners.
Obama to visit Southern California this week The president will tour the region Wednesday and Thursday, holding town hall-style meetings in Los Angeles and Costa Mesa and visiting Jay Leno on 'Tonight.' President Obama will tour Southern California on Wednesday and Thursday, with stops at town hall-style meetings in Los Angeles and Costa Mesa and a visit to " The Tonight Show With Jay Leno." The town hall meeting will be open to the public, and tickets will be distributed on Tuesday. . . . As he has in recent appearances outside Washington, Obama is expected to discuss the economy and how his administration is dealing with the global meltdown.
Nouriel Roubini 3
Obama to sit down with Jay Leno on 'The Tonight Show' He'll be the first sitting president in such a venue. By pitching his economic recovery plan to the show's 5 million viewers, he'll speak past the press corps to an audience beyond political junki In a career studded with historic firsts, President Obama is preparing for yet another: hitting the late-night comedy circuit to pitch his economic recovery plan. It's hardly a laughing matter, with the country in its worst economic shape in decades. And it certainly doesn't approach the import of Obama's election as the nation's first black president. However, by taking a seat Thursday night on " The Tonight Show with Jay Leno," Obama will become the first sitting president to appear in such an unlikely venue, erasing -- perhaps once and for all -- any vestige of the line that separates news from entertainment. It will also extend Obama's habit of speaking past the Washington press corps and ditching the capital for events that distance him from the Beltway status quo; for those keeping accounts, Obama may be sending a signal by going on the "Tonight Show" and then skipping Saturday night's Gridiron Club dinner.
Conservative talk radio on the wane in California The economy's downturn has depressed ad revenue at stations across the state, thinning the ranks of conservative broadcasters. Tune in to conservative talk radio in California, and the insults quickly fly. Capturing the angry mood of listeners the other day, a popular host in Los Angeles called Republican lawmakers who voted to raise state taxes "a bunch of weak slobs." With their trademark ferocity, radio stars who helped engineer Gov. Arnold Schwarzenegger's rise in the 2003 recall have turned on him over the new tax increases. On stations up and down the state, they are chattering away in hopes of igniting a taxpayers' revolt to kill his budget measures on the May 19 ballot. But for all the anti-tax swagger and the occasional stunts by personalities like KFI's John and Ken, the reality is that conservative talk radio in California is on the wane. The economy's downturn has depressed ad revenue at stations across the state, thinning the ranks of conservative broadcasters.
Obama Backs Health Benefits for Same-Sex Partners of Federal Employees The recently passed $676-billion omnibus spending bill includes language urging the federal government’s Office of Personnel Management to "consider" federal health benefits for same-sex domestic partners of federal employees. On Friday, White House Press Secretary Robert Gibbs was asked about that recommendation, something the Obama administration supports, he indicated. Gibbs said President Obama’s position on benefits for same-sex couples “remains the same” as it was during the campaign. “The president would work with Congress in order to…institute what he promised he’d do in the campaign,” Gibbs said at the Friday press briefing.
Municipal Pension Time Bomb Set to Go Off Think back to when property prices were going through the roof, personal spending was being turbocharged by ultra-cheap and seemingly limitless credit, and few could resist the siren song of consumerism. Under the circumstances, you would have thought that municipal authorities would have had more than enough to gorge on in their quest to squander taxpayer funds. Yet even with all the revenues that were flowing in from real estate, income, and sales taxes, it was not enough. Short-sighted and corrupt politicians also decided that it would be a great idea to make all sorts of open-ended commitments to a key constituency: state and local government employees.
Natural Gas Rigs Shutting Means Prices May Double Natural gas drillers from Devon Energy Corp. to XTO Energy Inc. are idling rigs at the fastest pace since 2002, setting the stage for this year’s worst commodity to almost double as supplies drop faster than demand. About 45 percent of U.S. rigs have been shut since September, which means fourth-quarter gas production will tumble 5.2 percent, faster than the 1.9 percent decline in use, the Energy Department forecast. Prices will rise to $7 per million British thermal units by January from $3.85 today on the New York Mercantile Exchange, according to a Bloomberg News survey of 20 analysts. The gain would be the largest since the first half of 2008.
Citi's Pandit hits paydirt The taxpayer-backed bank says its CEO made $10.8 million last year. Citi also announces a shakeup to its board. Citigroup, which has received hundreds of billions of dollars in federal aid, disclosed Monday that CEO Vikram Pandit received 2008 compensation valued at $10.8 million. The bank also announced changes to its board and nominated four new independent directors, including former U.S. Bancorp (USB, Fortune 500) chief Jerry Grundhofer. New York-based Citi, like many other banks that have received taxpayer funding, has come under fire for its spending on executive compensation and other perks.
Is stimulus spending cash into 'black hole'? There is a growing list of educated people predicting that the trillions of dollars spent by governments around the world to stimulate a moribund economy will not work. There's already Peter Schiff, head of Euro Pacific Capital in Connecticut, and Peter Morici, professor at the University of Maryland and former chief economist of the U.S. International Trade Commission. And you can add the name of Allan Brennan, manager of economic analysis and forecasting with the Alberta government's Department of Infrastructure and Transportation. "Stimulus packages will not help the economy at all," Brennan said in a presentation with Dundee Private Investors branch manager Trevor Hamon. "A lot of money is going to banks, but unless you get that money to consumers, things will not improve. Money is going down the black hole. If you think they're going to start consuming wildly, I don't think it's going to happen."
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Housing collapse ignites a chain reaction Brandon Robertson didn’t expect things to turn out this way when he started riding Atlanta’s housing boom 18 years ago. His two Jonesboro companies were building and selling more than 400 homes a year in suburban Atlanta as recently as two years ago. But real estate collapsed, and now the 35-year-old homebuilder finds himself in bankruptcy court. Like a rock tossed into a pond, the failure of Robertson’s companies has rippled far and wide in metro Atlanta:
The developer filed for Chapter 11 protection in February 2008, owing more than $95 million to hundreds of creditors, including local government agencies and contractors. That deepens the strain for companies already hurting from the collapse of the housing market.
The bulk of the debt - over $91 million - was owed to 40 financial institutions, including five Georgia banks that have since failed. Mounting bank failures across the country are part of a global financial crisis that is costing taxpayers hundreds of billions of dollars.
Hundreds of homes, lots and acres remain unsold, depressing property values in dozens of neighborhoods in Henry, Clayton and other counties.
Homebuilder confidence near record low Index unchanged in March as economic concerns continue to depress the market. Homebuilders' confidence remained at a historically low level in March as the weak economy continued to weigh on the market for new single-family homes, according to a report released Monday. The NAHB/Wells Fargo Housing Market Index held steady at 9 in March, unchanged from February, and up only one point from January's all-time low. A reading below 50 indicates that more homebuilders view conditions as poor than good. March marked the fifth consecutive month of single-digit readings, and was less than half the reading of 20 posted a year ago.
Obama plans small-business lending boost The Obama administration announced Monday that the 21 largest banks receiving government money must report monthly on how much lending they do to small businesses. All other banks getting taxpayer help are being asked to report quarterly on small business loans. Even banks that are not taking government funds are being told by the administration to "make an extra effort" to increase small business lending. The announcement was part of a broad package aimed at boosting the credit available to struggling small business owners that President Barack Obama and Treasury Secretary Timothy Geithner were unveiling in an East Room ceremony. The White House figures that making billions in federal loans available to small businesses was one way to address misgivings over the widely unpopular bailout program, which has sent hundreds of billions to large financial institutions like Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. with few strings attached.
GM to cut prices to lure back US buyers General Motors is preparing a fresh barrage of discounts and other promotions to coax Americans into buying more cars after an upcoming US government decision on further financial aid to the Detroit motor industry. The incentives will be designed to counter a slump in sales and GM’s market share, amid signs on both sides of the Atlantic that its financial woes are beginning to drive away customers. GM and Chrysler have so far received $17.4bn in emergency loans from the government and are seeking billions more. However, they need to prove their viability to a government task force. Steven Rattner, a former private equity investor who is a key member of the task force, told the Detroit Free Press yesterday that the group was committed to meeting the March 31 deadline.
Cheaper gas can't last, analysts warn Pump prices fell 3.4 cents, on average, in California last week, but crude prices are up and summer fuel formulations are more expensive to produce. Retail gasoline prices fell across much of the U.S. over the last week, the Energy Department said Monday, but analysts warned motorists to enjoy it while it lasts. Prices were expected to rise to as high as $2.25 nationally and to $2.50 in California and the West Coast by the Memorial Day weekend. The average cost of a gallon of self-serve regular gasoline in California fell 3.4 cents to $2.162. That was $1.442 a gallon below the year-earlier price. Nationally, the average fell 3.1 cents to $1.910 a gallon, which was $1.347 less than the price at this time last year.
Oil falls below $47 as U.S. economic worries return to fore Oil fell below $47 a barrel on Tuesday, giving up previous session's gains, as news about U.S. credit card defaults dampened sentiments and rekindled worries about the economic health of the world's No. 1 energy consumer. Poor economic data from the U.S., which saw February's industrial output plummeting to its lowest level in almost seven years, was also a stark reminder that the 14-month long recession in the world's largest economy is far from over, analysts said. U.S. light crude for April delivery fell 41 cents to $46.94 a barrel by 0222 GMT, reversing some of Monday's gains, that brought oil to settle $1.10 higher at $47.35.
Seattle Post-Intelligencer newspaper goes Web-only The Seattle Post-Intelligencer, which has chronicled the news of the city since logs slid down its steep streets to the harbor and miners caroused in its bars before heading north to Alaska's gold fields, will print its final edition Tuesday. Hearst Corp., which owns the 146-year-old P-I, said Monday that it failed to find a buyer for the newspaper, which it put up for a 60-day sale in January after years of losing money. Now the P-I will shift entirely to the Web. "Tonight will be the final run, so let's do it right," publisher Roger Oglesby told the newsroom. Hearst's decision to abandon the print product in favor of an Internet-only version is the first for a large American newspaper, raising questions about whether the company can make money in a medium where others have come up short.
Sheriff Arpaio Has ‘No Intention’ of Testifying Before Conyers Committee on Alleged Immigration Enforcement Abuses House Judiciary Chairman John Conyers (D-Mich.) told CNSNews.com he is going to invite Maricopa County (Ariz.) Sheriff Joe Arpaio to testify in his committee about alleged abuses by the Maricopa County Sheriff’s Office in its enforcement of U.S. immigration laws. But a spokeswoman for Arpaio told CNSNews.com that the sheriff -- who has not yet received an official invitation to testify -- currently has “no intention” of appearing before Conyers’ committee. The spokeswoman said, however, that Arpaio “welcomes” a Justice Department investigation into the way his sheriff’s office has handled enforcement of federal immigration laws.
Putting Troops on Mexican Border Needs to Be 'Looked at Very Carefully,' Senator Says The violence caused by drug cartels along the U.S.-Mexico border might not be as serious a national security concern as the war in Afghanistan, but it is a threat that calls for adequate resources, personnel, and perhaps military force, lawmakers said last week. More than 6,000 people were killed last year in drug cartel-provoked violence, and in January 2009, another 1,000 were killed, according to the U.S. State Department. Some of that violence is spilling over into U.S. cities along the border with Mexico. On Feb. 25, more than 700 drug-cartel members operating in the United States were arrested. Concerning the violence and national security options to protect Americans, Sen. Kay Bailey Hutchinson (R-Texas) said that the U.S. government is working with the Mexican government to combat the drug cartels. As for sending in U.S. troops to secure the border, she said: “I think the issue of military on the border has to be looked at very carefully. I’m not ruling it out, but I’m not ruling it in either – nor has Mexico asked for that.”
In Connecticut And Elsewhere, More Debtors Choose Personal Bankruptcy Maryann Hagberg has five little dogs and a house full of plants, yet there's hardly a stray hair or withered leaf on the floors of her home on a steep hill overlooking the city. Still, life can get messy, even for an ambitious neatnik who put herself through college in her 30s by waiting tables. So, joining a growing number of Americans in this recession, Hagberg has filed for bankruptcy to help manage overwhelming financial distress that could, she fears, drive her and her husband from their home.
Can Meg Whitman save California? In a bad economy, this sorry state has the worst credit rating and the highest taxes. The former eBay chief wants to run it like a business. Is that a good thing? It's been barely a month since Meg Whitman declared that she was running for governor of California, and the skewers are already out. The state's press has cast her as a political novice. Late-night comics are loving this notion of eBay's former CEO in charge of America's largest state. "Well, that makes sense," said Jay Leno. "I mean, the state's broke. If we're going to start selling stuff, who better to be governor than the head of eBay?" Many businesspeople, as well as most of her friends, think she's crazy to want to be governor at a time of crisis.
Merkel Keeps Cashbox Closed as She Spurns Obama Plea Forget Nicolas Sarkozy. Ignore Gordon Brown. Angela Merkel, taking advantage of Germany’s economic heft, is now the European Union’s dominant figure. And leaders from Warsaw to Washington had best not forget it. Just as the German chancellor vetoed a bailout for eastern Europe on March 1, she is now leading European opposition to U.S. President Barack Obama’s call for a global pump-priming package. She’ll determine the fate of a 5 billion-euro ($6.4 billion) infrastructure proposal at an EU summit in Brussels later this week. “It’s Merkel who holds the key to the cashbox, and she doesn’t want to give it up,” says Jean-Dominique Giuliani, chairman of the Robert Schuman Foundation, a research center in Paris.
U.S. raises new anti-terrorism approach with EU The United States proposed to European Union leaders on Tuesday they adopt a joint approach to fight terrorism and set aside divisions spurred by the Iraq war and Guantanamo prison abuses, EU officials said. The proposal was described as a broad idea in the early stages. It came as the two sides discussed a U.S. desire for Europe to accept inmates from the U.S. military prison in Guantanamo Bay, Cuba, where terrorism suspects are held. President Barack Obama has ordered the closure of the internationally condemned prison within a year and an end to harsh interrogation of suspects held there.
Mexico to raise tariffs on U.S. exports Mexico has announced plans to raise tariffs on almost 90 U.S. exports, Mexican and U.S. officials confirmed Monday. The new trade measures are in retaliation for the cancellation earlier this year of a U.S. commercial trucking project, Mexico’s state-run news agency said, and will target U.S. industrial and agricultural products delivered to Mexico. Mexico’s Economic Secretary Gerardo Ruiz Mateos called the cancellation of the program a breach of the North American Free Trade Agreement (NAFTA), the agency said.
Israel's national security aide barred from U.S. Former Israeli spy linked to Pentagon leak Uzi Arad, who is expected to serve as national security adviser in the next Israeli government, has been barred from entering the United States for nearly two years on the grounds that he is an intelligence risk. Mr. Arad, a former member and director of intelligence for the Mossad, Israel's spy service, is mentioned in the indictment of Lawrence Franklin, a former Pentagon analyst who pleaded guilty in 2005 to providing classified information about Iran in a conversation with two employees of the American Israel Public Affairs Committee (AIPAC). Beyond Mr. Arad's status, Prime Minister-designate Benjamin Netanyahu is likely to face difficulties abroad because of his choice, announced Monday, of Avigdor Lieberman to serve as foreign minister in a narrow new rightist government. Mr. Lieberman, head of the Israel Is Our Home party, has advocated requiring Israel's 1.46 million Arabs to take a loyalty test or risk expulsion.
A wary Arab world eyes Iran's elections here is a lot of diplomatic activity going on the Arab world. Amr Mousa, the secretary general of the Arab League, landed in Damascus while Syrian President Bashar al-Assad is headed to Qatar. Iranian Foreign Minister Manoucher Mottaki landed in Riyadh, to meet with King Abdullah II. Much of the diplomatic activity is related to the upcoming Arab summit, scheduled for Doha in late March. According to the Saudi channel al-Arabiyya, three Gulf states have told Qatar that they will be reducing their representation at the Arab summit "to the lowest level" if Iran attends. In December 2007, Qatar invited Iran to attend the Gulf Cooperation Council (GCC) summit in Doha, much to the displeasure of countries in the Gulf. The invitation was nevertheless repeated at the Arab summit over Gaza, held in January. This year, speaking at the Arab foreign ministers' meeting in Cairo, Saudi Foreign Minister Saud al-Faisal called on Arab states to unite to face the "Iranian challenge".
Ron Paul debates Stephen Baldwin on Legalizing Marijuana on CNN Larry King 03/13/2009
Ben Bernanke's Greatest Challenge Fed Chairman Discusses Recession, Financial Rescues And Recovery In Wide-Ranging 60 Minutes Interview The Federal Reserve controls the economy by setting interest rates. But after the crash of 2008, Bernanke invoked emergency powers, and with unprecedented aggressiveness has thrown a trillion dollars at the crisis. Ben Bernanke may be the most important Fed chairman in history. The question is, can he help lead America out of this deep recession and when?
The Chairman - Part 1
The Chairman - Part 2
Obama: Have 'absolute confidence' in U.S. economy President Obama said Saturday that investors can have "absolute confidence" in the U.S. economy, continuing a recent push to try to shore up markets after months of dire warnings had driven stock indexes to decade-long lows and prompted worry from the Chinese government its investments weren't secure. Mr. Obama also promised to "not go backwards" on trade and warned against protectionism in the face of an economic downturn, though he said "it may be difficult" to get done any new trade deals. The comments came as the president met with Brazil's President Luiz Inacio Lula da Silva at the White House in advance of a meeting of leaders from the world's biggest economies, known as the Group of 20 or G-20, early next month in London.
Gold: Demand Is High and Will Dictate Prices Gold and silver rallied over 1% and 2% yesterday as stock markets barely made gains in the US. Asian stock markets were mixed but the Nikkei fell 2.5% and most European markets are showing weakness again this morning and gold remains firm. Demand for gold remains extremely robust with broad based demand from both retail and pension investors but also now from very large players such as high net worth individuals, hedge funds, sovereign wealth funds (Government of Singapore Investment Corp - GIC) and central banks diversifying into gold.
Gold Bullion and Crude Oil Bull Market Turning Point Gold bullion and Crude Oil are both setting up for a rally higher if they continue to complete the breakouts. Oil looks like the best trade from a quick glance with huge profit potential but its important not to under estimate gold bullion as it can generate big moves even though is has already made a nice rally this year. Gold stocks look to be finding support and are testing resistance levels from both our trend line and 50 EMA. A breakout to the up side would be very bullish for these golden investments.
Obama Team Touts Economic Plans Seeking to Build Support, Officials Take Hopeful Tone President Obama yesterday acknowledged that a severe recession has brought "incredible pain and hardship" to millions of families, but said he is confident that his policies will revive the economy and help the nation avoid future calamities. Though the jobless rate is rising, Obama urged patience while federal efforts to stabilize the financial system and boost economic activity take effect. He also offered a vigorous defense of his decision to pursue an ambitious social agenda in the midst of the crisis, saying he is laying the foundation for "a post-bubble economic growth model."
Obama Team Heads to 'War' Over Economic Agenda A wave of top Obama financial advisers blanketed the airwaves to promote the president's budget proposal; at the same time they tried to blunt Republican charges that the White House is exploiting the crisis to enact sweeping changes. Billionaire investor Warren Buffett said last week that the country is in an "economic war," likening the crisis to the Pearl Harbor attacks. It's a war all right. President Obama adviser Christina Romer said as much on Sunday. But there are two sets of battle lines. One is between the American people and a deepening recession. The other is between the Obama administration and the minority in Congress -- each trying to convince the public it has the economic cure.
Economic Advisers Warn of No Quick Turnarounds Top administration economic advisers walked a careful line Sunday, saying that despite a few hopeful indicators and President Obama's call to investors to consider returning to the share markets, that it would "take some time" to turn a corner. Mr. Obama and his senior aides also sought over the weekend to quell Chinese concerns about the long-run security of U.S. Treasury notes, which had brought a rare expression of high-level concern last week from Prime Minister Wen Jiabao. "Not just the Chinese government, but every investor can have absolute confidence in the soundness of investments in the U.S.," Mr. Obama said Saturday after a White House meeting with President Luiz Inacio Lula da Silva of Brazil.
Bernanke sees U.S. recovery beginning in 2010 Ben Bernanke suggested in a taped interview on Sunday that the U.S. recession could last most of the year and said the biggest risk was that the political will needed to fix the fractured financial system could be lacking. "This (economic) decline will begin to moderate and we'll begin to see a leveling off," Bernanke said when pressed during an interview on the CBS program "60 Minutes" about whether he sees the recession ending this year. "We won't be back to full employment. But we will, I hope, see the end of these declines that have been so strong in a last couple of quarters," he said.
AIG Paying Out Tens of Millions in Bonuses The Treasury Department determined the government did not have the legal authority to block the current payments by the company. American International Group is giving its executives tens of millions of dollars in new bonuses even though it received a taxpayer bailout of more than $170 billion dollars. AIG is paying out the executive bonuses to meet a Sunday deadline, but the troubled insurance giant has agreed to administration requests to restrain future payments. The Treasury Department determined that the government did not have the legal authority to block the current payments by the company. AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history. Treasury Secretary Timothy Geithner has asked that the company scale back future bonus payments where legally possible, an administration official said Saturday.
At A.I.G., Good Luck Following the Money We return this week to the subject of the American International Group, the giant insurer that has received $170 billion in taxpayer guarantees, because the clamor over its rescue continues to grow. Of concern to those on both Capitol Hill and Main Street is the secrecy surrounding the $50 billion funneled to A.I.G.'s counterparties since it nearly collapsed last fall. Now that we live in bailout nation, why does the A.I.G. rescue rub so many the wrong way? Here is a hypothesis: Even as investors, employees, communities and taxpayers have been battered by the crippled financial system, A.I.G.'s counterparties were saved from losses on deals they struck with the insurer.
Obama Advisers, Lawmakers Lash Out at AIG Over Millions in Bonuses President Obama's economic advisers describe AIG's bonus pay-outs as "outrageous" and "not sensible." President Obama's economic advisers, along with top lawmakers, expressed outrage and anger Sunday over revelations that bailed-out insurance giant American International Group was going ahead with plans to pay executives tens of millions of dollars in new bonuses.
Treasury Demands AIG Cut Bonuses; $165 Million Looms American International Group Inc., the insurer saved from collapse by a $170 billion taxpayer bailout, was ordered by the U.S. Treasury to scale back its $1 billion plan to give retention pay and bonuses. AIG agreed to reduce some retention payments in 2009 by 30 percent and tie bonuses to the company's recovery, according to a person briefed on the matter and a letter from AIG Chief Executive Officer Edward Liddy. The New York-based insurer still plans to distribute about $165 million on March 15 because of legally binding contracts, said the person, who declined to be identified because the talks weren't public.
AIG Discloses $75 Billion in Bailout Payments Insurer Reveals List of Taxpayer Funds Doled Out to Settle Debts With Companies, Municipalities In the six months since the government's bailout of insurance giant American International Group, a rescue that has become increasingly costly and contentious, one question has loomed above all others: Where did the money go? The answer became a little clearer yesterday when AIG unexpectedly released the names of dozens of trading partners it has paid using billions in taxpayer dollars. The disclosure, which the company said was made after consulting the Federal Reserve, revealed that AIG paid more than $75 billion in the final months of 2008 to numerous domestic and foreign banks, as well as to various U.S. municipalities.
G20: the summit risks becoming the Kyoto of the economic meltdown The Bank of England started creating money from nothing on Wednesday, adding £2bn to its reserves which it promptly spent buying gilts from banks (non-bank financial institutions having spurned the offer). It plans to distribute a total of £75bn in this way, forcing down the price of money and increasing the supply of credit, or at least that's the theory. It is an audacious strategy and is right for the times. We're breaking all economic records for all the wrong reasons these days and we simply have to take the brakes off. It is impossible to tell what effects measures taken by the Bank and the Treasury since last October have had. But a combination of the Treasury's toxic debt insurance scheme, the Bank's asset purchase scheme, its liquidity assistance to banks and its financing guarantees, in harness with pumping new money into the economy, plus the state-sponsored refinancing of banks, are the policy responses others at London's forthcoming G20 summit should embrace.
G-20 Nations Reach General Consensus White House economic advisors say general agreement reached at the G-20 to pursue new regulations keeps momentum going and sets the stage for an April meeting. Senior White House economic advisers tell FOX News they believe meetings with finance officials from rich and developing countries Saturday brought general consensus on the need to boost economic stimulus spending and pursue a new form of global financial regulations with an eye toward regulating hedge funds and complex financial instruments, such as collateralized debt obligations and credit default swaps. There is no time clock on the regulatory regime or any prospect of it being negotiated and agreed to by the time of the Group of 20 meeting in London on April 2.
G20 vows to restore lending, boost IMF funding The world's most powerful economic policy makers on Saturday pledged to pull the global economy out of a steep downturn by focusing on efforts to restore bank lending, strengthen financial regulations and boost funding for the International Monetary Fund. The statement said the G20's "key priority" is to restore lending by tackling problems in the financial system and dealing with toxic assets. In a separate document, the G20 outlined a plan focused on providing liquidity, injecting capital into institutions, protecting savings and deposits and strengthening bank balance sheets. The weekend meeting aimed to lay the groundwork for a London summit of G20 leaders early next month. The G20 encompasses the world's largest industrialized and developing nations. The world's largest financial institutions have urged the G20 leaders to endorse the "bad bank" approach to dealing with the credit crisis.
G20 moves to centre stage HE US President, Barack Obama, has played down perceptions of a rift between the US and Europeans as the world's finance ministers prepare for a preliminary meeting of the G20 in London this weekend. Several congressional Democrats, including the House Speaker, Nancy Pelosi, are conceding the US may need a second injection of stimulus spending to boost activity. Other Democrats have reportedly said it will take more time to know whether the first recovery package is effective. The US has been urging the 20 largest economies to increase their spending.
Economists give Obama an "F" - Geitner got even lower marks In striking contrast to President Obama's popularity with the public, a new Wall Street Journal survey of economists gives the president and his treasury secretary failing grades. WSJ's Phil Izzo and Kelly Evans discuss.
Global trade collapsing Commentary: U.S. exports falling at 49% pace as customers fade away . . . . The pace of the decline is unprecedented in modern times, economists say. "We doubt even during the Great Depression that trade collapsed with such ferocity," said David Greenlaw, an economist for Morgan Stanley. The Great Recession, as the IMF calls it, has severed a crucial link in the global economy. U.S. consumer spending has been the main engine of growth for the whole world, but that spending was based largely on phantom gains in asset prices that were inflated by that cheap money from abroad that has now been disrupted. The profits that foreign producers made from selling to America, in turn, created millions of jobs in places such as China, Southeast Asia and the Persian Gulf. That was then: China reported its exports plunged 25% in February compared with a year earlier.
Introducing the axis of upheaval by Naill Ferguson The financial crisis is bad enough; but combined with empires in decline and ethnic disintegration, it is a recipe for disaster Just over seven years ago, in his State of the Union address of 2002, George W. Bush warned of an Axis of Evil that was assisting terrorists, acquiring weapons of mass destruction, and "arming to threaten the peace of the world". According to President Bush, this exclusive club had three members: Iran, Iraq and North Korea. The bad news for his successor, Barack Obama, is that he now faces a much larger and potentially more troubling axis - an axis of upheaval. What unites them is not so much their wicked intentions as their instability, which the global financial crisis only makes worse every day.
NAACP accuses banks of racism The NAACP is accusing Wells Fargo and HSBC of forcing blacks into subprime mortgages while whites with identical qualifications got lower rates. Class-action lawsuits were to be filed against the banks Friday in federal court in Los Angeles, Austin Tighe, co-lead counsel for the National Association for the Advancement of Colored People, told the Associated Press. Black homebuyers have been 3 1/2 times more likely to receive a subprime loan than white borrowers, and six times more likely to get a subprime rate when refinancing, Mr. Tighe said. Blacks still were disproportionately steered into subprime loans when their credit scores, income and down payment were equal to those of white homebuyers, he said.
Montana senator leads debate on care overhaul Tasked with drafting the president's promise to overhaul the nation's health care system by the end of the year, the Montana Democrat and chairman of the powerful Senate Finance Committee has had time to concentrate on little else. "I've served in the Senate for 30 years, and this is the hardest legislative challenge of my lifetime," Mr. Baucus told the National Business Group on Health's Washington conference on Wednesday. But the chairman, whose committee essentially controls Congress' checkbook by holding jurisdiction over tax issues, said he relishes the opportunity to ensure that every American is covered by a health care plan.
Obama Stimulus May Get a Timely Boost From U.S. Census Hiring The 2010 U.S. census may provide an extra kick to the U.S. economy, just as the effects of President Barack Obama's $787 billion stimulus plan start to take hold. The census will put more than 1.4 million people on the federal payroll over the next year, making it the largest peacetime government jobs program ever, according to the Census Bureau. The first 140,000 will start work in April. Most of the rest will be hired early in 2010.
Credit Card Cancer by Peter Schiff This week, with his pronouncement that "credit is the lifeblood of a healthy economy," President Obama reiterated what has been one of his most common themes in diagnosing our economic problem. The president has relied on this bedrock belief to propose policies that place the restoration of credit as the highest priority. However, despite his seemingly earnest intentions, the president and his economic advisors have misdiagnosed the ailment. Savings, not credit, is the lifeblood of a healthy economy. When not used properly credit can be like a cancer that sickens an otherwise healthy economy.
Rally Opportunities and Realities The Rampant Monetary Inflation reflected in M3 and in the various bailouts and loans are in the trillions of Dollars. And this tremendously increased monetary base is available to temporarily inflate the paper value of the Equities and other Markets, when money managers first think the markets have a chance for a sustained (for a few months, or even weeks only) rally, and, when The Cartel Interventional Regime "agrees" with them.
Pet Rocks and Mark-to Market Accounting Allowing for the fact all analogies limp to some degree and mark-to-market accounting is not purely a black or white issue, assume we are running a small chain of department stores in the 1970's. The chain experiences a great run selling pet rocks. Pet rocks have become so popular banks are willing to loan money to private investors for the purpose of buying them (leverage). The profits are coming in and bonuses are big. The department store's crack due diligence team assures management their elaborate forecasting models say the price of pet rocks will never go down. Even the general public knows the price of pet rocks "always goes up over time". Pet rocks are tangible assets - at least "you own something".
Geithner Ex Machina In lieu of globe-trotting advisors bearing deus ex machina solutions, each national government is left trying both to recapitalize its banks and also defend its cash savers. Trouble is, each government's funds are precisely limited to the cash inside its own borders. We, the people, are indeed the state, and you can only tax or rip off the savers for so long before all their money is spent. But everyone else is now stuck in the same fast-sinking boat too, so there's no one stood ready to bail us all out. Perhaps the Martians might help. Or failing that, maybe we'll have to ask God for a loan. Because we guess that Tim Geithner's money won't do. And we guess Tim Geithner knows it won't either.
Obama tech pick on leave after raid 2 men arrested in bribery probe President Obama's newly appointed chief information officer is on leave from his post after an FBI raid Thursday that resulted in the arrests of his former deputy and another man in connection with a D.C. government bribery scandal. Authorities did not implicate Vivek Kundra in the scandal, but a White House official said he was on leave "until further details become known" about the investigation into the D.C. Office of the Chief Technology Officer, which Mr. Kundra headed from 2007 until this year.
Mortgage relief stalls on Hill Disagreement among Senate Democrats over how many struggling homeowners should qualify for court-ordered mortgage relief has stalled a key part of President Obama's foreclosure prevention plan on Capitol Hill. Behind the scenes, top Democrats are offering banks and credit unions sweeteners to drop their opposition to the plan, hoping that even tepid support from lenders might win a few vital votes from skeptical Democrats and Republicans. The bill would give judges new power to lower the interest rate and principal on a primary home loan as part of a bankruptcy settlement. The measure passed the House last week - but only after a small revolt by moderates forced Democrats to narrow who might qualify.
A Higher Bar For Those Low Mortgage Rates . . . . To start with, none of the easy, bubble mortgages are around anymore. No "stated income" loans where you don't have to document your earnings. No option adjustable-rate mortgages, where you could choose to pay less than the interest due. Virtually no piggyback loans, where the lender supplies a first and second mortgage in the same package, up to 100 percent of the purchase price. You might still get an interest-only loan, but it's not cheap. The principal actors in the market today are the nationalized housing-finance companies, Fannie Mae and Freddie Mac, which purchase mortgage loans. In third place stands the Federal Housing Administration, which insures loans originated by private lenders. All together, the government sector accounts for 87 percent of the mortgages currently being made. . .
U.S. trade deficit continues to shrink U.S. exports and imports both fell for the sixth month in a row in January, narrowing the trade deficit. That trend intensified concerns over the collapse of world trade as finance ministers convened in London ahead of the April 2 global economic summit there. Paced by a 25 percent plunge in the price of oil, imports plummeted 6.7 percent in January. U.S. monthly imports now have declined 30 percent to $161 billion from a July peak of $230 billion. Over the same period, exports have fallen $43 billion, or 25 percent, to $125 billion.
World waits for word from OPEC Slash oil output to boost revenue but risk deepening the world's economic woes? Rarely have OPEC oil ministers faced a tougher choice. The Organization of the Petroleum Exporting Countries meets in Vienna Sunday, where members could reduce daily production by up to half a million barrels or do nothing. OPEC meetings are usually more clear-cut. If oil ministers of the 12-nation organization think prices are too low, they'll decide to crimp output - as they have at the last two meetings. If oil is too pricey, as was the case less than a year ago, they'll boost production. And if they are happy, they'll keep to the status quo. But desperate times call for more finessed decisions. This time, the ministers want to bolster prices.
Chaos, Confusion, and Civil War On 29 December 2008 the Wall Street Journal ran a piece about Igor Panarin, dean of the Russian Foreign Ministry's diplomatic academy. A former KGB officer, Panarin made a splash by predicting that America will probably come under martial law by the end of 2009, and may fracture into several states by 2011. When this happens, says Panarin, Russia and China will become the mainstays of a new global order. Americans are naturally skeptical of Panarin's analysis. But his conclusions are quite pedestrian. If North America sank beneath the ocean like the fabled continent of Atlantis, the world would belong to Russia and China. No significant obstacle would stand in their way. . . . . If Panarin is right about the breakup of the United States, then he is also right about the coming of a new global order under Moscow and Beijing. But is he right about the breakup of the United States?
Jim Rogers more Bankruptcies to come !!!!
Bracing for a bailout backlash The Obama administration is increasingly concerned about a populist backlash against banks and Wall Street, worried that anger at financial institutions could also end up being directed at Congress and the White House and could complicate President Barack Obama's agenda. The administration's sharp rebuke of the American International Group on Sunday for handing out $165 million in executive bonuses - Lawrence H. Summers, director of the president's National Economic Council, described it as "outrageous" on "This Week" on ABC - marks the latest effort by the White House to distance itself from abuses that could feed potentially disruptive public anger.
More stimulus needed? Possibly Less than a month after Obama signed a $787 billion recovery plan, there's talk of another. One leading economist puts 'at least even odds' on it. Well, that didn't take long. Less than a month after the $787 billion economic recovery package became law, Democratic leaders started talking this week about the possible need for more stimulus. We can't say we weren't warned. In the two months before the stimulus bill was enacted, economists' estimates for how much money would be needed to boost the economy were growing by the week as conditions deteriorated quickly. By the time Congress passed its bill, some were saying it wouldn't be sufficient to address the estimated $2 trillion decline in the country's output this year and next.
Sparta - Gold prohibition in a collapsing economy [600 BC] Spartan iron coinage - 700 BC to 350 BC . . . . As the situation deteriorated the state decreed that "no coin of gold or silver should be admitted into Sparta," and that they should "use the money that had long obtained". The decree did not pass into practice because the choice was a bleak one - no goods, or goods traded in gold. The Spartans either left (which they did in droves, leading to the end of Spartan power) or used gold. The Spartan system shows the dependence of a representative money system on the power and continuing integrity of the state.
Empty malls tell real story of great American disaster In town after town across America these days one can physically see the economic mantras of an entire generation turning to boarded-up wasteland before one's eyes. Shopping malls, which changed the American landscape within the course of a generation, are dying week by week. . . . Across the past 40 years some 200 cities built pedestrian malls. Today, only 30 remain. Drive around any town and one can see strip malls in similar decline, their parking lots nearly empty, boarded stores in the retail frontage like a mouth losing its teeth, as the lights of Circuit City go out and Linens 'n Things, Zales, Ann Taylor and Sharper Image retrench or collapse entirely.
White House Will Not Rule Out Taxing Health Benefits Austan Goolsbee, of the White House Council of Economic Advisers, plays down an article suggesting the administration is signaling support for the program as "highly overstated." President Obama's top economic advisers on Sunday disputed claims that the administration is receptive to the idea of taxing employee health benefits, but would not rule out the option. "He is open to all ideas," said Austan Goolsbee, of the White House Council of Economic Advisers, on "FOX News Sunday." Adviser Christina Romer, appearing on NBC's "Meet the Press," also would not take the option off the table. But both played down an article in The New York Times Sunday that claimed, based on interviews with advisers, that the president would not oppose efforts by Congress to tax health benefits -- even though he would not propose the change himself.
iPhone users can now jump on the gold bandwagon Buying and selling gold has taken another step towards to mass market with the launch of a gold-trading application for the Apple iPhone. The software will allow iPhone users to trade in gold and silver, or transfer the money to other people or companies, according to GoldMoney, a Jersey-based company that will provide the service. GoldMoney said the mobile payment application means any individual or merchant could open up an account and then receive a payment in gold or silver bullion within minutes."
The Constitution gives the U.S. too much Power [please read full article before jumping to conclusions! Makes a good point.] The greatest flaw, in my opinion, is that the Constitution allows the government to go into debt. This a problem, because, "the borrower is the servant to the lender", and thus, when the government goes into debt, it is no longer the servant of the people, but it becomes the servant of the moneylenders, and thus, the entire government is instantly overthrown and serves a new master the moment it begins to go into debt. Therefore, people who lend money to the government, are actually, in fact, guilty of treason. While no judge would convict today, the future is another issue. When things go bad, people tend to rise up and turn against moneylenders in a violent way, from time to time. Interestingly, the reason the Constitution was created in the first place, is that the new revolutionary government was in debt, and the moneylenders wanted a way to get re-paid, and their lack of re-payment was unjust, just as it was not right for the government to make promises it could not keep in the first place. It was unfair, and evil was already taking place. The Constitution was thus born in inequity, or shall I say, iniquity.
Cheney: Obama's Changes to Anti-Terrorism Policy Will Raise the Risk of Attack Former Vice President Dick Cheney warns that the administration is transitioning to a pre-9/11 mindset that views terrorism as a "law enforcement problem" and not a military threat. Former Vice President Dick Cheney said Sunday that the Obama administration will "raise the risk" of a terrorist attack by overhauling his predecessor's approach to the War on Terror. Cheney sharply criticized Obama's decisions to close the Guantanamo Bay detention camp, limit the methods CIA officers use to interrogate terror suspects and suspend military tribunals for alleged terrorists, saying those decisions taken together will make Americans less safe.
Russia says it is cutting oil output OPEC oil ministers said Sunday that they will stick to present output levels but seek to end overproduction by some members. The decision means there will be no cutbacks from production levels established in December. It also translates into pressure on members of the 12-nation producer group who are exporting more oil than their quotas call for. The 11 members under production quotas are overshooting their joint daily target level of just under 25 million barrels by about 800,000 barrels a day. Russia announced earlier that it was cutting oil exports - welcome news for OPEC oil ministers looking for ways to bolster prices by reducing supply without further hurting the global economy.
U.S. reconsiders its '2-war' readiness strategy The protracted wars in Iraq and Afghanistan are forcing the administration of President Barack Obama to rethink what for more than two decades has been a central premise of American strategy: that the nation need only prepare to fight two major wars at a time. For more than six years now, the United States has in fact been fighting two wars, with more than 170,000 troops now deployed in Iraq and Afghanistan combined. The military has openly acknowledged that the wars have left troops and equipment severely strained and has said that it would be difficult to carry out any kind of significant operation elsewhere.
Kremlin: Bombers near U.S. just talk A Russian air force chief said Saturday that Moscow could base some strategic bombers in Cuba or on an island offered by Venezuela, the Interfax news agency reported, but a Kremlin official quickly said the military had been speaking only hypothetically. The U.S. and Russia have been trying to reset their relationship, severely strained over U.S. plans to position missile defense elements in Poland and the Czech Republic and by Russia's invasion of U.S. ally Georgia last year. Russia has nothing to gain strategically from basing long-range craft within relatively short range of U.S. shores, independent military analyst Alexander Golts said, calling the military statement a retaliatory gesture aimed at hitting back after U.S. ships patrolled Black Sea waters near Georgia.
Treasury seeks $100 billion to aid ailing nations Geithner pledges fresh help for IMF, will ask Europe to boost stimulus Treasury Secretary Timothy F. Geithner yesterday unveiled a sweeping plan that calls on the United States and other nations to offer billions more to bail out economies in crisis and prods a reluctant Europe to prop up the reeling world economy with more aggressive government spending. But the campaign is triggering controversy on both sides of the Atlantic. In Europe, some officials doubt the wisdom of falling deeply into debt to create jobs and halt the plunge in consumer demand, as the United States is doing. On Capitol Hill, members of Congress have grown wary of approving still more money. Geithner said the administration will ask Congress to make $100 billion more available - nearly doubling the current U.S. commitment — to the International Monetary Fund to aid struggling nations.
Nations urged to act on economic crisis Germany, France, Japan resist spending, debt rise The White House on Wednesday proposed sweeping measures to combat the world financial crisis, calling on other countries to enact big stimulus packages and greatly increase assistance to foundering European countries through the International Monetary Fund. The Obama administration's prescription to stop the spread of the global contagion comes as reports show the world economy and trade are shrinking for the first time in decades amid a collapse of credit and banking systems.
Obama G20: Stimulus Obama outlined some of his priorities at the upcoming Group of 20 Summit in London, scheduled for early April. The administration has hinted that European countries will need to up the size of their stimulus packages. "The decline in global demand is enormous, and now is the time for us to provide some balance," Obama noted.
Geithner Urges ‘Forceful’ G-20 Action, More IMF Funds Treasury Secretary Timothy Geithner urged the Group of 20 nations to take “forceful” actions to end the financial crisis and called for an expansion of the International Monetary Fund’s supplementary borrowing program by about $500 billion. “This is a global crisis which requires a global response,” Geithner said today in a statement from Washington. “G-20 countries must take strong macroeconomic and financial sector measures.” A “reasonable benchmark” is the IMF’s recommendation for stimulus equivalent to 2 percent of a nation’s gross domestic product, Geithner said. Geithner will make the recommendations at a meeting later this week of finance ministers from 20 of the world’s industrial and developing nations that will lay the groundwork for a summit of government leaders on April 2 in London.
Pelosi dampens idea of second stimulus U.S. House of Representatives Speaker Nancy Pelosi poured cold water on the idea of another economic stimulus package on Thursday amid suggestions that some Democrats had already begun work on one. The top House Democrat said she first wanted to see how the $787 billion stimulus would help the ailing economy, and that additional legislation like the newly enacted $410 billion spending bill and other advancing measures would also help. "I really would like to focus on the first one," Pelosi told reporters. "I think it's important that the American people and the Congress of the United States have confidence in the recovery package that we have passed."
Geithner: Spending hikes are short term Treasury secretary defends burgeoning Obama budget President Barack Obama's ambitious new budget faced bipartisan skepticism Thursday as key senators questioned the administration's long-term budget outlook and the deficits it envisions rising in the middle of the next decade. Treasury Secretary Timothy Geithner defended it in testimony before the Senate Budget Committee, saying current increases in spending are short term and will have to be substantially reduced to get the country back into fiscal shape.
Obama, Geithner get low grades from economists President Barack Obama and Treasury Secretary Timothy Geithner received failing grades for their efforts to revive the world's largest economy, according to participants in the latest Wall Street Journal forecasting survey. A majority of the 49 economists polled said they were dissatisfied with the administration's economic policies, according to the paper, a stark contrast to Obama's popularity ratings with the general public. On average, the economists gave the president a grade of 59 out of 100, and although there was a broad range of marks, 42 percent of respondents rated Obama below 60, the paper said. Geithner received an average grade of 51, while Federal Reserve Chairman Ben Bernanke scored better, with an average 71, the paper said.
Jim Rogers - Hyperinflation will consume us and some GOOD ADVISE for the G20 next month
Money man says half of world's wealth gone Private equity chief: 'This is unprecedented in our lifetimes' Half of the world's wealth has disappeared, Jerome Corsi's Red Alert reports. Stephen Schwarzman, the chief executive officer of private equity company Blackstone Group LP, told Reuters that between 40 and 45 percent of the world's wealth had been destroyed in the past year and a half. "This is absolutely unprecedented in our lifetimes," he said.
Gold's Long-Term Fundamentals Remain Strong Gold fell 2.2% Tuesday (silver -3.1%) as increasing risk appetite saw stock markets in the US surge. A rally in stock markets was overdue but the sustainability of this latest rally is doubtful and equity markets in Asia were mixed and after a lower start, are tentatively higher in Europe. The financial and economic fundamentals remain very poor and deteriorating and unfortunately this is likely yet another dead cat bounce in equity markets. Superficially the news, in the form of a memo from the CEO to staff, from Citigroup (C) was a brief ray of light amidst the gloom, but Citigroup remains close to insolvency and remains on the ropes and this is likely to be a short lived reprieve. It is worth remembering that there were similar claims of financial good health by the CEOs of Bear Stearns and Lehman Brothers days before their demise.
Gold sales plunge by 70% in UAE, Saudi Arabia Global economic meltdown is telling it hard on gold sales and bullion markets in the United Arab Emirates (UAE) and Saudi Arabia. Rising unemployment, crash in realty prices and plunging stock markets have taken the sheen out of the gold market in all the major cities across UAE and the Saudi Kingdom. While gold sales in UAE cities like Dubai, Abu Dhabi and Sharja have plunged by nearly 70%, gold trading volumes have dipped in Saudi Arabia by at least 50% in February. ”Gold sales across the Gulf countries have dipped drastically thanks to lower tourist arrivals and the crash in property prices,” Mark Robinson, a bullion analyst based in Dubai told Commodity Online.
Don't Sweat Inflation: Deflation "In the Cards" for 2009 and Beyond, Shilling Says It has become conventional wisdom inflation will ultimately result from the combination of massive government spending, and the Fed's historic rate-cutting and other extraordinary stimulus. Runaway inflation and a weaker dollar may well be in our future, but probably much further down the road than most people currently expect, says Gary Shilling, president of A. Gary Shilling & Co.
Don't Bet on Hyperinflation For several months now, I've heard all of this talk of hyperinflation. I'm sure you have too. I've seen that word so many times over the past year that I might have even used it without realizing it. As I wrote in the original edition of America's Financial Apocalypse, "inflation is certainly going to be a very big problem." I stand by this previous forecast first made in 2006. However, hyperinflation isn't going to occur. While I may be wrong about some things in the future, I won't be wrong about this. Quite simply, America would go to war before allowing hyperinflation to set in.
Is This America's Dark Knight? In last year's hit movie, The Dark Knight, there is a classic scene between Alfred and Bruce Wayne. A befuddled Bruce cannot figure out what the Joker is actually trying to gain, and he is sharing his consternation with Alfred. Alfred responds by telling Bruce that some men are just different and, in one of the great lines of the movie, states bluntly, "Some men just want to see the world burn." While it is quite early on in the new administration's term in office, it appears to be behaving in exactly this way. Obama is playing the part of the Joker to perfection, aided and abetted by the likes of Nancy Pelosi and Harry Reid. The only difference being that, instead of wearing a clown's face, he has chosen to look promising and speak lofty words of nothingness as he and the other Democratic leaders push the nation ever closer to economic collapse.
Buffett's Berkshire Has AAA Debt Rating Cut by Fitch Billionaire Warren Buffett's Berkshire Hathaway Inc. had its top-level AAA credit rating cut by Fitch Ratings, which cited concern about the potential for losses on the insurer's equity and derivatives holdings. Buffett's role as chief investment officer also puts the company at risk if he becomes unable to do the job, Fitch said in a statement. Fitch cut the so-called issuer default rating on Berkshire to AA+, and senior unsecured debt to AA. The insurance and reinsurance units kept their AAA status, with a negative outlook for all entities, Fitch said.
Commodities prices soar, buoyed by gains on Street Commodities prices soared Thursday as buying interest for everything from gold to corn gained momentum amid a rally on Wall Street. Gold prices extended their gains, logging a 3 percent bounce over two sessions. Prices benefited from a three-day jump on Wall Street after weeks of unrelenting selling. Stocks gained strongly even as General Electric Co. saw its critical triple-A rating cut because of problems at its lending arm. Investors were encouraged that the blue-chip company maintained a stable rating despite the downgrade.
China 'Worried' Over Safety of U.S. Debt China, the U.S. government's largest creditor, is "worried" about its holdings of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said. "We have lent a huge amount of money to the United States," Wen said today at a press conference in Beijing that marked the closure of the annual National People's Congress meeting. "Of course we are concerned about the safety of our assets. To be honest, I am a little bit worried. I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China's assets." China should seek to "fend off risks" as it diversifies its $1.95 trillion in foreign-exchange reserves and will safeguard its own interests, according to Wen. Chinese investors held $696 billion of U.S. Treasuries as of Dec. 31, an increase of 46 percent from the prior year.
Central Banks in a "Pickle" Now that we heard that Citi had a good quarter, which is laughable(after how much public bailout?), I bet this latest financial rally doesn't last more than two weeks. Here is why… The US Treasury/Fed has put up $11 Trillion of bailouts and guarantees to the US and world financial system. But we don't hear virtually any specifics as to who got what. Why is that? Derivatives Secrecy problem That is because the world has well over $1000 trillion of derivatives out which are unregulated and deeply underwater. That is why we are not told who gets what, because if it were known how much loss is out there, we definitely would have had a world bank holiday, which has been narrowly averted two times in the last year and a half since Aug 2007.
Marc Faber : Do not Underestimate the Power of Printing Money . . . inflation, industrial commodities and market sentiment.
The Real Reason FDIC Is Going Broke The following excerpts are from a piece written today in Boston Globe. Reading through a well-written article one cannot help but notice and recognize the unfortunate and rather shocking facts of our government's level of negligence, incompetence and shortsightedness. Last week the Federal Deposit Insurance Corporation [FDIC], the insurer of our nation's bank deposits, asked for emergency powers to temporarily borrow as much as $500 billion until the end of 2010 to take over failed banks if the Federal Reserve, Treasury Secretary and White House agree such money is warranted. However, the FDIC is now facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.
Short & Sweet Governments (who use a fiat currency as we do) only have three ways to raise revenue: (1) Taxes, (2) Borrowing (Bonds) or (3) Printing Money (Quantitive Easing).
We know from world history that taxes cannot go higher than about 50% of one's income before people revolt. We are close to this percentage now, so that's not a solution.
Bonds, which are basically IOUs from the government, are debt that is guaranteed to be repaid on future revenues. Unless and until a government defaults (see Argentina, Iceland, Latvia, etc.) .
Quantitive Easing (QE) is the monetization of debt where the central bank (US Fed) buys the government's debt and turns it out into the economy as cash - thus, printing money from "thin air." Japan tried this in the 1990's with no success, and the UK has already resorted to it as announced just this week. Of course this increases the monetary supply which we know leads to inflation, and in extreme cases Hyperinflation (see Zimbabwe).
Bernanke calls for powerful regulator The US needs an overarching regulatory authority to prevent a repeat of risks building up unchecked across the financial system and exploding into economic crisis, Ben Bernanke said on Tuesday. In remarks that echo calls on Capitol Hill for a powerful co-ordinating regulator in the US, the Federal Reserve chairman said the central bank would need to be involved in such a body, if not take the lead role itself. He said the financial crisis, which had seen huge risks building up in lightly regulated institutions, had revealed the weakness of fragmented regulation. "This crisis has revealed some rather shocking gaps," he said. "Who was overseeing the subprime lenders, for example? Who was overseeing AIG? There simply wasn't enough adequate oversight in those cases." - Financial Times Dominant Social Theme: An "adult" sounds a warning.
Bernanke 1: Oversight , Financial Infrastructure, Boom Mentality, Great Depression, Recession 2010 Bernanke Q&A - Council on Foreign Relations
Bernanke 2: Capitalism broadly construed has been enormous success, Mark-To-Market
Bernanke 3: Deflation, Inflation, Stimulus, G20 Focus on Global Reach of Crisis
Bernanke 4: Systemic Risk Authority, Stress Testing, Princeton vs Fed Res
Subsidizing Failure The political response to this economic downturn has differed from previous responses to downturns in a number of ways, the most economically significant of which lies in the extent to which failure has been subsidized. Counterproductive economic pathologies have been encouraged, financial structures that endangered global prosperity have been bailed out and trillions of dollars have been poured into industries that obviously needed to downsize. Far from providing "stimulus," such subsidies both deepen the recession moderately and extend its duration inordinately.
GE loses top credit rating GE was one of only six companies left with a AAA rating from S&P General Electric Co. lost its prized top credit rating from Standard & Poor's over fears of rising loan losses and lower earnings at its lending arm. The credit rating agency lowered GE's long-term debt ratings to 'AA+' from 'AAA' Tuesday, a one notch reduction that markets had long expected. The move means it will be more expensive for GE to raise money in the credit markets.
I Pay My Mortgage: What's in the Housing Bailout For Me? Even if the housing rescue doesn't lower your mortgage payments, it may still benefit you As Uncle Sam issued check after to check to keep Wall Street bankers afloat, American taxpayers--who were picking up the tab--grew increasingly resentful of paying for others' mistakes. But when President Barack Obama announced a $75 billion plan to lower monthly mortgage payments for up to four million distressed homeowners in mid-February, frustration turned to rage. Just ask Rick Santelli, whose now-infamous rant against government subsidization of "the losers' mortgages" turned the obscure CNBC analyst into a household name, while underscoring the nation's growing distaste for bailouts. But the Obama administration has pitched its housing fix as one that would help all homeowners--not just troubled ones. So after fresh details of the plan were released Wednesday, it's time to ask: I'm a responsible homeowner; what's in it for me?
How big is the foreclosure problem?
Who qualifies for Obama's housing plan?
I don't qualify. How does this help me?
What incentive do I have to keep paying my mortgage
I'm not in trouble now, but how can I protect myself from the threat of foreclosure?
Is there a silver lining in this mess?
Obama's Loan Modification Plan: 7 Things You Need to Know The White House releases fresh details on its plan to save the housing market At the heart of the President Barack Obama's ambitious plan to rescue the housing market is the conviction that restructuring distressed mortgages will keep struggling borrowers in their homes and help insert a floor beneath plummeting property values. With $75 billion dedicated to reworking troubled loans, that's a big bet—especially considering that a top banking regulator said last December that almost 53 percent of loans modified in the first quarter of 2008 went bad again within six months. But supporters argue that mortgage modifications need to be properly engineered to work—and many early ones weren't. To that end, the Obama administration on Wednesday unveiled fresh details on its plan to restructure at-risk loans and help as many as four million home owners avoid foreclosure. Here are seven things you need to know about Obama's loan modification program.
GOP lawmakers oppose more money for GM House leader wants business plan, Senators think bankruptcy makes sense House Republican leader John Boehner said Sunday he doesn't support handing over more federal money to keep General Motors Corp. afloat unless the automaker develops a viable and long-term business model and can pay back government loans. "Anything short of that is just throwing good money after bad," Boehner said on CBS's "Face the Nation."
GM says it doesn’t need $2B from government Auto giant says cost-cutting measures are starting to take hold General Motors Corp.’s chief financial officer says the company will not need the $2 billion loan installment for March that it requested from the U.S. government in February. CFO Ray Young said Thursday in an interview with The Associated Press that GM told the Obama administration it won’t need the money so soon because its cost cuts are starting to take hold.
U.S. jobless seen nearing 10 percent U.S. unemployment will approach 10 percent as the country endures its worst recession since World War Two, leaving more than 13 million Americans jobless, according to a Reuters poll of economists. The economy will level out in the third quarter, the results showed, but the poll painted a bleaker picture than a survey conducted just a month ago. Median forecasts now assume gross domestic product will shrink an annualized 5.3 percent this quarter, following a brutal 6.2 percent decline at the end of 2008.
Jobless claims jump to 654K last week The number of people who filed for jobless claims for the first time last week jumped to 654,000 and those who receive continuing benefits also increased to 5.3 million, a new record, the Labor Department reported Thursday. The rise in the number of people who signed up for unemployment insurance for the week ended Saturday marked an increase from the 639,000 first-time filers the previous week, the agency said.
That Acursed Propensity to Save At the long last we got the official explanation how we got into this mess. In his March 2, 2009, column in The New York Times under the banner title Revenge of the Glut Paul Krugman tells us, quoting the authority of the Chairman of the Fedreal Reserve Ben Bernanke, that it is all the fault of the Asians. They save damn too much. They test the endurance of unhappy Americans who bankrupt themselves in trying to work off all that darned excess saving fast enough before it can do more damage. Even though they do their level best, they could not keep up with the prodigious output of the Asians and "global savings glut" is the result. It was the cause of the U.S. current account deficits in the first place; now it is causing more mischief by creating turmoil in the financial markets and in the banking system. In this scenario, the good guys are the Americans.
Homeowners See Taxes Rise as Property Values Sink Amid Deficits Americans battered by the biggest slump in home prices on record are facing higher property taxes as local governments struggle to plug budget deficits. Municipal finance officers budgeted for a 3.6 percent drop in revenue from residential taxes this fiscal year, a survey by the U.S. League of Cities in September shows. With home prices down 12.4 percent in the fourth quarter from a year earlier, the most ever for an index compiled by the National Association of Realtors, cities and counties are compensating with higher tax rates or appraisals, even where laws cap property-tax growth.
Fed reports record fall in household net worth The government says that the net worth of American households fell by the largest amount in more than a half-century of record keeping during the fourth quarter of last year. The Federal Reserve said Thursday that household net worth dropped by a record 9 percent from the level in the third quarter. The decline was the sixth straight quarterly drop in net worth and underscored the battering that U.S. families are undergoing in the midst of a steep recession with unemployment surging and the value of their homes and investments plunging.
Why Chrysler Represents the Ills of the New America I entered the corporate world as a management trainee learning the trade from the bottom up. There was a common theme coming from the managers above - I was to take care of the people below me because they were more important to the success of the company than I was. Yah, obviously it was true because my teamster foreman made three times my salary, and one of my technicals made twice what I did. In fact, of the 60 people in my first group - I was the lowest paid. Pay was based on relative contribution, not seniority, not org chart position. In those early days of my career, I watched the head of my company (and one of the 50 richest people in the world) walk through and greet the 'little people'. He knew many on a first name basis. He knew the profits were generated from the activities of the lower organizational levels.
RPT-FEATURE-Corporate oil booms in low-tax Switzerland The tidy towns and mountain vistas of Switzerland are an unlikely setting for an oil boom. Yet a wave of energy companies has in the last few months announced plans to move to Switzerland -- mainly for its appeal as a low-tax corporate domicile that looks relatively likely to stay out of reach of Barack Obama's tax-seeking administration. In a country with scant crude oil production of its own, the virtual energy boom has changed the canton or state of Zug, about 30 minutes' drive from Zurich, beyond all recognition. Its economy was based on farming until it slashed tax rates to attract commerce after World War Two.
A Besieged Bank, and Its Hometown, Look Inward Each workday, when the closing bell sounds on Wall Street, the mayor here in the Wall Street of the South takes stock of this city's fortunes. t is not hard. If it was a good day for Bank of America, whose headquarters towers over this city and its collective psyche, then it was a good day for the people in Charlotte. But if it was a bad one - and there have been too many of those lately - a bit more local pride and prosperity slip away.
Oil Trades Near $47 After Surging as OPEC Weighs Production Cut Crude oil traded near $47 a barrel, set for a fourth week of gains, as OPEC prepares to meet this weekend to consider a fourth cut in output. The global oil market is oversupplied and OPEC will lower output if needed, Shokri Ghanem, who chairs Libya's state-run National Oil Corp., said yesterday. Other ministers have called for the group to halt reductions. U.S. crude stockpiles rose last week amid a 3.5 percent drop in demand, the Energy Department reported on March 11. "The dynamic is a real supply and demand struggle at the moment," said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. "The market sees the downside risks still apply to demand but there is upside risk to supply if OPEC comes through with a cut."
Madoff refuses to name names Looks like everyone's favorite fraud story will be around quite a bit longer as the plea deal that would send Bernard Madoff to jail for roughly 150 years fell apart when he refused to accept a conspiracy charge that would have him implicate employees or family.
Madoff Goes to Jail After Guilty Pleas to All Charges When Bernard L. Madoff entered a federal courtroom in Manhattan on Thursday to admit that he ran a vast Ponzi scheme that robbed thousands of investors of their life savings, he was as elegantly dressed as ever. But, preparing for jail, he wore no wedding ring - only the shadowy imprint remained of one he has worn for nearly 50 years. He admitted his guilt for the first time in public, and apologized to his victims, dozens of whom were squeezed into the courtroom benches behind him, before being handcuffed and led away to jail to await sentencing. "I knew what I was doing was wrong, indeed criminal," he said. "When I began the Ponzi scheme, I believed it would end shortly and I would be able to extricate myself and my clients."
Madoff Life Prison Term Means Inmate Blame for Crash Bernard Madoff, who pleaded guilty today to masterminding the largest Ponzi scheme in history, was sent by a federal judge to the Metropolitan Correctional Center, a "horrendous" jail in lower Manhattan that houses swindlers and murderers. Behind bars, he may have to fight off prison inmates who want to squeeze him for money or blame him for the Wall Street crash. "Madoff isn't going to be real popular," said Larry Levine, who served 10 years in federal prisons for securities fraud and narcotics trafficking and now advises convicts on surviving time behind bars. "All the guys there will have wives or parents who are losing their homes or their jobs or who can't send money to them anymore. Everybody's going to be blaming Bernie."
A 'sorry and ashamed' Bernard Madoff pleads guilty Saying he was "deeply sorry and ashamed," Bernard Madoff pleaded guilty Thursday to pulling off perhaps the biggest swindle in Wall Street history and was immediately led off to jail in handcuffs to the applause of his seething victims in the courtroom. U.S. District Judge Denny Chin denied bail for Madoff, 70, and ordered him to jail, noting that he had the means to flee and an incentive to do so because of his age. Madoff earlier spoke softly but firmly to the judge as he pleaded guilty to 11 charges in his first public comments about his crimes since the scandal broke in early December. "I am actually grateful for this opportunity to publicly comment about my crimes, for which I am deeply sorry and ashamed," he said. "As the years went by, I realized my risk and this day would inevitably come. I cannot adequately express how sorry I am for my crimes."
Texas gov. rejects stimulus money for unemployment Texas Gov. Rick Perry announced Thursday he turned down $555 million of federal stimulus funding that would expand the state's unemployment benefits, saying the money would have required the state to keep paying for the expanded benefits after the stimulus money ran out. Perry, an outspoken critic of President Barack Obama's $787 billion stimulus bill, did accept most of the roughly $17 billion slated for Texas in the plan. But he turned down the unemployment benefits because he said it would require the state to increase the tax burden on Texas businesses. "During these tough times, Texas employers are working harder than ever to move products to market, make payroll and create jobs," Perry said at a news conference. "The last thing they need is government burdening them with higher taxes and expanded obligations."
More Americans say they have no religion A wide-ranging study on American religious life found that the Roman Catholic population has been shifting out o of the Northeast to the Southwest, the percentage of Christians in the nation has declined and more people say they have no religion at all. Fifteen percent of respondents said they had no religion, an increase from 14.2 percent in 2001 and 8.2 percent in 1990, according to the American Religious Identification Survey. Northern New England surpassed the Pacific Northwest as the least religious region, with Vermont reporting the highest share of those claiming no religion, at 34 percent. Still, the study found that the numbers of Americans with no religion rose in every state. "No other religious bloc has kept such a pace in every state," the study's authors said.
Obama’s New ‘Council on Women’ Seen As Vehicle to Promote Feminist Agenda President Barack Obama on Wednesday created a new bureaucracy to deal with women’s health, domestic violence and economic security. But some conservatives fear the new council will actively promote the feminist agenda in the government. Obama signed an executive order establishing the White House Council on Women and Girls with the intent of coordinating policies across all major federal departments to help women across the nation meet unspecified “challenges.”
U.N. Secretary-General Calls U.S. a ‘Deadbeat’ Donor, Sparking Republican Complaints The United States gives more financial support to the United Nations than any other country, but on Wednesday, in a closed-door meeting with the House Foreign Relations Committee, U.N. Secretary-General Ban Ki-moon called the U.S. “the biggest deadbeat” donor. The U.S. still owes around $1 billion to the world body, Ban told lawmakers. “We cannot do the work you ask us to do without the resources to get the job done,” the U.N. quoted him as telling the House committee. One Republican at the meeting called Ban’s comments “beyond belief.”
N. Korea gives U.N. heads-up on launch Discloses April satellite plans North Korea told two U.N. agencies that it plans to launch a communications satellite between April 4 and April 8 - an unprecedented disclosure seen as trying to fend off international worries that the launch is really a test of long-range missile technology. The notification to the International Maritime Organization and the International Civil Aviation Organization underscores that the communist regime is intent on pushing ahead the launch in an attempt to gain greater leverage in negotiations with the United States, analysts say. The U.S. and other governments have said any rocket launch - whether missile test or satellite - would violate a 2006 U.N. Security Council resolution banning North Korea from ballistic missile activity.
Military last resort for border violence Mexican drug cartels are the biggest organized crime threat to the United States, a top Homeland Security Department official told a House panel Thursday. The department is concerned enough about the escalating violence on the southwest border that its plans to respond to the situation include - as a last resort - deploying military personnel and equipment to the region if Homeland Security Department agencies should be overwhelmed, said Roger Rufe, the department's head of operations. However, Mr. Rufe, echoing comments a day earlier from President Obama, said now is not the time to militarize the border with Mexico despite drug violence just inside Mexico that threatens to migrate across the border.
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Thurs 03.12.2009
Foreclosure notices continue to go up Unaffected by lender reprieve Despite halts on new foreclosures by several major lenders, the number of households threatened with losing their homes rose 30 percent from last year's levels, RealtyTrac reported Thursday. Nationwide, nearly 291,000 homes received at least one foreclosure-related notice last month, up 6 percent from January, according to the Irvine, Calif.-based company. Although foreclosures are highly concentrated in the western states and Florida, the problem is spreading to states such as Idaho, Illinois and Oregon as the U.S. economy worsens. "It doesn't bode well" for the embattled U.S. housing market, said Rick Sharga, vice president for marketing at RealtyTrac, a foreclosure listing firm. "At least for the foreseeable future, it's going to continue to be pretty ugly."
Democrats draw up plan for second stimulus bill Democrats in the US Congress are drawing up plans for a second stimulus bill amid fears the first $787 billion package was not big enough to kick start the US economy. Just weeks after Congress approved the largest rescue package in US history, Nancy Pelosi, the speaker of the House of Representatives, said "we have to keep the door open" to another stimulus. David Obey, the chairman of the appropriations committee, said he has instructed his staff to start drafting another stimulus proposal, though he emphasised no deadlines or timelines had been set. Their remarks followed a meeting with economists who warned that only 2.5 million jobs would be "saved or created" over the next year, rather than the 3.5 million forecast by President Barack Obama.
Number One Reason to Own Gold What do the following industry-leading companies have in common? Alcoa, AIG, AMBAC, American Express, AMR (American Airlines), Bank of America, Bear Stearns, CBS, Citigroup, Countrywide Credit, Delphi, Dow Chemical, Eastman Kodak, Fannie Mae, Ford, Freddie Mac, Gannett, General Electric, General Motors, Goodyear Tire, Harley-Davidson, The Hartford, International Paper, JDS Uniphase, Lear, Lehman Brothers, Liz Claiborne, Macy's, MBIA, Merrill Lynch, MetLife, MGIC, MGM, Motorola, JC Penney, Prudential, Saks, Sears, SprintNextel, Tenet Healthcare, UAL (United Airlines), United States Steel, Wachovia Bank, Washington Mutual, Whirlpool, and Xerox.
The answer: Since the middle of 2007, all of these companies have seen their stock values decline by more than 80 percent.
At the close of markets on June 29, 2007, gold was at $648. Its price now is more than 40 percent higher than it was then. Gold has outperformed the stocks in these companies by at least seven-fold in the past 20 months. This example is a perfect demonstration of the number one reason to own gold. The best purpose for owning gold is for insurance against calamities that may affect the values of paper assets.
Central banks buy record 1.1 million oz of gold Bullion prices circled the $900 mark and did not stray more than about $5 from either side of that figure during relatively slow overnight dealings. Slack demand (save for a bit of industrial buying) was noted, although a few bargain seekers were spotted under $900. Not the type of buyer whose actions made for the recent surge in prices. Something else lacking confidence: surveyed participants in the Bloomberg Professional Global Confidence Index. Their group's metric fell to 5.95 - a reading that reflects items such as a 38 percent January shrinkage in German factory orders, the World Bank's forecast of a global economy in a concerted contraction for the first time since WWII, and a sharp drop in Chinese exports last month.
Gold prices gain as Wall Street wavers Gold prices gain as dollar weakens, Wall Street wavers; energy, agriculture futures falter Gold prices rose Wednesday, benefiting from a quieter day on Wall Street and as the dollar fell against other currencies. Oil prices and agriculture futures sank on new evidence that global demand is falling off. Gold rose as investors bought stocks with far less intensity than they did on Tuesday, when Wall Street had its best one-day performance so far this year. Meanwhile, the dollar showed some weakness against the euro and the British pound Wednesday. Though at times gold moves independently of the U.S. currency, it tends to rise when the greenback is weak. Investors often move into gold and out of the dollar as a shield against inflation, which is accelerated by a decline in the value of the dollar.
SPDR Gold Trust Holdings Climb to Record 1,038.17 Metric Tons Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, advanced to a record, according to figures on the company’s Web site. The fund held 1,038.17 metric tons of bullion as of yesterday, up 0.9 percent from March 10. The fund’s holdings are just behind the 1,040.1 tons held by Switzerland, the sixth- largest stockpile. The precious metal fell to $899.50 an ounce in the London afternoon fixing yesterday from $901.50 an ounce on March 10. Gold for immediate delivery was little changed at $910.53 an ounce at 9:20 a.m. in Singapore today.
Reports of Profits While Banks Fail This week Citigroup shocked Wall Street by announcing that the company would be profitable in the current quarter. At the same time, the Obama Administration indicated that it would be unlikely to nationalize American banks, preferring to provide low cost funding to encourage the private sector to buy distressed assets from the banks. The two developments sparked a vigorous rally in financial stocks, which had been drifting downward for weeks, caught in what appeared to be an unending death spiral. But have the good times really returned? On the surface at least, there are some promising points. Based on current income, and an upward trending yield curve (that will allow banks to borrow at nearly no cost from the Fed and lend to borrowers at a good profit) the banks should generate strong cash flow. But that is hardly the full story.
Geithner: Plan will work but not overnight Treasury Secretary Timothy Geithner said on the Charlie Rose Show Tuesday night that we'll be hearing about the Obama Administration's plan to deal with toxic assets soon. I haven't had a chance to watch the entire interview yet but this is what the Associated Press says: During an interview on "The Charlie Rose Show," Geithner said the plan the administration has put together will provide financing to private investors who are willing to buy banks' bad assets. He predicted the plan will succeed but will take time to work. That's essentially what Geithner told a closed-door meeting of congressional Democrats earlier in the week: the plan will work but not overnight.
Geitner's Full Interview on Google
Geithner Urges ‘Forceful’ G-20 Actions to End Crisis Treasury Secretary Timothy Geithner urged the Group of 20 nations to take “forceful” actions to arrest the financial crisis, and proposed a quarterly assessment of each country’s steps by the International Monetary Fund. “This is a global crisis which requires a global response,” Geithner said in a statement in Washington. “G-20 countries must take strong macroeconomic and financial sector measures.” A “reasonable benchmark” is the IMF’s recommendation for stimulus equivalent to 2 percent of a nation’s gross domestic product, Geithner said. . . . . The Obama administration soon will also push Congress for legislation that allows the IMF to “mobilize” its stockpile of gold, Geithner said today. Congress would need to approve the IMF funding expansion, although it wouldn’t count against the budget deficit, he said.
Geithner Said to Push G-7 to Ease Criticism of China Policy Treasury Secretary Timothy Geithner pushed Group of Seven officials to soften criticism of China last month after his accusation that the nation was “manipulating” the yuan strained ties with the U.S.’s second- biggest trading partner, said a person briefed on the matter. G-7 finance ministers and central bankers on Feb. 14 welcomed “China’s fiscal measures and continued commitment to move to a more flexible exchange rate.” By contrast, the group in April 2008 pressed for “accelerated appreciation” of the yuan. Geithner’s behind-the-scenes effort came just weeks after he publicly accused China of “manipulating” its currency during his Senate confirmation hearings, drawing criticism from the Chinese. Donald Straszheim, a former Merrill Lynch & Co. chief economist, said the G-7 shift may signal the U.S. Treasury won’t label China a manipulator in a report due April.
U.S. May Use Capital Injections for ‘Bad’ Asset Plan The Obama administration plans to use capital injections as an incentive to get U.S. banks to sell distressed securities to investors. The private investors will also get federal loans to buy the assets, in a two-pronged strategy intended to revive trading in mortgage-backed debt. Treasury Secretary Timothy Geithner said in an interview with PBS’s Charlie Rose show yesterday “it requires making sure there’s capital available to the system, that these banks have the incentive to start to move this stuff, that there’s a mechanism available” to finance investors. Geithner’s initiative reflects a bet that it will be cheaper to provide taxpayer financing than have the government buy the assets outright, as contemplated by the Bush administration.
Bernanke Says Banks Will Remain Capitalized, but "Too Big to Fail" Needs to End Federal Reserve Chairman Ben Bernanke stressed the need to overhaul operating rules for "too big to fail" institutions on Tuesday. Speaking to the Council on Foreign Relations in Washington, D.C., Bernanke said the U.S. government currently remains committed to ensuring major banks have the capital necessary to weather the recession and to meet their commitments. "Government assistance to avoid the failures of major financial institutions has been necessary to avoid a further serious destabilization of the financial system, and our commitment to avoiding such a failure remains firm," he said.
Freddie Mac Will Ask for $31 Billion from Taxpayers - on Top of $13.8 Billion it Got Last Year Freddie Mac Seeks $30.8B in US Aid After 4Q Loss Freddie Mac, facing mounting damage from the U.S. housing crisis, said Wednesday it will ask the government for nearly $31 billion in additional aid after posting a gargantuan loss of more than $50 billion last year. The report comes just weeks after Fannie Mae said it would need more than $15 billion in government assistance after losing almost $60 billion last year. The two companies, which were seized by the government last fall, are critical to the health of the U.S. real estate market. Together, Fannie and Freddie own or guarantee more than half of all U.S. home loans.
Freddie Mac Says Dividends to Treasury May Bury Future Profits Freddie Mac, the U.S. mortgage- finance company seized by regulators six months ago, said it needs more financial help from the government and raised doubts about its ability to become profitable again. Freddie’s decision yesterday to tap an additional $31 billion in aid in return for preferred stock will raise its annual dividend payment to the Treasury to $4.6 billion, a figure the McLean, Virginia-based company said may be beyond its means. “This dividend obligation exceeds our annual historical earnings in most periods, and will contribute to increasingly negative cash flows in future periods,” Freddie said in a regulatory filing.
Obama Defends Earmarks - Then Signs $410 Billion Bill Behind Closed Doors Obama Defends Pet Projects and Signs Spending Bill President Barack Obama, sounding weary of criticism over federal earmarks, defended Congress' pet projects Wednesday as he signed an "imperfect" $410 billion measure with thousands of examples. But he said the spending does need tighter restraint and listed guidelines to do it. Obama, accused of hypocrisy by Republicans for embracing billions of dollars of earmarks in the legislation, said they can be useful and noted that he has promised to curb, not eliminate them.
Greenspan: Don't blame me for this mess Former Federal Reserve Chairman Alan Greenspan has gotten a lot of blame for the current economic crisis which grew out of the housing bubble. His once near absolute belief in the wisdom of markets and bias against regulation is often mentioned by critics as kindling that helped create the inferno of a housing crisis that has incinerated trillions of dollars of wealth. Many observers have also pointed the finger at Greenspan for leaving key interest rates too low for too long in the earlier part of this decade.
Fed’s Rate Policy Didn’t Cause Housing Bubble, Greenspan Says The U.S. Federal Reserve’s “easy money” policies during the first part of this decade didn’t cause the housing bubble, former Chairman Alan Greenspan wrote in the Wall Street Journal. A surge in growth in China and other emerging markets led to an excess of savings that pushed global long-term interest rates down between early 2000 and 2005, Greenspan wrote in an article. That caused mortgage rates and the benchmark Fed-funds rate to diverge after moving “in lockstep” from 1971 to 2002, he said. The article is part of the former Fed chief’s defense against charges in books such as “Greenspan’s Bubbles” by William A. Fleckenstein that his policy of keeping rates too low for too long inflated the housing bubble. The collapse in the U.S. subprime-mortgage market led to about $1.2 trillion in writedowns and the bankruptcy of Lehman Brothers Holdings Inc.
Greenspan A Glutton For (His Own) Punishment Why Greenspan continues to try and defend his deplorable record as Fed Chairman is unknown. What is known is that the once powerful Sir Alan has seen his reputation steadily deteriorate to a level not much higher than laughing-stock. Here is what Greenspan had to say in his most recent commentary: “There are at least two broad and competing explanations of the origins of this crisis. The first is that the "easy money" policies of the Federal Reserve produced the U.S. housing bubble that is at the core of today's financial mess...The second, and far more credible, explanation agrees that it was indeed lower interest rates that spawned the speculative euphoria....
Alan Greenspan still hasn't got a clue On the same day that his successor signaled dramatic policy changes that would see the Federal Reserve "take away the punchbowl" before inflating yet another asset bubble, radically altering the way financial market regulators operate in the process, former Fed chairman Alan Greenspan was readying yet another in a long series of op-ed pieces aimed at defending his legacy. He didn't cause the housing bubble, or so he says.
The Looting of America’s Coffers Sixteen years ago, two economists published a research paper with a delightfully simple title: “Looting.” The economists were George Akerlof, who would later win a Nobel Prize, and Paul Romer, the renowned expert on economic growth. In the paper, they argued that several financial crises in the 1980s, like the Texas real estate bust, had been the result of private investors taking advantage of the government. The investors had borrowed huge amounts of money, made big profits when times were good and then left the government holding the bag for their eventual (and predictable) losses. In a word, the investors looted. Someone trying to make an honest profit, Professors Akerlof and Romer said, would have operated in a completely different manner. The investors displayed a “total disregard for even the most basic principles of lending,” failing to verify standard information about their borrowers or, in some cases, even to ask for that information.
Citigroup Executives Score $2.2 Million Betting on Own Stock Four Citigroup Inc. executives who bought the bank’s stock last week have already generated a $2.2 million paper profit, regulatory filings show. The executives, including director Roberto Hernandez, benefited as the company’s stock climbed 47 percent since March 10, when Chief Executive Officer Vikram Pandit said in a memo that the bank is having the best quarter since 2007. Their buying spree was the first by bank insiders since Jan. 14, filings show. “You’re supposed to buy when everyone else is selling,” said Bruce Foerster, a former Lehman Brothers Holdings Inc. managing director who now runs South Beach Capital Markets in Miami. Banks have internal systems to monitor executive trades and prevent abuses, he said.
Budget deficit reaches $765B in 5 months Lower tax revenue and massive government spending on the bank bailout pushed the federal deficit to $765 billion in the first five months of the budget year, well on its way to hitting the Obama administration's projection of a record annual imbalance of $1.75 trillion. The Treasury Department also said Wednesday that the February deficit reached $192.8 billion. That's a record for the month and up 10 percent from a year ago, but below analysts' expectations of $205.7 billion. With seven months left in the current budget year, which ends Sept. 30, the deficit already has shattered last year's record annual gap of $454.8 billion.
Barney Frank: $787-Billion Stimulus Plan Could Have Been 20 Percent Bigger -- $943 Billion The $787-billion economic stimulus plan signed into law in February could have been 20 percent larger, or about $943 billion, according to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee. Frank made his remarks following a speech at the National Community Action Foundation’s (NCAF) annual conference, at which House Appropriations Chairman David Obey (D-Wisc.) also said the recovery package should have been “bigger.” “Yeah, I agree” with Obey, Rep. Frank told CNSNews.com. “I thought [Fed Chairman] Ben Bernanke’s testimony helped with that. I think the terrible economic situation Obama has inherited was so bad that it [economic stimulus package] could have been 20 percent bigger.”
Some Banks, Feeling Chained, Want to Return Bailout Money The list of demands keeps getting longer. Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens. As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds. The conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, some experts say, but others say the conditions go beyond protecting taxpayers and border on social engineering.
Libor’s Creep Shows Credit Markets at Risk of Seizure The cost of borrowing in dollars is rising as the global recession deepens and central bank efforts to prop up the financial system fail to prevent a growing number of banks from requiring government bailouts. The London interbank offered rate, or Libor, that banks say they charge each other for three-month loans stayed at 1.33 percent today, near the highest level since Jan. 8 and up from this year’s low of 1.08 percent on Jan. 14, the British Bankers’ Association said. The Libor-OIS spread, a gauge of bank reluctance to lend, widened to the most since Jan. 9. Short-term borrowing costs are increasing as banks hoard cash and governments struggle to thaw credit markets after finance companies reported almost $1.2 trillion of writedowns and losses since the start of 2007. Banco Popolare SC yesterday became Italy’s first lender to seek state aid. Lloyds Banking Group Plc, the U.K.’s largest mortgage provider, ceded control to the government March 7. U.S. regulators seized 17 failing banks so far this year.
Banks’ Bondholders May Be Next to Share Bailout Pain Citigroup Inc. and Bank of America Corp.’s bond prices are sliding on concern that owners of debt issued by U.S. financial firms will be forced to swallow losses if the industry needs another bailout. U.S. bank debt has lost 7.8 percent and yields have jumped to record levels compared with benchmark rates in the past month, even after taxpayers committed more than $11.6 trillion to prop up financial firms. With shareholders almost wiped out at banks like Citigroup and lawmakers resisting more rescues, holders may be asked to swap bonds for new debt that offers reduced interest rates or lower face values, analysts said. “The bond market is getting more scared every day,” said Gary Austin of PDR Advisors in Charlotte, North Carolina, who manages $450 million in fixed-income securities. “At some time, the government is going to say enough is enough, the only way we will give you more cash is if the bondholders have to be hit.”
Official warns Congress not to force lending A top Treasury official told Congress Wednesday that the federal government should not micromanage banks that receive taxpayer assistance, a caution to lawmakers itching to see results from a $700 billion rescue program for the financial sector. Neel Kashkari, interim assistant secretary for financial stability at Treasury, told a congressional oversight panel that banks should not be forced to make loans that bankers might deem risky. "However well-intended, government officials are not positioned to make better commercial decisions than lenders in our communities," he told a subcommittee of the House Oversight and Government Reform Committee.
Is GE Next in Line for Government Bailout? Even though it just posted its third-highest annual profit ever, investors hammered shares of U.S. industrial giant General Electric Co. (GE) last week on a triple play of bad news:
Its first dividend cut in 71 years.
Speculation over a possible credit-ratings downgrade.
And growing worries that the once-unthinkable was becoming possible - a corporate bankruptcy that would put GE on the growing list of onetime Corporate America heavyweights that are now taking government bailout money.
GE’s biggest worries revolve around the company’s gigantic financial-services unit, GE Capital Corp., and whether it has adequate capital to counter an expected rise in delinquencies on its loans. Investors are also concerned about GE Capital’s accounting methods and how the company is valuing its vast real estate portfolio.
Will the FDIC Need a Bailout Too? We've tended to focus our bailout coverage on the billions of taxpayer dollars doled out by the Treasury Department. But Treasury hasn't been working alone, of course. There's the Federal Reserve, that opaque public-private institution that measures by the trillion. And then there's the Federal Deposit Insurance Corporation (FDIC), which has been working shoulder to shoulder with the Treasury and Fed, as well as catching banks as they fall. It's looking increasingly like the FDIC will have to turn to Treasury to help it weather the storm. As you can see in this graph, FDIC's deposit insurance fund has plummeted in the past year as a growing number of banks have failed.
Now-needy FDIC collected little in premiums With fund going strong, banks didn't pay for decade The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006. The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.
SEC head says 'uptick rule' may be reinstated SEC Chairman Mary Schapiro says 'uptick rule' may be reinstated; action likely next month Dramatic changes in the global economy may merit restoring a federal rule aimed at preventing a massive plunge in a stock price caused by a rush of short sellers, the head of the Securities and Exchange Commission said Wednesday. SEC Chairman Mary Schapiro said "hopefully" by next month the agency will open for public comment a proposal to reinstate the so-called uptick rule. On another crisis-related issue -- an industry push to scrap the accounting rule that forces banks to value assets at current prices -- Schapiro said the SEC wants revisions that would continue to provide the transparency investors need without excessively hurting banks.
Obama Sinks the Markets On March 3, President Obama said something remarkably stupid, wrong and politically tone-deaf. Our Obama-loving media either ignored it – or actually quoted it without comment. He claimed “The stock market is sort of like a tracking poll in politics. It bobs up and down day to day and if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong.” The Dow has now fallen more than 50 percent from its peak. Last month, it saw its biggest one-month drop since 1933. Grandpa’s retirement savings just half-vanished over the last few months, and the president is telling him it’s just a meaningless blip. This is not a poll – this is all about the American people’s economic future, or their present. The stock market is in its greatest free-fall since the Great Depression, and the President shrugs his shoulders.
The Federal Reserve is Bankrupt How Did It Happen and What are the Ugly Consequences? The Federal Reserve is bankrupt for all intents and purposes. The same goes for the Bank of England! This article will focus largely on the Fed, because the Fed is the "financial land-mine". How long can someone who has stepped on a landmine, remain standing – hours, days? Eventually, when he is exhausted and his legs give way, the mine will just explode! The shadow banking system has not only stepped on the land-mine, it is carrying such a heavy load (trillions of toxic wastes) that sooner or later it will tilt, give way and trigger off the land-mine!
GRAND ILLUSION – THE FEDERAL RESERVE The whole world is in a state of complete confusion. Americans are coming to the realization that their lives have been a grand illusion. You thought your neighbor had it made. They were driving a Mercedes, spent $40,000 on a new kitchen with granite countertops and stainless steel appliances, sent their kids to private school, had a second home at the shore, and took exotic vacations all over the world. Now their house is in foreclosure and you are paying to bail them out. The anger and outrage in the country is at the highest level since the Vietnam War. The American public is being misled by government officials, politicians, and the Federal Reserve regarding the causes of this crisis and the solutions needed to solve our economic tribulations. The average American does not know much about the Federal Reserve. The government and the Federal Reserve prefer to operate in the shadows. If the American public understood what their policies have done to their lives, they would be rioting in the streets. Henry Ford had a similar opinion: "It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
Into the Financial Abyss The U.S. Treasury recently released its “2008 Financial Report of the United States Government.” In case you had any doubts, our government’s finances are in a terrible mess. According to the report, under generally accepted accounting principles (the ones that private businesses are required by law to use), Uncle Sam’s total financial liabilities - explicit debts and unfunded obligations—exceed $65 trillion. That’s five times as large as our national GDP—a GDP, by the way, that happens to be shrinking at an alarming rate. I don’t know about you, but I find those incomprehensibly large numbers disorienting. I feel like Alice when she fell down the rabbit hole and entered a realm of the absurd. Does anyone believe that the federal government will ever be able to scratch together an extra $65 trillion on top of the other trillions that Washington intends to spend every year? Not a chance. As I wrote last fall, “We’re Broke.”
Forget About the "Recovery" At the risk of confirming my critics' dumbest charge - that I am a "doomer" - the mandate of clarity requires me to ask: to what state of affairs do we expect to recover? If the answer is a return to an economy based on building ever more suburban sprawl, on credit card over-spending, on routine securitized debt shenanigans in banking, and on consistently lying to ourselves about what reality demands of us, then we are a mortally deluded nation. We're done with that, we're beyond that now, we've crossed the frontier and left that all behind, and we'd better get our heads straight about it.
53% Say It’s Likely the U.S. Will Enter a Depression Similar to 1930’s Most Americans (53%) now think the United States is at least somewhat likely to enter a 1930’s-like depression within the next few years. The latest Rasmussen Reports national telephone survey found that 39% think this outcome is unlikely. Nineteen percent (19%) say a Depression is Very Likely while 7% say it is not at all likely. The latest results are more pessimistic than those found in early January, when 44% said a 1930’s-like depression was likely in the next few years, and 46% disagreed.
Bleeding America Dry Will taxpayers contract Wall Street’s malaria? American taxpayers’ finances are being sucked dry faster than a naked northern Minnesotan in a swarm of mosquitoes. But it is Uncle Sam’s fault. He is the one who so readily gave away the clothes off their backs, so that the big boys on Wall Street could cover their financial nakedness. Now Uncle Sam is dangerously exposed too, and the mosquitoes’ feeding frenzy is sapping the national lifeblood. When Congress approved the first bailout money, politicians said taxpayers could reasonably expect to turn a profit out of the deal. About $9.7 trillion later, the government has committed more money than at any time by any government in history, and the Great Recession rages on. In exchange for the servitude of multiple future generations, America has experienced almost zero success. There is no way that taxpayers will profit from this mess, and politicians know it.
Double-digit unemployment spreads A growing number of states endured double-digit unemployment rates in January, and others are close behind, buttressing fears that the national jobless rate could reach 10 percent by year's end. The rising joblessness reflects the pain that the housing, credit and financial crises - the worst since the 1930s - has caused workers and companies. The latest figures were issued Wednesday in the Labor Department's monthly report on state unemployment. "There is hardly any escape from this recession," said Steven Cochrane, managing director of Moody's Economy.com. "With state unemployment rates rising so quickly, it reinforces the notion of a 10 percent national unemployment by the end of the year."
4 states see double-digit jobless rates Four states -- California, South Carolina, Michigan and Rhode Island -- registered unemployment rates above 10 percent in January, and the national rate is expected to hit double digits by year-end. The U.S. Labor Department's report on state unemployment, released Wednesday, showed the increasing damage inflicted on workers and companies from a recession, now in its second year. Some economists now predict the U.S. unemployment rate will hit 10 percent by year-end, and peak at 11 percent or higher by the middle of 2010. In December, only Michigan had a double-digit jobless rate. One month later, four states did and that doesn't count Puerto Rico, which saw its unemployment rate actually dip to 13 percent in January, from 13.5 percent in December.
Insurance “Guarantee Funds,” Another Mirage? ……if a bank goes bust, its depositors are protected (at least theoretically) by FDIC…….is there a safety net for insurance policy-holders? Well, kind of. Each state has its own insurance “guarantee fund,” a private consortium of insurers operating in the state who agree to fund certain policy-holder’s losses should one of their brethren turn up insolvent. Here is a list of all the guarantee funds, including their insurance limits and contact information. But here’s the kicker: None of these guarantee funds actually have any funds. There’s no pot of money for a rainy day. No, state insurance guarantee schemes are “post-funded.” Bailout cash is raised AFTER an insurer fails.
Goldilocks, Gloom or Doom? Three Views of a U.S. Recovery When it comes to the U.S. financial crisis, it’s tough to know just what to think or who to believe these days. If you want an example, just look at yesterday (Tuesday). Citigroup Inc. Chief Executive Officer Vikram S. Pandit revealed that the embattled banking giant was having its best quarter since 2007, and said that he’s confident about Citi’s capital strength - statements that unleashed a flood of speculation that the worst of the banking crisis is over. At the same time, however, a media report stated that several of America’s largest banks - Citi, Bank of America Corp., Wells Fargo & Co., and JPMorgan Chase & Co. Inc., - still faced “potentially catastrophic” losses from their derivative holdings, if the economic situation gets worse.
Iran says capitalism on verge of collapse At start of 10-nation Economic Cooperation Organization summit including Turkey, Pakistan, Iranian President Ahmadinejad says 'liberal economy, free market have failed' suggests 'single currency' be used between group's members Iranian President Mahmoud Ahmadinejad told regional leaders meeting in Tehran on Wednesday to discuss the global economic crisis that the capitalist system was close to collapse. Opening a one-day summit of the 10-nation Economic Cooperation Organization (ECO) including Turkey, Pakistan and other neighbours, he also suggested a "single currency" should be used in trade between the group's members. "After the collapse of the closed socialist economy, the capitalist economy is also on the verge of collapse," Ahmadinejad said in his televised speech.
World Economy: Negative Growth - Or Positive Collapse? "Negative growth," says today's paper. Yes, dear reader. Stocks are advancing to the rear...and economies are growing...smaller. How we love these oxymorons! If only we could age negatively...and eat all we wanted and gain minus pounds! The commentators have it all wrong. Look on the bright side. The world economy is not in a period of negative growth. It's in a period of positive collapse! That's why the Great Depression was so great, after all. What's positive about this depression is that it is clearing away a generation's worth of mistakes, misallocations of resources and misplaced confidence. Stocks are down more than 20% this year. The U.S. economy is retreating at more than 6% per year. Britain is walking backwards at a 2% pace. And Japan? Wow...when it comes to negative growth, the Japanese are experts. Their economy is growing negatively at more than 12% per year. If this keeps up, by the time the next bull market comes along, there won't be any Japanese economy left.
Nations urged to act on economic crisis Germany, France, Japan resist spending, debt rise The White House on Wednesday proposed sweeping measures to combat the world financial crisis, calling on other countries to enact big stimulus packages and greatly increase assistance to foundering European countries through the International Monetary Fund. The Obama administration's prescription to stop the spread of the global contagion comes as reports show the world economy and trade are shrinking for the first time in decades amid a collapse of credit and banking systems. As with his domestic agenda, President Obama did not shy away from offering grandiose solutions to the historic crisis, but his call for European countries to enact stimulus plans about half the size of his own is not likely to receive a warm welcome at an April summit of the Group of 20 nations in London.
Financial Fraud Is Focus of Attack by Prosecutors Spurred by rising public anger, federal and state investigators are preparing for a surge of prosecutions of financial fraud. Across the country, attorneys general have already begun indicting dozens of loan processors, mortgage brokers and bank officers. Last week alone, there were guilty pleas in Minnesota, Delaware, North Carolina and Connecticut and sentences in Florida and Vermont — all stemming from home loan scams. With the Obama administration focused on stabilizing the banks and restoring confidence in the stock market, it has said little about federal civil or criminal charges. But its proposed budget contains hints that it will add to this weight of litigation, including money for more F.B.I. agents to investigate mortgage fraud and white-collar crime, and a 13 percent raise for the Securities and Exchange Commission.
Wal-Mart to Enter Electronic Medical Records Arena As the Obama administration begins investing billions in health information technology, Wal-Mart plans to use its unrivaled size to bring high-tech medical records to U.S. physicians. In recent years Wal-Mart, the world's largest retailer, has used its buying power to move into health care markets, negotiating steep discounts for prescription drugs and eye care products. With the government providing $17 billion of stimulus funding to encourage use of electronic medical records, the company sees an opportunity to serve as a low-cost, one-stop option for single doctors and small practices.
After Plea Hearing, Madoff Could Go Directly to Jail When Bernard L. Madoff arrives in federal court on Thursday to plead guilty to operating a vast 20-year Ponzi scheme, there is a strong chance that he will not return home. Under a $10 million bail agreement, Mr. Madoff has been confined to his penthouse apartment since his arrest on Dec. 11. As he was presumed innocent, the government had to persuade the court that he should not be allowed bail — something prosecutors failed to do at a bail revocation hearing in January. But once Mr. Madoff pleads guilty, the burden shifts. His own lawyers must then persuade the court that he should remain free until his sentencing, perhaps more than two months away, or should at least have a few more weeks of liberty to put his personal life in order.
Investigation Into Madoff Fraud Turns to a Small Circle of Accountants As Bernard L. Madoff faces another big day in court Thursday, some details are emerging about how he operated his vast Ponzi scheme. But many questions remain, including those surrounding a small group of accounting firms that represented many of Mr. Madoff’s investors — often at the behest of Mr. Madoff or those close to him. Some of these firms are being subpoenaed or questioned by regulators. A number of investigative agencies, for example, are making inquiries into Friehling & Horowitz, a three-employee firm based in a New City, N.Y., strip shopping mall, which provided auditing services for Mr. Madoff’s brokerage firm, Bernard L. Madoff Investment Securities. Andrew M. Lankler, a lawyer for David G. Friehling, declined to comment.
Overvalued euro set to plunge 'within months' Spread betting companies have reported a huge wave of short euro trades in the last two weeks, leading to speculation that a significant correction in the currency will come in the next few months. Investors take out short trades when they expect a currency to fall. In recent days, futures traders in the US have significantly increased their bets that the euro will fall against the dollar. Data released by the Washington-based Commodity Futures Trading Commission on Friday showed that the "net short position" of trades against the euro by hedge funds and speculators almost doubled in the week to March 3 to 19,431 contracts from 10,081 contracts a week earlier. "Quite a significant correction in the euro is coming in the next few months. The European Central Bank (ECB) is behind the curve in getting to grips with its economic problems," said David Buik of BGC Partners. He added that the eurozone entered recession later than other economies, but policy-makers had been too slow to act, putting the currency at risk.
Sarkozy announces French return to Nato after 43 years Nicolas Sarkozy has announced France's full return to the Nato alliance, four decades after General Charles de Gaulle pulled out of its military command. Choosing the symbolic location of the Invalides, where Napoleon Bonaparte is buried, the French President shrugged off the political controversy surrounding his decision saying it was good for "France and Europe". The president, as commander in chief, said France's long-standing semi-detachment was now counterproductive: "Our rapprochement with Nato bolsters national independence and our proclaimed but unrealised distancing from Nato limits our national independence," he said. "France will be stronger and more influential. Why? Because those who are absent are always in the wrong. Because France must be a joint leader rather than submit to others," he said.
U.S., Russia face tough discussions on weapons How does one count some of the world's deadliest weapons? Should nuclear warheads be separated from the missiles that carry them? Should conventional warheads be subject to reduction targets? Those questions - reminiscent of Cold War-era arms-control negotiations between the United States and the Soviet Union - are back on the global agenda as Washington and Moscow try to "reset the button" of their relations. "Arms control is the area where the United States and Russia have the longest history of cooperation, and it is the easiest place to renew the bilateral relationship," wrote Andrew Kuchins of the Center for Strategic and International Studies and Anders Aslund of the Peterson Institute for International Economics in a new book on U.S.-Russia ties.
World War 3: U.S. versus China It took the onset of World War II to lift the world out of the Great Depression that began in 1929. Ignore the historical hyperbole that claim Roosevelt’s “New Deal” had anything to do with it. It was war, plain and simple, that galvanized the U.S. manufacturing complex into debt-driven growth, and ended the period of stagnation following the economic contraction from 1929 to 34. Bernanke’s theory is that the depression would have been averted had the Federal Reserve acted decisively and boosted liquidity - a theory he is now testing. At that time, the Fed was limited to how much liquidity it could inject by the fact that the available money supply had to be connected (at least partially) to the available gold on hand in U.S. reserves.
War Underway for America! "Undocumented Obamanation Citizens” vs. Real Americans The Obamanation won’t even use the term “illegal alien,” let alone criminal invader, illegal immigrant or illegitimate migrant. They prefer their politically motivated term “undocumented citizen” to describe the 20 million illegal invaders already sucking the life out of the public trough, and their families yet to arrive… I will be called a “bigot” or a “racist” thug for calling them anything but “undocumented Americans,” which only proves just how insanely ignorant too many Americans really are today. So will you, if you dare to speak the truth anywhere in public, on any number of current affronts to American sovereignty and Security. But let’s get real for a second.… If I broke into your house in the middle of the night and took over your home against your will, would that make me an “undocumented home owner?” If I stole your car at gunpoint, would that make me an “undocumented car owner?” If I stole your children, would I be an “undocumented parent?” What kind of insanity infects the American society today? A full scale war is taking place on America’s southern border and in case you don’t know it, America has not yet entered the battle…
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Wed 03.11.2009
Taxpayers Billed $211 Million in Auction-Rate Failure From Carnegie Hall in New York to the Los Angeles bus and subway system, American taxpayers are paying investment banks millions of dollars in fees for bond auctions that never happened. State and local governments will spend about $211 million this year for the failed sales, based on the 0.25 percent average annual fee charged on the $84.5 billion of outstanding securities, according to data compiled by Bloomberg. The bonds - - long-term debt with interest rates reset through auctions every 7, 28 or 35 days -- typically require issuers pay their bankers even if auctions fail.
Senate passes omnibus bill Obama to sign $410 billion catchall with 9,000 earmarks The first major spending bill of the new Obama administration came stuffed with some old-fashioned pork as a $410 billion omnibus bill covering a slew of federal agencies won final approval Tuesday in the Senate. The bill to fund the government through the remainder of the fiscal year now goes to President Obama, just a day before a temporary spending law was due to expire. The clash over pork projects and spending levels foreshadowed the battle ahead for Mr. Obama's $3.55 trillion budget for 2010.
2009 American Eagle Silver Coins Suspended Before they even went on sale, proof and uncirculated 2009 American Eagle Silver Coins are temporarily suspended, according to a new United States Mint statement at its online store. The highly popular silver dollars are minted specifically for collectors, bearing the "W" mintmark to denote their striking at the Mint’s West Point facility. 2009 coins are on hold for the same reasons sales of American Eagle Silver proof coins were canceled early in 2008 — "unprecedented demand" and the Mint’s need to focus on bullion versions of the coin, which bear the same design, but do not have the "W" mintmark. These bullion versions are intended for investors, although coin collectors buy them as well.
Gold coin shortage likely to become chronic Is the U.S. Mint's production problem long-term or short-term? What will be the effect on gold coin prices? In 1999, at the height of the Y2K crisis and under the strain of record gold demand, the U.S. Mint produced 2,055,000 1-ounce gold American eagles. In 2008, with the world embroiled in an unprecedented economic crisis and once again under the strain of record gold demand, the U.S. Mint produced only 710,000 1-ounce American eagles and 189,500 1-ounce American gold buffaloes -- just under half its 1999 production. The Mint's ability to keep up with demand in the ramp-up to Y2K played a key role in suppressing premiums on bullion gold coins. The Mint's inability to keep up with demand in 2008 drove premiums to the double digits at one point and helped add 2 percent to the baseline cost of gold coin acquisitions in 2009.
Gold Is Ready To Go Very High Very Fast It appears that gold is ready to go very high very fast, as measured in all currencies of the world. It seems that gold is in the process of completing the mega cup and handle pattern that started to form in 1980 when gold was at about US $850. The interesting part is the fact that it seems that we are in the final phase which should take us to about US $ 1 300 (about R 14 000) and eventually to about US $ 1 700 (about R 18 760) in a very short time relative to the 29 years since 1980. Do not be surprised to see $50, $100 and more up days, should key levels be broken.
Pimco Predicts Inflation, Joining Buffett, Marc Faber Pacific Investment Management Co., which runs the world’s biggest bond fund, says inflation will revive, joining investors Warren Buffett and Marc Faber. “Inflation will rise in the medium term,” Pimco said in a report today on its Web site written by Chris Caltagirone and Bob Greer. Treasury securities that give investors protection against rising prices for goods and services are “attractive now,” the report said. Commodity producers are delaying projects, which may limit supply when global growth resumes, according to Pimco. That increases the potential for higher prices if demand increases, Pimco said. U.S. yields indicate inflation forecasts rose this year.
Marc Faber sees Little Boom
Dollar and Gold No Longer Headed in the Same Direction The torrid affair between the U.S. Dollar and gold appears to have come to a hasty conclusion in just the last week or so as shown below (click to enlarge). After following each other around like puppy dogs during most of February, at one point moving in the same direction for 15 days straight, they are now going their separate ways.
Sentiment in the Gold, Stock and Commodity Markets When the gold price rose to $1000 in late February there was naturally a lot of enthusiasm about this market's prospects, which, combined with the almost uninterrupted $200 rise over the preceding five weeks, paved the way for a downward correction. The gold price then fell for eight trading days in a row, with the eighth down day being last Wednesday. The stage was thus set for a rebound, but as noted in last week's Interim Update the fact that the 8-day decline had barely put a dent in bullish sentiment suggested that the overall correction from the February high had not yet run its course.
Has Gold's Downward Trend Ended? Gold’s recent downward trend may have ended last week after gold closed moderately higher for the week (gold +0.03% and silver +1.75%). The performance was impressive considering the continuing steep declines in stock markets. Gold’s outlook remains extremely positive especially as big money interests are once again realizing the safe haven attributes of the yellow metal. Both the Financial Times and the Wall Street Journal reported how large investors including hedge funds are buying gold as they believe that the central banks huge money printing will lead to significant inflation in the coming months that will see paper currencies depreciate in value.
What the Citi Conversion Might Really Mean We learned on February 27th of the Treasury's plan to convert up to $25 billion of their $45 billion preferred Citigroup shares to common equity. According to the company, the existing shareholders would be diluted by 74%. Thus, the taxpayers will cease collecting dividends on their holdings and they'll slide down the capital structure in Citigroup to the lowest rung on the ladder. Ostensibly, it looks like a good deal for the bank and not such a great deal for the government/taxpayer. So why would the government allow such a deal to occur? The answer is to gain more control over Citigroup (with other major banks next in line) in order to garner complete control over the money supply. The Treasury's preferred holdings in Citigroup carry no voting rights, whereas the common shares will. After conversion, the government would own 36% of the common stock. The government does not need to be the largest shareholder in the company to dictate policy, but it does greatly facilitate the process. The power grab will increase the Administration's and Fed's ability to direct bank lending, which can lead to an abrogation of the system of checks and balances that control our money supply.
Big banks will not be allowed to fail, Bernanke says Recovery later this year is not out of the question, says Fed chief Federal Reserve Board Chairman Ben Bernanke stressed Tuesday that major financial institutions would not be allowed to fail given the fragile state of financial markets and the global economy. In a speech in Washington, Bernanke repeated that a sustainable economic recovery will "remain out of reach" until the banking sector is stabilized. A recovery later this year is not out of the question, Bernanke said. If efforts by the Fed and the Obama administration can get the banks back to being reasonably stable, "then I think there is a good chance the recession will end later this year and 2010 will be a period of growth," he said.
Citigroup's shares rise as CEO plugs performance Stock price 'not an indication of our financial strength,' Pandit says Shares of Citigroup Inc. rallied 38% Tuesday, scoring gains as Chief Executive Vikram Pandit said the hard-hit provider of financial services was profitable during the first two months of the year and called its capital position "strong." The company joins the roster of several big U.S. banks, after blue chips J.P. Morgan Chase & Co., to tout its profitability for the year to date recently. Citigroup's shares have been under constant pressure over the last week, trading right around the $1 mark most of time after having fallen under $1 for the first time ever last week. Acknowledging concern about the share price, Pandit said in a memo to employees: "Our stock price is not an indication of our financial strength." See full text of the memorandum. Pandit also said Citigroup's enjoying the best quarter-to-date performance since the third quarter of 2007. All told, the company has lost more than $37 billion over the last five quarters. See MarketWatch First Take on Citi.
What the Citi Conversion Might Really Mean We learned on February 27th of the Treasury's plan to convert up to $25 billion of their $45 billion preferred Citigroup shares to common equity. According to the company, the existing shareholders would be diluted by 74%. Thus, the taxpayers will cease collecting dividends on their holdings and they'll slide down the capital structure in Citigroup to the lowest rung on the ladder. Ostensibly, it looks like a good deal for the bank and not such a great deal for the government/taxpayer. So why would the government allow such a deal to occur? The answer is to gain more control over Citigroup (with other major banks next in line) in order to garner complete control over the money supply. The Treasury's preferred holdings in Citigroup carry no voting rights, whereas the common shares will. After conversion, the government would own 36% of the common stock. The government does not need to be the largest shareholder in the company to dictate policy, but it does greatly facilitate the process. The power grab will increase the Administration's and Fed's ability to direct bank lending, which can lead to an abrogation of the system of checks and balances that control our money supply.
Tim Geithner's Black Hole Pity Barack Obama's economic advisers. The blogs are now demanding their scalps, and Treasury Secretary Tim Geithner and his colleagues face a nasty dilemma: There are no solutions to the banking crisis without extraordinary political and financial risks. Thus, they have adopted a three-pronged approach, delay, delay, delay, in the hope that somebody comes up with a breakthrough. Here's the problem: Today's true market value of the U.S. banks' toxic assets (that ugly stuff that needs to be removed from bank balance sheets before the economy can recover) amounts to between 5 and 30 cents on the dollar. To remain solvent, however, the banks say they need a valuation of 50 to 60 cents on the dollar. Translation: as much as another $2 trillion taxpayer bailout.
U.S. "in a deep mess" but we will fix it: Geithner U.S. Treasury Secretary Timothy Geithner pledged on Tuesday to "do what is necessary" to jolt the United States out of recession but said the rest of the world should agree to act in a coordinated way. On Public Broadcasting Corp's "Charlie Rose Show," Geithner claimed that steady overseas demand for U.S. Treasury debt was a vote of confidence that the Obama administration was on the right track in countering the "deep mess" the economy is in. "This president is going to do what is necessary to get us through this. ... We're a terrifically strong country with abundant resources, and we will get through this," said Geithner, referring to President Barack Obama's commitment to end the more than year-long U.S. recession.
Ron Paul on Bloomberg TV
Stimulus money might not be enough for California A state analysis of the federal stimulus indicates that California will get about $2 billion less than it needs to forestall the full tax hikes and budget cuts legislators approved last month. Reporting from Sacramento -- California appears likely to fall short on the federal stimulus money it needs to avoid the full brunt of tax hikes and spending cuts that lawmakers approved last month to settle a contentious 100-day budget stalemate. Legislators had hoped to ease those new taxes and budgetary cuts with funds from the U.S. rescue package, but a fresh analysis of California's flagging fiscal situation suggests the state needs about $2 billion more than Washington is providing.
A TRILLION HERE A TRILLION THERE "We are spending more money than we have ever spent before, and it does not work. After eight years, we have just as much unemployment as when we started and an enormous debt to boot." -US Treasury Secretary, Henry Morgenthau, May, 1939 . . . . . Our government has just finished spending upwards of $15 trillion and what have we got to show for it: An economy that is sinking deeper and deeper into the worst recession since the 1930's and dragging the rest of the world down with us. However, this time, instead of being the world's largest and strongest financial super power, our country is now in the worst financial condition in its history and the powers at be are doing their best to panic us into doing more of the same as what got us into this situation in the first place. Their only justification is, "Don't just stand there do something."
Regulators Who Won’t Regulate One of the most disturbing aspects of the current financial crisis is not just white-collar crime, but the lack of a cohesive reaction to it by law-enforcement and regulatory authorities. It was the lack of oversight and common sense regulation that permitted the crooks on Wall Street and elsewhere to create the epidemic of fraud impacting us all. As bad as the lack of justice for past misdeeds is to the public psyche, there is something even worse: regulators ignoring an obvious crime in progress. Especially when the evidence of that crime is readily available and published by the regulator itself. Yes, I’m back to the ongoing silver manipulation and the evidence of that crime being issued by the primary market regulator, the CFTC.
Banks' future woes in one word: plastic Troubled financials with a big credit card business should expect more losses as the economy continues to tank. Major banks have been hit hard by bad mortgages. Now, fears are growing that troubled financial institutions are going to have another consumer headache to deal with: credit card defaults. There have been no shortage of warnings about the business as the economy continues to sputter. Just last month, Bank of America CEO Ken Lewis warned lawmakers at a high-profile Congressional hearing on the government's $700 billion rescue plan that he had no doubts 2009 would be an "awful year" for the credit card industry. Unfortunately for Lewis and his peers, the nation's leading banks dominate the credit card landscape.
Credit Cards Raise ‘Canary in Coal Mine’ Alert in Canada Krystal Koglin didn’t think twice when Toronto-Dominion Bank offered to boost the limit on her Visa credit card 11-fold a couple of years ago. She went on a spending spree, hitting department stores like Holt Renfrew, treating friends at restaurants, splurging on designer jeans and buying “needless things” on EBay Inc. “Being a young adult and irresponsible, I spent a lot of money that I shouldn’t have,” the 24-year-old salon manager and BCE Inc. employee in Toronto said. “I couldn’t handle having the responsibility of a C$5,500 ($4,237) limit.”
Lyndon Baines Obama . . . . History never repeats itself exactly. But Barack Obama is making the same mistakes today that LBJ made in 1965. He has ordered 17,000 more U.S. troops into Afghanistan, as the situation deteriorates and the NATO allies pull out. He has no exit strategy. He has read a repudiation of George Bush as a mandate for a government seizure of wealth and power that exceeds anything attempted in the Great Society. Fully half of the $3.55 trillion in spending Obama will preside over this year will not be covered by tax revenue but by red ink. The money will have to be borrowed from abroad or printed by the Fed. Not only is Barack running a deficit four times as large as Bush's largest, he has called for $1 trillion in new taxes on America's most successful, who have already seen their savings and pensions ravaged. He wants a cap-and-trade system to deal with a global-warming or climate-change crisis many scientists believe is a hoax. He is going to provide health care for all, including immigrants, millions of whom arrive uninsured every year. He is going to plunge scores of billions more into education, though education has eaten up the wealth of an empire, as SAT scores sink further and further below the apogee of 1964, before LBJ and the feds barged in. He is going to ask Congress for authority to spend another $750 billion rescuing the banks.
Democrats Stung by Dissenters Unity on Agenda Eludes Party Leaders Democratic leaders in Congress did not expect much Republican support as they pressed President Obama's ambitious legislative agenda. But the pushback they are receiving from some of their own has come as an unwelcome surprise. As the Senate inches closer to approving a $410 billion spending bill, the internal revolt has served as a warning to party leaders pursuing Obama's far-reaching plans for health-care, energy and education reform. Those goals, spelled out in Obama's 2010 budget blueprint, continue to enjoy broad Democratic support. But as the ideas develop into detailed legislation, they will transform from abstract objectives into a tangle of difficult trade-offs. Crop subsidies, the student loan program and Medicare radiology rules are all currently niche concerns, but any one could become the next crisis for party leaders, with the potential to derail a major agenda item. One major proposal, to limit itemized deductions for wealthy taxpayers, has already raised doubts among prominent Democrats in both chambers.
China warned to act quickly to avoid deflation Prices paid by Chinese consumers fell for the first time in more than six years last month, official data showed on Tuesday, prompting warnings from economists that the government will need to act quickly if the country is to avoid a bout of deflation. China’s benchmark consumer price index fell by 1.6 per cent in February from a year earlier, after a 1 per cent rise in January, amid cooling domestic demand and widespread overcapacity. The year-on-year drop in prices marked the tenth consecutive month of moderating inflation and contrasted with an increase in the index of 8.7 per cent in February last year, the biggest rise in more than a decade, when food and energy prices were soaring.
Jim Rogers not so optimistic about China !!!!!
Depression Investing – Which Currencies to Hide in? The world’s a mess and in our eyes policy makers are inadvertently doing their best to worsen a bad situation. Let’s assume you’ve had it and want to hide somewhere safe to ride out the storm. Unfortunately there appears to be no such thing as a safe asset anymore. Therefore you may want to consider taking a diversified approach to something as mundane as cash. Sure, U.S. Treasury Bills are the one “safe” asset – at least by regulation. But will Treasury Bills retain their purchasing power as the U.S. government raises almost $3 trillion in the debt markets this year? As the debt to be raised is going to be in the range of 12% - 15% of GDP (some estimates the Treasury Department take seriously go as high as 18% of GDP), increased U.S. savings simply won’t be enough to fund the shortfall.
States Give Regulatory Relief to Insurers State regulators trying to help life insurance companies cope with the financial crisis have granted $6 billion of relief from requirements meant to ensure financial stability, according to data released yesterday. The top recipients were Allstate Life Insurance Co. with $1.4 billion; Jackson National Life Insurance Co. with $825.6 million and Hartford Life Insurance Co. with $655.2 million, according to the National Association of Insurance Commissioners.
Life insurers may need to raise capital, FBR says Sector may find it tough to earn its way out of trouble as credit losses mount Life and health insurers, including MetLife Inc. and Conseco Inc., may need to raise capital because they will find it more difficult to earn their way out of trouble amid mounting credit losses and slumping equity markets, analysts at Friedman, Billings, Ramsey said Tuesday. MetLife shares jumped 15% to $14.83, buoyed by a broad surge among financial-services shares after several days of losses. Conseco slumped 23% to 29 cents. "Recent spread-widening and economic deterioration significantly impacted our analysis, which implies that most life and health insurers are at risk of needing to raise capital as their prospects for earning their way out of the credit losses are diminishing, especially for stock-market-sensitive names," the analysts wrote in a note to investors. A gloomy forecast of future credit losses suffered by life and health insurers, which includes losses that have yet to be realized, suggests there's a "significant" need for capital across the industry, they said.
S.F. construction slows to a crawl Much can be learned about the San Francisco real estate market by taking a quick look at 10th and Market streets. A high-rise condominium tower was supposed to be built on the excavated lot on the southwest corner. Across the street, a new - and still empty - 20-story condominium tower was unsuccessfully put up for sale during the second half of 2008. The condos are now being marketed as rental apartments. During the past few years, the city experienced a major building boom. But now it is like most places in the nation, where banks are reluctant to approve construction loans and the demand for expensive homes and office space has evaporated.
At least 10 killed in Alabama shooting spree At least 10 people including the suspected gunman and his mother were killed in a shooting spree and car chase in southern Alabama on Tuesday, authorities said. The shooter, who was in his mid-30s, killed five people including the wife of a local deputy sheriff and her 3-month-old baby at a mobile home in Samson, according to Wynnton Melton, mayor of nearby Geneva, Alabama. His other victims included his own mother, two people killed at a convenience store and a man in a pickup truck who died during a car chase as the gunman apparently fired at random, said Melton. The shooting began in Samson, a small town in the southeastern part of the state and ended after a car chase and gun battle in Geneva, the county seat about 12 miles away, according to the FBI and local police.
Canada joins Transatlantic Union effort Working along with U.S for free-trade deal with European Union Canada has decided to join the United States in negotiating a transatlantic free trade agreement with the European Union. According to Canada's daily Financial Post, Canada and the EU have come to an agreement on the areas they would like to negotiate in a free trade deal that Canadian government officials believe could expand Canada's economy by approximately $12 billion. The agreement announced last Thursday concluded "scoping exercises" between Canada and the EU that began Oct. 17. The exercises determined 14 areas to be placed on the negotiating table, including trade in goods and services, investment, trade facilitation, customs regulation, technical barriers to trade, competition policy and sustainable development.
Atlantic stimulus rift grows Disagreements between the European Union and the US over how to combat the global recession widened on Tuesday as EU governments made clear they had little appetite for piling up more debt to fight the collapse in output and jobs. Finance ministers from the 27-nation bloc insisted in Brussels that it was doing enough to support world demand and did not need at present to adopt another fiscal stimulus plan, as Washington is urging. The US-European differences are casting a shadow over next month’s summit in London of leaders from the G20 group of advanced and emerging economies, an event to be attended by Barack Obama on his first visit to Europe as US president.
Madoff to plead guilty to 11 counts In a courtroom surprise, it was revealed Tuesday that Bernard Madoff will plead guilty Thursday to securities fraud, perjury and other crimes, knowing that he could face up to 150 years in prison for one of the largest frauds in history. The revelation came as prosecutors unveiled an 11-count charging document against the 70-year-old former Nasdaq chairman, and as his lawyer, Ira Sorkin, told a judge that Madoff planned to plead guilty this week without a plea deal. Madoff has been under house arrest in his $7 million Manhattan penthouse since he was arrested in early December after authorities said he confessed to his family that he had carried out a $50 billion fraud. In court documents filed Tuesday, prosecutors raised the size of the fraud to $64.8 billion, an amount recounted in apparently false statements from November 2008.
United Tech to cut 11,600 jobs United Technologies Corp, whose products range from elevators to jet engines, plans to cut 11,600 jobs as it adapts to an economy that has grown worse than it expected just three months ago. The diversified U.S. manufacturer also cut its 2009 profit forecast by roughly 13 percent and lowered its revenue target as it is no longer relying on an economic recovery later this year, its chief executive said on Tuesday. United Tech shares rose about 6.7 percent amid a broad stock market rally as Wall Street had regarded the company's profit target set in December as optimistic.
Rahall Proposes Bill to End All Mining in the U.S. Nick Rahall, chairman of the House Resources Committee, reintroduced mining reform legislation in the House of Representatives on January 27, 2009. The Congressman has obviously been away from real work for far too long. H.R. 699, the Hardrock Mining and Reclamation Act of 2009, should be labeled H.R. 666 because it appears to have been written by the Devil himself. If it passes as written, it will completely destroy an entire industry. . . . . H.R. 699 would completely wipe out all small-scale mining in the United States. Small-scale miners do not have the time and resources to handle the fees, lawsuits and reporting requirements. . . . . Like the current situation with oil, Americans would be forced to obtain natural resources overseas, sending money to countries that don’t like Americans and would love to control our prices. The legislation is co-sponsored by Reps. George Miller (D-CA), Henry Waxman (D-CA), Ed Markey (D-MA), Howard Berman (D-CA), Raúl Grijalva (D-AZ), Rush Holt (D-NJ), Jim Costa (D-CA), Donna Christensen (D-VI), Pete Stark (D-CA), Dale Kildee (D-MI), Maurice Hinchey (D-NY), Earl Blumenauer (D-OR), Patrick Kennedy (D-RI), Ron Kind (D-WI), Lois Capps (D-CA), Adam Schiff (D-CA), Mike Honda (D-CA), John Salazar (D-CO), Anna Eshoo (D-CA), Niki Tsongas (D-MA), and Gerry Connolly (D-VA).
Air Force called Pelosi's personal taxi service Taxpayers foot bill for House speaker's erratic demands for military planes House Speaker Nancy Pelosi has been using the Air Force as an on-call taxi service and wasting taxpayer money by erratically canceling and rescheduling flights, according to a new report. Judicial Watch, a public interest group that investigates and prosecutes government corruption, filed a Freedom of Information Act request with the Department of Defense and confirmed that the speaker has made multiple requests for military air travel. While the Department of Defense staff has attempted to answer Pelosi's numerous requests with military escorts and aircraft, her repeated last-minute rescheduling and cancellations have become a problem. According to the report, one DOD official complained of the "hidden costs" associated with Pelosi's erratic requests: "We have...folks prepping the jets and crews driving in (not a short drive for some), cooking meals and preflighting the jets etc."
The coming evangelical collapse An anti-Christian chapter in Western history is about to begin. But out of the ruins, a new vitality and integrity will rise. We are on the verge – within 10 years – of a major collapse of evangelical Christianity. This breakdown will follow the deterioration of the mainline Protestant world and it will fundamentally alter the religious and cultural environment in the West. Within two generations, evangelicalism will be a house deserted of half its occupants. (Between 25 and 35 percent of Americans today are Evangelicals.) In the "Protestant" 20th century, Evangelicals flourished. But they will soon be living in a very secular and religiously antagonistic 21st century. This collapse will herald the arrival of an anti-Christian chapter of the post-Christian West. Intolerance of Christianity will rise to levels many of us have not believed possible in our lifetimes, and public policy will become hostile toward evangelical Christianity, seeing it as the opponent of the common good.
On Returning To Our Founding Fathers' Concepts The United States of America was founded upon the American Constitution and Bill of Rights. After 233 years it appears we have strayed dangerously close to ruination of these ideas. Somebody measured the average life span of empires and said its 250 years. It seems to me if this nation would endure we better get busy reversing our stupid disasters and reinvent 1776. This is not an easy task and it cannot be done over night. However, if the will of the people is strong enough and they can recognize our precarious position there still might be a chance. We can endure going broke and the grinding fallout from our new and Greater Depression. This is what comes next. What we cannot endure is the loss of liberty, freedom and the old American way of capitalism and free enterprise.
Biden: Taliban negotiations likely Vice President Joseph R. Biden Jr. said Tuesday that 70 percent of the Taliban in Afghanistan and Pakistan are essentially mercenaries who possibly could be negotiated with instead of fought, and said the United States likely will try this approach. Mr. Biden, in Belgium to discuss Afghanistan with NATO officials in advance of next month's summit, said that he did not know what kind of concessions Taliban members might be willing to make, and said that the Afghan government would have to initiate and approve of any such talks. "But I do think it is worth engaging and determining whether or not there are those who are willing to participate in a secure and stable Afghan state," Mr. Biden said.
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Tues 03.10.2009
Feds prepare to revive Citigroup if needed It appears federal officials are declining to follow the advice of Sen. Richard Shelby (R-Ala.) who recently said Citigroup should be allowed to die. The Wall Street Journal is reporting that Obama Administration and Federal Reserve officials are preparing the crash cart in case they need to revive the ailing financial giant. An excerpt: Barely a week after the third rescue of Citigroup Inc., U.S. officials are examining what fresh steps they might need to take to stabilize the bank if its problems mount, according to people familiar with the matter. Federal officials describe the discussions, which are wide-ranging and preliminary, as "contingency planning." Regulators are trying to ensure that they are prepared if Citigroup takes a sudden turn for the worse, which they aren't expecting, these people say.
Bernanke Says Financial Rules Need an Overhaul The Federal Reserve chairman Ben S. Bernanke on Tuesday called for a broad reworking of how the government regulates the financial system to prevent future financial meltdowns. In a speech before the Council on Foreign Relations in Washington, Mr. Bernanke said the financial system needed to be regulated “as a whole, in a holistic way” and that stricter oversight of banks would not be enough to guard against future crises. “Strong and effective regulation and supervision of banking institutions, although necessary for reducing systemic risk, are not sufficient by themselves to achieve this aim,” Mr. Bernanke said.
Gold Less than Half Its Inflation Adjusted High in 1980 As expected, gold bounced Thursday after its recent sharp falls. Gold's lack of correlation with equities (gold has occasional very short term correlation with equities) was seen again as gold and silver were up some 2% while major US indices were down by some 4%. Citigroup, once the world's largest bank, fell below $1 per share and General Motors is struggling to avoid bankruptcy. Job numbers in the US today are expected to be poor and this should see gold supported today.
2009 to see gold at $1,500 per ounce, silver $25 Beware! Those who rush to buy gold should not neglect silver. If the present trend continues silver will be the metal people should be watching. According to experts, silver prices will go up faster than gold rates in the coming days due to increased demand and a shortage in supply. World’s largest mining conference in Toronto was told by experts that silver prices are poised to outperform gold while moving dramatically higher later this year due to increasing investment demand. Speaking at the Prospectors and Developers of Canada Association (PDAC) annual convention, German investment fund manager Oliver Frank told mediapersons that silver will likely end the year in the $25 per ounce. This bold projection is almost double current silver prices.
Gold coin shortage likely to become chronic Is the U.S. Mint's production problem long-term or short-term? What will be the effect on gold coin prices? In 1999, at the height of the Y2K crisis and under the strain of record gold demand, the U.S. Mint produced 2,055,000 1-ounce gold American eagles. In 2008, with the world embroiled in an unprecedented economic crisis and once again under the strain of record gold demand, the U.S. Mint produced only 710,000 1-ounce American eagles and 189,500 1-ounce American gold buffaloes -- just under half its 1999 production. The Mint's ability to keep up with demand in the ramp-up to Y2K played a key role in suppressing premiums on bullion gold coins. The Mint's inability to keep up with demand in 2008 drove premiums to the double digits at one point and helped add 2 percent to the baseline cost of gold coin acquisitions in 2009.
Fed Reserve Employee under Geithner! Reveals Hyperinflation Guaranteed! SOON!
U.S. dollar replaced by ... digital gold? Electronic currency could be global money of future When the dollar collapses, digital gold as a private bank-managed currency may replace it for international transactions, Jerome Corsi's Red Alert reports. Digital gold is a form of electronic market backed by gold storage. Private clients deposit gold or buy gold reserves from the digital gold bank. Private clients then utilize digital gold accounts to make or receive international payments. Payment values are determined by the price of gold backing transactions. Globalists are now promoting digital gold as a private-bank solution to the potential devaluation of fiat currencies.
Roubini Says S&P 500 May Drop to 600 as Profits Fall The Standard & Poor's 500 Index is likely to drop to 600 or lower this year as the global recession intensifies, said Nouriel Roubini, the New York University professor who predicted the financial crisis. The benchmark index for U.S. stocks would have to slump 12 percent from last week's closing level to meet his forecast. Roubini is assuming that companies in the S&P 500 will report profit of $50 a share this year and investors will pay 12 times that for equities. "My main scenario is that it's highly likely it goes to 600 or below," Roubini said today in an interview at the Chicago Board Options Exchange Risk Management Conference in Dana Point, California. A level of "500 is less likely, but there is some possibility you get there."
Time To Fire Tim Geithner We don't mean to sound impatient, but we've seen enough. The country is in the middle of the worst financial crisis in 75 years, and the second-most-important person in charge clearly isn't the right man for the job. When both engines on US Air Flight 1549 quit after takeoff, Capt. Sullenberger did not cling stubbornly to his preconceived view of the situation. He did not float endless versions of the same bad plan to air traffic controllers to see what they thought of them. He did not spend months preparing for a moment just like this only to be seized by indecision when it arrived. Instead, he just took the controls and landed the plane in the Hudson.
Geitner Gone by June "Tim Geithner has no financial skills. The only reason he is there [the Treasury Secretary] is to protect Goldman Sachs."
Detox for Troubled Assets Plan Is Critical to Reviving Financial System, FDIC Chair Says The government's plan to strip banks of troubled assets could force some firms to record large losses, but the painful purge would help restore confidence in the banking system, according to Sheila C. Bair, chairman of the Federal Deposit Insurance Corp. Bair said yesterday that the effort might require more money than the $700 billion Congress has approved to aid the financial industry, but she added that taxpayers would likely reap an eventual profit on the asset purchases. She said the greatest challenge was persuading banks and taxpayers to accept the necessity of the costly program.
How can investors have any faith in corporate America? Recently, a public radio host sponsored an economics professor from MIT. Since he was the former chief economist for the World Bank, you know that he was an Illuminist mouthpiece, a disinformation specialist for the powers of darkness. He was asked where all the money went that has been lost by the tens of trillions in various asset classes such as real estate and the stock market. He was asked if it just disappeared into the ether, and he said basically that this is in fact what happened, like there were no winners, but only losers as the values of assets plummeted. He does not want you to know about where all the money really went.
World loses 'over $50 trillion' Shrinkage equals year of output Financial assets around the world may have lost "well over $50 trillion" of value last year, a collapse of wealth equivalent to a year's worth of world economic output, the Asian Development Bank reported Monday. This "astounding" decline reflects stock market losses, write-downs on bonds and currencies losing ground against the dollar as investors engaged in a "surprising run" toward the greenback in search of a safe-haven currency, the ADB report said. The report attributed the "genesis" of the global financial crisis to growing imbalances among the main economies of the world. It blamed the United States for embarking on "a consumption binge and a growing fiscal deficit" without the internal savings to finance these explosions in demand. As a result, the U.S. trade deficit soared.
The Financial Times’ proposed agenda for the G-20 “Participants [at the London G20] must agree on three points. First, world demand is in freefall. Stimulus is necessary. The surplus countries with the most leeway to increase domestic spending – Japan and Germany, in particular – are not yet doing enough. They can afford to encourage serious spending and are, in any case, suffering the steepest contractions. In addition, if these habitual exporters were to become serious importers, it would be politically easier to hold back protectionism. Second, governments must take responsibility for dealing with their financial systems. The toxicity which started in mortgage-backed securities is spreading through the world’s banks as ever more assets go bad in the recession. Politicians must make sure that their banking systems are adequately capitalised and deal with the illiquid securities at the heart of this crisis. Third, governments must agree to put aside more money for the International Monetary Fund. The recession would enter a new, dreadful chapter if a rash of financial crises broke out across eastern Europe, Asia or South America. The fund’s current funds are clearly inadequate. The idea of a large issuance of SDRs – the IMF’s own reserve asset – is an excellent one. Changes in voting-weights, to raise Asia’s share and lower Europe’s, are also both inevitable and desirable.
AIG Warns of "Catastrophic" Collapse Troubled U.S. insurance company American International Group is seeking another bailout and warns that if the government abandons the company it may cause a "catastrophic" collapse. Bloomberg News said it acquired a 21-page presentation that outlined the consequences of allowing AIG to fail. The report said money-market funds -- seen as the safest investments -- could lose value, European banks would be forced to raise capital and AIG's competitors could be crippled. "What happens to AIG has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means," Bloomberg quoted the presentation. The presentation was reportedly circulated among U.S. regulators and labeled as "strictly confidential."
"Entire financial system is bankrupt" Nouriel Roubini on AIG
The men who broke a bank Eric Daniels and Sir Victor Blank took Britain's safest bank and turned it into a basketcase - and left the taxpayer on the hook too Eric Daniels's facade slipped only for a moment, and then when it was least expected. At a low-key speech to a breakfast organised by a Jewish charity last Monday, the American chief executive of Lloyds Banking Group was clearly fighting back tears as he spoke in his distinctive, gravelly drawl. Daniels, 57, renowned for his Buddha-like calm, was under extreme pressure. He was in the middle of a desperate fight to stop the government taking control of his bank. If he failed, he and his chairman, the City grandee Sir Victor Blank, would forever be remembered as the men who steered Lloyds, the pride of British banking, onto the rocks.
Central banks are still buying large quantities of Treasuries There has been a lot of chatter recently about the risk that foreign central banks would lose their appetite for Treasuries just as the US stepped up its issuance. The Fed’s custodial data, though, isn’t sending any warning signals. The CFR’s Paul Swartz calculated the 13 week (think 3 month) increase in central banks’ custodial holdings at the New York Fed. Central bank purchases are down a bit from their December high (at their peak, central banks added more than $200b to their Treasury portfolio during a 13 week period) but remain very, very strong. $150 billion over 13 weeks (3 months) is a big number. Central bank purchases in the first quarter of 2009, for example, look to exceed central bank purchases in the first quarter of 2004. And that was when Japan was investing what then was considered a huge sum in the Treasury market.
Warren Buffet / Peter Schiff on Kudlow Mar. 9 2009 pt 1/2
Buffett says economy fell off a cliff Billionaire Warren Buffett said unemployment will likely climb a lot higher depending upon how effective the nation's policies are, but he remains optimistic over the long term. Buffett said the nation's leaders need to support President Barack Obama's efforts to repair the economy because fear is dominating Americans' behavior and the economy has basically followed the worst-case scenario he envisioned. "It's fallen off a cliff," Buffett said Monday during a live appearance on CNBC. "Not only has the economy slowed down a lot, but people have really changed their habits like I haven't seen."
Buffett sees 'close to worst-case' outlook for U.S. economy The billionaire investor Warren Buffett said Monday that the U.S. economy had "fallen off a cliff" but eventually would recover, although a rebound could rekindle inflation worse than experienced in the late 1970s. Speaking on the CNBC financial news network, Buffett also said the economy was mere hours away from collapse in September, when credit markets seized up, the investment firm Lehman Brothers failed and the insurer American International Group got its first bailout. "The world almost did come to a stop," he said. He urged policy makers and regulators to communicate their efforts better to the public, though he stopped short of major, specific policy recommendations. "People are confused and scared," he said. "People can't be worried about banks, and a lot of them are."
Peter Schiff on Warren Buffet interview - Kudlow Mar. 9 2009 pt 2/2
Specter Says Nation on 'Brink of a Depression' Specter sees 'reasonable chance' stimulus law can help The nation is on the "brink of a depression," but there's a "reasonable chance" that the $787 billion economic stimulus package will help ease the situation, Sen. Arlen Specter said Monday. Specter, R-Pa., said the nation's economic situation is more dire than the public has been told, but did not elaborate. "Our economic problems are enormously serious — more serious than is publicly disclosed. And I think we're on the brink of a depression," he told reporters at the state Capitol. Specter cast one of only three Republican votes for the stimulus package that President Barack Obama signed last month, drawing flak from members of his party, particularly conservatives.
Obama's Budget Faces Test Among Party Barons What the Democratic barons of Congress liked best about President Obama's audacious budget was his invitation to fill in the details. They have started by erasing some of his. The apparent first casualty is a big one: a proposal to limit tax deductions for the wealthiest 1.2 percent of taxpayers. Mr. Obama says the plan would produce $318 billion over the next decade as a down payment for overhauling health care. But the chairmen of the House and Senate tax-writing committees, Senator Max Baucus of Montana and Representative Charles B. Rangel of New York, have objected to the proposal, citing a potential drop in tax-deductible gifts to charities.
Behind the Curve President Obama’s plan to stimulate the economy was “massive,” “giant,” “enormous.” So the American people were told, especially by TV news, during the run-up to the stimulus vote. Watching the news, you might have thought that the only question was whether the plan was too big, too ambitious. Yet many economists, myself included, actually argued that the plan was too small and too cautious. The latest data confirm those worries — and suggest that the Obama administration’s economic policies are already falling behind the curve. To see how bad the numbers are, consider this: The administration’s budget proposals, released less than two weeks ago, assumed an average unemployment rate of 8.1 percent for the whole of this year. In reality, unemployment hit that level in February — and it’s rising fast.
Bernanke Speaks [on Tuesday), Wholesale Inventories U.S. Federal Reserve Chairman Ben Bernanke will speak on bank regulation in Washington on Tuesday at the Council on Foreign Relations. Just last week, Bernanke came under fire while testifying before the U.S. Senate Banking Committee on the government's decision to provide billions of dollars more in aid money to AIG. "We really had no choice," Bernanke said. "Bankruptcy is just not a good option."
Forget about Recovery . . . . I maintain that there are countless constructive tasks waiting to occupy us on a long national "to do" list for rebuilding a national economy, but they are way different than the ones currently preoccupying government and the mainstream media. The Obama White House, Congress, and The New York Times are hung up on exercises in futility -- "rescuing" banks and insurance companies that cannot be rescued (because they are hopelessly trapped in "black hole" credit default swaps contracts), and re-starting a "consumer" binge that was completely crazy in the first place, based, as it was, on a something-for-nothing standard-of-living.
More Debt Won't Rescue The Great American Ponzi 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 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.
How Wall Street and Washington Are Betraying America The original title for this essay was "How Wall Street and Washington Betrayed America." As you can see from the above, this blog has a slightly different perspective. We would like to be able to say that this was an unfortunate problem that has occurred, and that we are dealing with its aftermath. The repair of the economy is just a matter of time and money.It is not, and we are not. The problem continues. This was not an exogenous event like an accident. It is a pernicious condition, a chronic wasting disease. The carriers of the infection are still at work. The system is distorted, sick, incapable of self-cure. Feeding intravenous liquidity to obtain the appearance of health will not work, only allow the disease to progress. Strong medicine is required. We will have no recovery until we have reform. We will have no reform until the banks are restrained, and balance is restored. The looting of the public Treasury will continue while the Congress and the Executive take their direction from Wall Street.
Imagine By Ron Paul Imagine for a moment that somewhere in the middle of Texas there was a large foreign military base, say Chinese or Russian. Imagine that thousands of armed foreign troops were constantly patrolling American streets in military vehicles. Imagine they were here under the auspices of “keeping us safe” or “promoting democracy” or “protecting their strategic interests.” Imagine that they operated outside of US law, and that the Constitution did not apply to them. Imagine that every now and then they made mistakes or acted on bad information and accidentally killed or terrorized innocent Americans, including women and children, most of the time with little to no repercussions or consequences. Imagine that they set up check points on our soil and routinely searched and ransacked entire neighborhoods of homes. Imagine if Americans were fearful of these foreign troops, and overwhelmingly thought America would be better off without their presence.
Treasuries Rise as Bernanke Fans Speculation Fed to Buy Assets Treasuries rose, extending last week's advance, after Federal Reserve Chairman Ben S. Bernanke added to speculation the central bank will buy government debt. The Fed will use "all the tools" it has to end the U.S. recession, Bernanke said two days ago, underpinning expectations it will purchase Treasuries to keep down borrowing costs. The global economy will probably shrink for the first time since 1945, the World Bank said yesterday, stoking appetite for the safety of U.S. debt and offsetting concern $63 billion of bond sales this week will overwhelm demand. The Dow Jones Stoxx 600 Index of European shares fell 1.2 percent today.
Obama Nominates Three for Assistant Treasury Secretary Posts President Barack Obama will make nominations for three assistant secretaries of the Treasury, where Secretary Timothy Geithner's efforts to revive the economy have been hampered by vacancies in top posts. Alan Krueger is the choice for economic policy, the White House said. David Cohen will be assistant secretary for terrorist financing and Kim Wallace for legislative affairs. Each currently serves as counselor to Geithner.
Obama to unveil education plan President Barack Obama will begin to outline his education reform plan today, announcing plans to expand pay incentives for good teachers and offering grants to schools that raise their standards for students. The president will announce his intent to hike federal support for expansion of performance pay models in at least 150 school districts around the country, according to senior administration officials. Grants included in his 2010 budget plan are designed to encourage states to raise statewide standards and to collect data about performance in early childhood education programs, the officials said. Funding available through Obama's recently passed economic stimulus plan will go to helping states upgrade the data systems they use to track student progress and teacher effectiveness.
TAX ALERT! (Snopes does not list this as "false", might want to check this out with the IRS and your Senators.) Income taxes are normally due on April 15th unless that date falls on a Saturday or Sunday, in which case they are due on Monday, the 16th or 17th. However, I have been told that the rule has recently been changed for this, and for the next 4 years, tax payments will not be due until you are nominated to a cabinet position. Please check with your Tax adviser to confirm…
U.S. Stocks Fall on Buffett, World Bank Warning About Economy U.S. stocks fell, extending the worst weekly slump in the Standard & Poor's 500 Index since November, after Warren Buffett said the economy "has fallen off a cliff" and the World Bank predicted a global contraction. Hewlett-Packard Co., DuPont Co. and Verizon Communications Inc. slumped 4 percent or more. Merck & Co. sank 7.7 percent, dragging down the Dow Jones Industrial Average, after agreeing to buy Schering-Plough Corp. for $41.1 billion. Aflac Inc., the largest provider of supplemental insurance, dropped 15 percent after UBS AG recommended selling the shares.
Peter Schiff Vlog Report 09 March 2009
Welcome to Squanderville In “Squanderville,” as Warren Buffett called the United States back in 2003, Americans are ready and willing to believe anything…that their homes will always rise in value, that their debt will never catch up with them, and that the American Empire is unshakable. But that too is a typical fin-de-bubble hallucination — that money will always be there when you need it. Americans have delusions of mediocrity. This is a point we’ve made before. We make it here again, because the things that were extraordinary a year ago are even more extraordinary now. Things that would have been taken for absurd a generation ago are now taken for granted. As a bubble expands, the celebration that began as a little cocktail reception turns into a wild party, with guests dancing on tables and throwing up outside. Soon, it gets out of hand. At the end of a bubble, the delusions and distortions swell up to grotesque proportions. People seem ready to believe anything as long as it fits their own fantasies. The hallucinations become so extravagant that they blow up.
Warren Buffet in Fortune Magazine The following three articles were written by Warren E. Buffet and published in Fortune Magazine’s October 26th, 2003 issue. America's Growing Trade Deficit Is Selling the Nation Out From Under Us. Here's a Way to Fix the Problem— And We Need to Do It Now. I'm about to deliver a warning regarding the U.S. trade deficit and also suggest a remedy for the problem. But first I need to mention two reasons you might want to be skeptical about what I say. To begin, my forecasting record with respect to macroeconomics is far from inspiring. For example, over the past two decades I was excessively fearful of inflation. More to the point at hand, I started way back in 1987 to publicly worry about our mounting trade deficits—and, as you know, we've not only survived but also thrived. So on the trade front, score at least one "wolf" for me. Nevertheless, I am crying wolf again and this time backing it with Berkshire Hathaway's money. Through the spring of 2002, I had lived nearly 72 years without purchasing a foreign currency. Since then Berkshire has made significant investments in—and today holds—several currencies. I won't give you particulars; in fact, it is largely irrelevant which currencies they are. What does matter is the underlying point: To hold other currencies is to believe that the dollar will decline. Both as an American and as an investor, I actually hope these commitments prove to be a mistake. Any profits Berkshire might make from currency trading would pale against the losses the company and our shareholders, in other aspects of their lives, would incur from a plunging dollar.
Jim Rogers Farmers Will Drive Lamborghinis pt 1/2 Mar-09-09
Banks Decimate Their Dividends Capital One is the latest to slash its payout as a way to conserve capital. Continued economic weakness has left few dividends within the financial sector intact as banks reduce their payouts to mere pennies in an effort to bolster their cash cushions. On Monday, Capital One Financial (nyse: COF - news - people ) said it plans to cut its quarterly dividend 86.7%, to 5 cents a share, from 37.5 cents a share, beginning in its second quarter, which will result in a May payout. The reduced dividend is expected to yield $500.0 million in annual savings and could improve the ratio of its tangible common equity to tangible managed assets by 25 basis points. The ratio is a measure used to gauge capital adequacy and a bank's strength.
Capital One cuts dividend 87 percent Capital One Financial Corp (NYSE:COF - News) will cut its quarterly dividend 87 percent to save $500 million annually as credit card losses increase and the economic outlook worsens, the company said on Monday. Capital One, whose shares were up 5 percent, is reducing its quarterly dividend to 5 cents a share from 37.5 cents beginning in the second quarter -- only one year after a 14-fold increase in the payout. Analysts and investors had expected the move after bigger rivals JPMorgan Chase & Co and Wells Fargo & Co took similar actions in recent weeks to preserve capital, especially given the high exposure of Capital One to risky credit card holders.
Failure is our salvation Systemic Risk Reduction via Failure One year ago, Bear Stearns faced collapse when its short-term lenders stopped rolling over their loans to the investment bank. The federal government and the FED stepped in. They financed and brought about an acquisition by the JP Morgan Chase (JPM) bank. The reason for this was systemic risk. The FED feared that a Bear Stearns failure would cause the financial system to melt down when one party after another could not pay off on contracts. JPM assured others that Bear would honor its contracts. The chairman and chief executive officer of JPM said "Bear Stearns' clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns' counterparty risk. We welcome their clients, counterparties, and employees to our firm, and we are glad to be their partner."
Jim Rogers Farmers Will Drive Lamborghinis pt 2/2 Mar-09-09
GM, AMR On Moody's 'Most Likely To Default' List Moody’s Investors Service, one of the big three U.S. ratings agency that totally missed the current economic debacle, is rolling out its new Bottom Rung List, and counting AMR, Reader’s Digest and, of course, GM among the public companies most in danger of defaulting. The company’s Bottom Rung List now will be published weekly. The Wall Street Journal laid out the 30 biggest companies on the list. Among them: Ford, Chrysler, auto parts suppliers Allison Transmission, Visteon and Lear and media giants Citadel Broadcasting and Univision Communications.
The 'Bottom Rung' -- Companies at Greatest Risk of Defaulting Moody's Investors Service is launching a list called the "Bottom Rung," which details 283 companies that are at risk of defaulting on their debt. Below are the 30 largest companies on the list, based on rated debt.
Ford deal freezes pay, cuts benefits Agreement puts pressure on GM, Chrysler Unionized workers at Ford Motor Co. approved contract changes that include freezing wages and cutting benefits in a move aimed at helping the automaker remain competitive. The United Auto Workers said Monday a majority of hourly workers voted in favor of modifications to the 2007 contract with Ford, eliminating cost-of-living increases and cash bonuses. The agreement is expected to be a model for Chrysler LLC and General Motors Corp., which need to bring their labor costs in line with those of foreign auto companies' plants in the U.S. as a condition for the $17.4 billion they have received in federal loans so far. Under terms of their loan agreements, progress must be made by March 31. The companies are seeking an additional $21.6 billion in government aid.
Ford Doing Fine From A "Conquest Standpoint" We've been wondering if Ford's decision to forgo bailout cash helped the company. They avoid the tough spotlight that comes with getting government dollars, but at the same time, they miss out on billions of dollars. Are they cutting off their nose to spite their face? Apparently not:
Police say PA car dealer died while torching cars A car dealer in Westmoreland County died of a heart attack while setting fire to several automobiles on his lot in Ligonier Township, police have concluded. Police Chief Michael Matrunics said today that Gregory C. Graham, the 61-year-old owner of Graham Colonial Motors on Route 711, acted alone Feb. 17 when he set the fires. After an investigation by township police and county detectives, the fires were ruled arson. Mr. Graham's body was found a short distance from the fire scene. In his possession were accelerants and the means to ignite them, including rolled up newspaper and gasoline.
Is the Future Going Down the Drain? Baby Boomers Going Bust It all happened faster than you can say “senior discount.” Millions of baby boomers born into the dawn of the most spectacular economic expansion in history are being forced to re-imagine their retirement futures. Few news outlets have failed to seize upon the low-hanging pun: the boomers have gone bust. Among the adjustments forced by the new circumstances, perhaps the cruelest twist for many boomers is the need to join younger generations in the roommate queue. The housing crash has forced record numbers of late-middle age homeowners to take in boarders or risk becoming boarders themselves. From California to Vermont, home-share organizations founded to assist the elderly are scrambling to meet the demands of newly bust boomers.
SunTrust plays rough with builders in Triangle SunTrust Bank of Atlanta refuses to extend loans to vulnerable builders, putting them in financial straits Danny Creech took the call last August. It was his bank, SunTrust. He owed the Atlanta lender $1.5 million, but the debt wasn't a worry. Creech, president of Landon Homes in Raleigh, routinely borrowed to buy and build homes. He paid debts when he sold homes and then borrowed again. When homes lingered on the market, getting an extension on the loan typically required only a two-minute call and a $150 fee. But this was no two-minute call. SunTrust wouldn't be extending the loan terms. The bank wanted to be paid back. In 60 days. Such demands are anathema to builders, whose businesses float in the flow of credit.
America loses 23,000 jobs every day and output suffers biggest slump in 25 years American businesses were forced to shed more than 23,000 jobs every day last month as recession tightened its grip on the economy, pushing the unemployment rate to a 25-year high. The rate jumped from 7.6 per cent to 8.1 per cent, the highest level since the downturn of the early 1980s. The US economy has lost 4.4 million jobs since the beginning of the slowdown, with more than half of these positions disappearing in the past four months alone. While the loss of 651,000 non-farm jobs in February was broadly in line with analysts' expectations, drastic revisions to the level of cuts in earlier months indicated that the employment market had been hit much more severely than had been previously thought.
Over 15,000 descend on Fullerton to protest higher taxes Shouting "Off with their heads!" and "Heads on a stick!" over 15,000 people from all over California descended on downtown Fullerton for the Revolt, Recall, Repeal rally to protest over $50 billion in tax increases in the state of California and to begin a recall effort against the governor and many state legislators. Freeway off ramps heading into Fullerton had to be shut down because so many people were heading to the event and police services were stretched thin, according to a sergeant handling traffic duty at the event.
Depression Dynamic Ensues as Markets Revisit 1930s The U.S. economy's vital signs may not confirm a diagnosis of depression. The symptoms increasingly point to one. As in the Great Depression, world trade is collapsing, wealth is evaporating and the banking system is broken. Deflation is a growing threat as companies slash production, pay and prices. And leaders worldwide are having difficulty making headway in halting the self-perpetuating decline. "We are tracking 1929-1930," says Barry Eichengreen, a professor of economics and political science at the University of California, Berkeley.
Georgians could pay future state taxes in gold If a bill under review by the Georgia House becomes law, state residents might be paying 2010 taxes in gold. Now assigned to the House of Representatives’ Banks & Banking committee, HB 430, or the Constitutional Tender Act, would require the use of gold and silver coin for the repayment of debts to the state, notably all state taxes. It would also mandate that any bank conducting business with the state accept gold and silver coins as deposits. In effect, the bill seeks to revive the gold and silver standards for certain forms of state business, and Georgia would become the only state in the country to do so. Reps. Bobby Franklin, R-Marietta, and Barry Loudermilk, R-Cassville, are sponsoring the bill.
Georgia HB 430 - Constitutional Tender Act; enact A BILL to be entitled an Act to amend Title 7 of the Official Code of Georgia Annotated, relating to banking and finance, so as provide a short title; to provide legislative findings; to define certain terms; to require any bank or lending institution serving as a depository for the state or any department or agency of the state to offer and to accept gold and silver coin for deposit; to amend Title 50 of the Official Code of Georgia Annotated, relating to state government, so as to provide legislative findings; to define certain terms; to require the exclusive use of gold and silver coin as tender in payment of debts by or to the state; to provide for related matters; to provide an effective date; to repeal conflicting laws; and for other purposes.
Open Letter to the GA Assembly - HB 430 Constitutional Tender Act Dear Representatives and Senators, As Georgia faces record unemployment, spiraling inflation, and an unfathomable burden of debt from Washington, DC, I would ask you to keep an open mind as you consider HB 430, the Constitutional Tender Act. Our Founding Fathers knew well the danger of entrusting monetary policy to unelected bureaucrats or, even worse, a private central banking cartel like the Federal Reserve. Since 1971 when US currency was un-Constitutionally severed from the gold standard, our economy has naturally gravitated away from sound investments in manufacturing and towards the easy gains in finance made possible by fiat money. As a result our nation's largest export has become the dollars themselves. But paper money backed only by itself will only retain the confidence of its holders for so long. The world has begun to realize the ludicrous nature of this system, and like Rome before us our financial system has begun to crumble. Let us not forget that the economic booms of the mid-1980s and late 1990s were fueled by the Federal Reserve's irresponsible lending of credit and were only outmatched by the economics busts of the early 1990s and now. None of these things would be possible under a sound money system, and I suspect that we would have instead seen steady (but realistic!) growth for last 35 years.
The road to economic recovery will not be easy, nor will it be swift. But building Georgia's economy on a bedrock of sound money is surely better than building it on the sands of fiat currency. I ask you to please support House Bill 430.
Cleveland Commercial Loan Delinquencies Signal More If you want to know what's going to happen to commercial real estate across the U.S., look no further than Cleveland and Detroit. Those two metropolitan areas lead the U.S. in mortgage delinquencies for owners of office buildings, apartments, malls and warehouses, a sign that cities hurt by the housing crisis will see their commercial markets dragged down next. Commercial properties with mortgage payments 60 days late or more rose to 3.93 percent as of March in the Cleveland area and to 3.75 percent in the Detroit area, according to data compiled by Bloomberg. The North American commercial property delinquency rate is 1.1 percent, according to Standard & Poor's.
President's Task Force Takes a Close Look at G.M. and Chrysler Plants Members of President Obama's auto task force visited General Motors and Chrysler on Monday to see firsthand the companies whose fates rest in their hands. Top advisers on the task force, like Steven Rattner and Ron Bloom, toured G.M. and Chrysler plants in Warren, Mich., including a Chrysler factory that builds Dodge Ram pickups. They also drove prototypes of G.M.'s new extended-range electric car, the Chevrolet Volt. The auto executives and workers can only hope they made a favorable impression, as the task force enters a critical phase for deciding how, and whether, to rescue the two automakers.
Wondering if Crude Could Fall Even More In recent weeks, as oil traded around $40 a barrel, the conventional wisdom among specialists was that the price decline that began last summer was largely over. Amid production cuts by the OPEC cartel, oil had apparently found a floor that would last until the global economy rebounded. But a growing chorus of analysts and economists is questioning that notion. While theirs is a minority view, they see troubling conditions in the oil market that could still push prices down sharply - and a global economy that is getting worse, not better. Some are predicting that oil could fall to $20 a barrel and stay low for years.
Masterful Masters on Our Masters Meet Tim Masters, an American of superior insight. After DNA evidence forced the State of Colorado to overturn his conviction for murder and free him from its cage, Mr. Masters knew precisely whom to blame for his ruined, stunted life. When CNN asked, "Any hard feelings toward the Fort Collins Police Department or the prosecutors in the case?", Mr. Masters responded, "Oh, absolutely. They locked me up for a decade for something I didn't do." Yeah, take a moment to recover from such stunning brilliance. I, too, sat thunderstruck as I thought, Wow, someone finally gets it!
In Mexico's drug wars, fears of a U.S. front Violence that has killed thousands is beginning to cross border, officials say With U.S. forces fighting two wars abroad, the nation's top military officer made an important visit last week to forestall a third. He went to Mexico. Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, made the trip to confer with Mexican leaders about the Merida Initiative, a three-year plan signed into law last June to flood the U.S.-Mexican border region with $1.4 billion in U.S. assistance for law-enforcement training and equipment, as well as technical advice and training to bolster Mexico’s judicial system.
No Political or Judicial Support for Second Amendment I fear there are a large number of gun owners and supporters of the Second Amendment (2A) who believe there still remains in the Congress some support (fear of not being reelected if they vote for gun control) for 2A. They are also of the belief, especially among the National Rifle Association (NRA) crowd, that the recent Heller decision was a major victory for gun owners. Both beliefs are highly suspect. It is true that Bill Clinton stated in his biography that the Democrats lost the Congress in 1994 because of the party's support for gun control. It is also true Al Gore very possibly lost the presidential race in 2000 because he was unable to carry his home state of Tennessee, many believe because of his anti-gun stance. Had he won Tennessee, Florida would not have mattered. But that was then, and this is now; the political and economic climate is much different today.
Obama White House: Extravagance, Secrecy and Enemies Lists It has long been rumored about ancient Rome that, at gala dinner parties, wealthy patricians used to vomit between food courses in order to make room for more. This practice, considered to be the epitome of gluttony, appears to have traveled for centuries and may have now arrived at Barack Hussein Obama’s White House. Although rumors of newly installed White House vomit rooms have not been substantiated, one can surmise… While Obama does nothing practical to stop the economic bleeding of the American system and its people, he has now established Wednesdays as his weekly revelry day—replete with cocktail parties, well known entertainers to amuse both Mr. and Mrs. Obama and their guests and dinners consisting of the best in imported fare—including multi-course dinners and $100/lb steaks. These are what are left of our tax dollars at work.
The shadow financial system – as illustrated in three new papers that cut through the London fog Gordon Brown wants to shine a bit more light on the shadow financial system. One plank of his G-20 action plan is: “reform of international regulation to close regulatory gaps so shadow banking systems have nowhere to hide” It isn’t exactly clear though why Brown needs the cooperation of the other members of the G-20 to do increase transparency here: an awful lot of the shadow financial system is based in the UK. If the UK collected the kind of detailed data that the US collects in the TIC, a large part of the shadow financial system would either emerge from the shadows or a lot of banks – and bankers – would need to migrate. And given how much trouble has emerged from the shadows, a bit more transparency about what goes on in the UK might have helped the world’s regulators (and the IMF) do a better job of providing a bit more “early warning” of budding problems. Think of the various less-than-transparent actors that have set up shop in London
Germany at odds with U.S. over crisis FRANKFURT: Germany may be at the heart of any European response to a weakening world economy, but Germany's heart is not in it. As world leaders gear up for a London summit meeting on April 2 where they are supposed to settle upon a coordinated response to the global economic crisis, conflict is brewing between Europeans who see tighter regulation of a skewed financial system as the main task ahead and Americans who are focused on the more immediate challenge of countering the acute dropoff in economic activity across the globe. The differences between Europe and the United States are most evident in Germany, where years of growth fueled by a mighty manufacturing base and a deep-seated suspicion of financial capitalism has spurred a powerful resistance to the Keynesian-style deficit-spending favored in Washington.
China Draws U.S. Protest Over Shadowing of Ships The White House protested yesterday what military officials called China's harassment and aggressive shadowing of a U.S. Navy ocean surveillance ship in international waters Sunday, and urged greater respect for maritime law. Five Chinese vessels "surrounded" the USNS Impeccable in the South China Sea and closed within 50 feet, with Chinese crew members "waving Chinese flags and telling Impeccable to leave the area," according to a Pentagon statement. In response, Impeccable sprayed water out of fire hoses at one of the vessels, but the Chinese crew stripped to their underwear as their ship "continued closing to within 25 feet," the Pentagon said.
White House tells China U.S. has right to be in China Sea The Chinese harassment of a U.S. naval surveillance vessel in the South China Sea, the Impeccable, drew a response from the White House at today's daily press briefing. White House Press Secretary Robert Gibbs essentially told the Chinese through the U.S. media that the U.S. Navy will continue to ply the waters where the Impeccable was since those are international waters.
Biden warns of 'deteriorating' Afghan situation U.S. Vice President Joe Biden urged NATO members to jointly confront al-Qaida and other extremist groups in Afghanistan where he said instability threatens all of the alliance's members equally. Appearing before NATO's top decision making body, Biden solicited ideas to reverse a losing military strategy in Afghanistan as part of President Barack Obama's policy to bring more European allies on board to fight the Taliban-led insurgency. He warned the situation in Afghanistan and neighboring Pakistan was worsening, adding, "The deteriorating situation in the region poses a security threat from our respect not just to the United States, but to every single nation around this table."
Pakistan's political crisis deepens ISLAMABAD, Pakistan (AP) -- Pakistan's shaky government threatened the opposition leader with sedition charges on Monday after he called for protests against the president, raising the stakes in a political crisis that threatens to weaken the country's fight against al-Qaida and Taliban. Lawyers and supporters of opposition leader Nawaz Sharif are vowing to blockade the parliament later this week over the refusal of President Asif Ali Zardari's government to reinstate fired judges. Pakistan was thrown into political chaos last month when the Supreme Court barred Sharif and his brother from elected office. Since then, both men have led an increasingly vocal campaign against the government, staging near daily anti-government rallies.
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Did you remember to set your clocks AHEAD one hour, in the US?
Greg McCoach: Gold - $2,000/oz. by Year's End? We see by the statistics that the HUI Index, which is a measure of gold and silver precious metal stocks, has performed better than any other asset class in the past 10 years. Now what's interesting is that we're still in the process of watching this gold bull unfold. In terms of the four stages of a bull market, we are probably past the midway point and heading into the latter stages. This is where the parabolic moves in the precious metals will start to happen. And with all that is unfolding in the world economic scene, it's not difficult to see why gold will soon be soaring.
Beware! Gold scams set to hit markets When gold prices soar, the crave for the yellow metals also shoots up. And consumers’ crave goes up, there are scamsters who are always ready with dubious schemes to fleece the unwitting customers. So, be prepared for frauds to flood the markets with suspicious schemes with an intension to make some fast bucks. Realising this, the US investigative agencies have organized a seminar for customers and urged them to be prepared to receive dubious mails from shady firms, which will offer unbelievable profits to customers and vanish after fleecing the people.
Hedge funds turn to gold Hedge fund investors who made money last year by betting against investment banks are now buying gold as a way of betting against central banks. The gold bulls include David Einhorn, founder of hedge fund Greenlight Capital, who last year came under the spotlight for his short selling of shares in Lehman Brothers, after arguing that the bank did not have enough capital to offset its exposure to falling property prices. Other funds looking at gold include Eton Park and TPG-Axon, investors said. Their belief in bullion is being expressed even as gold prices have retreated from last month's break above the $1,000 an ounce level. Spot gold in London closed last Friday at $939.10, after falling last week to $900.95 an ounce.
Silver will Seriously outshine Gold in 2009 Silver prices are poised to outperform gold while moving dramatically higher later this year due to increasing investment demand, attendees of the world's largest mining conference in Toronto were told earlier this week. Speaking at the Prospectors and Developers of Canada Association (PDAC) annual convention, German investment fund manager Oliver Frank told a packed room at the "Accessing European Capital" forum that silver will likely end the year in the $25 range. This bold projection is almost double current silver prices. A late 2009 surge in pent-up buying demand, particularly among Europeans, will prove to be the catalyst to silver reaching historic new highs, added the CEO of the Butzbach-based investment fund, Silver Capital AG.
At Treasury, a Sense of Cascading Problems and No Relief Rarely have so few people had so little time to prop up so many pillars of the economy as those in the Treasury Department under Timothy F. Geithner. In the six weeks since Mr. Geithner took over as Treasury secretary, he and a skeleton crew of unofficial senior advisers have been racing to make decisions that will shape the future of the banking, insurance, housing and automobile industries. But even as he maintains a frenetic pace - unveiling plans, testifying before Congress and negotiating new bailouts with the likes of Citigroup, General Motors and the American International Group - there are signs that events are getting ahead of him.
IMPORTANT message by Ron Paul. Ron Paul Calls Out Neocons By Name!!! Can freedom and the republic survive the takeover? Now the neocons come from the LEFT.
Oversight of Bank Bailouts Criticized House Panel Faults Treasury for Not Forcing Firms to Reveal Overseas Deals Congressional investigators are criticizing the Obama administration for failing to police deals where banks participating in the $700 billion federal bailout loaned billions of dollars overseas, highlighting the growing political tension over the extent of government involvement in firms receiving taxpayer funds. A report by a House oversight panel, which was described to The Washington Post in advance of its release this week, raises questions about a $8 billion financing deal for Dubai by Citigroup (recipient of at least $45 billion in bailout funds); a $1 billion investment in India by J.P. Morgan (which got $25 billion from the government rescue); and a $7 billion investment in China by Bank of America (which got $45 billion from the bailout).
Top U.S., Foreign Banks Got $50 Billion in AIG Aid Beneficiaries of the government's bailout of American International Group Inc. include dozens of U.S. and foreign financial institutions that have been paid roughly $50 billion. The beneficiaries of the government's bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant. Among those institutions are Goldman Sachs Group Inc. and Germany's Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.
Giant Omnibus Bill Includes $7.7 Billion in Earmarks for Bugs, Pigs, Parking – and La Raza Termite research, walrus rehabilitation and pig manure are among the more than 8,570 of earmarks in the omnibus spending package currently before the Senate. Critics charge the bill is stuffed full of so many pork barrel projects -- $7.7 billion worth -- that President Barack Obama should veto it. Perhaps the most controversial is a direct earmark for a Hispanic civil-rights group -- the National Council of La Raza -- worth $950,000. The group has been a lighting rod of controversy since it helped organize large protests in 2006 aimed at derailing efforts by conservative congressional Republicans to enforce U.S. immigration laws.
White House names Treasury nominees, needs more The White House named three nominees on Sunday for senior jobs at the U.S. Treasury Department, which still is trying to fill out its top ranks while dealing with a financial crisis. The three nominees were announced just days after two contenders for more senior posts withdrew their names from consideration. A Treasury spokesman said the Obama administration nonetheless was ahead of prior administrations in getting its top Treasury officials in place and said a perception that its work was being hindered was incorrect.
Minnesota Bank Asks Why It Pays for Wall Street Greed TCF Financial Corp., the Wayzata, Minnesota-based bank that never made a subprime loan and hasn't lost money since 1995, is asking why it should help clean up the mess made by Wall Street. "I'm kind of bitter," said William Cooper, chief executive officer of the 448-branch bank, adding that over the years TCF has invested about $1 billion in the Federal Deposit Insurance Corp.'s fund that guarantees bank deposits. "We pay for the excesses of our competitor over and over again." TCF is among more than 8,300 banks and lenders insured by the FDIC facing increased fees and a one-time "emergency" charge designed to raise $27 billion this year for the agency's depleted coffers. Community banks may take a 10 percent to 20 percent hit to 2009 earnings even if the FDIC halves that charge, said Camden Fine, president of the Independent Community Bankers of America.
U.S. regulators close Freedom Bank of Georgia U.S. regulators closed Freedom Bank of Georgia bank on Friday, the 17th U.S. bank to fail this year as the struggling economy and falling home prices take their toll on financial institutions. The Federal Deposit Insurance Corp said Freedom Bank of Georgia had $173 million in assets and $161 million in deposits. The failure is expected to cost the FDIC deposit insurance fund an estimated $36.2 million. Northeast Georgia Bank agreed to assume the deposits of Freedom Bank of Georgia, whose four branches will reopen on Monday as branches of Northeast Georgia Bank. Customers can access their money over the weekend by check, teller machine or debit card, the FDIC said.
Todd Sullivan on Fox News Channel Administration is using FEAR to sell their policy; coming class warfare
Washington plans for big bank failure A bill introduced in the Senate would give FDIC chief, Sheila Bair, a huge loan to handle 'emergency situations' in the banking sector. The government is bracing for a big bank failure. A bill introduced in Congress would give the FDIC, the agency that stands behind Americans' bank deposits, temporary authority to borrow as much as $500 billion from the government to shore up the deposit insurance fund. The bill -- the Depositor Protection Act of 2009, backed by Senate Banking Committee Chairman Chris Dodd, D-Conn. and Sen. Mike Crapo, R-Idaho -- wouldn't change the status of individual bank accounts, which through the end of this year are insured up to $250,000.
GOP Leaders Criticize Bank, Budget Plans Republican congressional leaders yesterday called President Obama's budget proposal wasteful and his plan to rescue the nation's banks unrealistic, urging the administration to "make hard choices" and allow some major financial institutions to fail. Obama administration officials, in turn, said that fixing the dismal economy would take time. They urged patience as the administration takes up health-care reform, reviews an inefficient government procurement process, and awaits the effects of the new public spending programs and tax cuts laid out in the $787 billion stimulus package recently signed into law.
BofA withdraws job offers to foreign MBAs Bank of America has become the first US bank to withdraw job offers made to MBA students graduating from US business schools this summer, citing conditions laid out in its bail-out deal as the reason. The recently passed $787bn stimulus bill in effect prevents financial institutions that have received money from the government's troubled asset relief programme from applying for H1-B visas for highly skilled immigrants if they have recently made US workers redundant. BofA, which has received a total of $45bn in Tarp funds, is in the process of digesting two large acquisitions - Countrywide, the mortgage broker, and Merrill Lynch - which will see thousands of jobs lost.
Who got AIG's bailout billions? Where, oh where, did AIG's bailout billions go? That question may reverberate even louder through the halls of government in the week ahead now that a partial list of beneficiaries has been published. The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion that the U.S. government has poured into American International Group Inc since last fall has been paid to at least two dozen U.S. and foreign financial institutions.
Bernanke to Discuss Regulatory Overhaul After last week's crush of economic news, including Friday's miserable employment report, the economic data front will feel quiet this week. On Thursday, the Commerce Department will report on February retail sales; analysts expect them to have fallen half a percent following gains in January. Friday will bring new international trade data expected to show a slightly lower deficit in January.
Rush to Judgment by Peter Schiff Talk show host and conservative icon Rush Limbaugh recently ignited a firestorm of criticism for expressing his desire that Barack Obama should fail. Democrats, and even some Republicans, suggested that he had put aside his patriotism to wish for an economic collapse that would result in political advantage for conservatives. However, if you believe as I, and apparently Rush, that Obama's plans will prevent recovery, then wishing that they fail to become actual policy is the right thing to do. The problem is that since Mr. Limbaugh has a history of partisanship, and since he did not forcefully criticize the Bush Administration for similar (if slightly more modest) plans, many cannot see past the messenger to recognize the truth in the message.
Alice in the White House Two of President Barack Obama's latest tax hikes so quickly fail the laugh test as to make one wonder if Alice in Wonderland has taken up residence in the White House as an economic advisor. The first would limit tax deductions for upper-income earners for their donations to charities. The second would limit their deductions for mortgage-interest payments. . . . . The problem here isn't that "rich" people would suddenly be harmed by the higher taxes. The problem is that charities and the housing market would be severely harmed. Every dollar the government takes out of the economy leaves fewer dollars to be donated or invested. Not a smart thing to do in a steep recession. If there is ever a time when charities are more needed, it's when more people are out of work. And when the recession's roots lie largely in the collapse of the housing market with millions of foreclosures, the last thing lawmakers should do is make housing even less affordable.
What's Dead? (Short Answer: All Of It) Just so you have a short list of what's at stake if Washington DC doesn't change policy here and now (which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can't believe, and they're showing it as an imminent event - like perhaps today imminent.)
Revisiting the Cartel's 'End Game' "'My question to you is, will you tell the American people to whom you lent $2.2 trillion of their dollars?' Sanders asked, referring to the size of the Fed's balance sheet. ...the central bank chairman replied, 'No,' Bernanke said the Fed's lending programs were not gifts or subsidies but rather over-collateralized loans. 'We have never lost a penny doing it,' he said" - U.S. Senator Bernie Sanders (I - VT) and Fed Chairman Ben Bernanke - Reuters, March 3, 2009 A measure of just how hapless the U.S. Congress is before the Power of the mighty Private for-profit Federal Reserve is reflected in the foregoing exchange between U.S. Senator Bernie Sanders and Fed Chairman Bernanke. Bernanke flatly refused to indicate to whom the $2.2 trillion on the Fed's balance sheet had been loaned to even though American taxpayers' funds were used to make the loans.
When Barack Obama and Gordon Brown see 'opportunity', we really do have a crisis The Left is threatening our freedom by using the downturn to bolster the power of the state The story so far: some capitalists behaved very badly. While this was going on, the socialists didn't ask questions because they were too busy spending the receipts that flowed from that behaviour. Now, the socialists - who were happy to look the other way during the good times or even to delude themselves into thinking that they were responsible for them - want to use the ignominy of the capitalists to seize the kind of power they thought they had lost forever. You may quibble at my use of the word "socialist" to describe people who generally present themselves as friends of the free market, and who have repudiated full-scale nationalisation (even of the banks at a moment when that option might have appeared irresistible).
Free Advice from Government . . . was WRONG for this year
U.S. Downturn Dragging World Into Recession Report Says Global Economy Will Shrink for First Time Since 1940s The world is falling into the first global recession since World War II as the crisis that started in the United States engulfs once-booming developing nations, confronting them with massive financial shortfalls that could turn back the clock on poverty reduction by years, the World Bank warned yesterday. The World Bank also cautioned that the cost of helping poorer nations in crisis would exceed the current financial resources of multilateral lenders. Such aid could prove critical to political stability as concerns mount over unrest in poorer nations, particularly in Eastern Europe, generated by their sharp reversal of fortunes as private investment evaporates and global trade collapses.
A Rising Dollar Lifts the U.S. but Adds to the Crisis Abroad As the world is seized with anxiety in the face of a spreading financial crisis, the one place having a considerably easier time attracting money is, perversely enough, the same place that started much of the trouble: the United States. American investors are ditching foreign ventures and bringing their dollars home, entrusting them to the supposed bedrock safety of United States government bonds. And China continues to buy staggering quantities of American debt.
Global economy forecast to shrink Trade to hit lowest point in 80 years The World Bank said Sunday that the global economy will shrink this year for the first time since World War II and that the global financial crisis will make it tougher for poor and developing nations to access needed financing. Trade is forecast to fall to its lowest point in 80 years in 2009, as economic hardship ripples across the globe, the bank said. The most drastic trade slowdowns are expected in East Asia, where growth had been robust, the bank said in a paper prepared for a meeting of finance ministers and central bank officials next week. The impact on the poorest countries will be severe, the bank said, predicting that a group of 129 countries face a shortfall of $270 billion to $700 billion this year. The bank, which offers low-interest loans and grants to developing nations, warned that international financial institutions will not be able to cover even the low end of that estimate.
Obama's healthcare plan: Not healthy, not wealthy, and certainly not wise. In his recent speech to Congress, President Barack Obama touted his administration's "historic commitment" to "the principle that we must have quality, affordable health care for every American." But the plan he's poised to enact would provide care that is neither quality nor affordable, and his commitment is historic largely for its folly. Obama's first budget calls for a whopping $634 billion to be put into a reserve fund for healthcare reform over the next ten years, but it provides few details on how the money is to be spent. Instead, in hopes of avoiding the political battles over details that bogged down President Clinton's attempts at healthcare reform in the early 1990s, it offers only a few broad principles intended to guide Congress in designing a reform package.
Health Sector Has Donated Millions to Lawmakers Health insurers and drug makers have showered members of the 111th Congress with millions in campaign contributions over the last four years, with a special focus on leaders who will play major roles in shaping health-care legislation, according to a study to be released tomorrow. Health insurers and their employees contributed $2.2 million to the top 10 recipients in the House and Senate since 2005, while drug makers and their employees gave more than $3.3 million to top lawmakers during that period, according to an analysis of federal elections data by Consumer Watchdog, a California-based advocacy group.
Obama's Pledge to Prune Pentagon Raises Fear of Job Cuts In pledging last week that the "days of giving defense contractors a blank check are over," President Obama is taking on the giant weapons contracting system that he says has "gone amok." Nearly everyone agrees that huge cost overruns and delays in creating new weapons have become the norm. Even so, fierce battles are starting over some of the prominent programs he would like to cancel or cut back. Defense experts say Mr. Obama will inevitably clash with members of Congress who are concerned about protecting jobs that such programs provide.
Obama Will Approve Federal Funding for Embryo-Killing Stem Cell Research Obama to Sign Order Reversing Restrictions on Stem Cell Research President Barack Obama is expected to sign an executive order on Monday reversing restrictions on federal funding of embryonic stem cell research. The long-expected move is likely to stir up not only the promise of scientific breakthrough but also the controversy over where government crosses a moral line. Obama will hold an event at the White House to announce the move, a senior administration official said Friday. The official spoke on condition of anonymity because the policy had not yet been publicly announced.
Four big problems with cap-and-trade The world is delighted: America is going green at last. President Obama's budget includes billions for renewable sources of energy and the transmission lines necessary to get power from the windy, sunny, remote sites where windfarms and solar collectors are located, to where people live. He also wants to fund a "smart" grid to enable consumers to reduce their energy consumption, give low-income consumers money to insulate their homes, and fund mass transit so that people will give up their cars. But he also wants to spend billions on the roads and bridges that make driving more pleasant, and on other shovel-ready projects that were on states' wish lists long before anyone worried about carbon emissions. So, a hardy band of environmentalists braved the below-freezing temperatures of Washington this week to protest what they see as the administration's lack of vigor in fighting global warming.
Obama faulted as indifferent on stocks Concern urged by Republicans, economists for markets Some Wall Street economists think President Obama could have voiced some sympathy about the plight of frightened shareholders when he compared the stock market's plunge to an election tracking poll that "bobs up and down, day to day." They worry that the president is underestimating the important role the stock market plays in the economy's performance, and that the markets' precipitous slide is actually a vote of no confidence in the administration's handling of the economy. There's also a suspicion that Mr. Obama and his advisers think only wealthy people own stocks. "There is some of that feeling that rich people are the ones who have stocks. He does have somewhat of that feeling. But you've got to remember that most people who own stocks aren't rich," said David Wyss, chief economist at Standard & Poor's, the influential Wall Street financial research and forecasting firm.
Ron Paul on the DL Hughley Show 3/7/2009
2009 Depression Will Be Nothing Like 1929 Let's call a spade a spade and quit trying to sugar coat yesterday's financial debacle by calling it a recession. It is obvious, we are in a full blown depression, but stacking up the Great Depression to the current situation is simply not an "apples to apples" comparison, when it comes to the stock market. There is abundance of noise alluding to the fact, that since the 1929 depression saw the stock market fall 85% from its highs, then today's stock market must also repeat the same fate, and eventually fall to the 2100 area. Nothing could be farther from the truth. The differences between now and then are vast:
We are in a global economy.
We have the computer, incredible technology and the ability for instant communication.
We have the internet, the single most powerful business tool. Bears, put that in your pipe and smoke it.
We have the knowledge and ability to learn from the last economic debacle-history has basically made us smarter.
Margin buying power leverage of ten to one has been reduced by 80%.
Money Stimulates Debate in States Over Plan's Goals As tens of billions of dollars in stimulus funds begin to flow across the country, states and federal agencies are gripped by disputes over whether the money is being used in ways that violate the letter or spirit of the legislation, battles that raise new questions about precisely what the intent of the legislation was and that threaten to delay the infusion of funds into the staggering economy. Kansas may save some of the state funds that will be freed up by stimulus money it is getting -- even though putting money in the bank would not stimulate the economy. Texas is spending nearly a tenth of its transportation funding on a long-delayed highway loop around Houston, despite criticism that the project goes against President Obama's call to move away from oil dependence. West Virginia wants to expand access to Medicaid but is still waiting for an answer about whether that goal is being encouraged under the law.
Quick Defaults More FHA-Backed Mortgages Go Bad Without a Single Payment The last time the housing market was this bad, Congress set up the Federal Housing Administration to insure Depression-era mortgages that lenders wouldn't otherwise make. This decade's housing boom rendered the agency irrelevant. Americans raced to aggressive lenders, seduced by easy credit and loans with no upfront costs. But the subprime mortgage market has crashed and borrowers are flocking back to the FHA, which has become the only option for those who lack hefty down payments or stellar credit. The agency's historic role in backing mortgages is more crucial now than at any time since its founding.
At Foreclosure Auction, Houses Sell, in a Frenzy In rapid-fire speech that resembled a horse-race announcer's, an auctioneer introduced the first of the day's 375 properties: a seven-bedroom, five-bathroom home in Roselle, N.J., with an estimated value of $565,000 and a starting bid of $129,000. (Final sale price: $245,000.) On the floor, four men called the bids, screaming, blowing whistles, thrusting their arms into the air and using their fingers to signal how much more was being offered over the last bid. "One man's misery is another man's fortune," the saying goes, and perhaps nowhere was it more true than at the Jacob K. Javits Convention Center on Sunday, where a mob of potential buyers convened for an auction of foreclosed homes, a fast-paced and somewhat unusual happening in a place more used to trade shows and corporate events.
After 60 years, Circuit City powers down RICHMOND, Va. (AP) -- What began 60 years ago as a humble television store in this sleepy Southern capital ended Sunday as Circuit City closed its doors for good its 567 remaining U.S. stores to be left broom clean and vacant. For the last month and a half, a group of four liquidators have conducted going-out-of-business sales for what was the nation's second-largest consumer electronics retailer, selling its remaining $1.7 billion worth of inventory weeks sooner than expected.
Laid-off workers e-mailing emotional, long farewells When Jim Neill got laid off, he sent around a farewell e-mail with a subject line designed to get people's attention: "Free food in the employee lounge." Then Mr. Neill, who had been with the National Association of Manufacturers for years, left 'em laughing. "These are tough times and with a young family I'm hunting for employment," he wrote, "but you'll be pleased to know I've also begun work on my long-delayed book and instructional DVD 'Rhymes With Truck: How to Use Profanity in Every Sentence.'"
The credit crunch tent city which has returned to haunt America [see photos] A century and a half ago it was at the centre of the Californian gold rush, with hopeful prospectors pitching their tents along the banks of the American River. Today, tents are once again springing up in the city of Sacramento. But this time it is for people with no hope and no prospects. With America's economy in freefall and its housing market in crisis, California's state capital has become home to a tented city for the dispossessed.
Obama is in trouble Did you feel it? The political ground shifting beneath President Barack Obama since his speech last week to Congress? It's been downhill since and I'm not referring mainly to the Dow Jones record-setting dive. The pivot point of the shift was the speech, or rather what the speech did to the evolving public narrative of Obama.
Speaker Pelosi Backs Senate Amendment to Regulate Talk Radio Speaker of the House Nancy Pelosi (D-Calif.) told CNSNews.com on Thursday that she supports an amendment to a Senate bill that would force the Federal Communications Commission (FCC) to "take actions to encourage and promote diversity in communication media ownership and to ensure that broadcast station licenses are used in the public interest." The amendment's language is viewed by many media experts as a means to regulate conservative talk radio, particularly popular programs such as the Rush Limbaugh Show and the Sean Hannity Show, among many others.
Barbie Moves to Shanghai to Escape U.S. Recession As consumer demand slumps in the U.S. and Europe, Barbie has packed her matching pink luggage and moved to China. Mattel Inc., the world's biggest toymaker, shunned London and Paris for the first dedicated store of its bestselling toy and chose instead a six-story building in Shanghai. The outlet opens today and offers everything from outfits styled by "Sex and the City" costume designer Patricia Field to beauty treatments to "Bitini" cocktails. "I like her clothes and shoes," said 11-year-old Li Qiunan, who has 14 of the blond, blue-eyed dolls and was scouting for another at a Feb. 20 preview of the store on Huaihai Road. "Barbie is charming and attractive."
Thanks to the Bank it's a crisis; in the eurozone it's a total catastrophe The Bank of England may have averted a catastrophe. If ever there was a time when this country needed its own monetary authorities - acting with wartime urgency - this is the moment. Those nations with fossilised or timid central banks clinging to outdated ideologies are not so lucky. Even less lucky are those such as Spain and Ireland that have surrendered policy to a body that is deaf to their pleas and constitutionally obliged to ignore the welfare of their particular societies. They face crucifixion. Spain's agony is already well advanced. Industrial output has fallen 24pc. Some 352,000 people have lost their jobs in two months. BBVA expects unemployment to reach 20pc next year, touching 4.5m. Premier Jose Luis Zapatero can do nothing as long as Spain remains in monetary union.
Summers calls for boost to demand Barack Obama's top economic adviser has urged world leaders to pump more public money into the economy in a co-ordinated effort to boost demand and lift the world out of recession. In an interview with the Financial Times, Lawrence Summers said the urgent need for a short-term increase in spending by governments temporarily overrode the longer-term goal of tackling the global imbalances many economists believe caused the financial crisis. The US administration had no choice but to take strong public action to "save the market system from its own excesses", he said.
Clinton: US Has Been Negligent on Climate Change Brussels - U.S. Secretary of State Hillary Rodham Clinton is telling Europeans that the Bush administration neglected the problem of global climate change. Speaking to several hundred young professionals at the European Parliament on Friday, Clinton was asked by a Belgian man what the Obama administration intended to do to address the problem and whether it sees energy security as linked to global climate change.
Ron Paul agitates Jim Baker over War Powers during hearing 03/05/2009
North Korea Cuts Contacts With South, Bars Workers From Complex North Korea cut its last communications channel with the government in Seoul and barred South Koreans from traveling to a shared industrial complex, as the regime protested U.S.-South Korea military exercises today. The communist nation also ordered its armed forces to be combat ready and threatened retaliation if its territory is violated during the drills, which last until March 20. "Our government is distressed at North Korea's continued actions and announcements," South Korea's Unification Ministry spokesman Kim Ho Nyoun told reporters today in Seoul. More than 700 South Koreans were unable to enter the Gaeseong Industrial Complex in North Korea today because of the severing of military communications and it is unclear whether 572 workers there will be allowed to return, he added.
Tension high on Korean peninsula amid military drills U.S. and South Korean troops began annual military drills on Monday and North Korea said it had put its armed forces on full combat readiness in response to the exercises, heightening tensions on the Korean peninsula. North Korea, which is preparing to test-fire its longest-range ballistic missile, also said it would regard the shooting down of any of its rockets as an act of war. The North Korean army said in a statement the drills were a "provocation" that would only occur "on the eve of a war," and cut off a telephone hotline with the South's military.
Iran test-fires new missile Iran has test-fired a new air-to-surface missile, Iranian media reported Sunday, in the Islamic Republic's latest display of its military capability. The missile test was carried out despite the offer by the administration of new U.S. President Barack Obama to engage Iran in direct talks if it "unclenches its fist." Iran's Fars News Agency said the domestically produced missile had a range of 110 km (70 miles) and was designed for use by military aircraft against naval targets. "Now these jet fighters have acquired a new capability in confronting threats," the semi-official news agency said. Iran's Press TV initially said a long-range missile had been tested, but later also used Fars' way of describing it.
Marine One Information Found on Computer in Iran Sensitive information about Marine One was reportedly found by Tiversa employees at an IP address in Tehran, Iran. A Pennsylvania company that monitors peer-to-peer file-sharing networks discovered a potentially serious security breach involving President Obama's helicopter, Marine One, WPXI-TV in Pittsburgh reported. Sensitive information about Marine One was reportedly found by Tiversa employees at an IP address in Tehran.
The Queen Mother and Chicken Rush Pie (1 of 3) Guests: Dean Baker, Andy Zaltzman Topics: Gordon Brown's 'new deal' and Rush Limbaugh; California considers licensing contract killing and is a radio talk show host plotting a coup?
Goldman Sachs, AIG and dark matter (2 of 3) Guests: Max Fraad Wolff and Andy Zaltzman Max blows up about the same old magical 'there is no risk anymore' market blowup
The banker virus and migrating to North Korea (pt 3 of 3) Guests: Max Fraad Wolff and Andy Zaltzman
Wall Street Braces for Ugly Friday Let's face it. Nothing about Friday's employment report will be pretty, and the 7 percent decline in stocks this week has been signaling that. Yet, stocks enter Friday still nervous about a jobs number that some economists say could point to a worse-than-expected decline in the economy during the first quarter. Economists expect the biggest job losses in 60 years, with a decline in non-farm payrolls of 650,000 and an employment rate of 8 percent.
Gold & The Panic Phase A couple of bright friends reported to me some overriding themes at the PDAC gathering in Toronto last weekend. Apparently, some surprise came to them. They mentioned that more than a few analysts, writers, and speakers still do not get it. They actually believe the situation with the USEconomy and US banking system has begun to stabilize. That is like saying a college basketball player has Michael Jordan under control, or a farmer has his Clydesdale horse under control, or a misguided King can call back the ocean tide, or a man has a hurricane under control as he clings to a roof rafter. The USEconomy has entered an accelerated phase of disintegration, while the populace has entered a new panic phase. The US stock market is under the microscope, and it just broke a key multi-year critical support level. This article is intended to be constructive, with a list of perceived meters and conditions, followed by a four-step foundation for a recovery. When finished reading the four planks, one should easily conclude that no solution, let alone attempt, is on the correct path or is in the works.
Peter Schiff Vlog Report March 05 2008
Why gold prices will keep rising Safety-seeking investors are pouring money into gold despite prices that, though lower recently, remain near historic highs. The more we worry, the higher gold will go. There are lots of good reasons to take a stake in gold, and right now the price is one of them. After topping $1,000 an ounce in mid-February, the price of gold bullion had tumbled to $940 Monday. That's very close to a band of technical support at $935. Yet another layer at $900 should keep it from falling much lower.
Dollar dips as investors brace for jobs data The dollar slipped against a basket of major currencies on Friday, retreating from a three-year peak hit this week as investors braced for data which is expected to show U.S. job losses accelerated last month. But the dollar gained versus the yen as overseas banks bought the U.S. currency, a move traders said was driven in part by foreign investors repatriating funds out of Japanese stocks. The yen held close to this week's four-month low near 100 yen per dollar on worries about the Japanese economy now languishing its deepest slump in more than three decades.
The D-word: Will recession become something worse? A Depression doesn't have to be Great — bread lines, rampant unemployment, a wipeout in the stock market. The economy can sink into a milder depression, the kind spelled with a lowercase "d." And it may be happening now. The trouble is, unlike recessions, which are easy to define, there are no firm rules for what makes a depression. Everyone at least seems to agree there hasn't been one since the epic hardship of the 1930s. But with each new hard-times headline, most recently an alarming economic contraction of 6.2 percent in the fourth quarter, it seems more likely that the next depression is on its way. "We're probably in a depression now. But it's not going to be acknowledged until years go by. Because you have to see it behind you," said Peter Morici, a business professor at the University of Maryland.
Ron Paul "They Should Stop Spending Money They Don't Have" 3/5/2009
FDIC warns US bank deposit insurance fund could tank The US government is warning banks that its deposit insurance fund could go broke this year as bank failures mount. The head of the Federal Deposit Insurance Corporation, Sheila Bair, in a letter to bank chief executives dated March 2, defended the FDIC's plan to raise fees on banks and assess an emergency fee to shore up the fund and maintain investor confidence. Bair acknowledged the new fees, announced Friday, would put additional pressure on banks at time of financial crisis and a deepening recession, but insisted they were critical to keep the insurance fund solvent and protect. "Without these assessments, the deposit insurance fund could become insolvent this year," Bair wrote. The FDIC chief said in the letter that the rapidly deteriorating economic conditions raised the prospects of "a large number" of bank failures through 2010. "Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative," she wrote.
Bair Says Insurance Fund Could Be Insolvent This Year Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency. "Without these assessments, the deposit insurance fund could become insolvent this year," Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group. "A large number" of bank failures may occur through 2010 because of "rapidly deteriorating economic conditions," Bair said in the letter. "Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative."
Deposits in Jeopardy? Discussing FDIC chairwoman Sheila Bair's warning on deposit insurance, with CNBC's Scott Cohn.
FDIC's head warns on bank deposit insurance fund The head of the Federal Deposit Insurance Corp. has warned that the fund insuring Americans' bank deposits could be wiped out this year without the money the agency is seeking in new fees from U.S. banks and thrifts. FDIC Chairman Sheila Bair acknowledged, in a letter to bank CEOs, that the new increased fees and hefty emergency premium the agency voted to levy last week will bring a "significant expense" to banks, especially amid a recession and financial crisis when their earnings are under pressure.
Spending Bill Stalls In Senate, 1 Vote Shy Language on Cuba Preserves Filibuster The Senate stalled action on a $410 billion spending bill that would fund much of the federal government for the current fiscal year amid resistance over the legislation's huge price tag and more than 8,500 pet projects. Last night, Senate Majority Leader Harry M. Reid (D-Nev.) canceled a final procedural vote that would have cleared the way for final passage and announced that debate would continue at least through Monday. Meanwhile, Reid said the Senate would consider further amendments, while he scoured for at least one more vote to reach the 60 needed to break a Republican-led filibuster. The legislation combines the nine spending bills that Congress failed to pass on schedule last year, amid a standoff on overall funding totals between Democrats leaders and President George W. Bush. The parties could agree only on sums for the departments of Defense, Homeland Security and Veterans Affairs.
100% Chance What Obama Is Doing Will Make Economy Worse
Caught in the Financial Downdraft Markets Resume Month-Long Sell-Off As Investors Brace for More Bad News President Obama and his aides this week were selling hope. The markets aren't buying. Two days after the administration sought to restore calm to the markets, major indexes yesterday plunged more than 4 percent on a cascade of bad economic and corporate news. General Motors' auditors raised "substantial doubt" about the automaker's ability to survive on its own, pushing the company's shares down. Moody's Investors Service said it might downgrade the long-term debt rating of Wells Fargo, causing investors to unload shares of the bank. And shares of Citigroup -- one of the biggest holdings in the government's bulging portfolio -- briefly traded below a dollar before bouncing back across that threshold later in the day.
Stocks tumble as investors worry about banks, GM Stocks plunge anew as brief optimism fades amid lack of positive news; Dow falls 281 Investors retreated from Wall Street again, driven by worries about the nation's big banks and General Motors Corp. Stocks slid to their lowest levels in more than 12 years Thursday, more than wiping out the previous session's rally. Investors wrestled with relentless uncertainty about the financial system and fresh concerns about GM. Short selling -- bets that stocks will fall -- ahead of the government's Friday employment report exacerbated the losses, slashing 281 points from the Dow Jones industrials and sending all the major indexes down more than 4 percent.
Peter Schiff Vlog Report March 05 2008 talks about GM and GE and more
Citigroup shares tumble below $1 Shares of Citigroup (NYSE:C - News), once the world's most valuable bank, tumbled below $1 on Thursday, taking its year-to-date drop to 85 percent. Citigroup, a Dow component, fell more than 13 percent to an intraday low of $0.98, hammered by continued fears over the bank's health and ability to avert nationalization. About two years ago, Citi's market value was above $270 billion. Today its market cap is a little over $5.4 billion.
JPMorgan, Wells Fargo, Bank America Face Ratings Cuts JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp., the three largest U.S. banks by market value, may face credit-rating downgrades by Moody’s Investors Service amid signs they’ll set aside additional cash for loan losses. JPMorgan, the largest U.S. bank by market value, had its ratings outlook cut by Moody’s to negative from stable. Moody’s said it will review the long-term debt ratings of Wells Fargo, the second-largest U.S. bank, and Bank of America, ranked third, on concern that higher credit costs may damage capital ratios.
Global Bank, Global Currency Within 15 Years
JPMorgan, Wells Fargo, Bank America Face Ratings Cuts JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp., the three largest U.S. banks by market value, may face credit-rating downgrades by Moody’s Investors Service amid signs they’ll set aside additional cash for loan losses. JPMorgan, the largest U.S. bank by market value, had its ratings outlook cut by Moody’s to negative from stable. Moody’s said it will review the long-term debt ratings of Wells Fargo, the second-largest U.S. bank, and Bank of America, ranked third, on concern that higher credit costs may damage capital ratios. The U.S. economy “deteriorated further” in almost all corners of the nation in the past two months as consumer spending slumped and manufacturing declined, the Federal Reserve said in its regional business survey this week. Ten of 12 Fed district banks reported worsening conditions in their regional economies and respondents didn’t expect a “significant pickup” until late 2009 or early 2010.
Barclays Asked to Account for 3.3 Billion in Lehman Bonus Money The difference between the monies transferred to Barclay's and the amounts actually disbursed may have accounted for almost a third of Barclay's reported pre-tax profits. One would have to wonder if the Barclay's executives were paid bonuses on such impressive financial results. Thus do fees and bonus money provide a cornucopia of personal enrichment to the financiers at the expense of the real economy.
Barclays questioned on funds Lehman Brothers’ US liquidators have asked Barclays to explain what happened to an estimated $3.3bn earmarked for bonuses and other liabilities that the UK bank received when it acquired part of the bankrupt Wall Street company last year. The move by Bryan Marsal, who heads the firm managing Lehman’s US liquidation, underlines the tension between the company’s creditors and Barclays, which acquired the North American arms of the investment bank for $1.5bn after it filed for bankruptcy in September. The decision by Alvarez & Marsal, charged with recovering funds for creditors, to query Barclays’ use of the money could fuel controversy over bonuses paid to Lehman executives who stayed with the UK bank.
Budget Battle Treasury Secretary Tim Geithner will be addressing the House Budget Committee this morning as it reviews the President's budget. A preview, with Rep. Paul Ryan. (R-WI) Budget Committee ranking member.
House approves mortgage bankruptcy overhaul Bankruptcy judges could cut the mortgage debt of homeowners in bankruptcy court as a last resort to avert foreclosure, under a bill approved by a 234-191 vote on Thursday in the U.S. House of Representatives. Seen by Democratic supporters as vital to stabilizing the crumbling U.S. real estate market, the so-called "cramdown" bill has been opposed by bankers, despite amendments made this week to limit its scope, including one restricting it to existing primary residence mortgages, not future loans. The Senate was expected to consider its own version of the House bill soon, but chances of passage are uncertain there.
Judges see red herring in mortgage cramdown fear Mortgage bankers are in knots over proposed U.S. legislation that allows loan contracts to be broken up in bankruptcy court, fearing it will taint the core of their business and raise interest rates. But their fight against the bill gaining momentum in Congress is an overreaction, or a red herring to prevent the industry from realizing inevitable losses, some judges said. "Judges aren't just going to run wild," said Judge Keith Lundin, of U.S. bankruptcy court in Nashville, Tennessee.
Senate delays spending bill vote to next week New stopgap measure needed to keep government going Senate Democrats beat back a series of Republican proposed changes to a $410 billion omnibus spending bill Thursday, but they couldn't muster enough votes to block more amendments as final consideration was postponed until next week. Senate Majority Leader Harry Reid, Nevada Democrat, had planned on passing the package Thursday night but could not secure adequate support to clear the 60-vote hurdle needed to cut off debate and allow a final roll-call vote.
We cannot afford to wait to recapitalise US banks Sir, Martin Wolf's excellent article on the pros and cons of nationalisation suggested, quoting Nouriel Roubini, that we could wait six months to determine how solvent US banks are before making decisions. This is possible but surely risky. At Wednesday's close, the junior subordinated debt of Citigroup (for example debt underlying the Citigroup XV 6.5 per cent Enhanced Trust Preferred Securities) yielded 27.6 per cent, and similar securities at many other large US banks yield high double digit amounts. With such yields on debt, anyone conducting business as a creditor with these banks must think twice.
GM auditors warn of bankruptcy risk General Motors on Thursday said that its auditors had expressed “substantial doubt” about its ability to continue as a going concern, and that it might be forced to file for bankruptcy. America’s largest carmaker made the statement in a 10-K form filed to the Securities and Exchange Commission, under a section on “risks related to us and our automotive business.” GM shares were down 14 per cent to $1.88 on Thursday. The carmaker said the opinion from Deloitte & Touche, the auditing firm, “states that our recurring losses from operations, stockholders’ deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern.”
GM's 10K: Auditor Concerned About the Automaker General Motors says its auditor has expressed doubt about the ability of the automaker to continue
GM auditors raise the specter of Chapter 11 GM auditors raise doubts about viability, company says Chapter 11 possible if bailout fails General Motors Corp.'s auditors have raised "substantial doubt" about the troubled automaker's ability to continue operations, and the company said it may have to seek bankruptcy protection if it can't execute a huge restructuring plan. The automaker revealed the concerns Thursday in an annual report filed with the U.S. Securities and Exchange Commission. "The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern," auditors for the accounting firm Deloitte & Touche LLP wrote in the report.
Concerns raised that GM will not survive Chief executive received compensation valued at $14.9 million DETROIT - General Motors Corp.’s auditors have raised “substantial doubt” about the troubled automaker’s ability to continue operations, and the company said it may have to seek bankruptcy protection if it can’t execute a huge restructuring plan. The automaker revealed the concerns Thursday in an annual report filed with the U.S. Securities and Exchange Commission.
Bank of America Says Bonus Disclosure Will Cause ‘Grave’ Harm Disclosing the identities of Merrill Lynch & Co. employees who were paid $3.6 billion in bonuses just before the firm merged with Bank of America Corp. will cause “grave and irreparable harm,” said lawyers for the companies. Bank of America today filed documents in state court in Manhattan to intervene in a case brought by New York Attorney General Andrew Cuomo to compel former Merrill Chief Executive Officer John Thain to testify about the bonus recipients. “Neither the individual names nor the job titles bear any reasonable or relevant relationship” to Cuomo’s investigation, the firms argued in the documents. “Nor is there a reasonable or relevant reason to disclose such information to the general public.”
Bernanke will you tell the American people to whom Fed Res lent $2.2 trillion of their dollars?
Undisclosed Losses at Merrill Lynch Lead to a Trading Inquiry One Merrill Lynch trader apparently gambled away more than $120 million in the currency markets. Others seemingly lost hundreds of millions on tricky credit derivatives. But somehow all this red ink did not spill into plain view until after Merrill earmarked billions for bonuses and staggered into the arms of Bank of America. Inside Bank of America headquarters here, executives are asking why. The bank is investigating how Merrill accounted for wayward trades in the final, frantic months of 2008 - and why at least one big loss was slow to appear on Merrill's books.
Fed Refuses to Release Bank Data, Insists on Secrecy The Federal Reserve Board of Governors receives daily reports on bailout loans to financial institutions and won't make the information public, the central bank said in a reply to a Bloomberg News lawsuit. The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast "a stigma" on recipients of more than $1.9 trillion of emergency credit from U.S. taxpayers and the assets the central bank is accepting as collateral.
Geithner on AIG accountability: Conditions will be placed with Gov't Assistance $$
Senators Ask Who Got Money From A.I.G. Trying to draw a line in the sand, a Senate panel told the vice chairman of the Federal Reserve to identify all the parties made whole by the bailout of the American International Group or forget about coming back to ask Congress for more rescue money. "You will get the biggest no you ever got," Senator Jim Bunning, Republican of Kentucky, warned Donald L. Kohn, vice chairman of the Fed board of governors, in a hearing on Thursday. "I will hold up the bill." The hearing, led by Senator Christopher Dodd, Democrat of Connecticut and chairman of the Senate Banking Committee, was called to examine the regulatory patchwork that had allowed huge risks to build up at A.I.G. Since the insurance conglomerate's near collapse in September, the federal government has committed $160 billion to keep it afloat.
Fed on AIG won't release NAMES "SOPHISTICATED INVESTORS" PAID OFF with Taxpayer's $$
Darth Wall Street Thwarting Debtors With Credit Swaps Amusement-park operator Six Flags Inc. and automaker Ford Motor Co. may be pushed toward bankruptcy by bondholders trying to profit from credit-default swaps that protect against losses on their high-yield debt. By employing a so-called negative-basis trade, investors could buy Six Flags bonds at 20.5 cents on the dollar and credit- default swaps at 71 cents. If the New York-based chain defaults, the creditors would receive the face value of the debt, minus costs. In a Feb. 27 note, Citigroup Inc.'s high-yield strategists put that profit at 6 percentage points, or $600,000 on a $10 million purchase.
Obama tries to pump up confidence in the economy Trying to pump up the nation's confidence, President Barack Obama said that Wall Street has been hammered so hard that "buying stocks is a potentially good deal," and he dispatched top aides to Capitol Hill to defend his plans for pulling the economy out of its deep recession. The stock market slipped ever lower, and Republicans suggested Obama was "cooking the books" in rosy recovery predictions.
Obama says US must solve health care problems now Obama says economy needs relief now from 'crushing costs' of health care right away The nation can't afford to wait for the economy to recover before tackling out-of-control medical costs, President Barack Obama is telling some of the most powerful players in the health care reform debate. "If we want to create jobs and rebuild our economy, then we must address the crushing cost of health care this year, in this administration," Obama says in remarks prepared for delivery to a White House forum on the issue Thursday. Excerpts were released by the White House. "Making investments in reform now, investments that will dramatically lower costs, won't add to our budget deficits in the long term -- rather, it is one of the best ways to reduce them," Obama said.
Obama Speaks at Healthcare Summit - Bloomberg
Hoyer Says Climate Change, Health Care May Pass House by August Majority Leader Steny Hoyer said the House wants to pass a major climate-change bill by June and a health-care plan by August and use procedures aimed at allowing the Senate to approve the legislation without Republican votes. Hoyer, a Maryland Democrat, said energy legislation to protect the climate could include a cap-and-trade system designed to rein in carbon dioxide emissions. He said lawmakers are considering using special “reconciliation” procedures intended to make the measures filibuster-proof in the Senate to overcome the need for 60 votes. Democrats control the Senate with 58 seats.
Stocks extend slide after factory orders report Stocks extend slide on decline in factory orders, disappointment over China stimulus Stocks are falling again after China deflated investors' hope that it would take new steps to stimulate its economy. More disheartening U.S. data added to the market's gloom Thursday. Chinese Premier Wen Jiabao said the government's current stimulus plan would help the world's third-largest economy grow by 8 percent this year, but he stopped short of promising new steps. The hope that China would unveil more government spending to help its economy was a major factor behind the market's bounce Wednesday. The rally followed a five-day pummeling that left the market at its lowest levels since 1997.
US factory orders shrink in January Businesses continued to cut back on spending in January as factory orders fell for the sixth straight month, government figures showed on Thursday. Separately on Thursday data showed that new jobless claims mounted last week, although at a slower rate, and worker productivity has fallen off amid thinning hours and growing job cuts. Shrinking business spending and the continued pace of workers filing for unemployment benefits signal that Friday’s official employment report could be worse than originally feared. Orders declined by 1.9 per cent to $351.9bn, trailing economists’ expectations, and following a revised drop of 4.9 per cent the month before. The string of consecutive declines was the longest since tracking began in 1992 and was fuelled by a big drop in orders for expensive durable goods as capital spending has collapsed.
Jim Rogers expect social unrest in the US 04 Mar 2009
Last-Ditch Jobs Fail Wall Street Seekers as Retail Hiring Tanks Interior designer J.C. Trabanco began applying for sales jobs after his Wall Street clients stopped calling last year. “It’s humbling,” Trabanco said as he waited outside an American Apparel store in Manhattan. The 50-year-old, who said he used to earn more than $100,000 a year, only briefly considered leaving when he realized he was among the oldest people in line for a chance at a job that may pay as little as $9 an hour. “You can’t be proud,” he said. As Macy’s Inc. eliminates 7,000 positions, Sears Holdings Corp. shuts 24 stores and furniture merchants slash payrolls by 11 percent, retail jobs are disappearing at a faster rate in this recession than in any other since the U.S. government began keeping track in 1939.
Where Did the Jobs Go? Older readers may remember the street photographers. In the 1940s they could be seen on the streets in most large cities. The photographer would stand on the sidewalk and take pictures of approaching pedestrians. As each person passed by he would receive a numbered card which, when presented at the photo shop later on, would enable the subject to see the picture and purchase one or more copies if he so desired.
Credit Suisse Resort Loans Default From Beverly Hills to Idaho To Jean-Pierre Boespflug, French- born developer of a ski resort in the Idaho outback, the $250 million loan from Credit Suisse Group AG was too good to pass up. Dealmakers from the Swiss bank’s Los Angeles office arrived to pitch Boespflug on the unorthodox loan in 2006, just when his Tamarack Resort was lining up financing for its base village beneath newly cut ski trails. Unlike regular construction loans, which dole out enough money to complete one project at a time, this one would let him build several clusters of homes and condominiums at the resort simultaneously. The loan would cover just a portion of the development cost. The idea was that proceeds from selling units in one building would be used to finish the next, and so on. As long as the homes and condos sold, Boespflug would be fine.
How Greenspan's Framework Went Awry - Daniel Kahneman
Mortgage Delinquencies Rise to Record on Job Losses Americans fell behind on their mortgages and banks seized homes at a record pace in the fourth quarter as unemployment rose to a 15-year high and real estate values tumbled. Mortgage delinquencies increased to a seasonally adjusted 7.88 percent of all loans, the highest in records going back to 1972, the Mortgage Bankers Association said today. Loans in foreclosure rose to 3.30 percent, also an all-time high. The U.S. real estate market lost $2.4 trillion in value last year, according to First American CoreLogic, and unemployment jumped to 6.9 percent in the fourth quarter, the highest since 1993. As the recession enters a second year, unemployment is becoming a major cause of delinquencies, said Jay Brinkmann, the Washington-based trade group’s chief economist.
12 pct. are behind on mortgage or in foreclosure Survey shows nearly 12 pct. of mortgage holders are behind on their payments or in foreclosure An industry survey shows a record 5.4 million American homeowners with a mortgage, or nearly 12 percent, were either behind on their payments or in foreclosure at the end of last year. The Mortgage Bankers Association said Thursday the percentage of loans at least a month overdue or in foreclosure was up from 10 percent in the July-September quarter and up from about 8 percent a year earlier.
Retail Sales Slide Further, Except at Wal-Mart February was another terrible month for the nation’s retailers, but the numbers they reported on Thursday were slightly less awful than in previous months. Wal-Mart Stores, the nation’s largest retailer, exceeded analysts’ expectations, once again underscoring that consumers are opening their wallets only to buy necessities. At stores open at least a year, a barometer of retail heath known as same-store sales, Wal-Mart had a 5.1 percent sales increase, compared with a 2.7 percent increase for the period a year ago. The company said its strong sales were driven by its grocery and health-and-wellness categories, and noted that more customers are streaming through its doors.
Job loss expected to double Downturn seen getting 'worse' The U.S. economy, which has shed 3.6 million jobs since the recession began, will lose another 3.4 million jobs before the worsening employment situation turns around, a leading economic forecaster predicted Thursday. The Labor Department likely will report Friday that the economy shed 750,000 jobs in February, Mark Zandi, chief economist for Moody's Economy.com, told reporters Thursday. A job loss of that magnitude would be more than twice the size of any monthly job loss during the 1981-82 recession, the deepest postwar economic downturn. Since 1970, measured on a percentage basis, only the job loss of December 1974 would exceed a loss of 750,000 jobs today. Tom Woods at the Liberty Forum (author of the book, Melt Down) Part I Tom Woods rousing speech at CPAC at the Campaign for Liberty's Liberty Forum.
Tom Woods Speaks at CPAC Part 2
Credit Suisse Resort Loans Default From Beverly Hills to Idaho To Jean-Pierre Boespflug, French- born developer of a ski resort in the Idaho outback, the $250 million loan from Credit Suisse Group AG was too good to pass up. Dealmakers from the Swiss bank's Los Angeles office arrived to pitch Boespflug on the unorthodox loan in 2006, just when his Tamarack Resort was lining up financing for its base village beneath newly cut ski trails. Unlike regular construction loans, which dole out enough money to complete one project at a time, this one would let him build several clusters of homes and condominiums at the resort simultaneously. The loan would cover just a portion of the development cost. The idea was that proceeds from selling units in one building would be used to finish the next, and so on. As long as the homes and condos sold, Boespflug would be fine.
Former Head of KB Home Indicted Over Backdating A federal grand jury indicted Bruce E. Karatz, the former chairman and chief executive of KB Home, on Thursday on charges of multiple counts of fraud and other crimes related to a stock option backdating plan. Authorities say the program bilked shareholders of KB Home out of millions of dollars. The indictment charges Mr. Karatz with 15 counts of mail, wire and securities fraud; four counts of making false statements in reports filed with the Securities and Exchange Commission; and one count of lying to the company's accountants, according to the United States attorney for the Central District of California. Mr. Karatz, 63, faces up to 415 years in prison if convicted on all charges.
Layoffs Without Notice Sting Workers With the economy weakening, chief executives want Wall Street to see them as tough cost-cutters who are not afraid to lay off workers. But plenty of job cuts are not trumpeted in news releases. Big companies also routinely carry out scattered layoffs that are small enough to stay under the radar, contributing to an unemployment rate that keeps climbing, as Friday's monthly jobs report is likely to show. I.B.M. is one such company. It reported surprisingly strong quarterly profits in January, and in an e-mail message to employees, Samuel J. Palmisano, the chief executive, said that while other companies were cutting back, his would not. "Most importantly, we will invest in our people," he wrote.
US home loan arrears affect one in nine One in every nine US homeowners with a mortgage was behind on home loan payments or in some stage of foreclosure at the end of 2008, as mounting job losses exacerbated the housing crisis, the Mortgage Bankers Association said on Thursday. The percentage of loans that were in foreclosure or at least one payment past due rose to 11.93 per cent in the fourth quarter, the highest since the MBA began keeping records in 1972 and a jump of almost 2 percentage points since the third quarter. Jay Brinkmann, chief economist at the MBA, said signs increased that the housing crisis had spread beyond boom-and-bust states such as California and Florida in the fourth quarter.
Freddie Mac starts plan for renting foreclosures Freddie Mac launches program for renting foreclosures to former borrowers, tenants Freddie Mac on Thursday launched a program that makes it possible for people facing eviction because of foreclosure to remain in their homes as renters. The government-controlled mortgage finance company also announced it is extending its moratorium on foreclosure-related evictions through April 1. The foreclosure rental initiative, which Freddie Mac announced in January, aims to prevent properties from becoming vacant and falling into disrepair. The company has about 8,500 properties in the foreclosure process, but many of those are vacant.
RV maker Monaco Coach files for Chapter 11 RV maker Monaco Coach seeks Chapter 11 bankruptcy protection as it explores sale Recreational vehicle maker Monaco Coach Corp., which has seen sales plunge amid the recession, said Thursday it has filed for Chapter 11 bankruptcy protection. The company said it plans to continue operating as it prepares to sell off parts or all of its business. The RV maker, which sent termination notices to nearly all its remaining employees earlier this week after an unsuccessful 20-month turnaround effort, said it owes between $100 million and $500 million and has assets in the same range. The Coburg, Ore.-based company estimated it has between 25,000 and 50,000 creditors. "We understand how difficult the events of the past several months have been on everyone at the company, and we recognize the changes personally affect many people," Monaco Coach Chairman and Chief Executive Kay Toolson said in a statement. "Further, we understand and deeply regret the effect of the action taken today on vendors and others with whom we have business relationships."
Rove & Miers will NOT be under OATH - It's a Crime to lie to Congress!
White House enemy No. 1: Rush Limbaugh The White House has seen the enemy, and his name is Rush Limbaugh. President Barack Obama's team is helping lead an effort to cast Limbaugh, a polarizing, conservative talk radio show host, as the Republican Party's new face, using campaign-style attacks against a high profile target. Democrats are taking advantage of a power void within the Republican Party now that George W. Bush has passed from the scene. The goal is to convince Americans that the popularly known "Grand Old Party" of Abraham Lincoln is a shell of its former self and in the grip of its most narrow, right wing, in hopes of making independents and moderates think twice about switching allegiance.
Venezuela's Chavez seizes U.S. food giant unit President Hugo Chavez seized a unit of American food giant Cargill on Wednesday and threatened to take over Venezuela's largest private company, renewing a nationalization drive as the OPEC nation's oil income plunges. Chavez's clash with the food companies, demanding they produce cheaper rice, came less than three weeks after he won a referendum on allowing him to run for reelection and marked his first nationalization in seven months. "I warn you this revolution means business," said Chavez, whose government has struggled with lower oil income and minor food shortages this year.
Jim Rogers Invest in Agricultural Commodities Mar 04 2009 As the supply of commodities continues be under stress, Jim Rogers, author, adventure capitalist and international investor tells Martin Soong & Sri Jegarajah why the case for agricultural commodities in China is particularly strong.
Clinton proposes high-level meeting on Afghanistan U.S. Secretary of State Hillary Clinton Thursday proposed a high-level international conference to map out a new strategy for Afghanistan and said neighbor Pakistan would be invited. "We hope that this meeting could provide an opportunity to reach a common set of principles, perhaps embodied in a chairman's statement on a common way forward," Clinton told NATO foreign ministers, without saying where it would take place. Aside from Afghanistan and Pakistan, Clinton also proposed inviting NATO allies and other nations contributing forces to the operation in Afghanistan as well as major donors and international organizations. Pakistani and Afghan foreign ministers met in Washington last week when the conference idea was discussed.
U.S. to invite Iran to Afghanistan meet: Clinton In its first public overture to Tehran, the Obama administration intends to invite Iran to an international conference on Afghanistan planned for this month, Secretary of State Hillary Clinton announced Thursday. "If we move forward with such a meeting, it is expected that Iran would be invited as a neighbor of Afghanistan," Clinton told a news conference in Brussels after meeting NATO foreign ministers. President Barack Obama, in a dramatic turnaround from Bush administration policy, has said the United States wants to engage Iran on a range of issues and the conference invitation would be the start of diplomatic outreach to Tehran.
NATO Resumes Ties With Russia BRUSSELS (Reuters) - NATO foreign ministers agreed Thursday to resume high-level formal ties with Russia, suspended last year after Moscow's military thrust into Georgia. Russia immediately welcomed the move. "This decision is a step in the right direction," Russia's RIA news agency quoted a foreign ministry spokesman as saying. NATO Secretary General Jaap de Hoop Scheffer announced the decision after Lithuania dropped its objections to work resuming within the NATO-Russia Council, the body that directs cooperation between the two sides on security issues. "The ministers reached agreement to formally resume the NATO-Russia Council including at ministerial level ... as soon as possible after the NATO April summit," said de Hoop Scheffer."
US heralds ‘fresh start’ with Russia Hillary Clinton, US secretary of state, said on Thursday it was time for Nato to make a fresh start with Russia, arguing that the 26-member alliance “can and must find ways to work constructively with Russia where we share areas of common interest.” Mrs Clinton was speaking at a meeting of Nato foreign ministers in Brussels, where the alliance is expected to agree that it will again hold meetings of the Nato-Russia Council (NRC) at the highest level. The operations of the NRC, a body in which Nato and Russia discuss security issues, were suspended last August after Moscow’s brief incursion into Georgia.
Armenian Currency Goes Poof On 3 March 2009 in the space of a few hours the Armenian dram evaporated from about 300 per dollar to about 400 per dollar and 275,000 drams per ounce of gold to approximately 365,000 drams per ounce of gold. This rapid 30% currency poofing is like when the Kazakhstan currency went poof but without the strategic geo-political considerations. Nevertheless, extremely ominous financial troubles stir in Eastern Europe. One knows the conditions are dire when Armenian Prime Minister Tigran Sargsyan advocates using the Russian ruble as a stable currency.
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Senator Sanders: "Will you tell the American people to whom you lent $2.2 trillion of their dollars?"
Bernanke: "No"
No? Indeed, Bernanke and Treasury refuse to provide this information even confidentially and off-the-record to Congress. And the official overseer of the TARP bailout program can't even get the information of where all the bailout money is going.
The Greatest Depression Under Way "The Greatest Depression" that The Trends Research Institute forecast, well before Wall Street or Washington would acknowledge recession, is upon us. The global financial markets are collapsing. All the pundit's cautious predictions and business media's hopeful expectations at the New Year for an economic turn around and imminent market bottom were dead wrong. There will be no turn around in the second quarter of 2009 or 2010 or 2011 America and much of the world has entered "The Greatest Depression." The global financial system, built on endless supplies of cheap money, rampant speculation, fraud, greed, and delusion is terminally ill and will not be coaxed into remission by stimulus packages nor restored to health by government buyouts and bailouts.
The Best Portfolio: Half Dollars and Half Gold The best portfolio might well be half dollars and half gold. As horrible as the economy in the U.S. is, Europe and the rest of the world is crashing also. America's economy may be in the toilet, but everyone else's is also, so people view the traditional reserve currency as a safe haven. In addition, institutions and individuals are trying to raise cash to ride out the depression. Many have debts in dollars, and so have to get dollars to pay back their debts. And during periods of deflation, every dollar can buy more, and so is worth more. Sure, the dollar will eventually be worth about the same as toilet paper. And it is in many ways illogical for the dollar to strengthen given America's financial woes and the trillions in bailouts and stimulus; but that is what is actually happening in the real world right now.
Rush for gold reserves as countries dump dollar Central banks in countries like India and China may soon go for gold instead of dollar as their reserve. China, the biggest foreign holder of dollar denominated treasury securities with some $681.9bn or about 12 per cent of treasury papers outstanding, may soon dump Uncle Sam’s currency for gold as it believes that dollar may nosedive following the bailout packages. This is the new trend among the major emerging economies. In India also, accumulation of foreign exchange reserves has been increasing in recent years. The country’s primary sources of foreign exchange reserves have been capital flows and portfolio inflows. While the share of gold in total foreign exchange reserves is very high in United States and European countries, the share is comparatively lower in Asian countries.
Jim Rogers there is no such a thing too Big to Fail !!!!!
The Best of Times, The Worst of Times for U.S. Dollar When President Obama took over the reins of government just six weeks ago, he stood at a historic crossroads. His decision on which route to take will make a profound impact on the future of the American economy and its currency. He could have persuaded a frightened Congress to initiate a structural change that would transform the U.S. economy from its dependence on debt-fueled personal consumption back to a path of productive growth. Instead, he took the easy route: attempting to delay the pain with stimulus and inflation, rewarding his benefactors without truly addressing our structural deficits. Disappointing for a man who campaigned on 'hope' and 'change.'
Cramer: Silver: A Fresh Look at a Shining Commodity Don’t ask for whom the silver bell tolls. It tolls for thee. Okay, I need to brush up on my Hemingway - maybe a trip to Key West to get away from the snow would do the trick - but you get the picture. Silver is an appealing commodity these days. As Bloomberg.com noted yesterday, silver is posting its biggest discount to gold in 13 years, making it the "poor man’s gold." That’s something that caught my eye because we all feel like poor men these days. So I figured it’s high time we gave silver the Cramer treatment. Why silver? Ever since silver was discovered near Acapulco in 1524 (only three years after Cortez brutalized the Aztecs in 1521, and helped himself to their gold), the shiny stuff has triggered limited but enthusiastic appeal among investors. Like I’ve said before, investors turn to commodities like silver and gold when the stock market goes south.
Where Do You Keep Your Gold? You've bought some physical gold - congratulations! We think you've made a wise decision. And yes, we're referring to physical gold that you've taken possession of - not electronic gold, ETFs, Perth Mint Certificates, etc. Those are all good choices, but your portfolio is incomplete until you have some coins or bars under your direct, physical control. Personal possession of real gold adds to your security by giving you privacy and portability. It's gold that no one has to know about, and you can carry $50,000 worth of it in one hand. But where do you keep this best-of-all type of gold without undermining the advantages? Let's assume that you've bought the gold over the counter, for cash, from a coin dealer, probably in a nearby town, who doesn't know you. So you are starting out with absolute privacy - no credit card charges, no canceled checks, no shipping records.
Obama Era Marked by Steep, Continuing Stock Market Declines President Barack Obama’s first five weeks in office have been marked by sharp declines in U.S. stock markets, as the economy has continued to decline despite numerous legislative proposals from Congress and the administration aimed at stabilizing it. Since Jan. 20, the nation’s largest stock market, the New York Stock Exchange’s Composite Index has declined steadily, losing 441 points, or $895 billion in value. The country’s second largest market, the NASDAQ, has also declined since Obama was sworn in, falling from 1,440 to 1,321 points, a 119 point drop.
Ron Paul "Budget Deficit Cuts A Fairytale By Administration" Bloomberg 3/4/2009
Geithner ducks a big question Mr. Geithner was on the hot seat again today. He did his best to sell a bad budget. The closing tape speaks for itself. One of the Congressmen asked a hard question. “Mr. Geithner can we sell the bonds necessary to fund this deficit? Are the Chinese still buying our bonds?” Mr. Geithner responded with a full three minutes of non-answers to those questions. At the end of three minutes the Congressman repeated his questions. For another two minutes Mr. Geithner ducked the questions. He just repeated the sound bights that had been drilled into his head. Mr. Geithner has to remember that he is in the big leagues now. When he talks on the Hill these days a few hundred thousand bond and currency traders are tuning in. I doubt that many of them missed the significance of Mr. Geithner’s non-answers to a direct question.
U.S. Sets Big Incentives to Head Off Foreclosures The Obama administration on Wednesday began the most ambitious effort since the 1930s to help troubled homeowners, offering lenders and borrowers big incentives and subsidies to try to stem the wave of foreclosures. People with mortgages as high as $729,750 could qualify for help, and there is no ceiling on how high their income can be as long as they are in danger of losing their homes. Interest rates on loans could go as low as 2 percent for some. Many homeowners could see their mortgage payments drop by several hundred dollars a month, and some could save more than $1,000 a month.
Unlucky or Unwise, Some Borrowers Are Left Out Chadi Moussa lives in a house valued at more than $1 million in Dublin, Calif., in the desirable East Bay area. Unfortunately, he owes nearly twice that much on his mortgage. Mr. Moussa, who runs a used luxury car dealership, is by any definition a troubled homeowner. But when he looked at President Obama’s housing rescue plan, he saw nothing for him because his mortgage was too high. “You give $25 billion to a bank, at least they should help people stay in their homes,” Mr. Moussa said. “But once you get to big loans, nobody’s doing anything about it.”
Fault Found in Takeover of Banks The Office of the Comptroller of the Currency was slow to mandate changes at a pair of banks that were taken over by the government in July, the Treasury Department's Office of Inspector General said in a report. The OCC was faulted for its supervision of First National Bank of Nevada and First Heritage Bank, both of which were owned by First National Bank Holding Co. of Scottsdale, Ariz. Despite identifying various problems over a number of years, the federal regulator didn't act quickly enough to make sure the banks changed their behavior, the report concluded.
Federal Reserve Beige Book Paints a Broadly Pessimistic Picture From Boston to Atlanta to San Francisco, the economy has gotten worse in the last two months, and in a snapshot of economic conditions released Wednesday, business executives were pessimistic about the chances for a near-term recovery. “The deterioration was broad based,” with only a few exceptions, the Federal Reserve said in its beige book, a regular sketch of economic conditions in 12 Fed districts nationwide. Many do not expect a recovery until late 2009 or early next year. The report said that “with rising layoffs and hiring freezes, unemployment has risen in all areas,” a point underscored by a new index that showed private sector job loss increased in February. ADP Employer Services said that employers cut 697,000 jobs in February compared with a revised 614,000 jobs lost in January.
Jim Rogers on the Obama Disaster Mar. 4 2009
14 Trading Firms Settle Charges for $69 Million More than a dozen Wall Street trading firms systematically cheated their customers of millions of dollars by improperly slicing bits of profit from countless trades, federal regulators said on Wednesday. The Securities and Exchange Commission disclosed the allegations after negotiating settlements. The firms did not admit or deny the charges but agreed to pay a total of more than $69 million in forfeited profits and penalties. The 14 firms named in the complaints are all “specialists,” trading firms that have a specific duty to maintain orderly markets by matching buyers and sellers and standing ready to conduct trades when buyers or sellers are scarce. They include units or subsidiaries of well-known Wall Street names, including E*Trade Capital Markets, Goldman Sachs Execution and Clearing, Knight Financial Products and TD Options.
Abruptly, Expatriate Bankers Are Cut Loose SINGAPORE — Losing your job anywhere is disorienting, but imagine being laid off when you work in a foreign country. Not only is your source of income, and perhaps a good part of your identity, suddenly yanked away, but often you lose your right to remain in the country. dd to that urgent disruption the calamity of a collapsing industry and you have the life more or less of thousands of American expatriates in banking and finance. The archetype of the young international banker cut one of the most dashing figures of the age of globalization. Well-educated and well-connected, able to take their pick of jobs, they skipped across employers like they did countries for weekend getaways.
Fears push GE stock to 18-year low General Electric Co shares fell as much as 16 percent on Wednesday, touching their lowest point since 1991, as anxiety over a possible downgrade for GE and its finance unit was compounded by an investor lawsuit over a recent dividend cut. The cost of insuring GE Capital's debt hit a record high on fears over the unit and new data released showed the percentage of GE shares held short reached an all-time high on February 20. GE shares recovered somewhat after the conglomerate said it had "acted aggressively" to adapt to the current recession and had no plans to raise additional equity. Losses eased further after a regulatory filing revealed GE Vice Chairman Michael Neal had bought 50,000 GE shares.
Dow to Drop 3000 More? Investing in silver and gold may be your ticket for wealth later because the Dow might drop significantly more, says Howard Ruff, The Ruff Times publisher and Joe Moglia, TD Ameritrade.
China Outlines Ambitious Plan for Stimulus Warning that China faces “unprecedented difficulties and challenges,” Prime Minister Wen Jiabao outlined a barrage of construction, increased subsidies and economic measures on Thursday aimed at continuing his nation’s modernization despite a world financial crisis. He also indicated that China’s leaders would seek to begin a fundamental shift in their economic strategy by encouraging citizens to spend and consume more goods, as in most Western economies. China’s startling growth has been driven so far by exports and abundant spending on roads, dams and other infrastructure projects, a trend that experts say cannot be sustained in the long term.
China optimism, oil's surge halts Wall Street 5-day rout Stocks rallied on Wednesday, ending a five-day losing streak, as another Chinese stimulus package boosted commodity prices and encouraged investors to jump into energy and natural resource shares. News that China will increase spending on infrastructure and manufacturing drove oil and metals prices higher, helping to underpin the market after it hit a 12-year low a day earlier. General Electric was among the few big names to end the day lower. The economic bellwether fell 4.6 percent to $6.69 for its fourth day of losses as investors worried its ailing financial arm could threaten the whole company. GE has fallen 21 percent this week.
Europe’s banks face a $2 trillion dollar shortage European banks face a US dollar “funding gap” of almost $2 trillion as a result of aggressive expansion around the world and may have difficulties rolling over debts, according to a report by the Bank for International Settlements The BIS said European and British banks have relied on an “unstable” source of funding, borrowing in their local currencies to finance “long positions in US dollars”. Much of this has to be rolled over in short-term debt markets. The currency mismatch has become a potential risk for banks as the dollar continues to climb against the euro and Swiss franc, and especially sterling and Sweden’s krona. “The build-up of large net US dollar positions exposed these banks to funding risk, or the risk that their funding positions could not be rolled over,” said the BIS. The report, entitled “US dollar shortage in global banking”, helps explain why there has been such a frantic scramble for dollars each time the credit crisis takes a turn for the worse. Many investors have been wrong-footed by the powerful rally in the dollar against almost all currencies, except the yen.
Jump-starting the shadow banking system A funny thing happened on the way from the lead story to the summary column in today's Wall Street Journal - the phrases "jump-start" and "shadow banking system" were placed right next to each other, making for a rather embarrassing admission of exactly what is going on. Reporters Liz Rappaport and Jon Hilsenrath were careful to use the term "jump-start" only once in their report and placed it far, far away from the phrase "shadow banking system", but, obviously, whoever was charged with compiling the summary section didn't feel the need. Here's the report about yesterday's announcement by the Federal Reserve to spend another trillion dollars to try to save yet another part of the financial system.
Fed Moves to Free Up Credit for Consumers The U.S. launched a program to finance up to $1 trillion in new lending to consumers and businesses, in an ambitious attempt to jump-start credit for everything from car loans to equipment leases. The Federal Reserve and the Treasury Department hope to revive the moribund market for so-called securitized lending, which until last year was central to providing consumer and business loans. Starting March 17, large investors -- including hedge funds and private-equity firms -- can obtain cheap credit from the Fed and use the money to buy newly issued securities backed by such loans.
EU pledges eurozone rescue Europe's financial authorities have revealed the existence of a contingency plan to rescue eurozone states at risk of default, giving the first clear assurance that the EU will mount a defence if monetary union comes under speculative attack. Joaquin Almunia, the economics commissioner, said EMU economies in distress can count on EU solidarity if they get into trouble, rather than having to go cap in hand to the International Monetary Fund. "It is clear that there are serious problems in certain countries. If a crisis emerges in one eurozone country, there is a solution before visiting the IMF. We are equipped intellectually, politically and economically to face this crisis scenario. It's not clever to tell you in public. But the solution exists," he said.
Will Germany Bail Europe Out? That question is on the lips of countless Europeans. The more important question is, what will Berlin expect in return? Germany began winter in the doghouse. Spring is yet to arrive, and already Berlin is being embraced as the savior of Europe. You have to wonder, what will Germany’s status be in Europe by fall? Less than four months ago, Germany was the bane of Europe, a colossal ball and chain weighing down the efforts of Paris, London and Brussels as they tried to solve Europe’s financial woes. Berlin’s mutinous refusal to back the flamboyant, American-style, billion-dollar bailout packages irked its neighbors. Tensions mounted, barbs flew, anti-German sentiment rippled. Today Europe is having a change of heart. “Everyone is turning to Germany as the ultimate savior of the European economy,” Reuters columnist Paul Taylor wrote last week.
Banks slash credit to diamond sector IDEX Online reported that Union Bank, one of the main financers of the Israeli diamond industry, has sharply cut credit to the diamond sector in 2008 by19.6 percent, reducing it from $586 million to $471 million. According to the bank’s 2008 financial results, the $115 million credit cut was in response to the failing global economy and its affect on the luxury market. The bank stated that Israeli banks have decreased the credit it extended to the Israeli diamond sector in last quarter of 2008 and in January 2009 by nearly 21 percent, reducing it from $2.45 billion to $1.94 billion, or $510 million. Based on these figures, Union Bank has a 24.3 percent market share. Expecting the crisis to continue for at least another year, Union Bank expressed a concern that clients may not meet credit payments due to a sharp fall in sales, cash flow and profitability as well as an erosion in the value of assets put up to guarantee the credit.
For Swiss Banks, an Uncomfortable Spotlight ZURICH — Banking has long been to this tidy city what cars are to Detroit and computers to Silicon Valley, only more reliably. For while fortunes swung wildly in those places, quietly serving the world’s wealthy made growth here as predictable as a fine Swiss watch. Until now. With Switzerland’s biggest bank, UBS, staggering beneath a tax scandal that has undermined this country’s vaunted banking secrecy — as well as $53 billion in write-downs on American subprime securities — not only is Switzerland’s reputation for stability threatened but so is the industry that made it one of the world’s wealthiest countries.
UBS Official Says Bank Can’t Turn Over More Names in U.S. Suit An executive for UBS AG, Switzerland’s largest bank, said its country’s laws prevent it from turning over most of the 52,000 customer identities being sought by the U.S. in a lawsuit that seeks to crack down on tax evaders. UBS agreed Feb. 19 to pay $780 million and disclose some client names to avoid prosecution for helping wealthy Americans avoid taxes. The bank has agreed to turn over about 300 names, said Senator Carl Levin, chairman of a Senate panel that held a hearing in Washington yesterday on offshore tax havens.
The global economy is on fire
SKorean finance chief says Eastern Europe a worry SEOUL, South Korea (AP) - Concerns over a a potential meltdown in Eastern Europe are causing instability in global markets, South Korea's finance minister said Thursday. "As Eastern European economies are exposed to a possible financial crisis, worries over additional global financial turmoil increase, causing foreign exchange rates, interest rates, and stock prices to fluctuate," Minister of Strategy and Finance Yoon Jeung-hyun said. Last month, credit ratings agency Standard & Poor's said "all the ingredients for a crisis are in place" in Eastern Europe because of rising government debt and a heavy reliance on foreign lending. The central banks of the Czech Republic, Bulgaria, Poland, Romania and Slovakia issued a statement Wednesday, saying reports the region's banks were in danger were "misleading" speculation and only increased the risk to stability.
Japan prepares to shoot down North Korean missile Tokyo is preparing to deploy warships in the Sea of Japan with orders to shoot down any missile fired by North Korea that approaches Japanese waters or the mainland. The Japanese Maritime Self-Defence Force has equipped a number of its Aegis destroyers with the Standard Missile-3 interceptor system, which has proved successful in tests conducted with the US military. Pyongyang has stated that it plans to launch a satellite into orbit from a site on the east of the Korean Peninsula, claiming it has the right to do so. Ministers in Tokyo have replied that launching a satellite - which has an almost identical launch profile as a missile - would still be a contravention of United Nations resolutions targeted at North Korea's weapons programmes.
Pakistan 'greater threat than Afghanistan' Pakistan is a greater danger to world security than Afghanistan, the most senior US diplomat in Kabul has warned. The country's nuclear arsenal, instability and radical Islamic politics mean the country is a greater threat to America than its insurgency-wracked northern neighbour. Christopher Dell, US chargé d'affaires in Kabul, made his comments two days after the latest high-profile terrorist attack in Pakistan, where unidentified gunmen opened fire on the visiting Sri Lankan cricket team in Lahore. Washington and London have both appointed super envoys to deal with both countries amid growing concerns over the stability of Pakistan and its effect on efforts to rebuild Afghanistan.
Russian scholar says US will collapse _ next year MOSCOW - If you're inclined to believe Igor Panarin, and the Kremlin wouldn't mind if you did, then President Barack Obama will order martial law this year, the U.S. will split into six rump-states before 2011, and Russia and China will become the backbones of a new world order. Panarin might be easy to ignore but for the fact that he is a dean at the Foreign Ministry's school for future diplomats and a regular on Russia's state-guided TV channels. And his predictions fit into the anti-American story line of the Kremlin leadership. "There is a high probability that the collapse of the United States will occur by 2010," Panarin told dozens of students, professors and diplomats Tuesday at the Diplomatic Academy - a lecture the ministry pointedly invited The Associated Press and other foreign media to attend. The prediction from Panarin, a former spokesman for Russia's Federal Space Agency and reportedly an ex-KGB analyst, meshes with the negative view of the U.S. that has been flowing from the Kremlin in recent years, in particular from Vladimir Putin.
Thousands of Mexican soldiers pour into the country's most violent city in crackdown on drug gangs Armed to the hilt, they came from land and air, determined to restore order to Mexico's most violent city. Nearly 2,000 Mexican soldiers and armed federal police poured into the border town of Ciudad Juarez last weekend. The city - just across from El Paso in Texas - has been ravaged by drug gangs. Just this month 250 people were killed there by hitmen fighting for lucrative smuggling routes.
AT&T will pay $2.6M for deceptive offer New York Attorney General Andrew Cuomo says AT&T Mobility has agreed to pay $2.6 million to settle claims its rebate offers were misleading and did not clearly disclose their limitations. His office says AT&T Mobility will pay more than 200,000 New York consumers who got rebate cards from the company for purchases of cell phones and other wireless equipment and services from 2005 through early 2008.
Harrah's wants to swap $2.8B in debt for new notes Privately held casino operator Harrah's wants exchange up to $2.8 billion in notes in order to lower its debt and have more time to pay back lenders. The Las Vegas-based company said late Wednesday it wants to swap notes coming due as early as next year for new notes due in 2018. The new notes would carry higher interest rates at 10 percent, but would be worth far less than the original notes. Investors who agree by March 18 to substitute $1,000 of old notes would get $30 in new notes.
Lennar CEO Miller got $1.1M in 2008 compensation Lennar Corp.'s chief executive received a 2008 compensation package valued at about $1.1 million, a 6.4 percent pay cut from the prior year, reflecting the homebuilder's decision to reign in executive pay as it struggles through the housing downturn. Stuart Miller, who also holds the title of president, received a salary of $1 million, but no bonus or stock option awards, according to an analysis of documents filed with the Securities and Exchange Commission Wednesday. Miller, 51, also received other compensation valued at $58,294, including $25,200 in dividends, $25,304 for car allowance payments, $6,900 in contributions to his 401(k) plan, $440 for term life insurance and $450 for long-term disability insurance. In fiscal 2007, Miller received a $1 million base salary and $130,397 in other compensation. He also was granted $9.95 million in stock and option awards, but he forfeited the proceeds because the homebuilder fell short of profit goals.
Ron Paul on heath care . . . and government control
NY AG to question 7 Merrill execs about bonuses The New York attorney general's office on Wednesday subpoenaed seven former Merrill Lynch & Co. executives as part of its ongoing investigation into the timing of year-end payments made to executives at the investment bank. New York Attorney General Andrew Cuomo subpoenaed Andrea Orcel, David Sobotka, Peter Kraus, Thomas Montag, David Gu, David Goodman and Fares Noujaim. The seven were identified in a Wall Street Journal report Wednesday as executives who received some of the largest bonuses at Merrill just days before it was taken over by Bank of America Corp. and weeks ahead of announcing the company lost more than $15 billion in the fourth quarter.
One in Five Homeowners Underwater More than 8.3 million mortgage holders in the United States - one in five homeowners - are underwater. That is, they owe more money on their house than their house worth. That’s because the total value of residential properties fell $2.4 trillion in 2008, from $21.5 trillion in December 2007 to $19.1 trillion at of the end of 2008, according to a study from First American CoreLogic. Worse, an additional 2.16 million properties could go underwater if home prices fall another 5%, the study said.
Economy of the Late 70's The federal government is throwing money at the problem, says Howard Ruff, author/The Ruff Times publisher
Obama Pick for HHS Faces Questions about State Aid Kansas Gov. Kathleen Sebelius, President Barack Obama's choice to head the Health and Human Services Department, is facing questions about increased state payments to a social services group whose board includes the chairman of the state Democratic Party. Last fall, Sebelius' secretary of social and rehabilitation services, Don Jordan, approved an increased rate for Community Living Opportunities, a nonprofit group that provides services to the developmentally disabled, that amounted to $713,000.
Montana Has It Right On Second Amendment According to ABC News (Feb. 25, 2009), “The Obama administration will seek to reinstate the assault weapons ban that expired in 2004 during the Bush administration, Attorney General Eric Holder said today… “‘As President Obama indicated during the campaign, there are just a few gun-related changes that we would like to make, and among them would be to reinstitute the ban on the sale of assault weapons,’ Holder told reporters.” Holder also said that President Obama would seek to make the assault weapons ban permanent, close the “gun show loophole,” and ban “cop-killer” bullets. At this point, I believe it is incumbent on me to say that both Eric Holder and Barack Obama have made a career out of doing everything in their power to strip the American people of their right to keep and bear arms. Even under the rubric of the abovementioned “few gun-related changes,” there is the potential for widespread assault against our Second Amendment.
from the sublime to the ridiculous . . . West Virginia Lawmaker Wants to Ban Barbie Because She’s Too Materialistic Just in time for Barbie's 50th birthday, a West Virginia lawmaker wants to outlaw the doll. Democratic Delegate Jeff Eldridge is proposing to ban the sale of the Mattel doll and others like her in West Virginia. He says the dolls influence girls to place too much importance on physical beauty, at the expense of their intellectual and emotional development.
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Term Asset-Backed Securities Loan Facility The Federal Reserve created the Term Asset-Backed Securities Loan Facility (TALF), to help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).
Jim Cramer Blasts Obama Administration for making our economic woes worse
White House Knocks Jim Cramer For Calling Obama Budget "Greatest Wealth Destruction By a President NBC's Tom Costello, on duty at the White House today, asked press secretary Robert Gibbs about some comments made by his CNBC colleague Jim Cramer. On the Today show this morning, Cramer called Pres. Obama's budget a "radical agenda," adding, "This is the greatest wealth destruction I've seen by a President." "I'm not entirely sure what he's pointing to to make some of the statements," said Gibbs. "And you can go back and look at any number of statements he's made in the past about the economy and wonder where some of the back-up for those are too."
What Obama's Cap-And-Trade Plan Will Cost You A study from the George C. Marshall Institute tries to quantify the costs of a cap-and-trade plan to reduce carbon emissions. They're not small, to say the least: And although this study uses 2008 as a baseline, the Obama plan would hit in 2012 and could come in combo with a hike in investment and incomes taxes for wealthier Americans and the creation of a special healthcare tax: The authors find that the constraints posed by the Lieberman-Warner cap-and-trade approach is equivalent to a constant (in percentage terms) consumption decrease of about 1% each year, continuing to 2050. Put another way, the cap-and-trade approach is the equivalent of a permanent tax increase for the average American household, which was estimated to be $1,100 in 2008, would rise to $1,437 by 2015, to $1,979 in 2030, and $2,979 in 2050.
Cap & Trade: Problem or Solution? Jim Rogers, chairman and CEO of Duke Energy, and CNBC's Larry Kudlow discuss whether a carbon cap and trade system is a solution or a problem.
Latest sell-off signals worse recession than expected Night, it seems, has descended upon the stock market. Emotional despair among investors has pushed the Dow Jones industrial average down to levels not seen in more than a decade. This old warhorse of stock indexes breached the psychological barrier of 7,000 on Monday as it fell 299 points, or about 4 percent. The index of 30 blue-chip stocks hasn't traded this low since May 1997. For disillusioned investors, such a technical barrier is far less significant than the real losses they have suffered. Millions of average investors have lost about half of the value of their stock holdings as the Dow has plummeted from its all-time high of 14,164 in October 2007 to its Monday close of 6,763. The bear market has now wiped out some $10.4 trillion in stock market value.
Jim Rogers: It's Better To Let Financials Fail The U.S. bailing out troubled financials is not going to remove systemic risk. In fact, it is making the problem worse, says Jim Rogers, author, adventure capitalist & international investor. He tells CNBC's Martin Soong & Sri Jegarajah why it is better to let financials fail.
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