Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 03.01.2010
FDIC Shuts Down Banks in Nevada and Washington By STEPHEN BERNARD AP - ABC News Regulators shut down banks in Nevada and Washington; putting US bank failures at 22 for year Regulators shut down banks in Nevada and Washington on Friday, marking the 21st and 22nd failures this year of federally insured banks. The Federal Deposit Insurance Corp. was appointed receiver of Carson River Community Bank, based in Carson City, Nev. and Rainier Pacific Bank in Tacoma, Wash. Carson River Community Bank had $51.1 million in assets and $50 million in deposits as of Dec. 31. Rainier Pacific Bank had $717.8 million in assets and $446.2 million in deposits as of Dec. 31.
I.M.F. Chief Suggests Look at New Reserve Currency By SEWELL CHAN - NY Times WASHINGTON — The chief of the International Monetary Fund said Friday that the organization should reorient itself to better detect systemic risks to the global economy and quickly step in with emergency loans when financial crises emerge. The I.M.F. leader, Dominique Strauss-Kahn, also floated the idea of creating a global reserve currency that could serve as an alternative to the dollar. After a speech at the I.M.F. headquarters, Mr. Strauss-Kahn said in response to a question about the fiscal crisis in Greece that the fund would be “happy to help if asked” but that the European Union appeared able to resolve the crisis on its own.
Head of IMF Proposes New Reserve Currency By HARRY DUNPHY AP - ABC News IMF's Strauss-Kahn suggests IMF may one day provide global reserve asset Dominique Strauss-Kahn, the head of the International Monetary Fund, suggested Friday the organization might one day be called on to provide countries with a global reserve currency that would serve as an alternative to the U.S. dollar. "That day has not yet come, but I think it is intellectually healthy to explore these kinds of ideas now," he said in a speech on the future mandate of the 186-nation Washington-based lending organization.
Michael Levy: Gold, The Real Reserve Currency
Coming Commercial Real Estate Crisis; 3000 Community Banks at Risk by Mike “Mish” Shedlock Here are a couple of stories similar to thousands playing out across the country, and tens of thousands more to come. The second article gets to the heart of the upcoming commercial real estate bust. The Minneapolis Star Tribune is reporting Brookdale Mall sold at auction for big markdown. A sheriff's foreclosure auction produced just one bid -- from the mall's mortgage-holders, who bid $12.5 million.
Crisis-Related Bank Failures Racing Toward 1,000 By Rocky Vega - DailyReckoning.com 02/27/10 Stockholm, Sweden – A new projection is now showing that roughly 1,000 US banks may fail because of the financial crisis that uncovered the toxic assets hidden on bank balance sheets. According to Reuters:
“James Dunne, senior managing principal of Sandler O’Neill, said 300 to 400 banks could be seized this year, especially as institutions start to deal with deteriorating commercial real estate loans.
“‘This is going to be a very slow recovery,’ Dunne said in an interview with Reuters.
“Regulators have seized 185 banks since January 2008. The Federal Deposit Insurance Corp has said the pace of failures is expected to peak this year.
“The agency said earlier this week that its ‘problem’ bank list jumped 27 percent during the fourth quarter to 702.”
Why the US economy could suffer another contraction Gerard Jackson - BrookesNews.Com Last December I pointed out that AMS (Austrian definition of the money supply*) had peaked in June 2009, even as the monetary base accelerated, and that this must mean that bank deposits are not expanding. The result would be "an inadvertent 'monetary tightening' that will have a detrimental impact on economic activity" which the fall in capital orders appeared to indicate. This now seems to be the case with the latest survey showing the demand for capital goods (plant and machinery) still falling.
Preparing for the Inevitable Bursting Bubble By RON LIEBER - NY Times Financial bubbles are a way of life now. They can upend your industry, send your portfolio into spasms and leave you with whiplash. And then, once you’ve recovered, the next one will hit. Or so you might think, as a veteran of two gut-wrenching market declines and a housing bubble over the last decade. There’s plenty of reason to expect more surprises, given the number of hedge funds moving large amounts of money quickly around the world and the big banks making their own trades.
True Fiscal Insanity: Creating Money to Buy Government Debt By The Mogambo Guru - DailyReckoning.com 02/26/10 Tampa Bay, Florida – I knew that something was amiss when I woke up and the house was quiet. Having the benefit of seeing a lot of movies where things were “too quiet”, I instantly knew that things being “too quiet!” meant that Indians were going to be attacking, or the Japanese attacking, or the Germans attacking, sometimes government goons rushing the place, or zombies, or the police. I dunno who, but you get the point. Grabbing the bare necessities (a couple of pistols, a few Uzi submachine guns, a rocket-propelled grenade launcher and a lot of spare ammunition) I rolled off the bed onto the floor with the idea of scuttling into the closet to cringe in a defensive posture, bristling with weapons, making my enemies stop and think before killing me, giving me, I figure, a additional three more seconds to live!
Time for Goldman to Come Clean Reuters via WashingtonTimes Even mighty Goldman Sachs makes mistakes. The Wall Street bank’s decision to help Greece keep some of its debts hidden from public view in 2001 was one of them. The arrangement, which allowed the Greek government to present accounts that understated the state’s liabilities by 1.6 percent of its gross domestic product, wasn’t illegal or against any regulations, and it was approved by Europe’s statistical authorities. But helping a client reduce the transparency of its finances is ethically questionable. For its own sake, as well as that of its shareholders, it’s time for Goldman to admit that it compromised its principles.
California is a greater risk than Greece, warns JP Morgan chief By James Quinn - Telegraph Jamie Dimon, chairman of JP Morgan Chase, has warned American investors should be more worried about the risk of default of the state of California than of Greece's current debt woes. Mr Dimon told investors at the Wall Street bank's annual meeting that "there could be contagion" if a state the size of California, the biggest of the United States, had problems making debt repayments. "Greece itself would not be an issue for this company, nor would any other country," said Mr Dimon. "We don't really foresee the European Union coming apart." The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged. California however poses more of a risk, given the state's $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.
Seeds of War By Joel Bowman - DailyReckoning.com 02/28/10 Taipei, Taiwan – A while back, our colleague, Chris Mayer, employed a wonderful analogy to illustrate the passage of time from the roaring twenties through to the dustbowl thirties. The former decade, Chris explained, was captured in essence by F. Scott Fitzgerald’s The Great Gatsby. It was a period ripe with wild speculation, fueled by an explosion in EZ money, and of reckless excesses in general. (If any of this sounds familiar, you can probably already guess the point at which Chris was driving.) Then, almost as quickly as it had begun, the party ended. Black Tuesday, October 1929, was somewhat akin to calling “closing time” at the Gatsby mansion cocktail party. Markets crashed, the public panicked and central planners did everything in their power to exacerbate the situation they themselves had caused in the first place.
Pictures of a Market Crash: Beware the Ides of March, And What Follows After JESSE'S CAFÉ AMÉRICAIN There are a fair number of private and public forecasters with whom I speak that anticipate a significant market decline in March. As you know I tend to agree, but with the important caveat that we are in a very different monetary landscape than the last time the Fed engaged in quantitative easing, the early 1930's. The biggest difference is the lack of 'external standards.' This introduces an element of 'policy decisions' that has been discussed here on several occasions.
FDIC Auctions $610.5 Million in Loans From Failed U.S. Lenders By Brian Louis -- Feb. 27 (Bloomberg) -- The Federal Deposit Insurance Corp. is seeking bids for $610.5 million of unpaid loans it’s holding from failed U.S. lenders including IndyMac Bank, Silverton Bank and New Frontier Bank. The loans are backed in part by land, developed lots and condominium construction projects, said Peter Tobin, managing director of New York-based Mission Capital Advisors LLC, the FDIC’s marketing agent and financial adviser for the offering. Most of the properties are in Colorado, California, Utah and Idaho, and about 78 percent of the debt is 90 days or more past due, according to a description on Mission Capital’s Web site.
Gold rises to 1-week high; strikes record in sterling By Lewa Pardomuan SINGAPORE, March 1 (Reuters) - Gold rose to a 1-week high on Monday on bargain hunting driven by a firmer euro, while sterling-priced bullion struck another record as the British currency tumbled against the U.S. dollar. Silver, also used in photography and electronics, jumped to its strongest in almost a month to track gold and the price of copper, which surged on worries about supply after an 8.8-magnitude quake hit top producer Chile.
Gold steadies, silver, copper surge SINGAPORE (Commodity Online) : Gold prices steadied in Asian trade Monday mainly on bargain hunting based on a strong euro amid a recovered dollar. Gold for immediate delivery was seen trading at $1116.32 an ounce at 11.30 a.m Singapore time while U.S. gold futures for April delivery hit an intraday high of $1,120.7 an ounce. Analysts said the precious yellow metal may drop for the first time in three days as the dollar stemmed its decline, damping investor demand for an alternative investment.
Do we really want $5,000 gold? Author: Lawrence Williams - MineWeb.com What does $5,000 gold really mean? Perhaps social chaos and, if so, who really wants that? General talk of gold as a potentially spectacular investment as opposed to an inflation hedge glosses over the true picture. Over the ages, gold has kept up with inflation pretty well, and it will probably continue to do so in the future, but it may not make you wealthy, just protect whatever wealth you have. True there have been periods when gold has outpaced the decline in currency values due to inflation, but that is usually when it is playing catch-up from a period of underperformance. Now some ultra gold bulls out there are predicting $5,000 gold - or even higher. While we think this unlikely in the foreseeable future, think what this means if it should come about. It can only really happen if there is an equivalent decline in the US dollar - or the onset of hyper dollar inflation.
Gold Futures Rise as Investors Seek Alternative to Currencies By Pham-Duy Nguyen and Nicholas Larkin Feb. 26 (Bloomberg) -- Gold rose for a second straight day, capping the first monthly gain since November, on speculation that concern over Greece’s debt will increase demand for bullion as an alternative to holding currency. Greece’s credit rating may be lowered within months if it fails to meet the objectives in its plan to reduce a budget deficit, Moody’s Investors Service said yesterday. The dollar fell as much as 1 percent against the euro after yesterday climbing to near a nine-month high.
Why central banks are not keen to buy IMF gold By Tex Norton - Commodity Online The IMF didn't get any bids for its latest offer to auction 191.3 tonnes of the remaining gold that it wants to sell. Apparently the central banks of the world have shown a distinct lack of interest in the proposed bullion sale. So gold game-over, correct? Not exactly. Recall that India bought 200 tonnes of gold from the International Monetary Fund late in 2009, along with Sri Lanka (10 tonnes) and Mauritius (two). The IMF gold sale is purportedly based on the IMF's desire to raise funds to help poor countries. I'll leave a discussion of that ill-conceived notion for discussion at another time. The fact remains that the gold is for sale and apparently no buyers are willing to step-up and be counted. At least, not publicly counted. Wonder why?
Gold bulls, bullion market and IMF gold sale By Jon Nadler - Commodity Online Gold prices showed additional firmness overnight and early this morning. For the most part, bullion prices managed to remain above the $1,100 an ounce mark as additional weakness pushed the U.S. dollar to near 80.50 on the trade-weighted index and as European stocks edged higher, reflecting a bit of a fresh resurgence in risk appetite. “Recovery has thus far mainly been fueled by a slight – and mostly technical – bounce in the EUR/USD pair and some short covering”, said Matthias Detremmerie, founder of Goldessential.com. The recovery in gold still needs to break above last week’s high around $1,131.50 before chartists would agree that further upside is likely. On the other hand: “To the downside, any manifest gold price weakness below the $1,088.00 an ounce level might likely to invoke fresh liquidations.”
Why gold price turns volatile during IMF gold sale By Jeff Clark - Commodity Online How many IMF officials does it take to change a light bulb? As you probably read, the International Monetary Fund announced they would proceed with selling the remaining 191.3 tonnes of gold from the 403.3 tonnes planned. The money is to be used for lending to poor countries. Lending implies the money will be repaid, which, in the case of the IMF, is a joke that isn’t funny. But that’s a topic for another day. The IMF stated that sales will be conducted in the open market, which is interesting because until now, gold has only been made available to central banks. While the IMF remains open to central banks buying some of the gold, sales will be conducted “in a phased manner over time” to avoid disruptions to the open market.
Gold, Currency Crisis and Debt-liquidating Depression or a Hyperinflationary Blow-off By: The_Gold_Report - MarketOracle.com -- However the evolving global currency crisis ultimately manifests itself, either total deflation and a debt-liquidating depression or a hyperinflationary blow-off, David Morgan of The Morgan Report says "There's none better than gold—and silver is probably just as good—if you're worried about a crisis hedge." In the interim, David tells us in this exclusive Gold Report interview, the time might be right to build cash and watch the markets. He likes the old adage: when in doubt, stay out. But he also likes finding opportunities in undervalued and overlooked resource equities for speculative investments.
Gold Prices Have ‘Substantial Upside,’ ETF’s Tuckwell Says By Kim Kyoungwha and Haslinda Amin Feb. 26 (Bloomberg) -- Gold prices may gain as investors seek a hedge against inflation and volatile markets, said Graham Tuckwell, chairman of ETF Securities Ltd. There’s “a lot of safety in commodities, particularly in gold, as a good hedge against volatile times,” Tuckwell said in an interview with Bloomberg Television. “There’s a substantial upside” for gold “as inflation comes through the system and the whole concept of fiat currencies is questioned.”
The Euro and a Conspiracy of Hedge Funds, Wheres All the Greek Gold? By: John Mauldin - MarketOracle.com The economy grew in the fourth quarter by 5.9%, the most in years. The adjusted monetary base is exploding. Bank reserves are literally through the roof. The Fed is flooding money into the system in an effort to get banks to lend. An historically normal response by banks (to increase lending) would have been massively inflationary, causing the Fed to stomp on the brakes. Despite raising the almost meaningless discount rate (as who uses it?), this week Ben Bernanke assured Congress of an easy monetary policy, with rates remaining low for a long time. Many ask, how can this not be inflationary?
COMEX INVENTORY DATA REVEAL AN ALARMING TREND By Adrian Douglas For more than 6 months I have been gathering data released daily by the COMEX concerning delivery notices and inventory levels of gold and silver. This data must be captured and recorded each day as there is no database of historical data available to the general public. Studying data on a daily basis is not conducive to seeing the big picture so I have just completed a study of what can be discerned by looking at the entire 6 months of data. The results are very revealing.
Dollar Declines Against Yen, Euro on Greek Aid, Home Sales Drop By Inyoung Hwang and Ben Levisohn Feb. 26 (Bloomberg) -- The dollar fell against the euro and the yen as German lawmakers said aid to Greece may come through a state-owned lender and sales of U.S. existing homes unexpectedly declined last month. The euro gained against the dollar as German officials said the nation is considering buying Greek bonds through state-owned lender KfW Group. The greenback depreciated against all of its 16 most-traded counterparts except the pound as home purchases dropped 7.2 percent last month, the second-largest decline ever.
Jim Rogers on Bloomberg: High Spending May Haunt Indian Economy
China Currency Poses Greatest Danger to Global Economic Recovery By: Bryan Rich - MarketOracle.com Toward the end of last year, many market followers were speculating on a Fed hike as early as the first half of 2010. Global stock markets had experienced explosive bounces, commodity prices had surged from the crisis lows, and risk spreads and market volatility had all subsided. In short, markets were pricing in a very optimistic outlook for global economic recovery - a return to normalcy. But just two short months into 2010, the exuberance about recovery has deflated. As I’ve explained in many of my Money and Markets columns, the world is still saddled with problems and vulnerable to lurking threats …
Will China Use Its U.S. Bond Holdings as a Weapon? By BRUCE WATSON - Daily Finance Following the $6.4 billion U.S. arms sale to Taiwan in January, some members of the Chinese military have advocated using China's considerable U.S. Treasury bond holdings as a weapon to retaliate against America. In a recent article in Chinese magazine Outlook Weekly, senior army officers at China's military university called for a stern response to the arms sale, stating that "we could sanction [the U.S.] using economic means, such as dumping some U.S. government bonds."
Germany and France agree to rescue Greece, with conditions By Rupert Neate - Telegraph Germany and France are putting together a plan to buy as much as €30bn (£26.7bn) of Greek debt to help the country avoid a calamitous sovereign default – but only if Athens commits to slashing public spending. Sources close to the German finance ministry said Germany’s state-owned KfW bank will buy Greek bonds or provide guarantees to other banks to buy them. France’s state-owned Caisse des Depots will also be involved in the aid package, according to Greek newspaper Ta Nea. The debt sale under consideration is thought to be between €20bn and €30bn. About half will be sold to France and Germany and half to debt investors.
EU Crafts Aid Plan as Rehn to Push Greece to Cut Budget Deficit By Simon Kennedy and Maria Petrakis -- March 1 (Bloomberg) -- European Union Monetary Affairs Commissioner Olli Rehn will likely push Greece to do more to cut its budget deficit today as governments craft a possible rescue package for the cash-strapped nation. Rehn will meet with Prime Minister George Papandreou as German lawmakers say euro-area officials are devising a plan to grant Greece about 25 billion euros ($34 billion) in aid should it need help financing its debt, possibly by using state-owned lenders such as the KfW Group to buy its bonds.
Germany's frugality bemoaned for inhibiting euro zone growth By Anthony Faiola - Washington Post BERLIN -- Greek extravagance touched off the biggest crisis in the 11-year history of the euro. But the world's most ambitious monetary union faces a less obvious problem that might be even harder to lick -- German frugality. Adoption of the euro a decade ago ushered in an era of cheap credit, soaring salaries and big government in nations like Greece, Spain and Portugal. Their debt-fueled splurges are now coming home to roost, with Greece the first to come close to running out of cash to operate the government, raising fears of a default. Germany -- Europe's economic powerhouse -- is expected to take a leading role in a rescue effort to prevent a possible run on the euro and the outbreak of a new bout of turmoil in global bond, currency and stock markets.
Treasuries Gain on Lower-Than-Anticipated Economic Data, Greece By Cordell Eddings and Susanne Walker -- Feb. 27 (Bloomberg) -- Treasuries advanced for the first time in three weeks as weaker-than-forecast economic reports and the threat of credit-rating downgrades for Greece spurred demand for the safety of U.S. government debt. Yields on 30-year bonds fell the most this week in six months as reports showed sales of new and existing homes unexpectedly tumbled, consumer confidence dropped and fourth- quarter consumer spending grew less than forecast. A report on March 5 is forecast to show that U.S. employers cut 50,000 jobs in February.
Is Goldman Finally About to be Leashed and Collared? Naked Capitalism Goldman may have made a fatal mistake. Fatal not to the existence of the firm, but to its standing, reputation, legitimacy, and ultimately, to the thing it covets most, its profits. Power is most effective when it is used as sparingly as possible. Niall Ferguson, in book The Cash Nexus, stressed the importance of financing to military success (he argues that England was able to punch above its economic weight due to its superior tax collection apparatus and more highly developed bond markets). The Rothschilds, which among other things financed governments at war, went to some lengths to underplay their influence so as not to threaten their state patrons/clients. The problem is that the behaviors that contributed to Goldman’s commercial success have over time become unbalanced, and are putting it at odds with governments.
The US recession and the myth of 1937 Gerard Jackson - BrookesNews.Com The current situation has many people referring back to the Great Depression, particularly the 1937 downturn. As usual they are drawing the wrong conclusions. The lesson that so many have failed to grasp is that the Great Depression is a tragic testimony as to what can happen to a country when governments defy economic laws. Let us begin with Roosevelt's 1935 Wagner Act. This had been passed in reaction to the Supreme Court's decision to declare the economically destructive National Recovery Act unconstitutional. However, constitutional lawyers advised business that the Wagner Act was also unconstitutional. In view of this advice most big businesses ignored the Act and used free market prices to increase output and employment. As a result unemployment fell from 9.1 million in 1935 to 6.4 million in 1937, iron and steel production rose to more than 100 per cent the 1933-34 level and car production more than doubled the 1933 level.
Zero Point of Systemic Collapse by Chris Hedges We stand on the cusp of one of humanity’s most dangerous moments. Aleksandr Herzen, speaking a century ago to a group of anarchists about how to overthrow the czar, reminded his listeners that it was not their job to save a dying system but to replace it: “We think we are the doctors. We are the disease.” All resistance must recognize that the body politic and global capitalism are dead. We should stop wasting energy trying to reform or appeal to it. This does not mean the end of resistance, but it does mean very different forms of resistance. It means turning our energies toward building sustainable communities to weather the coming crisis, since we will be unable to survive and resist without a cooperative effort.
Ron Paul's Texas Straight Talk 3/1/10 on his questioning of Ben Bernanke and Hillary Clinton
Report Shows Government's Liabilities Surging MoneyNews.com The federal government fell further into the red in 2009, with its financial position hitting a deficit of $11.46 trillion. That figure is 12.3 percent higher than the previous year, according to a new report issued by the Treasury Department on Friday. The annual report shows that the government's big entitlement programs such as Social Security and Medicare are facing a deficit over the next 75 years of $45.88 trillion, an increase in that deficit of $2.9 trillion in just one year.
Fannie Posts $72 Billion Loss for '09 By NICK TIMIRAOS - WSJ Fannie Mae reported a staggering $72 billion net loss for 2009, underscoring the challenges that still face the nation's largest mortgage financier and offering more grim news for taxpayers who may ultimately pick up the bill. The Washington-based company posted a $15.2 billion fourth-quarter loss and said it asked the U.S. Treasury for another $15.3 billion to stay afloat, bringing its total bailout tab past $76 billion. The quarterly results were an improvement from the year-ago period, when Fannie reported a $25.2 billion loss, but the annual loss surpassed the year-earlier loss of $58.7 billion.
Fannie Taps Treasury for $15.3 Billion More After a 10th Loss By Dawn Kopecki Feb. 27 (Bloomberg) -- Fannie Mae will seek $15.3 billion in U.S. aid, bringing the total owed under a government lifeline to $76.2 billion, after its 10th consecutive quarterly loss. The mortgage-finance company posted a fourth-quarter net loss of $16.3 billion, or $2.87 a share, Washington-based Fannie Mae said in a filing yesterday with the Securities and Exchange Commission. Fannie Mae, which owns or guarantees about 28 percent of the $11.8 trillion U.S. home-loan market, has been hobbled by a three-year housing slump that wiped 28 percent from home values nationwide and led to record foreclosures.
FDIC Auctions $610.5 Million in Loans From Failed U.S. Lenders By Brian Louis -- Feb. 27 (Bloomberg) -- The Federal Deposit Insurance Corp. is seeking bids for $610.5 million of unpaid loans it’s holding from failed U.S. lenders including IndyMac Bank, Silverton Bank and New Frontier Bank. The loans are backed in part by land, developed lots and condominium construction projects, said Peter Tobin, managing director of New York-based Mission Capital Advisors LLC, the FDIC’s marketing agent and financial adviser for the offering. Most of the properties are in Colorado, California, Utah and Idaho, and about 78 percent of the debt is 90 days or more past due, according to a description on Mission Capital’s Web site.
Carry Trades May Play Larger Role in Currency Markets, BIS Says By Bo Nielsen -- Feb. 28 (Bloomberg) -- The rise of carry trades, in which investors take advantage of interest-rate differences between countries, may signal bigger swings in currencies during crises, the Bank for International Settlements said. Variations in interest rates played a larger role in the latest financial turmoil than in either the Asian financial crisis of 1997-1998, or following the Russian debt default in 1998, the Basel, Switzerland-based BIS said in its quarterly report released today. That may reflect the “increasing role carry trades play in exchange rate movements,” it said.
Markets, AIG, Housing, health care
Don't go wobbly on us now, Ben Bernanke By Ambrose Evans-Pritchard - Telegraph Barack Obama's home state of Illinois is near the point of fiscal disintegration. "The state is in utter crisis," said Representative Suzie Bassi. "We are next to bankruptcy. We have a $13bn hole in a $28bn budget." The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. "It's a catastrophe", said the Schools Superintedent. In Alexander County, the sheriff's patrol cars have been repossessed; three-quarters of his officers are laid off; the local prison has refused to take county inmates until debts are paid.
Fed officials at odds on right level for rates Mark Felsenthal and Kristina Cooke NEW YORK (Reuters) - Two top Fed officials on Friday offered divergent signals on interest rates, with one arguing they should remain near zero for at least six months and another wishing to raise them "sooner rather than later." Charles Evans reiterated the central bank's commitment to keep borrowing costs at exceptionally low levels for an extended period, which he defined as lasting three or four Fed meetings or at least six months. "I still think it's going to be an extended period of time that interest rates are going to be low," Evans, the Chicago Federal Reserve Bank president told CNBC television. "It's a time of still too much uncertainty. Consumers are being very careful with the labor market situation," he said.
Tighter Financial Conditions Test Recovery By JON HILSENRATH Despite near-zero interest rates and a continuing flood of credit into the U.S. economy from the Federal Reserve, financial conditions tightened in the second half of 2009, according to a new study produced by a collection of Wall Street and academic researchers. Tight financial conditions could hobble the recovery and point out a contradiction: While interest rates remain near historic lows, the availability of credit is still constrained.
Why ‘Too Big to Fail’ is Too Short-Sighted to Succeed ResearchRecap.com NERA Economic Consulting argues in a new white paper that limiting the size of financial institutions may actually result in more risk-taking, not less. Selected excerpts: Legislative proposals that rely on a size-based identification process would erroneously identify a number of financial firms as systemically risky, when in fact they are not. Other firms that do in fact pose significant systemic risk would fail to be identified. Such a process, if enacted, would create a cross-subsidy of significant magnitude from firms that do not pose systemic risk to those firms whose activities are systemically risky.
AIG and Pru close to $35bn Asian deal By Francesco Guerrera in New York, Sundeep Tucker in Hong Kong and Paul J Davies in London - FT -- AIG and Prudential are close to agreeing the sale of AIA, the US life group’s Asian business, to the UK’s biggest insurer for about $35bn in cash, shares and other securities, in a deal expected to be announced this week. After a weekend of tense talks, the board of the government-controlled US insurer decided to press ahead with the sale of AIA, one of the jewels in AIG’s crown, and scrap a planned $10bn-$20bn partial listing of the unit, people close to the situation said. No deal has yet been sealed and the talks could still collapse but under the terms being discussed, Prudential would pay about $25bn in cash and the remaining $10bn in shares and other securities such as preferred stocks and options.
Government went deeper in red in 2009: Treasury WASHINGTON (Reuters) - The government's financial position, reported on an accrual basis that more accurately accounts for long-term liabilities, continued to deteriorate in fiscal 2009, a report issued by the Treasury Department on Friday showed. The government's net position, after deducting liabilities from assets, was in shortfall by $11.46 trillion in the fiscal year that ended Sept 30, 2009, compared with $10.2 trillion in fiscal 2008. Its net operating costs for fiscal 2009 were $1.3 trillion, up from $1 trillion in fiscal 2008 because of weaker revenues and spending to try to revive the economy, Treasury Secretary Timothy Geithner said in a foreword to the report.
Peter Schiff on Freedom Watch with Judge Napolitano 24 Feb 2010
Did Woodstock Hippies Lead to the Financial Collapse? By MARK GUARINO, The Christian Science Monitor New Film Claims Hippies-Turned-Boomers as Responsible for Excessive Spending, the Mortgage Crisis, and Recklessness on Wall Street A new film is gaining traction among tea-party followers for suggesting that the collapse of the US financial system has roots dating back 40 years to the Summer of Love. "Generation Zero," a film set to premiere in March, examines what producer David Bossie says is a "historic perspective on a generational change" that led to the September 2008 bank collapse. Bossie says generational narcissism, as represented by the 1969 Woodstock Festival, is responsible for the excessive spending, mortgage crisis, and recklessness on Wall Street.
Obama's Plan to Stem Foreclosures Would Do More Harm Than Good - By ZAC BISSONNETTE - Daily Finance -- The Obama administration is mulling a plan that would require lenders to make efforts to enroll homeowners in the government's Home Affordable Modification Program (HAMP) before they pursue foreclosure. According to a memo reviewed by Bloomberg, the proposal "prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed."
Obama Says Nation Cannot Lose Opportunity to Act on Health Care By Nicholas Johnston -- Feb. 27 (Bloomberg) -- President Barack Obama said this week’s summit on health care showed Republicans and Democrats can find some common ground on the issue, while indicating he’ll move forward even if all disagreements can’t be resolved. In his weekly address, Obama said the nation can’t afford to miss this chance to enact health-care legislation that would expand coverage to 31 million uninsured Americans.
What do we need health insurers for anyway? By Michael Hiltzik - LA Times Angela Braly can't kid me. When the chief executive of gargantuan health insurer WellPoint (parent of Blue Cross of California) went before a congressional subcommittee the other day, she displayed all the smile-through-the-tears pluck of Annie looking to a sunny tomorrow or Scarlett swearing to God she'll never be hungry again. WellPoint didn't really want to jack up health premiums on its customers by as much as 39%, she said -- it had no choice. "We care deeply about our California customers," she said. But what she was really telling the committee members was this: "Please put us out of our misery."
Administration proposes help for middle class By Blake Ellis, staff reporter NEW YORK (CNNMoney.com) -- In its first annual report released Friday, the Obama administration's middle-class task force introduced plans to address the "middle-class squeeze" in the U.S. economy. Vice President Joe Biden, who heads the year-old task force, said that the administration's focus over the past year has been on issues including retirement security, access to affordable education, the balance of work and caregiving and the creation of jobs for middle-class workers.
The secret lives of America's debtors By Julianne Pepitone NEW YORK (CNNMoney.com) -- Americans are loaded up with credit card debt. What's worse is that some husbands, wives and even children hide those money woes from their families. The results are often devastating. Hidden debt is a common and insidious problem. "It's a form of cheating so subtle you don't even know you're doing it," said Bonnie Eaker Weil, a relationship expert and author of the book Financial Infidelity. "It's a power struggle that can be more harmful to a relationship than adultery."
Brookdale sold at auction for big markdown By SUSAN FEYDER, Star Tribune A sheriff's foreclosure auction produced just one bid -- from the mall's mortgage-holders, who bid $12.5 million. Brookdale Center went on the auction block at a sheriff's foreclosure sale Friday, netting just one bid of $12.5 million from the shopping mall's lenders. The bid from Brookdale Mall HH LLC was well below the $51.8 million owed on a $54.2 million mortgage by the property's owners, Brooks Mall Properties of Coral Gables, Fla.
Jobless benefits start ending on Sunday By Tami Luhby NEW YORK (CNNMoney.com) -- Depending on extended unemployment benefits to see you through the Great Recession? You'd better not: The Senate failed to push back the Feb. 28 deadline to apply for this safety net. Starting Monday, the jobless will no longer be able to apply for federal unemployment benefits or the COBRA health insurance subsidy.
US manufacturers face skills shortages By Hal Weitzman in Chicago - FT Manufacturing companies in the US are struggling to find workers with technical skills even though the sector has shed more than 2m jobs in the past two years. The shortage of skilled staff could restrict companies’ ability to step up production as the economic recovery gathers pace. In interviews with the Financial Times, groups ranging from Boeing – one of the US’s biggest manufacturers and exporters – to small companies also said they faced a wave of skilled workers reaching retirement age in the next few years, with a shortage of younger workers to replace them.
Existing home sales drop By Ben Rooney NEW YORK (CNNMoney.com) -- Sales of existing homes unexpectedly fell in January, according to an industry report published Friday, highlighting concerns that the housing market is weaker than previously thought. The National Association of Realtors reported that home resales fell 7.2% last month to a seasonally adjusted annual rate of 5.05 million units, down from the revised rate of 5.44 million in December. Still, on a year-over-year basis, sales were up 11.4%.
Another Foreclosure Alternative By BOB TEDESCHI - NY Times Deeds in lieu of foreclosure HOMEOWNERS on the verge of foreclosure will often seek a short sale as a graceful exit from an otherwise calamitous financial situation. Their homes are sold for less than the mortgage amount, and the remaining loan balance is usually forgiven by the lender. But with short sales beyond the reach of some homeowners — they typically won’t qualify if they have a second mortgage on the home — another foreclosure alternative is emerging: “deeds in lieu of foreclosure.”
FICO is Shocked by Default Data By Addison Wiggin - DailyReckoning.com 02/26/10 Baltimore, Maryland – FICO, the outfit that computes your vaunted “credit score,” has just noticed that consumers with high scores are more likely to default on their mortgages than their credit cards. Last year, the firm says, folks with FICO scores of 760 or higher defaulted on real estate loans at three times the pace they defaulted on plastic.
FDIC to test principal reduction for underwater borrowers By Renae Merle - Washington Post The Federal Deposit Insurance Corp. is developing a program to test whether cutting the mortgage balances of distressed borrowers who owe significantly more than their homes are worth is an effective method for saving homeowners from foreclosure. The program would be aimed at a growing population of homeowners who are underwater on their loans, estimated at more than 20 percent of borrowers, or 11 million homeowners. Economists consider these borrowers among the most vulnerable to foreclosure, and some industry officials worry that more of them will simply walk away from their mortgages, or "strategically default," rather than spend a decade or more trying to regain positive equity.
Many borrowers in default stay put as lenders delay evictions By Alana Semuels - LA Times Despite being months behind, many strapped residents are hanging on to their homes, essentially living rent-free. Pressure on banks to modify loans and a glut of inventory are driving the trend. It's been 16 months since Eugene and Patricia Harrison last paid the mortgage on their Perris home. Eleven months since the notice got slapped on their front door, warning that it would be sold at auction. A terse letter from a lawyer came eight months ago, telling them that their lender now owned the house. Three months later, the bank told them to pay up or get out by the end of the week.
Many borrowers in default stay put as lenders delay evictions
Home resales drop for second consecutive month By Alejandro Lazo - LA Times In January, 7.2% fewer previously owned homes sold in January than December, which was down from November, the National Assn. of Realtors reports. If you're still having trouble selling your house, you're not alone. Sales of previously owned homes in January stumbled considerably for the second consecutive month. The National Assn. of Realtors in Washington said Friday that sales fell 7.2%. January sales were the lowest since June but 11.5% higher than in January 2009.
Green policies are laying down the foundations for future famines Viv Forbes - BrookesNews.Com This generation of pampered westerners is the first tribe in the history of the world that seems determined to destroy its ability to produce food. The history of the human race has always been a battle for protein in the face of the continual challenge of natural climate change. Nothing has changed for this generation, except the wildfire spread of a destructive new religion that requires the sacrifice of food producers on a global warming altar. Food creation needs solar energy, land, carbon dioxide and water. All four food resources are under threat.
Carbon taxes energy production and technology: more green nonsense Gerard Jackson - BrookesNews.Com Greens argue that solar and wind power are genuine alternatives to centralized electricity generation. Therefore the long term effect of a carbon tax would be to substitute the latter for the former with little or no loss in production. Critics counter that these alternative energy sources are very inefficient and would require substantial subsidies. This approach leaves me somewhat bewildered. To argue that solar and wind are inefficient alternatives to coal-fired power stations because they are more costly is no argument at all.
Toyota 'deliberately withheld' evidence in safety lawsuits, House panel says By Ken Bensinger and Ralph Vartabedian - LA Times -- Memos from a former Toyota lawyer describe failure to produce evidence in vehicle rollover lawsuits, says the chairman of the House Oversight and Government Reform Committee. Toyota Motor Corp. "deliberately withheld" evidence in lawsuits related to vehicle safety, exhibiting a "systematic disregard for the law," the chairman of a congressional committee said. The firm created "secret electronic 'Books of Knowledge' " that included information about design problems, yet never disclosed their existence in lawsuits, according to internal company documents released by the committee Friday.
Doctors tell Barack Obama to quit smoking Ewen MacAskill, Washington - guardian.co.uk, The American president has been trying to kick the habit for sometime, apart from the smoking he is in excellent health Barack Obama is still struggling to kick smoking, according to his first medical examination since becoming president. Obama is sensitive about his cigarette habit and tetchy with reporters who raise it. But after his 90-minute medical at the Navy hospital outside Washington yesterday morning, his doctors confirmed he had not yet managed to conquer the habit and suggested he "continue smoking cessation efforts". The doctors said the president used medication to try to ease the pangs, they described it as "nicotine replacement therapy, self-use".
Obama signs one-year extension of Patriot Act Sunset District Libertarian ExaminerRobert Taylor Sunday was supposed to be a glorious holiday for fans of civil liberties. The Patriot Act was set to expire today, but thanks to President Obama's signature, it now has a one-year extension. There are three scary sections of the Patriot Act that will stay in place. From the AP, the extensions will:
Authorize court-approved roving wiretaps that permit surveillance on multiple phones.
Allow court-approved seizure of records and property in anti-terrorism operations.
Permit surveillance against a so-called lone wolf, a non-U.S. citizen engaged in terrorism who may not be part of a recognized terrorist group.
How nuclear equipment reached Iran By PETER ENAV and DEBBY WU Associated Press How restricted nuclear equipment ended up where it wasn't supposed to Early last year, a Chinese company placed an order with a Taiwanese agent for 108 nuclear-related pressure gauges. But something happened along the way. Paperwork was backdated. Plans were rerouted, orders reconfigured, shipping redirected. And the gauges ended up in a very different place: Iran.
US steps up diplomatic pressure on Russia over Iran sanctions By Adrian Blomfield and Andrew Osborn in Moscow - Telegraph The US and its western allies have stepped up a behind-the-scenes campaign to persuade Russia to back tough United Nations sanctions against Iran. Amid fears that Moscow remains intent on weakening a planned Security Council resolution punishing Tehran for its nuclear programme, western diplomats are seeking to convince Russia to support much more robust measures. They hope the West's case for robust action will be strengthened on Monday when the International Atomic Energy Agency (IAEA), the UN's nuclear watchdog, meets in Vienna to discuss a damning new report on Iran's atomic intentions.
EXCELLENT INTERVIEW . . . take time to listen to what Bob Chapman has to say about the 16 nations that will likely be pushed into bankruptcy by October 2010 (include ring of fire nations - USA and UK) - just in time to suspend US November elections . . . plus more on Goldman Sachs engineering the financial destruction of sovereign nations, and endeavoring to get rid of their competitors
Bob Chapman's Friday Report on Alex Jones Tv 1/4: Power Grab by The EU
Bob Chapman's Friday Report on Alex Jones Tv 2/4: Power Grab by The EU
Bob Chapman's Friday Report on Alex Jones Tv 3/4: Power Grab by The EU
Bob Chapman's Friday Report on Alex Jones Tv 4/4: Power Grab by The EU
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