Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.

Tuesday 03.20.2012

As Sweden Goes, So Goes the World:
The Beginning of the End of Cash
Sweden could be pointing the way
to a (nearly) cash-free economy.
By Megan Garber - TheAtlantic.com
There are many, many things to dislike about analog money. Cash and coins are unwieldy. They're heavy. They're dirty. They leave no automatic record of the financial transactions that are made with them.
Here in the U.S., despite Square and PayPal and other services that would seem to herald the end of cash, bills and coins still represent 7 percent of our total economy. In Sweden, however -- which ranked first in this year's Global Information Technology Report from the World Economic Forum -- cash is scarcer. And it's becoming, the AP reports, scarcer still. While Sweden was the first European country to introduce bank notes in 1661, it's now come farther than any other country in the attempt to eradicate them. In most Swedish cities, the AP notes, public buses don't accept cash; tickets are prepaid or purchased with a cell phone text message. A small but growing number of businesses only take cards, and some bank offices -- which make money on electronic transactions -- have stopped handling cash altogether.

The Great American Bubble Machine
From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression -- and they're about to do it again
By Matt Taibbi - RollingStone.com
The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates.

The U.S. Cruises Toward a 2013 Fiscal Cliff
As tax cuts expire and spending falls, the economy will be hit with a 3.5% decline in gross domestic demand.
By ALAN S. BLINDER - WSJ.com
At some point, the spectacle America is now calling a presidential campaign will turn away from comedy and start focusing on things that really matter — such as the "fiscal cliff" our federal government is rapidly approaching.
The what? A cliff is something from which you don't want to fall. But as I'll explain shortly, a number of decisions to kick the budgetary can down the road have conspired to place a remarkably large fiscal contraction on the calendar for January 2013 — unless Congress takes action to avoid it.

Another Hidden Bailout: Helping Wall Street Collect Your Rent
By Matt Taibbi - rollingstone.com
Here's yet another form of hidden bailout the federal government doles out to our big banks, without the public having much of a clue.
This is from the WSJ this morning:

Some of the biggest names on Wall Street are lining up to become landlords to cash-strapped Americans by bidding on pools of foreclosed properties being sold by Fannie Mae...
While the current approach of selling homes one-by-one has its own high costs and is sometimes inefficient, selling properties in bulk to large investors could require Fannie Mae to sell at a big discount, leading to larger initial costs.

In con artistry parlance, they call this the "reload." That's when you hit the same mark twice – typically with a second scam designed to "fix" the damage caused by the first scam. Someone robs your house, then comes by the next day and sells you a fancy alarm system, that's the reload.

Gold ends higher as bargain hunting ensues
By Claudia Assis and Chris Oliver, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures ended higher Monday, shaking off initial weakness as bargain hunters snapped up the metal after sharp weekly losses and other commodities as well as U.S. equities also posted gains.
Gold for April delivery added $11.50, or 0.7%, to settle at $1,667.30 an ounce on the Comex division of the New York Mercantile Exchange.

Metal markets are bottoming out
By Avi Gilburt - MarketWatch.com
We have had quite a nice and successful run in the metal markets over the last year. For example, you may recall that on Feb. 25, we explained that we expected one last push up in the markets, after which, a correction would ensue. In our trading room on Feb. 28, I suggested that traders exit their short-term metals positions, and some to even short the market.
The next day, the precious metals entered into what some termed a "flash crash" of its own, and proceeded to begin a corrective decline. Our thoughts were that the correction would potentially target the 30-32 region in the futures, and the 158-161 SPDR Gold Trust region.

When Does Fiat Currency Run Out?
Published by Ian R. Campbell - StockResearchPortalBlog.com
A March 16 article reported the "The eurozone’s temporary bailout fund has paid out a 26.6 billion euro (about U.S.$35 billion) sweetener for Greek bondholders involved in the stricken country’s debt swap".
My Comments: I think one has to seriously wonder why such a payment would be made from what in the end has to be Eurozone (and perhaps European and perhaps even non-European) country taxpayers to private sector bondholders. The article says the amount could rise to 30 billion euros. Private sector investors typically ‘pay their money and take their chances’. For me, that such a payment is being made is tantamount to falling backward into what I think is the ‘too big to fail’ sinkhole. It seems to me there must be huge ‘financial sector’ risks perceived by the Euro Governments and Governments generally, or such a payment would not be even considered – let alone made. Hence the title of this commentary: ‘When Does Fiat Currency Run Out?’. I believe the theoretical answer is ‘never’. I believe the practical answer can be found in a statement attributed to Gordon Moore, the inventor of Moore’s Law. While Mr. Moore was referring to growth of something specific, I think the “it” in the following statement can fairly be said to broadly apply.

Note to Krugman:
Greece Proves Keynesian Economics Wrong
By Paul Roderick Gregory, Contributor - Forbes.com
Times columnist Paul Krugman’s continuous railing against austerity reached a crescendo with Greece’s default. In his What Greece Means, Krugman vents his outrage:
"What Greek experience actually shows is that while running deficits in good times can get you in trouble… trying to eliminate deficits once you’re already in trouble is a recipe for depression…Greece is the worst case, with unemployment soaring to 20 percent even as public services, including health care, collapse."

The Greek Tragedy, Act II
By Luigi Zingales - Project-Syndicate.org
CHICAGO – A Greek tragedy is typically composed of three acts. The first sets the scene. It is only with the second that the plot reaches its climax. For current-day Greece, the imposition of "voluntary" losses on the country’s private creditors represents just the end of the beginning. The real tragedy has still to unfold.
On the face of it, the "voluntary" arrangement with creditors might appear to have been a big success. The volume of Greece’s foreign debt has been reduced by more than €100 billion ($130 billion). Greece’s European partners have provided €130 billion in new loans. As a result, Greece has avoided generalized bank failures, and it has been able to continue paying its public employees.

BRICS Bank Could Change the Money Game
Analysis by Kester Kenn Klomegah - IPSNews.net
MOSCOW, Mar 19, 2012 (IPS) - India’s proposal to set up a bank of the BRICS nations (Brazil, Russia, India, China and South Africa) will top the agenda at the summit of the group in New Delhi Mar. 28.
India believes a joint bank would be in line with the growing economic power of the five-nation group. The bank could firm up the position of BRICS as a powerful player in global decision-making.
"The BRICS bank does not need much capital for a start," Alexander Appokin, senior expert at the Moscow- based Centre for Macroeconomic Analysis and Forecasting tells IPS. "What is more important is that the BRICS development bank presents a unique opportunity for indirect investment of central bank foreign reserves inside the countries."

Federal Reserve to fine eight more banks
on foreclosure violations
By Jim Puzzanghera and E. Scott Reckard - LATimes.com
Eight large banks face will be fined by regulators for foreclosure abuses, the Federal Reserve official said Monday.
The banks -- EverBank, Goldman Sachs, HSBC North America, OneWest Bank, MetLife, PNC Financial Services Group, US Bancorp and SunTrust Banks -- face sanctions for "unsafe and unsound practices in their loan servicing and foreclosure processing," the Fed said.

Bernanke Seen Not Knowing
Jobless Rate Below Fed Forecasts
By Caroline Salas Gage and Steve Matthews - Bloomberg.com
David Waldrop, 59, says he considers himself retired after searching unsuccessfully for work comparable to the job he lost in July 2007 at the U.S. Department of Energy in Atlanta.
"There was certainly nothing in my area at my level," he said. While the right opening might pull him back to employment, for now he sees his exit from the U.S. labor force as permanent. "I don’t see it happening," he said. "I don’t see anything offering opportunities."

Is Our Economy Too Broken for the Fed to Fix It?
By Noah Millman - TheAtlantic.com
A variety of much more knowledgeable commentators than I have been making the case for some time that the primary cause of our lingering economic difficulties is that the Fed has been too tight with money. Scott Sumner is probably the best exponent of this view, and of the view that a change in the Fed's policy framework is necessary to address this problem effectively for both the short and long term (if the Fed targeted NGDP rather than following some version of the Taylor rule, he argues, the policy responses during both the Great Recession and the Great Inflation of the 1970s would have been more correct), and he's won support from both the left and the right for his views - which makes sense because, from the left's perspective, he's making an argument for higher inflation and for placing a higher priority on reducing unemployment versus protecting the interests of asset-holders, while from the right's perspective he's articulating a policy alternative that could actually address our economic problems without increasing spending or the scope of involvement of the Federal Government in the economy (as a Keynesian fiscal policy would be likely to do).

No More Liquidity Needed for Economy: Fed's Fisher
By Reuters - CNBC.com
The U.S. financial system is well funded and needs no further injections of liquidity, a top U.S. central banker said on Monday.
"We have filled the tanks, there is plenty of liquidity. We need no more," Dallas Federal Reserve President Richard Fisher told a round table discussion at a business event in London.
Fisher is an outspoken policy hawk who has been critical of the Federal Reserve's last round of asset purchases

Treasury sells last mortgage bonds; program made $25 billion
By Jim Puzzanghera - LATimes.com
Reporting from Washington — The Treasury Department has sold the last of $225 billion in mortgage-backed securities it began buying during the financial crisis and announced the program designed to keep the housing finance market afloat made a $25 billion profit.
The purchases of bonds from Fannie Mae and Freddie Mac started in October 2008 and continued through December 2009 as part of a series of unprecedented government interventions into the financial system.

FDIC suing former Silver State Bank executives for negligence
Phoenix Business Journal by Jennifer A. Johnson
Four former bankers from Silver State Bank were grossly negligent and approved Arizona and Nevada land loans in violation of the bank’s lending policies that ultimately caused the bank’s failure, according to a lawsuit filed by the Federal Deposit Insurance Corp. in February.
Silver State was based in Henderson, Nev., but had four branches in Arizona.
The FDIC is suing for $86 million tied to losses incurred by Silver State as a result of what the agency described as risky land loans made to developers in Arizona and Nevada.

A rally built on fairy tales
As stock bulls hold out for 'happily ever after,' the setup for precious metals and miners could lead them into promising 'just right' trading territory.
By Bill Fleckenstein - Money.MSN.com
We appear to have finally reached the end of the latest chapter of the Greek debt-restructuring saga. The news on March 9 was that Greece had managed to reduce its obligations and extend its term structure via the proposed debt exchange, which obviously reduces short-term pressures and fears of a "messy" default.
That news, however, was sort of a nonevent for European debt and equity markets, while our stock market was boosted by the March 9 jobs number, which, at 227,000 jobs added, was about 17,000 higher than expected. In addition, January's total was revised upward by about 41,000 jobs.

The Market Is Overvalued
By Doug Kass - TheStreet.com
NEW YORK (Real Money) -- In recent weeks, many investors, traders and strategists have abandoned their previously bearish market and economic views (which had dominated their thinking at the beginning of the year). Some of the contributing factors that have led to a rekindling of the market's animal spirits in 2012 include:

• better jobs data;
• stabilization of the European sovereign debt problem (thanks to massive liquidity provided by the LTRO);
• a short-term Greek resolution (and debt exchange); and
• performance-chasing (as investors move from underinvested positions).

The Six States Where Taxes Are Soaring
247WallSt.com
As the economy struggles to recover, state and federal budget deficits continue to be the subject of increased attention. Just last week, the congressional budget office said that President Obama’s budget will produce a $1.3 trillion deficit in 2012 if enacted. It would be the fourth straight year of $1 trillion-plus deficits.
Many states haven’t been faring much better in their attempts to balance the budget. The recent recession resulted in some of the worst declines in state revenue since World War II, according to a recent report on state budgets by the Brookings Institution. In fiscal year 2010, a record 43 states faced budget deficits. In their fight to shrink their deficits, states have cut spending by slashing programs and lowering costs, while increasing revenue mostly by raising taxes.

The Expanding Wealth Of Washington
By Joel Kotkin, Contributor - Forbes.com
Throughout the brutal and agonizingly long recession, only one large metropolitan area escaped largely unscathed:Washington, D.C. The city that wreaked economic disasters under two administrations last yeargrew faster in populationthan any major region in the country, up a remarkable 2.7 percent. The continued steady growth of the Texas cities, which dominated the growth charts over the past decade, pales by comparison.

Jefferson County Creditors Seek to Appeal Bankruptcy Ruling
By Karen Gullo - Bloomberg.com
Creditors of Jefferson County, Alabama, seek to appeal a March 4 ruling by a federal judge who rejected their demands to throw out the biggest U.S. municipal bankruptcy.
Bank of New York Mellon Corp., trustee for the county’s sewer debt, JPMorgan Chase & Co. (JPM), which owns more than $1 billion of the sewer warrants, and other creditors filed a request for court approval to appeal the ruling simultaneously with filing notices of their intent to appeal, according to a filing today in U.S. Bankruptcy Court in Birmingham, Alabama.

California Cities Scramble to Avert Insolvency
Reuters - CNBC.com
When the city of Stockton, Calif., announced last month it would skip some bond payments and enter talks with its creditors, the municipal debt world shuddered.
If Stockton were to file for bankruptcy protection, it would be the largest U.S. city ever to do so. Other troubled Californian municipalities might be tempted to follow suit. Predictions of mass defaults on municipal bonds might start to look a little more realistic.
But a close look at the municipal finance situation across California suggests mass bankruptcies are unlikely.

$4 Gas? What a Bargain! (And, No, We're Not Kidding)
By RICH SMITH, THE MOTLEY FOOL - DailyFinance.com
According to a recent Gallup poll, most Americans say that if the price of gasoline gets up to somewhere in the neighborhood of $4 to $6 a gallon, they're going to have to make "major" changes in lifestyle. Driving less, certainly.Buying an electric car, maybe. Shopping less -- definitely.
Well, get ready to make a change, America. In some states -- Hawaii, California, Alaska, Illinois, and Washington, D.C. -- prices have already touched the $4 mark. In many other communities, with gas prices hitting an average of $3.81 a gallon nationally, it looks like change is at hand.
How much worse could it get? Quite a bit, actually.

Iran sanctions seen spurring more Saudi oil sales to U.S.
By Matthew Robinson and Jonathan Saul
(Reuters) - Saudi Arabia is preparing to extend this year's unexpected jump in oil sales to the United States, adding to speculation about the response of the world's top oil exporter to sanctions against Iranand a rally in prices.
The kingdom's shipments to the United States have quietly risen 25 percent to the highest level since mid-2008, according to preliminary U.S. government data, a sizeable leap that appears at least partly related to the imminent completion of a major expansion at its joint-venture Motiva refinery in Texas.

$5 gas prices would tank consumer: Wilbur Ross
Investor considers stakes in Ireland; cool on Spain after strikes
By Polya Lesova, MarketWatch
New York (MarketWatch) -- Wilbur Ross, the billionaire private-equity investor known for turning around struggling companies, said Monday he is concerned about the impact of rising gasoline prices on the U.S. economy.
"What I am worried about is the following: gas prices have been high and the effect on the consumer has been hidden," due to the mild winter, Ross told MarketWatch in an interview Monday at the New York Stock Exchange, on the sidelines of an event promoting investment in Ireland.

Gasoline price: Signs still point to a rise and to tight supplies
By Ronald D. White - LATimes.com
The average retail price of a gallon of regular gasoline in the U.S. continued to rise overnight while the price in California dropped by such a small amount that virtually no one will notice. Three more states joined the $4 a gallon club, bringing the total to six, and U.S. fuel experts continued at a record high pace.
Across the U.S., the average price of a gallon of regular gasoline rose another 4.1 cents since last week and 0.4 cents overnight to $3.842 a gallon. That's according to the AAA Fuel Gauge Report. The price looked painfully high a year ago on this date, but it was $3.548 a gallon then.

Natural gas pain is oil's gain as frack crews head to North Dakota
By Selam Gebrekidan
(Reuters) - Collapsing natural gas prices have yielded an unexpected boon for North Dakota's shale oil bonanza, easing a shortage of fracking crews that had tempered the biggest U.S. oil boom in a generation.
Energy companies in the Bakken shale patch have boosted activity recently thanks to an exceptionally mild winter and an influx of oil workers trained in the specialized tasks required to prepare wells for production, principally the controversial technique of hydraulic fracturing.

Has the Great Recession Made Us Forever Poorer?
By Matthew O'Brien - TheAtlantic.com
Here's a depressing thought: We might never fully recover from the Great Recession. Growth might never pick up enough to get us back to our pre-Lehman trend. We'll just be worse off, forever.
We're talking about this now because there's recently been a disconnect between jobs and GDP data. Jobs number say the recovery is accelerating. GDP numbers say it's not. (This is somewhat a reversal of the last three years, when jobs were lagging behind GDP.) The most likely answer to this apparent puzzle is that there isn't a puzzle at all. GDP growth will be revised upwards, and the numbers will all make sense. That might already be happening.

Why Most Employees Make Up to 30% Less
Than They Should -- Is It Happening to You?
Nancy Anderson, Contributor - Forbes.com
If you were offered a raise at work simply for being there and requiring no additional tasks, would you accept it? Of course you would. With no downside risk, most people would jump at the chance for additional compensation, but the reality is the raise was there all along. You just didn’t realize it. Many people forfeit a generous raise by not fully taking advantage of the benefits packages provided by their employer. Employers provide an additional 30% or more in benefits above and beyond salaries listed on a W-2. Many people even choose between prospective employers specifically for better benefits packages but after their new hire paperwork is filled out and the core benefits are chosen, maximizing that extra 30% in compensation falls by the wayside. Performing in the new job is top of mind.

Why Falling Wages Are Good News for Jobs (Seriously!)
Paychecks aren't keeping up with inflation. That's bad news for families, but good news for the job market.
By Jordan Weissmann - TheAtlantic.com
America's labor market is running a fever.
For the past year, Real wages for U.S. workers have been on a downslide. They're not collapsing, but they are falling. Since February 2011, average hourly wages have shrunk 1.1 percent when adjusted for inflation (in nominal terms -- what workers actually see on their pay stubs -- they've risen). Total weekly pay is down by a slightly smaller margin, 0.4 percent, because employees are working more hours.
This is a painful situation for families. It means that paychecks are lagging behind the cost of living. And because the official measure of inflation does not include energy or food prices, it also means most households are having to work even harder to make ends meet than the real wage data would suggest.

Jobs of the Future: A Skeptic's Response
There is a tendency to imagine that work will someday be like today's leisure, heavy on multitasking and social media.
By Alan Jacobs - TheAtlantic.com
A weak or unstable economy creates two kinds of anxiety: the acute and the chronic. People wonder whether they get a decent job today, or keep the one they have; but they also wonder about long-term trends -- especially if they have children. Where will the jobs be a decade from now? What skills will be best-suited to the economic environment of 2025? When people ask these questions today, they tend to focus on digital technologies because they're convinced that one way or another, the economy is turning digital. But is it? I have my doubts. And I wonder whether we're not letting a species of easy futurism blind us to some important issues.

Drug-resistant "white plague" lurks among rich and poor
By Kate Kelland
LONDON (Reuters)- On New Year's Eve 2004, after months of losing weight and suffering fevers, night sweats and shortness of breath, student Anna Watterson was taken into hospital coughing up blood.
It was strange to be diagnosed with tuberculosis (TB)- an ancient disease associated with poverty - especially since Watterson was a well-off trainee lawyer living in the affluent British capital of London. Yet it was also a relief, she says, finally to know what had been making her ill for so long.

At two-year mark, health law’s legacy is confusion
States and employers wait for guidance
By Paige Winfield Cunningham-The Washington Times
Two years after congressional Democrats squeezed out enough votes to pass President Obama’s health care overhaul, confusion still reigns among the states, insurers and average Americans struggling to comply with the hundreds of pages in the law.
Some states say they can’t move forward until the government issues more rules to clarify exactly what kinds of services need to be covered, while other states dispute that, saying enough information is available to plow ahead.

More Bankruptcy Concerns For Sprint (S)
By JON C. OGG - 247WallSt.com
In our daily research summary of analyst upgrades and downgrades, we noted how Sprint Nextel Corporation (NYSE: S) was downgraded at Bernstein and the firm took the rating down to Underperform from Market Perform. While that rating is never good under any circumstances, it is the “B” word that is causing the most fear this morning. The report is not exactly predicting a bankruptcy filing for Sprint. It is saying that the odds are now a very legitimate risk to the shares now.

Does the American Dream Exist Only in Europe?
Perhaps. But if you think America’s class system is as rigid as Europe’s, then you don’t know an old-fashioned social hierarchy when you see one.
By Yascha Mounk - Slate.com
American politicians, especially during an election year, often ascribe to Europe all the qualities they most love to hate. They say its governments are dysfunctional, its welfare states are wasteful, its war-weary populations effeminate and, worst of all, its health care systems socialist. But perhaps the most traditional foil to America’s superiority is the Old World’s fixation on class. In places like Europe, the standard story goes, a combination of social snobbery and a stagnant economy limits the prospects of ordinary people. In America, on the other hand, class simply doesn’t exist. Here, anybody can start at the bottom and work their way up to the top.

HILL POLL RESULTS GRIM FOR OBAMA
By John Hinderaker - PowerlineBlog.com
Polls are a dime a dozen and it is a mistake to draw too many conclusions from any one survey, but The Hill published a poll by Pulse Opinion Research this morning that will give Obama staffers heartburn. Pulse surveyed 1,000 likely voters, so the results are entitled to some respect. Complete results are here.
But first, a caveat: the Pulse poll sampled 36% Republicans, 32% Democrats and 32% independents. It would be great if that were the composition of the 2012 electorate–and, given what we have seen in generic Congressional preference surveys, it might be–but it would probably be prudent to adjust all numbers by a few percentage points. They are still grim for Obama:

Russian Anti-Terror Troops Arrive in Syria
By KIRIT RADIA and RYM MOMTAZ - ABCNews.com
A Russian military unit has arrived in Syria, according to Russian news reports, a development that a United Nations Security Council source told ABC News was "a bomb" certain to have serious repercussions.
Russia, one of President Bashar al-Assad's strongest allies despite international condemnation of the government's violent crackdown on the country's uprising, has repeatedly blocked the United Nations Security Council's attempts to halt the violence, accusing the U.S. and its allies of trying to start another war.

Niall Ferguson on China's Great Leap Backward
Beijing purges one of its own—
the Cultural Revolution isn’t over.
TheDailyBeast.com
"To understand China you have to think in generations," my Chinese friend explained. "And the key is that after 2012 the Cultural Revolution generation will be in charge."
While antiwar protesters clashed with the National Guard on American campuses and Czechs defied the Red Army in the streets of Prague, China had the Cultural Revolution. In some ways it was the ultimate ’60s teen rebellion. In other ways it was totalitarianism at its worst: a bloody revolution from above unleashed by one of the 20th century’s most ruthless despots.

Retired military officers call for curbing China’s power
By Sean Lengell - The Washington Times
China's burgeoning military poses a significant security threat to Southeast Asia and beyond unless quickly counterbalanced by the U.S. and its allies, said several retired military officers Monday at a Washington symposium.
That threat could hit global waters in as soon as 10 years, Yoji Koda, a retired vice admiral with the Japan Maritime Self-Defense Force, said at The Washington Times Foundation-sponsored event at the Capitol.

After attack, MK calls on Jews to leave FranceYa’akov Katz says Jews’ fate cannot be left in hands of world leaders
By AARON KALMAN - TimesOfIsrael.com
MK Ya’akov Katz called Monday for Jews to leave France in the wake of a deadly attack on a Jewish school in Toulouse.
"There is no Jewish future in France," Katz, of the National Union party, said, adding that the state of Israel is the future of the Jewish people, and that Jews should not trust their fate to "Sarkozy, Obama or other world leaders."

U.S. War Game Sees Perils of Israeli Strike Against Iran
By MARK MAZZETTI and THOM SHANKER - NYTimes.com
WASHINGTON — A classified war simulation held this month to assess the repercussions of an Israeli attack on Iran forecasts that the strike would lead to a wider regional war, which could draw in the United States and leave hundreds of Americans dead, according to American officials.
The officials said the so-called war game was not designed as a rehearsal for American military action — and they emphasized that the exercise’s results were not the only possible outcome of a real-world conflict.

- - - - - - - - - - - - - - - -
Archived Page Link
- - - - - - - - - - - - - - - -