Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Fri 05.01.2009
A Letter from the Future by Richard Heinberg Greetings to you, people of the year 2009! You are living in the year of my birth; I am one hundred years old now, writing to you from the year 2109. I am using the last remnants of the advanced physics that scientists developed during your era, in order to send this electronic message back in time to one of your computer networks. I hope that you receive it, and that it will give you reason to pause and reflect on your world and what actions to take with regard to it.
Of myself I shall say only what it is necessary to say: I am a survivor. I have been extremely fortunate on many occasions and in many ways, and I regard it as something of a miracle that I am here to compose this message. I have spent much of my life attempting to pursue the career of historian, but circumstances have compelled me also to learn and practice the skills of farmer, forager, guerrilla fighter, engineer - and now physicist. My life has been long and eventful . . . but that is not what I have gone to so much trouble to convey to you. It is what I have witnessed during this past century that I feel compelled to tell you by these extraordinary means.
You are living at the end of an era. Perhaps you cannot understand that. I hope that, by the time you have finished reading this letter, you will.
Gold Consolidation Nears End The battle for survival continues, as banks resorted to basic revisionist accounting (aka fraud) in order to claim improved health. Their reward was a financial sector stock rally of the most queer kind. The rally depended on all manner of contrived demand from the most sordid of chambers opposed to free markets, using tactics that are typically abhorrent. Next this beleaguered sector must withstand valuation checks and fair value scrutiny. Unless analyst dissent is declared illegal, the sector should fall in value. The new facade of Stress Tests has filled the void left by Financial Accounting Standards Board (FASB) concessions that led to phony balance sheets. These Stress Tests are neither a test nor a reflection of stress. They are rigged excuses for continued funds, and worse, might be used to coerce healthier regional banks into merging with dead Wall Street banks laced with insolvency and fraud.
How Gold Will Top $2,000 Per Ounce You no longer have to be a gold bug to think gold will rise in price. In fact, this buying by some of the world's greatest investors may be the leading indicator for a quick 116% climb - to $2,000 per ounce or higher. Give gold the cold stare of a professional handicapper and the odds look very good, indeed.
Sell Bonds and Buy Gold . . . . Governments all over the world are about to flood the bond markets with paper to finance their bank bailouts and economic stimulus plans, and the final bill could amount to more than $6 trillion on some estimates and very much higher for a full derivatives rescue plan. In effect the governments are about to need to raise the funds to fight another Napoleon. This massive new supply of bonds will depress the price of existing bonds, and indeed this is evident in the recent fall in 10-year bond prices and their rising yield. Inflation of the money supply we also know to be a natural enemy of bonds which pay a fixed coupon and are thus extremely sensitive to any rise of inflation that will swiftly erode the coupon, and even make it negative in real terms. And we know governments all over the world have embarked on massive money creation. This can not be good news for bonds, although in the short term the brief return of deflation will help them.
China Stockpiles the "Perfect Money" I was amused by the Reuters headline "China Admits to Building Up Stockpile of Gold" - although it kind of took me by surprise that they bought about 600 tons of gold without telling anyone since 2003, growing their stash by 75% since then. I eagerly scanned the article to see where it says that they bought the gold, to paraphrase, "Thanks to the good advice of Running Dog Yankee Imperialist Mogambo (RDYIM), who showed us the genius of the Austrian school of economics, and told us to buy as much gold as we can get our hands on because without gold as a backing for a currency, the yuan will be just another stupid fiat currency dancing to the inflationary tune of the government, which always wants to spend too much, like the U.S. and all the other stupid fiat-currency countries in the world nowadays, because a stupid fiat currency allows it to happen, ruining everything and we look like a bunch of chumps instead of venerated elders.
The Bullish Case for Silver After dropping almost 60% from its March 2008 peak of $21/ounce, silver appears to be on the rebound: Silver gained 24% back in the first quarter of 2009. With a track record of strong performance during economic crises, silver seems particularly well poised to weather the current storm, especially the impending threat of inflation. Even our own Brad Zigler pointed out the potential staying power of the silver rally way back in February. But if silver has so much potential, why is it still so hush-hush among investors?
"Devil of Deflation Will Snuff Out Gold," Minyanville's Harrison Says With the Fed pulling out all stops to fight the financial crisis, the "spectre of inflation" is driving the financial markets currently, says Todd Harrison CEO of Minyanville.com. The Fed is keeping the printing press on overdrive and fear that will lead to runaway inflation has helped propel the recent stock market rally, kept a bid in gold prices and put upward pressure on Treasury rates despite the Fed's efforts to keep them down. But "without the velocity of money and with the demand destruction [that's occurring] it's going to be hard for inflation to catch its footing," says Harrison.
Stress Tests are Not Stressful Enough Last week, when the U.S. Treasury unveiled the basics of their lender "stress tests", the Fed concluded that "most U.S. banking organizations currently have capital levels well in excess of the amounts required to be well capitalized." Simultaneously, they also claimed that the banks needed more capital. Apparently the Fed has little understanding of irony. Why would our central bankers conclude that "well capitalized" banks need "more capital?" Quite possibly, they believe, as I do, that the rosy economic assumptions that form the basis of the "stress tests" may be far too optimistic. I believe that neither the Fed nor the Treasury have any will to paint a clear picture of our financial turmoil. But that won't stop them from operating under those assumptions. A brief examination of the stress test assumptions shows why the Fed should be hedging their bets.
Why Congress Won't Investigate Wall Street - $$ Republicans and Democrats would find themselves in the hot seat. The famous Pecora Commission of 1933 and 1934 was one of the most successful congressional investigations of all time, an instance when oversight worked exactly as it should. The subject was the massively corrupt investment practices of the 1920s. In the course of its investigation, the Senate Banking Committee, which brought on as its counsel a former New York assistant district attorney named Ferdinand Pecora, heard testimony from the lords of finance that cemented public suspicion of Wall Street. Along the way, the investigations formed the rationale for the Glass-Steagall Act, the Securities Exchange Act, and other financial regulations of the Roosevelt era.
Pearls Before Swine - Perils of Free Money The swine flu could not have come at a worse time. Just when there were signs of a nascent recovery, confidence takes another hit. As a result, "reflation trades" may be put on ice if investors revert to "panic mode" again. While it is difficult to assess the full economic impact of the swine flu, we believe some of the dynamics are foreshadowed. This flu may reinforce long-term trends and provide an opportunity for investors to position themselves accordingly.
Both Boom and Gloom are Risky From Here We seem to be at an interesting juncture in market psychology. The long always cheerleaders are still out in full force, urging everyone to buy, buy, buy. But they always say that, so we have learned to filter out the noise of perpetual optimism. At the other end of the spectrum there is now a famous club of "bear" commentators who called the downturn a couple of years ago and are now continuing to receive significant media attention with dire predictions of untold doom yet to come.
MBIA Sues Merrill Lynch Over Subprime-Debt Protection MBIA Inc., the largest bond insurer, said two of its units sued two Merrill Lynch & Co. businesses now owned by Bank of America Corp. over protection sold against mortgage-debt defaults. The suit, filed in New York State Supreme Court, seeks to unwind or recover payouts for $5.7 billion of credit-default swaps and related insurance sold against collateralized debt obligations, Armonk, New York-based MBIA said today in a statement. Merrill Lynch misrepresented the nature of the debt being protected as part of a “deliberate strategy to offload” billions of dollars of “deteriorating” subprime mortgages between July 2006 and March 2007, as homeowner defaults began to soar, the insurer said in the statement.
Fibonacci Nightmare Well, I did it. I started fooling around with Fibonacci numbers and I scared myself half to death. Leonardo Fibonacci, was perhaps the greatest mathematician of the Middle Ages. I pried open his seven hundred year old crypt, dusted him off and asked him his specialty ... a question about the future. The question I posed, "Are we headed for inflation or deflation in 2009?" I was stunned by the clarity of his answer. This Einstein of his day warned, inflation of nightmare proportions and worse, is coming to this nation soon. . . . . . . . . Are we really headed for war with ourselves and hyperinflation once again in 2009? This cluster of Fibonacci numbers linking up and landing on the year 2009 is striking and elegant. Is this the year where the old world ends and the new world begins? Leonardo Fibonacci says yes.
BILL MOYERS JOURNAL | William K. Black | PBS The financial industry brought the economy to its knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with Bill Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout.
Banks best Obama on mortgage relief Bankruptcy judges can't ease payments Senate Democrats handed President Obama a rare congressional setback Thursday by helping to scrap his plan to give bankruptcy judges the power to force banks to reduce mortgages payments for struggling homeowners. Critics said Mr. Obama failed to use any muscle to preserve the "cram-down" provision, but the president's allies in the Democrat-led Congress blamed lobbying by the banking industry for killing the bill. Mortgage banking industry lobbyists, who gave more than $1.8 million in campaign contributions to Senate members in 2008, fought fiercely against the legislation, which was offered as an amendment to a housing bill.
Flawed Credit Ratings Reap Profits as Regulators Fail Ron Grassi says he thought he had retired five years ago after a 35-year career as a trial lawyer. Now Grassi, 68, has set up a war room in his Tahoe City, California, home to single-handedly take on Standard & Poor’s, Moody’s Investors Service and Fitch Ratings. He’s sued the three credit rating firms for negligence, fraud and deceit. Grassi says the companies’ faulty debt analyses have been at the core of the global financial meltdown and the firms should be held accountable. Exhibit One is his own investment. He and his wife, Sally, held $40,000 in Lehman Brothers Holdings Inc. bonds because all three credit raters gave them at least an A rating -- meaning they were a safe investment -- right until Sept. 15, the day Lehman filed for bankruptcy. “They’re supposed to spot time bombs,” Grassi says. “The bombs exploded before the credit companies acted.”
China Banks Surge to World’s Biggest May Be Too Good to Be True Just when the world is beginning to appreciate China’s biggest banks, unencumbered by Wall Street assets of no discernible value and fortified by record first- quarter lending, some analysts say it’s too good to be true. While Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd., three of the world’s four largest banks by market value, led an increase in lending focused on investments in railways, roads and ports, similar state-directed loans caused bad debts to snowball in the 1990s. The resulting rescue cost $650 billion and took 10 years.
Fed plans 5-year loans under TALF The U.S. Federal Reserve plans new loans with five-year terms under its Term Asset Backed Securities Loan Facility, or TALF, in a bid to boost the commercial real estate market, the Wall Street Journal reported on its website on Thursday. An announcement could come as soon as Friday or early next week, the paper said, adding that plans could still change. Earlier this month, a Fed official told Reuters that the central bank was considering expanding TALF to include commercial mortgage-backed securities with terms longer than three years.
U.S. Bank Test Results Delayed as Conclusions Debated The Federal Reserve will postpone the release of stress tests on the biggest U.S. banks while executives debate preliminary findings with examiners, according to government and industry officials. The results, originally scheduled for publication on May 4, now may not be revealed until toward the end of next week, said the people, who declined to be identified. A new release date may be announced as soon as tomorrow, they said.
Obama Again Uses the Word ‘Investment’ to Describe the Deficit Spending He Plans When President Barack Obama gave a primetime press conference on March 19, he used the terms “invest” and “investment” 18 times to describe the deficit spending he wants the federal government to pursue under his budget plan. In another primetime press conference last night, Obama again used the term “investment” three times to describe the deficit spending while almost in the same breath decrying “overleveraged banks” and those who “maxed-out on credit cards.” Merriam-Websters Online Dictionary defines “investment” as “the outlay of money usually for income or profit.” It defines “invest” as committing money “in order to earn a financial return.”
Obama say tough economy means 'more will be lost' resident Barack Obama is warning that "more will be lost" during a recession that has already cost millions of Americans their homes and their jobs. Marking 100 days in office, Obama was holding a prime-time news conference on Wednesday. The White House released excerpts of his opening statement in advance.
Government Will Stop ‘Meddling’ in Private Sector ASAP, Obama Says at News Conference At a primetime press conference Wednesday night, President Barack Obama said his goal is “to get the U.S. government out of the auto business as quickly as possible.” “I want to disabuse people of this notion that somehow we enjoy, you know, meddling in the private sector,” the president said in response to a question.
Bulldozing new homes in Southern California (Eric said this would happen!)
Part 2
U.S. power grid seen at risk Key members of Congress launched an effort Thursday to protect the nation's electricity grid from criminals, vandals or U.S. enemies, who could use the Internet to cripple computers that control the generation and distribution of power. The effort, led by the chairmen of the House and Senate homeland security committees, follows reports of hackers - possibly working for foreign governments - probing power controls for weaknesses.
MetLife posts 1Q loss; premiums, investments down MetLife reports loss in 1st quarter, hurt by sinking stock markets and lower premiums MetLife Inc. posted a first-quarter loss on Thursday, as declining revenue from premiums and losses on investments pushed the life insurance company's results below Wall Street's expectations. . . . . Like other insurers, MetLife has been hurt by stock market declines in recent months. The company said its loss on investments widened to $618 million, taking into account taxes. Its net investment income declined 24 percent to $3.3 billion from $4.3 billion in the year-ago quarter.
U.S. House acts to protect credit card users The U.S. House of Representatives overwhelmingly voted on Thursday in favor of legislation to protect credit card users from hidden fees, sudden interest rate hikes and questionable billing practices. The chamber voted 357 to 70 in support of the Credit Cardholders' Bill of Rights, sponsored by New York Democrat Carolyn Maloney. This year, 107 Republicans voted in favor of the bill, compared with 84 Republicans voting for a similar bill last year.
Detroit's angry lenders The Obama administration is learning Robert Burns' wisdom about "the best laid schemes o' mice an' men" the hard way as its plans to rescue Chrysler and General Motors meet commercial reality. The effort has been flawed from the outset. But once the political decision was taken that bankruptcy was not an option, two fundamental errors were made. First, the administration and its Congressional allies repeatedly shifted the goalposts, giving the impression they would use taxpayer cash and their bully pulpits to seal a deal. This encouraged brinkmanship. Second, they favoured politically influential unsecured creditors, giving better terms to the United Auto Workers than to lenders or even taxpayers. Under GM's offer, the UAW would get almost half the equity while noteholders, whose claims have legal parity, would get a fourth as much for debts more than twice as large
US auto industry opts for unthinkable Chrysler's Chapter 11 bankruptcy filing on Thursday sets the stage for what promises to be an epic legal battle over the Obama administration's attempt to reorder the US auto industry. Facing off against the administration will be a group of senior Chrysler debt holders who rejected a last-minute offer from the company under which creditors would have received $2.25bn (€1.7bn, £1.52bn) in cash for their $6.9bn in debt. Four leading banks, holding 70 per cent of Chrysler's debt, agreed to take 29 cents on the dollar. The dissident creditors argue that the proposed restructuring plan championed by the administration is unfair because it places their claims - which are secured on Chrysler's assets - below the unsecured claims of the United Auto Workers trade union.
Obama Says Chrysler Getting 'New Lease on Life' resident Barack Obama said the U.S. and Canada will commit more money to Chrysler LLC, which filed for bankruptcy, as it forms an alliance with Fiat SpA that will give the automaker a "strong chance of success." As part of the deal to get as much as $3.5 billion in operating loans from the U.S. government, Chrysler sought court protection today in New York, a process that an administration official said should be completed within two months.
'Surgical' Bankruptcy Is Set for Chrysler Chrysler, the third-largest American auto company, filed for bankruptcy protection Thursday and entered into an alliance with the Italian automaker Fiat in a bid for survival. The bankruptcy case, which government officials envisioned as a swift, "surgical" process, was filed in United States Bankruptcy Court in New York, with the first hearing scheduled for Friday morning.
Chrysler files for Chapter 11 bankruptcy Chrysler filed for bankruptcy protection Thursday and announced it will temporarily halt most of its vehicle production while it completes a deal with Italian carmaker Fiat designed to revive its tattered fortunes. The Obama administration said it had long hoped to stave off bankruptcy for the nation's third-largest automaker, but it became clear that a holdout group of creditors wouldn't budge on proposals to reduce Chrysler's $6.9 billion in secured debt. Clearing those debts was a needed step for Chrysler to restructure by a government-imposed Thursday deadline.
The Health Czar Can't Calculate Experts agree that our healthcare system is unsustainable and in need of reform to promote better coordination, accountability, outcomes, and cost effectiveness.[1] Regrettably, they also seem to agree that we need a robust central-planning authority — a health czar — to make this coordination happen. But as economist Ludwig von Mises proved in his 1920 treatise "Economic Calculation in the Socialist Commonwealth,"[2] under central planning any rational economic calculation, that is, any method to efficiently allocate resources, is practically and theoretically impossible — not just of higher cost, lower quality, and reduced innovation; not just uncoordinated, inefficient, and ineffective; but literally impossible.
Obama Security Aide’s Family Has Swine Flu A security aide helping with arrangements during President Barack Obama's recent trip to Mexico became sick with flu-like symptoms and three members of his family later contracted probable swine flu, the White House said Thursday. The disclosure from press secretary Robert Gibbs comes days after the White House played down risks to the U.S. delegation on the two-day trip that started April 16. Gibbs remained steadfast that the president was never at risk of contracting the flu, which has quickly spread across the globe. The employee, who was not named by the White House, is an aide to Energy Secretary Steven Chu and helped plan security for part of the administration's Mexico trip.
White House: ‘Vice President Misrepresented What the Vice President Meant’ White House (CNSNews.com) – What Vice President Joe Biden meant and what he actually said about traveling and the swine flu are two different things, White House Press Secretary Robert Gibbs told a somewhat snickering press room on Thursday. The explanation came after Biden, on NBC’s “Today” show, said that in light of concerns over the swine flu, he would not travel in “confined places,” such as an airplane or the subway. That goes beyond the precautionary measures cited by President Barack Obama, Homeland Security Secretary Janet Napolitano, and the Centers for Disease Control and Prevention – all of whom have advised people to wash their hands and to cover their mouth if coughing and nose if sneezing.
Shocker: Obama Staffers Attend Secret Dinners With Lefty Media The Washington Post’s Howard Kurtz has let the cat out of the bag in the Post’s April 27 issue about a regularly scheduled secret media dinner attended by some of the top left-wing journalists in the country. But it isn’t just the lefty scribblers that have attended these secret, off-the-record dinners for these gatherings have each featured a guest. Rahm Emanuel, Sec. of the Treasury Tim Geithner, and Fed Chairman Ben Bernanke have all recently had their chance to schmooze the press and guide them with the spin desired by the White House. So, not only does Obama’s Chief of Staff Rahm Emanuel have secret daily phone calls with which to program the media’s coverage of the White House, now it is revealed that Emanuel and other Obama staffers have been attending secret dinners to help the press “understand” what the White House wants reported? As Kurtz says, it all sounds “rather cozy,” doesn’t it?
A pandemic of panic -- are we dead yet? We were all supposed to be in the graveyard by now, done in by AIDS, SARS, bird flu, poisoned peanut butter, Hong Kong flu, killer tomatoes, global warming and strangulation by kudzu. But here we are, proof that there really is life after death. Now we learn that we might freeze before the pigs get us. (The chickens failed.) NASA scientists have observed that the solar wind is the weakest since we began keeping such records, that the magnetic axis of the sun is tilted to an unusual degree, and Ol' Sol is the quietest he has been in a century. A chill, say the solar scientists, may be on the way. (Or not.) Worse, says one of them, this could compel reappraisal of the science of global warning. Try as he might, poor old Al Gore just can't keep the cosmos in line.
Swine Flu Hammers Mexico In Mexico, Virus Adds to Effects of Global Slump $$ MEXICO CITY -- Mexico's government Wednesday suspended all nonessential activities to battle a swine-flu epidemic, which may be responsible for some 150 deaths here and also is hammering Mexico's economy deeper into recession. Mexico's health minister, José Ángel Córdova, urged private businesses to do the same. He also confirmed 99 cases of swine-flu infection, of which eight have proven fatal. The official said that the government has decided to step up restrictions, including suspending government administrative activities from May 1 to May 5. The suspension excludes supermarkets, communications, transport, gasoline stations, health services, banks and other financial services, he said.
When the Obama Backlash Comes Public opinion can be very fickle. Barack Obama has ridden a positive wave of opinion all the way to the White House. The public has welcomed him into office in that same spirit of hope in which he ran. Since the inauguration, however, the president is showing he has different plans than the ones he spoke about during the campaign. It should come as no surprise when the public turns on him just as easily as he has turned on them. The contradictions between Obama’s words and actions are many. He opposes big government, and then he vastly expands it. He says he favors bipartisanship, but doesn’t practice it. He says he is against earmarks, and then signs the largest pork package in history. And that is just to name a few.
Max Keiser on The Financial Armaggedon
Many South Florida car dealerships on the chopping block The financial toll on U.S. automakers GM and Chrysler will soon be evident in South Florida as more dealerships are forced to close. South Florida's love affair with shiny new cars is legendary, but for those who have a passion for General Motors and Chrysler vehicles, those bonds could soon be tested. inancially ailing GM said this week that it will cut 2,600 dealerships -- 42 percent of its network. It will begin notifying dealers as early as next month as it decides which will be eliminated. That's in addition to plans to shut down the Saturn brand entirely and over time phase out Pontiac models.
Consumer Spending Slows, Job Cuts Mount Consumer spending in the U.S. fell more than forecast at the end of the first quarter as mounting job losses threatened to weigh on a projected economic recovery later this year. Purchases decreased 0.2 percent in March, the first drop this year, the Commerce Department said today in Washington. Other reports showed wages and benefits rose at the slowest pace on record and firings continued, straining American workers.
New Hate Crimes Bill Unconstitutional and Threat to Religious Freedom? Wednesday night, while President Barack Obama held his televised press conference marking his first 100 days in office, the federal hate crimes bill passed in the House of Representatives by a vote of 249 to 175. But not everyone believes this piece of legislation is a great idea. They are cautioning many supporters that such a law is a two-edged sword and may have unintended consequences that includes misuse by overzealous and politically motivated prosecutors. During a discussion of HR 1913, the Local Law Enforcement Hate Crimes Prevention Act of 2009, opponents of the proposed law offered compelling arguments for scrapping the bill.
Secession: the Ultimate States' Right by Ron Paul Last week the governor of Texas ignited a media firestorm for his remarks involving the idea of secession. He did not call for Texas to secede from the United States. He merely pointed out that the federal government was treading heavily on the sovereignty of the states and that this can not continue indefinitely without a breaking point. The reaction to Governor Perry’s statements has been nothing short of hysterical. He has been called treasonous for making this obvious point and opening up a discussion. I am not calling for secession either, however there is nothing wrong with a healthy and open discussion of this issue. America was born from an act of secession. When King George’s rule trampled on the rights of the colonies, we successfully seceded from England. It took a war, but we were well within our rights. We applauded when former soviet states seceded from the USSR and declared their sovereignty. And hopefully the United States will eventually secede from the United Nations. We pay most of the bills of the UN, yet do not have the commensurate votes, so someday we will wake up and realize that membership, for these and other reasons, does not serve our interests.
4/24/2009 Ron Paul On Lew Rockwell Show : Federal Reserve, Secession, Future (1/2)
4/24/2009 Ron Paul On Lew Rockwell Show : Federal Reserve, Secession, Future (2/2)
Secession Is in Our Future The Inalienable Right of Secession . . . . The Declaration of Independence of the United States of America invokes the self-evident truths that all men are created equal and are endowed by their Creator with certain inalienable rights, that governments are formed to protect these rights and gain their just powers from the consent of the governed, and that when a government becomes abusive of these rights, it is the right — no, it is the duty — of the people to alter or abolish that government.
On October 17, 2006, 'a date which will live in infamy' . . . there were two acts of tyranny committed. The first was a public signing of the 'Military Commissions Act of 2006' which suspended habeas corpus allowing the president to declare you an 'enemy combatant' and end your rights to seek legal or judicial relief from unlawful imprisonment.
The second act of tyranny took place in a private Oval Office ceremony, in which the president signed into law the 'John Warner National Defense Authorization Act (NDAA) of 2007' which essentially eliminates the protections of the Posse Comitatus Act and re-wrote the Insurrection Act. The NDAA will allow the president to declare a 'public emergency' and take control of state-based National Guard units without the consent of the governor or local authorities, in order to 'suppress public disorder'!
Starve the Beasts - Start the Revolution It is apparent now there remains only one way for ordinary Americans who love their country and want at least some of what's good about it to be preserved for future generations: We must kill the FIRE Economy beasts (FIRE: Finance, Insurance and Real Estate). Recommended method of choice: Starvation - suitably slow and painful. We're the victims in a hostage situation, if you didn't know, held captive and mesmerized by the soft, flat-panel-TV glow of the FIRE Economy, which depends on our sheep-like conformity and Stockholm-syndrome-like admiration of our captors, but it's NOT too late to regain our senses, if only for the benefit of our children and grandchildren. Even if it is only wildly exaggerated - and it isn't - that the Systemically Important Too Big To Fail (SITBTF) institutions completely have captured our flag, our capital, our political parties, our "democracy" and our very lives, we as regular, hard-working, country-loving J6Ps have only this one remedy remaining, as all others woefully have failed.
A BRIEF OVERVIEW OF CAPITALISM, (SOCIALISM & BARACK OBAMA), COMMUNISM, FASCISM........ / PART 1 of 3
A BRIEF OVERVIEW OF CAPITALISM, (SOCIALISM & BARACK OBAMA), COMMUNISM, FASCISM........ / PART 2 of 3
A BRIEF OVERVIEW OF CAPITALISM, (SOCIALISM & BARACK OBAMA), COMMUNISM, FASCISM........ / PART 3 of 3
N. Korea Issues Threat on Uranium SEOUL, South Korea - North Korea said Wednesday that it would start a uranium enrichment program, declaring for the first time that it intended to pursue a second project unless the United Nations lifted sanctions. Calling the United Nations Security Council "a tool for the U.S. highhanded and arbitrary practices," North Korea also threatened to conduct nuclear and intercontinental ballistic missile tests.
China's Leaders Take Visible Approach to Swine Flu HONG KONG - In the clearest sign yet of how seriously China is taking the swine flu outbreak, President Hu Jintao convened a meeting on Thursday morning of the Standing Committee of the Politburo - the nine men who run China - that was immediately announced. It is rare for China's authorities to disclose any meeting of the standing committee, and particularly to do so as soon as the meeting ended. "I don't know if it has ever occurred before - it is really, really unusual," said Cheng Li, the director of the China Center at the Brookings Institution.
Civilians Flee as Pakistani Forces Hit Resistance SHEIKH JANA, Pakistan - The Pakistani forces air-dropped commandos into the main town in Buner on Wednesday and quickly retook control of it from Taliban militants who flooded into the area last week, the military said. But the district was far from recaptured and the military may be in for a hard fight. Villagers who fled the fighting and made it to this village on the plains said the military was bombing in Buner with fighter jets and firing rockets from helicopter gunships as Pakistani troops battled the Taliban on the ground for a second day.
Heavy Battles Are Raging With Taliban In Pakistan Heavy fighting raged for a third day in Pakistan's northwest on Thursday as civilians flooded from the area and the Pakistani military reported some gains in pushing back Taliban insurgents. The Pakistani military secured mountain passes to the west and south of Buner, a district 60 miles from the capital, according to its spokesman, Maj. Gen. Athar Abbas, who spoke at a news briefing at the military headquarters in Rawalpindi. Helicopter gunships also rocketed Taliban positions in the north of Buner, where the militants had apparently fortified positions in areas adjoining their stronghold in the Swat Valley.
Heavy Battles Are Raging With Taliban In Pakistan ISLAMABAD, Pakistan - Heavy fighting raged for a third day in Pakistan's northwest on Thursday as civilians flooded from the area and the Pakistani military reported some gains in pushing back Taliban insurgents. The Pakistani military secured mountain passes to the west and south of Buner, a district 60 miles from the capital, according to its spokesman, Maj. Gen. Athar Abbas, who spoke at a news briefing at the military headquarters in Rawalpindi. Helicopter gunships also rocketed Taliban positions in the north of Buner, where the militants had apparently fortified positions in areas adjoining their stronghold in the Swat Valley.
BARACK OBAMA: The Audacity of Marxism (American's Have Been Decieved) / Part 1 of 5
BARACK OBAMA: The Audacity of Marxism (American's Have Been Decieved) / Part 2 of 5
BARACK OBAMA: The Audacity of Marxism (American's Have Been Decieved) / Part 3 of 5
BARACK OBAMA: The Audacity of Marxism (American's Have Been Decieved) / Part 4 of 5
BARACK OBAMA: The Audacity of Marxism (American's Have Been Decieved) / Part 5 of 5
Congress OKs $3.6 trillion Obama budget Plan lacks Republican support Congress signed off on President Obama's $3.6 trillion budget largely along party lines Wednesday night, handing him a legislative victory that paves the way for a health care overhaul. The Senate cleared the plan by a vote of 53 to 43 after the House passed it 223 to 193. Not a single Republican in either chamber voted for the measure. Democratic defections included Sens. Evan Bayh of Indiana, Robert C. Byrd of West Virginia, Ben Nelson of Nebraska and Pennsylvania's former Republican Sen. Arlen Specter, all of whom joined 17 House Democrats in voting no.
Fed Is Said to Seek Capital for at Least Six Banks At least six of the 19 largest U.S. banks require additional capital, according to preliminary results of government stress tests, people briefed on the matter said. While some of the lenders may need extra cash injections from the government, most of the capital is likely to come from converting preferred shares to common equity, the people said. The Federal Reserve is now hearing appeals from banks, including Citigroup Inc. and Bank of America Corp., that regulators have determined need more of a cushion against losses, they added.
Beijing has 1,054 tonnes of gold now! Even when the world has been struggling to cope with the recession and its cascading effects, China has been secretly booking profits. If you have any doubt about the Communist nation’s ability to secretly convert adverse situations to its benefit, just check the data released by State Administration of Foreign Exchange (SAFE). In a recent announcement, SAFE said China has earned $82.5 billion from nearly $2 trillion in foreign exchange reserves last year, and is now the fifth largest holder of gold.
Special Alert - Stand Down In October 2007, just two days after the DJIA made its all-time high, I issued a newsletter entitled “Man Your Battle Stations.” Despite being known for having written two similar dire forecasts in August 1987 and January 2000, this one was clearly the most bearish. It literally said to sell everything except investments related to precious metals and to even short the stock market. I spoke of tremendous social, political (and geopolitical), economic and spiritual upheaval to come. This dire forecast led to BNN having me on to discuss this forecast.
2009 Silver Eagle Bullion Coins Scorching Hot Sales of 2009 Silver Eagle Bullion Coins are blistering hot, with an incredible record-breaking pace of 9.64 million sold through Monday, April 27, according to the latest US Mint sales stats. More silver eagles have been sold during February, March and even an unfinished April than any corresponding month since the American Eagle series was launched in 1986. What happened in January 2009? It was a great month for the eagles as well, coming in second place behind the record sales in January 2008.
How Government Guaranteed Bank Debt May CRUSH Public Borrowing It's no secret the the federal government's need to borrow has sky-rocketed. Thanks to the various bailouts and stimulus measures, expenditures by the feds have increased by one third and are likely to grow even higher. Meanwhile, the economic slowdown has decreased the amount the government collects in taxes. The only way to bridge the gap is more borrowing. While many are confident that the global appetite for the sovereign debt of the United States will remain robust, some of the government's own programs may start to diminish that appetite. The government's guarantees of various kinds of debt issued by financial institutions essentially makes some bonds issued by banks as "risk free" as Treasuries. But these bonds pay higher yields than government debt, which should make them more attractive for risk-adverse investors looking to maximize their returns on investment.
Dollar to Decline as 10-Year Yields Rise: Technical Analysis The dollar will probably decline should 10-year Treasury note yields rise “decisively” above 3.06 percent, Citigroup Inc. said in a report citing trading patterns. The greenback strengthened in 1993 against the currencies that went on to form the euro as U.S. 10-year notes rallied, technical analysts Tom Fitzpatrick in New York and Shyam Devani in London wrote today in a note to clients. The U.S. currency erased most of its gains as yields climbed in 1994, they said. “If this were the correct picture then one would expect significant renewed dollar weakness,” the analysts wrote. Buying the dollar and Treasuries was “the trade of choice” toward the end of 2008 and “is now unraveling,” they said.
U.S. Economy: GDP Shrinks in Worst Slump in 50 Years he U.S. economy plunged again in the first quarter, making this the worst recession in at least half a century. Gross domestic product dropped at a 6.1 percent annual pace, weaker than forecast, after contracting at a 6.3 percent rate in the last three months of 2008, the Commerce Department said today in Washington. The report, which reflected a record slump in inventories and further declines in housing, came hours before Federal Reserve officials said the economy continued to contract at a “somewhat slower” pace.
Niall Ferguson How bad the crisis could get Harvard historian Niall Ferguson in an interview about the severity of the global economic Crises. Will China save the United States or will they decide to concentrate on themselves? Protectionism could lead to a global meltdown
Geithner's Ridiculous Public-Private Crap Asset Partnership Plan Is Not Dead Yet Here's the official presser on the P-PIP: The Treasury Department today announced the receipt of more than 100 unique applications from potential fund managers interested in participating in the Legacy Securities portion of the Public Private Investment Program (PPIP). A variety of institutions applied, including traditional fixed income, real estate, and alternative asset managers. Successful applicants must demonstrate a capacity to raise private capital and manage funds in a manner consistent with Treasury's goal of protecting taxpayers. Treasury will also evaluate the applicant's depth of experience investing in eligible assets. Finally, the applicant must be headquartered in the United States.
Banks Urge Senate to Reject Mortgage Relief Bill A dozen financial groups, including the U.S. Chamber of Commerce and American Bankers Association, on Wednesday urged every member of the U.S. Senate to reject a key piece of President Barack Obama's plan to keep tens of thousands of Americans from losing their homes. The letter to senators was the latest push by an industry that has helped stall the proposal, which would have let debt-ridden homeowners reduce their payments in bankruptcy court. The Senate was expected to defeat the measure on Thursday. The plan faces nearly unanimous opposition by Republicans and even some Democrats who say they share industry's concerns that the forced easing, or "cram-down" of mortgage terms would ultimately drive up interest rates and further freeze credit lines.
Donald Luskin: Gold and the Upside-Down Bell Curve I regard gold as substitute money. So when you ask, "What's gold worth?" to me, what you're really asking is "What is the expected value of money?" If the financial crisis deepens and the world's demand to hold safe-haven balances increases sharply again back to the levels of panic that we saw last October, November, December, then the world will be plunged into a monetary deflation; deflation defined as extreme appetite for money as opposed to any asset or any thing - a desire for the complete safety of money. So when the demand for money completely outstrips the supply of money, you get deflation. In that kind of world, even gold isn't a safe haven; the only thing that would do is liquid money.
Do Treasury Bond Sales Influence Currency Markets? This week, the Treasury is auctioning 101B worth of 2, 5, and 7 year notes. They sold 40B 2 year notes Monday at a yield of .00949%. Yesterday they sold a record 35B 5 year notes and today they will offer 26B of 7 year notes. Next week they continue with an estimated 73B of 3,10 and 30 year bonds. The total amount borrowed during the quarter ending March 31st was 481B. During the current quarter ending June 30th, it is estimated they will borrow 515B dollars. Thus it can be implied from the massive current quarter’s needs that tax receipts have shrunk dramatically because of the recession. If total borrowing as estimated by some is at three trillion that means the 4th quarter borrowing by the Treasury will be huge. Where will all this money come from?
U.S. economy tumbles steeply in first quarter The U.S. economy shrank by a surprisingly steep 6.1 percent in the first quarter, hit by a record plunge in business inventories and sinking exports, but investors read signs of recovery in the report. The economy remained on track to emerge from recession in the second half of the year, analysts said, pointing to the run down in inventories that helped boost U.S. stock prices.
Perot Fund Turned Billions Into ‘Zero,’ Investor Says The family trust of billionaire and former presidential candidate H. Ross Perot was accused in a lawsuit of mismanaging a fund open to outsiders so that it went from $2.5 billion to “less than zero.” Southern Avenue Partners LP, which sued the Perot Family Trust and related entities, said Bermuda-based Parkcentral Global Hub Ltd. lost more than $3 billion while falsely claiming it was hedged against such losses. Southern Avenue wants to expand the suit to represent all the investors as a class.
Liar, Liar: Ken Lewis Changes His Story On Merrill Lynch Deal Remember the brouhaha last week over Ken Lewis's testimony to New York attorney general Andrew Cuomo about the government forcing his hand to close the acquisition of Merrill Lynch without disclosing losses to Bank of America's shareholders? It was the confession that launched a thousand inquiries into whether Hank Paulson or Ben Bernanke was behind the government's threat to remove Lewis if he backed away from the deal and whether Lewis should have resigned in protest rather than sacrifice shareholder interests to regulators demands.
Lewis out as Bank of America chairman, remains CEO Lewis loses post as Bank of America chairman after shareholder vote; remains CEO Ken Lewis was ousted as chairman of Bank of America Wednesday after shareholders angry about the company's acquisition of Merrill Lynch voted to separate the job from that of chief executive. Lewis will remain the CEO of the bank, but board member Walter E. Massey, president emeritus of Morehouse College in Atlanta, will become Bank of America Corp.'s chairman.
Obama vows great `vigilance' as swine flu spreads Obama vows `great vigilance' for swine flu as it takes first life in US, won't close border President Barack Obama pledged "great vigilance" in confronting the swine flu outbreak Wednesday night as it spread coast to coast across the U.S. The outbreak hit 11 states and closed schools amid confirmation of the first U.S. death -- a Mexican toddler who visited Texas with his family -- and the confinement of dozens of Marines after one came down with the disease in California. Some 100 schools were closed, and more might need to be shut down temporarily, Obama said, declaring, "This is obviously a very serious situation." The total confirmed cases in the U.S. rose to nearly 100, with many more suspected.
Chrysler Bankruptcy Looms as Deal on Debt Falters Last-minute efforts by the Treasury Department to win over recalcitrant Chrysler debtholders failed Wednesday night, setting up a near-certain bankruptcy filing by the American automaker, according to people briefed on the talks. Barring an agreement, which looked increasingly difficult, Chrysler was expected to seek Chapter 11 protection on Thursday, most likely in New York, these people said.
Will GM soon stand for ‘Government Motors?’ Restructuring plan calls for government to gain majority ownership If the government takes a majority stake in General Motors, will it end up taking the wheel, too? Under a restructuring plan put forth this week by GM, the ailing automaker would give majority ownership to the federal government to stave off bankruptcy. That handoff would amount to an extraordinary partial nationalization of the maker of Buicks, Cadillacs and Chevys that has been an independent company since 1908.
GM Bondholders Said to Plan Counteroffer to Take Majority Stake General Motors Corp.’s bondholders plan to present a counteroffer to President Barack Obama’s auto task force in Washington tomorrow that would give them control of the carmaker, according to a person familiar with the committee representing creditors. The bondholder committee plans to reject GM’s April 27 debt exchange offer that asked them to swap all their claims for a 10 percent stake in the reorganized automaker, said the person, who declined to be identified because the negotiations are private.
As Detroit Is Remade, the U.A.W. Stands to Gain In the devastating slump that has forced two of Detroit’s automakers to the brink of bankruptcy, the United Automobile Workers union stands to become one of the industry’s few winners. According to restructuring plans proposed this week, the union will have more than half the stock in Chrysler and a third of General Motors, meaning it will have tremendous influence, with the government, in determining the future of the companies. The United Automobile Workers union said Wednesday that its members ratified a cost-cutting deal with Chrysler by a 4-to-1 margin.
Boeing Presses Congress to Order More of Its Planes The Boeing Company, which was hit harder by the Obama administration’s spending cuts than any other defense contractor, is pushing Congress to increase its orders for planes and fighter jets by $3 billion, industry officials said Wednesday. Boeing is trying to get more orders for C-17 cargo planes and F/A-18 fighter jets added to a supplemental war-funding bill, officials said. They said Boeing’s lobbyists contend that building the extra planes would help preserve the military’s industrial base. Several analysts said they were likely to prevail because members of Congress are seeking to preserve thousands of jobs in their districts.
U.S. lawmaker sees credit card law in May President Barack Obama will sign wide-ranging, pro-consumer credit card reforms into law by late May, senior U.S. House Democrat Carolyn Maloney predicted on Wednesday. "President Obama seems very determined," Maloney, who met with Obama on Tuesday at the White House, told the Reuters Global Financial Regulation Summit in Washington. "He said, 'We're going to get that bill. We're going to enact it into law'."
Donors demand refund from Specter Political switch gets expensive as lawmaker's support shrinks Sen. Arlen Specter's switch to the Democratic Party is prompting his campaign donors large and small to demand their money back, including several Republican senators whose political action committees gave tens of thousands of dollars to the Pennsylvania lawmaker. Sen. Johnny Isakson didn't waste any time putting himself at the front of the refund line. The Georgia Republican asked Mr. Specter for a return of his leadership political action committee's $5,000 contribution Tuesday on the Senate floor - just hours after Mr. Specter announced he was changing his political stripes.
U.S. House passes "hate crime" bill that Bush opposed The Democratic-led U.S. House of Representatives Wednesday approved an expansion of federal "hate crime" laws -- an effort that former Republican President George W. Bush had opposed. On a vote of 249-175, the House passed and sent to the Senate a bill backed by the new Democratic White House to broaden such laws by classifying as "hate crimes" those attacks based on a victim's sexual orientation, gender identity or mental or physical disability.
American Express Cutting Clients Like Crazy American Express' risk-cutting poses its own risks What does AmEx want? That's a question American Express cardholders are asking more and more these days as the company turns the screws on long-standing customers and seems determined to show as many as possible the door. Similar moves by leading card issuers drew a scornful response from President Obama, who told industry leaders last week that "the days of any-time, any-reason rate hikes and late-fee traps have to end."
More than 100 U.S. schools closed because of swine flu At least 74 schools have closed across the country because of confirmed or probable cases of swine flu and 30 more have closed as a precautionary measure, the Department of Education said Wednesday. The elementary, junior high and high schools have closed because of the H1N1 virus, Department of Education spokesman Massie Ritsch said.
World Health Organization Raises Swine Flu Alert Level The global spread of swine flu, a pandemic, is highly likely, the World Health Organization said on Wednesday and raised its alert level to Phase 5, the next-to-highest level in the worldwide warning system. Phase 5 had never been declared since the warning system was introduced in 2005 in response to the avian influenza crisis. Phase 6 means a pandemic is under way.
Climate Talks for New Treaty Will Be Tough President Barack Obama’s chief climate negotiator said talks for a new treaty to combat global warming will be “extremely difficult” as nations grapple with how far emerging economies such as China should go to curb greenhouse-gas emissions. It’s “not going to be easy to reach an agreement,” Todd Stern, Obama’s special envoy for climate change, said yesterday at the conclusion of a two-day meeting in Washington of the world’s biggest emitters of carbon-dioxide pollution, a greenhouse gas blamed for rising temperatures and sea levels.
The Rise And Fall Of AIG's Financial Products Unit As we delve into the back-story behind the collapse of AIG, we thought it might be useful to lay out some key factual information about the firm's Financial Products unit, known as AIGFP, whose disastrous credit default swaps brought the company to its knees. How and when did AIG Financial Products get started? Who ran it, and from where? How did it get into credit default swaps, and what exactly are they, anyway? And how did this group of derivatives traders eventually wind up bringing down one of the most admired financial firms in the world?
AIG keeps key Paris employee, avoids possible default American International Group Inc said a key French employee will stay at the company, staving off the risk that his departure would leave the insurer in default on billions of dollars of insurance contracts. James Shephard has agreed to serve as chief executive of Banque AIG, with overall responsibility for the bank, AIG spokesman Mark Herr said. The Wall Street Journal reported that Shephard's departure could have triggered an AIG default on $234 billion of derivatives contracts.
American Statement of Grievance on Government & Judiciary (Part 2) Once the rights of the individual were treated as almost sovereign and respected above all else, as it was written into our Constitution. But now, after decades of individual liberty erosion, the rights of the collective are now considered superior, and are ceded a deference above those of any one person. This tendency, repeated many times over the years in controlling legal precedent, has slowly teased our society into a socialist mindset, spirit and practice. This quiescent tendency of belief is now normal and accepted, and it is the presumption and acceptance that all individual rights are only provisional, and are only granted solely at the discretion and benevolence of our governmental leaders. 3 We assert that without correction, this trend will lend itself to a slippery slope. As one set of injustices wrought becomes convention, it will become implicit foundation for the next set.
Obama Sows Seeds of Own Demise When the Obama administration crashes and burns, with approval ratings that fall through the floor, political scientists can trace its demise to its first hundred days. Although Americans are careful not to consign a presidency they desperately need to succeed to the dustbin of history, the fact is that this president has moved - on issue after issue - in precisely the opposite direction of what the people want him to do.
Europe's age crisis begins to bite The EU's working age population will peak next year before tipping into decline for half a century This will cause a relentless rise in pension and health costs that risk asphyxiating the region's economy. A new report by the European Commission said this financial crisis could turn into a "permanent shock to growth" from which Europe never fully recovers unless it moves fast to bring its public debts under control. The main danger is a "Lost Decade" akin to Japan's deflation slump, with economies contracting by 0.9pc into the middle of the next decade, but there is also a risk of a deeper downward spiral.
Don’t Know Much About Capitalism After eight years of watching conservatives blow trillions of dollars and comport themselves like anti-intellectual, jingoistic blockheads, I found myself ashamed to admit that the Left seemed to have all the genuine intellectuals - people who seemed to possess real curiosity, who refused to accept whatever official line the government was shelling out, and who sought genuine understanding instead of name-calling and pointless vitriol. With the Left now in power, though, they’ve by and large reverted to form. The very same people who just a year ago prided themselves on evaluating every Pentagon press release with an air of suspicion and hostility now accept without cavil whatever the Federal Reserve chairman or the Treasury secretary tell them. They’ll believe whatever economic superstition, no matter how transparently ludicrous, that happens to be in fashion. Whatever happened to “Question Authority”?
Blueprint (or blue plate special) for 'change'? Fabian Socialism & world government
Barack Obama: The Mendacity of Hope, Pt. I President Barack Obama's Brain Trust appears to be composed of recycled Washington insiders from previous administrations. Obama's Cabinet: Change? Obama voters wanted change. During the election, Obama supporters made it clear that "change" not only meant a different party occupying the White House and a different direction for American foreign and domestic policy, but—by choosing Obama over Clinton in the primaries—they expressed their desire for a Washington outsider. It might be instructive to take a look at the people with whom Obama has surrounded himself:
Barack Obama: The Mendacity of Hope, Pt. II Barack Obama's foreign policy posture is reminiscent of a previous president: George W. Bush In 2008, then-Senator Obama was pushed to the forefront of the passel of potential Democratic nominees due in no small part to his apparent status as the peace candidate. During the presidential campaign, Obama constantly reminded supporters of his 16 month plan for withdrawal from Iraq—except when he claimed to have an eleven and a half month plan. I clearly recall warning my liberal friends and family members that they were very likely going to be sorely disappointed with Obama.
UN Agenda 21 Sustainable Development
****** Important ! ******* Barack Obama, Fabian Socialist Who needs Molotov when we've got Alinski? Barack Obama is a Fabian socialist. I should know; I was raised by one. My Grandfather worked as a union machinist for Ingersoll Rand during the day. In the evenings he tended bar and read books. After his funeral, I went back home and started working my way through his library, starting with T.W. Arnold's The Folklore of Capitalism. This was my introduction to the Fabian socialists. Fabians believed in gradual nationalization of the economy through manipulation of the democratic process. Breaking away from the violent revolutionary socialists of their day, they thought that the only real way to effect "fundamental change" and "social justice" was through a mass movement of the working classes presided over by intellectual and cultural elites.
Obama on Track For Agenda 21
A Fabian Socialist Dream Come True The gradual revolution of the Fabian Socialists is quickly becoming a reality in America. The Fabian Society began in England in 1887 by a very small group of elitist socialist that sought to reform society gradually into one of socialism instead of through violent revolution. At first their purpose was to be an alternative in Britain for the more dominate Marxist Social-Democratic Federation, but their true goal was to accomplish socialism through a very gradual process using the voting booth and representative democracy as their instrument of change. In fact, one of their symbols is a Turtle with the motto: "When I Strike, I Strike Hard". Another symbol is the Wolf in Sheep's Clothing and the Globe on an Anvil being hammered into the Fabian model.
The World Rearms - Except for America The day is coming when Washington will have more military challenges to handle than just Afghanistan. Often, it takes an economic crisis to reveal where a country’s national priorities really lie. With this in mind, it is sobering to note that all of the world’s major power blocs are using this time of financial hardship to increase their military spending - except for the United States.
North Korea threatens nuclear and missile tests Isolated country raises stakes in worsening standoff over atomic program North Korea threatened Wednesday to conduct nuclear and missile tests and start an uranium-enrichment program in addition to its existing plutonium-based one, unless the U.N. apologizes for criticizing its recent rocket launch, dramatically raising its stake in the worsening standoff over its atomic programs. Pyongyang's Foreign Ministry said in a statement the country "will be compelled to take additional self-defensive measures" unless the U.N. Security Council apologizes immediately. "The measures will include nuclear tests and test-firings of intercontinental ballistic missiles."
Freedom Watch 4/29/2009 Guests Ron Paul, Peter Schiff, Daniel Hannan, Lew Rockwell (1/6)
Freedom Watch 4/29/2009 Guests Ron Paul, Peter Schiff, Daniel Hannan, Lew Rockwell (2/6)
Freedom Watch 4/29/2009 Guests Ron Paul, Peter Schiff, Daniel Hannan, Lew Rockwell (3/6)
Freedom Watch 4/29/2009 Guests Ron Paul, Peter Schiff, Daniel Hannan, Lew Rockwell (4/6)
Freedom Watch 4/29/2009 Guests Ron Paul, Peter Schiff, Daniel Hannan, Lew Rockwell (5/6)
Freedom Watch 4/29/2009 Guests Ron Paul, Peter Schiff, Daniel Hannan, Lew Rockwell (6/6)
A new gilded age Gold finds added lustre among formerly jaded investors When people look back on 2009 a few decades from now, it will be hard to find a better symbol of the tough times than an Internet gold jewellery buyer delivering the Super Bowl's most memorable commercial. Yet in an era in which bullion is emerging as the only reliable investment, it seems appropriate that Cash4Gold.com, a two-year-old startup out of Florida, claims to be the United States' fastest-growing company by taking gold pawning to the mainstream.
Inflation & Revolution The French Revolution was caused by the fiscal irresponsibility of the monarchy. Nobles and the Clergy paid no taxes, and when a title was given, that person was tax exempt for life. France was suffering from the costs of the Seven Years War, and helping America with its own revolution against the Brits. On top of that, there had been extremely bad weather and poor harvests. Starvation was common, and the government was broke. Unrest was everywhere, and innocents had been imprisoned. Finally, on July 14th, 1789, came the storming of the Bastille, and ever since, "Bastille Day," has been celebrated in France. France had heavy debts and huge deficits. (Gee Dad, isn't that what we seem to suffer from now?) Nine months later, in April, 1790, the inflating began.
China's big gold buy barely kept pace with forex The big surprise in China's revelation on Friday that it had secretly added over 450 tonnes of gold to its foreign reserves over the past six years may be the fact that it hasn't bought far more than that. Now, many analysts say the rare public disclosure may be a prelude to Beijing accelerating its purchases -- possibly from big government agencies or central banks -- as it worries about the erosion of its $2 trillion cash pile.
Jim Rogers Interview with Gold Seek Radio pt 1/2 24-04-09
China admits to building up stockpile of gold China revealed on Friday that it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes - or a pot worth about US$30.9-billion - and confirming years of speculation it had been buying. Hu Xiaolian, head of the State Administration of Foreign Exchange, told Xinhua news agency in an interview that the country's reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold reserves figure.
Economic BBQ on the Credit Default Spit . . . . The fact that a local barbeque place opened and closed in the last three years brought this tragically home to me, but it's going to get worse as he notes that "it was the first wave of defaults in 'subprime' mortgages that sparked today's economic meltdown," which was bad enough, but not as bad as the news that a "second wave" of "toxic property loans, however - a flood what you call 'option ARM' or 'Alt-A' loans - won't hit peak resets until 2011."
The U.S. Treasury's Golden Shell Game, Part 2 Good News: The US Treasury has a little over 261 million ounces of gold which, because of Breton Woods, they value at a price of $42.22 per ounce, giving it a book value of slightly more than 11 million dollars. The gold appears to be in repositories and while the amount has fluctuated slightly prior to 2006, the number has apparently settled at the level first noted in March 2006 and remained unchanged, including monthly working stock at the mint, since then. The above should be consolation for all the theorists who say the US no longer has any gold in Ft. Knox, or Denver or anywhere else. Physically, the gold is right where the government says it is. Fiscally, well, that's where some of the bad news comes in.
Jim Rogers Interview with Gold Seek Radio pt 2/2 24-04-09
Citi Scrambling To Raise Cash After Failing Stress Test When the history of this crisis is written, it will likely be the government's unending attempts to save two disastrous companies known as AIG and Citigroup that get the most attention. We don't suppose there's any way we could persuade Tim Geithner to just cancel this crazy share swap and just finally seize Citi and be done with it? We didn't think so.
Citi Begging Geithner For Permission To Pay Massive Special Bonuses Fresh off Citi's failing the stress test comes a familiar story. Citi's prize commodities-trading unit, Phibro, didn't have anything to do with stuffing the balance sheet full of the assets that are dragging the firm (and taxpayers) to the bottom of ocean. Phibro also generated more than half-a billion dollars of revenue for the firm last year. The head of the unit, Andrew Hall, took home $100 million.
Commercial mortgages at risk The volume of commercial mortgages at risk of default has quintupled since the beginning of 2008 as a deteriorating economy has made it increasingly difficult for shops and businesses to keep up with their payments. Special servicers, companies that collect payments from borrowers in distress on behalf of mortgage bond investors, reported $23.7bn of mortgages under their care at the end of the first quarter, according to Fitch Ratings. That was five times higher than the $4.6bn of mortgages needing special servicing at the end of 2007. Servicers experienced an almost 50 per cent increase in the volume of distressed commercial mortgages in the first quarter alone.
Fed's future role at issue on Hill Congress struggles with complex plan for reordering financial regulation. A key hangup is how much new power to give the Federal Reserve. A major Obama administration plan to deal with financial companies too big to fail is becoming too big to zoom through Congress. Top White House and Treasury Department officials have been working behind the scenes for weeks to push lawmakers to start tackling legislation aimed at rescuing giant financial companies on the brink of failure -- like American International Group.
Fed Relies on Bank Reserves to Stem Inflation When Crisis Eases Federal Reserve officials are relying on interest paid on bank reserves to help stem inflation once the economy stabilizes, spurring some former insiders to intensify their warnings that consumer prices may soar. By paying lenders to keep cash on deposit at the central bank, the Fed is seeking to prevent the money being poured into the broader economy, potentially pushing prices higher. The strategy is a gamble: interest on reserves last year failed to stop the benchmark interest rate from falling below the policy makers' target. Officials may discuss the issue at their gathering today and tomorrow in Washington.
Fed to reassess efforts at reviving economy At this week's meeting, policymakers will weigh the effectiveness of ongoing programs. As the recession grinds on, Federal Reserve policymakers will open a two-day meeting Tuesday to make a fresh assessment of economic conditions, review the effectiveness of programs in place and weigh whether they need to expand or change them. Any policy decisions would come Wednesday. Fed Chairman Ben Bernanke and his colleagues have already ratcheted down a key lending rate for banks to a record low near zero. To ease the impact of the recession, economists predict the Fed will keep its targeted range for its bank lending rate between zero and 0.25 percent at this week's meeting and probably well into next year. Fed officials have left the door open to announcing a new relief program, though they haven't hinted in recent weeks of any new efforts.
Salbuchi - Global Meltdown: What We Can / Should Do... Part 1 Describes what needs to be done regarding the Financial Meltdown. Put the financial system in its proper place and bring Health to the Economy. All based on the Argentine experience of having suffered systemic collapses, hyperinflation and the gross corruption of wanton speculation.
Treasury to borrow record amount for current quarter The Treasury Department said Monday it will need to borrow $361 billion in the current April-June quarter, a record amount for that period. It's the third straight quarter the government's borrowing needs have set records for those periods. Treasury also estimated it will need to borrow $515 billion in the July-September quarter, down slightly from the $530 billion borrowed during the year-ago period. The huge borrowing needs reflect the soaring costs of the $700 billion financial rescue program and the recession, which is nearing a record as the longest in the post-World War II period.
$1 billion a day for stimulus The Obama administration has committed $75 billion in stimulus money in 10 weeks. So far $14.5 billion has been spent, mostly for Medicaid. The federal government has made available more than $75 billion for stimulus projects in the 10 weeks since President Obama signed the $787 billion recovery package into law. Not all of that money has hit the streets, however. So far, $14.5 billion has been spent, nearly all of it to help states cope with rising Medicaid costs.
Justices Hear Arguments on Bank Regulation The Supreme Court heard arguments on Tuesday in a case that could change the way big banks are regulated. In the case, Cuomo v. the Clearing House Association, federal and state regulators have squared off over which part of the government should serve as the nation's watchdog for national banks. The case began four years ago, when Eliot Spitzer, New York's attorney general at the time, questioned why some national banks seemed to be making a disproportionate number of high-interest home mortgage loans to black and Hispanic borrowers.
Optimism About US Economy May Be Wishful Thinking Consumers hoping that the worst of the recession is over may be setting themselves up for disappointment as the US economy continues to deteriorate, a panel of economists and financial experts said Tuesday. Surging unemployment and the slow-moving impact of the government stimulus program will stall any real economic recovery until 2010 or even later, the panel said. Consumers fearful of losing their jobs are likely to continue to spend less while the housing and financial crises continue to unwind.
Bonds Show 'Terrifying' Economic Weakness The recent rise in stocks and talk about green shoots in the markets are optimistic assumptions, as the world downturn "still has a way to run," Hugh Hendry, Chief Investment Officer at Eclectica, told CNBC Tuesday. World gross domestic product looks overestimated, because global consumption has been based on debt, and this cannot continue, Hendry told "Squawk Box Europe." "In the last five weeks we had a rally in risk. Big deal," he said. "I am fearful of the surplus countries, like China and Germany. I think GDP has been overstated," Hendry added.
Citi, BofA reportedly told to boost capital Early results of bank stress tests indicate the troubled banks need more capital in case economic conditions worsen, according to a published report. Government regulators have told Bank of America Corp. and Citigroup Inc. that the banks need to increase their capital reserves based on preliminary "stress test" results, according to a report published Tuesday. The capital shortfall at Bank of America could amount to billions of dollars, the Wall Street Journal said, citing people familiar with the situation.
Mad Scramble to Spin Today's Stress Test Leak It's not good news that Bank of America and Citigroup have been told to raise more capital following the completion of the Fed's stress tests. The thing is, the stress test isn't even that stressful, so if they're being told to raise more cash under this scenario, how much more would they need under realistic worse-case conditions? But the defenders are all out with the same line: Well, gee, everyone knew they needed more cash, how can this be a surprise to anyone?
U.S. consumer confidence soared in April Americans lifted by hopeful signs economy starting to stabilize Hopeful signs that the worst may be over for the economy boosted Americans' moods in April, sending a closely watched barometer of sentiment to the highest level since November. The New York-based Conference Board said Tuesday that its Consumer Confidence Index rose more than 12 points to 39.2, up from a revised 26.9 in March. The reading marks the highest level since November's 44.7 and well surpasses economists' expectations for 29.5.
A New Plan to Help Modify Second Mortgages The Obama administration sought to expand its $50 billion plan to reduce home foreclosures, announcing a new program on Tuesday to help troubled homeowners modify second mortgages or piggyback loans. Under the new plan, the Treasury Department will offer cash incentives and subsidies to lenders who agree to substantially reduce the monthly payments on second mortgages or forgive those loans entirely. The goal of the plan is to plug a hole in the administration's original program, which offered subsidies to lenders who agreed to modify the primary or first mortgages of homeowners who had fallen delinquent or were in danger of doing so.
Mortgage Modification Bill Faces Trouble in Senate Days before an expected vote, Senate leaders yesterday touted their version of a proposal to allow bankruptcy judges to modify mortgages, but have yet to secure the support of the financial services industry and face fierce opposition that could derail the proposal again. Senate Majority Whip Richard J. Durbin (D-Ill.) has been negotiating with Bank of America, J.P. Morgan Chase and Wells Fargo for weeks. They are facing increasing pressure to conclude negotiations before a Senate vote later this week, but talks continue, according to Senate aides.
Home Prices in 20 U.S. Cities Declined at Slower Pace The decline in home prices in 20 major U.S. cities slowed in February for the first time since 2007, amplifying signals that the market may be stabilizing. The S&P/Case-Shiller index's 18.6 percent decrease compares with a record 19 percent decline the month before. The gauge has fallen every month since January 2007, and year-over-year records began in 2001.
Administration set to expand housing aid plan Incentives for mortgage lenders to lower bills on second mortgages The Obama administration is expected to announce Tuesday that it is expanding its plan to stem the housing crisis by offering mortgage lenders incentives to lower borrowers' bills on second mortgages. During the housing boom, lenders readily gave out "piggyback" second loans that allowed consumers to make small down payments or avoid fees entirely. While home prices soared, such mortgages were even extended to borrowers with poor credit scores and people who didn't provide proof of their incomes.
US home prices post 18.6 pct annual drop in Feb. Index shows US housing prices falling by 18.6 percent in February, but no annual record Home prices dropped sharply in February, but for the first time in 25 months the decline was not a record, another sign the housing crisis could be bottoming. The Standard & Poor's/Case-Shiller index released Tuesday showed home prices in 20 major cities tumbled by 18.6 percent from February 2008. That was slightly better than January's 19 percent and the first time since January 2007 the index didn't set a record. The 10-city index slid 18.8 percent, the first time in 16 months its decline was not a record.
A Look at Case-Shiller Numbers, by Metro Area The S&P/Case-Shiller home-price index, a closely watched gauge of U.S. home prices, showed accelerating price declines in November. No area experienced year-over-year price gains, the eighth straight month that has happened. None of the cities managed to avoid month-to-month declines for the second month in a row. In September, Cleveland and Boston managed to eke out gains from the prior month, while prices were flat in Chicago and Denver. Phoenix, Las Vegas and San Francisco continued to lead decliners, all with monthly drops over 3% and year-to-year drops over 30%.
CalPERS to vote against BofA board re-election California pension fund to vote against Bank of America's board, including CEO Ken Lewis The California Public Employees' Retirement System, the largest U.S. public pension fund, said Tuesday it will vote against re-electing all 18 Bank of America Corp.'s board members, including Chairman and Chief Executive Ken Lewis. CalPERS, an influential fund, says Lewis and the board failed to disclose information on Bank of America's acquisition of New York-based investment bank Merrill Lynch & Co. The group also opposes the more than $3.6 billion in bonuses that were paid ahead of schedule to Merrill employees before the deal was completed, even as Charlotte-based Bank of America was begging the government for aid to complete the acquisition.
Salbuchi - Global Meltdown: What we Can / Should do - Part 2 Describes practical example of how Finance and Economy can be put back straight again. To do this, we need to apply good Common Sense, which means not listening to the "experts" anymore...
F.D.I.C. Chief Calls for Broader Powers for Agency The chairwoman of the Federal Deposit Insurance Corporation, Sheila C. Bair, said in a speech on Monday that her agency should have broader powers to take over and close a variety of financial institutions to prevent taxpayers from shouldering the losses on firms deemed too big to fail. Instead of just seizing commercial banks, Ms. Bair said the F.D.I.C. should be able to take over troubled insurers, bank holding companies and other insolvent financial institutions and force stockholders and bondholders to bear the cost.
Arlen Specter Leaves GOP, Shifting Senate Balance Democrats Are Poised to Hold A Powerful 60-Seat Majority Sen. Arlen Specter of Pennsylvania provided a boost to President Obama's ambitious legislative agenda yesterday by abandoning the Republican Party in the face of shifting political realities at home and an aggressive courtship by the White House and party leaders. In an announcement that shocked colleagues on both sides of the aisle, Specter said he had become increasingly uncomfortable as a moderate in a party dominated by conservatives and would join the Democrats. He bluntly admitted that his decision was tied to his belief that he could not win reelection as a Republican next year.
Terror Plane Photo-Op Cost $328,835 Obama Orders Review of New York Flight as Cost Put at $328,835 President Barack Obama ordered a review of a publicity-photo shoot with one of the planes that serves as Air Force One that cost taxpayers $328,835 and caused a furor in New York City. Obama said he wasn't informed in advance of yesterday's low-altitude flight over New York Harbor, which rattled windows in New York's financial district and prompted some office workers to flee buildings in fear it was a terrorist attack. "It was a mistake," Obama said today before a meeting at FBI headquarters in Washington. "It will not happen again."
Flu could derail fragile global economy If the outbreak spreads quickly, analysts say the effect on trade could prolong - or even deepen - the recession. A quick and extensive swine flu epidemic could derail a global economic recovery, and even prolong and deepen the worldwide recession, economists said Monday. "We're not there right now. This has to first become a large-scale pandemic," said James Auger, senior analyst, North America, with IHS Global Insight, a global economic research and forecasting firm.
US flu cases rise, officials warn will worsen US swine flu cases, hospitalizations rise; Obama seeks $1.5b to fight outbreak Swine flu cases in the United States rose above 60 on Tuesday as governments around the world intensified steps to battle the outbreak that has killed scores of people in Mexico. President Barack Obama asked Congress for $1.5 billion to fight the fast-spreading disease. Federal officials suggested the flu may be spreading so fast, there may be no practical way to contain it, and no need to tighten borders further. So far, there have been no deaths from the fast-spreading virus in the United States.
Swine Flu Pandemic Outbreak Model - G4T Update
Swine Flu In this video, Dr. Joe Bresee with the CDC Influenza Division describes swine flu - its signs and symptoms, how it's transmitted, medicines to treat it, steps people can take to protect themselves from it, and what people should do if they become ill.
Chrysler lenders and Treasury reach deal The U.S. Treasury has reached an agreement in principle with Chrysler LLC's first-lien lenders that may help the troubled automaker avoid bankruptcy, two people briefed on the discussions said on Tuesday. The terms of the high-stakes debt restructuring deal were not immediately available, and representatives of Chrysler, the lenders and the Treasury could not be immediately reached for comment.
GM to force more than 1,000 dealers to close General Motors tells dealers it will force more than 1,000 underperforming outlets to close General Motors Corp. told its dealers Tuesday that it will force 1,000 to 1,200 underperforming locations to close their doors as the automaker tries to thin dealer ranks to make the remaining outlets more profitable. GM told the dealers about the plan in a video conference, according to a dealer who spoke on condition of anonymity because the video conference was private. It is part of the company's plan announced Monday to cut more than 2,600 dealers by 2010.
Tentative Deal Set on Chrysler Debt to Avert Bankruptcy The Obama administration is prepared to force Chrysler into bankruptcy by the end of the week unless it gets unanimous consent from a group of banks and hedge funds to retire the automaker's debt. The Treasury Department has told the lenders - 46 creditors in all - that they must accept $2 billion in cash to eliminate about $6.9 billion in secured debt by a deadline on Thursday. Anything short of total agreement to the terms would cause a bankruptcy filing, people close to the negotiations said Tuesday. None would agree to be identified because the talks have not been completed.
GM's New Road Map: Partial Nationalization Automaker to Shed Brands and Workers; Future Hinges on Deal With Bondholders Once a symbol of capitalist might and U.S. industrial prowess, General Motors would be half owned by the Treasury under a new sweeping plan that would also shut down GM's Pontiac operations, lay off 21,000 workers and impose harsh terms on the company's bondholders. The partial nationalization proposal -- a last-ditch effort developed by GM and the Obama administration's auto task force to keep the leading U.S. carmaker out of bankruptcy -- raised hackles in Congress and ratcheted up the game of brinkmanship with the company's bondholders, who have until May 8 to accept or to try to negotiate better terms.
GM cuts: Coming to a town near you Location, car models, and union deals are all factors General Motors will consider as it decides where its 23,000 layoffs will be made. Saying they'll cut costs is the easy part. Now, in order to stave off bankruptcy, comes the hard part: General Motors must axe 23,000 people and decide which plants to keep open, and which to permanently shut down. The company probably still doesn't know which factories it will close, analysts say. Over the next few weeks, GM execs will pour over numbers, charts and strategy as the government's end-of-May deadline for a viability plan approaches.
U.S. Home Prices Continued to Decline in February Phoenix has achieved the unwelcome distinction of becoming the first major American city where home prices have fallen in half since the market peaked in the middle of the decade, according to data released Tuesday. Though historical statistics are scant, experts said the precipitous decline probably had few if any equals in modern times. "Even during the Depression, I'm not sure prices fell this quickly," said Karl Guntermann, a professor of real estate at Arizona State University.
Clinton Says U.S. Is Ready to Lead on Climate After eight years largely on the sidelines of the international policy debate on climate change, the United States is prepared to lead negotiations toward a new global warming treaty, Secretary of State Hillary Rodham Clinton said Monday. "The United States is fully engaged and determined to lead and make up for lost time both at home and abroad," Mrs. Clinton told delegates from 16 countries at a State Department conference on energy and climate. "We are back in the game."
Global warming alarmists out in cold IT'S snowing in April. Ice is spreading in Antarctica. The Great Barrier Reef is as healthy as ever. And that's just the news of the past week. Truly, it never rains but it pours - and all over our global warming alarmists. Time's up for this absurd scaremongering. The fears are being contradicted by the facts, and more so by the week.
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Tues 04.28.2009
The History and Revisionist Theory of the Great Depression -- Can It Happen Again?
Excellent! One of the best articles you'll read on banking crisis: Falsifying Bank Balance Sheets by Antal E. Fekete Professor of Money and Banking San Francisco School of Economics . . . In 2009 we are wondering what has hit our banks. No mystery there. It was not subprime mortgages nor other loose lending practices. The banking crisis is entirely self-inflicted or, more precisely, government-inflicted the origins of which go back almost ninety years: faking balance sheets. That practice cannot go on forever. The day of reckoning comes when capital is called upon to do what it is supposed to do: to tie over the bank during a temporary setback. The kitty is opened, and found empty. Bank capital is gone, due to earlier legerdemain in trying to paper over paper losses. (No pun intended.)
The situation is actually worse, as far as the condition of our banks is concerned. . . . .
. . . . If you examine the latest measures initiated by the Geithner Treasury, there is indeed reason for alarm. Treasury Secretary Timothy Geithner openly invites private investors to speculate, risk free, in buying the toxic assets of the banking system. The risks, should they materialize, are covered by pledging, most improperly, the assets of the FDIC. If the gamble succeeds, private investors may keep the assets they have bought on the cheap. Otherwise the FDIC will pick up the tab and will reimburse investors for their losses.
The Effects of Inflation The effects of monetary inflation are three-fold. First, it brings about an unwarranted transfer of purchasing power (resources) to the creator of the new money and/or the first user of the new money. Another name for this unwarranted transfer is theft. Second, it has a NON-UNIFORM effect on prices, leading to mal-investment and the wastage of resources. The huge amount of savings and resources squandered in real-estate investments over the past several years exemplifies the havoc that can result from monetary inflation and why its effects cannot simply be counteracted at some later time by "withdrawing liquidity". Third, it EVENTUALLY results in a broad-based increase in the prices of everyday goods and services.
A Run On Gold Eagles?! Most people have never held a gold coin in their hands. Historically, an ounce of gold was worth a year's wages. Today, you can get one for about a thousand bucks. Seems like they must be rather common then. Not really. Still, most people have never held one or seen one. It's the lack of demand, and lack of knowledge out there. But demand is soaring from about 0% to maybe about one person in 23,000 of the population actually wanting one. Actually it's less people, since most people who have one, actually have more than one. ($14,000,000 million cash in the banks / $600 million market = 23,000).
4 more banks fail, lifting this year's tally to 29 Regulators shut banks in Georgia, Michigan, Idaho, California; 29 so far tops 2008 total Regulators on Friday shut down four more banks, boosting the number of failures this year to 29 -- more bank closures than in all of last year. The latest banks seized were American Southern Bank in Georgia, Michigan Heritage Bank, First Bank of Idaho, and First Bank of Beverly Hills in California. The Federal Deposit Insurance Corp. will continue to insure deposits at American Southern Bank, Michigan Heritage Bank, and First Bank of Idaho. The FDIC will payout the insured deposits of First Bank of Beverly Hills. Regular deposit accounts are insured up to $250,000.
At Fed meeting, central bank will weigh options New programs to jump-start economy unlikely, as are interest rate changes As the recession grinds on, Federal Reserve policymakers will open a two-day meeting Tuesday to make a fresh assessment of U.S. economic conditions, review the effectiveness of programs in place and weigh whether they need to expand or change them. Any policy decisions would come Wednesday.
TARP’s Price Tag Could Reach $2.9 Trillion, Inspector General Says For many Americans, the $700-billion financial bailout was a tough pill to swallow, but the cost to taxpayers could reach $2.9 trillion – nearly on par with the entire federal budget – according to the watchdog agency charged with oversight of the Troubled Assets Relief Program (TARP). Although the Treasury Department is only authorized to spend the $700 billion approved last year by Congress and signed by the president, the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) will invest up to $1 trillion each in partnering with the Treasury Department’s TARP.
G7 & G20: "Gee, Things Are Bad!" Finance ministers from around the world, including U.S. Treasury Secretary Timothy Geithner, have held a sort of economic summit this weekend in Washington D.C. While there appears to be signs that the global economy is in the process of stabilizing, financial ministers remain cautious that the world may not emerge from what is being categorized as the worst recession in decades until the middle of next year.
Marc Faber The FED will continue Printing Money
China gold stocks hit $US31bn after extensive buying CHINA has revealed it bought 454 tonnes of gold in the past six years as its foreign-exchange reserves surged, bringing its total holding of the precious metal to $US31 billion. In China's first update of gold stocks since 2003, Hu Xiaolian, head of the state administration of foreign exchange, said the country's bullion stockpiles had grown from 600 tonnes to 1054 tonnes, giving it the world's sixth-biggest holdings. The news is a positive sign for the prospects of gold, which is forecast to be Australia's third-biggest export earner next year, and confirms expectations China was boosting its stockpiles.
G-7 Says Strength of Rebound Depends on Bad Assets The Group of Seven finance chiefs' ability to handle banks' toxic assets will determine the strength of the economic recovery they now say will begin this year. In warning that the world economy could still take another turn for the worse, the finance ministers and central bankers who met over the weekend in Washington singled out the banks' impaired balance sheets as the biggest threat to a sustainable recovery.
Roubini Says U.S. Stress Tests Not 'Serious,' Banks Insolvent A persistent recession and mounting unemployment will leave the U.S. financial system "insolvent," implying the stress tests performed by regulators weren't rigorous enough, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis. Losses at U.S. banks and broker dealers will swell to $1.8 trillion, almost 100 percent more than the current amount, as the economic slump lasts at least through this year and the jobless rate climbs to 12 percent by 2010, Roubini said today at the CFA Institute's annual conference in Orlando, Florida.
Recession, Far From Over, Already Setting Records THE current recession has become the second-worst in the last half-century and is close to surpassing the severe 1973-75 downturn, according to the Index of Coincident Indicators, based on government data and compiled each month by the Conference Board, a private organization. Unlike the more widely followed Index of Leading Indicators, which is supposed to help forecast changes in the economy, the coincident index is aimed at simply recording how the economy is doing now.
Obama's legacy will turn on economic results Economic crisis is Obama's greatest challenge, principal focus The economy will determine whether Barack Obama achieves what few presidents have: a far-reaching change in American politics that might even earn its own title and legacy. Will there be an Obama version of the New Deal, the Great Society or the Reagan Revolution? Afghanistan, North Korea and other foreign hot spots certainly will test Obama. But the deeply troubled economy is his signature challenge and the focus of his greatest efforts, attention and gambles in his first 100 days in office.
White House miscalculations linger For those who were hoping that the Barack Obama administration had genuinely intended to resolve issues between Washington and Tehran, recent news has been disappointing. Hillary Clinton, in her first congressional testimony since becoming secretary of state, commented, "We actually believe that by following the diplomatic path we are on, we gain credibility and influence with a number of nations who would have to participate in order to make the sanctions regime as tight and as crippling as we would want it to be."
Stress Tests Put Obama Administration in “No-Win” Situation The Obama administration may have backed itself into a corner when it released the details of the "stress test" methodology being used to evaluate the health of the nation’s big banks. With final results not expected to be released until May 4, releasing the testing methods for Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp., and 16 other banks is only likely to increase market speculation - the exact result Obama’s economic team is trying to avoid.
Reflation watch The Morgan Stanley Cyclical index surged 7.0% last week and has now rallied 85% off of March 6 lows. Over this period, the S&P Homebuilding index is up 85%. The banks have risen 95% off lows, while the Morgan Stanley Retail index has rallied 64%. I thought it made sense to take a closer look at global reflation dynamics. Various risk markets have traditionally provided early indicators of reflationary dynamics. The "emerging" economies are clearly responding to the loosened global monetary backdrop.
Wall Street Shuts Off Money Supply To Capitol Hill In a move that may surprise a lot of folks, Wall Street reduced its political giving to just a few tiny drips in the first quarter of 2008. The total donations from employees at the top five banks receiving TARP capital was down 97% from the first quarter of 2007, according to an investigation by the Washington Independent. The reason for the decline isn't clear. As Washington and Wall Street move into an ever tighter relationship, with many banks dependent on taxpayer funds for their survival, you might expect political giving to increase. The Independent raises three plausible explanations for the drop in donations.
Tim Geithner Was Offered The Citi CEO Job Tim Geithner formed all his views of the financial crisis during his time as President of the New York Fed, where he worked side-by-side with many of the top banking CEOs. Because of this, and his conclusion that we're still just in a liquidity crisis, he's been an advocate of generous bailing out in order to get the credit flowing again. But the NYT has done some excellent digging to shed more light on just how close to Wall Street and Wall Street-friendly Geithner has been.
Are the Knives are Coming Out for Geithner? The clout of the press has decayed enormously over the last 40 years. The fourth estate was feared, resented, and begrudgingly respected in the corridors of power. But rule by beancounters, savvy media spin, and access journalism (journalists who write pointed stories get frozen out) have largely leashed and collared the press. Indeed, a friend who grew up in Eastern Europe when it was Communist said as of roughly 2000 that the news felt controlled.
Geithner, as Member and Overseer, Forged Ties to Finance Club Last June, with a financial hurricane gathering force, Treasury Secretary Henry M. Paulson Jr. convened the nation’s economic stewards for a brainstorming session. What emergency powers might the government want at its disposal to confront the crisis? he asked. Timothy F. Geithner, who as president of the New York Federal Reserve Bank oversaw many of the nation’s most powerful financial institutions, stunned the group with the audacity of his answer. He proposed asking Congress to give the president broad power to guarantee all the debt in the banking system, according to two participants, including Michele Davis, then an assistant Treasury secretary.
Who Else Did Hank Paulson Push Around? .... Ken Lewis is no innocent, but Hank Paulson comes off like a fracking psycho in Andrew Cuomo's letter to the SEC and TARP oversight committee. Cuomo basically gets Lewis to admit that he was taking one for the team (America) at the expense of his own shareholders, but would only admit that the negative impact of buying loss-laden Merrill would affect shareholders with a short-term time horizon. That's like a deli owner knowingly poisoning customers with day-old egg salad only between noon and two pm, followed by a fresh batch being put out for the dinner rush. There are also several insinuations uncovered by Cuomo's investigation that Paulson threatened the board of Bank of America with losing their jobs if they publicly discussed Merrill's imploding financial condition or sought to terminate the merger agreement.
Nouriel Roubini "I'm a realist" on Canadian Business Network 1/2
One Nation, Under Banks With Justice for No One The spectacle of Ben Bernanke and Henry Paulson running roughshod over Kenneth Lewis and his minions at Bank of America Corp. raises a pivotal question for all Americans: Is the U.S. a nation of laws, or a nation of banks? Let's start by examining the facts disclosed last week in a letter by New York Attorney General Andrew Cuomo, while taking pains to present the actions of each player in this drama in the fairest possible light.
Obama Overthrows Reagan's Government-Bad Dogma to Rescue Market Ronald Reagan used to joke that the nine most terrifying words in the English language were "I'm from the government and I'm here to help." Barack Obama is making those words welcome. As he approaches his 100th day in office, Obama is rolling back the Reagan Revolution and restoring government to a central role in the economy. He has passed the biggest budget stimulus ever, prepared the way for an overhaul of the U.S. automobile and banking industries and proposed a $634 billion government- funded expansion of health-care benefits.
Obama's Plans May Be Doomed by Unchecked Spending "A hundred million there, a hundred million here, pretty soon, even in Washington, it adds up to real money," President Barack Obama declared last week, paraphrasing a line attributed to the late Republican Senate leader, Everett Dirksen. The context is a looming policy and fiscal clash: Obama's economic, energy, health-care and education initiatives are expensive, and the U.S. faces trillion-dollar deficits as far as the eye can see. The president can make a compelling case that these priorities are urgent and can help revive the economy. Still, those initiatives, and a strong economy, may be unattainable without fiscal discipline elsewhere.
Schmidt's Gold Thoughts . . . . Just as mankind can not repeal the laws of physics, it can not repeal the "Laws of Money." The Federal Reserve is aggressively attempting to defy the "Laws of Money," believing that it can stuff the money genie back in the bottle anytime it desires to do so. . . . . . . . . Ultimately, this massive debt monetization will have an impact on the value of the U.S. dollar. To argue otherwise is to repudiate all of monetary history. The inevitability of the depreciation of the U.S. dollar that will follow is not in dispute by any reasonable or objective observers. Ideologues now in power in the Obama Regime may argue otherwise. However, ideology does not trump reality.
Stress Tests May Force Banks to Convert TARP Stock U.S. banks that received results of their federal stress tests last week were given three options if they need additional capital to withstand the recession. The reality is they may only have one. Getting federal aid or selling shares -- two of the choices offered to the 19 lenders being tested -- aren't practical politically or financially, according to analysts, including Jeff Davis, the research director at Howe Barnes Hoefer & Arnett Inc. in Chicago. Lawmakers have opposed adding more to the $700 billion that the government already committed and investors have balked at buying shares of financial firms after a two-year drop.
Fed study puts ideal US interest rate at -5% The ideal interest rate for the US economy in current conditions would be minus 5 per cent, according to internal analysis prepared for the Federal Reserve's last policy meeting. The analysis was based on a so-called Taylor-rule approach that estimates an appropriate interest rate based on unemployment and inflation.
IMF Says G-20 Fiscal Stimulus Will Reach 2% Target The International Monetary Fund raised its estimate for how much fiscal stimulus governments are injecting in an effort to fight the worst global recession since World War II. The Washington-based lender said yesterday that the Group of 20 industrial and developing countries had committed to spending increases and tax cuts totaling 2 percent of their gross domestic product this year and 1.5 percent next year. That marks an increase from last month's estimates of 1.8 percent for 2009 and 1.3 percent for 2010.
Paulson's 'Gift' to Lewis Delivered at Gunpoint Oil and water don't mix. Neither do business and politics, a truism becoming increasingly obvious with each new government initiative, or the exposure of fissures in the old ones, to save the financial system. The latest example of what happens when the business of government is business was last week's release of testimony from Bank of America Chief Executive Officer Kenneth Lewis to New York Attorney General Andrew Cuomo. In it, Lewis says he was strong-armed by former Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke to seal the deal to buy Merrill Lynch without telling his shareholders about the brokerage's mounting fourth-quarter losses, which came to $15.4 billion.
Cycle Revisited by Howard Ruff John Williams publishes the Shadow Government Statistics newsletter (www.shadowstats.com). He is an amazing professional economist with a great grasp of the real economy. He and I have arrived at the same conclusions about almost everything in the economy, despite the fact that we approach it from totally different directions: me from the fundamentals, and he from a real technical and numbers point of view. I am now in John's home in Oakland, California, looking past the government numbers to get his views on the world as it really is. Shadow Government Statistics reconstructs published government statistics the accurate way we used to do it that reflects reality, rather than the way these numbers are now manipulated, and comes up with different conclusions about the economy, such as the Consumer Price Index (CPI), and other revealing areas published by government.
Nouriel Roubini "I'm a realist" on Canadian Business Network 2/2
GM Debt-Exchange Plan Faces Hurdle - $$ A Counteroffer or Court Challenge From Bondholders' Group Is Possible General Motors Corp.'s bonds rose slightly and the cost of debt insurance fell after the auto maker announced its widely anticipated tender offer to eliminate $27 billion of bonds outstanding. But bondholders late Monday indicated they were far from happy with the offer. People close to an ad hoc committee representing bondholders said the group is preparing to make a counterproposal within the next 10 days. These people also said the offer may be challenged in court.
US to take majority GM stake US taxpayers would take a majority shareholding in General Motors under a sweeping debt-for-equity restructuring proposal that the carmaker revealed on Monday in a bid to avoid bankruptcy. Under the plan, GM said it would shut 13 of 47 plants by the end of next year, resulting in an additional 7,000 job losses. The latest job cuts would reduce GM's US workforce from 61,000 last year to about 40,000 by the end of 2010.
GM to cut 21,000 US factory jobs, shed Pontiac General Motors to cut 21,000 US factory jobs, shed Pontiac as it speeds restructuring effort General Motors Corp. said it will cut 21,000 U.S. factory jobs by next year, phase out its storied Pontiac brand and ask the government to take more than half its stock in exchange for half of GM's government debt as part of a major restructuring that would leave current shareholders holding just 1 percent of the company.
Faster Cuts and More Loans Are Key to G.M. Survival Plan General Motors said on Monday that it needed $11.6 billion more in government loans and that it planned to file for bankruptcy protection if a debt exchange with its bondholders was unsuccessful. G.M. also said that, by 2010, it would phase out its Pontiac brand, eliminate 42 percent of its dealers, close 13 plants and cut 21,000 hourly jobs as part of its revised restructuring plan.
UAW to Get 55% Stake in Chrysler for Concessions - $$ The United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker, according to a summary of the agreement that was reviewed by the Wall Street Journal. Fiat SpA "eventually" will own 35%, and the U.S. government and Chrysler's secured lenders together will end up owning 10% of the company once it is reorganized, that summary said. The summary was distributed Monday evening at a gathering of union leaders in Sterling Heights, Mich. The deal was first disclosed Sunday night. The UAW aims for Chrysler workers to vote Wednesday on the proposed agreement, which requires changes to the union's current Chrysler contract.
Increasingly, not just the poor are uninsured Officials say economic downturn is leaving those in the middle class without insurance The free-falling economy is sending many more people to the state's clinics that treat the uninsured. Last month, 2,498 patients without health insurance went to the clinics of Nevada Health Centers, a federally funded program that charges on a sliding scale. That's 52 percent more than in March 2008, when the clinics saw 1,642. If you look at the past six months compared with the previous six months, the increase is less, but still striking: 21.5 percent. Patricia Durbin, executive director of the Great Basin Primary Care Association, a nonprofit organization that promotes health care for people in need, said she didn't find those numbers surprising, given double-digit and growing unemployment rates.
WHO raises global alert level on swine flu WHO raises global alert level, signaling swine flu is spreading, but stops short of pandemic The swine flu epidemic entered a dangerous new phase Monday as the death toll climbed in Mexico and the number of suspected cases there and in the United States nearly doubled. The World Health Organization raised its alert level but stopped short of declaring a global emergency. The United States advised Americans against most travel to Mexico and ordered stepped up border checks in neighboring states. The European Union health commissioner advised Europeans to avoid nonessential travel both to Mexico and parts of the United States. The virus poses a potentially grave new threat to the U.S. economy, which was showing tentative early signs of a recovery. A widespread outbreak could batter tourism, food and transportation industries, deepening the recession in the U.S. and possibly worldwide.
Peso Tumble, Swine Flu May Prompt Mexico to Tap IMF Credit Line Mexico is more likely to draw on a $47 billion credit line from the International Monetary Fund after the deadly swine flu outbreak sparked the peso's biggest tumble in six months, according to Barclays Capital Inc. The spreading disease "raises the odds of tapping the facility," Eduardo Levy-Yeyati, head of emerging-market strategy at Barclays in New York and a former economist at the IMF, said in an interview. "The flu increases growth risks and currency pressures."
March 24, 1976: President Ford Orders Swine-Flu Shots for All Ford was acting on the advice of medical experts, who believed they were dealing with a virus potentially as deadly as the one that caused the 1918 Spanish influenza pandemic. . . . . It recalled 1918, when infected soldiers returning from the trenches of World War I triggered a contagion that spread quickly around the world, killing at least 20 million people. Fearing another plague, the nation’s health officials urged Ford to authorize a mass inoculation program aimed at reaching every man, woman and child. He did, to the tune of $135 million ($500 million in today’s money).
Congressman Paul on the Recent Swine Flu Scare
Monday - Apr 27, 2009 Government's Terror Plane Forces Evacuations All Over Financial District, Jersey City The plane that circled the Hudson River near lower Manhattan was an Air Force One on a "photo op" for the government. The FAA says that officials in New York were notified. But apparently the notification did not extend to Manhattan and Jersey City office buildings, many of which were evacuated this morning. Panicked office workers in the financial district and Jersey City were forced down stairs in a scene that recalled that terrible day in September 2001. One office worker reported having to rush down 40 flights on stairs in lower Manhattan.
'Panic Can Spread More Quickly Than Swine Flu' With the first case of swine flu confirmed in Europe, the world is gripped by fear of a global pandemic. German newspapers on Monday examine the measures taken to contain the disease and some warn against the spread of panic. With more than 100 people dead in Mexico and almost 30 infected in the US and Canada, the threat of a flu pandemic is gripping the world. Although there had been hopes that the emergency could be contained to the North American continent, Europe saw its first confirmed case on Monday.
US Declares Public Health Emergency for Swine Flu The U.S. declared a public health emergency Sunday to deal with the emerging new swine flu, much like the government does to prepare for approaching hurricanes. Officials reported 20 U.S. cases of swine flu in five states so far, with the latest in Ohio and New York. Unlike in Mexico where the same strain appears to be killing dozens of people, cases in the United State have been mild -- and U.S. health authorities can't yet explain why.
Is Swine Flu A Biological Weapon? Or are relatively limited number of deaths an indication that the panic is worse than the actual threat? There are some factors that suggest the swine flu killing people in Mexico may be a biological weapon, but obviously no such conclusion can be drawn at this time. The World Health Organization and the U.S. government have been quick to deny such claims. The swine flu virus is described as a completely new strain, an intercontinental mixture of human, avian and swine viruses. Tellingly, there have been no reported A-H1N1 infections of pigs. According to a source known to former NSA official Wayne Madsen, “A top scientist for the United Nations, who has examined the outbreak of the deadly Ebola virus in Africa, as well as HIV/AIDS victims, concluded that H1N1 possesses certain transmission “vectors” that suggest that the new flu strain has been genetically-manufactured as a military biological warfare weapon.
Swine Flu Pandemic Would Cost Trillions This afternoon, the WHO declared that the swine flu outbreak in Mexico and the U.S. is a health emergency of international concern. Reuters has put together a list of estimates of the economics costs that may be incurred if swine flu becomes a full out pandemic. The World Bank estimated in 2008 that a flu pandemic could cost $3 trillion and result in a nearly 5 percent drop in world gross domestic product. The World Bank has estimated that more than 70 million people could die worldwide in a severe pandemic.
Baxter To Develop Swine Flu Vaccine Despite Bird Flu Scandal The fox has been given the duty of guarding the henhouse A U.S. based pharmaceutical company that just weeks ago was involved in a scandal involving vaccines tainted with deadly avian flu virus has been chosen to head up efforts to produce a vaccine for the Mexican swine flu that has seemingly migrated into the U.S. and Europe. Baxter confirmed over the weekend that it is working with the World Health Organization on a potential vaccine to curb the deadly swine flu virus that is blamed for scores of deaths in Mexico and has emerged as a threat in the U.S., reports the Chicago Tribune.
CDC: US begins border monitoring for swine flu CDC: US has begun monitoring borders for evidence of swine flu spread, urges calm among public Amid surging worries about a global pandemic, the United States launched border screening for swine flu exposure Monday and a top federal health official said people should brace for more severe cases, "and possibly deaths." Meanwhile, President Barack Obama says the spread of swine flu is a cause for concern but "not a cause of alarm" and he's staying on top of the problem. Obama told a gathering of scientists Monday that the administration is "closely monitoring" cases of swine flu, how many people have it and what the threat is. Obama also said the American people can expect to get regular and frequent updates about what Washington is doing.
Secession: the Ultimate States' Right by Ron Paul Last week the governor of Texas ignited a media firestorm for his remarks involving the idea of secession. He did not call for Texas to secede from the United States. He merely pointed out that the federal government was treading heavily on the sovereignty of the states and that this can not continue indefinitely without a breaking point. The reaction to Governor Perry's statements has been nothing short of hysterical. He has been called treasonous for making this obvious point and opening up a discussion. I am not calling for secession either, however there is nothing wrong with a healthy and open discussion of this issue.
More Atheists Shout It From the Rooftops CHARLESTON, S.C. — Two months after the local atheist organization here put up a billboard saying “Don’t Believe in God? You Are Not Alone,” the group’s 13 board members met in Laura and Alex Kasman’s living room to grapple with the fallout. The problem was not that the group, the Secular Humanists of the Lowcountry, had attracted an outpouring of hostility. It was the opposite. An overflow audience of more than 100 had showed up for their most recent public symposium, and the board members discussed whether it was time to find a larger place.
Falungong silent in China, thriving abroad HONG KONG - Over the past decade, China's leadership has stood up to a daunting array of challenges as the nation continued its rise as a world power. Remarkably, one of the largest has been an army of meditation and exercise addicts whose leader claims to have supernatural powers. Ten years ago this week the Falungong, an organization devoted to a variety of the ancient practice of qigong or deep-breathing exercises, shook the Chinese government to its core. In the largest demonstration since the occupation of Tiananmen Square by student-led pro-democracy demonstrators in 1989, more than 10,000 Falungong practitioners gathered outside Zhongnanhai, the red-walled Communist Party headquarters in Beijing. There they demanded the release of 50 sect members who had been detained in the northern city of Tianjin and government recognition of the group as a legal entity.
Ron Paul gets some love from Hillary Clinton 04/22/2009 CSPAN
How Does $9000 Gold Sound? In recent days the Canadian and Swedish central banks have joined the majority of other G10 central banks by indicating that they too may engage in quantitative easing now that the interest rates have been reduced to 25 and 50 basis points respectively. The ECB is wrestling with ways to extend its own form of quantitative easing and an announcement is likely at its next meeting on May 7th.
Gold Up Sharply as the Bear Market Rally Falters Gold finished the week up 5.1 per cent at $913 while silver jumped 8.4 per cent to $12.90 as precious metals became a safe haven from the faltering six-week old bear market rally. This left gold prices at their highest levels in three weeks but fell short of a third break of the $1,000 barrier. However, the precious metals clearly established their position as the place to be as the bear market rally breaks down.
The capital well is running dry and some economies will wither The world is running out of capital. We cannot take it for granted that the global bond markets will prove deep enough to fund the $6 trillion or so needed for the Obama fiscal package, US-European bank bail-outs, and ballooning deficits almost everywhere. Unless this capital is forthcoming, a clutch of countries will prove unable to roll over their debts at a bearable cost. Those that cannot print money to tide them through, either because they no longer have a national currency (Ireland, Club Med), or because they borrowed abroad (East Europe), run the biggest risk of default.
Americans Rally Nationwide to End the Fed “End the Fed” rallies were staged across the nation in more than two dozen cities April 25. Attendees protested in front of every one of the dozen Federal Reserve Bank branches and expressed support of Ron Paul’s H.R. 833, which would abolish the Fed, and H.R. 1207, which would provide an independent audit of the quasi-private central bank. Peter Schiff keynoted the rally in New York City, noting of the current economic bust: “The Federal Reserve was behind all of it and we’re not going to get to the root of our economic problems unless we get to the root cause, which is the Federal Reserve and the phony monetary system we now have.”
End The Fed Rally NYC 1/2 - Who is the CRAZY Guy?!!!
China turns IMF gold sales into a wet noodle There may be some misunderstanding about the increase in Chinese gold reserves. The bulk of that gold has come from purchases of their own domestic production, not open-market purchases, so the impact on the price is indirect. But because China is the largest gold producer in the world and it is retaining the bulk of its production for reserve diversification, the impact is significant.
Gold, Silver - Important Alert! The Gold Direction Indicator is flashing another buy signal. This indicates that the pull-back that started late February is probably finished. A new rally is about to start. Some of the monetary inflation that the Obama team is injecting into the system is starting to turn into price inflation. The stock market rally which had drawn attention and money away from the gold market is running out of steam.
Buy Silver.... Now “by 2010 … banks will have enormous raw materials for … inflation.” Dr. Feldstein is one of the economists (there are many) 1 concerned that the Fed will follow form and not be able to handle the expanded money supply once money multiplier (velocity) turns up. As I pointed out on Monday’s Morning Note, the St Louis fed multiplier has fallen 40%, the same decline as during the Depression. Now most believe, including Dr. Feldstein, that the global economic recession will run “somewhere into 2010.” In the meantime there is more than a hint of disinflation in the global “air.” In Spain it is outright deflation with 35% unemployment in the under 25 age group.
Unintended Consequences by Peter Schiff With much fanfare this week, Congress and the Administration began a series of actions designed to protect over-leveraged consumers from the high fees imposed by credit card lenders. As with most other initiatives devised by government, this policy will create a host of unintended consequences that will undermine the benefit the program hopes to create. Anyone who carries a credit card knows that billing practices have become much more aggressive, punitive, and seemingly arbitrary over recent years. Sadly, these fees have become one of the only means the companies can use to compensate for the increasing defaults on their unsecured loans.
Fed Scandal Puts The Us Dollar Under Virtual Attack.... ...on the forex market, and if the front page article in yesterday’s Wall Street Journal regarding the Bank of America’s President, Mr. Lewis, the former Treasury Sec’y, Mr. Paulson, and Dr. Bernanke is even half way toward the truth the dollarwill be under even further material selling. If what Mr. Lewis has accused Dr. Bernanke of…. being directly complicit in withholding information from the BofA’s shareholders and from the American taxpayers regarding the Bank’s problems with assimilating Merrill Lynch… is even tangentially correct, Dr. Bernanke is economic and political “toast.”
Dollar Wins Heads-or-Tails Toss on Growth or Weakening Economy Former Federal Reserve Chairman Alan Greenspan said five years ago that predicting currencies is no better than tossing a coin. A growing number of traders are betting that heads or tails, the dollar wins. Investors bullish on the U.S. economy say the dollar will strengthen as America recovers first from the global economic recession. Those who expect the longest contraction since the early 1980s to continue say the currency should appreciate as the haven from turmoil in world markets. Foreign investors bought a net $22 billion of U.S. financial assets in February, the Treasury Department said April 15.
The Fed Needs A TARP Bailout The Federal Reserve has released fresh information on what assets it took on via the bailout of Bear Stearns and AIG. Not surprisingly, it's a bunch of toxic sludge -- $74 billion worth -- and it's already taken about $9.6 billion worth of losses. The upshot. The Fed may need a bailout:
Summers Says U.S. Economy to Decline ‘For Some Time’ The U.S. economy will continue to contract “for some time to come,” said Lawrence Summers, director of the White House National Economic Council. “I expect the economy will continue to decline,” with “sharp declines in employment for quite some time this year,” Summers said today on “Fox News Sunday.”
End The Fed Rally NYC 2/2 Peter Schiff Speaks to Angry Crowd!
Bear, AIG Dumped $74 Billion in Subprime, CDOs on Fed The Federal Reserve took on more than $74 billion in subprime mortgages, depreciating commercial leases and other assets after Bear Stearns Cos. and American International Group Inc. collapsed. In its biggest disclosure of the securities accepted to stabilize capital markets, the Fed said yesterday it had unrealized losses of $9.6 billion on the assets as of Dec. 31. The bonds, swaps and notes were taken in from Bear Stearns, once the fifth-biggest Wall Street firm by capitalization, and AIG, which had been the world’s largest insurer.
Gold and China's Global Currency Threat to the U.S. Dollar . . . . The bulk of international trade transactions have nothing to do with the U.S. except through the use of the $ to denominate their trade. Approximately 75% of global trade is denominated in the U.S. $ in this way. But the volatility of the U.S. $ has distorted and damaged, this aspect of global trade. Thus has been created an ideal environment for gold to rise as its importance in the changing global monetary system grows again.
China's Bubble Will Burst. And Painfully One more bubble, please. After the bubbles in technology, housing, and commodities, we saw the mother of all bubbles: the one in global liquidity. The world economy seemed to require bubbles for its continued functioning. I get the distinct feeling that investors’ prayers are now being answered: There's a new bubble now - or an old one is being re-inflated, depending on your perspective even as I type this. I’d like to call it the Troubled China Revival Program (TCRP).
China Is Not Another Ascendant Superpower, It's Just Another Nation with Structural Problems Correspondent Cheryl A. recently sent in two articles on China's ascendency with stake out the extremes in the thesis. The first is The great shift in global power just hit high gear, sparked by a financial crash: As an emboldened China sees, the American dollar is gravely wounded. And the days of US political supremacy are numbered.
China Won't Be Saving Grace for Commodities . . . . I think Wall Street's thinking that China is going to be the saving grace for commodities is inaccurate. I also think Freeport-McMoRan’s management has blatantly said that they don’t think that copper prices have bottomed out, but they still think that North America has more downward pressure, and they said they don’t think that China is going to be the saving grace.
Chinese Diversification Strategy In a series of maneuvers, Chinese officials have revealed their strategy implementation in a very broad set of steps. Beijing leaders plan to establish the yuan currency as a global reserve currency. The process will be made more complete after issuance of a large volume of Chinese Govt debt securities, soon in coming. The number of policy actions is impressive. While the USGovt is busy stepping backwards with FASB rules enabling false bank accounting, gearing up Treasury programs to direct colossal elite welfare / confiscation to failed banks responsible for the crisis, covering up Wall Street fraud and regulatory lapses and debt rating agency collusion, and ordering pork like the $9 billion high speed train from Disneyland to Las Vegas, the Chinese are making important meaningful critical strides. Within a year, the Chinese will have established the yuan currency as a legitimate alternative to the USDollar for global trade, and later to some extent for global banking. The Chinese Govt has ordered monetary policy changes that have boosted their money supply by 25.5% over the last twelve months, with a giant stimulus program and relaxed bank credit rules.
World looks to U.S. to spark recovery Leaders cite tentative signs of stabilization in American economy While much of the world blames the United States for triggering the global financial crisis and recession, most nations also are looking to America to start pulling the rest of the world out of the slump. A parade of foreign financial leaders in town for this weekend's spring meetings of the International Monetary Fund and World Bank denounced the financial excesses on Wall Street that have cost millions of jobs and caused trillions of dollars in lost output from Detroit to New Delhi. Yet they also hailed some tentative signs of stabilization in the U.S. economy after a winter of free fall that led the world economy into its worst downturn in modern times.
Barack Obama’s financial disaster will be much worse than you probably think. That’s because there is another even bigger financial disaster lurking ahead and that will start to come into play in a few short years.
There are alternatives to the Obama-style socialist health-care reforms. The Obama reform that will compound our financial crisis and create a health-care crisis
You can find better thinking and analysis on our major public policy questions in a free publication than you can in many of the expensive periodicals and newspapers you may be subscribing to.
I.M.F. Planning to Sell Bonds to Finance New Loans Hoping to raise money quickly for a new $500 billion emergency loan program, the International Monetary Fund is in the advanced stages of a plan to sell bonds for the first time in its history, officials for the group said Saturday. The bonds’ buyers are expected to be the governments of fast-growing emerging economic powers like China, Russia, Brazil and India. Though the fund has been authorized for decades to raise cash by selling bonds, officials have never done so because they wanted to avoid what amounts to short-term borrowing.
Warning over UK derivatives backlash London’s status as a leading financial centre risks being damaged if policymakers regulate over-the-counter derivatives without distinguishing between products that contributed to the financial crisis and those that did not, a report commissioned by the City of London Corporation says Monday. The report, prepared by consultancy Bourse Consult, will urge regulators not to “throw the baby out with the bathwater” amid recent calls for OTC – or privately negotiated – derivatives markets to be subjected to greater clearing and regulatory scrutiny.
Finance Chiefs Back a Bolder IMF, Bigger Role for Emerging Nations Global financial chiefs agreed yesterday to reshape the International Monetary Fund, moving to broaden its mission and accelerate plans to give developing giants including China, Brazil and India more say within the institution. The IMF, which in recent years had become largely an advisory body to nations in crisis, will now be charged with aggressive monitoring of the global economy. Underscoring that role, Treasury Secretary Timothy F. Geithner said yesterday that Washington had consented to a rigorous IMF review of the U.S. financial system for the first time since the fund was created at the end of World War II.
Bank CEO Blackmailed By The Federal Reserve And Treasury Department?
Back To The Future Recession - Or The Fed At A Crossroads... . . . .So what happens is, if we increase the supply of money and velocity stays the same, and if GDP does not grow, that means we'll have inflation, because this equation always balances. But if you reduce velocity (which is happening today) and if you don't increase the supply of money, you are going to see deflation. We are watching, for reasons we'll get into in a minute, the velocity of money slow. People are getting nervous, they are not borrowing as much, either because they can't or the animal spirits that Keynes talked about are not quite there.
There Goes More Taxpayer Money Into Wall Street Pockets (GS, JPM, MS) You can stop feeling bad for Wall Street now. Despite, Andrew Cuomo, Glenn Beck, Maxine Waters and the many other vessels of populist outrage, salaries for brokers, bankers and traders are climbing again. In fact, the New York Times points out, Goldman Sachs’ recent earnings report showed the financial giant set aside $4.7 billion for compensation in the first quarter.
Profits mask coming storm Contrary to surface appearances such as the recent stock market rally and "glowing" first quarter profitability statements from certain Wall Street banks, multipronged risks for renewed, considerable turmoil in the US financial sector are mounting. The recent six-week rally on Wall Street, led mostly by banking and other financial shares, isn't based on any concrete turnaround in the deeply worrying fundamentals of the financial sector.
FORECLOSURE ACTIVITY INCREASES 9 PERCENT IN FIRST QUARTER RealtyTrac®, the leading online marketplace for foreclosure properties, today released its U.S. Foreclosure Market Report™ for Q1 2009, which shows that foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 803,489 properties in the first quarter, a 9 percent increase from the previous quarter and an increase of nearly 24 percent from Q1 2008. One in every 159 U.S. housing units received a foreclosure filing during the quarter.
U.S. Housing Market Heading for a Bigger Crash, Another $4 Trillion of Asset Price Deflation Due to the lifting of the foreclosure moratorium at the end of March, the downward slide in housing is gaining speed. The moratorium was initiated in January to give Obama's anti-foreclosure program---which is a combination of mortgage modifications and refinancing---a chance to succeed. The goal of the plan was to keep up to 9 million struggling homeowners in their homes, but it's clear now that the program will fall well-short of its objective.
Chrysler Reaches Labor Accord With UAW, Ratification With CAW Chrysler LLC, racing against an April 30 deadline to cut labor costs or face bankruptcy, reached a tentative contract agreement with its biggest U.S. union and won ratification of a new accord with Canadian workers. Members of the United Auto Workers must still vote on their proposed money-saving contract, according to a statement today from the Detroit-based union.
GM to announce brand changes, restructuring moves GM to hold news conference Monday to announce brand changes, restructuring moves General Motors Corp. will announce details of its massive restructuring plan on Monday, including the demise of its storied Pontiac brand, more factory closures and bigger job cuts as it fights to avoid bankruptcy protection. The struggling automaker must make the announcement in advance of a planned offer to its bondholders to swap debt for company stock. GM owes $28 billion to large and small bondholders, and under Securities and Exchange Commission rules, it must disclose its operational plans before making an exchange offer.
GM Pushes the Throttle in China - $$ Affiliate's Plan to Expand Into Cars Is Seen as a Key to Growth in Asia General Motors Corp. is intensifying its focus on China as it edges closer to a bankruptcy filing in the U.S. and other international units sputter. The auto maker, until recently the world's biggest by output, has remained a relative powerhouse in China thanks to a pair of partnerships: a joint venture with Shanghai Automotive Industry Corp. and a minority interest in microminivan maker Liuzhou Wuling Motors Co.
Time For A Gas Tax (Starting In 2012) We hold this truth to be self-evident: When the global economy recovers, fossil-fuel prices are going to skyrocket again. Why? Three billion new capitalists consuming the same, largely finite resource stream. If there's an intelligent argument why oil will stay at $40 into the hereafter when production is relatively steady and consumption is rising, we'll be happy to evaluate it. But we haven't heard it yet.
Hill battle on war spending looms Critics fault bill's priorities President Obama's $83.4 billion war-spending bill is headed for an unexpectedly tough time on Capitol Hill, where Republicans are scrutinizing the funding priorities and rank-and-file Democrats want to include performance benchmarks for the Afghanistan mission. Despite bipartisan support for Mr. Obama's war policy in Iraq and Afghanistan, Republicans are taking a stand against the more than $81 million requested to shut down the prison camp at U.S. Naval Base Guantanamo Bay, Cuba.
Nouriel Roubini Obama Plan Too Little Too Late
Iceland takes a Left turn Turning Page, Iceland Elects New Leaders - $$ A coalition of left-leaning parties won elections in Iceland on Saturday, decisively beating conservatives who have dominated the island's politics for two decades and are widely blamed for the meltdown in its banking system last fall. The Social Democratic Alliance will hold 20 seats in the 63-seat parliament, and its coalition partner the Left-Green Movement will hold 14, giving the two parties an outright majority, according to results as of Sunday afternoon from state broadcaster RUV.
Democrats Agree to Fast Track for Health Care Revamp Democrats reached a tentative agreement to use a parliamentary procedure that would prevent Senate Republicans from blocking President Barack Obama’s proposed overhaul of the nation’s health care system, congressional aides said. The agreement calls for the same procedure, known as reconciliation, to be used to try to pass Obama’s proposal to cut federal subsidies to private providers of student loans, the aides said today.
Swine flu triggers alerts worldwide Governments and health authorities worldwide went on the alert over the weekend for a possible influenza pandemic as the death toll from a new strain of swine flu in Mexico reached 81. Janet Napolitano, homeland security secretary, on Sunday declared a “public health emergency” in the US as about 20 people there were confirmed to have been infected, though none is seriously ill. The World Health Organisation in Geneva had earlier made a similar announcement.
U.S. Declares Public Health Emergency Over Swine Flu American health officials on Sunday declared a public health emergency over increasing cases of swine flu, saying that they had confirmed 20 cases of the disease in the United States and expected to see more as investigators track down the path of the outbreak. “We are seeing more cases of swine flu,” Dr. Richard Besser, acting director of the Centers for Disease Control, said in a news conference in Washington. “We expect to see more cases of swine flu. As we continue to look for cases, I expect we’re going to find them.”
Mexico Peso Falls on Concern Swine Flu to Deepen Economic Slump Mexico's peso sank to its lowest in almost three weeks on concern an outbreak of the deadly swine flu will deepen an economic slowdown. The peso fell 1.7 percent to 13.5718 per U.S. dollar at 8:10 a.m. in Tokyo, compared to 13.3405 on April 24. The decline was the biggest among the 16 most-traded currencies against the dollar. Trading volumes in the Mexican peso usually picks up at about 7 a.m. New York time.
Pork Industry Moves to Quell Flu Fears - $$ The U.S. pork industry shifted into rapid-response mode following the news of an outbreak of swine flu in humans, trying to quell disease fears and protect an already weak pork market. Although there appears to be no evidence yet tying the flu to human contact with pigs, Russia banned meat imports from Mexico, several U.S. states and nine Latin American nations. In a news release Sunday, the National Pork Producers Council said, "Pork is safe to eat." The producers council, citing the Centers for Disease Control, said "preliminary investigations have determined that none of the people infected with the hybrid flu had contact with hogs."
Swine Flu Could Become More Dangerous The swine flu virus that has killed more than 80 people in Mexico may mutate into a "more dangerous" strain, the World Health Organisation has warned. Skip related content "It's quite possible for this virus to evolve... when viruses evolve, clearly they can become more dangerous to people," said Keiji Fukuda, of the global health watchdog. Mr Fukuda also called for international vigilance as health experts wait to see whether the virus will turn into a worldwide pandemic.
Could Food Shortages Bring Down Civilization? One of the toughest things for people to do is to anticipate sudden change. Typically we project the future by extrapolating from trends in the past. Much of the time this approach works well. But sometimes it fails spectacularly, and people are simply blindsided by events such as today's economic crisis. For most of us, the idea that civilization itself could disintegrate probably seems preposterous. Who would not find it hard to think seriously about such a complete departure from what we expect of ordinary life? What evidence could make us heed a warning so dire - and how would we go about responding to it?
How Long Will Our World Last? (Yes, We Are Screwed) Most people get worried about how much energy reserves we have left, but as this graphic shows, that's the least of our problems. The real problem is the materials we use to make things. Energy could be harnessed from eternal sources, like the sun, the wind, or the seas. But there is only a limited amount of elements in planet Earth and - what's worst - bringing them from other planets will prove impractical with our current technology (and the technology that will be available in the next century).
Americans Who Reject Marxist Socialism Are Castigated as 'Right-wing Extremists' It could not be nearer to what you suspect. Under his new regime, President Barack Obama’s Department of Homeland Security sent an intimidating message to law enforcement agencies nationwide calculated to silence any American who does not agree with the president’s social notions and political agenda. It is obvious that Rev. Jeremiah Wright is the driving force behind Obama’s paranoia. What the future president took away from Rev. Wright’s sermons contributes to Obama’s outlook and resultant policies, both at home and abroad. We have become a weakened country. Our enemies see a president who is ready to cozy up to any unscrupulous dictator who wants to inflict harm against our country, while Obama calls it a meaningful dialogue.
Obama Positioning For Backdoor Gun Control By Chuck Baldwin On his recent trip to Central America, President Barack Obama did more than cozy up to Marxist dictators; he also signed onto an international treaty that could, in effect, be used as backdoor gun control. It appears that Obama wants to use international treaties to do what congressional legislation is not able to do: further restrict the right of the American people to keep and bear arms.
There's No Place Like (Someone Else's) Home - $$ To Help Sell Houses, Temps Are Moved In; Hanging Baby Photos OCEANSIDE, Calif. -- The fragrance of sage-scented candles and sounds of jazz fill the air of a 2,600-square-foot house a block from the beach. Tiger-striped chairs flank tables crafted from exotic woods. Photos of a chubby baby hang on the walls. Whoever occupies 211 Windward Way, they seem to live the good life. Too good to be true, in fact. The house is owned by a builder, who hasn't been able to sell it for more than a year. And while someone really does live here, it's as part of an elaborate bit of stagecraft aimed at moving Southern California's echoing inventory of luxury vacant homes.
Swiss Ask U.S. to Drop Demand for Names of UBS Customers A tax-evasion case involving the Swiss bank UBS and 52,000 of its wealthy American clients is turning into a diplomatic chess game. The president of Switzerland, Hans-Rudolf Merz, has asked Timothy F. Geithner, the Treasury secretary, to drop a lawsuit led by the Justice Department seeking to force UBS to turn over the clients’ names, Daniel Haener, a Swiss government official in New York, said on Sunday. Under Swiss bank secrecy laws, disclosing clients’ names is a criminal offense that can carry prison terms and large fines.
Economy in intensive care while G7 squabbles Global economic recovery will take coordinated action among all the big economies, the International Monetary Fund warned this week, but as the IMF's spring meeting opens in Washington this weekend, the big economies are still squabbling over who's to blame for the crisis, and who should bear the cost of fixing it. More money for the IMF is nice, but it is "hardy going to solve the world's crisis," said Desmond Lachman, a former IMF official and now an analyst at the American Enterprise Institute.
Participants in Government Investment Plan Most financial institutions have received capital infusions via the Treasury's Capital Assistance Program, a bank-share purchase program intended to restore confidence in banks and get them to lend. This program is funded with $250 billion of the $700 billion Troubled Assets Relief Program authorized by Congress in October 2008 via the Emergency Economic Stabilization Act. Below, see a list of participating companies
Geithner to Outline Efforts to Fix Banking System Treasury Secretary expected to outline the Obama administration's efforts to clean up the U.S. banking system during meetings Friday with finance ministers from the Group of Seven nations. Treasury Secretary Timothy Geithner is expected to outline the Obama administration's efforts to clean up the U.S. banking system during meetings Friday with finance ministers from the Group of Seven nations, a department official said. Getting banks to lend again, along with government stimulus spending, is critical to turning around the U.S. and global economies, the official said Thursday, speaking on condition of anonymity because he wasn't authorized to speak on the record.
China's been building its gold reserves - now over 1,000 tonnes China revealed on Friday that it had quietly raised its gold reserves by nearly three-quarters since 2003, increasing its holdings to 1,054 tonnes and confirming years of speculation it had been buying. Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE), told Xinhua news agency in an interview that the country's reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold reserves figure.
Who holds the highest gold reserves? China becoming the fifth biggest holder of gold reserves with 1054 tonnes and it has already hit the headlines on Friday leading to a marginal rise in gold prices in major trading centres. The world leader in gold reserves is United States with 8133 tonnes as on September 2008 that accounts for 76.5% of its foreign exchange reserves. Germany has the second highest gold reserves at 3412.6 tonnes while IMF has 3217, France has 2508 tonnes constituting 58.7% of its forex assets.
Obama’s leap to socialism President Obama showed his hand this week when The New York Times wrote that he is considering converting the stock the government owns in our country’s banks from preferred stock, which it now holds, to common stock. This seemingly insignificant change is momentous. It means that the federal government will control all of the major banks and financial institutions in the nation. It means socialism.
Dick Morris: Obama Stimulus A Trojan Horse Filled With Socialists
Obama's Energy Czar: Socialist Agent For World Government Socialist International scrubs Carol Browner but deep connections to Bilderberg and globalist agenda remain Barack Obama's "climate czar" Carol Browner has been exposed as being a member of Socialist International, a highly influential group headed by a Bilderberg Group luminary that calls for the implementation of global government, despite Socialist International's attempts to seemingly "memory-hole" information about Browner on their website. It doesn't take a rocket scientist to understand that Obama and his cabinet are preparing to exploit fearmongering about global warming to push new measures of taxation, regulation and internationalism. Obama himself has vigorously promoted the revival of a bill that would slash carbon emissions by 80 per cent, a move that would inflict a new Great Depression, cost millions of jobs, and sink America to near third world status.
THE REAL DANGER (free pdf of this book) As We Go Marching Fascism will come at the hands of perfectly authentic Americans who have been working to commit this country to the rule of the bureaucratic state; interfering in the affairs of the states and cities; taking part in the management of industry and finance and agriculture; assuming the role of great national banker and investor, borrowing billions every year and spending them on all sorts of projects through which such a government can paralyze opposition and command public support; marshalling great armies and navies at crushing costs to support the industry of war and preparation for war which will become our nation’s greatest industry; and adding to all this the most romantic adventures in global planning, regeneration, and domination – all to be done under the authority of a powerfully centralized government in which the executive will hold in effect all the powers, with Congress reduced to the role of a debating society.
Fascist America, in 10 easy steps Naomi Wolf Tuesday 24 April 2007 From Hitler to Pinochet and beyond, history shows there are certain steps that any would-be dictator must take to destroy constitutional freedoms. And, argues Naomi Wolf, George Bush and his administration seem to be taking them all . . . . Because Americans like me were born in freedom, we have a hard time even considering that it is possible for us to become as unfree - domestically - as many other nations. Because we no longer learn much about our rights or our system of government - the task of being aware of the constitution has been outsourced from citizens' ownership to being the domain of professionals such as lawyers and professors - we scarcely recognise the checks and balances that the founders put in place, even as they are being systematically dismantled. Because we don't learn much about European history, the setting up of a department of "homeland" security - remember who else was keen on the word "homeland" - didn't raise the alarm bells it might have.
Invoke a terrifying internal and external enemy
Create a gulag
Develop a thug caste
Set up an internal surveillance system
Harass citizens' groups
Engage in arbitrary detention and release
Target key individuals
Control the press
Dissent equals treason
Suspend the rule of law
THE FINAL PLUCKING OF AMERICA'S FINANCIAL AND ECONOMIC SOVEREIGNTY Believe as you will about the 2008 Credit Crisis but if you fail to recognize that the final pieces of America's financial and economic sovereignty are being transferred in the name of finding a global solution to the crisis, then you will have believed those who intend to steal your assets next, as well as your freedom. How could America's financial sovereignty be plucked from her both at the domestic and international levels? It is not because of a five or even twenty-five year plan but one that may be hundreds of years old. This plan, I'm sure, did not happen all at once but took time to evolve. It is a diabolically brilliant strategy in its scheming. In order to understand, we need to review how the credit crisis will lead to the total transfer of America's sovereignty. . . . . . . . While there were concerted steps that helped to create the credit crisis, i.e.: Clinton's Community Reinvestment Act of 1994, the repeal of the Glass-Steagall Act in 1999, and 45 year low interest rates as a result of 9/11 in 2001. All of these were major steps to create the "right circumstances" to transfer control over America's financial and economic wealth.
MARXISM COMES TO AMERICA A dire warning, from a man born and raised under communism. Something is very, very wrong. This article is meant to get your attention. It is meant to scare you into finally seeing what is happening all around you. What you are trying so very hard to ignore. The things discussed here are real. They are documented fact. For the sake of everything you hold dear, your children and your grandchildren, please read this article with an open mind, then check the facts for yourself. What you do after that is between you and God. PUBLIC PRIVATE PARTNERSHIPS In a communist/socialist country there is no such thing as private enterprise. Everything is either owned or controlled by the government. The socialists are taking over America through the bailouts. The bailout money comes with strings. Through the strings and mandates that come with the money the government becomes your partner. It's called "Public Private Partnership." Create the financial crises, offer the solution (bailout money) and you have a complete totalitarian state. These huge bailout/stimulus packages will create hyperinflation and result in a worldwide economic disaster dwarfing the Great Depression. It will indenture you, your children, and your children's children under Socialist tyranny
Regulators to Meet With Banks on Friday on 'Stress' Tests Federal regulators have quietly scheduled face-to-face meetings on Friday with leaders of the nation's biggest banks to reveal the preliminary results of the stress tests. Officials plan to meet separately with top executives from each of the 19 major banks at the offices of the Federal Reserve Bank in their district, according to people briefed on the sessions. The banks will then have until Tuesday to dispute any of the findings. Federal officials are preparing to disclose the final results on May 4, and they expect to rely on the banks to release findings specific to their institution.
U.S. Weighs Revealing Bank Capital Needs After Tests The Obama administration may direct banks judged to need capital after stress tests to disclose how they plan to get additional funds when the government reveals the results May 4, a person familiar with the matter said.
U.S. to Tell Big Banks the Results of Stress Test Wall Street is stressed out about stress tests. After a two-month wait, the nation's 19 largest banks will start learning on Friday how they fared in important federal examinations - and which among them will need another bailout from the government or private investors. While many of the banks reported surprisingly strong first-quarter earnings, they are by no means out of the woods. A number of them are likely to need more capital to weather a prolonged recession, and the losses that might accompany it.
Harvard's Feldstein Sees U.S. Inflation Danger After 2010 Harvard University economics Professor Martin Feldstein said inflation will emerge as a threat to the economy after a sustained recovery develops next year. "In the next few years inflation is going to be the bigger problem" than deflation, or widespread declines in consumer prices, Feldstein said in an interview with Bloomberg Radio. He also said "we're not going to see a sustained turnaround in the economy until next year."
GLOBAL FINANCIAL COLLAPSE America is OVER !
Gold, Silver - Important Alert! The Gold Direction Indicator is flashing another buy signal. This indicates that the pull-back that started late February is probably finished. A new rally is about to start. Some of the monetary inflation that the Obama team is injecting into the system is starting to turn into price inflation. The stock market rally which had drawn attention and money away from the gold market is running out of steam. The situation in Pakistan which has been smoldering for months is moving to the front pages, and is causing anxiety in India, where people buy gold bullion when fear mounts.
Gold Should Be At the Heart of New Global Currency Since the Chinese put a new global reserve currency on the table at the G20 summit which created $250 billion in new IMF Special Drawing Rights, discussion of the new currency has increased, and the logic of putting precious metals into this basket is clear. Gold and silver have been used as money for several millennia because even the most artful alchemist has failed to find a way to manufacture precious metals. Over recent century's fiat or paper money collapses have always been followed by a reversion to gold and silver, why should it be different this time?
A Brief Look at Bernanke, Inflation, Deflation & Gold While the average American has some understanding of gold as a hedge against inflation and the dilutive printing of paper money, a more thoughtful analysis suggests that gold may actually prosper the most in response to the threat of deflation as we are now experiencing in 2009. In fact it is the Federal Reserve's greater concerns about deflation, not inflation, which may produce the greatest gains ahead for gold.
Fed Purchases $7 Billion of Treasuries in Buyback The Federal Reserve bought $7 billion of Treasuries maturing between May 2012 and August 2013 as part of the central bank's efforts to reduce lending rates and lift the world's largest economy out of a recession. All of the securities listed for possible purchase were acquired for the first time since the buybacks began last month, according to a Federal Reserve Bank of New York statement. The $985 million of the 3.625 percent notes maturing in May 2013 was the largest amount of the 20 securities acquired.
Bernanke Defends Bear Stearns Bailout Fed Chair Says Failure To Save Ailing Investment Bank Would Have Led To "Chaotic Unwinding" The Federal Reserve moved to assist a Wall Street investment bank on the brink of bankruptcy to prevent a failure that could have dealt serious consequences to the U.S. economy, Federal Reserve Chairman Ben Bernanke said Thursday. "Given the exceptional pressures on the global economy and financial system, the damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain," Bernanke told the Senate Banking Committee.
Storm erupts over BofA's Merrill takeover The circumstances surrounding Bank of America's controversial takeover of Merrill Lynch on Thursday sparked an unprecedented public dispute involving the bank's embattled chief executive, Ken Lewis, and top officials past and present. The furore - which adds to the pressure on Mr Lewis's position atop the bank - erupted when Andrew Cuomo, New York attorney-general, released documents raising fresh questions over Mr Lewis's failure to tell investors about huge losses at Merrill before completing the acquisition.
Bank of America Pressured by Paulson to Buy Merrill Bank of America Corp. Chief Executive Officer Kenneth D. Lewis failed to tell shareholders about mounting losses at Merrill Lynch & Co. because of pressure from federal regulators to complete the takeover, according to New York State Attorney General Andrew Cuomo. Henry Paulson, who was Treasury secretary last December, may have threatened to remove the management and directors of the Charlotte, North Carolina-based bank if they didn't comply, Cuomo wrote in a letter to Congress that was released today. Lewis also was told not to disclose his opposition to the Merrill deal because of "staggering" deterioration at the brokerage, or the regulator's action, according to Cuomo.
Paulson Contradicts Bernanke, Blames Bernanke For Lewis Threat Hank Paulson admitted to Andrew Cuomo that he threatened to oust Ken Lewis and the Bank of America board if Bank of America invoked a Material Adverse Change (MAC) clause to block the deal, Cuomo says. Paulson also added, however, that he made this threat at the request of Ben Bernanke. This contradicts Bernanke, who earlier denied (through a Fed spokesman) that he did not threaten Ken Lewis.
PAULSON RECANTS: Bernanke Didn't Make Me Do It Hank Paulson has recanted on what he told Andrew Cuomo, which was that Ben Bernanke asked him to threaten to oust Ken Lewis and the Bank of America board if Lewis decided not to go forward with the Merrill deal. Paulson says his words were his own and that Bernanke did not ask him to convey a specific message to Lewis, CNBC says.
BofA’s Lewis: Feds urged quiet on Merrill Charlotte Business Journal Bank of America Corp. Chief Executive Kenneth Lewis says Federal Reserve Chairman Ben Bernanke and former Treasury Department chief Henry Paulson pressured the bank not to discuss its increasingly troubled plan to buy Merrill Lynch & Co. According to The Wall Street Journal, Lewis, testifying under oath before New York Attorney General Andrew Cuomo in February, said he believed Paulson and Bernanke were instructing him to keep silent about Merrill’s financial problems. Merrill lost $15.3 billion in the fourth quarter. According to the newspaper’s review of the transcript, Lewis said the federal government wanted him to keep quiet while the two sides negotiated government funding to help BofA absorb Merrill. BofA bought the troubled brokerage on Jan. 1 for $29.1 billion, including $8.6 billion in preferred stock. The deal resulted in BofA’s receiving an additional $20 billion in federal bailout funds under the Troubled Asset Relief Program.
Lewis Testifies U.S. Urged Silence on Deal - $$ WSJ Bank of America Chief Says Bernanke, Paulson Barred Disclosure of Merrill Woes Because of Fears for Financial System Federal Reserve Chairman Ben Bernanke and then-Treasury Department chief Henry Paulson pressured Bank of America Corp. to not discuss its increasingly troubled plan to buy Merrill Lynch & Co. -- a deal that later triggered a government bailout of BofA -- according to testimony by Kenneth Lewis, the bank's chief executive. Mr. Lewis, testifying under oath before New York's attorney general in February, told prosecutors that he believed Messrs. Paulson and Bernanke were instructing him to keep silent about deepening financial difficulties at Merrill, the struggling brokerage giant.
Forget About Inflation... It's Deflation You Should Worry About A consensus has formed that the government's massive money printing and debt-powered spending binge will soon destroy the destroy the dollar, crippling the remaining savings of anyone dumb enough not to buy "real" assets--like gold. The Fed is printing money, Mauldin says, but overall credit is being destroyed. The government is desperately trying to bring back inflation, so we can lessen the real burden of our huge debts, but this will take a year or two at best. So in the meantime, Mauldin says, ignore the gold bugs. They've been wrong for 25 years and they'll keep on being wrong for the foreseeable future.
Time To Get Bernanke And Paulson Under Oath Sorry Bernanke and Paulson, we need more than an off-the-record statement through Steve Liesman on Ken Lewis's claim that he was told to clam up about troubles at Merrill Lynch. So far, all we have is the Bank of America (BAC) CEO's story, but if Attorney General Andrew Cuomo is actually serious about figuring out what happened, then he has to get both Ben Bernanke and Hank Paulson under oath. And if there are serious disagreements between what they say and what Lewis is saying, then someone's committing perjury.
U.S. pressured BofA to complete Merrill deal: Cuomo Bank of America Corp CEO Kenneth Lewis was pressured by senior federal officials Henry Paulson and Ben Bernanke to accept a merger with troubled Merrill Lynch & Co or lose his job, New York Attorney General Andrew Cuomo said on Thursday. In a letter to senior members of congressional committees and the head of the U.S. Securities and Exchange Commission, Cuomo said Lewis met then U.S. Treasury Secretary Paulson and Federal Reserve Chairman Bernanke in Washington in mid-December.
Mortgage Investors Form Battle Lines Over Housing Aid The head of Greenwich Financial Services LLC warned bond investors in Washington last month that government efforts to reverse the housing slump are doing more harm than good by undermining debt contracts. More than 30 money managers with stakes in the $6.7 trillion mortgage bond market that underpins the real-estate industry heard Bill Frey's March 25 talk, according to a list of the attendees. Since then, a group of investors with home-loan bonds totaling more than $100 billion have hired Patton Boggs LLP, Washington's biggest lobbying law firm, said Micah Green, a partner and former head of the Bond Market Association.
Rising Home Vacancies Give Bernanke Extra Time to Withdraw Cash Rising home vacancies may be a blessing in disguise for Ben S. Bernanke. A record number of empty homes across the U.S. will depress rents, the largest item in the Labor Department's consumer price index, into 2010, analysts said. That offers the Federal Reserve chairman plenty of time to withdraw the cash he's pumped into financial markets.
Know Your Enemy Do you know the enemy? Is it Iraqis, Iran, the Taliban, terrorists, Muslims, Russia, North Korea, China, or our government? General Douglas MacArthur had a distinct point of view on the more likely threat. "I am concerned for the security of our great Nation; not so much because of any threat from without, but because of the insidious forces working from within." . . . . . . . . Are You a Terrorist? Most people in America, comfortable in their manicured lawn suburban sprawl will discount the possibility of civil unrest, war, and dictatorship in this country. Could Nazi like sociopaths gain control of our government? It is inconceivable. Anyone who would bring up this possibility would be branded a lunatic. As Doug Casey recently pointed out in his article Street Fighting Man, the Germans thought the same thing.
Street Fighting Man Longtime readers know my standard response to questions about the severity of the Greater Depression: It's going to be worse than even I think it's going to be. "Coming Collapse" books will undoubtedly accumulate into an entire genre in the next few years, as they did a generation ago. This time it's not just fear mongering, although things won't get as bad as in James Kunstler's book The Long Emergency and certainly not as rough as in the movies Road Warrior or I Am Legend. But it's a good bet that a lot more is going to change than just some features of the financial system. Let's engage in a little speculation as to the shape of things to come.
I've long believed that this depression would not only be much different but much worse than the unpleasantness of the '30s and '40s. In those days, only a few people were involved in the financial markets; now almost anyone with any assets at all is a player. In those days, there were no credit cards, consumer debts, or student loans; now those things are ubiquitous. It's true that nobody will lose any money because of bank failures this time around; instead, everybody is going to suffer a loss from a collapse of the U.S. dollar, which is much worse.
Warning over US toxic asset plan The Obama administration will on Friday get the first indication of investor interest in its $1,000bn toxic assets plan amid fears that the threat of government intervention and banks' reluctance to sell will deter fund managers from participating. Applications to become one of the five asset managers charged with raising funds to buy mortgage-backed securities from banks are due today and groups including BlackRock, Pimco and Bank of New York Mellon are set to apply.
US accepts 'blame' for crisis ahead of IMF meeting America must take a "substantial share" of the blame for the continuing financial crisis, US Treasury Secretary Tim Geithner admitted as he warned that the rest of the world cannot be reliant on the US for its recovery. Mr Geithner, commenting on America's part in the global recovery in a speech in Washington DC, said that although the world needs the US to recover quickly, the opposite is also true. "The rest of the world needs the US economy and financial system to recover in order for it to revive," said Mr Geithner. "Just as importantly, we need the rest of the world to recover if we are to prosper again here at home." His comments came as the IMF's World Economic Outlook forecast the US economy would contract by 2.8pc this year and witness flat growth next year.
IMF predicts world recession will deepen The International Monetary Fund has slashed growth forecasts for every major country and urged governments to take forceful action to ensure the world economy's recovery from a severe recession. In its latest World Economic Outlook, the IMF said the global economy would likely contract 1.3 per cent this year in the deepest post-Second World War recession by far. Growth is set to re-emerge at a sluggish 1.9 per cent next year but the pick-up depends on aggressive measures to repair a poorly functioning financial system.
IMF WILL CREATE GLOBAL MONEY OF THE NWO Had Ronald Wilson Reagan not been elected the 40th President of the United States on Nov. 4, 1980, and had James Earl Carter been reelected instead, by the summer of 1981 the newspapers would not have been focused on Reagan recuperating from a near-fatal assassination attempt at the hands of wannabe assassin John Hinckley, but rather the media would be asking when would Americans start using the global currency of the International Monetary Fund instead of the US dollar? . . . . . . . . It is important to understand the ramifications of what transpired in London. While the national media in the United States reported that President Barack Obama's visit to the G-20 was a success, it was successful only if you think Jimmy Carter's stint in the White House was a success. Obama, who envisioned his trip to the G-20 as the reincarnation of FDR's dominance over Europe's leaders actually rebirthed the inefficaciousness of Carter. The community activist is simply not up to the task of leading a nation let alone believably affirming his role as the leader of the free world.
Is Obama's Stimulus Package Socialism in Disguise?
CYBER-SECURITY LEGISLATION HAS ORIGINS IN 'SUMMIT OF THE AMERICAS' Two new pieces of legislation are causing quite a stir and rightly so. Americans protective of our freedoms and privacy are once again confronted by the constant onslaught against our rights which requires our vigilance. This new legislation seeks to give even more power to the government to regulate the Internet and, in future, the possibility to regulate content and usage. What begins as a method of defeating terrorism and protecting telecommunications, can quickly become a method to regulate 'hate speech' to assign 'motive' or 'intent' to harm and even to regulate and legislate the flow of information that is deemed by the 'thought police' to be inflammatory or counter-productive to their cause.
OBAMA: TRILATERAL COMMISSION ENDGAME As previously noted in Pawns of the Global Elite, Barack Obama was groomed for the presidency by key members of the Trilateral Commission. Most notably, it was Zbigniew Brzezinski, co-founder of the Trilateral Commission with David Rockefeller in 1973, who was Obama's principal foreign policy advisor. Is this a mere coincidence or is it a continuation of dominance over the Executive Branch since 1976?
Secretary of Treasury, Tim Geithner
Ambassador to the United Nations, Susan Rice
National Security Advisor, Thomas Donilon
Chairman, Economic Recovery Committee, Paul Volker
Director of National Intelligence, Admiral Dennis C. Blair 6- Assistant Secretary of State, Asia & Pacific, Kurt M. Campbell
Deputy Secretary of State, James Steinberg
State Department, Special Envoy, Richard Haass
State Department, Special Envoy, Dennis Ross
State Department, Special Envoy, Richard Holbrooke
Experts Warn that Banking Euphoria Is Premature Good news from six US banks has raised hopes that an end to the financial crisis might be in sight. But German experts think the euphoria is wishful thinking. As they see it, things are going to get worse soon -- and banks will be forced to make billions more in write-downs. The news spreads like wildfire and hope starts to bloom. One after the other, six US banks -- including the largest, Bank of America -- have submitted performance figures for the first quarter of 2009 that are far better than experts had predicted.
Treasury Has 'No Strategy' to Manage the Billions in Securities it Owns Under TARP, Report Says The Treasury Department has not developed a strategy to manage the billions of dollars of investments it holds under the Troubled Asset Relief Program (TARP), according to a startling new report from TARP's inspector general. Treasury also does not have sufficient oversight authority over a joint Treasury-Federal Reserve lending program that is supposed to expand to $1 trillion, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) said in a report issued Tuesday.
Will New Fed "Tools" Avert Hyperinflation? People often accuse me of making "irresponsible" forecasts of massive price inflation. Even though they know that history is replete with examples of central banks ruining their currencies, these critics are sure that "it can't happen here." So in the present article I'd like to make the brief case for why we should all be very alarmed about the prospects for the U.S. dollar.
Barack Obama supports the ONE WORLD GOVERNMENT
Obama's Climate Change Envoy Urges Global Warming Treaty, Offers Few Specifics President Barack Obama's special envoy for climate change told the Senate Foreign Relations Committee Wednesday that the United States urgently needs to sign a new international treaty to control global carbon emissions in the name of fighting global warming. However, other than indicating that the administration is committed to imposing a cap-and-trade system to limit carbon emissions within the United States, he gave few specifics about the sort of international agreement the administration is seeking. The envoy, Todd Stern, had just returned from climate-treaty negotiations in Bonn, Germany. . . . . . . The conference in Copenhagen has a genesis in the United Nations Framework Convention of Climate Change that dates back more than a decade and includes the Kyoto Protocol. The Kyoto Protocol was opposed by the Bush administration because it required stricter sanctions on reducing greenhouse gas emissions for developed industrialized countries than developing industrialized countries, including China and India, both considered heavy contributors to global carbon emissions. [Because third world developing nations are exempt from energy related rules and restrictions imposed on developed nations under the treaty, this will be the biggest transference of wealth in the history of the world, from the first world economies, to the emerging economies - all under the guise of global warming. The US will be required to return to early 1970's level of energy usage, not adjusted for increase in population and that is the tip of the iceberg. Water vapor us the largest of the 'greenhouse gasses' they are trying to reduce. Carbon dioxide (what we exhale) is the second largest. Methane and nitrous oxide round out the top four. It's a sham they are trying to shame the US public into swallowing. Don't buy it!]
Introduction to Global Governance Since the beginning of civilization, someone, somewhere has fantasized about ruling the world. Alexander the Great, Julius Caesar, the various leaders of the Holy Roman Empire, are but a few of the would-be rulers of the world. The fantasy faded during the dark ages, but flourished again during the renaissance and was actively pursued by proponents of a British empire on which the sun never set. . . . . . . . . History demonstrates that global governance is not an event that will occur by force at some point in the future. Global governance is a process that has been underway for many years, gaining new definition and momentum since the collapse of the Soviet Union. The publication of Our Global Neighborhood is a signal of confidence that the international community is secure enough in its establishment of global governance that the movement cannot be reversed.
Mortgage Investors Form Battle Lines Over Housing Aid The head of Greenwich Financial Services LLC warned bond investors in Washington last month that government efforts to reverse the housing slump are doing more harm than good by undermining debt contracts. More than 30 money managers with stakes in the $6.7 trillion mortgage bond market that underpins the real-estate industry heard Bill Frey's March 25 talk, according to a list of the attendees. Since then, a group of investors with home-loan bonds totaling more than $100 billion have hired Patton Boggs LLP, Washington's biggest lobbying law firm, said Micah Green, a partner and former head of the Bond Market Association.
Commercial properties fall to foreclosure Crisis can sow blight, cut into local tax bases The foreclosure crisis is now claiming commercial properties across Massachusetts, prompting a surge of fire sales as the owners of office towers, hotels, and stores cannot meet or refinance sizable loan payments. In the first four months of the year, some auctioneers report they have already handled double the number of distressed properties they did in all of 2008. Among the recent casualties are Glen Ellen Country Club in Millis, a prominent Art Deco building in Boston's Park Square, and a yacht club and inn with views of the city skyline.
U.S. Said to Seek a Chrysler Plan for Bankruptcy The Treasury Department is directing Chrysler to prepare a Chapter 11 bankruptcy filing as soon as next week, people with direct knowledge of the talks said Thursday. The company faces a deadline of April 30 to come up with a viable business plan supported by its creditors, the United Automobile Workers union, and Fiat, the Italian car company that wants to acquire a stake in Chrysler.
California Sues Wells Fargo Over Securities Sales Joining a roster of state lawmen pursuing civil actions against banks, California's attorney general, Jerry Brown, sued three subsidiaries of Wells Fargo on Thursday, claiming the bank had lost some $1.5 billion for investors in the state who bought auction-rate securities. The lawsuit, filed in San Francisco, claims that three Wells Fargo units gave "false and deceptive advice" when they marketed the securities to small investors by claiming that they were as safe and liquid as cash. Instead, investors lost money when the market for auction-rate securities collapsed in February 2008.
Obama takes plastic, fine print to task Tells bankers no 'unfair' fees President Obama spelled it out for credit card issuers in large type Thursday -- no more "unfair" fees, sudden rate increases and misleading fine print. "The days of any time, any reason rate hikes and late-fee traps have to end," Mr. Obama said after meeting in the White House with executives from 13 of the largest credit card issuers, including Bank of America and Capital One Financial. "We want clarity and transparency from here on out," Mr. Obama said.
U.S. Existing Home Sales Dropped More Than Forecast Sales of U.S. previously owned homes fell in March after jumping a month earlier by the most in more than five years, indicating the market will remain depressed for much of the year. Purchases decreased 3 percent to an annual rate of 4.57 million, lower than forecast, from 4.71 million in February, the National Association of Realtors said today in Washington. The median price slumped 12 percent from a year ago and distressed properties accounted for about 50 percent of all sales.
U.S. jobless claims rise, home sales fall The number of newly laid off U.S. workers filing claims for unemployment aid rose last week and sales of previously owned homes fell in March, according to data on Thursday that showed the economy still sliding downward. First-time claims for jobless benefits rose 27,000 to 640,000 last week, the Labor Department said. In addition, the number of people still drawing benefits after an initial week of aid jumped 93,000 to a record 6.14 million in the week ended April 11.
And Now For Something Entirely Different: How Things Change Out From Under Us Anyone who has been around for a while and who pays any attention to the news sees many disturbing changes. Recently, I read a report that two children, ages seven and eight, had an altercation at school during recess. They were carted off in handcuffs by the police. The teachers or principal had dealt with the boys' disagreement by calling in the law. I wonder if the kids now have felonious assault records that will cancel their Second Amendment rights when they come of age.
Crisis Plunges US Middle Class into Poverty SOUP KITCHENS AND TENT CITIES The financial crisis in the US has triggered a social crisis of historic dimensions. Soup kitchens are suddenly in great demand and tent cities are popping up in the shadow of glistening office towers. Even drug dealers are feeling the pinch. Business is poor in the New York banking district around Wall Street these days, even for drug dealers. In the good old days, they used to supply America's moneyed elite with cocaine and crack. But now, with the good times gone, they spend their days in the Bowery Mission, a homeless shelter with a dining hall and a chapel.
Tony Blair calls on world to wage war on militant Islam Tony Blair has said he does not regret leading Britain to war in Iraq when he was Prime Minister and has called on the world to take on and defeat Islamic extremists. He believes that, without intervention, the problem will continue to grow in countries such as Afghanistan. He called for a battle to be waged against militant Islam similar to that fought against revolutionary communism. In an address last night to a forum on religion and politics in Chicago, Mr Blair said that the world today faced a struggle posed by "an extreme and misguided form of Islam", which threatened the majority of Muslims as well as non-Muslims.
Germany's slump risks 'explosive' mood as second banking crisis looms Warning that downturn will see unemployment hit 4.7m by 2010 A clutch of political and labour leaders in Germany have raised the spectre of civil unrest after the country's leading institutes forecast a 6pc contraction of gross domestic product this year, a slump reminiscent of 1931 and bad enough to drive unemployment to 4.7m by 2010. Michael Sommer, leader of the DGB trade union federation, called the latest wave of sackings a "declaration of war" against Germany's workers. "Social unrest can no longer be ruled out," he said. Gesine Swann, presidential candidate for the Social Democrats, said "the mood could turn explosive" over the next three months unless the government takes drastic action.
US seems powerless to halt Dear Leader The Obama Administration is gravely concerned about North Korea's nuclear programme, which is far more advanced than Iran's The Obama Administration is gravely concerned about North Korea's nuclear programme, which is far more advanced than Iran's. Yet its policy toward Pyongyang is little different than the course followed by George Bush in his second term and appears increasingly ineffective. Laying out that policy on Wednesday during congressional testimony Hillary Clinton, the US Secretary of State, urged North Korea to refrain from provocative acts and return to six-party talks, which Pyongyang abandoned in December.
US journalists to stand trial in North Korea Two women arrested in North Korea in March could be charged with spying to pressure Washington into talks with the regime Two U.S journalists detained in North Korea are to go on trial for unspecified criminal charges. Laura Ling and Euna Lee, who work for Current TV, were arrested in MArch near North Korea's border with China, while reporting on Koran refugees living in China. Pyongyang's official Korean Central News Agency said the reporters would stand trial 'on the basis of the confirmed crimes.'
North Korea is fully fledged nuclear power, experts agree The world's intelligence agencies and defence experts are quietly acknowledging that North Korea has become a fully fledged nuclear power with the capacity to wipe out entire cities in Japan and South Korea. The new reality has emerged in off-hand remarks and in single sentences buried in lengthy reports. Increasing numbers of authoritative experts - from the head of the International Atomic Energy Agency (IAEA) to the US Defence Secretary - are admitting that North Korea has miniaturised nuclear warheads to the extent that they can be launched on medium-range missiles, according to intelligence briefings.
Chinese Diversification Strategy In a series of maneuvers, Chinese officials have revealed their strategy implementation in a very broad set of steps. Beijing leaders plan to establish the yuan currency as a global reserve currency. The process will be made more complete after issuance of a large volume of Chinese Govt debt securities, soon in coming. The number of policy actions is impressive. While the USGovt is busy stepping backwards with FASB rules enabling false bank accounting, gearing up Treasury programs to direct colossal elite welfare / confiscation to failed banks responsible for the crisis, covering up Wall Street fraud and regulatory lapses and debt rating agency collusion, and ordering pork like the $9 billion high speed train from Disneyland to Las Vegas, the Chinese are making important meaningful critical strides.
The New Global Currency Franchise he recent G20 meeting revealed the beginnings of a seismic shift in the world's money system. Up until now, the United States has had the great good fortune to own the franchise on the global reserve currency. In effect the USA, unique among the nations, has had the ability to create and spend money at will, and best of all, have it accepted at par by most foreign nations. This franchise was acquired following the Second World War in a two step bait-and-switch maneuver. In 1944, the Bretton Woods Agreements established a currency exchange system based on the US dollar, which in turn was anchored in a fixed amount of gold. Seventeen years later, in 1971, the United States ended redemption of dollars in gold, effectively cutting the world's currency system adrift from its mooring to anything of real value.
Facism in America? - History Destined to Repeat? (1/5) - 4.10.2009
Facism in America? - History Destined to Repeat? (2/5) - 4.10.2009
Facism in America? - History Destined to Repeat? (3/5) - 4.10.2009
Facism in America? - History Destined to Repeat? (4/5) - 4.10.2009
Facism in America? - History Destined to Repeat? (5/5) - 4.10.2009
The Shock Doctrine: The Rise of Disaster Capitalism
Federal Program to Boost Private Lending Struggles to Get Money to Consumers In its first two months, the government's signature initiative to support consumer lending has fallen well short of expectations, deploying only a fraction of the amount officials had hoped to extend to stimulate auto loans, student loans and credit card lending. The slow rollout of the program has frustrated staff at government agencies working on the effort and diminished hopes that they could engineer a rapid return to healthy lending levels, according to interviews with government and industry sources. The initiative also serves as a window into the complexities of designing a giant rescue of the financial system.
Everything Hinges On Unemployment Defaults among prime borrowers are really starting to pick up. Why? Cause even solid borrowers can fall behind if they lose their jobs. Credit card companies see much deeper charge offs than they'd foreseen just a few months ago. Again, unemployment. While the talking heads insist that unemployment is a "lagging indicator", it's pretty clear that the financial system is highly levered to this numbers, so it's hard to imagine a real turnaround unless the economy stops bleeding jobs
Geithner says crisis unprecedented in modern times Geithner says US bears substantial share of responsibility for global economic crisis Treasury Secretary Timothy Geithner said Wednesday the United States bears a substantial share of responsibility for a global economic crisis that could cost the world up to $4 trillion in lost output this year alone. While the crisis started in the U.S., Geithner said its damage has spread widely with serious challenges facing much of the globe.
COP Hearing with Treasury Secretary Timothy Geithner
Uh-Oh: Prime Defaults Surge When JPMorgan announced earnings last week, it said the one category in its portfolio that was slightly worse than expectations were the loans made to prime borrowers. Now Fannie and Freddie, in a letter to Sen. Chris Dodd, say they're seeing the same thing -- a surge in prime defaults.
We Are All Flint, Michigan Now Flint, Michigan became a symbol of the vanishing of American manufacturing and the epitome of suburban decline, like a modern-day Wild West ghost town, only with way more Pistons fans. In today's New York Times, David Streitfeld wrote about Flint's latest proposal to put an end to the slow-motion trainwreck that is their daily existence once and for all. Once you get over the laughable aspects of this, you will realize, with horror, the fact that there are any number of cities and towns in this country that may end up having to do the same thing:
An Effort to Save Flint, Mich., by Shrinking It FLINT, Mich. — Dozens of proposals have been floated over the years to slow this city’s endless decline. Now another idea is gaining support: speed it up. Instead of waiting for houses to become abandoned and then pulling them down, local leaders are talking about demolishing entire blocks and even whole neighborhoods.
Treasury Secretary Geithner Says World Needs U.S. to Recover U.S. Treasury Secretary Timothy Geithner said Wednesday that the U.S. bears the brunt of responsibility for causing the financial crisis, and that the country's economy needs to recover in order for the rest of the global economy to bounce back. Speaking to the Economic Club of Washington, D.C., Geithner said the International Monetary Fund is forecasting that world growth will contract 1.3% in 2009.
Gold Spreads: The Real Gold Market Speaks The vast majority of those who read this site are fully aware of the shenanigans of the bullion banks over at the Comex and how they continue to bamboozle the hedge funds whose automaton-like response to momentum trading prevents them from beating this group at the paper game by standing for delivery in size. Additionally, their allegiance to system-trading and computer algorithms prevents them from thinking creatively and learning to take advantage of their enemies’ tactics against them. Good traders learn to adapt to changing market conditions and modify their strategies when confronted by successive losses - the hedge funds, however, when it comes to gold, do no such thing. Keep in mind that the name of the game in gold, as far as the monetary authorities are concerned, is deception. By artificially suppressing the price of gold, for much the same reason as the Fed has been artificially attempting to suppress long term interest rates by a deliberate policy of quantitative easing, the money lords hope to cloud the signals that free market prices would generate to the investing public.
Silver and gold guarantee freedom Silver and gold are not merely valuable commodities, investments, and media of exchange. More importantly, they are key "checks and balances" in America's legal and political institutions. The fight against the use of silver and gold as money that has been waged by bankers and rogue politicians since the 1870s as to silver and the 1930s as to gold --and will intensify as fiat currencies collapse throughout the world -- is ultimately directed against America's national independence, her constitutional government, and every common American's individual liberty and prosperity.
Platinum Climbs on Demand Outlook in China; Palladium Soars Platinum prices rose for the first time in five sessions on signs of increasing demand in China. Palladium futures jumped the most in almost a month. Platinum imports in China surged 35 percent in March from a year earlier, said Tom Pawlicki, a metals analyst at MF Global Ltd. in Chicago, citing government data. The metal gained as much as 2.4 percent, while gold rose as much as 1.4 percent. Platinum and palladium are used in auto parts and jewelry.
US gold rises on firm physical demand, PGMs higher U.S. gold futures rose on Wednesday on firmer physical demand, while renewed market talk of cold fusion technology boosted palladium and other platinum group metals.
Gold & Silver: Why London bullion market is booming LONDON: Which is the biggest Over-the-Counter (OTC) market for gold and silver in the world? It is the bustling city of London where bullion trade in the OTC market continues to boom, often beating futures trading in gold and silver.
Soon, gold to help docs scan human body! Soon, gold will help doctors see the inside of your body in a better way. Researchers have come out with a new method in which gold is used to generate internal images of the human body. Researchers at the Stanford Centre for Innovation in In-vivio Imaging have combined the precious metal with nanotechnology and lasers to create an imaging method that could replace MRIs and PET scans.
Miners rush to Zimbabwe gold treasure Zimbabwe, the country with over 1,00,000 per cent inflation is on the verge of a new era as far as the mining sector is concerned. Mining is Zimbabwe’s one major source of economy. But Draconian laws had been blocking the mining industry from expanding business in Zimbabwe. Following this, the government has been working on new rules for mining in the country. Now, the country has implemented these laws and gold producers are re-opening mines shut down in Zimbabwe. As a result of the new set of rules, the companies can sell gold directly in world markets which was not the case earlier.
Explaining the American Gold Rush! MoneyNews.Newsmax.com had the interesting headline "Mints Rush to Meet Gold Coin Demand." It starts off with a blockbuster statement, namely that the world is in "crisis mode". In fact, a report by The Independent in the United Kingdom notes, "With the world economy now in crisis mode, gold coin production is rising" all over the place, with the result that, "As investor appetite for gold increases worldwide, nations which mint coins of the precious metal have hiked production to satisfy the growing demand."
Gold Shrugs Off Fools’ Body Blows With the stock market giddy as ever yesterday, gold held up surprisingly well. The June Comex contract was off just slightly even though Dow Industrials tacked on 128 points. Ordinarily, with the broad averages in a moderate short-squeeze, we would have expected bullion futures to give up more of the gains they’d achieved on Friday. In a bigger picture gold looks even more impressive, since it has fallen by only six percent while the Dow has risen 24 percent since the bear rally began on March 6. The inverse correlation between gold and the stock market has become so pronounced lately that a nimble trader could practically arbitrage one against the other tick-for-tick. Why should gold and stocks be moving in opposite directions these days? The reason is simple: Gold has at last come to reflect anxiety about the true state of the global economy, and there are times like now when that anxiety momentarily abates.
Is China Trying to Back its Currency With Metal? There's talk of a recession from the Reserve Bank, down yonder way. And the Prime Minister has again promised the government is going to spend its way out this slump, or at least go broke trying. But we begin today's Reckoning with the idea that Australia is a massive treasure trove of mineral wealth, which is the next best thing to money in an age of paper paupers.
Sorry, Geithner, Law Says You Can't Refuse To Let Banks Repay TARP Treasury secretary Tim Geithner said again today that he plans on imposing conditions on banks that want to wriggle free of government control by repaying bailout funds. As we explained yesterday, this seems to fly in the face of a provision of the stimulus bill signed into law earlier this year which specifically prohibits the government from imposing conditions. What makes Geithner think he can impose conditions in violation of this law?
Tim Geithner: The Bureaucrat With No Friends When the market rallied yesterday, many were quick to cite Tim Geithner's appearance on Capitol Hill and some comments about the solid position of the banking sector. That Geithner could lift the markets is quite a perception change since earlier this year, when he was considered toxic. But though the market may rally, there are still considerable doubts about the Treasury Secretary, particularly when it comes to his presentation and handling of the economy.
More Goldman Sachs Secrets that Tim Geithner Might Not Share with You! Okay, this is going to be a quick and dirty review of Goldman's derivative real estate and off balance sheet real estate exposure as is probably reflected through their credit exposure as well. . . . . . . Now, why would Goldman's OTC Credit Exposure be increasing and deteriorating even as it has taken expensive emergency money from Warren Buffet and strings attached TARP funds it is trying to pass on like a itchy veneral disease? You would think they would be trying to get rid of this stuff versus stuffing the balance sheet with it.
Marooned on an Island of Debt by Greenspan’s Money Flood As usual, I put on an adult-sized diaper and my tinfoil hat in careful preparation to look at the change in Total Fed Credit last week, and it is a good thing I did, too, because the Federal Reserve (as expressed in their secret motto “We Are Evil”) created, out thin air, $29 billion new dollars in bank credit! Wow! The interesting part is that the Federal Reserve used that new money – and a lot more – to buy $62 billion of U.S. government debt last week! Hahaha! What a fraud! $62 billion! In one week! We are so freaking doomed!
Oil Rally Stalls as U.S. Equity Market Slide Dents Confidence Crude oil was little changed in new York after the risk of widening bank losses dragged U.S. equities and other commodities lower. Oil’s two-day climb stalled after lenders including Wells Fargo & Co. said credit markets haven’t recovered yet, pulling the Dow Jones Industrial Average and Standard & Poor’s 500 Index lower in late trading yesterday. U.S. oil stockpiles rose for a seventh week to their highest since September 1990, the Energy Department said yesterday.
Debt Issuance is a Rapidly Growing Problem On Wednesday the UK's Debt Management Office (DMO) announced they would be issuing a whopping £220 bln ($319 bln) in gilts this fiscal year. That's a 50% increase from the £146.4 billion borrowed in the fiscal year ended 31-Mar, and well above the £180 bln the market was expecting. . . . . . . Here on our side of the pond, we're faced with the same predicament: The need to issue massive amounts of new debt into a market already awash with debt. Meanwhile the historic buyers of our debt (China and Japan specifically), faced with their own domestic economic concerns and understandable concerns about the huge amounts of dollar denominated instruments already on their books, have hinted that they may be looking to scale back purchases.
Forget global imbalances, it is now a Sino-American imbalance – Or perhaps a Sino-North Atlantic or Sino-Euramerican imbalance. Europe plays a supporting role in the drama. If oil averages $50 or so this year and $60 or so next year – and if intra-European surpluses and deficits are netted out – the world’s macroeconomic imbalances reduce to the United States external deficit (which the IMF estimates will be under 3% of US GDP in 09), a somewhat smaller EU deficit and China’s 10% of GDP surplus. On the surplus side of the global ledger, the IMF forecasts that there will soon be China – and almost no one else.
Government to Complete Takeover of US Banks and Begins News Organizations Key to establishing a dictatorship worth its salt is gaining virtually absolute control of a country’s financial system. Today, that is what’s happening in the United States of America. In order to gain said control Barack Obama’s minion and Secretary of the Treasury Timothy Geithner is pushing for converting the current government-owned bank (under the pretense of “tax payer owned") preferred stock to common stock. This will give Obama’s government majority control of all banks who have taken advantage of the bogus TARP and “stimulus” bills. Do any still really wonder why the government is refusing to take back payment of those loan monies from the banks?
Too Big To Survive On April 20th, Bank of America announced a first quarter surge in earnings to $4.2 billion. At first blush, it looked like the kind of news that would ignite a stock market rally. Instead, the Dow closed down 289 points. Could it be that, despite the apparent good news, investors don't trust the banks or the economy? In recent months, the Administration has poured billions of dollars into those banks that it has deemed "too big to fail". B of A alone received some $45 billion. Perhaps now it is time to examine whether the liabilities of these same banks make them, conversely, too big to survive.
Police investigating death of Freddie Mac official VIENNA, VA. - The chief financial officer of Freddie Mac, one of the mortgage giants at the heart of the nation's financial meltdown, was found dead in his basement early Wednesday morning in what police said was an apparent suicide. David Kellermann, 41, apparently hanged himself in his suburban Washington home, said a law enforcement official familiar with the investigation. He asked not to be identified because the investigation was ongoing.
Freddie Mac Acting CFO David Kellermann Found Dead Freddie Mac Acting Chief Financial Officer David Kellermann, 41, was found dead early today in the basement of his home in a Washington suburb, police said. There were no signs of foul play, and the death is under investigation, Fairfax County, Virginia, Police Officer Shelley Broderick said. She said early reports from others in the department indicated Kellermann’s wife reported a suicide. The medical examiner’s office said it’s conducting an autopsy, and the results may be released as soon as today.
Suicide Sheds Light on Pressures at Freddie Mac The pressures were already immense when David B. Kellermann was promoted to the top financial position at the mortgage giant Freddie Mac last September. Then they got even worse. Mr. Kellermann’s boss and other top executives were ousted when the Treasury secretary seized Freddie Mac and its sibling company, Fannie Mae; others left on their own and were not replaced. Soon President Obama told the companies they were responsible for carrying out some of his programs to revive the economy, in addition to keeping the housing market afloat by buying and selling hundreds of thousands of mortgages a month.
Freddie Mac CFO Suicide Delays Bond Sale The tragic suicide of Freddie Mac CFO David Kellermann did have some financial market reverberations. Across The Curve says the mortgage giant was forced to postpone bond sale, at least for one day. The reason: traders want some added assurance that the suicide wasn't directly due to fraud or cooked books.
Gigantism stamped with failure "Too big to fail." It's been the mantra of our economic meltdown. Although meant to emphasize the overwhelming importance of this bank or that corporation, the phrase also unwittingly expresses a shared delusion that may be at the root of our current crises - both economic and ecological. In nature, nothing is too big to fail. In fact, big is bound to fail. To understand why that's so means stepping away from a prevailing set of beliefs that holds us in its sway, especially the deep conviction that we operate apart from nature's limits and rules.
GE exec says economic crisis resetting capitalism The top executive of General Electric Co. said Wednesday he couldn't predict when the recession would end or how bad it will be, but said the global economic crisis has "fundamentally reset" the way companies do business and capitalism itself. Speaking at GE's annual shareholder meeting in Orlando, Fla., following what has been a punishing year for the conglomerate, CEO Jeff Immelt said the downturn was the worst since the Great Depression, and that it would ultimately lead to changes such as greater government involvement in business and a restructuring of the financial services sector that was a root of the crisis.
What's Behind Us Is No Longer Important Paradigm Shift: Fundamental unperceived change in an individual's or a society's view of how things work . . . . The years ahead can be best described by the two Chinese symbols which when used together make the word danger; crisis and opportunity. Three trends will greatly influence investment considerations during the next decade; the current financial mess, agriculture, and energy. It is essential to understand how they are interconnected in order to position your portfolios to benefit. I must also note that of these three themes only the current financial mess has an immediate solution, and that solution is inflation.
The Goldsmiths—Part LXXIII n the past year, the Goldsmiths have broached the possibilities of deflation in at least four presentations (parts 27, 47, 54 and 56) in the context that the present economic deflation pressures are coming precisely from the plutocratic ruling Rothschild Cabal. But ultimately, the Goldsmiths have allowed that the eventual threat will devolve to a hyperinflationary blow off.
Soaring U.S. Budget Deficit Will Mean Billions in Bond Sales Millions of lost jobs mean billions in lost tax revenue for the U.S. government, and billions in additional Treasury debt to fund a federal budget deficit that may soar to more than four times last year’s record $454.7 billion. Employers cut 3.7 million positions from their payrolls in the six months since the fiscal year began Oct. 1, and the unemployment rate reached a 25-year high of 8.5 percent in March. That suggests receipts for April -- the biggest month for tax collection -- are likely to come in well below April 2008, analysts said.
California Sells Record $6.9 Billion in Build America Bond Deal California sold $6.85 billion of debt in the largest long-term general obligation bond sale in the state’s 158-year history, aided by a new federal subsidy introduced in the economic stimulus package. California, the most populous U.S. state and the lowest rated, sold $5.23 billion of taxable 25- and 30-year debt with the federal government rebating 35 percent of interest costs, The deal included $1.62 billion in notes that aren’t subsidized, Treasurer Bill Lockyer said in a news release today.
Pimco’s McCulley Says Commercial Mortgages ‘Broken’ Pacific Investment Management Co.’s Paul McCulley said problems still exist in the commercial mortgage market even as economic data including today’s housing price gains indicate the economy is in a bottoming process. “The commercial securitization market is broken,” said McCulley, a partner and fund manager at Pimco, in a Bloomberg Television interview from Newport Beach, California. “The focus in the last couple years has been on the residential side, but we are having a bust of sorts on the commercial side.”
Capital One Says Credit Card Defaults Are Soaring Here's bad news for the banks' credit card units. Capital One (COF), which reported a deeper-than-expected net loss last night, said on its conference call that it expected card defaults to surge past 10%. The current default rate is 8.4%, which is ahead of the 8.1% it was expecting just last quarter. For this type of thing, it all comes down to unemployment. If it the rise halts and people find jobs again, this should turn around to. If not, then the losses will exceed anything they've planned for.
European Central Bank used gold sales to buy dollars The European Central Bank said in its Annual Report that it used proceeds from gold sales to boost its U.S. dollar reserves in 2008, although dollar holdings fell as a proportion of overall currency reserves. The European Central Bank said on Tuesday it used proceeds from gold sales to boost its U.S. dollar reserves in 2008, although dollar holdings fell as a proportion of overall currency reserves.
Given its showing, shouldn't the IMF just pipe down? The casual way the IMF overstated British bank losses by some £60bn, and then retreated after a call from the Treasury, does not inspire much confidence that the fund is ready for its fast-escalating role as the world's monetary overlord. Critics are already irked by its G20 coup, when it secured powers to create £250bn in liquidity through Special Drawing Rights – its own quasi-currency. Jurgen Stark, Germany's man on the European Central Bank, called it "helicopter money" for the globe. "There hasn't been a study to see whether the world needs additional liquidity. In the old days, one would take a long time to explore such a thing."
Global Economy Called Worst Since 1945 The global economy will most likely contract this year for the first time since World War II, and the recovery will take longer than expected, the International Monetary Fund said Wednesday. The I.M.F. projected a 1.3 percent decline in global economic activity for 2009, down sharply even from the modest 0.5 percent growth it had projected in January. In the United States, still the “epicenter” of the crisis, according to the fund, economic contraction would be even greater, at 2.8 percent this year, with zero growth for 2010.
IMF sees 1.3% drop in global output The global economy will contract sharply this year and recover only sluggishly in 2010, the International Monetary Fund said on Wednesday as it called on governments to sustain or even increase fiscal stimulus next year. The IMF said that world output would contract by 1.3 per cent this year and grow by just 1.9 per cent the year after in what it described as a “substantial downward revision” of its January forecasts, when it said that the global economy would grow by 0.5 per cent this year and spring back to 3 per cent growth in 2010
World economy in severe recession, IMF says The International Monetary Fund on Wednesday slashed growth forecasts for every major country and urged governments to take forceful action to ensure the world economy's recovery from a severe recession. In its latest World Economic Outlook, the IMF said the global economy would likely contract 1.3 percent this year in the deepest post-World War Two recession by far.
The Case against "Smart Taxes" on Carbon Today is Earth day, and a week ago we "celebrated" tax day. It is fitting, in a sense, that Earth Day and Tax Day are only one week apart. Those who blame global warming on human activity see taxation as an effective and desirable means of preventing environmental global catastrophe. In a recent publication, former Bush advisor Greg Mankiw has extended an "open invitation to join the Pigou club" by embracing the idea of regulating greenhouse gases with corrective taxes.
Latin American Economy to Contract 1.5% in 2009 The economy in Latin America and the Caribbean will contract 1.5 percent this year on a drop in commodities prices, and slumping demand for exports and tourism, the International Monetary Fund said. The contraction will be more severe in Mexico because of its close ties to the U.S., and in Venezuela, the IMF said its World Economic Outlook report released today.
Treasury makes offer to Chrysler lenders Wall Street Journal: Treasury offers Chrysler lenders $1.5 billion plus 5 percent equity stake The Treasury Department lobbed back a new offer to Chrysler LLC's lenders, proposing that banks and hedge funds which hold $6.9 billion in debt forgive $5.4 billion in exchange for a 5 percent stake in a Chrysler-Fiat alliance, media reports said late Wednesday. The new offer represents payment of 22 percent of the debt lenders are owed, according to a report by The Wall Street Journal. That would be up from a previously rejected government offer of 15 percent payment and no stock.
G.M. Likely to Skip $1 Billion Debt Payment General Motors would likely forego making a $1 billion bond payment due June 1, opting instead to begin a debt-exchange offer by then, a spokesman for the carmaker said in a statement on Wednesday. The decision by G.M. isn’t much of a surprise. By that government-set date, G.M. will either have reorganized itself out of court, or it will file for bankruptcy protection. The Obama administration had previously told G.M. that it does not want to see its $13.4 billion lifeline to the carmaker used to make bond payments, a person briefed on the matter said.
Mich. gov, AG send letters to banks, automakers Mich. governor asks banks to help Chrysler; AG says auto bankruptcies should be filed in state Michigan's governor and attorney general have taken up letter writing in their latest efforts to affect the fate of two troubled automakers. The federal government's auto task force has given Chrysler LLC until the end of April to make further cuts and take on a partner or face liquidation. If General Motors Corp. doesn't meet the task force's June 1 deadline, it will be forced to restructure under bankruptcy protection.
Sources say GM to close plants up to nine weeks Most facilities to be affected; usual summer shutdowns last two weeks DETROIT - General Motors Corp. is planning to temporarily close most of its U.S. factories for up to nine weeks this summer because of slumping sales and growing inventories of unsold vehicles, two people briefed on the plan said Wednesday.
In China, G.M. Remains a Driving Force SHANGHAI — Ford may be standing taller than General Motors in Detroit these days — flush with cash while its rival is forced to go repeatedly to Washington, hat in hand, seeking government bailouts. But in China the tables are turned. G.M. is a powerful presence here with 8 to 10 percent of the market for cars, minivans and sport utility vehicles, making it the second-largest automaker in China for such vehicles, passed only by Volkswagen. One of G.M.’s local joint ventures, Wuling, dominates the sale of bare-bones pickups and vans, hugely popular in rural areas, with nearly half the market.
G.M. Plans to Double China Sales in Five Years General Motors, at its press conferences at the Shanghai auto show, is trying to prepare its Chinese customers for what a possible bankruptcy in the United States might mean to its ambitious Asian expansion plans. “It is very important to understand that if there is a court-ordered restructuring, it is different from in some other countries,” Kevin Wale, president of G.M.’s China Group, told a media gathering. “A company continues to trade and continues its business and can come out of it stronger than before.”
Small Cities Save Air Links Through Guardian Angels in Congress Taxpayers paid more than $3,600 per passenger last year to subsidize round-trip air fares on the 150-mile flight between Albuquerque and Alamogordo, New Mexico. For that much, a family of four could fly from Albuquerque to Paris and back. Alamogordo, with fewer than 40,000 residents, is one of about 150 small U.S. cities that benefit from $133 million the government will spend this year to keep planes flying on otherwise unprofitable routes. While New Mexico Airlines makes 12 round trips per week, an average of less than one passenger per day flew to or from Alamogordo last year.
Surprised at concentration of foreclosures in hard-hit states Foreclosure filings topped 800,000 for the first time in the first quarter, and RealtyTrac says most of those were concentrated in four states: Nevada, California, Florida and Arizona, and "What we found was that the concentration of foreclosure activity was even more severe in the hardest-hit states than we anticipated," says RealtyTrac's Rick Sharga
Delinquencies and Defaults Up, Up and Away Delinquencies and defaults are on the rise, due mainly to a handful of circumstances, including the backlog from recent foreclosure moratoria, a jump in unemployment and even a slight rise in marital spats, according to data released by the Federal Housing Finance Agency (FHFA) Tuesday.
Record number of Californians miss mortgage payments More than 135,000 notices of default -- the first step toward foreclosure -- were issued in the first quarter of 2009. That's a steep increase from the end of 2008; still, actual foreclosures decline. A record number of California homeowners failed to make their loan payments in the first three months of 2009, even as the number of homes lost to foreclosure continued to drop, according to figures released today. According to MDA DataQuick, the number of notices of default, the first step in the foreclosure process, rose to more than 135,400 for the period from Jan. 1 to March 31.
As Housing Market Dips, More in U.S. Are Staying Put Stranded by the nationwide slump in housing and jobs, fewer Americans are moving, the Census Bureau said Wednesday. The bureau found that the number of people who changed residences declined to 35.2 million from March 2007 to March 2008, the lowest number since 1962, when the nation had 120 million fewer people.
For Housing Crisis, the End Probably Isn’t Near The closest thing to a real estate crystal ball in the last few years has been the house auctions that are regularly held around the country. In 2006 and early 2007, the official housing statistics were still showing that house prices were holding up. But that was largely because so many sellers were refusing to sell. The auctions, made up mostly of foreclosed homes, showed the truth: house values were starting to plummet in many places.
U.S. credit card bill advances on eve of Obama meet Legislation to curb credit card fees and limit consumer penalties cleared a congressional panel on Wednesday, a day ahead of a meeting between industry executives and President Barack Obama at the White House. The bill is an early test of political will for Democrats pushing for regulatory reform amid the economic crisis and would mean sweeping changes for card-issuing banks, many of which have received government bailout money.
New Mexico Governor Raised $197,300 From Brokers New Mexico Governor Bill Richardson’s campaigns and political action committees received at least $102,300 from brokers hired by money managers seeking to handle $11.7 billion of state trust funds, campaign finance records show. In addition to the those donations, Richardson, a Democrat who ran for President in 2008, received at least $95,000 from the state trusts’ outside money managers, including $20,000 from former Quadrangle Group LLC founder Steven Rattner and $50,381 from Leo Hindery, founder of InterMedia Advisors LLC, according to New Mexico and federal campaign finance records.
Obama's New Muslim Appointment is Hope... for Egyptians? Muslim woman's appointment as Obama advisor draws cautious optimism Dalia Mogahed, a veiled Egyptian American, will advise President Obama on prejudices and problems faced by Muslims. Many Arabs hope it's a step toward reversing stereotyping. Reporting from Cairo -- Egyptians are cautiously rejoicing over the recent appointment of a veiled Egyptian American Muslim woman as an advisor to President Obama. Dalia Mogahed, senior analyst and executive director of the Gallup Center for Muslim Studies, was appointed this month to Obama's Advisory Council on Faith-Based and Neighborhood Partnerships.
Democrat Waxman: Climate Change Bill Will Not Drag Down Economy Top environmental advisers to President Barack Obama expressed general support Wednesday for a House Democratic bill to tackle climate change as the measure's chief sponsor rejected claims that limiting greenhouse gases will be a drag on the economy.
Army: 3 vials of virus samples missing from Maryland facility Missing vials of a potentially dangerous virus have prompted an Army investigation into the disappearance from a lab in Maryland. The Army's Criminal Investigation Command agents have been visiting Fort Detrick in Frederick, Maryland, to investigate the disappearance of the vials. Christopher Grey, spokesman for the command, said this latest investigation has found "no evidence of criminal activity." The vials contained samples of Venezuelan Equine Encephalitis, a virus that sickens horses and can be spread to humans by mosquitoes. In 97 percent of cases, humans with the virus suffer flu-like symptoms, but it can be deadly in about 1 out of 100 cases, according to Caree Vander Linden, a spokeswoman for the Army's Medical Research Institute of Infectious Diseases. There is an effective vaccine for the disease and there hasn't been an outbreak in the United States since 1971.
Huge Solar Storm Could Shut Down US A massive solar storm could be catastrophic for the United States and other countries, scientists warn. Such a storm could knock out power nationwide, ABCNews.com reported, leading to a nightmarish scenario that could include failures of transportation, communication and financial systems; shutdowns of government services; and a lack of safe drinking water, food and medication. Solar storms form when intense bursts of plasma erupt from the surface of the sun, creating what's called a coronal mass ejection (CME). These eruptions can produce electromagnetic interference that wreaks havoc with electricity-dependent technology on Earth.
Are We Ready for a Solar Katrina? Severe Solar Storms Could Harm Power Grid, Navigational Systems and Spacecraft, Scientists Say More than a million people without power. The distribution of drinkable water disrupted. Transportation, communication and banking upset. Trillions of dollars in damage. Hurricanes, blizzards and other earthly tempests aren't the only natural forces with the potential to sow catastrophe. Severe weather in the sun's outer atmosphere could knock out much of the country's power grid, incapacitate navigational systems and jeopardize spacecraft, scientists say.
No quick cybersecurity fix seen The intelligence expert who prepared a still-secret study on cybersecurity for President Obama said on Wednesday the danger of attacks on U.S. computer networks cannot be fixed easily or quickly. "Cyberspace won't be secured overnight and on the basis of one good plan," Melissa Hathaway told the nation's largest conference of private security experts, RSA. "This is a marathon, not a sprint." Hathaway said she had completed work on her report, prepared at the request of the president, and it will be made public soon. Her report aims to address the problem that countries and individuals can compromise, steal, change and destroy information, or damage the U.S. electric grid.
Obama Pushing Treaty To Ban Reloading -- Even BB guns could be on the chopping block Remember CANDIDATE Barack Obama? The guy who “wasn’t going to take away our guns”? Well, guess what? Less than 100 days into his administration, he’s never met a gun he didn’t hate. A week ago, Obama went to Mexico, whined about the United States, and bemoaned (before the whole world) the fact that he didn’t have the political power to take away our semi-automatics. Nevertheless, that didn’t keep him from pushing additional restrictions on American gun owners. It’s called the Inter-American Convention Against Illicit Manufacturing of and Trafficking in Firearms, Ammunition, Explosives, and Other Related Materials. To be sure, this imponderable title masks a really nasty piece of work.
Alan Keyes: Government Will Stage Terror, Declare Martial Law Former Presidential candidate gives most dire warning yet about Obama agenda Former presidential candidate Alan Keyes has given perhaps his most dire warning yet, saying that the Obama administration is preparing to stage terror attacks, declare martial law and cancel the 2012 elections, which is why they are demonizing their political enemies as criminals and terrorists. . . . . . . . . “It’s obvious that they will stop at nothing,” Keyes told attendees of a reception in Fort Wayne, adding, “We may wake up one day and there’s a series of terrorist attacks, the economy is paralyzed….martial law will be declared everywhere in the United States and it won’t end until the crisis ends.”
NLE 09: FEMA Takes Preparations for Martial Law to the Next Level FEMA is preparing to take its martial law exercises to the next level this July. According to a fact sheet buried on the FEMA website, the agency will host National Level Exercise 2009 (NLE 09) on July 27 through July 31, 2009. “NLE 09 will be the first major exercise conducted by the United States government that will focus exclusively on terrorism prevention and protection, as opposed to incident response and recovery,” the fact sheet states. It is designated as a Tier I National Level Exercise, or TOPOFF, which are exercises conducted annually in accordance with the National Exercise Program (NEP), “which serves as the nation’s overarching exercise program for planning, organizing, conducting and evaluating national level exercises,” according to FEMA.
Fidel Castro says Obama misinterpreted his brother's remarks The former Cuban president rejects suggestions that the island should free political prisoners or cut taxes on remittances from the U.S. HAVANA -- Fidel Castro says President Barack Obama "misinterpreted" his brother Raul's remarks regarding the United States and bristled at the suggestion that Cuba should free political prisoners or cut taxes on dollars people send to the island. Raul Castro touched off a whirlwind of speculation last week that the U.S. and Cuba could be headed toward a thaw after nearly a half-century of chilly relations. The speculation began when the Cuban president said leaders would be willing to sit down with their U.S. counterparts and discuss "everything, everything, everything," including human rights, freedom of the press and expression, and political prisoners.
Hillary Clinton warns of 'existential threat' in Pakistan Clinton says the government in Islamabad is ceding more and more territory to the militants and is 'abdicating to the Taliban and the extremists' in some matters. n an assessment that raised questions about the future of Pakistan, Secretary of State Hillary Rodham Clinton warned Wednesday that the country's fragile government is facing an "existential threat" from militants who are now operating within a few hours' travel of the capital. Clinton told a House committee that the government of Islamabad is ceding more and more territory to the militants and is "basically abdicating to the Taliban and the extremists" in signing a deal with militants that limits the government's involvement in the war-torn Swat Valley.
Ron Paul questions Hillary Clinton on Foreign Policy & Interventionism 4/22/2009
Japan Pays Foreign Workers to Go Home HAMAMATSU, Japan — Rita Yamaoka, a mother of three who immigrated from Brazil, recently lost her factory job here. Now, Japan has made her an offer she may not be able to refuse. The government will pay thousands of dollars to fly Mrs. Yamaoka; her husband, who is a Brazilian citizen of Japanese descent; and their family back to Brazil. But in exchange, Mrs. Yamaoka and her husband must agree never to seek to work in Japan again.
The Chinese are not happy BEIJING - At first it was nothing out of the ordinary. A book intriguingly titled China Is Not Happy was expected to generate a buzz because it claimed to detail the world's most populous nation and aspiring superpower's resentment of foreign abuses. . . . . . But, the book appears to have struck a cord with Chinese readers on a level that it was perhaps not intended to. In a surprising twist, the volume - which set out to arouse national indignation at foreign powers' treatment of China - has burst open the Chinese people's grievances with their own government.
Black Money In Black Money, FRONTLINE correspondent Lowell Bergman investigates this shadowy side of international business, shedding light on multinational companies that have routinely made secret payments -- often referred to as "black money" -- to win billions in business. "The thing about black money is you can claim it's being used for all kinds of things," the British reporter David Leigh tells Bergman. "You get pots of black money that nobody sees, nobody has to account for, ... you can do anything you like with. Mostly what happens with black money is people steal it because they can."
Gold Set for Huge Rally The gold price is poised to break through $1,000 an ounce this week and could reach $1,500 before a price consolidation. On Monday gold and silver closed higher while global stock markets fell as the five-week rally ended. This is an important trend reversal and marks a shift by investors to safe haven assets in advance of another plunge in equity values. The US dollar also strengthened across the board and bond prices rose. It is unusual to see both gold and the dollar rising together but again this normally signals an important trend reversal.
Why Gold Owners Are Targets of the Government If you own gold, you are in a war. You are under assault. You had better figure this out early. There is a full-scale war against you. The politicians and central bankers who are conducting this war against you are determined to see that you lose money on your investment. . . . . The reason why you are under assault is because you have demonstrated by your purchase of gold or a gold-related investment that you do not trust the monetary policies of your nation's central bank. If you are an American, this means you do not trust the monetary policies of the Federal Reserve System. You have taken a step that confirms your lack of trust in the government and its central bank. If you think the government and the central bank will sit quietly, while millions of citizens buy gold as a way to hedge against government and central bank policies, you are terminally naive. Gary North's detailed report on this: The Gold Wars
An Oil / Gold Reflation Pair Trade As commodities, gold and oil share many similarities. Both are negatively correlated to the U.S. dollar, offer a hedge against inflation, and perform well when investors seek hard assets. Over the last three years, the two items show daily price movements that are highly correlated to one another. All the similarities point to an expectation that as prices move up and down, the relationship between gold and oil should remain relatively static.
Birds best kept in hand MoneyNews.Newsmax.com had the interesting headline "Mints Rush to Meet Gold Coin Demand". It starts off with a blockbuster statement, namely that the world is in "crisis mode". In fact, a report by The Independent in the United Kingdom notes, "With the world economy now in crisis mode, gold coin production is rising" all over the place, with the result that, "As investor appetite for gold increases worldwide, nations which mint coins of the precious metal have hiked production to satisfy the growing demand."
A Nice Set Up A number of different factors have converged, creating what could be a lift-off point for the price of silver (and gold). This confluence of readily verifiable factors shows the silver market to be in a low risk and high reward situation. The factors involve both the paper and physical silver markets. The only question, as always, is if the manipulators, led by JPMorgan and protected by the CFTC, can thwart the set up once prices rally.
The Fed is now peddling inflation If there's any chance we'll avoid a painful bout of rising prices, it won't be the Federal Reserve that saves us. Also: Chipping away at tech forecasts. If there were any doubts of the inflationary determination of the Federal Reserve, the minutes of its Federal Open Market Committee meeting on March 17-18 should have put them to rest. Not only did certain Federal Reserve heads think that inflation was "below desirable levels," they also had this to say: "Even without a continuation of outright price declines, falling expectations of inflation would raise the real rate of interest and thus increase the burden of debt and further restrain the economy."
Coming Inflation Is Good for Commodities Higher inflation is coming. It's impossible to predict exactly when it will arrive, but the trillions of dollars worth of new money injected into the global financial system make it inevitable. The prospect of inflation will likely be one of the key drivers for the energy and commodities sectors over the medium term. Inflation will eat away at the dollar and other paper currencies, raising the value of tangible assets as a hedge. In this way, commodities are similar to gold.
Deflation could scupper UK economic recovery Britain's annual living costs fell for the first time in almost half a century last month, highlighting the risk that deflation could yet derail any UK economic recovery. Retail price inflation, which includes housing costs, fell to minus 0.4pc last month compared with March 2008 - the first negative reading since March 1960. While analysts said there were technical reasons for the fall, official confirmation of deflation - where asset prices and wages slide but debts do not - provides an uneasy backdrop for Wednesday's Budget. Experts attributed the negative RPI figures to the recent cuts in interest rates that have left Bank rate at a historic low of 0.5pc.
Roubini: You're All Fools Nouriel's not buying this "green shoots" memo: This consensus optimism is, I believe, not supported by the facts. Indeed, I expect that while the rate of US contraction will slow from -6 per cent in the last two quarters, US growth will still be negative (around -1.5 to -2 per cent) in the second half of the year (compared to the bullish consensus of +2 per cent). Moreover, growth next year will be so weak (0.5 to 1 per cent, as opposed to the consensus of 2 per cent or more) and unemployment so high (above 10 per cent) that it will still feel like a recession.
Roubini: Suckers Rally to Fade Well-known economist Nouriel Roubini, one of the few experts to foresee the current global crisis, said Tuesday a recent "suckers rally" in stock markets would fade as the U.S. economy continues to wither and the financial system suffers unexpected shocks. Hopes the world economy will stage a faster recovery this year have fueled a six-week rise in global markets, with major benchmarks on Wall Street and in Asia up more than 20 percent over just six weeks.
It May Be Time for the Fed to Go Negative WITH unemployment rising and the financial system in shambles, it’s hard not to feel negative about the economy right now. The answer to our problems, however, could well be more negativity. But I’m not talking about attitude. I‘m talking about numbers. Let’s start with the basics: What is the best way for an economy to escape a recession? Until recently, most economists relied on monetary policy. Recessions result from an insufficient demand for goods and services — and so, the thinking goes, our central bank can remedy this deficiency by cutting interest rates. Lower interest rates encourage households and businesses to borrow and spend. More spending means more demand for goods and services, which leads to greater employment for workers to meet that demand.
Fed’s Backdoor To Negative Interest Rates The confusion that Federal Reserve Chairman Ben Bernanke has created over the last two years has not done anything to improve the nation’s brain tissue bulk or toning either. Even a man of substantial physical and mental bulk, former Federal Reserve Chairman Paul Volcker has verbally challenged Bernanke’s 2% inflation target. If Volcker doesn’t get it, than there is little hope for the rest of us.
Peter Schiff Vlog Report 20 Apr 2009
Let big banks fail, bailout skeptics say Top economists tell Congress the administration must change its approach to saving troubled financial firms or risk strangling an economic recovery. The Obama administration must break up the biggest financial firms if the nation is to return to economic health, three prominent bailout skeptics told a congressional panel Tuesday. Columbia University professor Joseph Stiglitz and MIT professor Simon Johnson warned the Joint Economic Committee of Congress that the current government policy of propping up troubled financial giants could impede an economic recovery.
Gold Trades Little Changed as Geithner’s Remarks Ease Concerns Gold traded little changed in Asia after U.S. Treasury Secretary Timothy Geithner said the “vast majority” of the nation’s banks have enough capital, easing investors’ concerns about the global economy. The comments boosted equities and eased demand for the metal as an alternative investment.
Banks May Get Mix of U.S. Stock Conversions, Private Funding Treasury Secretary Timothy Geithner indicated that stress tests will show most of the 19 biggest U.S. banks have enough capital and said those requiring further funds may get a mix of converted government preference shares and private money. The Treasury chief, testifying at a congressional oversight panel yesterday, said each bank needing aid after the tests gauging their health would work with supervisors on the options, including tapping the $700 billion Troubled Asset Relief Program. Geithner also repeatedly stated that regulators -- not the Treasury -- are taking the lead on the exams.
Soaring U.S. Budget Deficit Will Mean Billions in Bond Sales Millions of lost jobs mean billions in lost tax revenue for the U.S. government, and billions in additional Treasury debt to fund a federal budget deficit that may soar to more than four times last year’s record $454.7 billion. Employers cut 3.7 million positions from their payrolls in the six months since the fiscal year began Oct. 1, and the unemployment rate reached a 25-year high of 8.5 percent in March. That suggests receipts for April -- the biggest month for tax collection -- are likely to come in well below April 2008, analysts said.
Dollar Declines as Geithner’s Bank Comments Erode Refuge Appeal The dollar declined against most actively traded currencies after Treasury Secretary Timothy Geithner said the “vast majority” of U.S. banks have sufficient capital, reducing the greenback’s haven appeal. The U.S. currency weakened more than 1 percent versus the Australian dollar, Swedish krona and New Zealand dollar on speculation the easing of concern about bank balance sheets will prompt investors to shift funds to higher-yielding assets. The euro gained for the first time in four days versus the yen and also strengthened against the dollar after a report showed German investor confidence in April increased to the highest level in almost two years.
Goldman Sachs Shook Tens of Billions Out of Tax-Payers Now They're Whining All the Way to the Bank The Wall Street crew relied on its political power to ensure that the rules remained rigged, even though their crooked deck wrecked the economy. Lloyd Blankfein, the CEO of Goldman Sachs, is very upset with the Troubled Asset Relief Program (TARP). Last fall, Mr. Blankfein borrowed $10 billion through the TARP at below market interest rates. Now, the government is starting to tie some real conditions to this money, for example, by limiting what Goldman can pay its executives. Mr. Blankfein argues that such conditions are making it impossible to run his business and is now anxious to return the TARP money.
Geithner's Testimony: Lots of Questions, Few Answers .... Secretary of the Treasury Tim Geithner testified before the Congressional Oversight Panel (COP) headed by Elizabeth Warren. In general, the questions were excellent; unfortunately, the answers were not forthcoming. One excellent question was, "How does protecting the common shareholders of Citigroup (C) help the economy?" There was no real answer to that question -- just a dance about how it was not appropriate for him to talk about any individual financial institution. The true answer to the question is: it doesn't.
Tim Geithner Is Trying To Steal Ben Bernanke's TARP Job Earlier this [Tuesday] afternoon we pointed out that Tim Geithner probably doesn't have the authority to tell banks they can't withdraw from TARP and its compensation restrictions by paying back the bailout money. The law actually says there should be no impediments to banks that want to withdraw--no requirements that they raise new money, and certainly no requirement that the "system" is healthy enough to withstand their withdrawal.
Credit Markets Still Tight, Geithner Says Despite huge government efforts to restore lending to normal, Treasury Secretary Timothy F. Geithner said Tuesday that borrowing costs remained high and credit was still not flowing normally. Speaking before a Congressional panel in Washington, Mr. Geithner said that some corners of the credit market had improved recently as the government set up programs to ease lending among banks, for home mortgages and commercial loans and credit for small businesses. But he acknowledged that the programs had not cured all problems in lending.
Stress Tests Are Biased In Favor Of Wall Street A Federal Reserve document obtained by the AP shows that the stress tests take a harsher view of loans than of other troubled assets. This would mean that banks holding large loan portfolios would be viewed as being at greater risk than banks holding derivatives and debt securities. Wall Street's former investment banks and the megabanks - JP Morgan, Citi and Bank of America - have large securities holdings, while regional banks tend to have a relatively larger portfolio of loans.
Obama's order to cut $100 million in federal spending underwhelms many Obama’s marching orders are less than meets the eye. Many of the savings he asked for are already under way and are included in the calculation. To be sure, this is an extra effort, on top of an agency-by-agency review of programs and proposed multibillion-dollar cuts in weapons programs. But it is decidedly marginal. "It’s always a good sign when the president is talking about savings," said Marc Goldwein, policy director of the Committee for a Responsible Federal Budget, a nonpartisan group that advocates fiscal discipline. "It’s valuable as a symbol," he said, "but $100 million is just not going to cut it."
A Crash this way Cometh The stock markets have gone up for six straight weeks. That's a pretty strong sign of a top. Our financial system continues to come unglued as Goldman Sachs leads the looting of the treasury after a financial coup d'état that has stolen $46,000 from each taxpayer to hand it over to the banks now running the country. After over $13.6 trillion has been poured into the banking system, I cannot see that a person I know has been enriched by even a single cent but each American is now indebted to the tune of an additional $46,000. It's going to end badly. We are not at the bottom; we aren't even near the bottom. In terms of the Great Depression, we are in 1931 or so; the bottom is ahead of us. I expect the dollar to default in the next few months after a General Motors and Chrysler bankruptcy convinces everyone that we are truly in a depression.
Meltdown losses of '$4 trillion' The International Monetary Fund (IMF) has warned that potential losses from the credit crunch could reach $4 trillion and damage the financial system for years to come. It says that even if urgent action is taken to clean up the banking system, the process will be "slow and painful", delaying economic recovery. It says that banks may need $1.7 trillion in additional capital. But it warns that political support for further bank bail-outs is waning. One year ago, the IMF estimated that total losses from the credit crunch would be $1 trillion, which has been exceeded, showing how rapidly the financial meltdown has escalated.
IMF: Losses from global credit crisis mounting IMF says US institutions could suffer losses totaling $2.7 trillion from credit crisis The International Monetary Fund said Tuesday worldwide financial institutions could suffer more than $4 trillion in losses from the global credit crisis with the U.S. leading the way with a total of $2.7 trillion. The $2.7 trillion estimate for the United States was nearly double the IMF's projection from just six months ago. The agency for the first time estimated losses for other regions of the world, saying the global total could surpass $4 trillion. The IMF also warned that governments must take decisive policy actions to contain the fallout. The agency said governments have made progress getting extra money into the banking system, but more needs to be done to deal with toxic assets on banks' books and shutting down insolvent financial institutions.
IMF Says Losses From Crisis May Hit $4.1 Trillion Worldwide losses tied to distressed loans and securitized assets may reach $4.1 trillion by the end of 2010 as the recession and credit crisis exact a higher toll on financial institutions, the International Monetary Fund said. Banks will shoulder about 61 percent of the writedowns, with insurers, pension funds and other nonbanks assuming the rest, the Washington-based lender said in a report released today on the state of the global financial system. The fund forecast $2.7 trillion in losses from U.S.-originated loans and assets, compared with its estimates of $2.2 trillion in January and $1.4 trillion in October.
Bail-out 'risk' for US taxpayers A watchdog for the US's $700bn bail-out plan for banks, said some aspects could be "unfair" to taxpayers. . . . . Part of Tarp is a "Public-Private Investment Programme" to buy troubled mortgages and securities that have been at the root of the credit crunch. But Mr Barofsky said taxpayer risk was many times that of the private parties. He also warned that the initiative, which includes giving private parties government subsidies to buy the troubled assets, could lead to more scope for fraud. The public-private partnerships - comprising Treasury, Federal Reserve and private investor money - could total $2 trillion.
Geithner Says Banks Will Have ‘Options’ for Boosting Capital Treasury Secretary Timothy Geithner said banks found to need additional capital at the conclusion of regulators’ stress tests will have a range of options for shoring up their balance sheets. The Treasury chief, testifying before a congressional oversight panel today, said lenders will be able to take taxpayer money, raise funds from private investors or convert previous government investments from preferred to common shares. Each bank can chose the “best mix” of alternatives and will likely make different choices, Geithner said. “They’ll be balancing lots of different considerations,” he said. “That’s a process they’re going to have to undertake, and it’s going to require a fair amount of care and effort.”
Dollar Declines as Geithner’s Bank Comments Erode Refuge Appeal The dollar declined against most actively traded currencies after Treasury Secretary Timothy Geithner said the “vast majority” of U.S. banks have sufficient capital, reducing the greenback’s haven appeal. The U.S. currency weakened more than 1 percent versus the Australian dollar, Swedish krona and New Zealand dollar on speculation the easing of concern about bank balance sheets will prompt investors to shift funds to higher-yielding assets. The euro gained for the first time in four days versus the yen and also strengthened against the dollar after a report showed German investor confidence in April increased to the highest level in almost two years.
Deflation: What is it? Deflation is a sustained decrease in the general price level of goods and services. It is often associated with periods of negative or stagnant economic growth like the Great Depression of the 1930s and the Japanese economy in the 1990s. What causes it? Deflation is typically triggered by falling consumer demand, as companies cut prices as they try to encourage spending. In the UK economy, spending has fallen as consumers are nervous about rising unemployment and investment losses, while tight credit markets limit borrowing. Why is it bad? Deflation increases the burden of debts as incomes fall while debts stay the same.
Spain’s Falling Prices Fuel Deflation Fears in Europe VALENCIA, Spain — Faced with plunging orders, merchants across this recession-wracked country are starting to do something that many of them have never done: cut retail prices. Prices dipped everywhere, from restaurants and fashion retailers to pharmacies and supermarkets in March. Hoping to increase sales, Fernando Maestre reduced prices by a third on the video intercoms his company makes for homes and apartment buildings. But that has not helped, so, along with many other Spanish employers, he is continuing to fire workers. The nation’s jobless rate, already a painful 15.5 percent, could soon reach 20 percent, a troubling number for a major industrialized country.
Geithner defends bank rescue program amid warnings Geithner faces questions about bailout amid warning it could expose taxpayers to losses Treasury Secretary Timothy Geithner defended the bank rescue program devised by the Obama administration Tuesday as the International Monetary Fund predicted U.S. financial institutions could lose $2.7 trillion from the global credit crisis. Geithner, testifying before the rescue plan's Congressional Oversight Panel, faced a battery of questions over the Treasury's public-private partnership investment plan to rid financial institutions of their troubled assets. His testimony came in the wake of a watchdog agency report that warned Obama administration initiatives could increasingly expose taxpayers to losses and make the government more vulnerable to fraud.
Banks still in distress, Geithner tells overseers Banks still broken, Geithner tells impatient overseers as they press for timetable, costs America's banks are still broken despite all their bailout billions, Treasury Secretary Timothy Geithner told impatient rescue overseers Tuesday as they pressed him on when things will get better and how much it will cost. A bleak new report estimated U.S. banks and other financial institutions could lose a stunning $2.7 trillion in all. How well is the mostly-spent $700 billion federal bailout working? "To date, frankly, the evidence is mixed," Geithner told a congressionally appointed oversight panel.
Fed tests harder on regional banks 'Stress tests' focus on loans, not securities, will favor big banks The government's "stress tests" of 19 large banks take a harsher view of loans than of other troubled assets, according to a Federal Reserve document obtained by the Associated Press. That approach favors a few Wall Street banks while potentially threatening major regional players. Regulators will use the tests to determine which banks are healthy, which need more capital and which might fail if the recession worsened.
U.S. Regulators Put Emphasis on Loan Quality in Tests tress tests on the 19 largest U.S. banks are increasingly focusing on the quality of loans they made after finding wide variations in underwriting standards, a regulatory official said. Supervisors concluded that banks’ lending practices need to be given as much weight as macroeconomic scenarios in determining the health of each bank, the official said. The approximately 200 examiners poring over the banks’ portfolios have found widely differing standards for mortgages and other loans, the person said.
Eliot Spitzer: Redemption Tour Emerging from exile after his own scandal, New York’s former top cop speaks his mind. Who has the right blend of power and personality to serve as Wall Street’s watchdog now? Very few government officials will be successful, because they don’t have the market credibility. If you want to understand markets, you have to understand the flip side of when markets don’t work. So if Warren Buffett wanted to say, “Here’s where, on a thematic level, government must step in to contain market failures,” he could do it. Or Felix Rohatyn. Or Bill Gates.
Traders Mounting "Speculative Attack" on U.S. Banks “The view being taken by people who trade credit in the United States is that we’re definitely not out of the woods. And I would say, in fact, there’s something of a run taking place in the credit market. Not a traditional bank run, but a speculative attack on some of the biggest financial players ….” Specifically, traders are shorting credit of major banks, betting that the government won't protect bondholders forever: ”Basically these people are betting the big banks will be forced into some sort of default. Now, if enough people bet that, and if the banks can’t draw on enough external support, which in their case would be from the U.S. government, then these runs can be self-fulfilling. It’s extremely dangerous and a situation that’s really not been addressed by the U.S. authorities.”
Treasury says about $110B left in bailout fund US Treasury says about $110 billion in resources left in $700 billion bailout fund Only $109.6 billion in resources remain in the government's $700 billion financial rescue fund. But Treasury Department officials said Tuesday they expect the fund will be boosted over the next year by about $25 billion as some institutions pay back money they have received. That would boost the total to $134.6 billion. The accounting details were made by Treasury Secretary Timothy Geithner in a letter to Elizabeth Warren, the head of the Congressional Oversight Panel.
IMF warns over parallels to Great Depression The International Monetary Fund has warned of "worrisome parallels" between the current global crisis and the Great Depression, despite the unprecedented steps already taken by central banks and governments worldwide. This recession is likely to be "unusually long and severe, and the recovery sluggish," said the Fund, releasing two advance chapters from its World Economic Outlook. However, it warned there is a risk that it could spiral down into a full-blown slump unless further action is taken to stop "feedback effects" gathering force.
Saving federal money the easy way SPIN METER: Obama's latest budget-tightening effort hardly makes a dime's worth of difference Cut a latte or two out of your annual budget and you've just done as much belt-tightening as President Barack Obama asked of his Cabinet on Monday. The thrifty measures Obama ordered for federal agencies are the equivalent of asking a family that spends $60,000 in a year to save $6. Obama made his push for frugality the subject of his first Cabinet meeting, ensuring it would command the capital's attention. It also set off outbursts of mental math and scribbled calculations as political friend and foe tried to figure out its impact. The bottom line: Not much.
5 Reasons Why House Prices May Never Recover House prices will eventually stop falling, probably in about two years. But will they ever recover to the levels we saw during the heights of boom? In some areas, prices might climb that high again. But for most markets, such a recovery will probably never happen, and would take decades it were to occur.
Once the bubble in an asset class pops, it never reflates.
Inflation destroys the gains anyway.
If we somehow avoid inflation, deflation will mean house prices keep sinking.
The combination of low interests rates and loose lending that fueled the boom is dead.
Demographics.
GM, Chrysler to get $5.5B more in government loans US gov't to loan GM up to $5B more, Chrysler to get $500M as automakers race to restructure. A federal report says the U.S. government will loan General Motors Corp. up to $5 billion more to make it through June 1, and Chrysler LLC could get up to $500 million more by April 30. The report on the bank bailout program released Tuesday by a special inspector general says the money will be made available for working capital as both companies try to meet government restructuring demands.
When Did Your County's Jobs Disappear? An interactive map of vanishing employment across the country. The economic crisis, which has claimed more than 5 million jobs since the recession began, did not strike the entire country at once. A map of employment gains or losses by county tells the story of how those job losses first struck in the most vulnerable regions and then spread rapidly to the rest of the country. As early as August 2007, for example—several months before the recession officially began—jobs were already on the decline in southwest Florida; Orange County, Calif.; much of New Jersey; and Detroit, while other areas of the country remained on the uptick.
USA - A Banana Republic Simon Johnson Decries Influence Of Wall Street Oligarchs America’s Crisis Resembles that of Emerging Markets: While at the IMF, Johnson saw so many financial crises that the core problem became old hat: In the free-wheeling growth years of an economic boom, the politicians and oligarchs of an emerging market like Russia or Argentina would get so close that eventually they would meld into a politico-industrial complex. As long as the boom lasted, this cozy relationship never bothered anyone--because everyone was getting rich. Fast forward to the latest market crisis--the one in the United States. The pattern is exactly the same, with a two-way money-and-power corridor now running between Washington and the modern oligarchs Wall Street.
Record Number Of State Businesses Close In First Quarter Nearly 3,500 Connecticut businesses closed between January and March - the highest number recorded in the first quarter of a year since the state began keeping records in 2000, Secretary of the State Susan Bysiewicz said Monday. The number of "business stops" rose by 16 percent to 3,477 in the first quarter of 2009 compared with the same period last year. In March alone, 1,676 Connecticut businesses shut down - the highest number in the month of March ever recorded. The number of businesses that opened during the first quarter was down by 13 percent compared with last year's first quarter, Bysiewicz said.
The Invisible Crash for Real Estate As I noted last week, the odds are high that in the coming months an inventory replenishment cycle will likely unfold, and in the process will give some long overdue lift to the moribund economic data. In my last article, I also tried to point out that while the headline numbers are bound to improve, that despite the improved news headlines, very little else is likely to have anything but an ongoing 'recession' feel. In fact, I would argue that ultimately, the contraction phase currently being seen is but a 'warm up' prelude to a much larger economic decline, which in the end will likely only be able to be characterized as a "major depression." The timing for the second phase of this large contraction is still hard to predict, as if the current Administration is successful in re-inflating the markets, the second leg of contraction could be pushed out several years. In that event, we would have the current contraction followed by a respite period of virtually stagnant, possibly slightly improving conditions, followed by a second and likely much more intense 'crash' phase a few years (2-4) down the road. In the end, much higher interest rates of all stripes are on the way, and with them eventually, a currency panic the world will remember for decades.
Don't Count on the Consumer for a Recovery The U.S. economy remains mired in a deep recession. How deep, well fourth quarter' GDP declined 6.3% which was the biggest drop in output in 26 years. GDP figures for the first quarter are not available yet but are expected to be down an equivalent amount. Earnings and profits will also be down substantially in the first quarter after falling 20% in the fourth.
Shakeout Nears for Real Estate Firms Though it came as no surprise to investors, the collapse of General Growth Properties, the nation's second-largest mall owner, has stirred new fears about a coming debacle in commercial real estate. The company, which owns 200 shopping centers encompassing 200 million square feet and 24,000 tenants, filed for bankruptcy protection last week. With the credit markets virtually shut down, General Growth said it was unable to refinance the $3.3 billion in debt that had already matured or would be due this year. These included loans totaling $900 million on two malls in Las Vegas - Fashion Show and the Shoppes at the Palazzo - that were due to be repaid in November. An additional $6.4 billion in debt matures next year.
Dealer Jobs Vanish as GM, Chrysler Bankruptcies Loom Thousands of GM and Chrysler LLC dealers across the U.S. are preparing for the probability that as many as 5,000 of them will be forced to close because of an automaker's bankruptcy. Dealers say they're ordering fewer vehicles, cutting expenses, retiring debt and firing workers to preserve cash.
GM, Chrysler to get $5.5B more in loan General Motors Corp. could get as much as $5 billion more in federal loans, while Chrysler LLC could get $500 million as they race against government-imposed deadlines to restructure, according to a government report filed Tuesday. The quarterly report by a special inspector general on the auto industry and bank bailout programs says the money will be made available for working capital. GM has until June 1 to complete restructuring plans that satisfy the government's auto task force, while Chrysler has until April 30.
In China, G.M. Remains a Driving Force Ford may be standing taller than General Motors in Detroit these days - flush with cash while its rival is forced to go repeatedly to Washington, hat in hand, seeking government bailouts. But in China the tables are turned. G.M. is a powerful presence here with 8 to 10 percent of the market for cars, minivans and sport utility vehicles, making it the second-largest automaker in China for such vehicles, passed only by Volkswagen. One of G.M.'s local joint ventures, Wuling, dominates the sale of bare-bones pickups and vans, hugely popular in rural areas, with nearly half the market.
The Top 12 Brands Likely to Disappear To determine which brands are most likely at risk, 24/7 Wall Street examined 100 large brands it believes are in trouble and, for each, looked at public financial records, sales information, analyses from industry experts, the competitive landscape in each's industry and the likelihood that a brand could be sold off in the case of parent-company financial trouble. The analysis points to the most serious peril for the following 12 brands which, 24/7 Wall Street says are most likely to disappear by the end of 2010:
Budget rental car
Borders books
Crocs footwear
Saturn vehicles
Esquire Magazine
Old Navy
Architectural Digest Magazine
Chrysler brand cars
Eddie Bauer
Palm
AIG
United Air Lines
Kerry aims to rescue newspapers The "death of newspapers" has drawn powerful political interest. Troubled by the possible shuttering of his hometown paper, Sen. John Kerry reached out to the Boston Globe on Tuesday, then called for Senate hearings to address the woes of the nation's print media. "To the Boston Globe family," the Massachusetts Democrat wrote to employees of the 132-year-old publication, which faces closure unless it can come up with $20 million in union concessions to parent company the New York Times by May 1. The Globe is losing $1 million a week.
'60 Minutes' video: Cold fusion is hot again Twenty years ago it appeared, for a moment, that all our energy problems could be solved. It was the announcement of cold fusion--nuclear energy like that which powers the sun--but at room temperature on a table top. It promised to be cheap, limitless, and clean. Cold fusion would end our dependence on the Middle East and stop those greenhouse gases blamed for global warming. It would change everything. But then, just as quickly as it was announced, it was discredited. So thoroughly, that cold fusion became a catch phrase for junk science. Well, a funny thing happened on the way to oblivion--for many scientists today, cold fusion is hot again. "We can yield the power of nuclear physics on a tabletop. The potential is unlimited. That is the most powerful energy source known to man," researcher Michael McKubre told "60 Minutes" correspondent Scott Pelley. McKubre says he has seen that energy more than 50 times in cold fusion experiments he's doing at SRI International, a respected California lab that does extensive work for the government.
More Than Junk Science
A Jackboot at Home, an Olive Branch Abroad President Obama seems intent upon cramming stifling socialist programs down our throats domestically, while he relies upon pretty-word diplomacy with foreign nations that have vowed to destroy us. Reportedly the President’s chief of staff Rahm Emanuel stated that an economic crisis is too good an opportunity to be wasted on economics, when it can be used, as Franklin Roosevelt did in the Depression, to revolutionize the nation’s social and political structure, in effect to amend the Constitution without the bother of submitting amendments in accord with the Constitution’s Article V.
San Francisco Police Department Their Representative in Congress is Nancy Pelosi. Chief Heather Fong (left), the first SFPD female chief of police; Theresa Sparks (center, former male), president of the San Francisco Police Commission, CEO of a multi million-dollar sex toy retailer, and a trans sexual woman. Sgt. Stephan Thorne (right, former female), the first transexual SFPD police officer.
Britain in elite company with budget blues Our predicament is desperate but not serious, as they used to say in the Austro-Hungarian Empire. Britain’s budget deficit threatens to hit £175bn this year, or 12pc of GDP. That is just about the worst performance of any major country at any time in history, during peacetime. Gordon Brown’s sin as Chancellor was to run a fiscal deficit of 3pc of GDP at the top of the long boom, when other countries were prudently using their windfall tax revenues to build a storm buffer. Many ran surpluses in 2007: Finland (+5.3pc), Denmark (+4.9pc), Sweden (+3.5pc), Spain (+2.2pc), Australia (+1.6pc) and Canada (+1.4pc). Germany was near balance.
Obama funds $20M tax payer dollars to immigrate Hamas Refugees to the USA Presidential Determination No. 2009-15 of January 27, 2009 Unexpected Urgent Refugee and Migration Needs Related To Gaza Memorandum for the Secretary of State By the authority vested in me by the Constitution and the laws of the United States, including section 2(c)(1) of the Migration and Refugee Assistance Act of 1962 (the ``Act''), as amended (22 U.S.C. 2601), I hereby determine, pursuant to section 2(c)(1) of the Act, that it is important to the national interest to furnish assistance under the Act in an amount not to exceed $20.3 million from the United States Emergency Refugee and Migration Assistance Fund for the purpose of meeting unexpected and urgent refugee and migration needs, including by contributions to international, governmental, and nongovernmental organizations and payment of administrative expenses of Bureau of Population, Refugees, and Migration of the Department of State, related to humanitarian needs of Palestinian refugees and conflict victims in Gaza. You are authorized and directed to publish this memorandum in the Federal Register. (Presidential Sig.) THE WHITE HOUSE, Washington, January 27, 2009 [FR Doc. E9-2488 Filed 2-3-09; 8:45 am] Billing code 4710-10-P
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Gold price could hit $1,500 The aggressive monetary policy of central banks around the world is playing havoc with the structure of the bullion market, creating a chronic shortage of gold that may soon push the metal to fresh records above $1,500 an ounce. Charles Gibson, a gold expert at Edison Investment Research, argues in a new report that negative real interest rates (below inflation) in the US and beyond has upset the "leasing" machinery in the gold industry and led to a sustained market squeeze. This is what occurred in the late 1970s, driving gold prices to $850 and ounce – roughly $1,560 in today's terms. Gold finished last week at $870.
Gold: Traders remain bullish as hedge fund managers buy gold futures Gold is set climb this week on speculation the decline in prices may boost demand from jewellers and other buyers of the physical metal, say analysts Gold is expected to climb this week on speculation the decline in prices may boost demand from jewellers and other buyers of the physical metal. Fourteen of 34, or 41 percent, of traders, investors and analysts surveyed by Bloomberg News said gold would advance this week. Eleven of them forecast lower prices and nine were neutral.
Gold yields an annual average return of 26% Gold is turning out to be the best form of investment asset for seasoned traders, financial planners and even house wives, according to a Gold Survey 2009 from the World Gold Council. The WGC survey says gold has yielded an annual average return of 26% in the last decade.
Fear Returns to Gold The markets (well, at least some of them) appear to be returning to the fearful reality that the global recession has no end in sight. The main beneficiaries of this realization are the dollar and gold and thus it should be no surprise that both are rallying strongly in tandem today. I have a suspicion, however, that gold will not be able to capitalize on the fear trade as successfully as it did earlier this year.
IMF Gold sale is a masterstroke from India, China India is working on a more ambitious proposal of selling the entire gold as it is an idle asset with the IMF. India and China want the IMF to sue the money to invest to raise IMF liquidity or spend it to improve incomes of the poorest countries. A large part of the IMF gold may find its way into central banks and private players. Since most of it will be out of reach for retail markets, gold prices may not get hammered.
Coming Inflation Good for Commodities Higher inflation is coming. It's impossible to predict exactly when it will arrive, but the trillions of dollars worth of new money injected into the global financial system make it inevitable. The prospect of inflation will likely be one of the key drivers for the energy and commodities sectors over the medium term. Inflation will eat away at the dollar and other paper currencies, raising the value of tangible assets as a hedge. In this way, commodities are similar to gold. The economic slowdown has reduced demand for oil and natural gas, but the supply-and-demand fundamentals are tightening rather than loosening. This is because supply has been declining at a greater rate than demand.
The 1997 Silver Price Manipulation During the late 1970s, the silver market was claimed to be "cornered" by the Hunt Brothers. That was far from true, for what they failed to understand, was that the attitude of the major brokerage houses was not that you were a pure trader-customer, but someone to pick - off for profit. During the 1980s, I had to take on some hedging projects that were awesome. One was in platinum. When you are the largest trader in a narrow market, they watch everything you do. If I was to sell, they assume the whole lot is being sold and jump in front. You suddenly find yourself trapped. I was a witness to the Hunt collapse. They couldn't get out of the market at any price. The dealers were selling in front of them taking short positions looking to buy back when the Hunts were in a state of panic dumping at any price.
Jack Bauer can't stop 'The Goldman Conspiracy' 10 reasons why Wall Street has absolute power over America's democracy Two mind-numbing fast-paced dramas. Two parallel worlds. One real, one fiction, both deadly. Jack Bauer, mythic hero of "24." Dying from a deadly bio-pathogen leaked from weapons developed by Starkwood, a rogue mercenary army attacking the presidency, hell-bent on taking over America. The other drama in play: "Hank the Hammer" Paulson, iconic Wall Street hero, a Trojan Horse placed inside Washington by Goldman Sachs as Treasury Secretary in control of America's $15 trillion economy. Goldman, a modern dynasty with vast financial powers much like those once used by the de' Medici, Rothschilds and Morgans to control nations.
Bank bailout may hurt taxpayers, be open to fraud Inspector general cites potential flaws in bank bailout, urges Treasury to adopt safeguards Taxpayers are increasingly exposed to losses and the government is more vulnerable to fraud under Obama administration initiatives that have created a federal bank bailout program of "unprecedented scope," a government report finds. In a 250-page quarterly report to Congress, the rescue program's special inspector general concludes that a private-public partnership designed to rid financial institutions of their "toxic assets" is tilted in favor of private investors and creates "potential unfairness to the taxpayer."
Geithner faces critical report on bail-out Tim Geithner, US Treasury secretary, will face lawmakers in Congress on Tuesday morning, hours after publication of a report that criticises aspects of the bank bail-out and days before stress test results that could lead to the government taking larger stakes in the financial ?sector. His appearance before the congressional oversight committee comes after increasingly confident public performances and tentative signs of improvement in parts of the economy.
Krugman: New Treasury Plan Is Just Shuffling Deck Chairs On The Titantic The latest bank rescue idea is getting criticized in all the usual places. This morning the New York Times reported that the Obama adminsitration is considering converting TARP preferred shares to common equity. Paul Krugman, who has been a leading critic of the Bush-Obama bailout moves, thinks the move is just "shuffling-deck-chairs" on the Titantic. According to Krugman, the move to reclassify the shares does nothing to improve bank capital. Senior creditors should be indifferent to whether shares are preferred or common, since both are junior to debt.
Derivatives: A $700+ Trillion Bubble Waiting to Burst In the past three years, while banks all over the world and Wall Street were imploding, while some $40-$50 trillion of capital was being destroyed in global stock markets, one financial market kept growing. That market is the financial derivatives market. According to the Bank for International Settlements [BIS], the global Over the Counter [OTC] derivatives market has grown almost 65% from $414.8 trillion in December, 2006 to $683.7 trillion in June of 2008. On the BIS’s own website, there are no updated figures for the notional derivatives market since June 2008, so we can likely assume, with some margin of safety, that this market has now grown to more than $700 trillion. Comparatively speaking, the total market cap of all major global stock markets is approximately $30 trillion.
Fed's Kohn Says GDP to Show Large Decrease, Sizeable Risks to Inflation Ahead Federal Reserve Vice Chairman Donald Kohn said next week's release of the Commerce Department's advance GDP estimate for the first quarter of 2009 is expected to show another sizable decrease, and this recession is likely to be among the deepest and longest since World War II. Speaking in Delaware on Monday evening, Kohn said consumption appears to have steadied after a sharp drop in the second half of 2008. Kohn also said that the declines in sales and construction of single-family homes have abated, due in part to low mortgage interest rates and greater affordability of housing.
Stocks slide as investors dump financials Stocks fall as investors worried about trouble spots on balance sheets dump financials Investors are having doubts about banks' profit reports and wondering whether their better-than-expected performance mask larger problems with bad debt. Stocks fell sharply early Monday as investors sold financial stocks and locked in profits after a six-week rally. The major indexes slid more than 2.5 percent, including the Dow Jones industrial average, which fell 200 points.
Dow's biggest decline in 7 weeks Wall Street pulls back after six straight weeks of gains on worries about banks, despite BofA quarterly results. Stocks tumbled Monday as a six-week old rally lost steam on worries about financial sector earnings, despite Bank of America's better-than-expected quarterly results. . . . . "We had a nice run over six weeks, but it was still a bear market rally," he said. "Now today, people are looking at Bank of America and asking how they could have earned what they did and whether it's just a one-time thing."
A New Round of Worries Pushes Shares Lower Wall Street's nagging fears about the financial system resurfaced on Monday, pushing stocks sharply lower. Even as the banking giant Bank of America posted big profits, investors fretted about losses and other write-downs that could be lurking. And as the focus of earnings season shifts from banks to non-financial institutions, investors were bracing for lower profits and falling revenues that would reflect how the toll of the recession and last fall's financial crisis had spread to industrial companies, retailers and others.
Purported Stress Test "Leak" Gives Market Jitters Here's how on-edge the market and regulators are right now... Last night, The Turner Radio Network, a white supremacist outlet run by Hal Turner, published what it claimed was a "leak" of the Treasury stress tests. They didn't actually publish a document, just a summary and in short they said the stress tests showed the entire banking system was stunningly insolvent.
U.S. Officials Signal No Need for More TARP Funds From Congress Obama administration officials signaled there may be no need to request more financial-rescue funds from Congress as several banks plan to return taxpayer money and others are pushed to tap private markets first. White House chief of staff Rahm Emanuel said while he had not seen results of stress tests on the 19 biggest banks, he believed "we won't" have to get more money. Aide Lawrence Summers said "the first resort for more capital is going to the private markets," by issuing new equity or swapping some liabilities into stock that dilutes other stakeholders.
At the heart of America's Economic Problems Any healthy economy has a reasonable balance of consumption and production. This is the manifestation of the age-old equation of "supply and demand". When you hear that there are "imbalances" in an economy, it sounds tame but it could mean anything from a bad problem to a massive crisis. America needs to address this balance of consumption and production if it is going to be back on a sound foundation for economic growth and prosperity. The problem is that government policy created the massive imbalances in recent years and current policy initiatives will only make matters worse.
Geithner says system health linked to bank paybacks U.S. Treasury Secretary Timothy Geithner said he would consider the health of the financial system and the flow of credit in deciding whether banks can repay bailout funds from the government, the Wall Street Journal reported on Monday. In an interview published on its website, the newspaper said Geithner indicated the health of individual banks would not be the sole criterion for returning government funds.
Profits mask bank problems A string of surprisingly strong earnings reports suggests US banks are emerging from a near-death experience, but some analysts say the troubled sector faces more pain. Bank of America on Monday joined the parade of financial firms reporting robust results - a profit of $US4.2 billion ($A6.02 billion) in the first quarter, beating its performance for all of 2008. Last week, Citigroup, JPMorgan Chase and Goldman Sachs all topped expectations with strong profits, a hopeful sign for an industry critical to recovery from the severe recession. Wells Fargo said its results would show "record" profits in the January-March quarter. The apparent renewed health of banking sector comes in part from record-low interest rates from the Federal Reserve, which has cut its base rate to near zero as part of an effort to stimulate lending and growth.
Bank of America's surge in bad loans revives economic gloom The embattled US financial services group Bank of America (BoA), which is facing a revolt by shareholders, delivered a gloomy assessment of economic conditions as a surge in bad loans forced it to set aside $13.4bn (£9.2bn) to cover credit losses. BoA reported a first-quarter profit of $4.2bn, compared with $1.2bn for the same period a year ago. But analysts said that after stripping out a series of large one-off gains, the bank's underlying performance was closer to break-even.
Treasury has enough capital for banks State preferred could be converted to common, raising governance issues The U.S. government has enough money to shore up 19 large U.S. banks that are participating in a $700 billion financial rescue package, according to key Obama administration officials. "We believe we have those resources available in the government as the final backstop to make sure that the 19 are financially viable and effective," White House Chief Of Staff Rahm Emanuel said on the ABC program "This Week" on Sunday.
Recession pits small banks against big banks First they felt their reputations were stained by the financial meltdown. Now they're paying a price they protest is unfair. Small bankers are complaining loudly that they had nothing to do with the excesses of big Wall Street firms, freewheeling deals in the mortgage market and risky investments that precipitated the economic crisis. Still, in the meltdown's wake, community bankers find themselves under tighter scrutiny from federal regulators. They say the $700 billion financial bailout has favored large institutions. And they are upset about a special assessment the government wants to charge to shore up the Federal Deposit Insurance Fund, which failed banks are draining. This all comes as the government, trying to stimulate the economy, is pleading with banks - big and small - to lend, lend, lend.
How Much Could the Government Lose on TARP? While the U.S. government keeps doling out taxpayer money in a frenzied effort to save the financial system, more scrutiny is being paid to what the government is getting in return for its bailouts -- and how big a loss taxpayers are likely to suffer in the end. Elizabeth Warren, who heads the Congressional Oversight Panel responsible for keeping tabs on the Troubled Asset Relief Program [TARP], estimates that $590.4 billion of the total $700 billion approved by Congress has been spent or committed over the past six months. But economic stabilization efforts that have relied on the Federal Reserve's balance sheet have "permitted Treasury to leverage TARP funds well beyond the funds appropriated by Congress," the panel said in its Apr. 7 oversight report.
TARP 25 cents per $1, Goldman 'Hidden forms of Government Subsidiaries', Obama Promises Broken
Big banks have a big credit problem Bank of America and Citigroup have been sinking billions into rainy day funds, but problem loans are growing even faster. Banks are socking away funds for future loan losses at a record clip. But at the sickliest institutions, problem loans are rising even faster. On Monday, Bank of America became the latest big bank to report a stronger-than-expected quarterly profit, posting net income of $4.2 billion, or 44 cents a share. Analysts had expected a profit of just 4 cents a share.
Yellen says policymakers need to pop bubbles San Francisco Federal Reserve President Janet Yellen said late Thursday that central banks need to deal with bubbles in asset prices before they get too big, although monetary policy may not be the best tool for the job. Letting them go unchecked "can lead to grave consequences," she said in prepared remarks for a conference held in honor of economist Hyman Minsky in New York. "Episodes of exuberance, like the ones that led to our bond and house-price bubbles, can be time bombs that cause catastrophic damage to the economy when they explode," said Yellen, a voting member this year of the Federal Open Market Committee. The FOMC has cut interest rates close to 0% and, by buying up debt and making special bank loans, the Fed has pumped about $1 trillion into the U.S. financial sector. It meets against later this month.
Help Design The Next Financial Meltdown Armed with the lessons of the current crisis, a brand new regulatory regime is set to emerge. Much of it will focus on reducing financial complexity, with an eye towards eliminating bizarre derivatives that "nobody" can value. Lenders will face new regulations so that we don't have the subprime mess again. Hedge funds will be forced to disclose what they own. Some of it may be helpful, and eventually we'll return to a new normal. The crisis will past. But people are wily. As Richard Bookstaber, author of Demon of our own Design, is fond of pointing out, when you design safety measures for a nuclear plant, the machinery doesn't sit there, trying to come up with ways to deceive safety officials. Sure, sometimes it breaks in unexpected ways, but not because it schemes.
Engineering Confidence Obama, Geithner, Bernanke Tout Hard It's normal for the CEO of a public company to speak glowingly of its products and prospects in complete contradiction to whatever reality might be showing. Have you ever heard of a company president saying, "Well things don't look that great for us, and our future isn't very exciting either."? The answer is probably " yes", but only after they've filed for Chapter 11. CEO's are expected to 'talk up' their companies, just as fund managers 'talk their book' whenever anybody sticks a microphone or camera in their face. When Goldman Sachs predicted that oil could rise to $105 a barrel in March of 2005 when it was trading in the $50 - 60 per barrel range, it set a new price record of $71 by the end of August.
Obama wants agency spending cut by $100M Official: Obama calling on Cabinet to cut spending by $100M, heads to CIA for consultations President Barack Obama convenes his first formal Cabinet meeting Monday and will ask department and agency chiefs to look for ways over the next 90 days to cut $100 million out of the federal budget, a senior administration official said. Back from his fence-mending trip to Latin America and the Caribbean, Obama will be reminding the panel that American families are having to make tough financial decisions and need to know the government is spending their money wisely, too. The official discussed Topic A for the session on grounds of anonymity because it will be behind closed doors. A second senior official, also speaking anonymously, said Obama will point to cuts already being proposed.
T. Boone Pickens sees oil at $75 at end-year Texas oil billionaire T. Boone Pickens on Monday reiterated his prediction that crude oil prices would hit $75 a barrel this year as producers scale back production. Pickens said about OPEC producers: "They told you they want $75 by the end of the year, I would count on that, I believe them."
Chrysler Financial Turned Down TARP Funds To Avoid Pay Caps Last week, Chrysler Financial turned away a $750 million government loan. Executives said that they had plenty of cash to meet short term financial needs. Now the Washington Post is reporting that the real reason Chrysler Financial turned down the government funding is that executives didn't want to abide by new federal limits on pay. The dynamic should be familiar to anyone who is a regular reader here. For executives, pay caps dramatically change the bailout calculus. If they take the bailout, they find their compensation so severely limited it isn't much better than having the company go bankrupt. If they don't take the bailout, they may risk their company but they also preserve a potential upside. Obviously, many executives will chose to risk the company to preserve their pay.
GM exec says 1,600 will lose jobs in next few days GM exec says 1,600 will lose jobs this week as automaker downsizes to stay in business About 1,600 white-collar workers at General Motors Corp. will lose their jobs in the next few days as the troubled automaker accelerates cost cuts in order to qualify for more government aid. GM North America President Troy Clarke said Monday in an e-mail to employees that the layoffs are needed to ensure the company's long-term viability.
Get Ready For A Web Sales Tax State tax rolls have been so decimated there’s an effort in Washington to squeeze local taxes out of web retailers to make up the difference. The New York Post reports that a bill is likely to be introduced this week to force eBay, Amazon and others to start collecting sales taxes fro online shoppers on behalf of states.
(Un)Intended Consequences: Uncertainty, Inflation & Inflexibility Present policies may be sowing the seeds for the next financial crisis. Despite recent market optimism, we believe present interventions could produce significant future adverse and unintended consequences. Rather than curing the patient, the present initiatives may be overprescribing the patient with medication that cause significant side effects (and leave a bad taste in the mouth).
Amish workers hit hard by recession After wave of layoffs, leaders change policy, OK jobless aid The Amish are defined by their religious beliefs, shunning modern conventions such as automobiles, insurance and electricity in their houses. But some of the Amish in hard-hit northern Indiana realize they can no longer avoid another newfangled idea: unemployment checks. The Amish church frowns on government aid but relented on unemployment checks after a wave of layoffs stung Amish laborers in this settlement 120 miles east of Chicago. Church leaders justified the decision because workers are collecting on the unemployment taxes they already paid into the system. "No one says go out and do it," explained Eli Miller, 72, an Amish bishop who also prepares income tax returns. "But when they have to feed their families, we thought it would be OK to accept some of it, even though we would rather not."
Astronaut says we're not alone We are not alone. "We are being visited," the 79-year-old grandfatherly "spacefarer" told 100 or so UFOlogists gathered at a National Press Club conference called by the Paradigm Research Group (motto: "It's not about lights in the sky; it's about lies on the ground"). "It is now time to put away this embargo of truth about the alien presence," said the astronaut who made the longest moonwalk in history. "I call upon our government to open up ... and become a part of this planetary community that is now trying to take our proper role as a spacefaring civilization."
Max Keiser on the worldwide food Riots Part 1/3
Max Keiser on the worldwide food Riots Part 2/3
Max Keiser on the worldwide food Riots Part 3/3
'60 Minutes' video: Cold fusion is hot again Twenty years ago it appeared, for a moment, that all our energy problems could be solved. It was the announcement of cold fusion--nuclear energy like that which powers the sun--but at room temperature on a table top. It promised to be cheap, limitless, and clean. Cold fusion would end our dependence on the Middle East and stop those greenhouse gases blamed for global warming. It would change everything. But then, just as quickly as it was announced, it was discredited. So thoroughly, that cold fusion became a catch phrase for junk science. Well, a funny thing happened on the way to oblivion--for many scientists today, cold fusion is hot again. "We can yield the power of nuclear physics on a tabletop. The potential is unlimited. That is the most powerful energy source known to man," researcher Michael McKubre told "60 Minutes" correspondent Scott Pelley. McKubre says he has seen that energy more than 50 times in cold fusion experiments he's doing at SRI International, a respected California lab that does extensive work for the government.
Banks Shut in Missouri, Nevada, Bringing 2009 U.S. Tally to 25 Banks in Missouri and Nevada were seized by regulators today, bringing this year's tally to 25 and equaling the number of banks shuttered in all of 2008, as a recession drives up unemployment and home foreclosures. American Sterling Bank of Sugar Creek, Missouri, was shut by the Office of Thrift Supervision and Great Basin Bank of Nevada in Elko was closed by the Nevada Financial Institutions Division. The Federal Deposit Insurance Corp. was named receiver of the banks with combined assets of $451.9 million and deposits of $393.3 million, the FDIC said in e-mailed statements.
The Moral Case For Rampant Inflation Despite the seeming complexity of the programs, the government's strategy for battling the financial situation is pretty straightforward. The idea is to transfer as much private debt as possible to the federal government, betting that the government's balance sheet can sustain the added leverage. Eventually, the private sector, free from all the debt it's built up, is expected to return to growth -- with the help of some new bridges, high speed rail lines and other stimulus goodies. There are basically two ways the government can buy up all this debt. It can borrow the money, in large part from foreign sources, or it can just print it up and create rampant inflation.
Inflation is looming on America's horizon The US last week showed its first signs of deflation for 55 years, prompting inevitable fears of further deflation in the future. Yet the primary reason for the negative rate of US inflation is the dramatic 30 per cent fall of commodity prices. That will not happen again. Moreover, excluding food and energy, consumer prices are up 1.8 per cent from a year ago. That is the good news: the outlook for the longer term is more ominous.
Gold - Confidence and Inflation "You can fool all of the people some of the time and some of the people all of the time, but you can't fool all of the people all of the time, but you can give it a good go and discredit the rest who won't be fooled!" If it doesn't go like that maybe it should? The issue of Money. Many are still digesting the outcomes of the G-20 meeting in London. So a thought occurred to me. If I went to my bank and asked, "May I have another loan? Oh, I know I am terribly over-borrowed already, but could you lend me my entire year's income on top of my present loans?" He would ask me, "against what collateral?" I would say, "none!" His reply would likely not come from the best of English. Now I tell him that, "I am your only client and say no and you'll go bust as well as me." Then he might smile and hail me as his financial savior too?
The Future of Money: The Return of the Gold Standard The most successful of the current crop of microcurrencies is GoldMoney, a 21st-century take on the oldest financial trick in the book. When a retired Florida oncologist named Douglas Jackson launched the world’s first digital-gold currency in 1996 - an online payment system fully backed by precious metal reserves and marketed under the brand name e-gold - he did not appear to be on the winning side of monetary history. Once upon a time, nearly a hundred years before, the gold standard reigned supreme: A dollar bill or a pound note or any other major currency was in those days just a marker for a fixed amount of government gold, redeemable at any time. But by the onset of the Depression, the economist John Maynard Keynes had declared the gold standard a “barbarous relic,” too crudely physical a form of money for the complex demands of modern economies. And by the century’s end, the multitrillion-dollar global money supply had long since shed its ties to gold or any other tangible asset in particular and now resided almost wholly in the digital circuitry of financial networks. Money had gone virtual, and reattaching it to gold made as much historical sense, it seemed, as instant-messaging by pigeon post.
Max Keiser about the Shadow banking System
The Calm Before the Storm I take a much longer-term view and, basically, the way certain things - like metal prices or market bottoms - are going to react is going to depend largely on what happens elsewhere, mostly with the government. The things we're trying to analyze are not masters of their own domains, so to speak. I think a lot of this money printing that has been taking place is starting to filter into prices and it's showing in metal prices, it's showing in grocery prices, it's showing in all kinds of prices. In terms of a market bottom for the general market, I hesitate to predict that because, again, so many things are wrong and so many things are moving or changing that it is absolutely impossible, at least for me, to predict. What I do know is the market is going to significantly underperform vs. gold.
The Time To Buy Gold And Short General Equities Is Near Gold is now very near our long anticipated target buying range of $855 to $823, and the S&P 500 is getting overbought, though it may push up to the 930-945 range (which should represent an excellent shorting opportunity). Crude oil remains trapped between $37 and $56, and the Japanese Yen is showing potential signs of starting to strengthen again. Below is a ratio chart of the gold price versus the S&P 500 Index - broadly representing the overall U.S. stock market. Most equity markets worldwide also fall or rise roughly in line with the S&P 500 index. The higher the ratio, the more gold is worth compared to the equity market.
The Goldsmiths - Part LXXI While the Rothschild Cabal plutocrats are busy planning their Amero or some other regional currency for the Americas (to lead the way to a one world currency), Venezuelan President Hugo Chavez and his colleagues are moving forward with their own plans for a regional currency to replace the US dollar. Chavez made the announcement on Apr 16, 2009 in Caracas. The Sucre In a story on "Venezuela and Leftist Allies Create Regional Currency," by Patricia Rondon, Reuters reported it as follows: "An alliance of Latin American and Caribbean governments led by Venezuela will create a regional electronic currency that is expected to circulate by 2010, Venezuelan President Hugo Chavez said on Thursday. "The leftist Chavez, who has called the global financial crisis the end of capitalism, has frequently urged allies to stop storing currency reserves in dollars and recently proposed creating an international currency backed by oil reserve/ es." Per the story, the new currency will be called the sucre. It is to be built around the ALBA trade bloc of nations.
Funds try to spot the great oil rebound Oil is too cheap. At around $50 a barrel, it is trading far below the production costs of almost all new sources of crude and energy substitutes. A sustained price above $70 is needed to cover investments in Canada's tar sands, the deep-water fields off Brazil, and Russia's "High North" above the Arctic Circle. Much the same goes for biofuels from grains (sugar is cheaper). They matter. Bioethanol swings the global crude price. It accounted for 60pc of extra oil supply worldwide from 2007-2008.
Socialism is no longer an insult, but it is a bit of a joke The s-word was once the worst thing you could call an American, but the recession has sparked a revival in its fortunes, writes Tom Leonard. Even before a poll last week revealed that almost a third of young Americans now prefer it to capitalism, socialism has been enjoying something of a renaissance recently in the United States. For decades, calling another American a socialist was about the nastiest thing you could say. Franklin Roosevelt got it all the time. But it declined in the post-Cold War era: without the commies, it just didn't sound so menacing. "Liberal" replaced it as the pejorative of choice for the political Right. Now, the "s" word is back on top again, thanks largely to huge bank bailouts and federal stimulus packages. If you can drive home the point with a "USSA - Comrade Obama" car bumper sticker, all the better.
What's this? Financial Chronicle reports that China and India want the IMF to sell its entire holdings of gold to raise money for funding poor nations (yeah, since when have China and Russia been worried about poor nations?). The IMF has gold holdings of about $100 billion. A very small part of China's reserves is in gold. It's obvious that China wants fewer dollars and more gold. If China went into the open market for gold, they would probably drive the price of gold up to $2,000 an ounce. My bet is that China would like to take in the whole $100 billion of the IMF's gold. And they're working on it.
President Obama may not sanction IMF gold sale Global stock markets continue to rally on the "we think it's over" hope, especially driven by financials as news about increased earnings for the first quarter has emerged. Some scepticism still persists as indicated through the ongoing collapse in global trade and employment which does not bode well for the broader markets. Crude Oil has spent either side of Easter in a tight range around $50 which has become a bit of a pivot point for now. Buyers are looking for demand to improve taking its cue from the improved sentiment in stock markets, also aided by expectation of supply problems once this current demand slump is over.
Why central banks refuse to sell gold? Do you know the role of Central Bank Gold Agreement in the global gold prices? The CBGA has a huge role in the prices of the yellow metal. And, this time, if you trust the World Gold Council's advice, the central banks are not selling as much gold as it used to under the CBGA. So, according to WGC, the central banks have sold only 91 tonnes of gold in the first six months of the fifth and final year of CBGA from the 500 tonnes permitted under the agreement. And the pact will expire in September. Total sales in the 2007-2008 year were 358 tonnes and sales in 2006-2007 year were 475.8 tonnes.
The New Financial Overlords: The Debt Class and those that provide the Debt in Serfdom. Understanding the new Structure of the American Financial Landscape. The stock market at least in its current form is a horrible indicator of the actual economic carnage falling upon the majority of Americans. Most Americans are witnessing the current rally and wondering why the massive run up (largely in financial related stocks) is going forward while they are getting called into supervisor offices behind closed doors and being laid off or seeing their hours cut back. Wall Street has completely disconnected from Main Street. It is also hard for many to understand how they are having their limited income being taxed to finance the bailouts of Wall Street and financial cronies while they are asked to do more with less. They are seeing these same institutions, alive because of the massive funding from the American people since our government ideally should reflect the will of the majority, shut off credit lines and raise rates while the government through the U.S. Treasury and Federal Reserve showers the banks and Wall Street with easy low rate financing thanks to the American taxpayer. Welcome to the new America.
Gerald Celente Violent Revolution will start soon part 1 /2 America moving into fascism - state controlled capitalism
Zero Percent on Treasury Bills as China, Fed Policies Converge The last time U.S. Treasury bill rates headed toward zero percent investors were panicking. Now it's an indication Federal Reserve Chairman Ben S. Bernanke's efforts to revive credit markets are starting to work. Rates on three-month bills turned negative in December for the first time since the government began selling them in 1929 as investors sacrificed returns to preserve principal. After increasing at the start of the year, rates have dropped 0.20 percentage point since the beginning of February to 0.13 percent April 17.
Treasuries shaky as investors' sanctuary America has seen a lot of speculative manias during the past decade - whether the wild buying spree in technology stocks in the late 1990s, the euphoric boom in housing in the middle of this decade, or the seemingly unstoppable rise in oil and other commodities last year. Now there may be a bubble developing in the market for Treasury debt, if only because there is no safer place for investors to park their cash and escape the collapse in stocks, commodities, mortgage debt and other stricken markets.
The Inundation of Debt and Its Toll on Our Economy It is the crux of our economy. It is the all-important foundation upon which economics is built. It is supply and demand and the constant attempt to reach an equilibrium that our policymakers are now dealing with in their attempt to revive our economy. To fund the astronomical size of the stimulus packages the White House has authorized, as well as to finance the budget deficit, the government has had to issue record amounts of debt. As the government sells its debt and increases the supply of bonds in the marketplace, it must lower the price to find sufficient buyers, driving interest rates on the debt up. On Friday, the yield on 10-year Treasury notes rose 13 basis points to 2.89%, as the price dropped $11.25 per $1000 face amount to 98?.
Gold Extends Decline for Third Day as Equity Rally Trims Demand Gold dropped for a third day as the strength of global equity markets eroded demand for the precious metal as a safe-haven investment. Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell for a second day, dropping 1.2 percent to 1,105.98 metric tons on April 17, the lowest since March 19. The decline in the fund's holdings may put pressure on bullion at the start of the week, according to UBS AG.
The Seduction of America The biggest step towards the world of modern finance was the abandonment of the Bretton Woods stability framework and fixed exchange rates that took place in the 1970's and Nixon's final nail in the coffin for gold convertibility with the US Dollar. It was not for the reason that most believe i.e. the creation of fiat currencies but because of the creation of a new era of financial complexity. Suddenly the world had a plethora of new financial variables - exchange rates, floating rate instruments denominated in euro-currencies and I do not mean the Euro of today but the euro market that originated for dollar based deals that were outside the US jurisdiction and based in London, financial futures and swaps etc. etc.
Max Keiser - Terminator Seeds & Copyright Inside Story 19 April 2009
Obama Says He'll Seek 'Accountability' for Bank Aid President Barack Obama said he'll demand "accountability" from any U.S. banks that require additional taxpayer money following "stress tests" being conducted by regulators. "We'll try to use as light a touch as we can, but I'm not going to simply put taxpayer money into a black hole where you aren't going to see results or some exit strategy so the taxpayers ultimately are relieved of these burdens," Obama said at a news conference today in Trinidad and Tobago as he wrapped up his first Summit of the Americas.
No taxpayer money for any bank "black hole" U.S. President Barack Obama said on Sunday that stress tests for the country's top banks would show some need more public help than others, but he vowed not to pour taxpayer money into a "black hole." "Different banks are in different situations. They're going to need different levels of assistance from taxpayers," Obama told a news conference in Port of Spain, Trinidad and Tobago, where he was attending the Fifth Summit of the Americas.
US to put conditions on Tarp repayment Strong banks will be allowed to repay federal bailout funds, but only if such a move passes a test to determine whether it is in the national economic interest, the Financial Times reported on Sunday, citing a senior U.S. administration official. The report said banks that had plenty of capital and demonstrated an ability to raise fresh capital from the market should, in principle, be able to repay government funds.
U.S. economy still under strain President Barack Obama said on Sunday that the U.S. economy remained under strain and his top economic adviser tempered hopes for a speedy recovery that have driven the stock market to successive gains. "We're not out of the woods. This is still a difficult time for the economy. Credit is still contracted," Obama told a news conference in Port of Spain, Trinidad and Tobago, where he was attending the Fifth Summit of the Americas.
Volcker: Recovery will be a 'long slog' Obama's senior economic advisor says economy is in a "great recession"; says Fed's role in economy will be reviewed. Paul Volcker, senior economic adviser to President Barack Obama, said Saturday that the U.S. economic recovery will be a "long slog" but that the rate of decline "is going to slow." The United States may not be in a Great Depression but it is "in a great recession for sure," following the economy's unprecedented tumble in late 2008, Volcker said at a financial markets conference at Vanderbilt University in Nashville, Tennessee. Volcker, a former chairman of the U.S. Federal Reserve, did not give a time-frame on his expectations for when the United States will pull out of the recession that started in December 2007.
Bernanke Says Crisis Damage Likely to Be Long-Lasting Federal Reserve Chairman Ben S. Bernanke said the collapse of U.S. lending will probably cause "long-lasting" damage to home prices, household wealth and borrowers' credit scores. "One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be," the Fed chairman said today in a speech at the central bank's community affairs conference in Washington. "The damage from this turn in the credit cycle -- in terms of lost wealth, lost homes, and blemished credit histories -- is likely to be long-lasting."
U.S. May Convert Bank Bailouts to Equity Share President Obama's top economic advisers have determined that they can shore up the nation's banking system without having to ask Congress for more money any time soon, according to administration officials. In a significant shift, White House and Treasury Department officials now say they can stretch what is left of the $700 billion financial bailout fund further than they had expected a few months ago, simply by converting the government's existing loans to the nation's 19 biggest banks into common stock. Converting those loans to common shares would turn the government aid into available capital for a bank - and give the government a large equity stake in return.
Gerald Celente Violent Revolution will start soon part 2 /2
Federal banking takeover unlikely White House touts 'tools' Some big banks will need more bailout bucks, Obama administration officials said Sunday, although it is unlikely the government might need to take over any reeling institution. "We're confident that, yes, some are going to have very serious problems, but we feel that the tools are available to address these problems," senior presidential adviser David Axelrod said.
Citi's "Accounting And Government Magic" Credit ratings agency Egan-Jones is seriously unimpressed by Citigroup's (C) reported first quarter "profit." Zero Hedge has its latest comment on the bank: Accounting and government magic - the recasting of FASB157 enables financial institutions to defer the recognition of losses with the result that C's March trading profits swung from a $6.8B loss to a $3.8B gain. Another item worth reviewing is the decline in interest expense from $16.5B last year to $7.7B this year. Nonetheless, much more equity capital is needed. Beyond the conversion of preferred to common, watch the form of any additional capital.
Stiglitz Says Ties to Wall Street Doom Bank Rescue The Obama administration's bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said. "All the ingredients they have so far are weak, and there are several missing ingredients," Stiglitz said in an interview yesterday. The people who designed the plans are "either in the pocket of the banks or they're incompetent."
Bernanke calls for regulatory balance Federal Reserve Chairman Ben S. Bernanke said Friday that financial innovation is good for the economy but should be properly regulated. New financial products, such as subprime mortgages and structured investment vehicles, have become symbols of the economic crisis. The challenge for the government is to come up with regulations that protect consumers without stifling innovation, the Fed chief said. "As we have seen all too clearly during the past two years, innovation that is inappropriately implemented can be positively harmful," Mr. Bernanke said in a speech to a Fed conference.
Regulators Finally Admit Stress Test Isn't Stressful Enough Finally, regulators are acknowledging the fact that their stress tests aren't stressful enough. We've already passed the baseline scenario, and the pessimistic scenario of 10.4% unemployment isn't even that pessimistic. So, does this mean regulators are going to revisit their assumptions. Nope, they're too far along in the process to do that. But according to FT, they are going to take the results more seriously. In other words, if a bank "fails" the stress test, then they really failed.
Do Banks Have To Disclose The Stress Tests Results? When it comes to the results of the stress-test, the Obama administration believes that darkness is the best disinfectant. It doesn't want capital markets to freak out about the stress tests, and so it plans to keep the results quiet. We have a feeling the only time we'll hear that a bank needs to raise new capital is when it actually does.
Obama's Revenue Plans Hit Resistance in Congress President Obama is running into stiff Congressional resistance to his plans to raise money for his ambitious agenda, and the resulting hole in the budget is threatening a major health care overhaul and other policy initiatives. The administration's central revenue proposal - limiting the value of affluent Americans' itemized deductions, including the one for charitable giving - fell flat in Congress, leaving the White House, at least for now, without $318 billion that it wants to set aside to help cover uninsured Americans. At the same time, lawmakers of both parties have warned against moving too quickly on a plan to auction carbon emission permits to produce more than $600 billion.
Obama to ask agency heads for budget cuts President Barack Obama said Saturday he will ask all of his department and agency heads for specific proposals for cutting their budgets at his Cabinet meeting early next week as he searches for ways to streamline government spending. Obama, who is attending the Summit of the Americas in Trinidad this weekend, said in his weekly radio and Internet address that he would make the request for cuts Monday at a Cabinet meeting.
Will public pensions be next bailout? Along with the stock market, retirement savings, and taxpayers' sanity, state and municipal government employee defined-benefit pension funds are reeling from the financial meltdown. The current economic turmoil and stock market downturn have caused government employee pension funds to lose hundreds of billions of dollars. The crisis only reinforces the need for states to move their pension systems from the onerous defined-benefit obligation to a more mobile and sustainable defined-contribution model. It's a potentially catastrophic problem.
Peter Schiff 4/18/2009 "Government Propping Up Malinvestment - Punishes Savers"
Obama to take aim at credit card abuses President Barack Obama plans to crack down on deceptive credit-card industry practices that have saddled U.S. consumers with huge debts and soaring interest rates, a senior aide said on Sunday. Top White House economic adviser Lawrence Summers said Obama would be "very focused in the very near term on a whole set of issues having to do with credit card abuses."
IMF to cut global forecast, sees 2010 recovery The International Monetary Fund's (IMF's) Managing Director Dominique Strauss-Kahn was quoted on Sunday as saying the IMF would cut its global economic forecasts in the coming week and that he expected a recovery to start in the first half of next year. "The forecast that we will present this week will be worse than the previous one," Strauss-Kahn told Germany's Handelsblatt business daily in an interview to be published on Monday.
After the Bank Failure Comes the Debt Collector Rick Williamson, a Chicago banker turned junk-loan buyer, knew the name-calling would start again when he moved to foreclose on the Fayetteville Athletic Club, a sprawling, family-run gym and spa complex in this corner of northwest Arkansas. "Vulture, bottom feeder," Mr. Williamson said, recalling insults thrown his way during his years hunting for bargains in distressed real estate. And just as he predicted, the insults are flying. "Trash-eating rat," is how Robert Shoulders, the club's owner for the last 13 years, described Mr. Williamson. "What he does is reprehensible. I am not sure how he can sleep at night." Mr. Williamson sees it differently. And the government agrees.
Home Equity ATMs Run Out Of Cash The housing boom didn't just make Americans rich on paper. It padded our expense accounts. In the process, it goosed economic growth. How? Through "mortgage equity withdrawal"...the use of one's house as an ATM machine. In the years in which house prices rose 10%+ per year, Americans didn't just let that extra wealth sit around unused. They took it out and spent it (often on home improvements and downpayments on additional houses). Now that house prices have fallen nearly 30%, however, the source of that cash--home equity--has, in many cases, evaporated. So we've stopped making mortgage equity withdrawals. As a consequence, we've stopped spending the money we used to take out of our home ATMs.
Why a 50% Drop in Housing Is Not the Bottom The psychology behind the idea that a 50% reduction in bubble-era housing prices constitutes a "bargain" is flawed for a number of reasons. . . . . Let's consider a model of all bubbles, regardless of the asset or the era: No model can predict the timing, highs or lows of any bubble, but bubbles tend to follow a pattern traced in human psychology
Living adjustment not sure in 2010 Federal, military and Social Security retirees, who got a 5.8 percent inflation adjustment in January, won't like what's not coming up in 2010. According to the numbers crunchers, the retirees may not get any cost-of-living adjustment next January. That group of retirees represents about one in every six Americans. And it takes in a huge chunk of the Washington area, which is home sweet home to hundreds of thousands of federal and military retirees, as well as millions who get monthly Social Security benefits.
WH pushing to reinstate gun ban A top National Rifle Association official said the Obama administration is using the increased publicity surrounding drug cartels in Mexico as an opportunity to push for reinstating the ban on semi-assault weapons. "They're trying to piggyback this whole phony issue on the back of the tragedy in Mexico," said Wayne LaPierre, executive vice president of the gun-rights group, on CBS' "Face the Nation" on Sunday.
Gee . . . will Americans have to wear Fart-Monitors when the gov decides to regulate these emissions? Carbon emissions fuelled by high rates of obesity High rates of obesity in richer countries cause up to 1bn extra tonnes of greenhouse gas emissions every year, compared with countries with leaner populations, according to a study that assesses the additional food and fuel requirements of the overweight. The finding is particularly worrying, scientists say, because obesity is on the rise in many rich nations. "Population fatness has an environmental impact," said Phil Edwards, from the London School of Hygiene and Tropical Medicine. "We're all being told to stay fit and keep our weight down because it's good for our health. The important thing is that staying slim is good for your health and for the health of the planet." The study, carried out by Edwards and Ian Roberts, is published today in the International Journal of Epidemiology.
'Shut Up, America' author on 'Fox and Friends' Brad O'Leary exposes Washington's plan to ration free speech In "Shut Up, America! The End of Free Speech," O'Leary says the plan amounts to the development of party-approved "commissar committees" to censor the kind of lively and free-wheeling debate America has known since the scrapping of the so-called "Fairness Doctrine" by President Reagan's Federal Communications Commission in 1987. By demanding radio stations answer to local community watchdog boards to ensure programming is "balanced," "fair," "diverse," "tolerant" and "serving the public interest locally," O'Leary says the rules and legislation being planned will once again make talk radio accountable to politicians, political activists and bureaucrats at the FCC.
White House: GOP is 'party of no' President Obama wants Republicans to return to Congress this week from their spring recess with a more constructive attitude toward health care, energy and other administration initiatives. Republican lawmakers say they have ideas, just not the ones the president may want. "When you're the party of no, when you're the party of never; when you're the party of no new ideas, that's not constructive," White House Chief of Staff Rahm Emanuel said Sunday. "The challenge will be, will the Republicans come to the table with constructive ideas?"
Eight states hit by double-digit unemployment The unemployment rate increased in 46 states in March and eight states are now suffering from double-digit joblessness, the Labor Department reported Friday. The eight are: California, North and South Carolina, Indiana, Michigan, Nevada, Oregon and Rhode Island.
GM chief says bankruptcy still 'probable' Debt, labor costs remain key General Motors Corp. Chief Executive Officer Frederick A. "Fritz" Henderson said Friday that a bankruptcy filing remains "probable" around June 1 because the auto giant has not achieved breakthroughs in drastically reducing its debt and labor costs, though the company is working fervently to avoid bankruptcy. Chrysler executives, meanwhile, warned labor unions that the company will go bankrupt by the end of this month unless they agree to slash labor costs.
Porsche Chooses China for Entry Into Sedans Porsche unveiled its entry into the luxury sedan market here on Sunday night, the eve of the Shanghai auto show. It was the latest confirmation of the importance of the Chinese auto market and the first time that Porsche has entered a new market segment at an auto show outside Europe or North America. Auto sales rose 10 percent last month in China to a record, and exceeded sales in the United States for the third month in a row as the world’s largest single-country market. That has prompted automakers from around the world to pay particular attention to the Chinese market, with a range of models to be introduced here.
FEMA: National Level Exercise 2009 (NLE 09) National Level Exercise 2009 (NLE 09) is scheduled for July 27 through July 31, 2009. NLE 09 will be the first major exercise conducted by the United States government that will focus exclusively on terrorism prevention and protection, as opposed to incident response and recovery. . . . . EXERCISE FOCUS NLE 09 will focus on intelligence and information sharing among intelligence and law enforcement communities, and between international, federal, regional, state, tribal, local and private sector participants.
Russia's nuclear attack on U.S. may start with major banks While US scientists put forward the new doctrine of the Minimum Nuclear Deterrence (targeting missiles against Russia's 12 key enterprises), Bigness.ru decided to draw a map of a limited strike that could paralyze the US economy. It turns out that the United States is much more vulnerable than Russia at this point. An attack against only five targets in the USA will throw the US economy back into the Stone Age. US scientists put forward an idea to focus targets on 12 key objects of the Russian economy: enterprises of Gazprom, Rosneft, Rusal, Nornikel, Surgutneftegaz, Evraz and Severstal. The suggestion became an absolutely new approach to the deterrence doctrine. The USA currently has the Mutual Assured Demolition Doctrine, which stipulates an attack of some 200 targets on Russia's territory.
Obama Defends Reaching Out to Chávez Leaders from the Western Hemisphere, inspired by a new American president, closed a two-day summit meeting proclaiming a new dawn for relations in the region, which had been marked by bitter disagreements in recent years with the United States. The antagonism seemed to melt away, replaced by a palpable enthusiasm for a new openness from the United States and hopes of improved relations for Washington with Venezuela and Cuba, which emerged as a core issue here.
Obama Closes Summit, Vows Broader Engagement With Latin America PORT OF SPAIN, Trinidad and Tobago, April 19 -- President Obama concluded a summit of the hemisphere's leaders Sunday by articulating a broad new agenda for Latin America and the Caribbean, having gained momentum in his bid to repair relations with some of the region's shrillest critics of the United States. In a news conference at the end of the fifth Summit of the Americas, Obama outlined what he is learning about the world and how he intends to engage it based on his experiences here and earlier this month in Europe and Turkey. He expressed support for a more central U.S. place in global alliances, including a firm endorsement of the United Nations, and said, "We do our best to promote our ideals and our values by our example."
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Second Largest US Commercial Retail Real Estate Company Files for BankruptcyThis is the tip of the iceberg, still the early stages of failures in the real economy which has been distorted beyond all reason by the outsized financial sector, a failed regulatory regime under the influence of Wall Street, and reckless financial engineering by the Fed. The nation's second-largest shopping mall owner, General Growth Properties, filed for Chapter 11 bankruptcy protection Thursday in a tough bargaining move to restructure its $27 billion in debt. General Growth, which owns more than 200 malls including four in Colorado, said shoppers at its malls will not be affected by its bankruptcy filing.
Mall operator General Growth Properties files for Chapter 11 bankruptcy In its drive to become the second-largest owner of shopping malls in the nation, General Growth Properties Inc. racked up $27 billion in debt. At around 2 a.m. in Chicago on Thursday morning, the retail giant buckled under the weight. After months of tense negotiations with tightfisted lenders, General Growth filed for Chapter 11 bankruptcy in a bid to protect its 200-plus shopping malls including the Glendale Galleria in Southern California and the South Street Seaport in Manhattan.
Is commercial real estate a time bomb? Mall operator General Growth Properties' bankruptcy is worrisome. But even if commercial real estate weakens further, the market probably won't collapse. Bankruptcy is coming to the food court. And that's got to make you wonder if the commercial real estate market is a disaster waiting to happen. General Growth Properties, the nation's second largest operator of shopping malls, filed for Chapter 11 protection Thursday morning. That makes General Growth (GGP) the biggest retail casualty yet of this recession, a downturn that also led to the bankruptcies of Circuit City, Linens 'N Things and Steve & Barry's.
Barry Diller: Trust Me, This Isn't A Bottom IAC chairman Barry Diller has $2 billion in cash burning a hole in his pocket. But despite that -- and the recession -- he says valuations on the types Internet companies he'd like to buy are still too high. But those prices will come down soon enough, Barry told CNBC in an interview today: "We've seen the finance sector and we've seen all of the chaos that's come of that. We haven't seen it yet relative to real estate, relative to corporate debt, things like overleveraging.
Diller Doesn't See A Bottom
Six developers try selling condos in bulk With homebuyers becoming increasingly scarce, desperate sellers aim to tap the interest of real estate investors with bundled apartment units and reduced prices. With buyers of individual condominiums in short supply, developers are bundling up unsold units in a half dozen new residential buildings in Manhattan and Queens and hawking them to investors in bulk at substantial discounts. Halstead Property Development Marketing has been quietly marketing these packages for a few weeks. This week, the firm turned up the heat and began advertising the deals, according to Stephen Kliegerman, executive director at Halstead.
Robert Shiller's Fatal Prescriptions Economist Robert Shiller now prescribes a strong dose of medicine - actually poison - for the U.S. economy. Shiller's diagnosis and doctoring are the same as those of the Bush-Obama-Bernanke regimes. He only wants greater and more persistent doses of the poisons. Shiller's policies will crush the realization of the American entrepreneurial spirit, and even that spirit itself, as they crush the economy. They continue on a larger scale the process of destroying the foundations of American greatness that began with the Progressive movement.
Falling housing starts dampen hope on housing recovery New U.S. housing starts fell more than expected in March after a surprise surge the previous month, government data showed on Thursday, dealing a blow to hopes that housing market stability was on the horizon. The Commerce Department said housing starts fell 10.8 percent to a seasonally adjusted annual rate of 510,000 units, the second lowest on records dating back to 1959, from February's downwardly revised 572,000 units.
Depression Lurks Unless There's More Stimulus: Robert Shiller In the Great Depression of the 1930s the U.S. government had a great deal of trouble maintaining its commitment to economic stimulus. "Pump- priming" was talked about and tried, but not consistently. The Depression could have been mostly prevented, but wasn't. Ultimately, the reason for this policy failure was inadequate understanding of the relevant economic theory. In the face of a similar Depression-era psychology today, we are in need of massive pump-priming again. We appear to be in a much better situation due to the stronger efforts to date. Still, there is a danger that, because of a combination of faulty economic theory and inadequate appreciation of human psychology, as well as deep public anger, we will not continue with such stimulus on a high enough level.
Who is the 'Greater Fool' Now? Many Americans, and indeed many people the world over, have lived in a Ponzi bubble economy for more than a decade. They have applied the Greater Fool Theory in the false belief that they would always be able to sell their house or their stocks or bonds or other highly leveraged assets to "bigger fools" than they were for buying them in the first place. With the collapse of the housing bubble and the stock market it begs the question "Who is the 'greater fool' now?"
Dow to Gold Ratio - No Trends Broken The chart below is a long-term weekly line chart of the Dow Industrial to Gold ratio. With stocks rallying and gold swooning for the last six weeks, it is often easy to lose site of the big picture. The big picture suggests that the rally in stocks coupled with the correction in gold is just a counter trend move against the longer term and more important trend (bull market for gold relative to stocks).
Ten Reasons to Buy Silver Now Amid all the recent attention I've placed on the continued manipulation in silver, some may mistakenly assume that diminishes the case for silver. Nothing could be further from the truth. I'm convinced that silver is a better buy than ever before. Here are detailed reasons why I believe that is the case. One, the near-term emotional temperature of the market is low. There is no bullish "fever" where uninformed investors are driven to buy silver because of a sharply rising price. That will happen, but it's not true now. While silver is still above the price lows of last fall and higher than year-end prices, the recent price action is nothing to write home about. The price has been below most of the important moving averages, causing silver to be "oversold."
A 'Copper Standard' for the world's currency system? Hard money enthusiasts have long watched for signs that China is switching its foreign reserves from US Treasury bonds into gold bullion. They may have been eyeing the wrong metal. China's State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons. Nobu Su, head of Taiwan's TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can. "China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years."
TARP Report:`Very Deep Concern' About TARP Metrics, Goals - Warren TARP Oversight Elizabeth Warren, a Harvard University law professor and chairman of the congressional panel that oversees the U.S. Treasury's Troubled Asset Relief Program, talks with Bloomberg's Mark Crumpton about the panel's latest report on the use of TARP funds.
Banks Must Brace for New Losses Use the above link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.
The Deliberate Global Economic Crisis The top tiers of the United States government, along with numerous national and international organizations, are in complete cooperation and collusion with the entities controlling the money supply. In unity, the combined alliances of this money controlling entity have waged a global economic ambush against the governments and citizens of the world. Giving a name to this "entity" such as, Illuminati, Banking Cartel, Bilderberg Group etcetera, matters not. The organizations controlling the money supply exist and have coordinated together for decades to create, control, manage and manipulate all aspects of the faulty economic debt model being utilized around the globe. As a result, they have created a conglomerate of organizations which is without question the most influential power on the earth superseding all governments including the government of the United States. Let's label this group the PCMS -"People Controlling the Money Supply."
Let's Just Cancel The Stress Tests Is there any good reason to follow through with the stress tests and actually release the results? Word is, the White House plans to announce its findings on May 4. But, but... first regulators are going to publish a paper explaining the stress tests on April 24. It's the latest evidence that the whole concept is becoming something of a fiasco for the administration, which is now going to great pains to maintain its credibility as a serious test for banks, while not spooking investors.
Partners in Crime Rightly, the students of Austrian Economics have laid the blame for the current economic crisis squarely on the doorstep of the Keynesian policies of governments and central banks. However, in this case, there are other culprits involved, most notably the former titans of financial services. During this decade, major international money center banks from Wall Street to London and even to Zurich displayed unimaginable greed, reckless risk taking and gross negligence. Depositors, borrowers and shareholders should be questioning whether any major financial institution will ever again be worthy of their trust.
Beware incredible shrinking 401(k) match, expert warns Number of companies suspending or reducing contributions could double this year. Nearly 200 corporations have already stopped matching workers' contributions to their 401(k) plans and the number could very well accelerate — and possibly double — in the coming months. That's the prediction of Pam Hess, head of retirement research at consulting firm Hewitt Associates, who noted that roughly 5% of corporations have suspended or reduced their matching 401(k) contributions over the last year.
IMF Chief: Global Economy's Freefall May Be Ending The global economic meltdown may be starting to wind down, and recovery could emerge in 2010 if countries act together and immediately adopt policies aimed at ending the recession, the head of the International Monetary Fund said Thursday. Dominique Strauss-Kahn said "2009 will almost certainly be an awful year; we expect global growth to enter deeply negative territory." He said the impressive economic gains many countries have made during the past decade are threatened.
Jim Rogers: Diversification Is A Scam "Diversification is something that stock brokers came up with to protect themselves, so they wouldn't get sued [for making bad investment choices for clients]. Henry Ford never diversified, Bill Gates didn't diversify. The way to get rich is to put your eggs in one basket, but watch that basket very carefully. And make sure you have the right basket. You can go broke diversifying. Ask anyone who's diversified in the last three years. They've lost money."
Did Jamie Dimon Just Kill The Public-Private Partnership? Will any bank actually sell assets into Tim Geithner's Public-Private Partnership? Speaking on the company's just-concluded conference call, JP Morgan (JPM) CEO Jamie Dimon downplayed the PPIP, saying the bank had nothing to sell into it, and that it certainly had no interest in partnering with the government as a buyer. What's more, he said, he didn't consider the PPIP to be that big of a deal, suggesting that it's just one small piece of what Treasury is doing to prop up the system.
Losses On PRIME Mortgages Worse Than Expected At JP Morgan Although JPMorgan had to take various losses in its real estate and credit card portfolios this quarter, the management was quick to say that everything was in-line with previous estimates given by the company. One area that's coming in worse than expectations: prime mortgages.
Is JP Morgan Pessimistic Enough On Credit Cards? Jamie Dimon spoke with an almost uncanny candor about the chargeoffs at its core Chase Card operations. The firm says losses were already at 7.7%, a huge jump from 5.6% in the first quarter. It predicted that chargeoffs will likely reach 9% to 9.5% in the second quarter. That's a pretty pessimistic view but is it pessimisitic enough? Dimon was blunt about what he sees as driving losses in the credit card business. When unemployment goes up, so do chargeoffs for credit cards. When house prices decline, chargeoffs go up. When both happen, it gets even worse.
Learn About Making Home Affordable Refinancing Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today's lower mortgage rates perhaps due to a decrease in the value of their home. Modification Many homeowners are struggling to make their monthly mortgage payments perhaps because their interest rate has increased or they have less income.
Peter Schiff 4/14/09 - Schiff Report Video Blog
NBC Brass Tell CNBC To Stop Bashing Obama Apparently, the right-wing tone of CNBC -- which has provided a platform towards tea protesters and tips on Obama-proofing your portfolio -- isn't going over well at NBC corporate. Top talent and execs at the network were ordered to a three-hour meeting, organized by Jeff Zucker, to discuss the issue . . . . . . . . One topic under the microscope, our insider said, was on-air CNBC editor Rick Santelli's rant two months ago about staging a "Chicago Tea Party" to protest the president's bailout programs -- an idea that spawned tax protest tea parties in other big cities, infuriating the White House.
CNBC SWEATS 'OBAMA-BASHING' "It was an intensive, three-hour dinner at 30 Rock which Zucker himself was behind," a source familiar with the powwow told us. "There was a long discussion about whether CNBC has become too conservative and is beating up on Obama too much. There's great concern that CNBC is now the anti-Obama network. The whole meeting was really kind of creepy."
Is Obama's Green Push Forcing GM To Shed A Profitable Brand? As, GM figures out what brands to sell, which ones to keep and which ones to just pull the plug on, you'd think the goal would be to consolidate the units that are the most profitable, while tossing the money losers. But it sounds like the administration, seeing the world through green-colored glasses, sees things differently. The Journal reports that GM is being pressured to dump its GMC light trucks business.
A.I.G. Chief Owns Significant Stake in Goldman Edward M. Liddy, the dollar-a-year chief executive leading the American International Group since its bailout last fall, still owns a significant stake in Goldman Sachs, one of the insurer's trading partners that was made whole by the government bailout of A.I.G. Mr. Liddy earned most of his holdings in Goldman, worth more than $3 million total, as compensation for serving on the bank's board and its audit committee until he stepped down in September to take the job at A.I.G. He moved to A.I.G. at the request of Henry M. Paulson Jr., then the Treasury secretary and a former Goldman director.
Napolitano: Rightwing Extremism Report Contains 'Assessment,' Not 'Accusations' Homeland Security Secretary Janet Napolitano went on national television Thursday morning to explain her department's controversial report describing who is at risk of becoming a right-wing extremist. The April 7 report raised the possibility that in the current economic and political climate, returning war veterans and people who "are dedicated to a single issue, such as opposition to abortion or immigration" may be susceptible to recruitment by "extremists" bent on carrying out violent attacks.
Increase in First-Time Delinquent Income Taxpayers As a deep recession strips Americans of their jobs, homes and investments, the 2009 U.S. tax season promises to see a large uptick in first-time delinquent income taxpayers. "Our calls are up 280 percent," said Richard Boggs, founder and chief executive of Los Angeles-based Nationwide Tax Relief, a firm that helps delinquent taxpayers resolve tax issues.
IMPORTANT -- It's much worse than you think! Insight as to why bank rates were lowered to 1% after 9/11, beginning the shadow banking system with 20 -30 trillion dollars worth of fraudulent trades and accounting which has now ballooned to hundreds of trillions of bad news for American taxpayers. The REAL CRISIS has not yet begun.
Max Keiser on Alex Jones Show April 6
SAN JOSÉ STATE UNIVERSITY ECONOMICS DEPARTMENT Thayer Watkins EPISODES OF HYPERINFLATION Hyperinflation is just inflation at an extremely high rate. Usually this also means the inflation is out of control and its level is not precisely predictable.
U.S. has nightmares about bedbug return EPA itching for a nationwide solution The federal government is waking up to a bedbug outbreak. The tiny reddish-brown insects, last seen in great numbers before World War II, are on the rebound. They have infested college dormitories, hospital wings, homeless shelters and swanky hotels. They live in the crevices and folds of mattresses, sofas and sheets. Then, most often before dawn, they emerge to feed on human blood.
Ohio to Replace Laid-Off Janitors with Inmates Ohio wants to use prisoners to replace Statehouse janitors and groundskeepers who were laid off because of budget cuts, angering a labor union. The state board that operates the building says it will probably use two inmates to do groundswork and another five for night cleaning. The Ohio Civil Service Employees Association, the state's largest public employees' union and the one that represented the laid-off workers, filed a grievance Wednesday to reverse the plan.
Foreclosure filings jump 24% March and first-quarter total filings were the highest monthly and quarterly totals on record. Repossessions fall 3%. Foreclosure activity skyrocketed in March and the first quarter of 2009 to their highest levels on record as banks lifted moratoria on filings. Total foreclosure filings - which include default papers, auction sale notices and repossessions - reached 803,489 in the first quarter, according to a report released Thursday by RealtyTrac, on online marketer of foreclosed properties. That is a 24% jump over a year earlier and a 9% increase compared to the previous quarter.
A Future of Private Roads and Highways Introduction to The Privatization of Roads and Highways. Walter Block writes, "This book is dedicated to my fellow Americans, some 40,000 of them per year who have died needlessly in traffic fatalities. It is my sincere hope and expectation that under a system of private roads and highways in the future, that this number may be radically reduced."
Tennessee Senate approves guns in restaurants bill The state Senate today approved the bill that would allow people with handgun-carry permits to take their guns into restaurants that serve alcoholic beverages as long as they are not drinking themselves. Guns are currently banned in Tennessee establishments that serve alcohol. But the legislation approved on a 26-7 vote in the Senate differs in two important ways from a similar guns-in-restaurants bill that passed in the House of Representatives earlier this month - and those differences must be resolved before either of them can become law.
Homeland Security Secretary to Name A 'Border Czar' Homeland Security Secretary Janet Napolitano is naming a "border czar" to oversee issues related to drug-cartel violence along the U.S.-Mexico border and the hundreds of thousands of people who try to enter the U.S. illegally through the Southwest. An Obama administration official says Napolitano on Wednesday will name Alan Bersin, a former federal prosecutor, to fill the new post at the Homeland Security Department. The official would speak only on condition of anonymity ahead of the announcement expected in El Paso, Texas.
Baptist pastor beaten + tazed by Border patrol - 11 stitches
Abusive Border Patrol Agents w/ Nun Chucks at NM Checkpoint
Deal Brings TV Shows and Movies to YouTube In another step in its transformation from an online jumble of amateur videos to a destination for mainstream TV programs and movies, YouTube said Thursday that it had signed deals with Hollywood studios to showcase thousands of TV episodes and hundreds of movies on its Web site. And Google, which owns YouTube, said it might eventually bring another innovation to the site: payment for some premium content.
Divisions grow as Afghan women protest law allowing marital rape The women shouted: "Equal rights and human rights!" A few feet away, men hollered back: "Death to you dogs!" and "Death to the slaves of the Christians!" Then some men picked up small stones and pelted the women. More than 100 protesters -- mostly young women -- demonstrated Wednesday against an Afghan law they say legalizes marital rape.
Iran About to Join the Nuclear Club Every week brings ominous new signs that Iran soon will possess operational nuclear weapons. Just this week Israeli President Shimon Peres-their senior diplomat and wise man-issued an uncharacteristic warning: "If (President) Ahmadinejad doesn't work with the Obama Administration and the international community to stop building nuclear weapons, of course we will then strike." his blunt threat is a startling development coming from President Peres, a normally calm, collected and reticent-to-bluster statesman. The Israeli President - a ceremonial post not a policy-making one - then added that "we will not be able to move forward on this without the United States."
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Thurs 04.16.2009
Tax Day Is Met With Tea Parties Some people wore their tea bags hanging from umbrellas or eyeglasses. Others simply tossed them on the White House lawn. Wednesday's deadline for filing income tax returns offered some Americans a timely excuse to vent their frustrations as demonstrators attended more than 750 Tax Day tea parties in cities like Boston, Washington, East Hampton, N.Y., and Yakima, Wash. The events were meant to protest government spending, particularly the Obama administration's $787 billion stimulus package and its $3.5 trillion budget.
N.S.A.'s Intercepts Exceed Limits Set by Congress The National Security Agency intercepted private e-mail messages and phone calls of Americans in recent months on a scale that went beyond the broad legal limits established by Congress last year, government officials said in recent interviews. Several intelligence officials, as well as lawyers briefed about the matter, said the N.S.A. had been engaged in "overcollection" of domestic communications of Americans. They described the practice as significant and systemic, although one official said it was believed to have been unintentional.
Top Dem 'dumbfounded' by 'extremism' report The top House Democrat overseeing the Department of Homeland Security is demanding that officials there explain how and why they wrote and released a controversial report identifying veterans as potential terrorist threats. Rep. Bennie G. Thompson of Mississippi, chairman of the House Homeland Security Committee, said in a letter to DHS Secretary Janet Napolitano that he was "dumbfounded" such a report would be issued. "This report appears to raise significant issues involving the privacy and civil liberties of many Americans -- including war veterans," Mr. Thompson said in the letter sent Tuesday. PDF of report: http://video1.washingtontimes.com/video/extremismreport.pdf
You Might Be a 'Radicalized Right-Wing Extremist' If… What and who exactly are President Obama's homeland security officials afraid of these days? If you are a member of an active conservative group that opposes abortion, favors strict immigration enforcement, lobbies to protect Second Amendment rights, protests big government, advocates federalism or represents veterans who believe in any of the above, the answer is: You.
Tossed package ends D.C. 'Tea Party' A demonstration against government waste and high taxes outside the White House on Wednesday was halted after a suspicious package was thrown over the White House fence. U.S. Secret Service officers immediately cleared Pennsylvania Avenue Northwest and Lafayette Park just north of the White House shortly after 2 p.m., forcing about 2,000 protesters to the sidewalks north of the park. Journalists at the White House were ordered back inside the press room. A robot was inspecting the package, which the Associated Press reported appeared to be a box of tea bags.
Whatever Happened to States' Rights? On Tuesday, Texas Gov. Rick Perry issued a statement in support of a state resolution supporting states' rights under the 10th Amendment to the U.S. Constitution. "I believe that our federal government has become oppressive in its size, its intrusion into the lives of our citizens, and its interference with the affairs of our state," Perry stated. "I believe that returning to the letter and spirit of the U.S. Constitution and its essential 10th Amendment will free our state from undue regulations, and ultimately strengthen our union." Perry's statement is a clarion call for more local sovereignty, for less command-and-control from above. But is it too late for states to regain their status in the great struggle for policymaking power implemented by the Constitution?
Tax Day Protests Could Be 'Saving Moment Of Our Republic,' Keyes Says The grassroots mobilization of the Tax Day Tea Party protests could be the 'saving moment of our republic,' former U.S. ambassador to the United Nations and presidential candidate Alan Keyes told CNSNews.com in an exclusive interview on Wednesday. Furthermore, voters should prepare to oust their congressional incumbents in the 2010 midterm elections regardless of their affiliation for selling the U.S. 'down the river to socialism,' Keyes told CNSNews.com.
Nationwide Taxpayer Tea Parties Protest Government Spending Protesters began gathering at state Capitols and in neighborhoods and town squares across the country Wednesday to kick off a series of tax-day protests designed to echo the rebellion of the Boston Tea Party. Demonstrators said they're steamed about government spending since President Barack Obama took office.
Enough is enough! That's the heartland tea-party message Is bailout nation about to strike again? Sure looks like it. According to a bunch of Page One news stories, life-insurance companies are about to get TARP'ed. This is nuts. The public is clamoring for an end to TARP and bailout nation. That's a key message coming from the heartland tea parties cropping up spontaneously across the country. This is turning into a real populist uprising against rising taxes (especially state, local and property taxes), the Troubled Asset Relief Program and all the federal bailouts - and the trillions of dollars in deficits and debt being used for financing. If Team Obama ignores this uprising, it has a political tin ear.
Note to Media: Just Do Your Damn Jobs and Cover Tea Parties If you build it, they will come. Forget the baseball reference. It is as outdated as the year "Field of Dreams" was released - 1989. Tea party tax protesters know why. The metaphor is a lie - at least as far as the mainstream media are concerned. If you do something of note and the media choose not to cover it - the issue might as well never exist. Such is the fate of Wednesday's national Tax Day Tea Party. This mega-gathering of tax protesters is scheduled for every single congressional district. More than 500 events are planned. And the national news media have either been silent or shown contempt for the effort. That's not journalism. It's blatant censorship that would amaze even George Orwell.
Economic survivalists take root When the economy started to squeeze the Wojtowicz family, they gave up vacation cruises, restaurant meals, new clothes and high-tech toys to become 21st-century homesteaders. Now Patrick Wojtowicz, 36, his wife Melissa, 37, and daughter Gabrielle, 15, raise pigs and chickens for food on 40 acres near Alma, Mich. They're planning a garden and installing a wood furnace. They disconnected the satellite TV and radio, ditched their dishwasher and a big truck and started buying clothes at resale shops.
Derivatives Losses Spreading New Data Reveals Largest US Banks at Risk of Failure According to Weiss Research: JPMorgan Chase, Citibank, Wells Fargo, HSBC USA, Goldman Sachs, SunTrust, Compass, Fifth Third, and Huntington In a press conference held yesterday to review fourth quarter call report data and TheStreet.com bank ratings, Martin D. Weiss of Weiss Research, Inc. concluded that:
Three out of four of the nation's largest banks are at risk of failure -- JPMorgan Chase, Citibank, Wells Fargo.
Also at risk are HSBC USA, Goldman Sachs and large regional banks, including SunTrust Bank, Compass Bank (Alabama), Fifth Third Bank (Michigan), Huntington Bank (Ohio) and Etrade Bank (Virginia).
The total number of at-risk banks and thrifts rose to 1,816 in the fourth quarter, from 1,568 banks in the prior quarter, an increase of 16 percent.
Dangerous Unintended Consequences: How Banking Bailouts, Buyouts and Nationalization Can Only Prolong America’s Second Great Depression and Weaken Any Subsequent Recovery
OIL SHOCK AND INFLATION AHEAD Slogans are comforting and easy to learn. Since late 2008 the hard-worked slogan is that cheaper oil, today, is one of the few rays of sunshine for the recession-wracked global economy. Today's variant of the mother slogan "High oil prices hurt economic growth" has little or no proof to offer, for example cheaper oil helping recovery of 4WD car sales, airline passenger numbers, house building activity, world steel output, or production of plastics, pesticides and fertilizer. The fallback slogan for cheap oil aficionados is that even if it doesn't restore growth, cheaper oil will hold down inflation.
Why IMF announces but fails to sell gold? As I wrote last week, the price of gold declined going into the G-20 meeting last Thursday. It has continued to decline since then in large part because the specter of International Monetary Fund gold reserves possibly being sold into the market. Supposedly, the IMF would be selling 403 tons (just under 13 million troy ounces) of its gold holdings to fund efforts to resolve the global financial crisis. In all likelihood, this gold will never be sold or, if it is, will be completely sold to a single central bank.
Obama's code of secrecy On April 15, tax day, most Americans feel a little violated as the government peeps into their most private affairs to see what's taxable. The Obama administration views such transparency as a one-way street. Government secrecy has become the norm under this administration, particularly when it comes to the financial bailout. Exhibit A is a gag order preventing banks from divulging how they performed on the Treasury Department's financial "stress tests." These tests were instituted Feb. 25 to gauge the liquidity of the country's 19 biggest banks and determine whether they could survive another dramatic economic downturn. Federal officials told the bankers to keep mum about how stressed out the tests say their institutions are.
Should Obama Control the Internet? Should President Obama have the power to shut down domestic Internet traffic during a state of emergency? Senators John Rockefeller (D-W. Va.) and Olympia Snowe (R-Maine) think so. On Wednesday they introduced a bill to establish the Office of the National Cybersecurity Advisor-an arm of the executive branch that would have vast power to monitor and control Internet traffic to protect against threats to critical cyber infrastructure. That broad power is rattling some civil libertarians. The Cybersecurity Act of 2009 (PDF) gives the president the ability to "declare a cybersecurity emergency" and shut down or limit Internet traffic in any "critical" information network "in the interest of national security." The bill does not define a critical information network or a cybersecurity emergency. That definition would be left to the president.
Obama: Economy Gaining Traction Weak Retail Data Signal Confidence Remains Off-Kilter The president and the Federal Reserve chairman voiced cautious optimism yesterday that the economy could be beginning to stabilize. But the economy wasn't cooperating. Retail sales dropped sharply in March, the government reported, and wholesale prices fell steeply. Both pieces of data underscore the hard slog the nation faces to emerge from its deep recession and the limitations of more optimistic talk from Washington. The stock market fell 2 percent, as measured by the Standard & Poor's 500-stock index.
All banks expected to pass stress test; analysts not so sure The U.S. banking industry is strong enough to weather a deteriorating economy - that's the headline expected from the government when it reveals the results of its bank stress tests in the first week of May. "We expect the stress test to demonstrate that the 19 banks are all well capitalized even under the stress test's worst-case scenario," says Scott Talbott, senior vice president at the Financial Services Roundtable, which represents the largest financial institutions. However, a chorus of bank analysts and economists are questioning the rigor of the stress tests if the results are really so positive. After all, just six months ago, the entire financial system was brought to its knees from the stress of capital market losses and rising mortgage defaults.
Treasury tallies $10 billion for mortgage mods Six large U.S. banks could pocket nearly $10 billion in federal subsidies if they modify troubled home loans and are able to save homeowners from foreclosure, the Treasury Department said on Wednesday. The mortgage specialty arms of Citigroup, JPMorgan Chase and Wells Fargo & Co. would each earn over $2 billion for modifications that have long-lasting success, according to the Treasury's formula. The money is available through a $50 billion program to encourage mortgage servicers to ease the terms on troubled loans. Many more mortgage servicers will be eligible for the subsidies, the Treasury said.
Goldman Revamp Puts Dec. Losses Off Books Calendar Shift Left 1 Month Unreported December was a disastrous month for Goldman Sachs, producing a loss of $780 million, but you wouldn't know it from looking at the company's bottom line for the last quarter of 2008 -- or the first quarter of 2009. December fell through the cracks as the big investment-banking firm moved from a fiscal year ending in November to a fiscal year beginning in January. Billions of dollars of write-downs in the value of commercial real estate loans and other assets showed up in neither period.
Dollar Optimism Drops to One-Year Low as Fed Dilutes Currency Expectations for a weaker dollar increased to the highest level in a year after the Federal Reserve diluted the currency to lift the economy out of a recession, a survey of Bloomberg users showed. Participants turned bearish on the dollar over the next six months for the first time since January, according to 1,349 respondents from Paris to New York in the Bloomberg Professional Global Confidence Index. They were most bullish on Brazil's real since August and expected the Mexican peso to rally for the first time since January, as the Group of 20 nations pledged on April 2 to spend $1 trillion to revive global economic growth.
Accumulate silver soon: Got Gold Report As the Big Markets, the big equity markets, continued to give bears heartburn over the past two weeks; as base metals enjoyed a kind of price renaissance, pushing higher despite troubling economic news; as governments continued to find new ways to "fix" major economic problems caused by excessive borrowing with much more, ridiculously excessive borrowing, relaxing accounting standards and now even using the U.S. government's printing press to "buy" its own treasuries (diluting all dollars in the process) ... while those seeds of inflation and eventual debasement of all fiat currencies wound up - gold and silver continued to correct lower.
Fed Says U.S. Economy's Decline Slowed in Some Areas The Federal Reserve said the U.S. contraction slowed across several of the biggest regional economies last month, with some industries "stabilizing at a low level." Five of 12 Fed district banks "noted a moderation in the pace of decline," the Fed said today in its Beige Book business survey, published two weeks before officials meet in Washington to set monetary policy. Other banks weren't as positive, with the Atlanta district, the Fed's second-biggest regional economy, reporting that "activity remained weak in March."
U.S. Won't Cite China on Currency The Treasury Department said on Wednesday that China was not manipulating its currency to increase its exports, a big retreat from the criticism expressed by Timothy F. Geithner in January during his Senate confirmation hearing to become the Treasury secretary. The new report highlighted the political and diplomatic constraints that the Obama administration faces in dealing with China. American officials remain frustrated that China's currency policies lower the cost of Chinese goods and make American products more expensive in foreign markets. But they are relieved that China is fighting the global recession with an enormous fiscal stimulus program to spur domestic growth.
Geithner Refrains From Labeling China a Manipulator U.S. Treasury Secretary Timothy Geithner refrained from labeling China as a currency manipulator, backtracking from an assertion he made during his confirmation hearings in January. In its first semiannual report on foreign-exchange policies since Geithner became secretary, the Treasury said that while the yuan remains "undervalued," no country "met the standards" for illegal currency manipulation during the period of the report, from July 2008 through December 2008.
Ahead of Stress Test Results, Banks Balk at More Federal Aid The nation's largest banks are pressing the government to curtail the next round of federal aid to the financial system, a high-stakes tactic senior officials described as grandstanding that could undermine a necessary rescue. Federal regulators are racing to assess the health of banks so the government can provide the capital they need. The Obama administration hopes to unveil its appraisal by the first week of May, although sources said the work is in an early phase. An administration official said yesterday that significant information about the financial condition of the banks would be revealed, including how much capital they would have to raise.
U.S. Program Lends a Hand to Banks, Quietly Eager to escape the long arm of government, Goldman Sachs is preparing to return $10 billion in taxpayer funds as fast as the ink can dry on the check. But the bank, and a number of others, is quietly holding on to other forms of public support that come with virtually no strings attached. Banks have been benefiting from an indirect subsidy adopted by the federal government at the height of the financial crisis last fall that allows them to issue their debt cheaply with the backing of the Federal Deposit Insurance Corporation.
Lending By Bailout Recipients Falls Again Number of Loans Down in February Despite U.S. Aid Lending by the nation's largest banks fell 6 percent in February from the previous month, continuing a downward trend that began in October with the financial crisis, according to data published yesterday by the Treasury Department. The 21 banks in the survey have received more than $211 billion in federal funding to support new lending with the aim of stimulating the economy. The money has not accomplished its purpose.
Robert Merton: Why The Financial Train Went Off The Rails (Video) There will be a time "beyond crisis," asserts Robert C. Merton, who delves into the dense science of derivatives -- a field he has fundamentally shaped -- to explain how the vast global economic collapse has come about, and how financial innovations at the heart of the collapse could also be tools for reconstruction.
Say Goodbye to Fannie and Freddie Fannie, Freddie Face Pressure to Revamp as U.S. Aid Increases Fannie Mae and Freddie Mac are under pressure from lawmakers to revamp their operations as the mortgage-finance companies tap more government money to survive. Among the options under discussion are combining the companies, breaking them up or reshaping their missions.
Fed Considers More Disclosure on Emergency Programs Federal Reserve officials are considering steps to provide the public with more information about emergency programs aimed at reviving credit and ending the U.S. recession. The central bank will probably increase disclosure on the collateral it holds against loans to financial firms, while also weighing a full range of options, including possible press conferences, according to people familiar with the matter.
Sorry, Taxpayers, You Aren't Getting Paid Back By Goldman Sachs Goldman Sachs chief financial officer David Viniar said returning the TARP funds is duty. But most people probably have no idea what happens when that duty is performed and TARP funds are returned. We're pretty sure that many Americans probably assume that returned TARP funds will go to repay debt taken on by the government to create the financial bailout. Sadly, they're wrong.
New palladium coin bill passed in the US 14th April 2009 New legislation has been passed by the US government which will allow the Mint to produce palladium versions of Saint-Gaudens' ultra-high-relief bullion coins. In a bill introduced by Senator Max Baucus and passed on 1st April, palladium from the Stillwater Mine in Montana could now be used to manufacture the 0.995 fine one-ounce double eagle coins. Under the terms of the agreement, no fractional ounce size issues will be made, although the edge of the coins can feature the raised lettering that characterised the original gold incarnation.
New penny's slow start in circulation increases value The penny, often picked on for its piddly value, has found some self worth in 2009. The 2009 Lincoln cent - slow to spread into consumers' pockets - is being sold for big bucks. Single coins have fetched more than $1 each. Fifty-cent rolls have frequently ranged from $2 to more than $50 at online auction websites.
UBS to Cut 7,500 More Jobs After $1.8 Billion Loss UBS, the Swiss banking giant, plans to cut an additional 7,500 jobs after it lost about 2 billion Swiss francs, or $1.8 billion, in the first quarter and clients withdrew funds, the company said on Wednesday. Oswald J. Grübel, who took over as chief executive in February, said the company would reduce the number of employees worldwide to 67,500 in 2010, compared with the 75,000 positions that his predecessor envisioned for the end of this year. To return to profit, UBS is focusing on its core operations of wealth management, investment banking and asset management.
Consumer prices dip unexpectedly Consumer prices dipped unexpectedly in March, leaving inflation over the past year falling at the fastest clip in more than a half-century. The recession is expected to keep a lid on inflation as widespread layoffs dampen wage pressures and weak demand keeps companies from raising prices. The Labor Department said Wednesday that consumer prices edged down 0.1 percent last month as a drop in energy prices offset the biggest rise in tobacco prices in more than a decade. It was a better performance than the 0.1 percent rise in the Consumer Price Index that economists had expected.
GM pushes faster plan to cut U.S. dealers General Motors Corp has told U.S. dealers it is accelerating its timetable for closing about 1,700 dealerships as it rushes to meet a June 1 deadline to restructure under U.S. government oversight, people with knowledge of the discussions said. In a series of meetings with key dealers including representatives of the National Automobile Dealers Association, GM executives also said about 200 dealerships had closed in the first quarter, according to people briefed on those talks.
GM may drop Pontiac, GMC brands - Bloomberg General Motors Corp, facing a June 1 deadline to restructure under U.S. government oversight, may drop its Pontiac and GMC brands as part of broader cost-cutting moves, Bloomberg reported, citing people familiar with the matter. The two brands are being studied as part of talks with an Obama administration task force assessing whether GM can be restructured without bankruptcy, sources told Bloomberg on Wednesday. GM's Chevrolet, Cadillac and Buick brands are likely to be safe, the news agency reported.
Calpers May Buy TARP Assets on 'Glimmer of Hope' The California Public Employees' Retirement System said it plans to buy assets of Citigroup Inc. and other financial companies under the U.S. government's $700 billion Troubled Asset Relief Program. Calpers, as the largest U.S. public pension manager is known, is setting aside "billions of dollars" and is ready for more investments, Henry Jones, a Calpers board of administration member, said in a speech in Seoul.
Unsure of Saturn's Fate, Dealerships Are Closing Saturn, one of three brands that General Motors plans to drop, has been running ads that tell skittish car shoppers, "We're still here." But Saturn is getting harder to find. One of the company's largest dealers shut down four of his six Saturn stores in Wisconsin on Wednesday. After Thursday, Saturn will no longer be in Corpus Christi, Tex. And forget about buying a new Saturn anywhere near Kansas City, Mo., or in any of the 45 cities across the United States where Saturn dealers have closed this year.
Child abuse spikes as U.S. economy flounders One 4-month-old baby was shaken so violently she needed surgery. Another 3-week-old suffered fractured ribs from abuse at home. A 9-year-old diabetic boy stopped receiving proper treatment for his condition. Those cases reported by Boston hospitals are part of a spike in child abuse in United States during a recession that has driven some families to the brink and overwhelmed cash-strapped child-protection agencies. "In the last three months we have twice as many severe inflicted injury cases as we did in the three months the previous year," said Allison Scobie, program director of the Child Protection Team at Boston's Children's Hospital.
Obama Prepares For Mexico Talks On Drug Trade One-Day Trip Meant to Show Solidarity President Obama will travel to Mexico on Thursday in a show of solidarity with his Mexican counterpart, Felipe Calderón, who has asked the new U.S. administration to do more against a thriving drug trade that threatens the integrity of his government and country. In advance of the one-day visit, Obama administration officials have said the president will pledge to do more to stop the flow of U.S.-made firearms to the drug cartels fighting for control of smuggling routes along the border. Officials say he also wants to broaden the U.S. relationship with Mexico, long dominated by drugs and immigration, to include economic and environmental interests.
Russia May Need to Seek International Loans MOSCOW, April 14 -- Russia may have to borrow money from international markets next year for the first time in a decade, Finance Minister Alexei Kudrin said Tuesday, as the government seeks to conserve cash amid a severe recession. Russia last turned to foreign lenders in 2000. Since then, it had stashed windfall oil profits -- helped by a surge in commodity prices -- into a reserve fund and accumulated the third-largest foreign currency reserves in the world.
N. Korea Answers U.N. With Defiance Inspectors Ousted, Talks Denounced Fuming at the U.N. Security Council for condemning its missile launch, North Korea ordered U.N. nuclear inspectors out of the country on Tuesday, said it will restart its plutonium factory and vowed never to participate again in six-country nuclear negotiations. In response, the White House called on North Korea to "cease its provocative threats" and honor its commitments.
U.N. inspectors leave North Korea U.N. nuclear inspectors left Pyongyang on Thursday, Japan's Kyodo news agency said, after being ordered out by North Korea, which has raised tensions by vowing to quit disarmament talks. The U.N. Security Council unanimously condemned North Korea's launch of a long-range rocket on April 5 as contravening a U.N. ban and demanded enforcement of existing sanctions against Pyongyang.
Adrian Salbuchi sees clearly, through the smoke and mirrors:
Adrian Salbuchi - Obama: Things Are Not Always What They Seem - Part 1 Many things in this world are not what they seem.. Obama is one of them. He is as unlikely an American president as can be imagined. Why did the powers that be, allow him to come this far? What is his special mission?
Adrian Salbuchi - Obama: Things Are Not Always What They Seem - Part 2 Just as the "Globalization" of the nineties needed for the USSR to go, so now "World Government" needs for the USA to go... Is Barack Hussein Obama destined to become the last president of the United States?
Wednesday's radio show is rebroadcast of yesterday's show. PTG is OPEN for business - call 800-951-0592
April 15: It's T-Day Patriot rocker, thousands more planning to 'take America back' Steve Vaus, whose patriotic anthem "We Must Take America Back" got him blacklisted by the recording industry 17 years ago, will be singing the re-recorded song with updated lyrics at the San Antonio Tax Day tea party on April 15: T-Day.
94 Years of Serfdom This April 15 is the 94th year that Americans have had to file an income tax. For most Americans, the day is a non-event. The federal and state governments have already collected the taxes due by withholding from each paycheck over the course of the calendar year. Most Americans never saw the money and have no real idea that they earned it. Some Americans have their incomes over-withheld as a form of forced savings. They look forward to tax time as it means they will receive a refund check from the government that they can use for a summer vacation, a big screen TV, a new appliance, or a down payment on a new car. Few Americans realize that over the last 94 years they have been enserfed and have no more rights to their own labor than medieval serfs or 19th-century slaves. The 16th Amendment to the Constitution was ratified because the income tax was only for the rich. Some states ratified the amendment because no one in the state had an income high enough to be subject to the tax.
Federal agency warns of radicals on right The Department of Homeland Security is warning law enforcement officials about a rise in "rightwing extremist activity," saying the economic recession, the election of America's first black president and the return of a few disgruntled war veterans could swell the ranks of white-power militias. A footnote attached to the report by the Homeland Security Office of Intelligence and Analysis defines "rightwing extremism in the United States" as including not just racist or hate groups, but also groups that reject federal authority in favor of state or local authority. "It may include groups and individuals that are dedicated to a single-issue, such as opposition to abortion or immigration," the warning says.
Should Americans Prepare for a “Summer of Rage”? Why some are saying it’s time to get your guns, get out of the city and head for your survival bunker. Americans are the most heavily armed people in the world. They are also probably the most heavily doped, drugged and indebted. With the economy breaking down, an explosive cocktail could be brewing. The protests at the G-20 and nato summits could be a harbinger of what is headed for Main Street America.
Hedgecock seeks popular uprising [audio clip] Columnist who revealed DHS crackdown calls government report 'un-American' . . . . The DHS document warns against the possibility of violence by unnamed "right-wing extremists" concerned about illegal immigration, increasing federal power, restrictions on firearms, abortion and the loss of U.S. sovereignty and singles out returning war veterans as particular threats. The report, titled "Right-wing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment," dated April 7, states that "threats from white supremacist and violent anti-government groups during 2009 have been largely rhetorical and have not indicated plans to carry out violent acts."
Income Tax 'Defiers' Include D.C. Detective Protesters Call System Illegal; IRS Disagrees D.C. police Detective Michael C. Irving was looking for a way to keep more money in his pocket when he settled on a little-known "program" that he claimed exempted him from income taxes. During a three-year period, while earning more than $450,000, he did not pay a dime to the U.S. Treasury or D.C. government. Irving had not stumbled upon an obscure tax loophole. Authorities say the respected homicide investigator was participating in an extreme form of tax cheating that they worry could be going mainstream.
American Legion to DHS: We're not terrorists 'It is important for all of us to remember that Americans are not the enemy' In response to a newly unclassified Department of Homeland Security report that warns of dangers associated with "right-wing extremists" - and singles out returning war veterans as particular threats - the American Legion has fired off a letter to DHS in protest. "I think it is important for all of us to remember that Americans are not the enemy. The terrorists are," writes David K. Rehbein, national commander of the American Legion, to DHS Secretary Janet Napolitano. The Legion's letter comes in response to a report titled "Right-wing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment," dated April 7, which warns against the possibility of violence by unnamed "right-wing extremists" concerned about illegal immigration, increasing federal power, restrictions on firearms, abortion and the loss of U.S. sovereignty.
Great Speech, Obama! But Still Wrong About The Problem We can't say enough about the joy of having a sharp, articulate, and charming president lead this country through this crisis. Every time we watch Obama speak, our confidence is restored. That said, we wish Obama didn't spend so much time hanging out with Tim Geithner and Larry Summers, who we assume are responsible for the mistakes Obama continues to make in his diagnosis and treatment of the banking problem.
In Georgetown Speech, Obama Offers Cautious Optimism President Obama today laid out a vision for a new era of U.S. economic prosperity and called on the nation to "get serious" about reforming entitlement programs such as Medicare, Medicaid and Social Security -- reform that he said starts with overhauling the American health care system. "Make no mistake: health care reform is entitlement reform," Obama said in a speech at Georgetown University in Washington. "That's one of the reasons why I firmly believe we need to get health care reform done this year." This will bring down costs "across the system, including in Medicare and Medicaid," he said.
New Bubbles Brewing in Shanghai and Wall Street Since the historic 1987 stock market crash, the Federal Reserve has responded to every recession in the US economy by slashing interest rates, and funneling massive amounts of money into the hands of Wall Street’s aristocracy, - the ruling class that dominates the two political parties in Washington. The Fed’s cash injections have usually found their way into assets, including commodities, stocks, and mortgage-backed securities, and often fueling speculative binges into stratospheric heights. But on March 12th, US President Barack Obama warned a group of chief executive officers of the Business Roundtable, that the Fed “can’t continue with its policies of endless cycles of bubble and bust, and instead, must build a new foundation for future economic growth.” Obama blamed the lingering banking crisis on “reckless speculation and spending beyond our means, on bad credit, inflated home prices, and over-leveraged banks. Such activity isn’t the creation of lasting wealth. It’s the illusion of prosperity, and it hurts us all in the end,” Obama warned.
Obama Says 'Pitfalls' Ahead Before Economy Recovers President Barack Obama said today that his economic-stimulus package and plans to rescue banks and bolster housing are starting to "generate signs of economic progress," while warning of "pitfalls" ahead. Local and state governments along with construction companies are beginning to rehire workers, and credit markets are starting to thaw, Obama said in a speech at Georgetown University in Washington.
Ron Paul 4/14/2009 "Obama Wrong, Destroying Dollar W/ Economic Fascism & Central Planning"
Don't 'Invest' in Gold - Save It An old Chinese saying declares that wisdom begins by calling things by their right name. Truer words could not be spoken about gold. If you call gold by the wrong name, you begin down the wrong road, which is a serious handicap. It can easily prevent you from understanding why you should own gold as well as how to determine its value. The point is that gold is not an investment; it is money. The following table presents gold’s performance over the past eight years in terms of nine different currencies.
GOLD THOUGHTS Grand and glorious global housing bubble came to an end not because it had caused so much money to be borrowed. It came to an end because no more money could be borrowed. Debt bubbles come to traumatic conclusions not because so much credit had been created. Debt bubbles implode when no more credit is available. Lack of credit, the fuel for a mania, is what comes to be the problem. Governments do not, perhaps regrettably, come to an end. They are, though, periodically brought to their knees by debt. The Spanish monarchy went “bankrupt” more than once from over spending and debts. Argentine governments simply decided it did not wish to repay its borrowings. U.S. government is headed in that direction.
Why I Prefer the Silver Lining by Howard Ruff In my recent interview on CNBC’s Squawk Box, I was asked why I preferred silver. Here’s why:
I am bullish on gold. I can enthusiastically endorse all the bullish arguments. In fact, my investment in the Central Fund of Canada Ltd. (CEF) contains one ounce of gold for every 50 ounces of silver. I am not negative on gold; far from it. It’s a question of better or best.
At these prices, gold is not a greatly in-demand industrial metal. It has industrial uses, but many of these uses are too expensive for gold. Gold is a monetary and jewelry metal. It also is enthroned in human consciousness as a store of value. I expect gold to continue to rise if Barack Obama continues to create so much currency.
Silver is also a jewelry and monetary metal, but it is also a very important industrial metal. It has over 2,000 industrial uses. Back in the ‘70s when I liked silver over gold, there was ten times as much silver above ground as there was gold. Despite that, we made two to three times as much money on silver as we did on gold.
Now the ratio has changed. Industrial use has so depleted our silver inventory that government now owns none and there is six times more gold above ground than silver, which is by far the scarcer of the two metals.
Silver To Play Catch Up With the trilateral commission on wealth distribution working to “pick the pockets” of the people and confiscate wealth on a new level, many investors are trying to figure out whether they should buy gold or silver to protect themselves. Although both metals have performed fairly well, gold has done better, posting average double digit gains every year for the past 8 years. Silver’s performance however, was somewhat hampered in the crash of 2008. As gold posted the year with positive gains, silver closed the year down about 38%. The current historical gold to silver ratio is out of balance, with potential for a move back towards the historical standards.
Gold, Silver Fall in N.Y. on Improved Outlook for U.S. Economy Gold fell in New York on speculation that the U.S. economy will rebound, eroding the appeal of the precious metal as an alternative asset. Silver also declined. Federal Reserve Chairman Ben S. Bernanke said there are signs that the “sharp decline” in the economy may be easing, citing home and car sales, construction and consumer spending. Before today, investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, had risen 45 percent this year as investors sought a haven from financial turmoil.
DMCC to hold global gold meet on April 27 DUBAI: In an effort to assert that Dubai has not lost its position in global gold charts, Dubai Multi Commodities Centre (DMCC) has decided to host an international gold forum on April 27 at the Atlantis, The Palm. Dubai has been witnessing a slump in gold business during the recent past due to the recession looming over the world and slump in tourist flow. DMCC Gold Convention will be addressed by industry experts from organisations like Standard Bank Plc, the World Gold Council, McKinsey & Co., GMFS Ltd. and Dubai Gold Securities.
Indian politicians beat IMF, own tons of gold NEW DELHI: At a time when the world is witnessing a gold rush and recession, India is in the middle of a general election which itself will pump in around Rs 10,000 crore into the economy. Gold has been a major part of the assets of candidates in this election. But, one interesting feature of India’s elections is that all the candidates will have to declare their assets before the Election Commission in an affidavit. If you check some of the candidates’ assets you can find some interesting factors about their gold possessions. One glance at the affidavits will make you wonder that with these much gold in their possession they will be having more gold than the IMF has.
The Rich Get Richer What we’re seeing in the global financial markets is just a moment in time. We’ve all heard the news that the financial markets have lost trillions in wealth, that this wealth has been “destroyed.” Well, fortunately, this is not true. As a matter of fact, when speaking of money, it is important to understand that money cannot be destroyed. Yes, it is true many have the appearance of losses at these current prices, but that would only be reality if every investor on earth decided to sell everything today. So these losses are merely paper losses and not actual losses. Money hasn’t been destroyed, it has simply been moved around. And in these moments, the money generally moves from the emotional investor to the disciplined investor.
Move Over Neel Kashkari, Obama Taps Fannie CEO To Run TARP How will "I ran the TARP" look on Neel Kashkari's resume? We're guessing pretty good, because in this environment government experience is huge. Anyway, he can finally start applying for jobs, since Obama has tapped his replacement. The lucky guy is Herb Allison, who has been the CEO of Fannie Mae since October
*** Taxing Grandma to Subsidize Goldman Sachs Monday afternoon, Goldman Sachs reported much larger than expected first quarter profits, and this comes on the heels of Wells Fargo’s strong earnings reported last week. No one should be surprised. The Federal Reserve has provided the banks with lots of cheap funds through its various emergency lending facilities and quantitative easing. The Federal Reserve has permitted the banks and financial houses to park vast sums of unmarketable paper on its books - securities made nearly worthless by the misjudgment and avarice of bankers. In return, the Fed has provided these scions of finance with fresh funds, cheaply, that they may lend at healthy rates on credit cards, auto loans and even mortgages. While the Fed cuts the banks slack, the bankers are busy turning the screws on their debtors by raising credit card rates and fees, and harassing distressed borrowers with all the zeal of the Roman army sacking Palestine.
Goldman Sachs Buries Losses to Beat the Estimates That canny crew at Goldman Sachs does it again. Last night in a surprise move Goldman announced their earnings early, showing a surprising profit of $1.8 billion, beating the Street estimate handily. The bulk of their profit purportedly came from speculative trading for their own accounts, using 'cheap FDIC guaranteed funds.' Goldman also took the opportunity to announce a new stock issue designed to allow shareholders to help them pay back their government TARP funds. Since Goldman is putting aside 50% of its profits for employee bonuses even now, while they are still holding government subsidies, the reasons for this are obvious.
S&P Doesn't Buy Goldman Sachs' Turnaround Standard & Poor's warned today that Goldman's awesome earnings last quarter may not be sustainable. The ratings agency is leaving in place its its negative outlook on the firm's credit rating of A. "Coupled with persisting weak economic conditions and capital markets turmoil, we believe it would be premature to conclude that a sustained turnaround" in Goldman Sach's financial performance is under way S&P wrote in a note reported by Bloomberg.
Why Goldman's Blowout Quarter Is Mostly Meaningless The stunning quarterly results achieved by Goldman Sachs tell us almost nothing about the financial health of Goldman, and less than nothing about the health of the banking sector. Goldman, even more so than many of its competitors, still remains basically opaque. We don't know the source of its profits, except in a general way, and the outdated types of financial disclosures it makes only further obscures its financial health.
How Goldman's Declining Share Price Wiped Out $1 Billion In Book Value The way Goldman Sachs accounts for stock awards to employees wiped out about a billion in book value last quarter. Ironically, this loss came because Goldman was delivering stock to employees that was substantially cheaper than when it was originally awarded. The fact that delivering less costly stock can drain book value is an example of how complicated book keeping at investment banks can be. Often what looks like a bad thing for a bank, turns out to be a boost to the books. While what looks like a good thing can sometimes be a sap book value.
Bailout Nation at Crossroads: Will Govt. Let Goldman Repay TARP? By posting much better-than-expected first-quarter results late Monday and selling $5 billion of stock early Tuesday, Goldman Sachs reestablished itself as the premiere financial services firm. Goldman may have timed the stock sale perfectly as well, selling 40.65 million shares this morning at $123 each. The price was 5.5% below Monday's close, and Goldman shares were recently down 7.5% as a result, but at the same price the firm sold shares in September and well above its late-January low of $59.13. But Goldman Sachs also put itself on a potential collision course with the U.S. government by declaring its intent to use proceeds from the stock sale to repay the $10 billion of TARP funds it received last October - "if permitted by our supervisors." No matter what you think of Goldman, that caveat should send a chill down your spine. America truly is at a crossroads: At the very moment both President Obama and Ben Bernanke are declaring - essentially - the worst of the crisis has past, the idea Goldman (or any other firm) would be prohibited from repaying the TARP funds smacks of economic gangsterism. (Who else but a mobster forces you to take money and then won't let you repay the loan?)
U.S. Planning to Reveal Data on Health of Top Banks The Obama administration is drawing up plans to disclose the conditions of the 19 biggest banks in the country, according to senior administration officials, as it tries to restore confidence in the financial system without unnerving investors. The administration has decided to reveal some sensitive details of the stress tests now being completed after concluding that keeping many of the findings secret could send investors fleeing from financial institutions rumored to be weakest. While all of the banks are expected to pass the tests, some are expected to be graded more highly than others.
Fed's Fisher Forecasts Steep Contraction in U.S. GDP Federal Reserve Bank of Dallas President Richard Fisher said "grim" figures indicate the world's largest economy shrank steeply last quarter. "The economic data in the U.S. is quite grim, and I expect a contraction at an equally dismal rate in the first quarter," Fisher said in a speech today in Hong Kong. He reiterated his prediction that the jobless rate may exceed 10 percent this year.
Retail and Price Data Show Ongoing Economic Weakness Retail sales declined in March, the government reported on Tuesday, ending two months of tentative gains and signaling more weakness in demand as worried consumers continue to tighten their budgets. The 1.1 percent monthly drop in retail sales displayed the fragility of some recent "glimmers of hope" in the economy cited by President Obama and other policy makers as they press the administration's economic agenda.
Is Deflation Still a Problem? A specter is stalking the continent -- the specter of deflation. OK, maybe that's a little melodramatic, but today's PPI report does raise concerns that deflation could still prove to be a serious problem. . . . . . . We will see tomorrow if the return of deflation at the producer level has been matched by consumer prices. While falling prices may sound like a good thing, they are really not. They put additional pressure on debtors, who are stressed enough as it is, and raise the likelihood of defaults. That, in turn, is not good for creditors like banks. They hurt debtors since they have to repay with dollars that are worth more. Real interest rates go up, but there is not much that can be done to lower short-term interest rates since they are already near zero. Overall, it still looks like deflation is a more serious near-term problem than inflation, despite the Fed throwing great gobs of money at the economy. Inflation may turn out to be a problem down the road, but probably not until the economy is back on track and expanding at a good clip.
Bernanke: Economy still in recovery Retail sales fell 1.1 percent in March, the Commerce Department said Tuesday, lowering optimism that the U.S. economy has recovered from the depths of the recession. The agency reported $344.4 billion in sales last month, which is 9.4 percent less than in March 2008. Sales from January through March 2009 were down 8.8 percent, compared to the similar period a year ago, according to the report. Among the biggest sale drops in March 2009, compared to March 2008, were at U.S. gasoline stations, where sales were down 34 percent. Auto and parts dealers reported a 23.5 percent drop in sales.
Ben’s Un-shrinkable Balance Sheet As he stated again clearly today, the Chairman of the Federal Reserve has deluded himself into thinking that when the time comes, he will be able to shrink the size of the Fed’s balance sheet and reduce the monetary base with both ease and impunity. He also has deluded himself into thinking inflation will be easily contained. It is very important that he does not fool you, as well. The Fed believes low interest rates should not be the result of a high savings rate, but instead can exist by decree, a conviction which has directly led consumers to believe their spending can outstrip disposable income.
Sorry, Ben, We Can't Prevent Failure And Stupidity Ben Bernanke is giving a speech at Morehouse College right now. Unfortunately, there is little chance he'll address one of the most pressing challenges we face. The topic of a number of Bernanke and Geithner's recent speeches is how we can create a financial system characterized by prudence and efficiency. This includes the idea that the great challenge is designing a regulatory regime under which large, complex financial institutions will no longer be at risk of massive failure. The solution he favors involves a better regulatory regime that can successfully monitor risk, which is a little like a drunk trying to solve the problem of spending all his money on booze by favoring rivers made of whiskey. Might be nice but it ain't gonna happen.
Bernanke Bet on Keynes Has Meltzer Seeing 1970s-Style Inflation Federal Reserve Chairman Ben S. Bernanke is siding with John Maynard Keynes against Milton Friedman by flooding the financial system with money. If history is any guide, says Allan Meltzer, the effort will end in tears. Inflation “will get higher than it was in the 1970s,” says Meltzer, the Fed historian and professor of political economy at Carnegie Mellon University in Pittsburgh. At the end of that decade, consumer prices rose at a year-over- year rate of 13.3 percent.
Exposing the Federal Reserve by G. Edward Griffi We'll start way back in history to give some kind of historical perspective to this; we'll go back to the first century BC and the tiny kingdom of Phrygia. There was a philosopher by the name of Epictetus and it was Epictetus who said: "Appearances are of four kinds: things either are as they appear to be; or they neither are nor appear to be; or they are but do not appear to be; or they are not and yet appear to be." . . . . . . . . I thought, accidentally perhaps, Epictetus had given me a track to run on so-to-speak. Actually it could be the theme since if there's anything in the world that is deceiving it is the Federal Reserve System. In fact, it is one of those appearances of the fourth kind which are those appearances which are not and yet appear to be. I'm going to use that as sort of a hook on the topic. We'll come back to it from time-to-time and punctuate it if I can remember to do that because it tells us something at the most fundamental level about the Federal Reserve System and that is that appearances can be deceiving.
U.S. State Tax Revenue Drops Most in 50 Years, Institute Says U.S. states’ sales tax collection dropped the most in 50 years in the final three months of 2008, a result of the worst economic recession in a generation, according to the Rockefeller Institute of Government. Sales tax collections fell 6.1 percent in the fourth quarter compared with the same period the year prior, the Albany, New York-based fiscal research group said in a report today. The institute’s survey of the 50 states also found that overall state tax collections, including income tax, fell 4 percent in the fourth quarter last year.
Government May “Nationalize” GM by Swapping Debt for Equity In a move that would effectively nationalize the country’s largest automaker, the U.S. government is considering taking an equity stake in General Motors Corp.in exchange for part of the $13.4 billion it has already lent the company, Bloomberg News reported, citing people familiar with the matter. Such a move would likely mean bondholders would get a smaller piece of a new company that would emerge in bankruptcy with most of GM’s saleable assets. The bondholders, who own $27.5 billion in GM debt, had been offered 90% of the new entity’s equity in an earlier settlement proposal. That debt is now trading for as little as 8 cents on the dollar.
Obama Auto Team Considers Swapping GM Loan for Equity The U.S. government is considering swapping some of the $13.4 billion it lent General Motors Corp for an equity stake in a stripped-down version of the carmaker, people familiar with the matter said. A government stake would mean a smaller share of the new company for bondholders, who own $27.5 billion in GM debt. Bondholders had been offered 90 percent of the new entity’s equity by the company. The swap would be part of an effort to cut GM’s debt as the carmaker approaches a June 1 deadline to come up with a plan to become viable, the people said.
Top Obama official sought bonus after bailout Left bailed-out Citigroup after Obama appointment Shortly before joining the Obama administration, Deputy Secretary of State Jacob J. Lew reported in a little-noticed government filing that he intended to collect a bonus for his 2008 work at Citigroup even though the Wall Street firm had just received a massive federal bailout. Now administration officials - who expressed outrage when other bailed-out firms such as American International Group Inc. (AIG) awarded bonuses to executives - are steadfastly refusing to say whether Mr. Lew accepted the money in January or how much of his nearly $1.1 million compensation from Citigroup last year was paid in the form of bonuses.
Consumer Spending Declines: A Historical Oddity The facts are pretty straightforward. National economies rev up - or not - based on what business spends (known as investment), what households buy (consumption) and what is bought or sold between a country and the rest of the world. The American household was the rock in all this. In recessions since 1945, private consumption has typically fallen only 0.4 percent in a single quarter before rebounding to pre-recession levels within two quarters. All this even as exports and business investment waned.
Retail Sales, Producer Prices Declined in March Retail sales in the U.S. unexpectedly dropped in March for the first time in three months, raising concern the biggest part of the economy may falter once again heading into the second quarter. Purchases fell 1.1 percent, with declines from car dealers to electronics stores and restaurants, the Commerce Department said in Washington. Only pharmacies and grocery stores saw a gain. The Labor Department said wholesale prices fell last month, indicating that deflation risks remain.
Longer Unemployment for Those 45 and Older When Ben Sims, 57, showed up earlier this year for a job interview at a company in Richardson, Tex., he noticed the hiring manager - several decades his junior - falter upon spotting him in the lobby. "Her face actually dropped," said Mr. Sims, who was dressed in a business suit befitting his 25-year career in human resources at I.B.M. Later, in her office, after several perfunctory questions, the woman told Mr. Sims she did not believe the job would be "suitable" for him. And barely 10 minutes later, she stood to signal that the interview was over. "I knew very much then it was an age situation," said Mr. Sims, who has been looking for work since November 2007, a month before the economic downturn began.
Older Borrowers, Out in the Cold YUBA CITY, Calif. -- In 2006, Carol Couts, a 66-year-old widow in Yuba City, Calif., was living in her home, payment-free, when a mortgage broker persuaded her to refinance her no-cost mortgage for one that exceeded her monthly income by more than $400. She can't afford the payments, and unless her lender modifies the loan to make it affordable, she'll lose her home of 25 years. She's given away most of her furniture and her cat, and packed her belongings in cardboard boxes. "We've got nowhere to go," she says, referring to herself and her dachshund, Ollie. As the government presses lenders to modify mortgages, a large subset of distressed borrowers is being left out: older homeowners on low fixed incomes. Many of them are now facing foreclosure, say legal-aid advocates and AARP attorneys, because they were sold loans they could never afford, often fraudulently.
Moody's Downgrades The Whole Country The Federal government is still AAA, but every municipal debt issuer is now suspect and shaky according to Moody's. For the first time ever, the ratings agency placed all munis on negative outlook, a precursor to potential downgrades. Historically, the agency looked at munis individually and considered them to be too diverse to make blanket statements about. But it seems overspending and the hollowing out of the revenue base is a nationwide phenomenon affecting cities and states everywhere.
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 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.
Obama removes barriers to Cuba President Obama on Monday lifted the most stringent Bush-era restrictions on trade, travel and remittances to Cuba and opened the door for new U.S. telecommunications deals on the island, in a move that signaled a different approach to the communist regime and was seen as heading off a potential issue of contention at a major hemispheric summit later this week. "We're getting the United States out of the business of regulating the relationship between Cuban families," said Dan Restrepo, the president's top adviser on Latin American issues at the National Security Council. "The Cuban government should get itself out of the way and allow Cuban families to support Cuban families. And that creates the kind of space, in our view, that is necessary to move Cuba forward to a free and democratic Cuba," he said.
Harder-Edged Warnings About Britain's Economy LONDON - In the dank gloom of the factory that he and his fellow workers had just occupied, John Horscroft recalled a time 30 years ago when strikes and industrial unrest in Britain were an everyday occurrence. "It feels like those days again," said Mr. Horscroft, who with 226 colleagues was laid off when a car parts factory in North London was shut down last month after its American parent company, Visteon, put three British plants into bankruptcy protection. "We are all together now, fighting for a cause."
Russia May Turn to Foreign Banks for Loans to Cover Deficit MOSCOW - Russia may borrow from foreign banks for the first time in a decade to bridge a budget deficit next year, the finance minister, Aleksei L. Kudrin, told a cabinet meeting Tuesday, signaling that the Kremlin was planning for a long recession that could deplete its oil windfall funds. That Russia could turn to borrowing abroad is not a new proposal; officials have floated the idea of a bond issue to shore up the budget in 2010. In his comments on Tuesday, however, Mr. Kudrin signaled in the strongest terms yet that Russia would turn again to foreign borrowing for the first time since a sovereign default in 1998.
North Korea Expels UN Inspectors, Vows to Resume Nuclear Work North Korea ordered United Nations nuclear inspectors to leave the country "at the earliest possible time," and said it will end disarmament talks as well as resume the reprocessing of spent atomic fuel. North Korea's actions came a day after the UN condemned it for launching a long-range rocket April 5 in defiance of earlier resolutions. The move is a setback in the diplomatic effort to coax Kim Jong Il's regime to stop pursuing nuclear arms in exchange for economic aid and political ties.
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Tues 04.14.2009
Ron Paul, Right About the Economy, Right About Freedom . . . . . Yet Ron Paul did more than just deliver the message of freedom to the masses. He was able to make some predictions about the direction this country was taking. More surprisingly, he showed that the American people are interested in economics and how money works, particularly young Americans. After all, it is the younger generations who are going to have to pay for the follies the government engages in today. What do people think debt is anyway? What do people expect from a system where money creation is based on debt? Like the old fairy tale of the Pied Piper of Hamelin, debts are to be paid as promised else likely the children will suffer the consequences. Perhaps the people of this nation understand more than the establishment gives them credit for and that is why there was such an outcry against the recent bailouts.
Fewer Taxes for Real Economic Stimulus Taxes are the issue this week as Americans struggle to make the April 15th deadline to file their returns. It is a good time to contemplate the effects of big government and what it does to our country. The income tax is one of the most egregious encroachments on our liberties today. It is a form of involuntary servitude, which was supposed to have been outlawed by the 13th Amendment. Tax Freedom Day is defined as the day when the nation as a whole has theoretically earned enough income to fund its annual federal tax burden. For all of the days of the year before this day, you are a slave to government. For 2009, Tax Freedom Day will come on April 13th. Almost a century ago in 1910, before the mistakes of 1913-namely the inception of the Federal Reserve and our current income tax, Tax Freedom Day was January 19th, signifying a mere 5% burden. Somehow, our country functioned just fine.
Ron Paul On Tax Freedom Day "You Are A Slave To Government" 4/13/2009
Tea parties going global More than 2,000 protests planned for Tax Day – even in Denmark While WND has found information for more than 700 tea parties, the American Family Association is reporting Tax Day protests for 2,000 cities – and Tax Day Tea Party claims the movement has now spread overseas. With less than two days before citizens take to the streets, the mainstream media are beginning to report the widespread movement – but many major outlets are doing so in critical columns and television reports. New York Times columnist Paul Krugman wrote, "Republicans have become embarrassing to watch. And it doesn't feel right to make fun of crazy people." He said the tea parties are not an accurate representation of public sentiment. "They're AstroTurf (fake grassroots) events, manufactured by the usual suspects," he wrote.
Tea Parties Forever This is a column about Republicans — and I’m not sure I should even be writing it. Today’s G.O.P. is, after all, very much a minority party. It retains some limited ability to obstruct the Democrats, but has no ability to make or even significantly shape policy. Beyond that, Republicans have become embarrassing to watch. And it doesn’t feel right to make fun of crazy people. Better, perhaps, to focus on the real policy debates, which are all among Democrats.
Tax-day protests across nation set to send message Boston Tea Party-inspired protests have randomly cropped up across the country in opposition to the federal government's spending increases, and now plans are under way for a coordinated national tea party, reminiscent of 1773's dumping of tea by Colonists into Boston Harbor in response to taxes levied by Great Britain's King George III. "People are finally starting to feel the result of years and years of irresponsibility and out-of-control government," said Eric Odom, one of the organizers. The event is planned for Wednesday - appropriately enough, April 15 tax day - at an expected 700 locations.
Tax and Spend
Gold Prices Post Modest Gain as Dollar Slides Gold prices posted a modest gain on Monday amid weakness in both stocks and the dollar ahead of companies' first-quarter earnings reports. Oil prices were lower, while grain futures were mixed. Often seen as a save-haven investment, gold has largely been taking cues from both Wall Street and the currency markets as of late. On Monday, investors were hesitant to place big bets in either stocks or currencies, fearful that companies' reports might show more weakness in the economy. Investors had been more upbeat in recent weeks, sending stocks and the dollar higher on the hope the economy could be turning around. This has hurt demand for gold.
Going for gold: How the world's mints are coining it The world's mints are coining it as unprecedented numbers of savers search for safer investments A few years ago his visits to the mint, founded more than 800 years ago, might have seemed eccentric. No longer. From the Russian Georgy Pobedonosets to the American Eagle, gold coin production is being cranked up in mints around the world to satisfy customers believing the assets may be immune to the global financial crisis. Russia's state-controlled Sberbank says it has never seen such strong demand for investment coins. In Australia, the Perth Mint had to suspend new orders for gold coins because it could not keep pace with overseas demand. And, in America, the US Mint says sales of its one-ounce American Eagle gold bullion coins rocketed by more than 400 per cent to 710,000 ounces in 2008. "The demand for gold and silver," said US Mint spokeswoman Carla Coolman, "has been unprecedented."
George Soros The System has Broken Down
TH*NK*NG (TAXES) I've been thinking about taxes. Actually I've been thinking about the American Revolution, tax freedom day on July 3, wars, 1913 and the 16th Amendment, social engineering, and the need for real tax reform. This nation revolted and broke away from motherland England because of taxes. Ok, there were justifications like "don't tread on us," but the real battle cry was "no taxation without representation!"
The Yellow Brick Road of Gold, Peace and Prosperity Professor Antal E. Fekete's paper, The Marginal Productivity of Debt - Why Obama's Stimulus Package Is Doomed to Failure, ends with the following paragraph: Indeed, the financial and economic collapse of the last two years must be seen as part of the progressive disintegration of Western civilization that started with government sabotage of the gold standard early in the twentieth century. Ben Bernanke, who should have been fired by the new president on the day after Inauguration for his part in causing irreparable damage to the American republic may, in the end, have the honor to administer the coup de grâce to our civilization. Professor Fekete's observation that Western civilization is disintegrating is true. The process was set in motion one century ago when Western governments abandoned the gold standard as they prepared to enter the First World War.
Geithner to host global finance meeting Treasury secretary will meet next week with finance ministers from the world's top economies next week. Treasury Secretary Tim Geithner will host a meeting of international finance ministers next week, the Treasury Department said Monday. The April 24 gathering of Group of 7 officials in Washington, D.C., will be followed by a larger meeting of Group of 20 ministers. After a summit in London earlier this month, G-20 member nations agreed to increase oversight of the global financial system and pledged more than $1 trillion to the IMF to help economies in need.
Peter Schiff Vlog Report 13 Apr 2009 comments on GS, the dollar, commodities, inflation
Goldman Sachs Announces First Quarter Profits Goldman Sachs announced first quarter earnings this afternoon that were far better than analysts expected and said it would raise $5 billion through a stock offering in order to repay taxpayer funds. Goldman, which received $10 billion in federal rescue funds, said it would use the money from the stock sale "plus additional resources" to return the full amount of the government investment "after the completion of the stress assessment, if permitted by our supervisors and if supported by the results of the stress assessment." The stress testing of 19 large banks by the government is to be completed later this month. Goldman is widely expected to pass.
GOLDMAN WINS AGAIN For a brief, startling moment, it looked as though Goldman Sachs (GS) might be brought down to the level of the rest of Wall Street. That moment has now come and gone. With a strong, profitable quarter and the announcement of a brilliantly timed equity offering, Goldman Sachs (GS) will soon be free the TARP shackles that temporarily dragged the firm into the disgraced Wall Street mud.
Goldman Sachs taps private capital to refund US taxpayer $5bn offer is first such deal by US bank in credit crisis / Bonuses to rise 18 per cent on back of record profits Goldman Sachs last night launched a $5bn (£3.4bn) share offer, raising funds that it promised to use to pay back money from the American taxpayer and becoming the first US bank to tap private capital since the financial panic that engulfed the industry last autumn. The move was announced alongside financial results that showed the investment banking giant's trading division made record profits in the battered financial markets over the past three months.
Goldman Bonuses Are Way Up Too! Goldman Sachs set aside $4.7 billion for salaries and bonuses last quarter, after taking in a profit of $1.7 billion. That means that Goldman's employees stand to profit far more than it's shareholders from this quarter's outperformance. The $4.7 billion in compensation is 50% of Goldman's total revenues for the quarter. The first quarter of last year, compensation ate up just 48% of Goldman's revenues. As Heidi Moore at the Wall Street Journal reports, Goldman's rising compensation comes despite the fact that the firms has cut its headcount by 7% since the end of last year. That means that the remaining employees are each taking an even bigger slice of the pie.
Goldman Sachs to sell $5bn in shares to repay Tarp loan Goldman Sachs said that it would raise $5 billion in a share sale to pay off its government loan, as the Wall Street bank revealed an expectation-beating $2.6 billion pre-tax profit for the first quarter of 2009. In an announcement made after US stock markets closed yesterday, the bank said that it would use cash raised from investors plus existing resources to pay off its entire $10 billion loan from the $700 billion Troubled Asset Relief Programme (Tarp) set up last year to bail out America's banks.
Goldman push to repay $10bn Goldman Sachs signalled its determination to be the first major bank to emerge from the financial crisis, revealing plans late on Monday to raise $5bn to pay back government funds and reporting stronger-than-expected first-quarter earnings of $1.81bn. The bank said that, pending government approval, it would use the $5bn raised through the sale of common stock to help pay back the $10bn allocated to it last year as part of the Troubled Asset Relief Programme.
Jim Rogers Says Investors Should Expect More Bottoms pt 1/3 Apr 13 2009
Tarp investigator seeks evidence of book fiddling he official policing the $700bn Tarp fund says he is investigating whether banks have “cooked their books” to secure bail-out money. Neil Barofsky, special inspector-general for the troubled asset relief programme, told the Financial Times he was seeking evidence of wrongdoing on the part of banks receiving help from the fund, which was designed to ease credit conditions and support distressed industries.
Wells Fargo May Need $50 Billion in Capital Wells Fargo & Co., the second- biggest U.S. home lender, may need $50 billion to pay back the federal government and cover loan losses as the economic slump deepens, according to KBW Inc.'s Frederick Cannon. KBW expects $120 billion of "stress" losses at Wells Fargo, assuming the recession continues through the first quarter of 2010 and unemployment reaches 12 percent, Cannon wrote today in a report. The San Francisco-based bank may need to raise $25 billion on top of the $25 billion it owes the U.S. Treasury for the industry bailout plan, he wrote.
SEC to review whether BofA broke the law The Securities and Exchange Commission is reviewing whether Bank of America broke the law by not telling shareholders about Merrill Lynch’s plan to pay out $3.6bn in bonuses before they voted for a government-backed merger of the two banks. Merrill paid the bonuses in December, days before it was acquired by BofA and a month before bonuses were normally dispensed. BofA has said it was not required to tell its shareholders about the bonuses. But Mary Schapiro, chairman of the SEC, wrote in a letter to a Democratic congressman that the regulator was “carefully reviewing the Bank of America disclosure” and had not yet expressed a view on whether the bonus plan should have been revealed.
Bernanke Bet on Keynes Has Meltzer Seeing 1970s-Style Inflation Federal Reserve Chairman Ben S. Bernanke is siding with John Maynard Keynes against Milton Friedman by flooding the financial system with money. If history is any guide, says Allan Meltzer, the effort will end in tears. Inflation "will get higher than it was in the 1970s," says Meltzer, the Fed historian and professor of political economy at Carnegie Mellon University in Pittsburgh. At the end of that decade, consumer prices rose at a year-over- year rate of 13.3 percent.
Fed Buys $7.37 Billion in Two- and Three-Year Debt The Federal Reserve purchased $7.37 billion of Treasuries maturing between two and three years as part of the central bank's efforts to reduce lending rates and lift the world's largest economy out of recession. Eight of the 20 securities maturing in March 2011 through April 2012 listed for sale were acquired, the Federal Reserve Bank of New York said in a statement today. The Fed bought $3.755 billion of the 1.375 percent note due in March 2012, the largest single maturity purchased.
Jim Rogers Says Investors Should Expect More Bottoms pt 2/3 Apr 13 2009
The Feds Keep Spending Alive What a wonderful time to be alive! Never has it been easier to feel superior to our fellow man! So many dopey ideas…so many preposterous delusions! So many fools…so eager to part ways with their money! We have to pinch ourselves occasionally…and remind ourselves that it is real. Yes, after the real estate bubble burst, we thought the fun might be over. But no! In come the feds. As you know, what brought about the housing bubble was a sort of madness that caused people to do the damnedest things with their money. But now, the feds are doing even stranger and crazier things!
Possible Second Round of Panic Hitting Financial Markets The panic is over. The panic has yet to begin. Which is it? Or is it both? We'll take both. The panic in financial markets subsided in March and stocks rallied. Stocks didn't make new lows on bad news and the bad news (as bad it was) ceased to get more bad, which was good. But what about Main Street, what's going on there? According to the Westpac-Melbourne Institute consumer index released yesterday, Australians were exactly 8.3% more confident in early April than they were in April March. See what a dose of low petrol prices, declining interest rates, and government cash can do for you?
America’s hidden unemployment crisis Temp workers easily cast aside but have little safety net Over the past decade, U.S. businesses increasingly have relied on contract workers as a way to keep a lid on health care and retirement benefit costs and to give them more flexibility to adjust payrolls as conditions change. Now, with the American economy flashing code red, companies from Wall Street to Silicon Valley are casting off temporary workers and freelancers left and right, typically without any severance pay.
Cities Turn to Fees to Fill Budget Gaps After her sport utility vehicle sideswiped a van in early February, Shirley Kimel was amazed at how quickly a handful of police officers and firefighters in Winter Haven, Fla., showed up. But a real shock came a week later, when a letter arrived from the city billing her $316 for the cost of responding to the accident. “I remember thinking, ‘What the heck is this?’ ” says Ms. Kimel, 67, an office manager at a furniture store. “I always thought this sort of thing was covered by my taxes.”
More Hotels Facing an Uncertain Future Hotels have been struggling for months as businesses and individuals cut back on travel. But what was a bad situation is likely to turn worse as a rapidly growing number of hotels — including many high-end and luxury properties — are forced into bankruptcy or foreclosure in coming months. Jim Butler, a hotel industry lawyer, said those who manage distressed hotel loans have told him that their workloads have jumped tenfold in recent months. “Things seem to be accelerating,” Mr. Butler said, and predicted that before the recession is over, the number of hotels in bankruptcy or foreclosure could rise above the 2,000 or so reached in the industry’s last big downturn in the 1990s.
Jim Rogers Says Investors Should Expect More Bottoms pt 3/3 Apr 13 2009
Obama's HHS Secretary nominee can't count Can't get her taxes right. Can't figure out how much money she's received from one of the nation's most infamous abortion doctors. Best and the brightest, my friends. Behold Kathleen Sebelius the Lowballer: President Barack Obama's health secretary nominee got nearly three times as much political money from a controversial abortion doctor as she told senators. The Health and Human Services Department said Monday that the omission was an oversight that Kansas Gov. Kathleen Sebelius would correct.
China Slows Purchases Of US Bonds China's talk about slowing down purchases of US debt may be more than just talk. While the government there is still wildly exposed to the dollar, and a huge buyer of Treasuries, new data indicates that the country has seriously pulled back its purchases. In fact, reports NYT, the government was a net seller during January and February, though it resumed its purchasing in March. A number of Chinese officials have expressed concern over the dollar in recent weeks, as the US has sought to actively assure them that all payments will be made, and that there are no intentions of inflating the dollar to the moon.
MetLife won't take TARP money, eyes stress test MetLife, the largest U.S. life insurer, on Monday said it will not take money from the government's $700 billion Troubled Asset Relief Program, saying it already has sufficient capital. The company also confirmed that because it has more than $100 billion of assets and is organized as a bank holding company, it is one of the 19 U.S. companies participating in a government "stress test" of its ability to weather a steep economic downturn.
401K losses devastate retirees State and local government pension programs face insolvency Massive losses have been taken in 401K programs, while state and local government pension programs around the country are facing insolvency. Last year, mutual fund losses were substantial, estimated at between a 20 to 50 percent plunge, depending upon the investment strategy of the fund. "Since the vast majority of 401Ks are invested in mutual funds, losses in the industry created huge losses in private retirement accounts throughout the United States," Corsi writes. "Suffering investors may need years of investment gains in a recovered economy just for their 401K plans to recover to pre-recession values."
The Coming Siege of Austerity It's a curious symptom of the consensus trance zombifying the American public and its auditors in the media that something like a "recovery" is now deemed to be underway. And, as events compel me to repeat in this space, it begs the question: recovery to what? To Wall Street booking stupendous profits by laundering "risk" out of bad loans with new issues of tranche-o-matic securitized paper? This I doubt, since there isn't a pension fund left from San Jose to Bratislava that would touch this stuff with a stick, even if it could be turned out in collector's editions of boxed sets. Does it mean that American "consumers" (so-called) are awaited momentarily in the flat-screen TV sales parlors with their credit cards fanned-out like poker hands, ready for "action?" Not too likely with massive non-performance out in cardholder-land, and half the nation's electronics inventory wending its way onto Craig's List. Are we expecting more asteroid belts of new suburbs carved in the loamy outlands of Dallas and Minneapolis, complete with new highway strips of Big Box shopping and Chuck E. Cheeses? Go to banking's intensive care unit and inquire (if you can) among the flat-lining production home-builders and the real estate investment trusts on life support when they expect to rev up the heavy equipment.
GM Told To Prepare For June 1 Bankruptcy There's still a chance that GM will come to an agreement with bondholders and avert a bankruptcy, but it's looking pretty unlikely. As such, the Treasury has told GM that June 1 is the cutoff and to start preparing for bankruptcy on that day. Members of the Treasury's auto task force have held a series of calls with the company to prepare for what they're calling a "surgical" bankruptcy. Quick, pre-planned, efficient, etc. In fact, under one scenario, a "Good GM" would emerge from bankruptcy in just two weeks with $5-$7 billion in capital from the Government.
GM recalling 1.5M vehicles over potential fires GM recalling 1.5 million vehicles because of possible engine fires General Motors Corp. is recalling 1.5 million vehicles because of potential engine fires. GM says there have been no reports of any fires or injuries. Some of the recalled vehicles are no longer in production. The recall includes the 1998-1999 Oldsmobile Intrigue, the 1997-2003 Pontiac Grand Prix, 1997-2003 Buick Regal, and the 1998-2003 Chevrolet Lumina, Monte Carlo and Impala.
A Few Thoughts on the Upcoming Auto Sector Implosion As the General Motors (GM) and Chrysler bankruptcy is now a matter of weeks if not days away (if one listens to CNBC "it is all priced in") I could not help but wonder just what the fallout of a bankruptcy would be on security holders in the structured realm. And any such consideration would have to take into account the potential fallout from the OEs but also within the entire supply chain (which few are talking about on prime time TV).
Malls shedding stores at record pace Vacancy rates at strip malls, neighborhood markets and community centers accelerate as retailers confront spending slump, industry report says. Strip malls, neighborhood centers and regional malls are losing stores at the fastest pace in at least a decade, as a spending slump forces retailers to trim down to stay afloat, according to a real estate industry report. The consequence for consumers: Fewer stores to shop and less product choice. In just the first quarter of 2009, retail tenants at these centers have vacated 8.7 million square feet of commercial space, according to the latest report from New York-based real estate research firm Reis. That number exceeds the 8.6 million square feet of retail space that was vacated in all of 2008.
Bankruptcies surge despite law meant to curb them Bankruptcies are surging despite law that made them tougher and more expensive The number of U.S. businesses and individuals declaring bankruptcy is rising with a vengeance amid the recession, despite a three-year-old federal law that made it much tougher for Americans to escape their debts, an Associated Press analysis found. "There's no end in sight," said bankruptcy lawyer Bryan Elliott of Hickory, N.C., who is working seven days a week and scheduling prospective clients a month in advance. "To be doing this well and having this much business, it is depressing. It's not a laugh-a-minute job."
Foreclosure Sales Stalled by Red Tape Bargain Hunters Flock to Bid on Bank-Owned Homes, but Settlement Is Often Delayed Anxious to meet the bank's demands for quick action, Andrew Garcia and his fiancee, BethAnne Hoffmann, rushed to find financing to buy a foreclosed-on house in a lovely tree-lined Baltimore neighborhood. That was in January. A month later, the bank that's selling the house broke its own closing deadline. The couple has been in limbo since. In frustration, they turned to their congressman's office for help. Only then did they receive an apologetic call and a new proposed closing date of April 24 -- but still no signed paperwork.
Recession closes in on chicken farmers Nationally, 800 to 900 chicken farmers have lost contracts since last fall, almost all of them in the South. The farmers are at the mercy of big chicken processors. Four years ago, Andrew Meeks literally bet the farm on chickens. Now he fears he made a losing bet. His three massive chicken houses are empty, and a "For Sale" sign has sprouted out front. Meeks, a contract chicken farmer, borrowed nearly half a million dollars to refurbish his 25-acre farm, putting up as collateral his home, the farm and virtually everything else he owns. But the company that provided his chickens and paid him to raise the birds canceled his contract. Without chickens, he can't earn the money to pay off his loans. Foreclosure is on the horizon.
Secret DHS Doc Predicts Violence in Response to New Gun Restrictions In the wake of the MIAC report and the Virginia Terrorism Threat Assessment, another document issued by the Department of Homeland Security “for official use only” covering so-called “rightwing extremism” has surfaced. The document warns federal and local officials to expect “terrorism” in response to planned firearm restrictions and other points covered below. . . . . According to the DHS and FBI, local law enforcement’s primary concern should be the high volume of gun and ammunitions purchases over the last few months. The document equates Americans who stockpile ammunition to “rightwing terrorists.” Moreover, stockpiling (merely purchasing) ammunition is an indication of involvement in “paramilitary training exercises” and potential terrorist activity.
24 people indicted in mortgage fraud plot $11 million netted in San Diego -area scheme Federal prosecutors indicted 24 people in a massive mortgage fraud scheme that they said was led in part by a gang member from San Diego and netted participants $11 million in profits. In an indictment unsealed yesterday, prosecutors laid out a wide-ranging racketeering conspiracy that ran from 2005 to 2008 and targeted homes across the county. Among the identified leaders was Darnell Bell, a documented member of the Lincoln Park street gang. Bell, 38, used his status in the gang to recruit other members for the scheme and "maintain discipline," according to the indictment.
Blueprint for silencing talk radio exposed New book warns of 'commissar committees' to censor speech As popular opposition to the reinstitution of the so-called "Fairness Doctrine" mounts, Barack Obama and the Democrat-dominated Congress will end-run critics with legislation that will curb dissent on talk radio through the imposition of "localism" rules and community watchdog boards across America, charges a new book by a former NBC Westwood One talk-show host. In "Shut Up, America! The End of Free Speech," author Brad O'Leary says the plan amounts to the development of party-approved "commissar committees" to censor the kind of lively and free-wheeling debate America has known since the scrapping of the so-called "Fairness Doctrine" by President Reagan's Federal Communications Commission in 1987.
Homeland Security document targets most conservatives and libertarians in the country Remember that now-retracted Missouri Information Analysis Center report which stated that small-government types (specifically Ron Paul, Bob Barr and Chuck Baldwin supporters) were potential terrorist threats? According to this new Homeland Security report , all it takes to fit the terrorist profile is to have general anti-government feelings or prefer local/state government to federal control over everything. The federal Homeland Security Department document entitled “Rightwing Extremism: Current Economic and Political Environment Fueling Resurgence in Radicalization and Recruitment” contains the following definition: Rightwing extremism in the United States can be broadly divided into those groups, movements, and adherents that are primarily hate-oriented (based on hatred of particular religious, racial or ethnic groups), and those that are mainly antigovernment, rejecting federal authority in favor of state or local authority, or rejecting government authority entirely. It may include groups and individuals that are dedicated to a single issue, such as opposition to abortion or immigration.
Disagree with Obama? Gov't has eyes on you On Feb. 20, 2009, Missouri's Department of Public Safety issued a report to all law enforcement in the state entitled "Missouri Information Analysis Center Strategic Report: The Modern Militia Movement." The report linked people holding conservative views on immigration, abortion, the U.N., the New World Order, etc., to dangerous and violent "militias" that Missouri law enforcement were instructed to be on guard against. Conservative opinions were demonized and made the subject of law enforcement scrutiny. The report was leaked. National and state public reaction was strong and negative, and Missouri retracted the report and apologized.
Predator Drones are Due to Fly Over Detroit In the movies, the Predator is usually the bad guy, for good reason. But the government announced recently that they plan to employ a good Predator to hover at about 19,000 feet over the Canadian - Michigan International Border area. Presumably this deployment is aimed at detecting, illegal aliens, drug cartels and terrorist attempting to illegally enter America at Detroit. However, the new technology probably won't help with terrorist, because they usually enter this country legally, such as at a port of entry.
The North American Model Legislature Querétaro (Mexico), May 24th to 29th, 2009 The North American Forum on Integration (NAFI) is a non-profit organization based in Montreal. NAFI, created in 2002, aims to address the issues raised by North American integration as well as identify new ideas and strategies to reinforce the North American region. Description of the Triumvirate 2009 (American version)
UK economy set to tumble deeper into recession A leading economic forecaster gave warning today that the world's seven core economies, including the UK, will head further into recession over the coming months but floated the prospect of a "tentative" recovery in some industrialised nations. The Organisation for Economic Co-operation and Development (OECD) said that its leading indicator for the Group of Seven nations had fallen in February from 92.2 to 91.3. This resulted in a 10.3 point drop year-on-year, it said.
Swiss bank 'to close US customer accounts' Concessions from Credit Suisse after American pressure over tax avoidance The Swiss bank Credit Suisse is edging towards closing the accounts of thousands of American customers as tax authorities in Washington step up a campaign against offshore banking secrecy. According to reports in the Swiss media, Credit Suisse has between 2,500 and 5,000 US clients with Sfr3bn (£1.78bn) in accounts undeclared to the Internal Revenue Service. A Sunday paper, Sonntagszeitung, reported that customers are being given a choice of moving their money to a subsidiary, CS Private Advisers, which would declare financial details to the US authorities. Alternatively, they will be sent a cheque for the balance of their funds. The move marks an escalation in a confrontation between the US authorities and Switzerland's age-old tradition of banking privacy.
White House Announces Easing of Cuba Restrictions The White House announced on Monday that it is abandoning longstanding restrictions on family travel, remittances and gifts to Cuba, and is also taking steps to open up telecommunications with the island, a significant shift in policy that fulfills a promise President Obama made during his election campaign. The long-awaited announcement is meant "to reach out to the Cuban people," the White House press secretary, Robert Gibbs, said at a news briefing.
Obama eases Cuba restrictions President Obama on Monday removed restrictions on travel and remittances to Cuba imposed under President Bush and opened the way for telecommunications companies to do business on the communist-run island, a move applauded by advocacy groups and lawmakers but called only a first step by some. Mr. Obama did not call for lifting the U.S. trade embargo with Cuba, which requires congressional approval and is the subject of debate right now on Capitol Hill, where there is strong support for legislation that would allow all Americans to travel to Cuba.
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Mon 04.13.2009
Gold is an undervalued asset held by IMF In the recent past, there is a lot of talk about the International Monetary Fund’s gold holdings because the G20 leaders have allowed the IMF to sell part of its gold reserves to raise funds to fight recession. So, there is an increased enthusiasm to know how much gold the IMF has and how it will impact the international bullion markets if IMF sells around 400 tonnes of the yellow metal now.
Gold For bread in Zimbabwe
More hopeful glimmers, but more bad news, too Retail sales should be higher, but output is still dropping President Barack Obama sees "glimmers of hope." Federal Reserve Chairman Ben Bernanke sees "green shoots." Investors have seen stock markets rise 25%. Is the economy mending? Or is it still getting worse? The economic data to be released in the coming week are likely to show a few more "glimmers of hope" amid a very bleak economic landscape. It will be a very busy week for economic data, with several top-tier indicators set to be released. Retail sales likely increased modestly in March on the rebound in auto sales. Housing starts are expected to decline again in March. Industrial production should show another big drop for March. Consumer sentiment probably inched higher in April.
Gold-Plated Economy in Nevada Town Becomes Rare Beacon for the Jobless ELKO, Nev. -- Gold fever has inoculated this historic cow town from the state's economic malaise, making it an island of relative prosperity in a state flooded with unemployed workers. While Las Vegas, Reno and other onetime hot spots reel from the real-estate crash and wider recession, this area's gold-mining operations are adding jobs and spreading wealth in surrounding Elko County. The area boasts 26,700 jobs, up from 25,500 a year ago, while Nevada has lost many jobs. Construction is up here, as are taxable sales. There's a paradox, though: The unemployment rate in Elko County -- which has a population of 50,000 -- has risen to 6.4%, from 4.2% last year due to the "lifeboat effect." The town has become the last hope for jobless people streaming in from elsewhere in Nevada and beyond.
Peter Schiff: Reflating the Bubble Amid an “inflationary depression” in the U.S., Peter Schiff, president and chief global strategist of Euro Pacific Capital, sees opportunities in the maelstrom. Facing a massive redistribution of wealth, he advises investors to act quickly and “divest U.S. dollar assets into physical precious metals, other currencies and equities outside the United States.” In this exclusive interview with The Gold Report, the widely-quoted expert on money, economic theory and international investing discusses what led up to our current “phony economy” and how investors can actually profit from the crisis.
Bubble Economics
Robert Reich: We're Not Even At The End Of The Beginning Of The Crisis Add Robert Reich to the list of economists who are skeptical that all this "good news" from the banks shows that we're on the verge of a recovery. From his personal blog: But we're not at the beginning of the end. I'm not even sure we're at the end of the beginning. All of these pieces of upbeat news are connected by one fact: the flood of money the Fed has been releasing into the economy. Of course mortage rates are declining, mortgage orginations are surging, and people and companies are borrowing more. So much money is sloshing around the economy that its price is bound to drop. And cheap money is bound to induce some borrowing. The real question is whether this means an economic turnaround. The answer is it doesn't.
‘Surgical’ Bankruptcy Possible for G.M. The Treasury Department is directing General Motors to lay the groundwork for a bankruptcy filing by a June 1 deadline, despite G.M.’s public contention that it could still reorganize outside court, people with knowledge of the plans said during the weekend. Members of President Obama’s automotive task force spent last week in meetings and on conference calls with G.M. officials and its advisers in Detroit and Washington. Those talks are expected to continue this week.
AIG Refuses To Accept Swap Reform Last week was supposed to be the big kickoff for the standardized credit default swap protocols designed by the International Swaps & Derivatives Association. But one big player in the CDS market refused to sign up for the overhaul of the global derivatives market: AIG's Financial Products group. AIG confirmed to the Financial Times that it did not adopt the “Big Bang” protocol that has been signed by more than 2,000 market participants. The protocol is supposed to create a standard procedure for resolving swaps when debt defaults occur. It became effective on Wednesday.
Former Bush Aide's Solution To Crisis: Tax The Poor! It's tax time, so expect a ton of tax-related articles and op-eds over the next few days. Don't worry. All interest in the subject will be gone by Thursday. In the meantime, former Bush Press Secretary Ari Fleischer has a WSJ op-ed arguing that our tax collections are too skewed towards the higher end and that the the middle and the poor don't pay enough. His argument is that it's just plain bad that 50% of the population don't pay income taxes -- that they don't have their skin in the game. That it's fundamentally bad for democracy. It's pretty much the opposite of what Obama and the left are saying, that the key to raising revenue is to put an even greater burden on the few folks at the top of the pyramid.
Investigator Wants To Know If Banks Lied To Get TARP Cash Neil Barofksy, the special inspector-general for the TARP, tells FT he intends to examine whether banks lied in order to be eligible for TARP. “I hope we don’t find a single bank that’s cooked their books to try to get money but I don’t think that’s going to be the case,” said Mr Barofsky, who has been dubbed the “Tarp cop”. Just how banks value mortgage-backed securities and other assets on their books has been an issue of intense debate as the financial crisis has unfolded.
Banks Risk Reporting Too-Good Earnings Last week, Wells Fargo (WFC) said it will report record Q1 earnings. It caused the stock to shoot up, but it also raised a few eyebrows as analysts wondered how realistic the company is being with respect to loan losses. Goldman Sachs (GS) reports earnings later this week, and there's talk that it may be the company's second-best quarter ever. Karl Denninger believes any Goldman profit will purely to do the AIG (AIG) conduit, and since the company has ostensibly hedged its exposure to the insurer, it's getting paid twice for its failure. Barry Ritholtz chimes in, calling it "theft on a grand cale" and that it's "time for the guillotine."
China Slows Purchases of U.S. and Other Bonds Reversing its role as the world’s fastest-growing buyer of United States Treasuries and other foreign bonds, the Chinese government actually sold bonds heavily in January and February before resuming purchases in March, according to data released during the weekend by China’s central bank. China’s foreign reserves grew in the first quarter of this year at the slowest pace in nearly eight years, edging up $7.7 billion, compared with a record increase of $153.9 billion in the same quarter last year.
China Flexes its Muscles and Finds Support in a Bid to Dump the Dollar as the World’s Main Reserve Currency Finance officials from Beijing in Moscow on Thursday held a videoconference to discuss the creation of a “supra-national reserve currency,” the latest evidence of the support China is getting from developing countries as it seeks to replace the U.S. dollar as the world’s main reserve currency. This controversial proposal – and the support that it’s getting – also underscores China’s continued emergence as a growing global force in both the financial and political arenas. That’s a trend that successful global investors won’t be able to ignore.
It’s Time to Wake up America Free markets don’t work, says Tim Geithner and Ben Bernanke. Indeed nearly all our government leaders say so; the G-20 too. The economy is a mess, but no worries because we got your back. We’ll spend and print our way out of this economic crisis, then slap a whole heap of regulation on the bad guys to make sure they never hurt us again. I say, no thanks. And you should too. As my dad used to say, “It’s time to wake up America.” These people may be smart, but they are bad economists. Worse yet, they were and still are the epicenter of this mess, no matter how much they deny it. And they are causing havoc with the economy. Yes, Wall Street had its role, but it was big government lending institutions like Fannie Mae and Freddie Mac, so called deposit insurers like the FDIC, cartelization agencies like the SEC and, most importantly, the easy monetary policy of the Federal Reserve that ultimately gave us this economic crisis. Free markets didn’t fail. Free markets didn’t cause this mess - government intervention did.
Gold and the Casino Capitalism House of Cards Members of the G20 have announced they will, as necessary, reflate their economies to create liquidity, unfreeze credit and restore global economic growth. But can reflation, whether through fiscal expansion, money printing or, if you prefer, the awkward phrase quantitative easing, be introduced without accompanying inflation? It would be reasonable to debate that question if the current crisis had not been the result of a U.S.-centric casino capitalism spree that developed over the last few decades, moved into overdrive in the years following the turn of the century and ended with a house of cards collapse.
When an Economic Cure Fights Itself ALMOST every day, a few letters arrive, saying that a group in some city or town is about to have a “tea party.” The gist, in case you haven’t received any of these invitations, is that President Obama’s taxing and spending plans are far too lavish. The United States will be burdened with immense debts, the protesters say. Taxes will be far too high for comfort, and we will decline as a nation. The tea parties are aimed at stopping all that. These tea parties strike me as off-base, in some respects, though they evoke a certain principle that rings true, or at least possibly true.
Marc Faber, Hyperinflation, Equity and Gold Prices in November 2002 when ‘Tomorrow’s Gold’ was published talk of hyper inflation looked pretty ridiculous. Yet in the Bild newspaper the German Finance Minister Peer Steinbrueck warns that the world could face an inflation crisis in the medium term, after the immediate economic crisis ends, due to the huge amounts of liquidity being pumped into financial markets. He said: ‘What causes me concern is that the next crisis is already being programmed because of all the enormous debt-financed counter measures being conducted worldwide’. For good measure he dismissed calls for a third German stimulus package in six months as ‘nonsense’.
Budget Expands Government as Economy Contracts Last week the House passed another budget that increases federal power, raises taxes, and increases the national debt. I voted against it, and was pleased to see that not a single Republican representative voted for it. Legislators often see bipartisanship as constructive, but I disagree especially where the destruction of our economy or our liberty is concerned. There has been too much bipartisan consensus on expanding government far beyond the bounds of the Constitution which we all swore to defend and uphold. Because of this, I have never been able to vote for a budget. However, it was good to see Republicans come together on this important vote, even if their alternative budget was almost as bad.
Obama Bank Fix "Worse Than A Lie" -- Former Regulator Black We continue to believe the Obama administration's approach to the banking crisis has been warped by its personal relationships with Wall Street. Former regulator William Black, who has been a vocal critic of the current approach, goes further, calling the bank stress tests "a complete sham" and the cover-up of the insolvency of massive financial institutions "felony securities fraud."
China Slows Purchases of U.S. and Other Bonds Reversing its role as the world’s fastest-growing buyer of U.S. Treasuries and other foreign bonds, the Chinese government actually sold bonds heavily in January and February before resuming purchases in March, according to data released this weekend by China’s central bank. China’s foreign reserves grew in the first quarter of this year at the slowest pace in nearly eight years. For the quarter, the reserves edged up $7.7 billion, compared to a record increase of $153.9 billion in the same quarter last year.
Colorado bank biggest US bank failure of 2009 New Frontier Bank, one of Colorado state's biggest banks, was closed down by state regulators, the Federal Deposit Insurance Corporation said in a statement. Based in Greeley, Colorado, New Frontier had, as of March 24, total assets of two billion dollars and and total deposits of about 1.5 billion, the FDIC said. It was the 23rd bank closed to business since January. Until New Frontier, the biggest bank failure this year had been California's Merced Bank, with 1.7 billion in assets.
2 more banks fail, lifting this year's tally to 23 Federal regulators shut down two more banks Friday, raising the number of bank failures so far this year to 23. The first bank was Cape Fear Bank in Wilmington, N.C., the first North Carolina bank to fail in nearly 16 years. The other bank was New Frontier Bank of Greeley, Colo., the second Colorado bank this year to collapse. The Federal Deposit Insurance Corp. took over both banks Friday after their respective state regulators closed them down. The FDIC did not tap a buyer for New Frontier Bank, and instead created the Deposit Insurance National Bank of Greeley. The FDIC named San Francisco-based Bank of the West to manage the entity, which will stay open for about 30 days to give New Frontier Bank's customers time to open accounts at other insured institutions.
Fed muzzles banks on 'stress tests' The Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of "stress tests" that will gauge their ability to weather the recession, people familiar with the matter said. The Fed wants to ensure that the report cards don't leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government's plan to release the results in an orderly fashion later this month. "If you allow banks to talk about it, people are just going to assume that the ones that don't comment about it failed," said Paul Miller, an analyst at FBR Capital Markets in Arlington.
Treasuries Little Changed as Fed Prepares Two Days of Purchases Treasuries were little changed, following three weeks of losses, as the Federal Reserve prepared to purchase U.S. government securities today and tomorrow in its effort to reduce borrowing costs. The central bank plans to buy Treasuries due from March 2011 to April 2012 today and from September 2013 to February 2016 tomorrow, according to its Web site. Government and central bank reports this week will show U.S. retail sales increased in March while a drop in factory production and slower inflation indicate the recession isn’t over, Bloomberg News surveys of economists show.
Social Security Bomb About To Explode Remember how we didn't have to worry about Social Security now because payments from the program wouldn't exceed revenue for another decade or more? Well, the CBO has revised its estimates. It's still projecting a tiny surplus for next year--tiny--but Chris Martenson thinks those estimates will quickly be revised down:
Why You've Never Heard of the Great Depression of 1920
GM eyes possible bankruptcy Troubled US automaker General Motors is set to renegotiate a less advantageous deal with bondholders to restructure its debt, but a bankruptcy declaration remains more likely, US media reported Friday. "GM's restructuring could play out in one of two ways. It could successfully negotiate cost-cutting concessions with unions and bondholders so it can become viable outside of bankruptcy. Or, in the more likely scenario, it will reorganize by filing for Chapter 11" bankruptcy, The Wall Street Journal reported, citing unnamed people familiar with the situation.
German finance minister warns of inflation Costly international stimulus plans to fight the economic crisis ultimately risk fanning inflation, German Finance Minister Peer Steinbrueck was quoted Saturday as warning. Steinbrueck told the Bild daily "we are preparing the next crisis with (stimulus) measures financed by enormous debts," from the hundreds of billions of euros (dollars) poured into the plans by the United States, Germany and other countries.
Obama and the Democrats deny an age-old economic lesson In the spring of 1984, I was 10 years old and had one burning desire — to get my hands on the new Twisted Sister album Stay Hungry. "We're Not Gonna Take It" was the greatest song I had ever heard. Well, at least since Quiet Riot's "Cum on Feel the Noize" the year before and Def Leppard's "Rock of Ages" before that. But with only a $5-a-week allowance, I would have to wait two weeks before being able to afford the $7.99 cassette. When I begged my parents for the extra money early, I was told that "money doesn't grow on trees." But Mom and Dad were wrong.
An Asset Bubble for the History Books Big bank money bombs will blow up money supply, economic data distorted beyond recognition, Fed magically conjures money, dollar set to lose its status in world currencies, zombie banks suck in healthy banks, just like in the movie, mark to market rules still hiding trillions in losses Many of you may recall that there was a tulip mania in Holland in the 1630's that has become synonymous with asset bubbles. Just to give you an idea of how over-the-top this mania became, the price for a single tulip bulb at one point during this mania was in the tens of thousands of dollars in terms of today's prices. And believe it or not they were writing futures contracts on tulip bulbs! Now, courtesy of our new Treasury Secretary, Kissinger protégé Little Timmy Geithner, who is on loan from the Federal Reserve Bank of New York, and Little Timmy's sidekick, Buck-Busting-Ben, chairman of the privately owned Fed, we are about to experience a hyperinflationary money bubble as Little Timmy and Buck-Busting-Ben create and unleash a money supply mania. That money supply mania will cause many other manias, including gold and silver manias, as tangible asset prices skyrocket.
Ireland is ECB's sacrifical lamb to satisfy German inflation demands Put bluntly, Ireland is being forced to roll back the welfare state and tighten fiscal policy in the midst of a savage economic contraction in order to uphold the deflation orthodoxies of Europe's monetary union. If Ireland still controlled the levers of economic policy, it would have slashed interest rates to near zero to prevent a property collapse from destroying the banking system. The Irish central bank would be a founder member of the "money printing" club, leading the way towards quantitative easing a l'outrance.
Guide to the New World Order
Goldman Sachs hires law firm to shut blogger's site Goldman Sachs is attempting to shut down a dissident blogger who is extremely critical of the investment bank, its board members and its practices. The bank has instructed Wall Street law firm Chadbourne & Parke to pursue blogger Mike Morgan, warning him in a recent cease-and-desist letter that he may face legal action if he does not close down his website. Florida-based Mr Morgan began a blog entitled "Facts about Goldman Sachs" – the web address for which is http://goldmansachs666.com – just a few weeks ago.
Cities Collapsing throughout the USA "With enough abandoned lots to fill the city of San Francisco, Motown is 138 square miles divided between expanses of decay and emptiness and tracts of still-functioning communities and commercial areas. Close to six barren acres of an estimated 17,000 have already been turned into 500 "mini- farms," demonstrating the lengths to which planners will go to make land productive. The city, like the automakers, has to shrink to match what's left, said June Thomas, a professor of urban and regional planning at the University of Michigan in Ann Arbor. "The issue is how," she said. "There's no vision." "People are moving out of the city, trying to find work," said David Martin of Wayne State University's Urban Safety Program. Those who stay "can't afford to move out." "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.
Recession grounds airplanes across U.S. Downsized airlines mothball surplus jetliners in desert Old jets come here, empty engine pods shrink-wrapped in white, tall red tails fading to pink in the desert sun. More will come soon. Some will never fly again. Airlines have announced plans over the past year to take 1,700 planes out of service as fewer people fly. United Airlines is retiring all 94 of its Boeing 737s by the end of this year, and Northwest Airlines has cut its old DC-9 fleet by about a third. The number of planes in storage has jumped 29 percent in the past year to 2,302, according to aerospace data firm Ascend Worldwide. That includes 930 parked by U.S. operators alone.
Michigan Facing "Economic Katrina" If GM Files for Bankruptcy, Rep. McCotter Says Already saddled with the country's highest unemployment rate, Michigan faces "an economic Katrina" if GM or Chrysler file for bankruptcy, says Representative Thaddeus McCotter (R-MI). Last month, President Obama rejected the automakers' proposals that included combined job cuts of 50,000 workers. McCotter now fears job cuts beyond that level will result, as well as the potential for a "cascading effect" in auto suppliers (which have been given a $5 billion TARP lifeline) and other related industries if either GM or Chrysler files for bankruptcy.
Credit Suisse starts shutting U.S. offshore accounts Swiss bank Credit Suisse has started closing down the offshore accounts of U.S. clients who have not declared the money to the U.S. authorities, a newspaper reported on Sunday. The Sonntagszeitung newspaper said the bank had about 2,500-5,000 U.S. clients with undeclared offshore accounts worth about 3 billion francs, without citing its sources.
GM bondholders prepare case against bankruptcy plan General Motors Corp's bondholders are preparing legal arguments against the automaker's bankruptcy plan, the Wall Street Journal reported on Sunday, citing people familiar with the matter. A plan to split the corporation into a "new" company made up of the most successful units, and an "old" one of its less-profitable units, is seen as the most sensible configuration, a source familiar with GM's plans told Reuters last week.
Restore Order and Win a Financial War MANY Americans are bewildered, aggrieved and even angry about the financial shenanigans that led to the current mess - and about the seemingly unending stream of government bailouts. They should be. A bunch of wealthy, supposedly smart financial “experts” made irresponsible bets that went bad, pushing our economy to the brink and taking the rest of us down with them. Millions of people worldwide have already lost jobs. Millions more will. And taxpayers are being handed monstrous bills for mistakes that were not their doing.
Showdown Seen Between Banks and Regulators As the Obama administration completes its examinations of the nation’s largest banks, industry executives are bracing for fights with the government over repayment of bailout money and forced sales of bad mortgages. President Obama emerged from a meeting with his senior economic advisers on Friday to say “what you’re starting to see is glimmers of hope across the economy.” But there were also signs of growing tensions between the White House and the nation’s banks over the next phase of the financial rescue.
Recession Pain, Even in Palm Beach LONG before the number was redolent of bailouts and bank failure, David Neff decided that Trillion was the perfect name for his clothing store here on Worth Avenue, this town’s boulevard of luxe retail. The idea was to brace customers for the you’ve-got-to-be-joking price tags — $6,800 for a sport jacket, $800 for a button-down shirt — and to convey unparalleled opulence. “We wanted people to know that this is a lot,” Mr. Neff says, gesturing to the clothing, “and we didn’t want anyone to open next door with a store that sounded like it might be more.” Until last year, this idea actually seemed reasonable.
80 Years Later: Parallels Between 1929 and 2009
Climate bill could trigger lawsuit landslide Allows action from those 'expected to suffer' Self-proclaimed victims of global warming or those who "expect to suffer" from it - from beachfront property owners to asthmatics - for the first time would be able to sue the federal government or private businesses over greenhouse gas emissions under a little-noticed provision slipped into the House climate bill. Environmentalists say the measure was narrowly crafted to give citizens the unusual standing to sue the U.S. government as a way to force action on curbing emissions. But the U.S. Chamber of Commerce sees a new cottage industry for lawyers. "You could be spawning lawsuits at almost any place [climate-change modeling] computers place at harm's risk," said Bill Kovacs, energy lobbyist for the U.S. Chamber of Commerce.
32 Million Reasons To Fear A War With China According to a new study, sex selection in China will create an excess 32 million boys of reproductive age in China over the coming generation. It's been said frequently that China may be the first country on earth to get old before it gets rich, simply due to the one-child-per-family policy.
Massive Stimulus Packages Add to Japan's Pile of Debt Spending Plans Balloon to $270 Billion, Mostly Borrowed Japan, which soothed the pain of its ruptured bubble economy in the 1990s with massive government borrowing, is again swallowing giant doses of deficit medicine. To recover from a global downtown that has hurt Japan more than any industrialized nation, Prime Minister Taro Aso announced on Friday his third and largest stimulus package since coming to power last September. At a cost of $150 billion, it brings the total amount of new spending to $270 billion, about 5 percent of Japan's gross domestic product."Our prime objective is to prevent the economy from falling through the floor," Aso said.
U.S. Ship Captain Rescued From Pirates by Navy SEALs Mombasa, Kenya, April 12 -- An American captain being held by Somali pirates was freed unharmed Sunday in an operation carried out by U.S. Navy SEALs, U.S. military officials said. Three of the pirates were killed and the fourth was captured. The captain, Richard Phillips, who had been held in a lifeboat adrift in the Indian Ocean since Wednesday, was initially taken aboard the Norfolk, Va.-based guided missile destroyer USS Bainbridge. He was later flown to the USS Boxer, where he received medical attention and phoned his family. The operation took place at 7:19 p.m. local time, the Navy said.
Study claims 'highly engineered explosive' found in WTC rubble A team of scientists claim to have unearthed startling data from dust and debris gathered in the days and weeks after the World Trade Center towers collapsed on Sept. 11, 2001. In a study published by the Open Chemical Physics Journal -- a peer-reviewed, scientific publication -- Steven E. Jones and Niels Harrit level a stark allegation: that within the dust and rubble of the World Trade Center towers lays evidence of "a highly engineered explosive," contrary to all federal studies of the collapses.
Iran claims control of full nuclear fuel cycle TEHRAN | Iran now controls the entire cycle for producing nuclear fuel, the Iranian president said Saturday, highlighting his country's growing capabilities at a time when the U.S. wants to negotiate with Iran over its nuclear program. President Mahmoud Ahmadinejad's comments came two days after the inauguration of a facility that produces uranium oxide fuel pellets for a planned heavy-water reactor - the final step in the long, sophisticated nuclear fuel cycle. "Today, with the grace of God, Iran is a country controlling the entire nuclear fuel cycle," Mr. Ahmadinejad said on state television.
Realpolitik for Iran For Mohammad ElBaradei, the head of the International Atomic Energy Agency, “a combination of ignorance and arrogance” under the Bush administration squandered countless diplomatic opportunities with Iran and so allowed it to forge ahead with its nuclear program. Referring twice to former Vice President Dick Cheney as “Darth Vader,” ElBaradei told me in an interview that “U.S. policy consisted of two mantras — Iran should not have the knowledge and should not spin one single centrifuge. They kept saying, wait, Iran is not North Korea, it will buckle. That was absolutely a mistake.”
Peres makes rare hint at possible strike on Iran President Shimon Peres had some unusually aggressive words for Iran Sunday, seemingly threatening military action if US President Barack Obama's overtures to the Islamic republic fail to bear fruit. In an interview with Kol Hai Radio, Peres also said that the arrest before the weekend of a Hizbullah terror cell in Egypt was a blow to Iranian President Mahmoud Ahmadinejad's power.
Key U.N. Powers Agree on N. Korea Statement NEW YORK, April 11 -- The U.N. Security Council's five permanent powers and Japan reached agreement Saturday on a statement condemning North Korea's April 5 rocket launch over Japan. The text would revive a 2 1/2 -year-old threat of financial and travel sanctions against individuals and entities linked to Pyongyang's missile program. The pact set the stage for a likely agreement as early as Monday by the 15-nation council on a statement that would also demand that North Korea not conduct any additional missile tests. It ended a diplomatic standoff between the United States and China, which blocked an American-backed effort to rally international criticism of North Korea, formally known as the Democratic People's Republic of Korea.
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Fri 04.10.2009
Today's radio show was a KHNC replay from last week
A Culture of Faith is Necessary to a Free Society A recent survey of religious practice in the United States indicates that religious observance is at an all-time low. Two thirds of Americans no longer attend religious services with any regularity and ten percent assert they do not believe in God at all. Fifteen percent of Americans say they have no religion, double the percentage in 1990. “American Becoming Less Christian, Less Religious,” blared the headlines. In this season of Easter, this news is something for us to ponder. . . . . . . John Adams, one of the greatest Americans of our Founding generation, and our nation’s second president, once stated “Our Constitution was made only for a moral and religious people. It is wholly inadequate for the government of any other.” . . . . . . A society based solely on reason, without any reference to transcendent faith, has been tried and has utterly failed.
Five Reasons to Go for Gold Gold has been on a roller coaster, moving down, then up - to just over a $1,000. It has currently pulled back to under $880. The precious metal's performance, not to mention its disconnection to the markets, has baffled seasoned experts and analysts alike. For a market in crisis, we haven't seen gold skyrocket like many would have expected.
The U.S. dollar is weakening.
Inflation fears.
Emergence of China and India.
Supply constraints.
Geopolitical instability.
Fiat Currencies May be Replaced by Gold Standard Gillian Tett is the head financial writer for the Financial Times, one of the leading mainstream financial publications. Investment analyst and financial writer Yves Smith says of Tett: [Whatever] Tett is writing about ... will be taken seriously, since Tett is read by central bankers. So it is newsworthy that Tett writes today that the odds of a return to the gold standard are increasing: A panel at the World Economic Forum meeting in Davos ... was asked to produce one concrete recommendation to fix the global financial crisis. The top pick? ... a new reserve currency, akin to an old-style gold standard.... Moreover, these musings about a gold standard are currently cropping up in all manner of unlikely places. One savvy European property developer (who aggressively sold most of his holdings in early 2007) recently told me that he is now moving a growing proportion of his assets from government bonds into gold, even at today's elevated prices. "The logical conclusion of where we will end up eventually is with some type of gold standard," he explains, arguing that future inflation will almost inevitably cause a future collapse in government bonds. Half a world away in the Middle East, some sovereign wealth funds now say that they are stocking up enthusiastically on food and gold, due to similar reasoning.
In uncertain times, all that glisters is a gold standard A few months ago, Terry Smith, head of Tullett Prebon, the interdealer broker, chaired a panel at the World Economic Forum meeting in Davos which was asked to produce one concrete recommendation to fix the global financial crisis. The top pick? Not anything on toxic assets or fiscal spending. Instead, this gaggle of leading financiers called for a new reserve currency, akin to an old-style gold standard. "Two-thirds of the world's assets are denominated in a fiat currency issued by a country whose authorities are taking policy actions which seem inevitably to lead to its debasement," explains Mr Smith, noting that "it seems . . . the Chinese have now concluded that this is not acceptable".
Gold sold for scrap outstrips new purchases For the first time in nearly 30 years, there are more people selling gold jewellery as scrap than buying new items. The high price of gold combined with the economic downturn has encouraged people to raise extra cash by selling everything from family heirlooms to tooth fillings. GFMS, the leading precious metals analyst, said yesterday that an estimated 500 tonnes of gold had been sold as scrap during the first three months of this year.
The Quiet Coup The Way Out Looking just at the financial crisis (and leaving aside some problems of the larger economy), we face at least two major, interrelated problems. The first is a desperately ill banking sector that threatens to choke off any incipient recovery that the fiscal stimulus might generate. The second is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support. Big banks, it seems, have only gained political strength since the crisis began. And this is not surprising. With the financial system so fragile, the damage that a major bank failure could cause—Lehman was small relative to Citigroup or Bank of America—is much greater than it would be during ordinary times. The banks have been exploiting this fear as they wring favorable deals out of Washington. Bank of America obtained its second bailout package (in January) after warning the government that it might not be able to go through with the acquisition of Merrill Lynch, a prospect that Treasury did not want to consider. The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary.
Do You Really Want Rahm Emanuel Running The Banks? Who do we replace our evil oligarchs with? Rahm Emmanuel (who made $19MM in 18 months as an investment banker)? Jamie Gorelick (made $40MM at Fannie, appropriate for a former Clinton Attorney General)? These were government officials and representative of the types of people who are useful to corporations. They are even more dangerous because their connections make them valuable precisely because all they do is navigate regulations and government oversight, granting their firms special status relative to those who compete on the merits. We need fewer of these people, more unsympathetic Wall Streeters who everyone knows is selfish and greedy. The last thing we need are bankers who do the 'public good', because saddling these institutions with this vague objective gives rise to all sorts of payoffs under the guise of helping the poor, as it merely makes sure the SEIU, African-Americans, women, the handicapped, and transgendered Native Americans--to mention only a few--are treated fairly. The do-gooders usually end up pocking more for themselves than anyone; at least a businessman is honest about his selfishness (United Way and CRA blather excepted).
What is fragile should break early while it is still small.
No socialisation of losses and privatisation of gains.
People who were driving a school bus blindfolded (and crashed it) should never be given a new bus.
Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks
Counter-balance complexity with simplicity
Do not give children sticks of dynamite, even if they come with a warning .
Only Ponzi schemes should depend on confidence.
Do not give an addict more drugs if he has withdrawal pains
Citizens should not depend on financial assets or fallible “expert” advice for their retirement.
Make an omelette with the broken eggs.
Dollar Devaluation To Fix The Great Recession A quick dollar devaluation would work wonders for submerged borrowers. Don't kid yourself: It could happen. What began as government social tinkering--with implied threats to banks and mortgage companies to extend home loans to even the most marginal of borrowers--led to a greed-blinded mortgage banking business and the meltdown we are experiencing today. Now we are asked by the same congressional leadership to go along with taxpayer-funded bailouts of the very banksters who, while making millions, created the mess.
Banks asked to keep quiet on stress tests The U.S. Treasury Department is asking banks not to mention the regulatory "stress tests" as part of their first-quarter earnings results, according to a source familiar with government discussions. Many of the top 19 U.S. banks who are undergoing regulatory stress tests have already completed internal versions of the examinations, which are designed to determine their capital needs under more adverse economic conditions. However, the banks do not yet know the results of the government's version of the assessment, the source said.
All 19 Banks "Pass" The Stress Test At this point, the big stress test at 19 of the nation's largest banks seems like something of a joke. For one thing, the parameters are way too optimistic. We're already at the baseline scenario for the downturn -- with no unemployment slowdown in sight -- and even their extreme pessimistic scenario is really not that extreme. Then there's the political angle. There have been reports about Treasury-FDIC catfights (surprise!) and various leaks about when the information would be released, and how best to handle it so as not to upset investors (read: how best to withhold material information).
Inside the Fed's Trillion-Dollar Decision: Crisis Outweighed Inflation Fears Worries about a prolonged economic slump and a lack of progress in thawing frozen credit markets persuaded Federal Reserve leaders last month to inject more than a trillion dollars into the economy, according to meeting minutes released yesterday. The decision to buy nearly $1.2 trillion in long-term Treasury bonds, mortgage-backed securities, and the debt of mortgage-finance firms Fannie Mae and Freddie Mac was the latest in a series of unconventional measures the central bank has used to combat the recession.
Fed Governor Admits: Mark-To-Market Is "Nowhere Near" The Problem Speaking at an event in South Dakota, outgoing Federal Reserve governor Gary Stern, admitted that our current problems have nothing to do with mark-to-market accounting: Dow Jones Newswire (not online): "I don't think it's at the heart or anywhere near the heart of the problems we're suffering," Stern said in response to a question from the audience at the South Dakota Economic Summit in Sioux Falls, S.D. The troubled assets on financial institutions' balance sheets "are worth less than they were when they were bought and that's a fact," Stern said. "I am not a critic of mark-to-market accounting. It's not perfect, but I'm not aware of a better approach," Stern said.
The "Disaster Stage" of U.S. Financialization Thirty to forty years ago, the early fruits of financialization in this country - the first credit cards, retirement accounts , money market funds and ATM machines - struck most Americans as a convenience and boon. The savings and loan implosion and junk bonds of the 1980s switched on some yellow warning lights, and the tech bubble and market mania of the nineties flashed some red ones. But neither Wall Street nor Washington stopped or even slowed down.
The Pension Problem Isn't Going Away Let's just put on our rose-colored glasses for a moment. We see the stock market returning over the next year to 10,000ish and the economy bottoming in Q2 or Q3, setting up for a gradual, but slowish recovery over the next several quarters. That's great, but some problems just aren't going away. For example, retraining all of the people who somehow made their money in housing won't be easy. That's one.
Ron Paul - Imagine You Saw The Economic Crisis Coming? Audit The Fed!
Be Careful What You Wish For Apart from the obvious financial distress that the current economic crisis has inflicted on most Americans, perhaps one of the more irksome byproducts of the meltdown has been the inescapability of clueless economic blather. It's bad enough when so-called economists serve up the same Keynesian nonsense that has led us down the current cul-de-sac in the first place. At least those people have some incidental knowledge, however deeply flawed, of basic economic concepts. It's far worse when political pundits, whose understanding of economics typically comes from Treasury Department talking points, hold forth as if they really know what is going on.
Fed says plan now to avert inflation The United States economy will skid more deeply into recession in coming months, Federal Reserve policy-makers warned on Thursday, but it is time to start planning how to wind down spending to avert an inflationary surge. The president of the Kansas City Federal Reserve Bank, Thomas Hoenig, said that hard as it was to predict when the winding-down process must be initiated, it will happen. "We know it has to happen, but the timing I can't tell you. Nobody knows. We will watch every indicator of data that suggests a recovery is on the way," Hoenig said in response to audience questions after a speech in Tulsa, Oklahoma. "Failure to do that at the right time means you risk a much higher inflation environment," he added.
Nothing We don't yet know how many trillions will be swallowed up by the government's rapidly breeding herd of stimulus-bailout-help!help! measures. But additional bold steps are sure to come, some already in R&D and others to be invented on the fly to answer each new wave of bad news. Expect price tags suitable for proving how serious and determined the authors are.
Sucker Rally! Sucker rallies (or bull traps) in a bear market are a time-honoured tradition. Bear markets see many rebounds, ranging from feeble rises of maybe 10 per cent over a period of a couple of weeks to ones that last years and recoup anywhere from 50 per cent to even over 100 per cent from the low. Call it from the little sucker to the really big sucker. Little suckers bring a wave of short-term euphoria that "This is the end of the bear," while really big suckers make everyone forget about the previous drop, and then just when they believe it won't happen again, they are slammed in the teeth. The former are wonderful for nimble traders; the latter are wonderful for those who possess a healthy skepticism and realize that this is a nice party but it will eventually end badly.
Don't Fight The Fed. Please. Former Federal Reserve members worry about its independence from Congress. As the Panic of 2008 unfolded--as banks crashed, markets tumbled and the economy slowed--the U.S. Federal Reserve pulled out every weapon in its arsenal to stop it, including a few that people never knew the Fed possessed. But this creative use of Fed policy--and the inevitable difficulty of unwinding the complex operations once the recession ends--has raised the specter of a new risk: Congress.
The most chilling words since 'New World Order' Last weekend, speaking in Prague, Barack Obama took the New World Order rhetoric to soaring new heights. "All nations must come together to build a stronger, global regime," he said. While Bush's earlier phrase set off alarms in some circles, it was ambiguous enough to allow for plausible deniability that he actually intended to work toward some sort of "world government." Obama's choice of words leaves little doubt about what he means. Though few have so far questioned his desire "to build a stronger, global regime," the words are clear. Let's consult the Random House dictionary for the definition of "regime."
a mode or system of rule or government: a dictatorial regime.
a ruling or prevailing system.
a government in power.
the period during which a particular government or ruling system is in power.
How about the American Heritage dictionary?
a form of government: a fascist regime.
a government in power; administration: suffered under the new regime.
the period during which a particular administration or system prevails.
A Truly Global Currency [with Gold included?] Russia has proposed that the I.M.F. created, synthetic currency [Special Drawing Rights], with changes [Gold backing], be adopted by the world to replace the U.S.$ as the world's prime reserve currency. Both China and Russia proposed new currencies, not so much in the hope that their proposals will be accepted, but bringing to the attention of the world that the $ is losing credibility and not serving the role is should as the world's reserve currency. At the same time the I.M.F. was boosted to a much stronger global role than ever before by the addition of nearly $1 trillion to its Balance Sheet. It seemed appropriate to Russia then to attempt to elevate the Special Drawing Right to a real global currency from the synthetic bookkeeping role it has at present. With the I.M.F. now placed in such an important role in the global monetary world and if such a proposal were adopted, would it work?
Were Traders Tipped Off About The Wells Fargo Announcement? There were two big pieces of news this week contributing to the run in the financials. First was the Tuesday-night leak that the Treasury would expand the TARP to cover the insurers. Shares of companies like Hartford (HIG) and Lincoln National (LNC) soared over 20% the next day. Then this morning, Wells Fargo (WFC) came out with its positive pre-announcement and the banks are rallying hard on the news. So were traders tipped on the news? Maybe.
Treasury Won't Say If It Has Refused to Allow Banks to Give Back 'Bailout' Money The Treasury Department won't reveal the names of financial firms that are seeking to return the funds they received late last year and this year under the Troubled Asset Relief Program (TARP)--funds the firms no longer want and would like to give back to the Treasury in return for the federal government surrendering the ownership interests it took in the firms. Despite repeated requests for the information from CNSNews.com, Treasury spokesman Andrew Williams wouldn't say how many financial institutions want to give the money back in exchange for getting their stock back.
Look What Government Did To The First Americans! US Secretary Interior Bruce Babbitt Confronted!
The Outlook For China's Economy Even with a recovery, things won't be the same again. China, the world's second largest economy by purchasing power parity, contributed over 10% to global economic output in 2007 and 2008 and is thus a key part of any recovery of the global economy. China faced a severe deceleration of growth in the second half of 2008 based on a number of indicators: GDP, production of electricity, the Purchasing Managers' Index (PMI), weakness of auto sales, a fall in residential home sales, manufacturing data and falling imports and exports. In fact, calculated on a quarter-by-quarter basis like most other countries, Chinese growth (which is reported only on a year-on-year basis) was practically zero and even negative by some private sector estimates.
Obama Buys 17,600 Detroit-Made Vehicles First, President Obama generally subsidized the struggling U.S. automakers by pouring in billions of government bailout money to keep them in business. Now, he's specifically subsidizing GM, Ford and Chrysler by using $285 million in government bailout money to purchase 17,600 new vehicles for use in government fleets, the government said today. Don't be surprised if next week you see the president spotting Chrysler chief executive Bob Nardelli a twenty for lunch. The purchase will be made by the General Services Administration, will be executed by June 1 and will focus on more fuel-efficient vehicles, the government said. Of the 17,000 vehicles, 2,500 will be hybrid sedans.
Government Speeds Up Hybrid Car Purchase The government has stepped on the gas, accelerating parts of a big purchase of fuel-efficient, hybrid vehicles to replace part of the federal government's aging fleet. The General Services Administration will buy 2,500 hybrid sedans by next Wednesday and the government will use $285 million of economic stimulus funds to purchase a total of 17,600 fuel efficient vehicles by June 1 from Chrysler, Ford and General Motors. "I am 100 percent committed to a strong American auto industry, and we will stand with America's auto workers and their families during these difficult times," President Obama said in a statement.
Are We More Like 1932 - or 1923? Endless reports in the media have pointed out that this global recession is "worse than anything since the Great Depression." To be fair, it's not even certain yet that this nasty downturn has beaten the mid-1970s downturn, though it probably will. But even if that does happen, by focusing exclusively on the 25% unemployment of the 1930s and the "Grapes of Wrath" Joad family as our inevitable future, we're ignoring another equally unpleasant potential scenario: The Weimar German hyperinflation of 1923.
Fed Minutes: We Have Not Yet Even Begun to Print! The Federal Reserve is a unit of quasi-government, with no taxing authority or income of any kind, except that obtained from the U.S. Treasury and its client banks. However, it can and does create money, in the form of liquidity, which it then sends to banks. The liquidity that it releases into the market has the net effect of diluting the value of the U.S. dollar. The Fed has extended credit to Fannie Mae, Freddie Mac, various banks, and insurance companies. It has "borrowed" this money from itself by increasing its balance sheet from $900 billion to the current $2.1 trillion.
How Paper Mills Gamed The System To Grab Billions From Taxpayers When we write about banks and hedge funds scamming the bailout, a lot of readers think we’re being too cynical. Why not assume good faith on behalf of financial institutions rather than persistent exploitation in favor of profits? And can’t well-designed rules and regulations prevent the would-be scammers from gaming the system?
U.S. Trade Deficit Narrows as Imports Fall Sharply Trade between the United States and the rest of the world contracted again in February, but an unexpected increase in exports fueled a debate about whether the economy was beginning to stabilize. The Commerce Department reported on Thursday that imports fell sharply in February, dropping another 5 percent as American businesses reduced their spending on foreign-made machinery and consumer demand for imported televisions, toys and furniture remained low. But in a reversal, American exports bounced back slightly after six months of declines. Exports grew by $2 billion as the country exported more automobiles, semiconductors, pharmaceuticals and chemicals.
Nationalisation of Hypo bank proposed in German plan to ease banks crisis Germany unveiled plans yesterday for its first nationalisation of a bank in the postwar era as it mulled over more radical plans to create a state-backed "bad bank" to relieve its troubled banks of hundreds of billions of euros in toxic loans. Berlin announced an offer to take over the stricken Hypo Real Estate, Germany's highest-profile casualty of the credit crisis, confirming that it would offer investors in the group €1.39 a share for their holdings. The offer marked a move by the German Government to deploy new powers it took this year to allow nationalisation, previously barred by constitutional law, with a view to curing the financial running sore of Hypo.
Obama's New World Order This article addresses Washington's financial coup d'etat in the context of discussing Michael Hudson's important, very lengthy and detailed April 5 Global Research.ca one titled: "The Financial War Against Iceland - Being defeated by debt is as deadly as outright military warfare." . . . . . . Like many others, "It owes more than it can pay" and is bankrupt. It was planned that way, and the idea is to strip-mine the nation and its people of their resources, enterprises, assets, land, homes, jobs and futures through perpetual debt bondage. Bankers get enriched. Nations and people, however, are discarded like trash, with the IMF as enforcer, to be reinvigorated with an additional (G 20-pledged) $750 billion, quadrupling its resources to $1 trillion if fulfilled.
Wall Street and Western European bankers planned it and now ordered the government "to sell off the nation's public domain, its natural resources and public enterprises to pay (its) financial gambling debts." Also, raise permanent taxes at the worst possible time, then suck the maximum wealth from the country leaving behind an empty hulk and impoverished, desparate population. It's called dystopia Merriam-Webster defines as: "an imaginary place where people lead dehumanized and often fearful lives," the opposite of utopia under conditions of deprivation, poverty, disease, violence, oppression, and terror, much like in Orwell's Nineteen Eighty-Four.
Max Keiser: Predicting the collapse of Iceland (filmed April, 2007)
March 2006 WHERE DOES THE MONEY COME FROM? The normalization or Europeanization of Iceland The Icelandic Economic Miracle An article by Dr. sgeir Jnsson, Chief Economist Kaupthing Bank, Iceland
Iceland Collapse Disaster
Iceland is declared Bankrupt - Oct, 2008
European Journal | Iceland: A chill wind blowing
Bigger isn't better if you're a bank [UK] George Osborne, the Shadow Chancellor, is pushing two ideas for the reform of the banking system. One is bad and won't happen; the other is good(ish) and just might. The bad one is that retail banks and investment banks should be legally separated, as they were in the United States until the repeal of the Glass-Steagall Act in 1999. There are just two tiny snags with this notion: it would be almost impossible to implement and would not have prevented the banking crisis, anyway. The idea has been rubbished by such as figures as Tim Geithner, the US Treasury Secretary, Lord Turner, the head of the Financial Services Authority, and the Prime Minister. But it is fashionable in political circles on both sides of the Atlantic, and Mervyn King, the Governor of the Bank of England, thinks it is at least worth debating.
Talk of insurance rescue propels industry stocks But few qualified for TARP Shares of large U.S. life insurance companies initially surged Wednesday following news they may receive aid from the government's $700 billion financial industry rescue program, but the Treasury Department said only life insurers that own banks or savings and loans qualify for assistance, and that no new programs for the industry were being considered. Shares of Hartford Financial Services Group Inc., which spiked 35 percent to $11.40 minutes after the market opened, closed at $9.59, a gain of 13.5 percent. Hartford and Lincoln National Corp., two of the nation's largest life insurers, and several others applied to become thrift holding companies last fall.
U.S. Retail Chains Report Another Sales Drop in March Flowered dresses and linen jackets may be hitting store shelves, but it is not yet springtime for American retailers. Major chains on Thursday reported March sales results that were worse than their February figures, though the rate of economic deceleration that plagued stores during the holidays has slowed a bit. Sales for the overall retailing industry fell 1.8 percent, according to Thompson Reuters. The good news for March, retail analysts said, is that not every retailer was in free fall - which is what appeared to be the case during the holiday shopping season. Still, the word of the day is "caution."
TARP Recipients Required to Modify Loans, HUD Says Banks receiving federal aid through the U.S. Troubled Asset Relief Program must also take part in the government’s mortgage modification initiatives, Housing and Urban Development Secretary Shaun Donovan said. The U.S. is “going to require as a condition of participation in TARP going forward that banks do participate in” the Obama administration’s Making Home Affordable plan, Donovan said in an interview on Bloomberg television today. The requirements would apply only to banks taking new TARP money in the future, not those that have previously taken aid, Melanie Roussell, a HUD spokeswoman, said in an interview.
The Real Estate Bust Is Far From Over For those thinking that the real estate bust is all over with - think again. The residential market has hit the ditch and continues to sink lower, but now the commercial property market is rolling over and will take many lenders down the drain with it. America's small and regional bankers are pointing their fingers at the big banks, claiming the big money center banks "have tarred and feathered us," City National Bank chief executive Bill McQuillan told the Wall Street Journal during the Independent Community Bankers of America convention in Phoenix. But banks - large and small - all over the country are loaded with commercial real estate loans, and that collateral is heading south according to a Deutsche Bank report.
California Foreclosures About To Soar The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium — this wave is so big I would not put it past them trying it. CA foreclosure background - in mid-2008 the foreclosure wave was artificially held back as a result of the CA law SB1137 enacted in Sept 2008. This also kept NOD’s and NTS’s at much lower levels than the actual defaults that were occurring. Other bubble states and several banks/servicers also went on random moratoria and the foreclosure wave was held back for the past six months. But just like so many other intervention and moratoria in the past, the problem just comes out the other side even more violent than if they would have done nothing. Adding insult to injury, the GSE’s announced this week that they were coming off moratorium, which could increase foreclosures by 20-25% alone.
Farmer bailouts must be revised Megabillion-dollar bailouts are in today's headlines. But let's not forget the longest-running bailout of all - the roughly $25 billion subsidy showered annually on just some of America's farmers. These are Depression-era programs. Born in the 1930s, they've long outlived their justification. But hey, who can say no to $25 billion? The farm subsidies mostly reward households that don't need a handout. The average farm household pulls in more than $80,000 each year in sales and taxpayer subsidies, and has a net worth of more than $800,000. Moreover, farm program money is based on crop acreage, so the lion's share of money doesn't go to hardscrabble farmers with broken fingernails. It goes to mammoth agribusinesses, some of which are even subsidiaries of insurance companies and energy conglomerates.
More Squatters Are Calling Foreclosures Home MIAMI — When the woman who calls herself Queen Omega moved into a three-bedroom house here last December, she introduced herself to the neighbors, signed contracts for electricity and water and ordered an Internet connection. What she did not tell anyone was that she had no legal right to be in the home. Ms. Omega, 48, is one of the beneficiaries of the foreclosure crisis. Through a small advocacy group of local volunteers called Take Back the Land, she moved from a friend’s couch into a newly empty house that sold just a few years ago for more than $400,000.
Wool Is Now A Toxic Asset Wool prices in New Zealand, the world’s second-largest exporter, have fallen to the lowest levels in 30 year. The global constuction slump has devastated demand for carpeting in new buildings. And, let's face it, if you're going to cut back on expenses, passing on the new rug might be a good idea. "Adjusting for inflation, strong crossbred prices are about 75 percent lower than 30 years ago," Bloomberg reports.
Obama to ask for $75bn for war spending President Barack Obama was poised on Thursday to request $83.4bn in fresh funding for military operations in Iraq and Afghanistan and aid to help Pakistan combat extremists. The proposed spending would push the total cost of the two wars to nearly $1,000bn since the September 2001 terrorist attacks. The request threatens to alienate some of Mr Obama's supporters because he ran for president on a platform of staunch opposition to the war in Iraq and voted against some similar requests by George W. Bush's administration.
Defense Cuts Would Hit Boeing Hardest U.S. aerospace giant Boeing would be hit harder than other defense contractors if the Pentagon's proposed cuts to major weapons programs are approved, analysts said April 7. Boeing's stock fell 2.65 percent to $37.15 in trading a day after Defense Secretary Robert Gates presented a "reform budget" that calls for deep cuts in some big projects led by the company. Gates' recommendations call for ending production of F-22 Raptor fighter jets, scaling back the Army's Future Combat Systems (FCS) program of hi-tech vehicles and robots, canceling plans for more C-17 transport planes and cutting elements of the missile defense program.
Boeing warns on Q1 profit, to cut plane output Boeing Co warned on Thursday first-quarter profit would be slashed by lower-than-expected airplane prices and production cuts on its lucrative widebody planes as cash-strapped airlines defer purchases, sending its shares down 3.6 percent in after-hours trading. The world's No. 2 plane maker, along with rival Airbus, is being hit hard as carriers and cargo operators struggle with the economic downturn. So far this year, Boeing's order book shows more cancellations than orders for jets.
Obama and Gates Gut the Military The secretary's new budget will leave us weaker to pay for the president's domestic programs. On Monday, Defense Secretary Robert Gates announced a significant reordering of U.S. defense programs. His recommendations should not go unchallenged. In the 1990s, defense cuts helped pay for increased domestic spending, and that is true today. Though Mr. Gates said that his decisions were "almost exclusively influenced by factors other than simply finding a way to balance the books," the broad list of program reductions and terminations suggest otherwise. In fact, he tacitly acknowledged as much by saying the budget plan represented "one of those rare chances to match virtue to necessity" -- the "necessity" of course being the administration's decision to reorder the government's spending priorities.
Peter Schiff 4/9/09 - Schiff Report Video Blog Update on America being broke, trade deficit, loans, Wells Fargo, gold and Asia.
Virginia Fusion Center Releases "Homegrown Terrorism" Document panning 39,598 square miles, Virginia has a population of almost 7.5 million residents. Roughly half of these residents are concentrated in the northern Virginia, central Virginia, and Hampton Roads regions. All three of these regions feature ethnically diverse populations with cultural ties to the Middle East, the horn of Africa, Southeast Asia, and other areas heavily impacted by terrorist activities. Virginia's network of colleges and universities also represent a potential avenue of entry for terrorist operatives and a possible forum for recruitment of sympathizers.
Report Says UAE-Kuwaiti Group Makes Textron Bid KUWAIT CITY - A consortium of United Arab Emirates companies and a Kuwaiti firm is close to a deal to buy U.S. aircraft manufacturer and defense contractor Textron Inc., a Kuwaiti newspaper reported April 9. Al-Watan, quoting unidentified sources, said the consortium is offering $21 a share - more than double Textron's current market price - valuing it at more than $5 billion. Shares in Textron, an international industrial company with operations in aircraft, defense and finance - including Cessna aircraft and Bell helicopters - closed April 8 at $9.11.
Government turns on sales ignition for Chinese cars China recorded a month of record car sales in March, underlining the country's rise in the world just as carmakers in the United States are scrambling to avoid bankruptcy. Chinese people, eager to leave behind the age of the bicycle bought 1.1 million vehicles in March, up 5 per cent from the previous record of 1.06 million in March last year, data from the China Association of Automobile Manufacturers showed. The figure cemented China in its position as the world's largest car market, outstripping even the United States. Sales have been buoyed not only by a desire for many Chinese to own their first car, but also government tax cuts and rebates on small car purchases that were meant to lure buyers back into showrooms.
A town hall meeting and a mosque ISTANBUL - Istanbul has been the pivot of East-West, and indeed North-South, relations for millennia, and Turkey was an inspired, and indeed brave, choice for an early visit by United States President Barack Obama. If former president Bill Clinton had been accused of being a crypto-Islamist, or secret adherent to Islam, there is no way that either his spin-doctors or his own timorous instincts would have allowed him with miles of a mosque. Yet Barack Hussein Obama, demonized by web-weirdos across America as a Muslim fifth columnist, goes to Turkey and visits the Blue Mosque - accompanied by Islamist party Prime Minister Recep Erdogan - and holds a town hall meeting with young Turks.
Obama may cede Iran's nuclear rights When the wastes of Qyzylqum and Karakum blossom in early spring, the enchanting sight can pain one's heart. But the killer deserts are deceptive in appearance, especially Qyzylqum, which is in the tract of land between the two great rivers in Central Asia - the Amu Darya and Sirdarya. In the spring of 1220, when Genghis Khan abruptly rode out of the Qyzylqum with a few hundred Mongol horsemen to take the Amir of Bukhara by surprise, the Amir never imagined that the desert would so easily concede safe passage to a Mongol stranger. Bukhara - one of the biggest cities at that time along with Cordoba, Cairo and Baghdad - paid heavily for the desert's treachery. Bukhara took over two centuries to recover from "God's wrath", which the austere Khan insisted he was administering to the slothful, opulent city for its sinful ways.
Iran says running 7,000 enrichment centrifuges Iran is now running 7,000 uranium enrichment centrifuges, a senior official said on Thursday, an announcement likely to increase Western concerns about the Islamic Republic's disputed nuclear plans. Gholamreza Aghazadeh, head of Iran's Atomic Energy Organisation, also said it had obtained the technology to produce more "accurate" centrifuges, which are used to enrich uranium.
Iran's president opens door to talks with US on nuclear programme Iran's president, Mahmoud Ahmadinejad, has opened the door to talks with the US over his country's nuclear programme, declaring that Tehran wanted negotiations based on 'justice'. Mr Ahmadinejad delivered a moderate message on Iran's annual "day of nuclear technology". The hardline leader, who rose to power on a tide of anti-American demagoguery, gave his first response to an invitation from the world's leading powers, including the US, to join a new round of talks. "The Iranian nation has from the beginning been after logic and negotiations, but negotiations based on justice and complete respect for rights and regulations," he said during a speech in the city of Isfahan, where he opened a new nuclear plant.
Iran Claims Gains in Nuclear Program TEHRAN - Iran inaugurated its first nuclear fuel manufacturing plant on Thursday and said it had increased its capability to enrich uranium. The developments came a day after the United States said it would participate in talks with Iran and other nations over Tehran's nuclear program. Iran's president, Mahmoud Ahmadinejad, inaugurated the plant in the central city of Isfahan as Iran celebrated National Nuclear Day, begun three years ago when Iran announced for the first time that it had succeeded in enriching uranium. The plant is now producing nuclear fuel for the country's 40-megawatt research reactor in Arak. The uranium for Arak requires no enrichment before engineers turn it into fuel rods, setting it apart from most reactors.
U.S. drops conditions on Iran talks Joins EU-led dialogue as 'full participant' The Obama administration accelerated a diplomatic blitz with Iran on Wednesday, saying that it will drop previous conditions and become a "full participant" in European Union-led nuclear negotiations. The talks, headed by EU foreign policy chief Javier Solana, have been going on for more than four years. The Bush administration refused to take part unless Iran stopped enriching uranium, which Tehran says is for civilian purposes but can be also used to build a nuclear weapon. The decision was announced as top diplomats from six nations dealing with the issue met in London. The group is known as the "P5+1" and includes the five permanent members of the U.N. Security Council - the U.S., Britain, France, Russia and China - as well as Germany.
********** REAL HERO ***********
Way to go, Steve!!
39 Year-Old Gas Station Owner Plays The Masters, Shoots +7 An inspiring story of gas station owner who always wanted to be a pro golfer but wasn't quite good enough...and never quit. This year, at 39, Steve Wilson won the amateur tournament that gave him an automatic place at The Masters. Steve Wilson teed off this morning. He shot 7-over on the day, which won't be good enough to win. But we imagine his son, caddying for him above, is as proud as can be.
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Thurs 04.09.2009
KHNC closed today, so no new radio show PTG is OPEN for business as usual - 1- 800-951-0592 Eric and Joe will be back on Friday for the Patriot Radio News Hour
Gold to 'blow through' record high this year Gold prices will "blow through" a record high this year as inflation accelerates amid a surge in government spending, said Mark Johnson, the manager of the US$1 billion USAA Precious Metals and Minerals Fund. "This will be a positive year for gold," Johnson said in an interview in New York. "With all the liquidity that has been pumped into the system, there's definitely going to be inflation. For us, it's not a question of if gold will rise, but when."
Gold & Gold Stocks Riding a Thin Line This week in gold we have seen prices drop lower creating a lower low. This is generally not a good sign if we want to see higher prices in bullion and gold stocks. That being said, a lot of traders are now starting to short gold because is has filled its gap lower which occurred Monday at the open due to over night commodity prices. I am refraining from this short term play because of several things:
Gold is still within its support zone and could reverse any day
Although we have a lower low this pattern could very well be a 1-2-3 wave retrace
Stochastic Indicator for gold is starting to turn up indicating possibly stronger prices
Gold stocks are currently at a short term support level
Gold, Silver, Economy + More Many of you may recall that there was a tulip mania in Holland in the 1630's that has become synonymous with asset bubbles. Just to give you an idea of how over-the-top this mania became, the price for a single tulip bulb at one point during this mania was in the tens of thousands of dollars in terms of today's prices. And believe it or not they were writing futures contracts on tulip bulbs! Now, courtesy of our new Treasury Secretary, Kissinger protégé Little Timmy Geithner, who is on loan from the Federal Reserve Bank of New York, and Little Timmy's sidekick, Buck-Busting-Ben, chairman of the privately owned Fed, we are about to experience a hyperinflationary money bubble as Little Timmy and Buck-Busting-Ben create and unleash a money supply mania. That money supply mania will cause many other manias, including gold and silver manias, as tangible asset prices skyrocket.
Gold Sales - Scams and Big Money Today I am offering some information on the hidden world outside the mainstream gold trade and investment scene. There is much ignorance and confusion on the subject - scams, victims, criminals, legitimate business and big money. It is an essential trade for many economies and for people that rely on gold sales for their survival. What a great subject - intrigue, scandal, danger, survival, opportunity and excitement!
Smart Money Continues to Accumulate Gold Gold fell a further 2.7% Monday (silver nearly 4.8%) as the animal spirits from the G20 communiqué and much vaunted IMF gold sales led to further selling and the shorts continued to press their advantage. Dollar strength and oil weakness also contributed to the sell off Monday. Interestingly, gold rose strongly overnight in Asia and in Europe Tuesday morning despite continued dollar strength and oil weakness. This may be a technical rebound from oversold levels but the fundamentals remain sound and this will likely see gold remain well supported at these levels.
Downbeat outlook prevails inside Fed The Federal Reserve sharply downgraded its economic outlook at its latest meeting only three weeks ago, minutes released on Wednesday revealed, challenging the view that green shoots of recovery are now plain to see. "The staff's projections for real GDP in the second half of 2009 and 2010 were revised down," the minutes say. Fed staff no longer expected growth would recover this year, and instead forecast that output would "flatten out gradually" in the second half and then "expand slowly next year".
Fed sees economy sliding further Federal Reserve policy-makers, faced with bleaker forecasts for a rapidly worsening recession, decided to buy a "substantial" amount of U.S. Treasury and mortgage debt to halt the slide, minutes of their most recent meeting showed on Wednesday. Staff economists for the Federal Open Market Committee lowered projections for U.S. real gross domestic product in the second half of 2009 and 2010, indicating a more gradual recovery. However the minutes, which were from the central bank's March 17-18 meeting, did not offer any revised figures.
How Bernanke Staged a Revolution This chairman set out to lead as a civil servant rather than a celebrity economist. Facing a thundering financial collapse, he has reinvented the Federal Reserve. Every six weeks or so, around a giant mahogany table in an ornate room overlooking the National Mall, 16 people, one after another, give their take on how the U.S. economy is doing and what they, the leaders of the Federal Reserve, want to do about it. Then there's a coffee break. While most of the policymakers make small talk in the hallway, their chairman, Ben S. Bernanke, pops into his office next-door and types out a few lines on his computer.
Banks Holding Up in Tests, but May Still Need Aid For the last eight weeks, nearly 200 federal examiners have labored inside some of the nation's biggest banks to determine how those institutions would hold up if the recession deepened. What they are discovering may come as a relief to both the financial industry and the public: the banking industry, broadly speaking, seems to be in better shape than many people think, officials involved in the examinations say. That is the good news. The bad news is that many of the largest American lenders, despite all those bailouts, probably need to be bailed out again, either by private investors or, more likely, the federal government. After receiving many millions, and in some cases, many billions of taxpayer dollars, banks still need more capital, these officials say.
Regulators may not want TARP money back soon Many U.S. banks would rather return taxpayer money than face a growing litany of restrictions that come with it, but they may find regulators are in no rush to take it back. For banks, taking money from the U.S. Treasury Department's $700 billion Troubled Asset Relief Program has morphed from a sign of strength last fall to a headache now.
The Goldsmiths-Part LXIV There are a host of lessons which can be learned from Weimar Germany's bout with hyperinflation in the early 1920s. Much of this story has been told in a number of writings over the years. The Goldsmiths, Part LIX, addresses that issue extensively. Without wasting time repeating that material, there is one important issue which is crucial to understand. It was briefly commented upon in the Goldsmiths, Part LIX. Here, that idea will be expanded on and related to the present situation developing in the United States.
U.S. Imagines the Bailout as an Investment Tool During World War I, Americans were exhorted to buy Liberty Bonds to help their soldiers on the front. Now, it seems, they will be asked to come to the aid of their banks - with the added inducement of possibly making some money for themselves. As part of its sweeping plan to purge banks of troublesome assets, the Obama administration is encouraging several large investment companies to create the financial-crisis equivalent of war bonds: bailout funds.
Obama Plan to Monetize the Debt/Stimulus = Ponzi Scheme
The Great Deception The bulls are deceived into believing we’re in a new bull market. They’ll be disappointed when this rally falls apart. They’ll give up on stocks and sell the market down to the 5,000 level…or below. The gold and commodities markets deceive the bears. They expect prices to go up as the feds put in more money. They’ll be disappointed when gold sinks. You saw the big whack they gave gold on Monday. It went down hard. Yesterday, it recovered slightly – back up $10. The big spenders will be disappointed too. They’ve got debt. And they’re counting on consumer price inflation to lighten up those debts, making them easier to pay. Instead, deflation will make their debts heavier…weighing down so heavily on the debtors that many of them will be crushed by it.
Obama's G20 plan kisses off Declaration of Independence New international board to intervene in decisions about U.S. companies The final communiqués coming out of the G20 meeting in London April 2 included a document entitled "Declaration on Strengthening the Financial System." "By agreeing to the stipulations in this document, President Obama gave the blessing of the United States to the G20 decision to elevate the Financial Stability Forum into the Financial Stability Board," Corsi wrote. "The United States has only one vote in the newly constituted Financial Stability Board, a group that will be largely controlled by European central bankers."
The Financial New World Order: Towards a Global Currency and World Government Following the 2009 G20 summit, plans were announced for implementing the creation of a new global currency to replace the US dollar's role as the world reserve currency. Point 19 of the communiqué released by the G20 at the end of the Summit stated, "We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity." SDRs, or Special Drawing Rights, are "a synthetic paper currency issued by the International Monetary Fund." As the Telegraph reported, "the G20 leaders have activated the IMF's power to create money and begin global "quantitative easing". In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it."
Lukewarm verdict on US financial rescue plan Congressional panel warns that the US Treasury's $700bn bail-out may prove inadequate. The $700bn bail-out of the US financial industry has been criticised by a Congressional panel which called it a "mixed" success and questioned whether it would be enough should the recession worsen. The panel, chaired by Professor Elizabeth Warren of Harvard Law School, branded the US Treasury's funding of the financial system "a short-term bridge from earlier prosperity to future prosperity". The panel also questioned whether Treasury Secretary Tim Geithner and his predecessor Hank Paulson have done enough to safeguard the US economy.
What Really Happened in London Last week's gathering in London of the leaders of the 20 foremost economic countries in the world had been billed as the most important global financial meeting in more than 60 years. The stage had been set for hotly contested economic policies to be hashed out with the intensity of a Cold War arms negotiation. However, for most observers, the results of the G-20 failed to live up to the billing. Other than a masterful display of haute couture by the new American first lady, there are few results that anyone can really call significant.
The IMF Rules the World Not much substantive news was expected to come out of the G-20 meetings that ended on April 2 in London - certainly no good news was even suggested. Europe, China and the United States had too deeply distinct interests. American diplomats wanted to lock foreign countries into further dependency on paper dollars. The rest of the world sought a way to avoid giving up real output and ownership of their resources and enterprises for yet more hot-potato dollars. In such cases one expects a parade of smiling faces and statements of mutual respect for each others' position - so much respect that they have agreed to set up a "study group" or two to kick the diplomatic ball down the road.
Analyst Slams Sheila Bair, Says FDIC Could Go Bankrupt Remember Sheila Bair's comments about how the FDIC would experience $0 in losses from guaranteeing loans as part of the bailout scheme? Well, we weren't the only ones who thought the statement seemed totally out to lunch.
‘No-Risk’ Insurance at F.D.I.C. The Federal Deposit Insurance Corporation was set up 76 years ago with the important but simple job of insuring bank deposits. Now, because of what could politely be called mission creep, it’s elbowing its way into the middle of the financial mess as an enabler of enormous leverage. In the fine print of Treasury Secretary Timothy F. Geithner’s plan to lend as much as $1 trillion to private investors to help them buy toxic assets from our nation’s banks, you’ll find some details of how the F.D.I.C is trying to stabilize the system by adding more risk, not less, to the system.
Will the PPIP Bankrupt the FDIC? The Times article focuses on one element of the plan, which is the FDIC's guaranteeing of the non-recourse loans to the public private partnerships. The first question that springs to mind is: Why the FDIC? The simple answer is that it is an end-run around Congress. This is, however, not what the FDIC was set up to do. It was set up to guarantee bank deposits, which lowers the economic impact if a bank fails, and also helps prevent bank failures by minimizing the potential bank runs. Being able to do this at all requires a very broad interpretation of the FDIC's mandate (see the NYT article for details). It appears that the FDIC is getting into this a bit blind, or is not being straight with the taxpayers.
TARP Is 6 Months Old, Little Evidence Of Success Elizabeth Warren, the TARP watchdog, has released her six month report card on the state of TARP. Yep, it's been six months and we're still mainly here and in one piece, so take a second to be glad for that. As was reported a few days ago, Warren's report calls for the government to administer tough justice to the banks, arguing that there are four keys to the success of any banking system rescue, when looking throughout history.
Elizabeth Warren Introduces COP's April Report
Treasury says some insurers qualify for TARP The U.S. Treasury said on Wednesday some life insurers have met requirements for government capital investments under an existing rescue plan, and their applications for funds are now being considered. "There are a number of life insurers that have met requirements for the Capital Purchase Program because of their bank holding company status," said Treasury spokesman Andrew Williams. "These are among the hundreds of financial institutions in the CPP pipeline that will be reviewed and funded as appropriate on a rolling basis."
Tom Friedman Trashes Cap And Trade It's becoming more and more evident that the nation is on a crash course towards implementing a cap and trade system to reduce carbon emissions. Stop! says Tom Friedman in a op-ed for the New York Times. Friedman makes a simple but compelling argument against cap and trade. He says a tax will be more easily passed because more people will understand it.
Bank Of America Needs $36.6 Billion More Ken Lewis says Bank of America (BAC) is quite profitable and he wants to start repaying TARP right away. Pshaw. Oppenheimer analyst Chris Kotowski -- who's obviously trying to fill the shoes of his predecessor Meredith Whitney -- says the bank will actually need to raise $36.6 billion more.
Futures Up After Big Homebuilder Merger, Insurer Bailout Hey! It's a deal. Don't see too many of these nowadays. Homebuilder Pulte is buying out Centex for $1.3 billion, which should, if nothing else, bring some much-needed consolidation to the beleaguered sectors. We're not sure what it means for the entire market, but it's something. And of course the insurance stocks are all racing up on reports that they'll be let in under the TARP. Hartford is up 21% pre-market. Lincoln National is up 25%.
Banks Use Bailout Bucks To Pay Off Dot Com Boom-Bust IPO Lawsuit It's often said that the problem with bailouts is that taxpayers wind up footing the bill for bad behavior. That's never been more true than today. You see, today a group of investment bank underwriters and companies settled a long-running lawsuit over to over alleged fraud in the pricing of initial public offerings in the late 1990s. It was a case that sprung out of the last crash and lasted well into this one. It grew to include over 300 IPOs, mostly of of tech and internet companies that went public between 1998 and 2000. Class action lawyers claimed that the stocks were marketed at inflated prices and compensation to underwriters hidden.
Marc Faber: We're In For A 5% to 10% Correction Even though Marc Faber, who publishes the famous Boom, Gloom & Doom report, says Standard & Poor’s 500 Index may drop as much as 10 percent in the coming weeks, the market prognosticator is sounding relatively bullish these days. For instance, although he predicts a correction this spring and summer, he also says the rally may resume after July. “We need some kind of correction, maybe around 5 to 10 percent, and after that we can maybe rally more into July,” Faber said in an interview with Bloomberg TV in Singapore. “The economic news, while it won’t be good, the rate of getting worse will slow down.”
Stocks May See ‘Correction’ of 10%, Marc Faber Says Marc Faber, the investor who recommended buying U.S. stocks before the steepest rally in more than 70 years, said the Standard & Poor’s 500 Index may drop as much as 10 percent before resuming gains. The measure may decline to about 750 and rebound after July, Faber, 63, said in a Bloomberg Television interview in Singapore. Global stock markets are unlikely to fall below their October and November lows, he said.
SEC advances 5 options on short-selling rules Securities and Exchange Commission advances 5 options for reining in short-selling Federal securities regulators are considering several ways to place restrictions on traders who bet that stock prices will fall. One option the Securities and Exchange Commission put forward for public comment Wednesday is restoring a Depression-era rule that prohibits short sellers from making their trades until a stock ticks at least one penny above its previous trading price. The goal is to prevent selling sprees that feed upon themselves -- actions that battered the stocks of banks and other companies over the last year. Short-selling is legal and widely used on Wall Street. But as the market has plunged, investors and lawmakers have pressed the SEC to reinstate the rule. They say its absence since mid-2007 fanned market volatility, prompting bands of hedge funds and other investors to target weak companies with an avalanche of short-selling.
Moody's strips Berkshire Hathaway of top rating Moody's Investors Service cut its credit ratings on Berkshire Hathaway Inc from Aaa, the top rating, saying the recession and investment losses at insurance operations of investor Warren Buffett's holding company reduced its ability to support funding needs. Wednesday's cut to Berkshire's rating means Moody's no longer has a Aaa rating on any company with significant financial-services operations. Moody's cut the ratings on Omaha, Nebraska-based Berkshire to Aa2, the third-highest investment grade, and cut to Aa1, the second-highest, its ratings on Berkshire's reinsurance subsidiary National Indemnity Co and bond insurance arm Berkshire Hathaway Assurance Corp.
Firm Acted as Tutor as It Sold Risky Deals to Towns Small Town Caught on Downside of Risky Bonds LEWISBURG, Tenn. - Five years ago, this small factory town was struggling to pay the interest on a bond for new sewers. Bob Phillips, Lewisburg's part-time mayor and full-time pharmacist, was urged by the town's financial adviser, an investment bank named Morgan Keegan & Company, to engage in a complex financial transaction to lower interest rates. When a Lewisburg official attended a state-sponsored seminar intended to lay out the transaction's benefits and risks, he was taught by investment bankers from Morgan Keegan.
Lenders slash credit for responsible borrowers As lenders close a record number of credit card accounts and slash credit lines, they're targeting an unlikely population: responsible borrowers. A new study by Fair Isaac, the creator of the FICO credit score, shows that 11% of U.S. consumers, about 22 million people, had their lines cut or accounts closed even though they pay their bills on time and have good credit. This is more than double the 5%, or 10 million consumers, who had blemished credit and saw their lines reduced in that same period, the six months ended last October.
Credit card companies shut down 8 million credit card accounts in February while accepting more Bailout Credit Cards from the U.S. Treasury.400 Million Credit Card Accounts still open. Many American households have been strapped for money for many years. The benefit of having a debt bubble is the ability to cover up troubling economic trends and drown out any noise while people feed at the bubble. During this time, credit was easily accessible and many families used credit cards as a bridge loan to hold them over for another month. That lifeline is becoming more and more limited. That is why we are seeing bankruptcies jumping sky high in the latest filings with U.S. courts. In news that will make life harder for more on the edge, credit card companies pulled 8 million credit card accounts in February. The peak number of credit cards was reached in July of 2008 at 483 million. The current number of credit card accounts open is 400 million.
Consumers fall behind on loans at record rate A record number of consumers are falling delinquent or into default on their loans, a problem that some economists say will only get worse this year. A record 4.2% of consumer loans were delinquent at least 30 days in the fourth quarter, the latest data available, according to the Federal Reserve. Another 4% of consumer loans were in default, meaning they'd been written off by lenders.
Stress takes its toll on banks Financial stocks fell Monday as investors' attention turned to ongoing stress tests at the nation's top banks ahead of a likely regulators' meeting later this week. In addition, a gloomy research note pointed out that the whole industry is plenty stressed as evidenced by large, and likely to accelerate, loan losses. Federal bank regulators plan to meet early this week to hash out how to read the results of the stress tests, according to a Wall Street Journal report. A Treasury official declined to comment on the report of the meeting, but said the Treasury remains confident the stress tests will be finished by the end of this month.
Banks aren't reselling many foreclosed homes A vast "shadow inventory" of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say. Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
GM, Chrysler Miss Benchmark for $25 Billion Loan Program Next month, $25 billion in loans aimed at producing more fuel-efficient cars will start flowing to suppliers and automakers -- just not to the two companies most in need of funding, General Motors and Chrysler. The Energy Department program dictates that companies must be "financially viable" to receive the loans. And last week, the Obama administration ruled that, at least for now, both GM and Chrysler cannot meet that benchmark.
Employed and Unemployed Both Feel the Pinch It ain't really news that employment is falling along with the economy falling off a cliff because everybody is up to their freaking eyebrows in debt and people and businesses are naturally reluctant to be rushing out to borrow more money will-nilly to spend more, and more, on more and more Cheap Consumer Crap (CCC), and businesses sure don't need a lot of employees to make or sell less stuff. So I was only mildly shocked by the AP headline "Jobless Rate Bolts to 8.5 Percent, 663K Jobs Lost", which is getting to that point where you will want to curl up into the fetal position just cry, cry, cry your little eyes out until your mommy finally comes along and tells you to shut the hell up because everything is going to be "fine."
Goldfinger Brown Rides Again All the hot air emanating from the participants of the just concluded G20 Summit in London has, with the help of the breathless press, made its way into our neighborhood and lifted the Gordon Brown Alert wind sock atop the Casey Research headquarters. A little background: Gordon Brown, Britain's prime minister, became infamous for his, let's say, slightly off judgment when he was still serving as chancellor of the Exchequer. Between 1999 and 2002, Brown managed to sell 400 tons or 60% of the country's gold at the very bottom of gold's 20-year bear market. The average price per ounce achieved at the 17 gold auctions was $275 - costing British taxpayers around $2.96 billion. This stroke of genius earned the chancellor such sterling titles as "Sold The Gold Brown" and "Bottom Brown," among others that don't meet our PG rating for publishing.
U.S. Electrical Grid Penetrated by Russian and Chinese Spies Officials said water, sewage and other infrastructure systems also were at risk. WASHINGTON -- Cyberspies have penetrated the U.S. electrical grid and left behind software programs that could be used to disrupt the system, according to current and former national-security officials. The spies came from China, Russia and other countries, these officials said, and were believed to be on a mission to navigate the U.S. electrical system and its controls. The intruders haven't sought to damage the power grid or other key infrastructure, but officials warned they could try during a crisis or war. "The Chinese have attempted to map our infrastructure, such as the electrical grid," said a senior intelligence official. "So have the Russians."
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Strange Days James Howard Kunstler Even while a wave of reflex nausea washed over America last week, and the unemployment rolls swelled by much more than another half million, the greatest stock market suckers' rally in seventy years pulled in the last of the credulous. These are strange days. The earth is heaving and the buds swelling again - at least north of the equator, where most of the action is - and the global economy, which was supposed to be a permanent new add-on to the human condition, is sloughing away in big horrid gobs. But no one in charge of anything can believe it. The banking fiasco has introduced so much noise into the system that world leadership can't think straight.
Important for understanding hyper-inflation Adrian Salbuchi - Global Financial Collapse - Part 1 An Argentine opinion on the Global Financial Crisis, describing the whole Global Financial System as one vast Ponzi Scheme. Like a pyramid, it has four sides and is a predictable model. The four sides are: (1) Artificially control the supply of public State-issued Currency, (2) Artificially impose Banking Money as the primary source of funding in the economy, (3) Promote doing everything by Debt and (4) Erect complex channels that allow privatizing profits when the Model is in expansion mode and socialize losses when the model goes into contraction mode.
Salbuchi - Global Financial Collapse - Part 2 How will the Global Financial Collapse end? Are we on the way towards global war and world government?
Gold Rebounds on Demand for Haven Investment; Platinum Advances Gold rose for the first time in four sessions on speculation that the credit crisis will deepen, boosting the precious metal's appeal as a haven. Bank stocks headed lower after the Times of London reported that the International Monetary Fund will raise its toxic-debt estimate to $4 trillion. Gold reached $1,007.70 an ounce on Feb. 20, this year's high, before a monthlong surge in equities curbed demand for the metal.
Gold could 'easily' return to $1,000 Gold prices could "easily" re-attain the $1,000 an ounce level this year and could even push through the $1,100 barrier, setting a new record high, according to GFMS, the precious metals research consultancy that released its Gold Survey 2009 today. GFMS said that it was "only a question of time" before investment demand proved sufficiently powerful to overcome weak fabrication demand, particularly in the gold jewellery market, and surging scrap supplies, the the twin obstacles which have managed to halt the advance in gold prices short of the $1,000 an ounce level.
Gold: Is silver the new gold? For many years consumers and investors have favoured gold, but persistently high prices mean the time has come for silver to reassert its credentials as a jewellery material and a store of value. Signs that the economic downturn may at last be reaching a floor is also expected to help silver to pick up the momentum it needs to outperform gold. The debate about the relative merits of gold and silver has been triggered by news the world's largest consumer, India, for the second month running in March did not import any gold, and may even have become an exporter.
Soros Says Fed in a Bind: Beware Stagflation, Bursting of Bond Bubble After the financial market collapsed last fall, the Fed responded with a massive injection of liquidity and expansion of the monetary base. Eventually, Ben Bernanke & Co. will face the challenge of having to remove that liquidity from the system. "That's a big and difficult task and probably the authorities will not be able to do it well," says legendary financier George Soros, chairman of Soros Fund Management. "That's the fear that drives people into gold." Soros wouldn't say whether he's actively trading gold but certainly implied it's a good bet; more explicitly, he agreed with the view there's a "bubble" in Treasuries that's likely to burst sooner rather than later.
Know all about IMF gold reserves In the recent past, there is a lot of talk about the International Monetary Fund's gold holdings because the G20 leaders have allowed the IMF to sell part of its gold reserves to raise funds to fight recession. So, there is an increased enthusiasm to know how much gold the IMF has and how it will impact the international bullion markets if IMF sells around 400 tonnes of the yellow metal now.
Bernanke's Financial Rescue Plan: The growing prospect of a U.S. default Fed chief Ben Bernanke has embarked on the most radical and ruinous financial rescue plan in history. According to Bloomberg News, the Fed has already lent or committed $12.8 trillion trying to stabilize the financial system after the the bursting of Wall Street's speculative mega-bubble. Now Bernanke wants to dig an even bigger hole, by creating programs that will provide up to $2 trillion of credit to financial institutions that purchase toxic assets from banks or securities backed by consumer loans. The Fed's generous terms are expected to generate a flurry of speculation which will help strengthen the banking system while leaving the taxpayer to bear the losses. It is impossible to know what the long-term effects of Bernanke's excessive spending will be, but his plan has the potential to trigger hyperinflation or spark a run on the dollar.
George Soros warns 'zombie' banks could suck lifeblood out of economy Billionaire investor George Soros has warned that bailing out banks could turn them into "zombies" that suck the lifeblood of the American economy, which he predicted is in for a "lasting slowdown". He also cautioned that the recent rise in global stockmarkets is a "bear market rally because we have not yet turned the economy around". His gloomy verdict weighed on Asian stockmarkets today, alongside a report that the International Monetary Fund now estimates that the toxic debts racked up by banks and insurers could spiral to $4tn.
Bank Worries Return to Wall Street Investors who rode the currents of a month-long stock market rally hit the brakes on Tuesday, cashing some profits and taking more defensive positions as they braced for the start of a rough earnings season. The selling cut across all sectors, led by losses in telecommunications companies, industrial producers like Caterpillar, chemical companies and retailers. It was Wall Street’s second day of losses during a shortened trading week.
Soros: "Danger of Collapse Has Passed," But Stock Rally Not Sustainable "The real danger of collapse has passed," says legendary financier George Soros. But the "fallout of the collapse" of the banking system "will linger." In the wake of Lehman Brothers' bankruptcy on Sept. 15, 2008, authorities were forced to put the financial system remains on "artificial life support, which is where it is now," says Soros, the chairman of Soros Fund Management and author of several books, including most recently The Crash of 2008 and What It Means. As a result, the billionaire speculator says the stock market's recent rally is doomed to fail. "Now we will face reality," he says, referring to a belief policymakers "did not succeed in recapitalizing the banks to point where they can lend freely." Unfortunately, "talk of zombie banks – that's where we are now," Soros says. "Instead of providing the lifeblood of credit, [banks] are effectively drawing it to themselves."
UBS halts foreign travel over tax worries UBS has banned more than 1,000 of its private bankers from travelling overseas over fears they could be targeted by foreign governments investigating tax evasion. The Swiss bank, which is in a legal battle with the US over its unwillingness to divulge names of American clients it helped avoid paying tax, has issued a global travel ban for all client-facing staff in its Wealth Management & Swiss Bank and its Wealth Management US divisions. The move comes a week after the G20 agreed to take a tough line on tax evasion, with world leaders pledging to stop wealthy individuals from using offshore tax havens to escape levies.
Treasury Seeking More Private Investors for Its Bad-Asset Program Treasury extends deadline for toxic asset program The Treasury Department is making it easier for hedge funds and other private investors to participate in its plan for buying up banks' bad assets, an acknowledgment that the interest level so far has been lackluster. Analysts said the move shows the program hasn't yet attracted enough large fund managers who may be wary of ending up on the wrong side of a congressional probe or public backlash. The program's requirements also excluded too many smaller managers, they said.
Banks brace for derivatives 'big bang' Credit default swap dealers are cleaning up a dark corner of the derivatives market, but the risk of a blowup remains. One corner of the wild and wooly world of derivatives is about to get a little tamer -- and not a moment too soon for those who fret over the rising cost of bailouts. The banks that handle the bulk of the trading in credit default swaps -- the unregulated contracts whose misuse helped AIG (AIG, Fortune 500) bring about its own demise -- are adopting new trading and settlement rules this week in a shift the industry has labeled the "big bang."
IMF to raise estimate on US credit losses he International Monetary Fund is likely to raise its estimate of total credit losses on US assets from $2,200bn to about $2,800bn when it releases its Global Financial Stability report later this month. The new estimate, while up significantly from January, will almost certainly be lower than a $3,100bn figure circulating on Tuesday, which contributed to pressure on US bank stocks. The IMF is also expected to release for the first time an estimate of total losses on European assets, which is likely to exceed $1,000bn.
Soros Says Gain in U.S. Stocks Is 'Bear-Market Rally' George Soros, the billionaire hedge- fund manager who made money last year while most peers suffered losses, said the four-week rally in U.S. stocks isn't the start of a bull market because the economy is still shrinking. "It's a bear-market rally because we have not yet turned the economy around," Soros, 78, said in an interview yesterday with Bloomberg Television, referring to the recent rebound in stock prices. "This isn't a financial crisis like all the other financial crises that we have experienced in our lifetime."
George Soros warns shares will fall further Stock markets slumped for a third day in a row as a welter of warnings that last week's bounce was no more than a "bear market rally" ended hopes of a sustained recovery. George Soros, the billionaire financier, helped unsettle markets by voicing fears that share prices had further to fall. In an interview, he said: "It's a bear-market rally because we have not yet turned the economy around. This is not a financial crisis like all the other financial crises that we have experienced in our lifetime."
When $10 Trillion Comes Due CNNMoney.com has a great table adding up the cost of all the U.S. bailout programs (more than two dozen of them). It shows the total allocated so far is a mind-boggling $10.5 trillion (U.S.), with $2.6 trillion (U.S.) of that already spent. The sums leave one wondering if the cost will be worse than the disease. How is it ever going to be paid? When the bill came due during the 1970s for the guns and butter policies of the 1960s (Vietnam War and Great Society programs), the result was a roller coaster ride in the economy, accompanied by a steady ratcheting up of inflation. Will the bailout similarly lead to a decade-long period of painful adjustment?
CNNMoney.com's bailout tracker The government is engaged in a far-reaching - and expensive - effort to rescue the economy. Here's how you can keep tabs on the bailouts.
U.S. Local Governments Get Moody's Negative Outlook U.S. local governments were assigned a negative outlook by Moody's Investors Service, the first time the New York-based credit rating company gave such an assessment to the overall group of debt issuers. The collapse in housing, turmoil in financial markets and what may become the broadest and deepest national recession since the 1930s will pressure "many if not most local governments" over the next 12 to 18 months, Eric Hoffmann, a Moody's analyst, said in a news release today.
Market bear Roubini sticks to dour forecasts There's still bad news ahead for the U.S. economy and the bear market for stocks is not over yet, according to a prominent economist who foretold much of the current turmoil. Nouriel Roubini, a professor at New York University's Stern School of Business and chairman of economic research firm RGE Monitor, said on Tuesday that he expected more dour macroeconomic data and problems in the banking and housing sectors, as well as pressures on consumers.
Bernanke's Financial Rescue Plan: A Glide-Path to Destitution Fed chief Ben Bernanke has embarked on a radical and ruinous financial rescue plan. According to Bloomberg News, the Fed has already lent or committed $12.8 trillion trying to stabilize the financial system after the the bursting of Wall Street's speculative mega-bubble. Now Bernanke wants to dig an even bigger hole, by creating programs that will provide up to $2 trillion of credit to financial institutions that purchase toxic assets from banks or securities backed by consumer loans. The Fed's generous terms are expected to generate a flurry of speculation which will help strengthen the banking system while leaving the taxpayer to bear the losses. It is impossible to know what the long-term effects of Bernanke's excessive spending will be, but his plan has the potential to trigger hyperinflation or spark a run on the dollar.
Bank 'stress test' results delayed Treasury will wait until after first-quarter earnings season to release results in order to soften impact on stocks. The U.S. Treasury Department is planning to delay the release of any completed bank "stress test" results until after the first-quarter earnings season to avoid complicating stock market reaction, a source familiar with Treasury's discussions said Tuesday. The Treasury is still talking about how results of the regulatory stress tests on the 19 largest U.S. banks will be released, and may disclose them as summary results that are not institution-specific, the source said.
Ron Paul - Wall Street Is Only The Beginning!
Investment losses hit public sector pensions The crisis facing pension plans for US state and municipal employees is deepening as investment losses deplete the resources of retirement funds for teachers, police officers, firefighters and other local government workers. The largest state and municipal pension plans lost 9 per cent of their value of more than $2,000bn in the first two months of this year, according to data from Northern Trust. That followed a loss of 30 per cent in 2008, equal to about $900bn. Smaller funds, which underperform the larger ones, lost more, experts say.
Double blow for US pensions as values crash The collapse in value of US state and local government pension plans is a disastrous double blow for them: they are being forced to sell off assets at huge discounts to pay out pensions, and are at the same time seeing their funding levels plummet to dangerous new lows. In the past year the funds, whose collective $2,000bn-plus in assets make them key investors in every asset class, have lost about 40 per cent of their value through investment losses.
TARP for life insurers - report The Treasury Department may allow life insurers that are bank holding companies or thrifts to apply for TARP funds The Treasury Department could allow certain life insurers apply for funds from its Troubled Asset Relief Program, according to people familiar with the matter, The Wall Street Journal reported in its online edition late Tuesday. Investors have been increasingly worried about the health of life insurers, which have been hit hard by worries about capital requirements and growing losses. According to the Journal, Treasury could announce within the next few days that life insurance firms that are bank holding companies or thrifts will be eligible for TARP. While life insurers that are bank holding companies have already been eligible for TARP funds, Treasury has yet to give applications the go-ahead.
Treasury Plans to Extend TARP to Life Insurers The Treasury Department plans to extend the Troubled Asset Relief Program to certain eligible life insurers, according to people familiar with the matter. Several life insurers have been burdened lately by capital constraints amid ailing markets. The Treasury is expected to announce within the next several days the inclusion of life insurers that are bank holding companies or own a thrift, these people said. How much money would be available to the insurers remains unclear. The Treasury says it has about $130 billion remaining in TARP funds. Life insurers that are bank holding companies have been eligible for TARP for some time, but the Treasury had not yet given the green-light to approve their applications.
Treasuries Rise as Stock Decline Overshadows Supply Concern Treasury 10-year notes rose for the first day in four as a retreat by stocks on concern corporate profits will decline spurred demand for the relative safety of government debt. Ten-year yields have moved in the same direction as the Standard & Poor's 500 Index 77 percent of time during the past year, according to Bloomberg calculations. The U.S. auctioned $6 billion in Treasury Inflation Protected Securities today and will sell a record $35 billion in three-year notes tomorrow as part of three note sales this week.
Questions over the Fed's Treasuries buy When the Federal Reserve announced plans to buy US government securities on March 18 it made a big splash in the markets - much bigger than many Fed officials expected. The interest rate or yield on 10-year Treasuries instantly fell from 3 per cent to 2.5 per cent and a little more than half of this decline was passed through to private borrowers according to the swaps market. It looked as if the Fed had discovered a potent way of driving down private borrowing rates without getting ever more embroiled in financing private credit markets directly.
Adrian Salbuchi - Will It Be World Government? - Part 1: Private Power Summarizes how the Global System REALLY works. "New World Order" as a generic description of periodic global systemic overhauls. Now, the Power Elite want to go for World Government.
Salbuchi - Will It Be World Government? - Part 2: "Orchestration" Describes how the New World Order-promoting Think Tanks, Lobbies and NGO's operate as strategic and tactical DESIGNERS AND PLANNERS. The actual EXECUTION of their plans, however, is done from each Member's "natural place of action", i.e., as CEO or decision-maker at Multinational Corporations, Transnational Banks, Multilateral Institutions, Ivy-League Universities, The Media or Governement. Now, they are going for World Government...!
Financial Crisis 'Far From Over,' Panel Says Govt. May Spend More than $4 Trillion but Economy Faces 'Prolonged Weakness,' Oversight Panel Reports Though some economic measures are improving, the financial crisis "is far from over" and "appears to be taking root in the larger economy." This, despite the government's commitment to spend trillions of taxpayer dollars on a massive bailout of the financial system. These were the findings released in a report today by the Congressional Oversight Panel, the body charged with overseeing the government's Troubled Asset Relief Program, the $700 billion plan aimed at bailing out the country's financial sector. "We still have a long way to go. A very long way," Elizabeth Warren, the Harvard Law School professor who chairs the panel, said in an interview today with Bloomberg News. The panel reported that the government has spent, lent or set aside more than $4 trillion through the Troubled Asset Relief Program, the Federal Reserve and the Federal Deposit Insurance Corporation.
Plan to Expand Financial Oversight May Add New Risks The Obama administration's plan for a sweeping expansion of financial regulations could have unintended consequences that increase the very hazards that these changes are meant to prevent. Financial experts say the perception that the government will backstop certain losses will actually encourage some firms to take on even greater risks and grow perilously large. While some financial instruments will come under tighter control, others will remain only loosely regulated, creating what some experts say are new loopholes. Still others say the regulation could drive money into questionable investments, shadowy new markets and lightly regulated corners of the globe.
Contracting Boom Could Fizzle Out Jobs Would Return to Pentagon The recent surge in the Washington area's defense-contracting workforce would begin to ebb under Defense Secretary Robert M. Gates's latest budget proposal as the Pentagon moves to replace legions of private workers with full-time civil servants. The budget would reverse a contracting boom, beginning after the 2001 terrorist attacks, in which the proportion of private contractors grew to 39 percent of the Pentagon's workforce. Gates said he wants to reduce that percentage to a pre-Sept. 11 level of 26 percent. The government said it would hire as many as 13,000 civil servants to replace contractors in the coming year and up to 39,000 over the next five years.
Two Currencies Sure To Rise In Value Can there be any doubt where we are heading with all of these 'dollars' being printed? Inflation or hyperinflation is within sight but it will probably take a few more years to get there. And then what? You better 'hope' you are correctly positioned to benefit from this investment scenario. There are several ways this may play out, but we believe it will ultimately be a game with the global currencies in a race for the bottom. Two currencies which are surely destined to rise in value in the coming years in this environment (at least relative to other currencies) are the Canadian Dollar and the Australian Dollar, both currencies of countries with substantial natural resources.
Think Barack Obama will save America?
WASTING A GOOD CRISIS: RESULT - $200 OIL Rohm Emanuel's famous quote regarding the current financial crisis, "Never let a serious crisis go to waste...it's an opportunity to do things you couldn't do before." was ignored last summer when oil prices reached $147 a barrel. The Obama administration has taken advantage of the financial crisis to ram through their socialist agenda which will add trillions to the National Debt. It will stimulate unions, bureaucrats, government employees, and defense contractors. It will do nothing to address the looming energy crisis which will sweep over the country shortly. Again, politicians and pundits will be shocked and astonished when oil soars. They will vilify oil companies, OPEC, and the dreaded speculators. They ignore the old fashioned supply and demand equation that even a dimwitted Congressman should be able to comprehend.
U.S. Consumer Credit Decreased by $7.48 Billion The pace of borrowing by U.S. consumers fell in February as fewer Americans sought credit to make purchases amid what may become the worst recession in seven decades. Consumer credit fell by $7.48 billion, or 3.5 percent at an annual rate, to $2.56 trillion, the Federal Reserve said today in Washington. Credit increased by $8.14 billion in January, more than previously estimated. The Fed's report doesn't cover borrowing secured by real estate.
Consumer credit resumes pullback Government says a decrease in credit card debt paces an overall drop in consumer lending. Consumer credit fell in February, led by a sharp decline in credit card usage, a government report said Tuesday, as the ailing economy and widespread unemployment curbed spending. Total consumer borrowing fell a seasonally adjusted $7.4 billion, or 3.5%, to $2.564 trillion in February, according to the Federal Reserve. Revolving credit, which includes credit card debt, tumbled $7.8 billion to $955.7 billion. That's a 9.7% decrease from the previous year.
GM in "intense" bankruptcy preparations General Motors Corp is in "intense" and "earnest" preparations for a possible bankruptcy filing, a source familiar with the company's plans told Reuters on Tuesday. A plan to split the company into a new company made up of the most successful units, and an 'old company' of its less-profitable units is gaining momentum and is seen as the company's best configuration for the future, said another source familiar with the talks.
Local Currencies Make Sense In This Economy A growing number of cities are experimenting with printing up their own local currencies as a way to cope with the recession. Detroit is among the cities, having created a bill called the "scrip" that can only be used at participating. Normally, you'd think that merely creating currency wouldn't do much good. After all, physical currency isn't wealth. But local currencies might actually make sense. Think about them as occupying a middle ground between official, national currency and barter. In places where money is low, people may still have skills or resources of value. Individuals might still benefit from trade -- exchanging some form of work for someone else's goods or services.
Default Count Rises to Highest Since Great Depression Thirty-five companies defaulted in March, the highest number in a single month since the Great Depression, according to Moody’s Investors Service. The rate at which speculative-grade corporate borrowers worldwide failed to meet their obligations rose to 7 percent from 4.1 percent at the end of last year, Moody’s said in a report today. So far this year, 79 companies rated by Moody’s have defaulted, the New York-based ratings firm said. Almost $1.3 trillion of losses and writedowns at financial institutions worldwide, combined with the deepest economic slowdown since World War II, have weakened companies’ finances, reducing their ability to pay debt. The global default rate will peak at 14.6 percent in the final quarter of this year, Moody’s predicted, lower than last month’s 15.3 percent forecast.
Why home prices may never recover The home-price optimists insist prices are bound to return to their 2006 peaks. But there is no reason to think they have to. And if they continue to fall, Americans' relationship to their homes could change dramatically. Two years away from the peak of the great housing bubble, the talk has turned to whether we've reached a bottom. And whenever there is talk of a bottom, there is the inevitable talk of recovery, the speculation about just how long -- five years? 10? -- it will take for us to get back to where we were. Even at this point, the idea that there is simply no going back -- not for decades -- is still hard to stomach for Americans who have never seen or imagined a more or less permanent drop in value of housing.
Oil Companies Loath to Follow Obama's Green Lead The Obama administration wants to reduce oil consumption, increase renewable energy supplies and cut carbon dioxide emissions in the most ambitious transformation of energy policy in a generation. But the world's oil giants are not convinced that it will work. Even as Washington goes into a frenzy over energy, many of the oil companies are staying on the sidelines, balking at investing in new technologies favored by the president, or even straying from commitments they had already made.
Consumer Borrowing Declined in February Consumer borrowing plunged in February at a 3.5 percent annual rate, more than analysts had expected, as Americans cut back their use of credit cards by a record amount. The Federal Reserve said Tuesday that consumer borrowing dropped at an annual rate of $7.48 billion in February from January, which amounts to a 3.5 percent annual rate of decline. Wall Street economists expected borrowing to slide by only $1 billion, according to a survey by Thomson Reuters. The decline was led by a record drop in borrowing on credit and charge cards, which fell at an annual rate of $7.8 billion, or 9.7 percent. That is the sharpest drop in dollar terms since federal records began in 1968, and the steepest percentage fall since 1978.
Florida's Resurrection of Debtors' Prison As the Christian world readies itself for extra masses, spiritual observance and ultimately glorious celebration during Easter Week, the concepts of charity and forgiveness seem to be missing in Florida. State judges have been throwing poor people into jail for not paying even minor debts owed to Florida courts. This is a frightening development, particularly when one considers that twenty-five other states are watching and eager to learn how to fundraise in this same horrifying manner.
Zbigniew Brzezinski
Biden: New Israel would be 'ill-advised' to attack Iran US Vice President Joe Biden said Tuesday the new Israeli government of Prime Minister Benjamin Netanyahu would be "ill-advised" to attack Iran, but stressed that it was unlikely to do so. "I don't believe that Prime Minister Netanyahu would do that. I think he would be ill-advised to do that," Biden said in an interview with CNN, when asked about possible Israeli strikes on Iranian nuclear sites. "My level of concern is no different than it was a year ago," he added. Presenting his new government to Israel's parliament a week ago, Netanyahu alluded to an eventual nuclear-armed Iran as the biggest threat to his Jewish state.
Obama says Iraq entering critical phase U.S. President Barack Obama pushed Iraq's feuding factions to compromise on Tuesday, sounding a note of impatience as he said Iraqis should take responsibility for their country so U.S. troops could leave. Obama, whose troop withdrawal strategy assumes Iraq staying relatively stable over the next 18 months, voiced concern that elections late this year could bring unresolved political issues "to a head" in a country that is only slowly emerging from years of sectarian violence in which tens of thousands died.
US moves on Iran nuclear trade New York prosecutors joined with the Obama administration on Tuesday to shut down a China-based network that allegedly supplied Iran's nuclear and missile programmes with the unwitting aid of some of Wall Street's biggest banks. The action is likely to prove a test of the administration's relationship with Beijing, which to date has been unenthusiastic about sanctions on Tehran. The move came as US Vice-President Joe Biden warned Israel not to strike Iran and as Washington sought to win time for possible negotiations with the Islamic Republic by slowing down Tehran's progress towards nuclear weapons capability.
SPLC Responsible For Labeling Patriots Terrorists Law Enforcement Deeply Compromised The Southern Poverty Law Center has always been a hells nest of Zionists who promote Anti American views and distribute inaccurate and subversive information. The Anti Defamation League is the unregistered agent of a foreign power, in this case the state of Israel. It has always been involved in espionage and subversion and it has been caught in the act many times. It should come as no surprise that the infamous MIAC documents which were leaked by the Missouri State Highway Patrol were sourced in these subversive organizations. Please forward this information to all law enforcement organizations. . . . Supporthttp://www.alipac.us
The men behind Barack Obama - Part 1/2 A deep and closer look at Barack Obama and the men who control this puppet. And the future it holds for all of us globally and the consequences which may arise when this man seizes office.
No NEW Patriot Radio News Hour Wednesday or Thursday. PTG is OPEN for business all week; New Radio show on Friday.
Strange Days (James Kunstler) The executives of Citibank, Goldman Sachs, J.P. Morgan, and a long list of hedge funds, will be found cringing in their wine-lockers behind a measly layer of privet hedge when the tattooed minions of Glen Beck come a'calling. Even while a wave of reflex nausea washed over America last week, and the unemployment rolls swelled by much more than another half million, the greatest stock market suckers' rally in seventy years pulled in the last of the credulous. These are strange days. The earth is heaving and the buds swelling again -- at least north of the equator, where most of the action is -- and the global economy, which was supposed to be a permanent new add-on to the human condition, is sloughing away in big horrid gobs. But no one in charge of anything can believe it. The banking fiasco has introduced so much noise into the system that world leadership can't think straight.
Gold to re-attain $1000, break $1100 barrier Gold will re-attain the $1000 mark in the coming months and even break the $1,100 barrier, according to Gold Survey released on Tuesday simultaneously in London, Toronto and Johannesburg. Philip Klapwijk, Chairman of GFMS at the London launch of the report said, “the price may have pulled back a fair bit from the February highs but that was largely just the market’s reaction to jewellery demand crumbling and scrap booming. It’s far from game over for investors and it will be that crowd which sets the price alight”.
Toxic debts could reach $4 trillion, IMF to warn Toxic debts racked up by banks and insurers could spiral to $4 trillion (£2.7 trillion), new forecasts from the International Monetary Fund (IMF) are set to suggest. The IMF said in January that it expected the deterioration in US-originated assets to reach $2.2 trillion by the end of next year, but it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21. In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia. Banks and insurers, which so far have owned up to $1.29 trillion in toxic assets, are facing increasing losses as the deepening recession takes a toll, adding to the debts racked up from sub-prime mortgages. The IMF's new forecast, which could be revised again before the end of the month, will come as a blow to governments that have already pumped billions into the banking system.
Fed seals foreign currency swap accords Four central banks can borrow unlimited dollars The Federal Reserve on Monday lined up almost $300bn worth of euros, yen, pounds and Swiss francs to lend to US-based banks to meet foreign currency needs. The US central bank has reached currency swap agreements with the European Central Bank, the Bank of Japan, Bank of England and Swiss National Bank for access to up to €80bn (£73bn), Y10,000bn (£67bn), £30bn and SFr40bn (£24bn). Officials see the move as a precautionary step to strengthen their capacity to respond to any future pressures. The Fed will not immediately draw on the currency lines and has no instant intention to distribute foreign currency to US banks. But policymakers intend to make foreign currency available to US lenders, probably through an auction, if the need arises. Global central bank currency arrangements had focused on ensuring that lenders based outside the US had adequate access to financing in dollars, the world’s main reserve currency. Many non-US banks are structurally short of dollars and their efforts to secure dollar funds in the crisis amplified pressure on dollar money markets.
Peter Schiff on CNBC Checking Market's Pulse Apr 06 2009
Goldbugs rest assured, inflation will return Much like an actor who can’t help looking sideways at any mirror he passes, the market has decided, based on its own technical action over the past couple of weeks, that it is in something more than a bear market rally. A rally, that is, in risk assets, but not in gold. The gold price, after bouncing around in a channel in the $900s, is, I believe, going to move decisively lower over the next several months, probably to somewhere below $800 an ounce. This is the converse of what you see most visibly in the equity markets. Since the autumn, people have believed that their money was about to be pulled out of bed early some morning, taken out to the woods, and shot. This was absurd. Despite the US Congressional hearings you may have been watching, we don’t shoot your money any more. Instead, in times such as these your money is often let out on probation to play around for a few months. Then, sometime later this year, it will be thrown into a state-run camp, where it will be forced to work in a “public-private partnership” for what officials determine is the common good. You will get reports on some sort of quasi-Treasury letterhead about its condition, probably signed by Bill Gross, possibly holding a paramilitary title.
Going for gold: How the world's mints are coining it The world's mints are coining it as unprecedented numbers of savers search for safer investments A few years ago his visits to the mint, founded more than 800 years ago, might have seemed eccentric. No longer. From the Russian Georgy Pobedonosets to the American Eagle, gold coin production is being cranked up in mints around the world to satisfy customers believing the assets may be immune to the global financial crisis. Russia's state-controlled Sberbank says it has never seen such strong demand for investment coins. In Australia, the Perth Mint had to suspend new orders for gold coins because it could not keep pace with overseas demand. And, in America, the US Mint says sales of its one-ounce American Eagle gold bullion coins rocketed by more than 400 per cent to 710,000 ounces in 2008. "The demand for gold and silver," said US Mint spokeswoman Carla Coolman, "has been unprecedented."
Obama stimulus, devalued dollar = Gold $2500 US debt monetization = Dollar devaluation = Higher gold price. The implementation of President Obama's 11 years of Trillion Dollar Budget Deficits will oblige the Federal Reserve to monetize a goodly portion of the multi-trillion dollar issuance of US Treasury debt paper. Markets understand this, even if the Council of Economic Advisors does not.
Jeffrey Sachs: Geithner Plan Is An "Unconscionably Large" Rip-Off Jeffrey Sachs, one of the early critics of Tim Geithner's Public-Private Investment Partnership scheme, is admitting he was wrong about the program--it's far worse than he thought. The worst problem is that it is completely open to being scammed by banks because it allows the banks selling the toxic assets to be buyers as well. This creates the potential for a daisy-chain scam: a bank creates an off-balance-sheet entity that buys bad assets for far more than they’re worth, using money borrowed from taxpayers. When the assets turn out to be worthless, the bank-created entity then defaults on the loan. Because the loan is non-recourse, the government is left holding the worthless assets and is out the entire amount of the loan. In effect, the plans lets banks write themselves checks straight from the US taxpayers.
US Recovery Is Far Off, Banks Are 'Basically Insolvent': Soros The U.S. economy is in for "a lasting slowdown" and won't recover this year, while "the banking system as a whole is basically insolvent," billionaire investor George Soros told Reuters Financial Television Monday. While nationalization of banks is "out of the question," he said stress tests being conducted by the U.S. Treasury could be a precursor to a more successful recapitalization. But he warned about the danger of watering down mark-to-market accounting rules, saying this creates conditions for prolonging the life of U.S. 'zombie' banks. Soros also said the U.S. dollar is under pressure and may eventually be replaced as a world reserve currency, possibly by the IMF's Special Drawing Rights, a synthetic currency basket comprising dollars, euros, yen and sterling. China recently proposed greater use of Special Drawing Rights, possibly as an eventual global reserve currency. "In the long run, having an international accounting unit other than the dollar may be to our advantage," Soros said.
Geithner Wrong, Crap Assets Correctly Priced, Say Harvard And Princeton Profs The government's official view that toxic assets are incorrectly priced due to illiquidity "fire sales" is wrong, a new study by Harvard and Princeton finance professors suggests. You can read the whole paper by Harvard's Joshua Coval and Erik Stafford and Princeton's Jakub Jurek below. The striking conclusion is that the low prices of toxic assets actually reflect the fundamentals, rather than being driven by an illiquidity discount.
Geithner's PPIP Toxic Asset Plan Hits Snags, Gets Delayed The Treasury Department is delaying the deadline for those who want to participate in the Public-Private Investment Program and loosening some of the guidelines for participation. This suggests that the programs have not attracted the level of support the government had hoped for. The changes are meant to make it easier for firms to participate in the "legacy securities" portion of the program.
Why You Can Forget About A Strong Economic Recovery With the stock-market rally charging into a fifth week, analysts and commentators who were warning about DOW 5000 a month ago are now becoming jubilant. We're finally there! The worst recession since World War II is over! It's time to buy again! Some of the economic data in the past couple of weeks has indeed been not-quite-as-horrible-as-feared, and the rate at which things are getting worse has eased. But that doesn't mean we're coiling up for a rip roaring recovery.
Administration Seeks an Out On Bailout Rules for Firms Officials Worry Constraints Set by Congress Deter Participation The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials. Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.
US debt sets stage for inflation Weakening the dollar will help us dig out from a mountain of debt, but it may also hasten an already wary world's move away from the dollar as the currency of choice. It's too soon to bury the U.S. dollar as the global reserve currency, but it is time to start thinking about writing its obituary. For years now, as the U.S. trade and budget deficits have mounted, the strongest support for the dollar as the world's money was the lack of a viable alternative. The Japanese economy is too sick for investors to put their faith in the yen. The euro has its own problems. The European Central Bank may be the staunchest inflation opponent in the world now, but each country in the union still runs its own budget, and some -- Italy, for example -- are facing a combination of stagnant growth and aging populations only slightly less daunting than Japan's.
Gold Falls in New York as Demand for Haven Wanes; Silver Drops Gold fell to the lowest price in more than two months, erasing this year’s gains, on speculation that the U.S. economy will rebound, eroding the precious metal’s appeal as a haven. Silver dropped the most in two weeks. Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell for the first time in two weeks as a month-long rally in equities curbed demand for safety assets. Before today, the Standard & Poor’s 500 Index had rallied 23 percent since March 6 while gold dropped 4.8 percent. “People don’t think they need that flight-to-quality buying and that’s putting gold into the background,” said Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago.
Obama Wants to Control the Banks There's a reason he refuses to accept repayment of TARP money. I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn't much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street's black hole. So why no cheering as the cash comes back? My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell 'em what to do. Control. Direct. Command. It is not for nothing that rage has been turned on those wicked financiers. The banks are at the core of the administration's thrust: By managing the money, government can steer the whole economy even more firmly down the left fork in the road. If the banks are forced to keep TARP cash -- which was often forced on them in the first place -- the Obama team can work its will on the financial system to unprecedented degree. That's what's happening right now.
Why We Shouldn't Worry If Banks Game The Bailout Jeffrey Sachs is the latest economist to realize that -- gasp! -- scheming banks could game the bailout and screw the taxpayers by buying toxic assets from each other. It's not just your imagination. It really is everyday that someone trips over themselves to explain just what a scam the Geithner PPIP actually is. But here's the thing: that's a feature, not a bug. The system is meant to be gamed.
Former Wall Street computer whizz Michael Osinski made the 'bomb' that broke the banks Michael Osinski, a former Wall Street computer programmer whose fancy software helped bring the banks to near collapse, says he is dismayed at the financial whirlwind. As world leaders in London put the finishing touches to their G20 communiqué, Michael Osinski was up to his thighs in water on the other side of the Atlantic, retrieving oyster cages at low tide off a misty Long Island. Nowadays, he supplies oysters to some of the best restaurants in Manhattan. But he was following the efforts to reach agreement on tackling the global economic crisis with a deep personal interest. For in his previous incarnation, Mr Osinski played a crucial, if inadvertent, role in stirring up the financial whirlwind that has battered the world. As the top computer programmer for the titans of Wall St, he wrote the complex software that bundled home mortgages into bonds, making possible the subprime loans collapse that sparked the global meltdown. "I didn't realise I was building a bomb at the time," said Mr Osinski, 55, as he reflected on his part in the worst slump since the Great Depression. "I thought I was building something that was a valuable tool for the industry. And for many years, it was." But, he added wistfully, "the software turned out to be more sophisticated than the people using it".
Someone Tell Obama: Americans Did Not Cause the Financial Crisis, the World's Central Banks Did Every economic bust demands scapegoats. And you can always bet your bottom dollar that politicians and journalists will be the ones leading the mob. (One need only recall the Democrats' recent efforts at whipping up hatred against bankers for confirmation of this dismal fact). But all said and done, you can never beat a good conspiracy story. And that is basically what Simon Johnson has given us. According to this brilliant student of economic history America is facing
Mike Mayo Says To Sell Banks, Loan Losses Just Getting Started So far, the analysts that have been the most negative on banking are sticking to the script. Meredith Whitney continues to hammer the large banks day in and day out, and Mark Mayo, the former Deutsche Bank analyst, is also quite negative. Mayo, currently at Calyon Securites, said in a new note that while certain mortgage assets have been written down heavily, other loan assets are just starting to feel the pinch.
Mayo on banking sector - CNBC
Why Congress Must Stop the Fed's Massive Pumping . . . . Now, the essence of credit is not about lending money as such but actually lending the real stuff — real savings. Without real savings no lending is possible. The fact that banks have accumulated a large amount of bad assets may indicate that the pool of real savings is in trouble. If this is the case, it will be futile to try to boost lending by pushing more money into the banking system. If the pool of real savings is falling, this means that the percentage of false activities exceeds the percentage of wealth-generating activities out of total activities. Consequently, banks are likely to remain reluctant to lend regardless of the Fed's pumping; this in turn will continue to undermine bubble activities. As a result the growth momentum of prices will continue to weaken. The Fed could bypass various lenders and hand money directly to people in order to boost spending and reverse the decline in prices — via "helicopter money." Such a policy is likely to severely damage the real economy.
Bill Black: “top elites” all presently committing “fraud” Geithner is…covering up. Just like Paulson did before him. Geithner is publicly saying that it’s going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they’re allowing all the banks to report that they’re not only solvent, but fully capitalized. Both statements can’t be true. It can’t be that they need $2 trillion, because they have masses losses, and that they’re fine. These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed….
Bank Stress Tests A "Complete Sham" -- Former Regulator The bank stress tests currently underway are “a complete sham,” says William Black, a former senior bank regulator and S&L prosecutor, and currently an Associate Professor of Economics and Law at the University of Missouri - Kansas City. “It’s a Potemkin model. Built to fool people.” Like many others, Black believes the “worst case scenario” used in the stress test don’t go far enough. He detailed these and related concerns in a recent interview with Naked Capitalism. But Black, who was counsel to the Federal Home Loan Bank Board during the S&L Crisis, says the program's failings go way beyond such technical issues. “There is no real purpose [of the stress test] other than to fool us. To make us chumps,” Black says. Noting policymakers have long stated the problem is a lack of confidence, Black says Treasury Secretary Tim Geithner is now essentially saying: “’If we lie and they believe us, all will be well.’ It’s Orwellian."
Long-term recession exit strategies carry high risk The good news is that even some of the world’s most enthusiastic economic pessimists, such as Nouriel Roubini of New York University, are beginning to discuss “exit strategies” from the worst global recession in generations. The bad news is that many of these exit strategies appear as toxic as a bunch of subprime mortgage assets. At the Ambrosetti finance forum over the weekend, where leading economists, policymakers and business leaders debated the state of the world, a surprising consensus emerged that the global economy would recover from recession next year, if not before. In spite of the calamitous collapse in global output and world trade, the huge monetary jolts and fiscal stimuli administered by the authorities in the US and elsewhere would surely revive economic life. The agreement reached last week at the G20 meeting of global leaders in London had also boosted investor confidence, while the additional funding provided to the International Monetary Fund would support vulnerable emerging market economies. But the question that then arose was: to what extent would today’s unprecedented economic interventionism undermine tomorrow’s recovery?
Is Gold a Better Hedge than Oil? We've groused before about gold's much-vaunted role as an inflation hedge. When we looked at gold's long-term performance last year (see our January 2008 rant, "A Picture's Worth A Thousand Words (Or Dollars)"), we wondered if, indeed, the yellow metal would match its 1980 highs on an inflation-adjusted basis. As it turned out, gold didn't. But crude oil did. We figured gold would have to average $1,563 an ounce in 2008 to equal its 1980 record when rises in the U.S. Consumer Price Index [CPI] were factored. Gold, loco London, managed to run up to $1,023 in March, but only averaged $872 for the year. West Texas Intermediate [WTI] crude, by contrast, needed a CPI-adjusted mean price of $95 a barrel in 2008 to equal its 1980 performance. Spot oil delivered to Cushing, Okla., averaged $100 last year.
DOE Head Steven Chu: "Our Dependency On Oil Is Dangerous And Shortsighted Energy Secretary Steven Chu uncorks quite the mission statement in an op-ed published in Newsweek, writing "our dependency on oil is dangerous and shortsighted." This isn't like when George W. Bush said the country is addicted to oil, it appears as though there's some substance behind this rhetoric. After all, this comes from a guy that doesn't even own a car. While Chu admits that "burning oil for fuel can be understood" from a physicist's perspective, as it is the most efficient fuel going, from any other angle, it makes no sense. He calls oil "a huge drain on our economy because any dollar we send overseas for oil is a dollar we can't reinvest in America," and it "weakens our security because much of the world's oil is controlled by regimes that do not share our values."
FDIC’s Insurance Commitments 34% Higher Than Reported Conventional wisdom says that financial companies are having trouble borrowing because credit markets are broken. This is dangerously wrong. The credit market itself is fine. It’s balance sheets that are broken. They have so little equity relative to their assets, there’s no cushion to protect creditors from losses. With few good borrowers available and with the price of credit being capped by government, naturally creditors have little inclination to lend. Washington’s solution is to “guarantee” all manner of risky investments, to use the public’s balance sheet to absorb trillions of dollars worth of private sector losses. We’re told this will “restore confidence” in borrower balance sheets, leading to increased lending. But this policy is dangerously misguided and may very well lead to economic Armageddon.
Hedge fund paid Obama adviser Summers $5.2 million Lawrence Summers, a top economic adviser to U.S. President Barack Obama, was paid about $5.2 million by hedge fund D.E. Shaw in the past year, financial disclosure forms released by the White House showed on Friday. Summers, a former U.S. Treasury secretary and Harvard University president, also was paid $2.7 million in speaking fees by a range of organizations and companies, including several troubled Wall Street financial firms, they showed. The disclosure documents on Summers and other White House officials advising Obama on the global financial crisis covered 2008 and the first few months of this year. Summers became an official adviser on Jan. 20 when Obama took office.
Conn. AG questions credit rating companies Connecticut Attorney General Richard Blumenthal is questioning why $400 million in federal bailout money is going to the big three credit agencies that he says helped created the economic meltdown. Blumenthal said Monday he is investigating why a $1 trillion government bailout program steers money to Moody's, Fitch and Standard & Poor's. "This potential $400 million windfall overpays the Big Three raters and undercuts competitors _ another money reward for failure," Blumenthal said in a news release. "The same Big Three that overrated bonds now regarded as toxic assets will be rating new bonds issued to restart lending and solve the economic crisis they helped create." The program, created by the Federal Reserve and the Treasury Department, is called the Term Asset-Backed Securities Loan Facility.
Sign of strength or evidence of weakness? China’s dollar reserves [CFR] On Friday, Paul Krugman interpreted China’s call for a new reserve currency as a sign of weakness: “But Mr. Zhou’s speech was actually an admission of weakness. In effect, he was saying that China had driven itself into a dollar trap, and that it can neither get itself out nor change the policies that put it in that trap in the first place.” China is, according to Krugman, hoping for a magical solution that will “rescue China from the consequences of its own investment mistakes.” I agree. Krugman rather provocatively argues that “China acquired its $2 trillion stash — turning the People’s Republic into the T-bills Republic — the same way Britain acquired its empire: in a fit of absence of mind.”
Treasuries Little Changed as Supply Looms After Fed Purchase Treasuries were little changed as traders shifted focus to this week’s note sales after the Federal Reserve completed its sixth purchase of debt. The Treasury scheduled the auction of $59 billion in coupon securities, including a record $35 billion of three-year notes on Wednesday. The Fed bought $2.53 billion in U.S. debt, part of its plan to lower consumer borrowing costs by purchasing up to $300 billion of Treasuries. “The battle continues between the Treasury and the Fed,” said Jeffry Feigenwinter, head of Treasury trading at BNP Paribas Securities, one of 16 primary dealers that trade with the central bank. “The Fed is trying to keep rates low while the Treasury needs to fund all these programs and needs to raise a lot of cash.”
Today's Bear Market Now Not As Bad As The Great Crash! We are happy to report, via Doug Short, that today's bear market is no longer as bad as the Great Crash, as measured by depth-of-decline-over-time. Thanks to the rally of the past month, we've crawled back above the Great Crash trendline. It's worth noting, however, that the rip-roaring bull market of the past month does bear an unnerving resemblance to a similar pattern in 1931...before the last leg of the Great Crash took the DOW from down 50% to down 89%.
As Home Values Fall, Property Tax Revolt Brews In many cities across the US, homeowners are filing record numbers of assessment appeals, wanting their property taxes to reflect their shrinking value of their houses. Homeowners watching the value of their houses slowly ebb are storming tax offices from Ann Arbor, Mich., to Atlanta, demanding that county officials reassess their homes and lower their property taxes. It is a question of fairness, says Gene Burleson of Atlanta, who stood in line April 1 to appeal his assessment. His house has lost 25 percent of its value since it was last assessed, he adds: "I'm just trying to insulate myself from coming tax increases." Property taxes have become a rallying point for disgruntled Americans because, unlike sales or income taxes, they can be challenged directly by individual citizens: Some 40 percent of assessment appeals are successful. Yet the movement threatens already stressed counties, putting the tax receipts that pays for schools and police at risk.
From Bubble to Depression - Why the housing crash ruined the financial system but the dot-com collapse did not. How can one crash that wipes out $10 trillion in assets cause no damage to the financial system and another that causes $3 trillion in losses devastate the financial system? . . . . in this downturn, the government is compounding the problem by transmitting the losses to the public balance sheet at unprecedented levels, effectively shutting down the private markets it is "bailing out" in favor of public support (of course, with the private corporations and investors allowing to retain far more profits and avoid far more losses than they truly deserve). The piece is pretty good. It drives home the point that various sorts of government intervention and folly combined to make this the biggest bubble in history.
From Bubble to Depression? WSJ version Bubbles have been frequent in economic history, and they occur in the laboratories of experimental economics under conditions which -- when first studied in the 1980s -- were considered so transparent that bubbles would not be observed. We economists were wrong: Even when traders in an asset market know the value of the asset, bubbles form dependably. Bubbles can arise when some agents buy not on fundamental value, but on price trend or momentum. If momentum traders have more liquidity, they can sustain a bubble longer. But what sparks bubbles? Why does one large asset bubble -- like our dot-com bubble -- do no damage to the financial system while another one leads to its collapse? Key characteristics of housing markets -- momentum trading, liquidity, price-tier movements, and high-margin purchases -- combine to provide a fairly complete, simple description of the housing bubble collapse, and how it engulfed the financial system and then the wider economy.
EU-US summit exposes divisions over Turkey France and Germany in Prague on Sunday (5 April) poured cold water on US calls to press ahead with Turkish enlargement. In a seperate development, Czech politicians named statistician Jan Fischer as the country's new caretaker prime minister. "The United States and Europe must approach Muslims as our friends, neighbours and partners in fighting injustice, intolerance and violence," US President Barack Obama said at an EU-US summit in the Czech capital. "Moving forward toward Turkish membership in the EU would be an important signal of your commitment to this agenda and ensure that we continue to anchor Turkey firmly in Europe." The remarks drew criticism for interference in EU affairs from French leader Nicolas Sarkozy, who reiterated his long-standing opposition to Turkish accession.
Greenspan's Bogus Defense Greenspan's main argument is that the Fed lost control of the ability to move long-term interest rates, especially 30-year fixed mortgage rates. Since it is these longer rates that (at least in theory) ought to influence house prices much more than the overnight federal-funds rate, Greenspan can't possibly be held responsible for the housing bubble.
California Plans $4 Billion Bond Offering With Federal Backing California plans to sell $3 billion to $4 billion of taxable bonds this month, including a portion backed by federal borrowing subsidies from the Obama administration’s economic stimulus plan, a state official said. As much as $1 billion from the sale, scheduled for the week of April 13, would be used to replenish a state account that loans money for projects that don’t qualify for tax exempt status, such as stem cell research and housing. Another $1 billion would be used to directly finance such projects, while an undetermined amount would take advantage of the Obama subsidy to build public infrastructure such as roads and levees, said Tom Dresslar, spokesman for California Treasurer Bill Lockyer. Municipal issuers taking advantage of the Obama plan, known as Build America Bonds, can get cash from the Treasury to cover 35 percent of the interest on taxable bonds sold this year and next for roads, schools, sewers and other public works. Selling taxable debt also allows California to attract pension funds and other traditional buyers of corporate debt with higher yields than comparably rated alternatives.
Ford Motor Cuts Its Automotive Debt by $9.9 Billion The Ford Motor Company said Monday that it had reduced its automotive debt by 38 percent, or $9.9 billion. The debt reduction, which Ford estimates will reduce its annual cash interest expense by more than $500 million, is the latest evidence that Ford is moving ahead of its domestic rivals General Motors and Chrysler in revamping to survive the weakest United States auto sales in three decades. Ford, the only American automaker that has not sought emergency federal loans, is using $2.4 billion in cash and 468 million shares of its common stock to reduce its outstanding automotive debt by $9.9 billion, from $25.8 billion at the end of 2008.
Cash-for-Clunkers Proposals Gain Popular Traction It's not just General Motors (GM) and Chrysler that are hoping to get an emergency tow from Washington. Battered by double-digit sales declines, all automakers selling in the U.S. are pinning their hopes on a federal program in the making that would give consumers a rebate for trading in old clunkers for new, more fuel-efficient cars. In Germany a similar incentive caused auto sales to spike 21.5% in February and created the best sales quarter for GM's Opel brand in a decade. On Mar. 30, President Barack Obama endorsed the idea of a trade-in program, but working out the legislative kinks on bills that have kicked around Congress since December has proved more difficult than anticipated.
*****Planning the Steps to World Government . . . . In short, we have the global crisis which the 1994 Human Development Report said would probably need to happen in order to shift to a global system of government. It is also glaringly noticeable that the report was right on the money in terms of where the world needed to move to complete a global integration of countries. Without the continuous move to drop the barriers between nation-states that began with the birth of the International Monetary Fund and the World Bank in 1944 and continued into the 1990s with the birth of the World Trade Organization in 1994, it would not be possible to have the global financial integration through common regulatory laws that the leaders of the G20 are calling for. Furthermore, a world central bank, the Special Drawing Rights, and an Economic Security Council would not be possible. However in a world where there are no longer any barriers between nation-states, total integration and a world government structure is possible.
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.
West has to deal with toxic debt to end recession Attempts by the G20 leaders to halt the global recession are doomed unless they get to grips with the "toxic" debt hidden in the shadow economy, warned to Hernando De Soto, the prize-winning Peruvian economist. Mr De Soto said: "This toxic debt is the elephant in the room and solving the problem is the missing link to getting the world economy moving again. Until we know what proportion of the estimated $600trn [£400trn] of derivative contracts is toxic, then credit markets will remain in a state of chronic paralysis. He added: "No amount of fiscal stimulus or new international regulation will get the banking system fixed until we know how much poisonous paper there is on the balance sheets of the banks. The G20 leaders have given the world economy a blood transfusion but now they need to get on with the operation if they are to save the patient's life."
Fabian Socialists Gone Wild Fabianism feeds on Capitalism, but excretes Communism . . . . Marx believed that without socialism capitalism could not exist. One feeds on the other. Fabian socialists are the link to communism and strange as it may seem it’s the international bankers, the elite puppeteers represented within the Bilderberg Group, the enormously wealthy Windsors, George Soros, David Rockefeller, the Rothschild/Warburg/ Schiff interests, the old royal money interests, Queens of Sweden and Denmark and those key, entrenched members of parliaments, congresses, former presidents and agents for current office holding presidents and country leaders - all oligarchs.
Loonie Loses 3% as Carney Pushes Quantitative Ease Foreign-exchange traders are stepping up bets Bank of Canada Governor Mark Carney will join Japanese, Swiss, U.K. and U.S. central bankers and dilute the nation’s currency by embracing quantitative easing. Among the world’s most traded currencies, only the yen, pound and U.S. dollar performed worse in March than Canada’s dollar as central bankers began printing money last month to buy debt assets after exhausting other monetary-policy tools. The New Zealand dollar, which like Canada’s tends to track fluctuations in prices of raw materials, had its best month in at least 20 years in March, according to data compiled by Bloomberg.
China and Russia oppose West’s call for robust response Japan and its Western allies faced resistance from China and Russia last night in seeking a tough response to the North Korean rocket launch. The rocket passed over Japan, which called an emergency meeting of the 15-nation UN Security Council. Western diplomats say that the launch violated UN sanctions on North Korea’s missile programme, and were pushing for a “robust response” by the council that could include new measures. Security Council Resolution 1718, passed in 2006, demands that North Korea suspend all activities related to its ballistic missile programme.
China gets assertive as US ties grow MONTEREY, California - Chinese President Hu Jintao and US President Barack Obama met last Wednesday on the sidelines of the Group of 20 financial summit in London. It was their first meeting since Obama took office two months ago and hence attracted a lot of attention. Attention it deserves. It was not just a meeting to get acquainted but one that both gives an indication of where bilateral relations stand and sets the road map for the future. Overall Sino-US relations remain stable thanks to both countries' efforts in promoting dialogue and consultation, developing mechanisms for managing disputes and cooperating in areas where Beijing and Washington have common interests. While the former George W Bush administration's many foreign policy decisions were controversial, its China policy has enabled the Obama administration to focus on strengthening bilateral cooperation in dealing with global economic challenges.
Obama rebuilds bridges with Islam It is extraordinary to think that an American president should have to make a public speech in a friendly Muslim capital explaining that the US is not at war with Islam. Yet after eight years of the Bush administration and its misguided policies in the broader Middle East, the Pew Global Attitudes Project registered a collapse in support for the US in Nato-allied Turkey to 9 per cent. There, as elsewhere in the Muslim world, a majority had come to believe that the US, through its policies in Israel-Palestine, Lebanon, Afghanistan and, above all, Iraq, was indeed at war with Islam. The beneficiaries of this political disaster have been Islamists in general and jihadi extremists in particular.
Obama pledge on Mideast solution Barack Obama on Monday offered his clearest pledge since taking office to pursue a two-state solution between Israel and the Palestinians, as he took his message of remaking US relations with the Muslim world to Turkey. Speaking in Ankara, Mr Obama urged Israel and Palestinians to “live up to the commitments they have made”, in what is likely to be seen as a rebuke to Israel’s new rightwing government, whose foreign minister last week distanced himself from a 2007 US-backed process to create a Palestinian state. The Palestinian Authority on Monday night welcomed Mr Obama’s statement, while Benjamin Netanyahu, Israel’s prime minister, issued a brief statement saying: “Israel appreciates President Obama’s commitment to Israel’s security and to the pursuit of peace.” He did not mention the two-state solution.
Obama Tells Turks That U.S. Is Not at War With Islam Barack Obama, making his first visit to a Muslim nation as president, declared Monday the United States "is not and will never be at war with Islam." Urging a greater partnership with the Islamic world in an address to the Turkish parliament, Obama called the country an important U.S. ally in many areas, including the fight against terrorism. He devoted much of his speech to urging a greater bond between Americans and Muslims, portraying terrorist groups such as al Qaida as extremists who do not represent the vast majority of Muslims.
Obama Unsettles Europeans With Comments Supporting Membership for Muslim Turkey in European Union Obama's warm reception in Europe took a chilly turn Sunday after some leaders took issue with his support for Turkey's aspirations to join the European Union. Speaking ahead of his arrival in Ankara late Sunday for his first visit as president to a Muslim country, Obama urged E.U. leaders in Prague to move ahead with E.U. membership for Turkey.
G-20 Deal or no Deal? Max Keiser - 4 Corners - Part 1
America's Financial Oligarchy Is Still in Control "The crash has laid bare many unpleasant truths about the United States. One of the most alarming is that the finance industry has effectively captured our government", says Simon Johnson, a chief economist with the International Monetary Fund in 2007 and 2008. In an article entitled "The Quiet Coup" in the May, 2009 issue of the Atlantic magazine he (with James Kwak) goes on to say that "if the IMF's staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform and if we are to prevent a true depression, we're running out of time".
Mayo Gives ‘Underweight’ Rating to Banks, Citing Loan Losses CLSA analyst Mike Mayo assigned an “underweight” rating to U.S. banks, saying loan losses may exceed Great Depression levels and the government may be forced to take over large lenders. Financial shares and major U.S. stock indexes dropped after Mayo advised clients to sell shares of banks including Winston- Salem, North Carolina-based BB&T Corp. and Cincinnati’s Fifth Third Bancorp. Mayo said in a report today that he assigned “underperform” ratings to Bank of America Corp. and JPMorgan Chase & Co., the two biggest U.S. banks by assets. “While certain mortgage problems are farther along, other areas are likely to accelerate, reflecting a rolling recession by asset class,” said Mayo, who joined CLSA from Deutsche Bank AG last month. “New government actions might not help as much as expected, especially given that loans have been marked down to only 98 cents on the dollar, on average.”
World Turns its Back on the Dollar, as the U.S. Borrows and Spends its Way Into Bankruptcy For a few fleeting, horrifying moments recently, 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 that resulted in violent currency movements were the latest reminder that the 21st century economic order will bear little resemblance to the world we now know.
Swiss slide into deflation signals the next chapter of this global crisis Watch Switzerland closely. It is tipping into deflation, the first Western country to succumb to Japan's disease. Swiss consumer prices fell 0.4pc in March (year-on-year). Swiss CPI will be minus 1pc at least by July, nearing the level where spending psychology changes. By the time you have a self-feeding spiral, it is too late. "This is something that we must prevent at all costs. The current situation is extraordinarily serious," said Philipp Hildebrand, a governor of the Swiss National Bank. The SNB is not easily spooked. It is the world's benchmark bank, the keeper of the monetary flame. Yet even the SNB's hard men have thrown away the rule book, taking emergency action to force down the exchange rate of the Swiss franc.
The G20 Moves the World a Step Closer to a Global Currency single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order. "We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity," it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century. In effect, the G20 leaders have activated the IMF's power to create money and begin global "quantitative easing". In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.
Rise of China - Peter Schiff 4/2/09
New Regulations Will Make "Too Big To Fail" Worse The primary goal of any new financially regulatory regime should be, simply, that no company can be so big or important that its failure would dramatically destabilize the system. We'll never prevent failure -- nor would we want to -- but we want to make sure that anybody can go down for the count without need of a bailout. This goal isn't just so that we eliminate future bailouts (though that'd be a nice effect) but so that counterparties to these institutions can't take excessive risk with the knowledge that the government will be there to back them up. As studies have shown that this is a contributing factor to financial crises, it has to be killed if possible. But it's not clear that the new regulatory system unveiled by Tim Geithner solves this problem. In fact, it may make things worse.
The Gold Sector & Most Powerful Indicator The Gold sector has been performing relatively well over the past month. The price of gold has broken trend line support but is still holding horizontal support and forming a bull flag. Gold stocks and the broad market have been performing well and that has boosted the price of gold stock. Gold bullion has been under pressure, because money is being pulled out of physical gold and put to work in equities, which provides much more potential than gold at current levels.
There Will Be (Hyper)Inflation The demise of fiat-money regimes around the world has become unmistakable. They can only be kept alive by central banks creating ever-greater amounts of base money and governments underwriting commercial banks' liabilities. The US Federal Reserve, for instance, increased the stock of the monetary base - which includes banks' demand deposits held with the Fed, plus coins and notes in circulation - from $870.9 billion in August 2008 to $1735.3 billion in January 2009. Banks' "excess reserves" - banks' base-money holdings minus required reserves - rose from $1.9 billion to $798.2 billion. These excess reserves allow the banking sector, which operates under fractional reserves, to increase the credit and money supply manifold.
The Goldsmiths-Part LXII The first major development was an agreement for the G20 states to give the International Monetary Fund and the World Bank a total of $1 trillion which would be further given by these institutions to the struggling/developing/emerging/Third World states. Exactly which nations are scheduled to get this $1 trillion was not clear; but we can bank on it that most of it will end up in the hands of the big banks through hook or crook.
Fed to Continue Using All Available Tools to Restore [Reinflate] U.S. Economy, Bernanke Says The Fed will continue to use all available tools to restore the U.S. economy, and remains confident that its goals can be achieved, Fed Chairman Ben Bernanke said while delivering closing remarks at the Richmond Fed's Credit Market Symposium on Friday. "I am confident that we can meet these challenges, not least because I have great confidence in the underlying strengths of the American economy," the head of the U.S. central bank said in Charlotte North Carolina.
Max Keiser - G20 Analysis
Dollars and Gold I am a concerned American citizen and an unwilling taxpayer. I'm concerned because these piecemeal government bailouts continue unabated at the citizenry's expense. The United States government should either nationalize the banks or simply let them fail. As a student of Austrian economics, I prefer the latter but in reality that has a snowball's chance in hell of happening. Piecemeal infusions of dollars only serve to prolong the agony of a dysfunctional economy. Monetization of Treasury bonds to the tune of $300 billion will not be nearly enough to solve our country's financial problems but it is enough to placate the Chinese for now or at least shut them up for awhile. We can surmise what they whispered in Billary's ear while she was getting the cold shoulder in Beijing about a month ago.
The Gold Confiscation Of April 5, 1933 From: President of the United States Franklin Delano Roosevelt To: The United States Congress Dated: 5 April, 1933 Presidential Executive Order 6102 Forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates By virtue of the authority vested in me by Section 5(b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, entitled
The Credit Bubble Was a Ponzi Scheme Enabled by the US Dollar It was the US dollar that was monetized, or more specifically US debt obligations, which are now substantially worthless and will have to take a significant haircut in real terms. This is similar to the Japanese experience in which they monetized their real estate. Ironically, those expecting this deleveraging to result in a stronger dollar could not be more mistaken. The Obama Administration is scrambling to obtain relief from Europe and Asia, getting them to inflate their own currencies through 'stimulus,' in order to continue to hide the unalterable truth - the US must partially default on its debt as expressed in the dollar and the Bond. This is the inevitable outcome of all Ponzi schemes. Several smaller, private schemes already have collapsed. The big one is yet to come down. And when it does, the foundations of democracy will shake, several governments will fall, and we will once again experience the kind of uncertainty more familiar to those who lived in the first half of the twentieth century. The sad truth is that the Obama Administration has barely begun the real work of rebuilding the economy. Everything to date is simple looting, paper-hanging, and the rewriting of history.
Is This It? Yesterday the Federal Reserve offered $25 billion in its Term Securities Lending Facility, a specialized lending program that was put in placed after Bear Stearns collapsed. Under the program, "primary broker-dealers" can exchange "illiquid" securities securities for Treasurys. Yesterday no one decided to make that trade. There are two ways to read this result. The first is that no firms felt they needed aid to meet short-term funding needs. The second is: "Holy crap! Something is seriously broken!" It could well be that Geithner's Pee-Pip deal is so attractive to banks--after all it offers a huge subsidy--that they are holding the assets to sell later rather than borrowing against them in the TSLF.
Half The Country's Banks Could Go Bust Texas billionaire Andy Beal isn't a household name. He's best known in some circles as the main subject of the book The Professor, The Banker and the Suicide King, which is about his quixotic $100,000-per-hand poker match against many of the game's top pros (he got his clock cleaned). Perhaps part of the reason he's an unknown is that even though he's a banker, he retrenched his business during the credit boom, even going so far as to lay off employees. But now that the bubble's over, he's stepping on the gas pedal, buying distressed loans, hiring and lending more than ever to businesses that have nowhere else to go.
Milton Friedman explains role of gold in Great Depression. August 22, 2007
How banks were bullied into making bad loans 'Community activists' used pressure tactics to secure high-risk mortgages Using tools provided by the federal Community Reinvestment Act, community organizers led by a self-described "banking terrorist" applied bullying tactics to secure high-risk mortgages and to shake down lending institutions for billions of dollars - actions that likely contributed to the "mortgage meltdown" that triggered the worst economic crisis since the Great Depression.
US Banks Operating Without Reserve Requirements Banks typically have 3% of their assets in cash in order to meet customer needs. Since 1960, banks have been allowed to use this "vault cash" to satisfy their reserve requirements. Today, bank reserve requirements have fallen to the point where they are now exceeded by vault cash, which means lowering reserve requirements to zero would have virtually no impact on the banking system. US banks are already operating free of any reserve constraints. The graph below shows reserve requirements falling to zero over the last fifty years.
Hidden deficit horrors It all seems so weirdly surreal that US federal deficit-spending exceeds 14% of gross domestic product (GDP), which doesn't even include the 7% of GDP that is the "balanced part" of the federal government's budget! So the question is, "Is all that spending additive?" I mean, do you add 14% plus 7%? If so, then isn't government spending 21% of GDP enough to kill the economy a dozen times over, which is what happens every other time in all of history when some brain-dead government of some idiotic country full of childishly-trusting morons allows their corrupt government to spend more than it takes in by creating as much fiat currency as it wants?
Treasuries Slide as Traders Focus on Record U.S. Debt Supply Treasury notes dropped for a second week as investor concern about record U.S. borrowing overshadowed the first debt buybacks by the Federal Reserve since the 1960s. U.S. securities fell 1.7 percent in 2009, according to Merrill Lynch & Co.'s U.S. Treasury Master index, as the government issued debt to help revive the economy and service the budget deficit. It will sell an estimated $59 billion in notes April 7-9. The U.S. needs to borrow $3.25 trillion this fiscal year, including sales to replace maturing securities, Goldman Sachs Group Inc. estimated.
Treasury Auctions Set for This Week The Treasury's schedule of financing this week included Monday's regular weekly auction of new three- and six-month bills and an auction of four-week bills on Tuesday. According to traders, at the close of the New York cash market on Friday, the rate on the outstanding three-month bill was 0.20 percent. The rate on the six-month issue was 0.40 percent, and the rate on the four-week issue was 0.15 percent.
Mark-to-Market Debate: The Value of Fair Value
Big insurers may need U.S. lifeline MetLife, Pru, others see losses overwhelm their cash cushions Life insurance companies were some of the most enthusiastic consumers of Wall Street's most toxic junk during the boom years. Now they're suffering a most serious case of indigestion: They face billions worth of investment losses that threaten to wipe out their coffers, forcing them to raise cash when doing so is just about impossible. Unless the federal government intervenes for yet another financial sector bailout, experts warn of the biggest wave of life insurer failures in 20 years. "The industry is getting hit from all directors," says Rob Haines, an analyst at independent debt research firm CreditSights. "I never imagined we'd come to this."
Treasury chief puts bailed-out bank CEOs on notice The government may require new faces in executive suites at banks requiring "exceptional assistance" in the future, Treasury Secretary Timothy Geithner said Sunday. Critics of the Obama administration's move last weekend to force out the chairman of General Motors Corp., Rick Wagoner, as a condition for possible additional federal loans say that strong government intervention contrasts with measures placed on the financial industry in return for billions in infusions.
U.S. May Oust CEOs at Banks Needing 'Exceptional' Aid Treasury Secretary Timothy Geithner said he's prepared to oust the senior management and boards of directors at banks that require "exceptional" assistance from the U.S. government. "If in the future, banks need exceptional assistance in order to get through this, then we will make sure that assistance comes," while ensuring taxpayers are protected, Geithner said today in an interview on the CBS "Face the Nation" program. "Where that requires a change in management and the board, then we will do that." Geithner noted that American International Group Inc., Fannie Mae and Freddie Mac had their chief executives removed after it became clear the companies couldn't survive without government rescues. The Treasury is reviewing how much capital the biggest U.S. financial companies need in order to endure a severe economic downturn.
Global Fiscal Crisis Brings Renewed Role for IMF A year ago, the International Monetary Fund was in a funk. Its handling of past financial crises had made it deeply unpopular. Its finances were shaky. A fifth of the staff was looking to leave. Without new crises to address, doubts about its relevance grew even among insiders. As one veteran staffer put it, "It was a period of introspection." The second-guessing ended in September as the global economic crisis took hold and countries again turned to the fund for advice and financial support. Its comeback became official this week when world leaders meeting in London pledged to quadruple its resources and strengthen its mandate.
Geithner 7: Like US Taxpayers Giving Arms to Al Qaeda More on why the Geithner Plan is nothing but a huge subsidy to the banks and large bond shops.
Estimated U.S. taxpayer cost for bailout jumps U.S. congressional budget analysts have raised their estimate of the net cost to taxpayers for the government's financial rescue program to $356 billion, an increase of $167 billion from earlier estimates. The Congressional Budget Office had originally projected the $700 billion Troubled Asset Relief Program would cost taxpayers $189 billion. The additional cost, which applies to TARP spending for fiscal years 2009 and 2010, was included in the CBO's March projection of a $1.8 trillion deficit for fiscal 2009, which ends September 30.
Banking on Beijing China's priority is saving itself, not sinking the dollar. There are two ways to interpret the fact that China is America's largest creditor at a moment of stupendous American borrowing. The first is as an economist. And we'll get to that. But the second is as a thriller writer-or paranoid economic and political nationalist-and it is much, much juicier. The thriller scenario begins in the blood-red corridors of the Zhongnanhai leadership compound in Beijing, next door to the Forbidden City. Here China's political elite has been plotting their usurpation of American power for decades. Bent over their Lenovo Thinkpads, the brilliant sons of Communism have engineered nothing less than a global revolution. Dissolute, wasteful, crass America has been rotting, borrowing and spending, licking lead toys and watching "The Girls Next Door." Meanwhile, diligent, thrifty, clever China has been preparing to take its place, squirreling away money and buying American debt.
Dollar Devaluation is Inevitable... Just like in 1934 It is evident to all the US economic environment is an unmitigated disaster. In fact we seem to be hell bent for leather falling into another Great Depression (the recent Bear Market Rally in Wall Street notwithstanding). This begs the question: What can President Obama do to avert the excruciatingly sad events of the 1930s? Here are the economic problems causing havoc today in the USA:
The banking system is collapsing
Tidal waves of foreclosures sweep the country
Tumbling housing prices
A bear market ravages Wall Street stocks
Massive unemployment throughout the nation
Overall we are in a deflationary spiral
Interest rates are abysmally low
Consumer confidence is bottomless
"It's déjà vu all over again!"
Sal Khan: Understanding the Crisis
Oil Going To $200 On Obama's Watch The saga of North American oil is well underway. The current financial crisis, triggered in part by the global oil crisis, is only serving to mask the decline of oil supply in this region. That the supply of oil would move in reverse to the advance in price over a 6 year period—a sustained period—is a brutal fact that can no longer be denied. Remember, much of this oil is extracted with the benefit of the latest technology and profit-maximizing, “rational” actors. While this is less true in Mexico, I maintain that PEMEX, the state run oil company, while not in the league of Saudi Aramco is no Venezuelan PDVSA. PEMEX avails itself of the latest technology, and Mexico is well explored. While it’s also true that offshore California, offshore Florida, and parts of Alaska are undeveloped, even a Marshall Plan to develop those resources would not result in oil coming on stream until several years from now.
Fed 'extremely uncomfortable' about bailouts Bernanke: Fed 'extremely uncomfortable' about bailouts; but strategy to ease crisis is working While acknowledging that the Federal Reserve was "extremely uncomfortable" about last year's bailouts of big financial companies, Fed Chairman Ben Bernanke said Friday the central bank's strategy to ease the financial crisis is working. Bernanke was referring to the Fed's unprecedented decisions last year to step in and financially back JPMorgan Chase's takeover of then-troubled investment house Bear Stearns and throw its first of four financial lifelines to insurance giant American International Group.
Should We Kill the Fed? For the financial crisis that has wiped out trillions in wealth, many have felt the lash of public outrage. Fannie and Freddie. The idiot-bankers. The AIG bonus babies. The Bush Republicans and Barney Frank Democrats who bullied banks into making mortgages to minorities who could not afford the houses they were moving into. But the Big Kahuna has escaped. The Federal Reserve. "(T)he very people who devised the policies that produced the mess are now posing as the wise public servants who will show us the way out," writes Thomas Woods in "Meltdown."
The Shell Game The modern version of the Shell Game, as used by the leaders of the Government's financial team uses a much more sophisticated version but the basic purpose is the same. By homologating a number of government agencies together under the shells, the punters, in this case US taxpayers are prevented from seeing either the whereabouts or the size of the pea hidden within. For the average punter, the various rapid fire announcements of bailouts, transfers and recourse plans emanating from several Federal agencies together with an almost total lack of Congressional oversight have muddied this particular playing field, mightily. $12.8 Trillion so far.
London G20, Gordon Brown - "New World Order is emerging"
Obama Bank Policy Signals $1 Trillion in Writedowns U.S. regulators may force Bank of America Corp., Citigroup Inc. and at least a dozen of the nation's biggest financial institutions to write down as much as $1 trillion in loans, twice what they've already recorded, based on Federal Deposit Insurance Corp. auction data compiled by Bloomberg. Banks failing Federal Reserve evaluations of loans this month may be ordered to make sales worth as little as 32 cents on the dollar, according to FDIC data. That would be less than half of the 84 cents on the dollar the Treasury Department suggested was a possible purchase price. Some of the bank- insurance agency's auctions brought 0.02 cent on the dollar.
Banks could bet on toxic assets with taxpayers' money U.S. banks that received billions of dollars of taxpayer money to bolster their capital could place bets on the same toxic assets that got them into trouble in the first place -- and with government support. It is unclear whether U.S. regulators will prevent banks receiving government aid from participating as buyers in the $1 trillion Public-Private Investment Program (PPIP) designed to unclog credit markets and bank balance sheets.
Failure Rate Rises on Mortgages Revised in Late 2008, U.S. Says Mortgages modified in the third quarter failed at a faster pace than those revised in the first, and the delinquency rate on the least risky loans doubled, signs of deteriorating credit quality, U.S. regulators said. Loans modified in the first quarter to help borrowers keep their homes fell delinquent 41 percent of the time after eight months, and second-quarter loans had a 46 percent default rate, the Office of the Comptroller of the Currency and Office of Thrift Supervision said in a report today. Third-quarter trends "are worsening," the agencies said.
Midwest economy shows deep recession OMAHA, Neb. | A Nebraska economist says his regional business conditions survey suggests the recession is the worst in the past 25 years. Creighton University professor Ernie Goss says the overall index for the Mid-America Business Conditions Survey of supply managers and executives has been wallowing in negative territory, although it has been rising of late. . . . . . . "This recession is stacking up to be the most severe economic downturn in the past 25 years." And, Goss said, the March figure indicates a worsening recession at least through September. The survey states are Kansas, Missouri, Arkansas, Iowa, Minnesota, Nebraska, North Dakota, Oklahoma and South Dakota.
With the Downturn, It's Time to Rethink the Legal Profession The economic downturn is hitting the legal world hard. American Lawyer is calling it "the fire this time" and warning that big firms may be hurtling toward "a paradigm-shifting, blood-in-the-suites" future. The Law Shucks blog has a "layoff tracker," and it is grim reading. Top firms are rapidly thinning their ranks, and several - including Heller Ehrman, a venerable 500-plus-lawyer firm founded in 1890 - have closed. The employment pains of the legal elite may not elicit a lot of sympathy in the broader context of the recession, but a lot of hard-working lawyers have been blindsided, including young associates who are suddenly finding themselves with six-figure student-loan debts and no source of income.
Fannie, Freddie worker bonuses total $210M Bonuses for Fannie, Freddie workers total $210 million; regulator defends payouts Mortgage finance giants Fannie Mae and Freddie Mac plan to pay more than $210 million in bonuses through next year to give workers the incentive to stay in their jobs at the government-controlled companies. The retention awards for more than 7,600 employees were disclosed in a letter from the companies' regulator released Friday by Sen. Charles Grassley of Iowa, the senior Republican on the Senate Finance Committee. The companies paid out nearly $51 million last year, are scheduled to make $146 million in payments this year and $13 million in 2010.
New G.M. Chief Doesn't Rule Out Bankruptcy A week into his new job as chief executive of General Motors, Fritz Henderson said on Sunday he was confident in the future of the company but a structured bankruptcy remains a possibility. Mr. Henderson has just 55 days remaining to meet President Obama's timetable to come up with a new plan to save the struggling car giant. Speaking on NBC's "Meet the Press," he said that the company was working to avoid bankruptcy, but that if it failed to meet its goals for cutting costs and shrinking the company, it "may very well be the best alternative." "If it can't be done outside of a bankruptcy process, it will be done within it," he said.
Too Many Cars, and They're Not on the Road After 'Car Bubble' Collapses, Excess Inventory Creates a Backlog The sea of new cars, 57,000 of them, stretches for acres along the Port of Baltimore. They are imports just in from foreign shores and exports waiting to ship out -- Chryslers and Subarus, Fords and Hyundais, Mercedeses and Kias. But the customers who once bought them by the millions have largely vanished, and so the cars continue to pile up, so many that some are now stored at nearby Baltimore-Washington International Marshall Airport. The backlog exists because many of the factors that contributed to the collapse of the housing bubble -- cheap credit, easy financing, excessive production, consumers buying more than they could afford -- undermined another large and vital American industry.
Barney Frank Doesn't Think Congress Will Vote on Obama's Auto-Industry Restructuring Program House Financial Services Chairman Barney Frank (D-Mass.), whose panel has oversight over the Troubled Asset Relief Program (TARP), told CNSNews.com on Thursday he is "not very well informed" about President Barack Obama's plan to restructure General Motors and Chrysler, and he said he does not think that Congress is going to vote on the matter. The auto industry bailout and restructuring is being funded with money taken out of the TARP law enacted last fall to bailout out the banking industry. Legislation dealing with the banking industry, including TARP, comes directly under the jurisdiction of Frank's committee.
Caterpillar layoffs Caterpillar layoffs due to 4Q profit falls 32 pct Caterpillar Inc.'s layoffs are due to fourth-quarter profit dropped 32 percent as the global economic slowdown sapped demand for heavy equipment, forcing the company to lower its 2009 profit expectations and make further job cuts that will ultimately wipe out 20,000 positions. Earnings for Caterpillar Inc., the world's largest manufacturer of mining and construction machinery, fell far short of expectations as customers pulled back on purchases of equipment that mines quarries and helps build homes, highways and offices. Demand took a hit from slumping commodity prices, tight lending markets and historically low housing starts.
Milton Friedman on Limited Government The best case for limited government ever made
Jobless rate hits 25-year high The U.S. unemployment rate soared to 8.5 percent last month, a 25-year high, as employers slashed 663,000 jobs and cut workers' hours to the lowest level on record, the government said on Friday. In a report underscoring the economy's distress, the Labor Department also revised its data for January to show job losses of 741,000 that month, the biggest decline since October 1949. February's drop in non-farm payrolls was unrevised at 651,000. The report, coming in the wake of recent data that have surprised on the upside, did little to alter perceptions the economy's downward momentum was slowing, as unemployment tends to peak well after a recession ends.
One in 10 Americans gets help from U.S. to buy food A record 32.2 million people -- one in every 10 Americans -- received food stamps at the latest count, the government said on Thursday, a reflection of the recession now in its 16th month. Food stamps, the major U.S. anti-hunger program, help poor people buy groceries. The average benefit was $112.82 per person in January. The January figure marks the third time in five months that enrollment set a record.
Iowa becomes third U.S. state to allow gay marriage The Iowa Supreme Court cleared the way for gay marriage in the state on Friday by declaring a law that limits marriage to a man and a woman unconstitutional. The ruling makes Iowa the third U.S. state after Connecticut and Massachusetts, and the first in the Midwest, to allow gay and lesbian couples to marry. Gay marriage was briefly legal in California, but voters repealed it in a November 2008 referendum, though efforts are under way to revive the issue. The Iowa case, Varnum v. Brien, involved six same-sex couples who sued the Polk County Recorder of Deeds Timothy Brien in 2005 for refusing to grant them marriage licenses.
I.B.M. Withdraws $7 Billion Offer for Sun Microsystems I.B.M. withdrew its $7 billion bid for Sun Microsystems on Sunday, one day after Sun's board balked at a reduced offer, according to three people close to the talks. The deal's collapse after weeks of negotiations raises questions about Sun's next step, since the I.B.M. offer was far above the value of the Silicon Valley company's shares when news of the I.B.M. offer first surfaced last month. Sun, an innovative pioneer in computer workstations, servers and Internet-era software, has struggled in recent years and spent months trying to secure a suitor. With I.B.M. and others shying away from a deal, a bruised Sun could be forced to continue pursuing a solo business model whose prospects have been questioned by many analysts.
TSA detains official from Ron Paul group The Transportation Security Administration is investigating the detention and harassment of a Ron Paul organization official by airport screeners, an incident that was caught on tape at a St. Louis airport. Steve Bierfeldt, director of development for Campaign for Liberty, was selected for additional screening after officials spotted a metal box in his luggage that contained a large amount of cash and checks made out to the campaign.
What Will Trigger the Next World War? Bnjamin Netanyahu is on a mission. Over the next several months, Israel's new prime minister aims to convince world leaders of the imminent danger Iran poses to Western civilization. Shortly before he was sworn in on Tuesday, Netanyahu told the Atlantic that besides fixing the economy, Washington's other primary imperative must be to prevent Iran from obtaining nuclear weapons. "You don't want a messianic apocalyptic cult controlling atomic bombs," Netanyahu said of the Islamist theocracy. Should the Obama administration fail to stop Iran, Netanyahu said, Israel might be forced to preemptively strike the Islamic Republic.
Chile: The One Country That Was Prepared for the Financial Crisis Chile prepared for a downturn far better than either Britain or the United States, and is in a correspondingly better position now. Chile was the first Latin American economy in living memory to implement the free market properly under its dictator-president Augusto Pinochet (1973-90), who early in his rule decided that socialism didn't work and hired a bunch of advisors [Miltie Freedman and the Chicago Boys] from the University of Chicago. Pinochet privatized Chile's major companies, and in 1982, Chile became the first country to privatize its social security system. Chile's democratic governments after 1990 dismantled most of Pinochet's security apparatus, but they kept a lot of his economic policies, and so Chile has remained notably well run economically.
Ron Paul on North Korea 4/5/09
Defying World, North Koreans Launch Rocket North Korea defied the United States, its allies and a series of U.N. resolutions by launching a rocket on Sunday that it said propelled a satellite into space but that much of the world viewed as an unsuccessful effort to prove it is edging toward the capability to shoot a nuclear warhead on a longer-range missile. The United States Northern Command issued a statement that North Korea's Taepodong 2 missile flew over Japan, with its payload landing in the Pacific Ocean. "No object entered orbit and no debris fell on Japan," the assessment said. Still, the launching drew swift international condemnation and prompted the U.N. Security Council to convene an emergency meeting on Sunday in which the United States, Japan and South Korea vowed to penalize the North.
North Korean Missile Launch Was a Failure, Experts Say North Korea failed in its highly vaunted effort to fire a satellite into orbit, military and private experts said Sunday after reviewing detailed tracking data that showed the missile and payload fell into the sea. Some said the failure undercut the North Korean campaign to come across as a fearsome adversary able to hurl deadly warheads halfway around the globe. Defying world opinion, North Korea in recent weeks had moved steadily and fairly openly toward launching a long-range rocket that Western experts saw as a major step toward a military weapon. The launching itself of the three-stage rocket on Sunday, which the North Korean government portrayed as a success - even bragging that the supposed satellite payload was now broadcasting patriotic tunes from space - outraged Japan and South Korea, led to widespread rebuke by President Obama and other leaders, and prompted the United Nations Security Council to go into an emergency session.
China, Russia Rebuff U.S. at UN on North Korea Launch China and Russia resisted a U.S. call for tougher sanctions against North Korea at an emergency meeting of the United Nations Security Council today after the communist country launched a rocket, prompting international condemnation. Chinese and Russian envoys urged restraint, saying further study was needed to determine whether, as the U.S. asserts, the launch violated UN resolutions prohibiting North Korea from developing missile technology. The positions of the two nations, which can veto any sanctions resolution, signaled the likelihood of protracted negotiations on a UN response.
NATO: New leader, more troops for war The leaders of NATO overcame the objections of the alliance's only Muslim member nation and this afternoon named the prime minister of Denmark as its new secretary general-designate. Turkey had threatened to block the appointment of Anders Fogh Rasmussen as NATO's secretary general because, as premier, he had defended the right of a Danish newspaper to publish cartoons depicting the prophet Mohammed. Those cartoons sparked protests and riots across the Muslim world in 2005.
Meltdown 101: What G-20 leaders said -- and meant Meltdown 101: G-20 leaders vow to fight economic downturn -- but what do their promises mean? WHAT THEY SAID: "We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4 percent and accelerate the transition to a green economy." WHAT THEY MEANT: The words in the communique were strong but in reality the major countries did not pledge any additional efforts on government spending or tax cuts to boost their own economies. Because of strong opposition from France and Germany, President Barack Obama was not able to achieve his goal of getting the other G-20 countries to commit to spending the equivalent of 2 percent of their domestic economy on stimulus efforts to boost jobs. That is a goal the United States has reached with the $787 billion two-year stimulus program Obama pushed through Congress.
G-20 Summit, the credit bubble and IMF gold There's a new committee to save the world in town! They got together and had a fancy dinner. They blamed hedge funds, corporate fat cats, tax dodgers, and the credit ratings agencies. They threw some more money at the IMF so that it can send gift baskets of currencies to poor countries. Then they took a silly class photo and immediately began congratulating themselves on how smart and courageous they are. . . . . . . We're talking about the institution of government. Because that's what this G20 meeting was all about. It was about Big Government getting even bigger. It was about Big Government using the crisis as a chance to put the shackles on the free market. And it was about Big Government defending the way it funds itself (through debt and paper money).
Dollar may exit, but Gold will stay It looks like the US dollar is going to lose its status as the world’s reserve currency. There has been talk of the need for a new reserve currency abandoning the dollar and instead putting in place a basket of currencies as world reserve. No final word has come out from the April 2 G-20 Summit in this regard. Whether dollar is abandoned in favour of a new currency reserve, world’s oldest currency, gold will continue to reign supreme
The G20 moves the world a step closer to a global currency The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity. A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order. "We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity," it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century. In effect, the G20 leaders have activated the IMF's power to create money and begin global "quantitative easing". In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body.
Obama Endorses Soros Plan to Loot America At the G 20 summit in London, President Barack Obama won rave reviews from reporters, many of whom clamored like school kids for the chance to ask him a question at his news conference, but the official conference document proves that plans are being made for what can only be described as the further looting of American taxpayers in order to feed unaccountable and corrupt global entities. This is not “global cooperation,” as so many in the media described it, but a massive new expansion of the power and authority of international agencies and institutions such as the United Nations, the International Monetary Fund and the World Bank.
Banks Plan To Bid Up Each Other's Toxic Assets With Taxpayer Money (GS, MS, BAC, C) We told you this was coming. FT has learned that the major US banks, Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS) and JP Morgan (JPM) are all interested in buying toxic assets from one another, using the massive leverage provided by Tim Geithner's public private investment partnership. This was a possibility folks saw coming from the first day, and amazingly, Sheila Bair has said she's open to this kind of money laundering. And let's be honest, that's exactly what it is. Banks buying assets from each other to inflate their books has nothing to do with "price discovery" or any such nonsense. It's all about using taxpayer money to create bids that are higher than what the market currently prices those assets at. And if it turns out those bids were too high and the cash flows never materialize then, oh well, it's the taxpayer left holding the bag.
Bailed-out banks eye toxic asset buys US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury's $1,000bn (£680bn) plan to revive the financial system. The plans proved controversial, with critics charging that the government's public-private partnership - which provide generous loans to investors - are intended to help banks sell, rather than acquire, troubled securities and loans. Spencer Bachus, the top Republican on the House financial services committee, vowed after being told of the plans by the FT to introduce legislation to stop financial institutions "gaming the system to reap taxpayer-subsidised windfalls".
U.S. House passes $3.55 trillion budget for fiscal year 2010 The House of Representatives passed a $3.55 trillion budget for fiscal year 2010 Thursday night, capping off weeks of acrimonious partisan debate and a long day of voting marked by the defeat of several alternative plans. The House version of the budget passed by a margin of 233-196 in a virtual party-line vote. All but 20 House Democrats supported it; no House Republican voted in favor. In London, England, where he has been attending the Group of 20 summit, President Obama lauded the House vote. "Tonight, the House of Representatives took another step toward rebuilding our struggling economy," he said in a statement.
G-20 Shapes New World Order With Lesser Role for U.S., Markets Global leaders took their biggest steps yet toward a new world order that's less U.S.-centric with a more heavily regulated financial industry and a greater role for international institutions and emerging markets. At the end of a summit in London, policy makers from the Group of 20 yesterday delivered a regulatory blueprint that French President Nicholas Sarkozy said turned the page on the Anglo-Saxon model of free markets by placing stricter limits on hedge funds and other financiers. The leaders also pledged to triple the resources of the International Monetary Fund and to hand China and other developing economies a greater say in the management of the world economy.
Obama yields to 'collective action' U.S. wants to cooperate, not dominate LONDON | President Obama proclaimed Thursday that the era of the United States attempting to dominate world affairs is over, saying he is committed to "collective action" by the 20 biggest economies to end the worst financial crisis in 80 years. Giving substance to his rhetoric, the president signed on to a radical revamping of the world's major financial institutions that surrenders the traditional right of the United States and Europe to lead them. The Group of 20 nations announced a surprisingly large $1.1 trillion in funding to help the organizations combat a collapse in world trade and assist nations in crisis, although it failed to agree on additional stimulus measures, which had been a U.S. priority.
World Leaders Pledge $1.1 Trillion to Tackle Crisis LONDON - Struggling to bridge deep divides over how to revive a paralyzed global economy, the leaders of the world's largest economies agreed Thursday to bail out developing countries, stimulate world trade and regulate financial firms more stringently. But President Obama conceded that there were "no guarantees" that those measures would reverse the biggest global downturn in six decades. Prime Minister Gordon Brown of Britain, host of the Group of 20 summit meeting called to fight the crisis, announced at its conclusion that the leaders had committed to $1.1 trillion in new funds that would greatly increase the capital available to the International Monetary Fund. The goal would be a revival in trade, which is expected to contract this year for the first time in 30 years.
G-20 Backs Regulation Crackdown, $1.1 Trillion Aid World leaders agreed on a regulatory blueprint for reining in the excesses that fed the worst financial crisis in six decades and pledged more than $1 trillion in emergency aid to cushion the economic fallout. The Group of 20 policy makers, meeting in London, called for stricter limits on hedge funds, executive pay, credit-rating firms and risk-taking by banks. They tripled the firepower of the International Monetary Fund and offered cash to revive trade to help governments weather the turmoil resulting from the surge in unemployment. They avoided the divisive question of whether to deliver more fiscal stimulus to their own economies.
G20 summit: Gordon Brown strikes historic $1 trillion deal Gordon Brown claimed to have struck a "historic" deal to end the global recession as he unveiled plans to plough more than $1 trillion into the world economy. The Prime Minister announced the creation of a "new world order" after the conclusion of the G20 summit of world leaders in London. "This is the day that the world came together to fight back against the global recession," he said. "Not with words but with a plan for global recovery and reform."
Gordon Brown Announces 'New world order is emerging' At G20
G-20 winners and losers The summit ended on a high note with President Obama pleased that the world's biggest nations will pump more money into the global economy. The big losers? Cowboys who play in the financial markets. How was the G-20 summit in London? "We did OK," said President Barack Obama. "I go back home satisfied," said Indian Prime Minister Manmohan Singh. "We'd never thought we'd obtain such broad agreement," said French president Nicolas Sarkozy. It's usual procedure at summits for world leaders to walk out of the meeting and claim they got what they wanted. Sometimes it's even true. In the case of Thursday's London confab, the post-meeting harmony was particularly striking because it followed several weeks of public bickering about issues ranging from the size of economic stimulus packages to tougher international regulation of financial markets. In the end, there was something for everyone. So who are the winners and losers?
Lou Dobbs On The G20 And The New World Order
Did the ECB Save COMEX from Gold Default? On Tuesday morning, gold derivatives dealers, who had sold short in the face of a fast rising gold price, faced a serious predicament. Some 27,000 + contracts, representing about 15% of the April COMEX gold futures contracts remained open. Technically, short sellers are required to give “notice” of delivery to long buyers. However, in reality, buyers are the ones who control the amount of gold to be delivered. They “demand” delivery of physical gold by holding futures contracts past the expiration date. This time, long buyers were demanding in droves.
Asian voices gain force as crisis drags on Asian nations, who dominate the roster of industrializing economies, have won a greater say in salvaging and reshaping the global system that brought them unprecedented prosperity but now threatens to reverse that progress. The sweeping consensus on reviving growth and stepping up surveillance of international financial institutions reached Thursday at the Group of 20 summit of major economies reflects that growing sway. "I believe people will be encouraged by the fact that China and India and Japan and many countries ... we've all been able to come together in a way we could never have done even a year or two ago and designed quite detailed proposals that will reshape the global financial system," a jubilant British Prime Minister Gordon Brown said as the one-day meeting wrapped up with a pledge of $1.1 trillion in loans and guarantees to developing countries.
China pushes for bigger role in reshaping the world economy Chinese leaders have criticized the U.S. financial system and proposed a new international currency to replace the dollar. The nation sees the global downturn as a huge opportunity. Reporting from Shanghai -- At a time when the U.S. and other traditional economic powers are weakening, China is flexing its muscles, signaling it will seek a much more assertive role in shaping the future of the world financial order. The apparent shift in Beijing's approach is likely to be displayed at the Group of 20 nations' summit today in London, as China presses for changes in a global finance system long dominated by the U.S. and Western Europe.
Nations Craft Hard-Fought Pledge To Repair World Financial System Plan Aims to Tighten Regulation, Increase Lending, Aid Poor Nations LONDON, April 2 -- President Obama and the leaders of the world's largest economies on Thursday declared their intention to create a new era of worldwide financial oversight and government investment as they scrambled to shore up the collapsing global economy. Setting aside differences in philosophy and national character, at least for now, the leaders agreed to make available more than $1 trillion in new lending to spur international growth. While leaving it to individual nations to enact, they promised tough new regulations aimed at banks and other financial institutions whose free-wheeling activities sparked the crisis. And they vowed renewed support for trade and new help for the globe's poorest countries.
Hannity, Morris Agree with Conspiracy People About New World Order
Board loosens bank accounting rules Under intense pressure from Congress and financial institutions, a powerful group that oversees U.S. accounting rules voted Thursday to relax a requirement that forced banks to report massive declines in asset values - a practice that deepened the credit crisis and economic downturn. The decision by the Financial Accounting Standards Board helped to spark a stock market rally that sent the Dow Jones Industrial Average briefly above 8,000 for the first time in two months. Under previous "mark-to-market" accounting rules, financial institutions had to value their holdings at market rates, a requirement that severely bruised their balance sheets during economic declines. The new rule permits companies to use more of their own judgment in determining the value of assets - leeway that experts hope will help them survive tough times.
Congress isn't helping Commentary: Accounting standards now determined by mob rule The only thing worse than bankers making up accounting rules is members of Congress making them up. Repeating its blunder from the 1994 battle over stock options, the staid Financial Accounting Standards Board has buckled to political pressure demanding that it change accounting rules. The FASB voted Thursday to ease the interpretation of rules requiring banks and other big institutions to value their assets on a reasonable basis.
FASB approves more mark-to-market flexibility Panel passes measure unanimously; measure could boost bank profit Responding to pressure applied by lawmakers on Capitol Hill, the Financial Accounting Standards Board on Thursday voted unanimously to give auditors more flexibility in valuing illiquid mortgage assets that may have long-term value. The new guidance, which is expected to boost bank operating profits when they report first quarter results later this month, alters so called mark-to-market rules, which have required banks and other corporations to assign a value to an asset, such as mortgage securities, credit-card debt or student-loan investments, based on the current market price for either the security or a similar asset.
Mark to Market Aside, Job Decay Must Take Toll on Equities Consumers with stable jobs are likely buy goods and services. Consumers who have jobs but sense their job security is unstable are less likely to buy goods and services. And, consumers without jobs buy only the goods and services necessary to survive. As the unemployment rate climbs in the U.S., it is rational for consumers to pull back spending. Investors and advisers everywhere seem convinced that equity markets will continue to climb higher, but weekly jobs data to be released Thursday morning and the BLS Employment report to be released on Friday may change that sentiment.
Glenn Beck On Harold Koh & Global Governance
Is the Rush to Exit TARP a Trap? Banks weigh payback, the fate of the system could be at stake Thomas Geisel decided to bail out of TARP, the Troubled Asset Relief Program, rather than accept a bailout. To the program's critics, Geisel is making the right move, but I'm not so sure. Geisel, the chief executive of Sun Bancorp Inc., said the government's changing rules for TARP made keeping the money a burden rather than a boon. TARP had gone from a capital infusion that Sun could have used to lend or buy troubled rivals, to an albatross that required 5% interest a year.
FASB gives firms more leeway in valuing assets Accounting board gives companies more leeway in valuing assets, starts in current quarter The board that sets U.S. accounting standards on Thursday gave companies more leeway when valuing assets and reporting losses, providing a potential boost to battered banks' balance sheets. The independent Financial Accounting Standards Board voted to adopt new guidelines under the so-called mark-to-market accounting rules, which require companies to value assets at prices reflecting current market conditions. The board was meeting at its headquarters in Norwalk, Conn. The changes, which apply to the second quarter that began this month, will allow the assets to be valued at what they would go for in an "orderly" sale, as opposed to a forced or distressed sale. The new guidelines also will allow banks to avoid reporting some losses on securities by splitting them among factors like fluctuating interest rates that won't have to be counted toward net income or loss.
Hedge Funds Say G-20 Crackdown Makes Industry a 'Scapegoat' World leaders' plans to step up regulation of hedge funds will make the $1.4 trillion industry a "scapegoat" for the near-collapse of the financial system, the funds' lobby group said. The Group of 20 leaders said today they would extend oversight to all financial institutions important to global financial stability including "systemically important" hedge funds for the first time. The industry would be regulated by a proposed Financial Stability Board made up of members of the G- 20 and European Commission.
Geithner's perception problem Until Treasury sets clear conflict rules for its public-private investment plan, some will view the program as another sop to powerful financial interests. Where Tim Geithner sees a confluence of public and private interests, some people see a torrent of potential abuse. The public-private investment plan Geithner outlined last month would provide cheap federal funding for private investors to buy bank assets. The arrangement aims to set a market price for banks' troubled loans and securities, avoiding government price setting -- the source of much criticism of Henry Paulson's original Troubled Asset Relief Program. But while market participants embrace private-sector pricing, some fear the Geithner plan - known as the Public-Private Investment Partnership plan, or PPIP - could pave the way for chosen financial firms to rip off taxpayers.
Treasury Secretary Will Decide How Much Pay Is ‘Unreasonable’ for Executives Executives at companies receiving bailout (TARP) money may not receive salaries, bonuses or other compensation that is "unreasonable or excessive," under a bill passed by the House of Representatives on Wednesday. The bill leaves it up to the Treasury secretary to define how much money would be considered "unreasonable or excessive. The “Pay for Performance Act” also says companies receiving money from the Troubled Asset Relief Program must directly base employee compensation on “performance standards” established by the Treasury secretary.
As Crisis Loomed, Geithner Pressed But Fell Short Before Timothy Geithner became Treasury chief, he regulated major U.S. banks. Now he says: "We're having a major financial crisis in part because of failures of supervision." In September 2005, Timothy Geithner made one of his most visible moves as a supervisor of the U.S. banking system. He summoned the nation's top financial firms and their regulators to streamline an antiquated system that threatened Wall Street's boom. Billions of dollars worth of financial instruments known as credit derivatives were being traded daily, as banks and investors worldwide tried to protect against losses on increasingly complex and risky financial bets. But the buying and selling of these exotic instruments was stuck in a pencil-and-paper era. Geithner, then head of the Federal Reserve Bank of New York, pressed 14 major financial firms to build an electronic network that would cut backlogs and make the market easier to monitor.
Joseph Stiglitz On CNBC April 2 2009
Will the economy 'double dip'? There are signs the U.S. economy could soon emerge from recession. But there are also fears that a recovery could lead to inflation and another downturn in 2010. The recession entered its 17th month this week, and despite some encouraging signs, few expect a true recovery until the end of this year at the earliest. Even so, some financial experts think all the stimulus that the government has doled out could lead to a sharper turnaround than currently expected. But that's not necessarily a good thing. That's because such a bounce could trigger a quick rise in inflation that leads to another downturn. "If the United States experiences a too rapid recovery, there may be a risk of another recession in 2010," said Bart van Ark, vice president and chief economist of The Conference Board in a report Wednesday. "It may fuel expectations for a return to inflation, adding to the uncertainty concerning the pattern and path of economic recovery."
Peter Schiff Interviews Marc Faber: The Ultimate Doom & Gloom Report In late February, Euro Pacific President Peter Schiff interviewed the eminent economist Marc Faber by telephone from his office in Hong Kong. Ordinarily, we’d hesitate to bring you this potent of a cocktail of doomsayers. It’s just too depressing. But the Dow broke 8,000 today. Donna Karan is selling $600 designer jeans. Cramer says the depression is over. RIM trounced expectation. So you’re probably well-fortified to take a strong dose of inflationary depression medicine. The two bears discuss everything from the ineffectiveness of stimulus, to Asia’s prospects to the proper allocation of investment assets now. (Hint: 10 percent in gold.) The gloomiest part by far comes at the very end: Schiff: If you had to leave one message with our readers to take away from all this, what would that be? What would be the big takeaway for them? Faver: We live now in an environment of very, very high volatility, because on the one hand you have the private sector that has tightened lending conditions, and wealth has been destroyed, and households will save more and be more prudent financially than they've been; in other words, credit or liquidity is tightening. Then on the other hand you have these clowns in government that think that they can solve any problem. As Mr. Geithner said recently, "we know how to fix the problems." Well if he knew so well how to fix the problems, why did he let the problems happen in the first place?
The G20's Hidden Agenda of Devaluing the U.S. Dollar to Inflate Asset Values Larry Edelson writes: I'm buried monitoring the markets … scrutinizing them virtually 24/7 … checking every piece of news I can get my hands on. I also have three Dollar Index charts on my trading screen: A monthly chart, a daily chart, and a 60-minute chart to check the short-term moves. That's because there's a lot going on in the currency markets. They need to be monitored closely. Miss a development - no matter how small it may seem - and it can cost you big time! That's especially true now because a very important G-20 meeting convened TODAY in London. And it has the potential to rock the currency markets. So in this column of Money & Markets , I'm going to give you an important, complimentary look at the recently published March edition of my Real Wealth Report , which took an in-depth look at the G-20 meeting and the history of currency devaluations.
U.S. Dollar Expected to Weaken Following G20 Communique The USD ends mixed today after another volatile two-way session; some pairs extending their ranges during New York trade. Most action was ahead of the London fix as US fundamentals were released as well as overseas news reports from pre-G-20 meeting participants; traders note that volumes dropped significantly after the London fix exaggerating price moves into the end-of-day. GBP rallied to a new daily high ahead of expected resistance around the 1.4450 area; high prints in late New York at 1.4440 with traders ready for more upside overnight as stops above the 1.4450 area are said to be in size. Cross-spreaders for GBP also active some desks report but most of the action was overnight for Yen.
A Guide to Hiding Toxic Assets Tomorrow marks an important economic decision regarding FAS 157 and marked to market accounting . This is going to be another reason to, at the very least, question government intentions. The following is a complete look into how marked to market accounting has affected the banks, and what the real intentions behind banning FAS 157 really are. As it's well documents, credit default swaps are derivative products. That's just a fancy way of saying that CDS are purchased with leverage. In other words, you can sell $100,000 of default insurance while holding $2,500 of capital. Being that these products are currently (not for long) marked to market, the value of the derivatives are derived from the price they can receive by selling them on the open market. This is where all of the problems regarding bank earnings and problematic debt to capital ratios come from. Let's think about it in a different way.
Don't Be Fooled by the Stock Market Rally, More Pain Ahead The G20 protestors have got it all wrong. They shouldn't be on the streets of London , carping about bankers. They should be barricading the German embassy, demanding a stimulus package from German Chancellor Angela Merkel. You see, it's all the exporters' fault, this economic crisis we're in. Irresponsible countries like Germany , Japan and China have selfishly forced their top-notch cars and their cheap clothes on the innocent Americans and British. Faced with such a vast array of quality products that we couldn't actually afford, it's little wonder that we borrowed ourselves silly - how could we resist? And now that the credit has dried up, the Germans refuse to goad their own consumers into spending more. Instead, they seem to expect us to come up with all the stimulus packages to get our consumers spending again. The cheek! So it serves them right that we consumers of the world are going on strike...
Defending Capitalism Against Old Europe's G20 Guillotine Germany and especially France have fought long and hard against the Anglo-Saxon model of unfettered and weakly regulated free market capitalism for the past 30 years, and as a consequence of which have seen their economic power diminish in relative terms as the Anglo-Saxon capitalism model was adopted world-wide following the collapse of the Soviet Union. However, following the ever growing fraud estimated at more than $10 trillion perpetrated by those running the world's major financial institutions that had brought the financial system to brink of collapse during September / October 2008, which was only prevented when the tax payers were forced to underwrite the fraud and cover the losses of figment asset valuations that allowed bank officers collectively to bank billions if not trillions in bonuses by utilising "mark to fantasy".
Defrauding the American Tax Payer, Geithner's $500 Billion Gift To Pimco Geithner's Heist America Plan is receiving words of self-serving praise from Pimco's Bill Gross. Indeed, Geithner's Non-Recourse Gift Keeps on Giving to Bill Gross . Treasury Secretary Timothy Geithner's plan to rid banks and markets of devalued assets may be a boon for Pacific Investment Management Co.'s Bill Gross. The plan may reward investors with 20 percent annual returns on "really toxic" mortgages bought at 45 cents on the dollar by allowing them to borrow six times their money with "non-recourse" government-backed debt, New York-based Credit Suisse Group AG analysts Carl Lantz and Dominic Konstam wrote in a March 27 report. That loan would be worth 15 cents to an investor seeking the same return who can't use borrowed money.
Geithner's Non-Recourse Gift Keeps on Giving to Gross Treasury Secretary Timothy Geithner's plan to rid banks and markets of devalued assets may be a boon for Pacific Investment Management Co.'s Bill Gross. The plan may reward investors with 20 percent annual returns on "really 'toxic'" mortgages bought at 45 cents on the dollar by allowing them to borrow six times their money with "non-recourse" government-backed debt, New York-based Credit Suisse Group AG analysts Carl Lantz and Dominic Konstam wrote in a March 27 report. That loan would be worth 15 cents to an investor seeking the same return who can't use borrowed money.
Gordon Brown's Overtly Religious Call For A New World Order At St Paul's Cathedral
Banks Get New Leeway in Valuing Their Assets A once-obscure accounting rule that infuriated banks, who blamed it for worsening the financial crisis, was changed Thursday to give banks more discretion in reporting the value of mortgage securities. The change seems likely to allow banks to report higher profits by assuming that the securities are worth more than anyone is now willing to pay for them. But critics objected that the change could further damage the credibility of financial institutions by enabling them to avoid recognizing losses from bad loans they have made. Critics also said that since the rules were changed under heavy political pressure, the move compromised the independence of the organization that did it, the Financial Accounting Standards Board.
Commercial Property Defaults Rise as Equity Dries Up Commercial property loans in default or foreclosure rose in the first quarter as the U.S. recession cut occupancies and the credit crisis stymied refinancing. Delinquent loans climbed 43 percent in the first three months of this year to $65.9 billion, according to data from New York-based research firm Real Capital Analytics Inc. That's up from $46 billion at the end of 2008. A total of 3,678 U.S. properties are now listed as in distress by Real Capital. Commercial real estate values have fallen at least 30 percent since their 2007 peak and may decline another 11 percent this year, increasing the number of properties that may be repossessed, Deutsche Bank AG's real estate unit said in a March 25 report. AREA Property Partners Managing Partner William Mack said today lost value may already stand at 33 percent.
FHA losses may compel federal rescue The Obama administration soon may be forced to subsidize the government's mortgage insurance program with taxpayer dollars as economic troubles cause defaults and foreclosures to surge. No decision has been reached, officials said Thursday at a Senate subcommittee hearing focused on the fiscal health of the Federal Housing Administration. But if the agency's losses grow too high, the FHA would be forced to raise money - either by increasing insurance premiums on new borrowers or seeking a subsidy from the federal budget. President Obama's housing secretary, Shaun Donovan, told senators that officials are evaluating whether aid for FHA will be needed as part of the administration's $3.6 trillion budget for next year.
U.S. consumer loan delinquencies highest on record More U.S. consumers have fallen behind on loan payments than ever before, and the problem may worsen as millions more find themselves out of a job, a study released Thursday shows. According to the American Bankers Association, which represents most large U.S. banks and credit card companies, the percentage of consumer loans at least 30 days late rose to a seasonally adjusted 3.22 percent in the October-to-December period from 2.9 percent in the prior quarter.
Uncollectable credit card debt hits record high Credit card write-downs rise to 8.82% in February, and could hit double digit percentage by the end of the year, Moody's says. Credit card write-downs soared to record levels in February, representing an all-time high in the 20-year history of the Moody's Credit Card Index, as job losses mounted, the rating agency said Wednesday. Credit card charge-offs, the write-down of uncollectable debt, advanced decisively to 8.82% in February, marking the sixth consecutive month of increases. The level is more than 300 basis points higher than a year ago. Sharp increases were experienced across several large issuers and have closely followed the surges in unemployment occurring over recent months, the rating agency said.
Ex-Chairman of A.I.G. Says Bailout Has Failed WASHINGTON - Maurice R. Greenberg, the former chairman of the American International Group, said Thursday that the government's $170 billion bailout had failed and that taxpayers would have been better off letting the company go bankrupt. "It is clear that the current approach has not worked and cannot work in today's environment," Mr. Greenberg, who was ousted from A.I.G. in 2005, told the House Oversight and Government Reform Committee. "A.I.G., in my judgment, in the current plan, will not pay the taxpayers back." Refusing to accept any personal blame for his former company's collapse, Mr. Greenberg insisted that A.I.G.'s problems stemmed from mismanagement after he left and that the Treasury and Federal Reserve had made things worse by trying to break the business up and sell it off in pieces.
I.B.M. Reportedly Will Buy Rival Sun for $7 Billion I.B.M. appears on the verge of acquiring Sun Microsystems, a longtime rival in the computer server and software markets, for nearly $7 billion. The two companies have been negotiating for weeks, ironing out terms of an agreement that would turn I.B.M. into the dominant supplier of high-profit Unix servers and related technology. I.B.M. is offering $9.50 a share, down from a bid of $10 a share, said people familiar with the discussions who were not authorized to speak publicly. The new agreement would restrict I.B.M.'s ability to walk away from the deal, these people said. Even at $9.50 a share, the deal would value Sun, based in Santa Clara, Calif., at close to $7 billion. It is close to a 100 percent premium based on Sun's value before rumors of an acquisition spread last month.
Small businesses "close to the breaking point" After months without access to fresh loans and facing persistent weak orders many U.S. small businesses, a prime source of jobs for the struggling economy, may be forced to close in coming months. Business consultants and operators say there are growing signs that the double body blow of recession and credit crunch are taking a heavy toll on U.S. small businesses, defined as enterprises with 500 or fewer employees. "The situation has clearly worsened for many small businesses in the past few months," said George Cloutier, head of Orlando, Florida-based American Management Services Inc.
G.M. Willing to Consider Bankruptcy General Motors stated in a regulatory filing to the Treasury Department on Thursday that it is prepared to file for bankruptcy protection if it cannot restructure out of court. It echoes what G.M.'s new chief executive, Fritz Henderson, said this week, but marks the first time G.M. has officially disclosed to President Obama's auto task force that it was willing to consider such a step. In the progress report included in the regulatory filing , G.M. said it continued to "strongly believe" that an out-of-court restructuring would be the "highest value outcome" for its customers and the United States.
Too Many Cars, and They're Not on the Road After 'Car Bubble' Collapses, Excess Inventory Creates a Backlog The sea of new cars, 57,000 of them, stretches for acres along the Port of Baltimore. They are imports just in from foreign shores and exports waiting to ship out -- Chryslers and Subarus, Fords and Hyundais, Mercedes and Kias. But the customers who once bought them by the millions have largely vanished, and so the cars continue to pile up, so many that some are now stored at nearby Baltimore-Washington International Marshall Airport. The backlog exists because many of the factors that contributed to the collapse of the housing bubble -- cheap credit, easy financing, excessive production, consumers buying more than they could afford -- undermined another large and vital American industry.
Oil jumps above $52 on stock market gains Oil soars above $52 a barrel as stock markets gain on hopes for stabilizing US economy Oil prices surged nearly 8 percent Thursday as investors shrugged off a jump in unemployment and focused instead on rising stock markets and the hope that the U.S. economy has finally bottomed out. Meanwhile, natural gas prices dropped as a government report said U.S. inventories were unchanged since last week and remain well above historical levels. Both commodities are key for the American economy. A change in crude prices affects everything from how much it costs to fill up at the gas pump to the cost of making golf balls, shampoo and thousands of other petroleum-based products. Natural gas is used around the country to make electricity, and a change in prices affects how much power companies want to charge rate payers.
Social Security surpluses DISAPPEARED 8 years ahead of schedule Recession Bites Into Social Security’s Surplus Criminals know that people who are distracted might forget to keep an eye on their valuables. It’s just happened to us as a nation. We have all been so busy whining about bonuses at American International Group Inc. and arguing about the so-called card- check legislation that we forgot to watch the Social Security surplus. While we were looking away, that surplus disappeared, eight years ahead of schedule. Something extraordinarily important was revealed in mid- March and received almost no news coverage. If you typed in the words “Social Security” on Google’s news service last Friday, the top hit was a New York story about a man who kept his dead mother in a freezer ever since she died back in 2007, just so he could continue to collect her benefit checks.
Soros Calls The G20 A Success Geore Soros, for one, is happy with how the G20 turned out. The hedge fund manager spoke to Maria Bartiromo at the conclusion, lauding the news that the IMF would create $750 billion in special drawing rights. He says this will save countries on their own.
George Soros Claims G20 Was Gordon Brown's Finest Hour
United States Economy, U.S. Dollar and the China Factor A crisis of global confidence in the US Dollar is upon us. Foreigners have begun to lose respect for USGovt approach to problem solving, for US bank administration, and for US Dollar custodial management. Foreigner creditors have suffered deep losses from fraudulent bond export, continue to sit atop mountains of US$-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 US Dollar valuation propped up by liquidation forces rather than US Economic strength. Foreigner creditors see the USTBond yields forced down by liquidation forces rather than USGovt debt integrity.
The Chinese Manufacturing Bubble Is About To Burst It may have passed under your radar in the global economic hubub, but Chinese manufacturing is in the tank and sinking deeper. While the economic meltdown threw a fair amount of gasoline on the fire, Chinese manufacturing was heading in the wrong direction well before the credit and capital markets went haywire. The cost of labor in China is going up fast, fueled by inflation (before the economic debacle) and by Chinese government actions. The goal of Chinese economic policy is twofold: first to draw in vast amounts of foreign - mostly American - cash. They have obviously met that goal very well. They also look to create jobs; after all they have 1 point 3 billion mouths to feed. Here they have come up short - about 300 million mouths short.
Angry French Workers Take Their Bosses Hostage PARIS - When negotiations over the restructuring of Caterpillar's operations in the French city of Grenoble broke down this week, the workers did what more and more of their countrymen are doing these days: They took their bosses hostage. The company executives, including Nicolas Polutnik, the chief executive of Caterpillar France, were subjected to a night of pounding revolutionary rock music and shouted threats, said Eric Amstutz, a spokesman in Geneva for Caterpillar's European operations. "It was a rough situation," Mr. Amstutz said.
Obama, Lee issue 'stern, united' warning to N. Korea LONDON -- President Obama joined South Korean President Lee Myung-bak at the G-20 economic summit Thursday in calling for a "stern, united" world response if North Korea proceeds with plans to launch a long-range rocket. The statement came as world leaders gather in London to thrash out a solution to the worst financial crisis in decades and amid news reports that North Korea has begun fueling a long-range rocket in preparation for launch. Mr. Obama and Mr. Lee met in the morning, before the world leaders settled down to negotiate a deal on how to rescue the global economy.
As North Korea readies rocket launch, U.S. turns up pressure U.S. officials say Washington doesn't plan to shoot down the long-range rocket if Pyongyang follows through, but they would pursue stronger sanctions against the regime. Reporting from Washington -- The U.S. and its allies stepped up pressure on North Korea on Thursday to scrap its planned launch of a long-range rocket, with President Obama agreeing with the South Korean president to respond sternly if Pyongyang proceeds. U.S. Defense Department officials said the U.S. was not planning to shoot the rocket down but that the U.S. would increase diplomatic pressure on North Korea if it goes ahead, as expected. The government in Pyongyang would find it more difficult to get what it wants from the outside world, including diplomatic recognition, trade and investment, and security guarantees, the officials said.
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The Soft Panic of 2009 Has Just Begun . . . . the CRE [commercial real estate] crash could be even more disastrous than the housing bubble. The costs will run into the hundreds of billions of dollars. Falling CRE values are a problem, but it's not the big problem. The big problem is the debt. As we've seen time and time again, markets do work - when they're allowed to. The Hancock Tower is the perfect example. The owners were forced to liquidate. They lost all of their equity. The property and all the liens against it (primarily the $640 million mortgage) were sold to a new owner.
Commercial Real Estate Limbo; Lenders Ignore Defaults There is a new twist in commercial real estate action today. Lenders are ignoring defaults of $billions on commercial real estate as if nothing happened, praying that credit conditions will improve. . . . . This is not a liquidity issue. This is solvency issue. The properties are indeed broken. They are broken by debt. There is more debt on those properties than can possibly be paid back. No one will possibly buy them for the amount owed. And every day that passes the value of those commercial properties sinks. Bondholders are only delaying the inevitable.
In-Depth Look - G-20 Leaders Meet Analysis and discussion with Nassim Taleb a man they call risk management guru talking about volatile environment, unexpected events, mark to market accounting and more.
The G20 Party in London Can Do Nothing Productive Keeping yourself, your family and your assets safe during a credit contraction can be a particularly daunting task but I am sure you are up for it. Gold is the currency. Irredeemable tickets, like the FRN$, Euro, Pound and Yen merely function like the common stock of nations. Like a falling share price of a corporation; when those irredeemable tickets, either digital or paper, lose purchasing power it does not bode well for the nation.
Obama seizes agenda on world stage Pledges cooperation with Russian, Chinese leaders President Obama met for the first time Wednesday with the leaders of Russia and China - the two countries with the greatest ability to help or hurt U.S. strategic and economic objectives - and came away with an ambitious agenda for nuclear disarmament and economic cooperation. With Russian President Dmitry Medvedev, Mr. Obama pledged to seek a new treaty slashing nuclear weapons and to work on issues ranging from Iran and North Korea interactions to developing clean energy and getting Russia into the World Trade Organization.
G20: US$ Funeral, US Failed Debtor MAJOR GLOBAL TURNING POINT Perhaps it was a grand error of judgment to host the G20 Meeting in London. The epicenter of the financial hegemony, corruption, hidden agency influence, and financial market destruction has clearly been the United States and the United Kingdom working in tandem. So great risk comes with the hosting of this meeting in London. The British Empire, aka Great Britain, is the site of the most devastating economic and banking ruin in a century, on a scale much larger than Iceland, but with a certain hand in the Iceland downfall. Millions of British citizens are angry, worried, and justifiably so. Their economists, bankers, and government leaders have presided over at best a severe national decline that must withstand diverse reform and reconstruction, and over at worst a national failure of state that must endure a collapse before any conceivable reconstruction. The decline if not collapse in the UK seemed for a time to lag that of the US, but lately events have accelerated inside the harrowed United Kingdom. The United States has the advantage of just printing trillion$ and floating about for a bit much like a derelict vessel with feigned movement!
We still owe the rich "The Big Picture is that a huge concentration of wealth has been going on for decades, and the people at the top have stretched greed about as far as can be done before things blow up", which is about as pithy as you can get about the terrors of mal-distribution of wealth, a cancerous condition that comes from a huge, decades-long monetary and fiscal boom where all the money filters up the food chain because the wealthy are the ones who have the wherewithal to borrow all the money to buy all the government debt so that the government funnels more and more money to the rich via increasing interest payments because the government has to borrow more and more money just to offset the inflation in prices that the new money created, and why deflation of financial assets, in a big bust like right now, has, among its other beauties, the ability to correct this unhealthy imbalance.
George Soros Sees Potential for Global Meltdown It is interesting how the farther we go along the more negative George Soros gets, which is the opposite of many others. While he admits he was behind the curve at first, he retooled during 2008, and his bearishness is now growing by leaps and bounds each story I read about him. He must be talking a lot with his buddy Jim Rogers ;) (I'll have an extended Rogers video out Thursday.) Actually there are some themes below that were discussed in The Atlantic piece we posted this weekend; mostly denial by the powers that be of what exactly is going on.
Dollar Debased Like Never Before The G20 summit is set to dominate the markets for the rest of the week. A variety of issues will be discussed but perhaps most importantly China and the other BRIC nations will be pushing very hard for a reform of the international monetary system. And it is not just the US' strategic competitors in Russia (called for a return to a partial Gold Standard) and China who are calling for changes. European Central Bank council member Ewald Nowotny said a "tri-polar" global currency system is developing between Asia, Europe, and the United States and that he's skeptical the U.S. dollar's centrality can be revived. Nowotny said in October "what I see is a system where we have more centers of gravity - I see for the future a tri-polar development, and I don't think that there will be fixed exchange rates between these poles"
G20 summit: Nicolas Sarkozy is trying to gain all the glory Even though Gordon Brown has gathered the world's leaders together in London for the G20, and Barack Obama is holding his first meetings with some of the most important people on the planet, it is Nicolas Sarkozy, president of France, who is trying to steal all the publicity. Mr Sarkozy, who has already been claiming credit for the summit's existence in the first place, has been grandstanding by threatening to walk out of the G20 if there is not an agreement on stronger international financial regulation. By doing so, he is signalling that matters of regulation are higher up his agenda, and, he says, Germany's, than that of the US and UK.
Economic Expectations Fighting a War to Avoid Prolonged Recession
The Sting Stunning new evidence of manipulation in silver and gold has just been published by the Office of the Comptroller of the Currency (OCC), a bureau of the U.S. Treasury Department. The OCC, first established in 1863, charters, regulates and supervises all national banks. Their new data proves the manipulation in unambiguous terms. The report also confirms how the U.S. Government, in partnership with JPMorgan Chase, intentionally cheated silver investors worldwide of many billions of dollars during the fourth quarter of 2008, and longer. This was all outside the futures market I normally write about. It was a scam of historic proportions.
Decoupling Set to Increase This week, the leaders and finance ministers of the 20 most economically important nations, or G-20, will convene in London to develop coordinated policies that they hope will prevent a worldwide depression. The leaders will also consider greater transnational regulatory oversight of the financial industry and the future of the U.S. dollar as the world's 'reserve' currency. By any reckoning, this meeting will be the most important international economic conference since Bretton Woods in 1944, or the Great Powers economic meeting in Rome in 1922. All the leaders are now acknowledging what was formerly in dispute: that the world is facing a severe recession. But as is evident by the pre-meeting media blitz, the London G-20 will reveal a split of the group into two opposing camps.
Gold ends slightly higher ahead of G20 meeting Gold futures rose slightly Wednesday as the metal's investment appeal increased with expectations that the meeting of the Group of 20 nations may not pull the world's economy out of recession. But rising U.S. stocks curbed gold's attractiveness and limited gains in prices. Trading stayed in a narrow range as investors remained cautious ahead of the G20 meeting on Thursday, when the dollar's status as the global reserve currency is expected to be discussed. The planned sale of 403 tons of gold by the International Monetary Fund is also expected to be discussed at the summit. Meanwhile, the European Central Bank said Wednesday it had completed the sale of 35.5 tons of gold.
G20: Capitalism at the Brink Ahead of New Reforms Just what lies ahead for investors in global markets remains the great unknown. I'm not talking about corporate earnings or the viability of the banking system; rather, what will happen following a global government initiative to reform capital markets? Ahead of the G-20 summit this week in London, policy-makers will probably begin to set a potentially damaging new course to revamp securities laws affecting the entire gamut of finance, including hedge fund regulations, bank leverage, new capital adequacy ratios and even plans to increase the pressure on offshore tax havens. The latter is a sideshow, aimed at deflecting the real crisis, which has engulfed the banking system.
China Boosts Yuan Swaps, Store Payments as Dollar Concern Grows China's leaders, increasingly concerned about the nation's $740 billion of U.S. Treasuries, are making it easier for trading partners and consumers to do business in yuan. The People's Bank of China has agreed to provide 650 billion yuan ($95 billion) to Argentina, Belarus, Hong Kong, Indonesia, Malaysia and South Korea through so-called currency- swaps. More such arrangements are being planned so importers can avoid paying for Chinese goods with dollars, the central bank said. In Hong Kong, which has pegged the currency to its U.S. counterpart since 1983, stores from Park'n Shop supermarkets to jewelers accept yuan.
The New Deal dollar and the Obama dollar Much talk has been floating around comparing United States President Barack Obama with president Franklin D Roosevelt and the yet-to-be-fully-developed - or revealed - Obama recovery plan with the New Deal. So far, the differences between the two leaders in crisis are more visible than the similarities. Obama's US$787 billion stimulus package is viewed by many economists as too small for the task and too diffused to tackle the immediate need of halting layoffs and promoting new job creation. The $275 billion home mortgage refinancing plan managed by newly installed Treasury Secretary Tim Geithner is beset with complexity that few seem to fully understand or know how to navigate.
Would Cleansing Banks' Balance Sheets Kick-start the US Economy? US Treasury Unveils Plan to Buy Banks' Troubled Assets Last Monday the US Treasury presented a plan that is aimed at cleaning toxic assets from banks' balance sheets. The Treasury is to take over up to $1 trillion in bad assets (such as mortgage securities) with the help of private investors. According to the plan, for every $100 of bad mortgages being purchased from banks, the private sector would put up $7 that would then be matched by $7 from the government. The remaining $86 would be covered by a government loan.
More Ugly Details Emerge On "Geithner's Heist America Plan" The Obama Administration insists it wants to "partner" with private investors for its new toxic-asset purchase plan. But the more details that emerge, the more it seems Treasury wants to work with only a select few companies. This is no way to conduct a bank clean-up. The investment community was already suspicious last week when Secretary Timothy Geithner unveiled his plan, announcing that Treasury would select four or five companies as "fund managers" to purchase toxic securities. Given that the whole idea is to create a liquid market for these assets, we'd have thought Treasury would encourage as many players as possible.
Roubini: Go Ahead, Keep Dreaming of That "V-Shaped" Recovery As we noted earlier, Nouriel Roubini of RGE Monitor actually has a surprisingly non-apocalyptic forecast for the economy: The first quarter of this year will mark the worst rate of decline, and the outlook will gradually improve from there. We'll still be in a recession through 2009, says Roubini (in contrast to most economists, who think the economy will be growing nicely by Q4). But then, finally, the economy will begin to recover. But what will this recovery look like? Will it be the V-shaped rocket launch that some bulls are looking for? No. It will be an L-shaped slog, says Roubini. The economy will grow at a depressingly slow rate for quite a while, and the stock market will tread water.
Ousting bailed-out U.S. bank CEOs an option: Geithner U.S. Treasury Secretary Timothy Geithner said on Wednesday he would consider forcing out chief executives of banks that receive government bailouts if they were not managing their businesses properly. In an interview with CBS, Geithner said economic recovery depends on a financial system that effectively provides credit, and the government would hold companies receiving public aid accountable. When asked whether he left open the option to pressure a bank CEO to resign, Geithner responded, "Of course. Of course."
Another Gripe: European Banks Got AIG Rescue Funds [European banks and Wall Street got reimbursed at 100% while some US banks got paid 30%] PARIS - The $165 million in bonuses paid by bailed-out insurer AIG have incensed politicians and the public in the United States. Some observers are grumbling over a far bigger payout: to the banks -- some of them in Europe -- which were rescued on their holdings of AIG derivatives. Much of the $182.5 billion that US taxpayers stumped up to save AIG went out the door to meet the company's obligations on derivatives known as credit default swaps, winding up in the coffers of banks based in London, Paris and Frankfurt as well as those on Wall Street. Even though American International Group, Inc. has had to be taken over by the government, the banks were paid what they were owed, instead of being asked to take a partial settlement. It's that part that has some people complaining, since an AIG that entered bankruptcy proceedings would have only paid part, if anything.
AIG massive payments to banks stoke bailout rage ........ The fact that billions of dollars given to prop up giant insurer AIG were then transferred to European banks and Wall Street investment houses could raise new doubts about whether the rescue was really economically necessary. "It doesn't to me seem fair that the American taxpayer has got to bear the 100 percent of the downside," said Campbell Harvey, a finance professor at Duke University. "A hedge is not a hedge if you did not factor in the counterparty risk. And the U.S. taxpayer should not be obligated to make people whole for hedges that were not properly executed."
Big Banks' Recent Profitability Due to AIG Scam? AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this - for lack of a better word - fraudulent scam.
Hitler's Specter Inspires Bill White to Battle With Greenspan William White's tussle with Alan Greenspan is spilling into their retirements as world leaders meet in London to try to prevent the next financial meltdown. White challenged the former Federal Reserve chairman's mantra that central bankers can't effectively slow the causes of asset bubbles when he was chief economist at the Bank for International Settlements. As heads of state gather for tomorrow's Group of 20 summit, several former central bankers and regulators are advising them to advance the same arguments White has made for more than a decade: raise interest rates when credit expands too fast and force banks to build up cash cushions in fat times to use in lean years.
China Invests to Be Leader in Electric Vehicles Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that. The goal, which radiates from the very top of the Chinese government, suggests that Detroit's Big Three, even as they struggle to stay alive, will face even stiffer foreign competition on the next field of automotive technology than they do today. "China is well positioned to lead in this," said David Tulauskas, director of China government policy at General Motors.
Measure Twice, Cut Once The political turmoil lately has been judged by short term results clouded by philosophical fundamentals. This has led to a series of short, snap decisions that have often blown up in the faces of both the Executive and Legislative branches of government. The problem is not necessarily the rules but the dynamics of the rules. TALF, TARP, ARRA, PPIP, etc. etc. etc The "unveiling" of these programs continues to provide a lack of details as evidenced by the market response and general news outlets. The government is doing a poor job of anticipating future problems.
Unemployment will be higher in 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."
Three Reasons Commercial Real Estate Could Hold Back a Recovery .......... there's a dark cloud in this picture. And it's big - big enough, in fact, to potentially finish off the U.S. banking sector, blotting out the U.S. economy's new dawn. That dark cloud is the commercial real estate sector. With rent prices falling and vacancies rising due to the recession-weakened economy, delinquencies on commercial mortgages are already escalating steeply. And the credit crunch bred from the recession is often making it impossible for property owners to avoid deeper trouble by refinancing.
Housing in a Death Spiral, Taking the Mortgage Industry with It Once the homeowner is underwater, the continuing decline in equity is on the backs of the banks and mortgage holders. When Geithner acknowledges the bailout funds are down to $135 billion (and, as we saw over this past weekend, will not comment on if this is enough) we know the truth and it is scary he won't speak the truth. $135 billion is about two weeks of losses in American mortgages if fully absorbed by the banks. We are in deep deep trouble and our government and the banks are not fully acknowledging it. Many of the large banks are insolvent. They were like the Monopoly player that plowed all their cash into buying hotels - no reserve at all.
Record Drop in Index of Home Prices It may be spring on the calendar but housing prices are locked into perpetual winter. The Standard & Poor's Case-Shiller Home Price Index, a widely watched measure of 20 metropolitan areas, fell 19 percent in January from a year earlier. That was a record drop, slightly edging out the previous month. Prices in the worst-hit metropolitan areas have now fallen nearly by half. None of the cities showed month-to-month improvements. Thirteen showed record annual rates of decline. "There's no daylight that I can see in this report," said David Blitzer, chairman of S.& P.'s index committee. He cited the numbers for Phoenix as "gruesome." Prices there fell 5.5 percent in one month, and are now down 48.5 percent from their June 2006 peak.
Ford's March sales drop 41 percent Ford Motor Co.'s U.S. sales fell nearly 41 percent in March, as low consumer confidence and job uncertainty continued to keep buyers away from showrooms. The Dearborn, Mich.-based automaker said Wednesday it sold 131,102 cars and light trucks last month, compared with 221,642 in March 2008. However, the company's March sales improved 32 percent from February, when the automaker sold 99,060 vehicles and the U.S. sales overall hit their lowest point in more than 27 years.
GMAC expands auto lending to more consumers GMAC to temporarily waive some dealer charges and fees, set aside $5B for consumer loans General Motors' financing arm said Wednesday it will temporarily waive some dealer fees and make $5 billion available for loans to an expanded pool of potential car buyers in a bid to halt the extended slide in U.S. vehicle sales.Car dealers nationwide have been hammered by low consumer confidence and worries among potential buyers about the future of the U.S. auto industry. A lack of available credit also has left many consumers who might be still looking for a new vehicle without the affordable financing they needed to make a deal.
Disassembly Line IF YOU'VE FLOWN into Atlanta's Hartsfield-Jackson airport, you've probably seen the old Ford plant at Hapeville, just northeast of the airfield, bounded by a ribbon of rail tracks on one side and I-75 on another. It extends across 122 acres, and sits so close to the airport that flight-path lights once covered the roof of the massive main assembly plant. The plant opened in 1947. Ford closed it in October 2006, the second of 14 closures announced earlier that year. Some 2,000 workers lost their jobs as a result of the closing; 500 of them accepted transfers to other plants, the rest took severance. The city of Hapeville, with just 6,000 residents, lost its largest source of municipal revenue.
Actually, We're not Saving Yet There seems to be much confusion lately about the consumer's increased savings rate and if this is a good or bad condition for the health of the U.S. economy. While many Austrian economists are lauding our new found predilection to save, the Administration is obsessing over forcing banks to increase lending and compelling consumers to step up their borrowing. It is factually correct to believe the U.S. consumer must embark on a protracted period of savings and reduced consumption in order to reconcile the decades of imbalances encouraged by the Fed and banking system. Unfortunately, the very idea of a newly-frugal consumer is a complete farce. According to the Bureau of Economic Research, Americans saved 1.8% of their disposable income in 2008.
Republican budget plan would cut taxes, spending U.S. Senate Democrats on Wednesday rejected a bid to freeze some government spending as House Republicans offered an alternative budget plan that would slash taxes and repeal most stimulus spending. The two chambers of the Democratic-led Congress were moving toward passing as early as Thursday slightly slimmed-down versions of President Barack Obama's $3.55 trillion 2010 budget plan. Since Democrats have comfortable margins in the House of Representatives and Senate, the House Republican plan is not expected to pass. The budget legislation is not binding but sets guidelines for spending and tax measures Congress will consider later this year.
Expect Oil to Approach $100 / barrel Again By Summer Inflation has been trickling back in, and the price of oil has rocketed recently. With crude closing just above $54/gallon, I foresee a repeat of what happened last summer, except this time I don't think deflationary forces will cause crude to come down crashing and prevent the idiotic political forces from Washington into pushing us into a full-fledged energy crisis. Congress has made it clear any company that makes exorbitant profits is at risk. Oil companies, in particular, are on close watch. Most of the talk last year about a windfall profits tax was once oil crept over $110/barrel and the price of gas was $3 or more at the pump.
California Needs New $11 Billion Cash Loan as Deficit Emerges California will likely need $11 billion to pay bills in what may be its largest cash-flow borrowing since 2003, state finance officials said. The state will have exhausted all available cash by August along with $19 billion in internal funds and may need to bridge a $10.6 billion gap between projected monthly expenditures and revenue, state controller John Chiang, a Democrat, said yesterday in a news release. California, home to one of every eight Americans, faces an $8 billion budget shortfall in the coming fiscal year even after Governor Arnold Schwarzenegger and lawmakers agreed in February to close a record $42 billion deficit with a package of tax increases, spending cuts and borrowing intended to leave the government with a surplus 16 months from now.
Boats Too Costly to Keep Are Littering Coastlines MOUNT PLEASANT, S.C. - Boat owners are abandoning ship. They often sandpaper over the names and file off the registry numbers, doing their best to render the boats, and themselves, untraceable. Then they casually ditch the vessels in the middle of busy harbors, beach them at low tide on the banks of creeks or occasionally scuttle them outright. The bad economy is creating a flotilla of forsaken boats. While there is no national census of abandoned boats, officials in coastal states are worried the problem will only grow worse as unemployment and financial stress continue to rise. Several states are even drafting laws against derelicts and say they are aggressively starting to pursue delinquent owners.
Obama's Faustian Bargain The assumption that the Obama administration's diplomatic initiative to our enemies will enhance America's image in the world has yet to be proven. What should concern us more however is the price our enemies will exact from us as part of that rapprochement, and whether it is really and truly worth the cost? As Barry Rubin of the Global Research in International Affairs Center in Israel wrote recently: "In the Middle East, it is not so useful to think yourself popular and show yourself to be friendly. You have to inspire fear in your enemies and confidence in your friends. And if you don't inspire fear in your enemies - if you're too nice to them - then you will indeed foment fear among your friends."
Netanyahu to Obama: Stop Iran - Or I Will In an interview conducted shortly before he was sworn in today as prime minister of Israel, Benjamin Netanyahu laid down a challenge for Barack Obama. The American president, he said, must stop Iran from acquiring nuclear weapons-and quickly-or an imperiled Israel may be forced to attack Iran's nuclear facilities itself. "The Obama presidency has two great missions: fixing the economy, and preventing Iran from gaining nuclear weapons," Netanyahu told me. He said the Iranian nuclear challenge represents a "hinge of history" and added that "Western civilization" will have failed if Iran is allowed to develop nuclear weapons. In unusually blunt language, Netanyahu said of the Iranian leadership, "You don't want a messianic apocalyptic cult controlling atomic bombs. When the wide-eyed believer gets hold of the reins of power and the weapons of mass death, then the entire world should start worrying, and that is what is happening in Iran."
Israeli Minister Dismisses Peace Effort In a blunt and belligerent speech on his first day as Israel's new foreign minister, the hawkish nationalist Avigdor Lieberman declared Wednesday that "those who wish for peace should prepare for war" and that Israel was not obligated by understandings on the Israeli-Palestinian conflict reached at an American-sponsored peace conference in late 2007. "Those who think that through concessions they will gain respect and peace are wrong," Mr. Lieberman said during a transfer ceremony at the Foreign Ministry. "It is the other way around; it will lead to more wars." His predecessor in the post of foreign minister, Tzipi Livni, a centrist, led Israel's negotiating team with the Palestinians in a year of intensive talks after the 2007 conference, held in Annapolis, Md.
North Korea Threatens to Down U.S. Surveillance Planes SEOUL, South Korea - Escalating its anti-foreign vitriol, North Korea threatened on Wednesday to shoot down American military planes it said were spying on the site of its impending rocket launching. In mid-March, North Korea's regime announced that it would launch a satellite into orbit between Saturday and next Wednesday. Since then, it has warned that any attempt to interrupt the launching will be considered an act of war. "If the brigandish U.S. imperialists dare to infiltrate spy planes into our airspace to interfere with our peaceful satellite launch preparations, our revolutionary armed forces will mercilessly shoot them down," the North's state-run Korea Central Radio said. The broadcast accused the United States of deploying RC-135 surveillance aircraft to spy on the Musudan-ri launch site near the North's northeast coast. North Korea regularly accuses American surveillance aircraft of intruding into its airspace, a claim the United States military dismisses as propaganda. Its threats to shoot them down reflects the overall tension between the United States and North Korea over the planned rocket launching.
Seeking New Start, U.S. and Russia Press Arms Talks President Obama and President Dmitri A. Medvedev of Russia, in their first meeting, vowed a "fresh start" in relations and announced their intention to cooperate on a variety of issues, beginning with negotiations on a new arms control treaty. In seeking to recast a relationship that has been teetering on the brink of a new cold war, the two leaders also promised to work together on the war in Afghanistan and efforts to rein in Iran's nuclear ambitions. Appearing after a 70-minute session here, the two struck a warm tone. "What we're seeing today is the beginning of new progress in the U.S.-Russian relations," Mr. Obama said. "And I think that President Medvedev's leadership is, and has been, critical in allowing that progress to take place."
Fidel Castro: China 'bitter drink' for the West Cuban leader Fidel Castro called China's growing economic power in the world a "bitter drink" for the West, ahead of a Group of 20 (G20) summit set to tackle the economic crisis later this week. "Recognising the growing role of China in the global economy is a bitter drink for the West," Castro wrote on Monday in an article on the Cubadebate website. The ailing Castro (82) criticised the way several international media organisations have covered China on the eve of a G20 summit of major developing and industrialised nations in London on Thursday. "The global public opinion has the duty and the right to learn more about the problems of an economic crisis that has struck all the peoples of the world," added Castro, now a frequent newspaper and online columnist.
The rise and rise of the neo-Taliban This year, though, the 70,000 troops - 38,000 of them American - face a new and ominous challenge in the form of the neo-Taliban, a new generation of Pakistani, Afghan, al-Qaeda and Kashmiri fighters who have adopted al-Qaeda's ideology, and who plan new tactics, according to Asia Times Online investigations. The neo-Taliban's efforts will complement the traditional guerrilla war of the Kandahari clan in southwestern Afghanistan and suicide operations in and around Kabul and in southeastern Afghanistan.
North Korea starts fueling rocket North Korea has begun fueling a long-range rocket it plans to launch between April 4-8, CNN said, starting a process that experts say means the rocket will be ready for lift-off in three to four days. South Korea, Japan and the United States see the planned launch as a test of North Korea's longest-range missile, the Taepodong-2, and have said it would violate U.N. Security Council resolutions imposed after an earlier exercise in 2006. Any attempt to punish North Korea will infuriate Pyongyang, which has threatened to restart its plant that makes arms grade plutonium and also quit nuclear disarmament talks if the United Nations takes action.
World Depression: Regional Wars and the Decline of the US Empire All the idols of capitalism over the past three decades crashed. The assumptions and presumptions, paradigm and prognosis of indefinite progress under liberal free market capitalism have been tested and have failed. We are living the end of an entire epoch: Experts everywhere witness the collapse of the US and world financial system, the absence of credit for trade and the lack of financing for investment. A world depression, in which upward of a quarter of the world's labor force will be unemployed, is looming. The biggest decline in trade in recent world history - down 40% year to year - defines the future. The immanent bankruptcies of the biggest manufacturing companies in the capitalist world haunt Western political leaders.
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