Commodities May Correct in H2:2009 Due to Excessive Chinese Stockpiling But Rise in 2010 as the Global Economy Starts a Growth Recovery
Check out the following reports from Nouriel’s speech at a mining conference in Kalgoorlie, Australia:
Bloomberg – Roubini Says Commodity Prices May Rise in 2010
The Wall Street Journal – Dr. Doom Sees Double-Dip Recession Risk, in Remarks Down Under
125 Responses to “Commodities May Correct in H2:2009 Due to Excessive Chinese Stockpiling But Rise in 2010 as the Global Economy Starts a Growth Recovery”
Finally first, but in a really bland spot. C’est la vie!
Deflation or Inflation?This is not the right question.The point is that a massive inflationary force is counterbalancing deflationary forces.In fact I do not know why anyone (except FED) would like to buy bonds or notes denominated in dollars.Please explain to me why it is interesting to buy dollar-denominated debt.The dollar is simply crashing. Stocks are up in dollars but the dollar is becoming trash. So that why all this happiness?———————————Who loses?Cautious savers lose!Who wins?Risky gamblers that on a normal capitalist system would have to accept the rules.This interest rate (0-0.25%) on dollar denominated asset is something infamous.The lesson seems to be:Do not lend your money to Uncle Sam if you can buy something else. Otherwise the paper aristocracy will hurt you.
International Forecaster Weekly | August 1, 2009Follow The Economic Failures To Fix The Messquotesan early appraisal of the Chinese visit to Washington…The big question is has China demanded the rest of our high technology expertise that Bill Clinton was unable to deliver to them? Or have they pledged government properties to the Chinese?…electric car from China to hit US next year…Coda Automotive said former US Treasury Secretary Henry Paulson will serve as an adviser to the start-up electric-car maker on partnerships in China.Paulson has “deep, personal relationships in China and unique insights into the country and its people,” the Santa Monica, Calif.-based company said in a statement.Coda also said Paulson invested in the company earlier this year, without giving details.Coda plans to deliver its first model, a sedan, next year. The company, which began operating in June, intends to make and distribute electric vehicles and battery systems for transportation use.http://www.theinternationalforecaster.com/International_Forecaster_Weekly/Follow_The_Economic_Failures_To_Fix_The_Mess…Besides Paulson, Greencarreports reported “other new investors” as John Bryson, former chairman and chief executive officer of Edison International and Coda board member; Thomas “Mack” McLarty, Bill Clinton’s former Chief of Staff; and Farallon Capital Management founder and partner Thomas F. Steyerhttp://www.greencarreports.com/blog/1022714_electric-car-startup-coda-gets-more-cash-plus-hank-paulson-as-advisor…NOTE: In addition, Naked Capitalism reported July 24 that Steyer, formerly with Goldman Sachs, was named to the New York Fed’s newly-created “investor advisory council” that was packed with “the outer circle of insiders, the banks being the In Crowd.”The committee members, according to the official press release, “New York Fed Announces Creation of the Investor Advisory Committee on Financial Markets,” include:Keith AndersonCIO, Soros Fund Management LLCNicole ArnaboldiVice Chairman of Alternative Investments, Credit Suisse GroupLouis BaconChairman, CEO and Founder, Moore Capital Management LLCWilliam ClarkDirector, State of New Jersey Department of the TreasuryDivision of InvestmentMohamed El-ErianCEO and Co-CIO, Pacific Investment Management CompanyGarth FriesenPrincipal, III AssociatesGary GlynnPresident and CIO, US Steel and Carnegie Pension FundJoshua HarrisManaging Partner, Apollo Advisors LPAlan HowardDirector and Co-Founder, Brevan Howard Asset Management LLPGlenn HutchinsCo-CEO and Co-Founder, Silver LakeSander LevyManaging Director, Vestar Capital PartnersMorgan StarkManaging Member, Ramius LLCThomas SteyerSenior Managing Member, Farallon Partners LLC,The release says, “The New York Fed anticipates that committee membership will evolve to ensure additional perspectives are expressed in the committee.”http://www.nakedcapitalism.com
“Wal-Mart just issued $1 billion in Samarai bonds in yen…”The Treasury’s borrowing needs have been exploding and the auctions are getting progressively weaker. This presents a serious problem for the dollar. Once 78 on the USDX is broken the index should freefall. We expect the government will staunchly defend 78, but will lose the battle probably in October or at least by the end of the year. As a result you will see more bonds being issued in foreign currencies such as the yen, yuan and euro bonds. Wal-Mart just issued $1 billion in Samarai bonds in yen. Issuance of foreign currency denominated bonds by corporations and eventually by the US Treasury will signal that the day of the dollar as the world’s reserve currency will be coming to an end. Lenders will want to get repaid in a currency they know will have future value. This kind of issuance puts more and more pressure on the dollar. Issuance of bonds in a foreign currency will be a clarion call that dollar hegemony is ending. The result will be other currencies will gain in strength versus the dollar, but the flip side is that they are all fiat currencies and all will fall versus gold.–Bob Chapman 08/01/09
Oh so its a recovery eh? Well good for Nouriel that he was 100% invested in stocks while he told us to be in cash. At least he won’t suffer our pain at having missed the biggest rally in history. At least he earned all that money predicting doom and gloom while our money earned almost nothing in cash. He is a real smart guy. Now we know why they call him Dr Doom; he brings doom to those who listen to him.
Good summations on Roubini by the trio, IMOBy Peter Taylor:Prof Roubini had said that the US was likely to face a once-in-a-lifetime housing bust, sharp declines in consumer confidence and deep recession – forecasts that all proved accurate. Last month he warned that a “double-dip” recession was possible unless governments that had embarked on monetary stimulus strategies and gorged on debt found a clear strategy for exit._____________And this, from Tom Stundza:Roubini expects rising general economic growth in 2010 and 2011 but warns there always is a risk of a second slump caused by high government debt, rebounded oil and gas prices and a lack of job growth…”In the short term there has been a massive stockpiling of commodities by China,” Roubini says. “My concern is that China might have accumulated an inventory of commodities that is probably excessive to the growth of their own economy.” This could keep prices down this year. China earlier this year went on a buying spree after the global collapse in demand for metals, energy products and other industrial staples, bulking up its domestic government inventories.China will meet its target of 8% growth in gross domestic product this year, Roubini says, and should grow again next year. So, “as the global economy moves towards growth as opposed to a recession, you are going to see further increases in commodity prices, especially next year,” Roubini says._____________And Bloomberg (noting that “Oil has jumped 56 percent in 2009 and copper has surged 86 percent”):Roubini predicted on July 23 that the global economy will begin recovering near the end of 2009, before possibly dropping back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth.
So, if the good Dr isn’t your cup of tea – stop reading this blog and go somewhere else. Sour grapes makes a terrible wine.
Saving Our Brave, New World by Butler ShafferQuoteAnd so, we seem to have reached that stage where state violence has become its own raison d’être. Social and economic problems are no longer considered within the sphere of authority of legislative bodies; congress is too slow to act when “we need action, now!,” and so the president or governor takes over and appoints – without anyone else’s approval – “czars” to rule over various realms of human activity. My thesaurus advises me that synonyms for “czar include “despot,” “tyrant,” “dictator,” “slave driver,” “duce,” “oppressor,” and “Führer.” One news report informs us that some thirty-two “czars” have been appointed in a number of states.This is what we have become, a consequence that should reveal to all that scribbling words on parchment and calling them a “constitution” is ineffective to prevent any significant number of people from doing whatever they want to do. The response of some mainstream media’s “talking heads” to America’s embrace of “czars” has been not to question the statist power implications, but only to suggest calling such officials by a different name! As has become the norm in our world, if we use an alternative word to describe something (e.g., “waterboarding” instead of “torture”) it becomes a different act.http://www.lewrockwell.com/shaffer/shaffer196.html
In the previous thread I posted this:Unruly town meetings leave Rep. Tim Bishop (D-N.Y.), Rep. Allen Boyd (D-Fla.), Rep. Thomas Perriello (D-Va.), Rep. Bruce Braley (D-Iowa), and Rep. Dan Maffei (D-N.Y.) in fear of their safety.Tim Bishop was confronted by boiling anger and rising incivility. Within an hour of the disruption, police were called in to escort the 59-year-old Democrat — who has held more than 100 town hall meetings since he was elected in 2002 — to his car safely.“I had felt they [more town meetings] would be pointless,” Rep. Tim Bishop (D-N.Y.) told POLITICO, referring to his recent decision to temporarily suspend the events in his Long Island district. “There is no point in meeting with my constituents and [to] listen to them and have them listen to you if what is basically an unruly mob prevents you from having an intelligent conversation.”Is this not delicious! Run the scallywags out of town on a pole. Ha!http://news.yahoo.com/s/politico/20090731/pl_politico/25646============Here are a few related videos and Web sites:John Conyers says it’s too difficult to read the healthcare bill – http://www.youtube.com/watch?v=ACbwND52rrwCrowd Explodes When Arlen Specter Urges That We “Do This Fast” – http://www.youtube.com/watch?v=J-Bpshk5nX0TIM BISHOP PROTEST, SETAUKET, NY (part two) – http://www.youtube.com/watch?v=XOdlZgMHKcQSchumer's Office Visit – http://www.youtube.com/watch?v=D0Pf0GS7p98http://www.operationembarrassyourcongressman.com/http://teapartypatriots.org/TownHalls.aspx
Wall Street profits from trades with FedBy Henny Sender in New YorkAugust 3, 2009 –Wall Street banks are reaping outsized profits by trading with the Federal Reserve, raising questions about whether the central bank is driving hard enough bargains in its dealings with private sector counterparties, officials and industry executives say.The Fed has emerged as one of Wall Street’s biggest customers during the financial crisis, buying massive amounts of securities to help stabilise the markets. In some cases, such as the market for mortgage-backed securities, the Fed buys more bonds than any other party.However, the Fed is not a typical market player. In the interests of transparency, it often announces its intention to buy particular securities in advance. A former Fed official said this strategy enables banks to sell these securities to the Fed at an inflated price.The resulting profits represent a relatively hidden form of support for banks, and Wall Street has geared up to take advantage. Barclays, for example, e-mails clients with news on the Fed’s balance sheet, detailing the share of the market in particular securities held by the Fed.“You can make big money trading with the government,” said an executive at one leading investment management firm. “The government is a huge buyer and seller and Wall Street has all the pricing power.”A former official of the US Treasury and the Fed said the situation had reached the point that “everyone games them. Their transparency hurts them. Everyone picks their pocket.”The central bank’s approach to securities purchases was defended by William Dudley, president of the New York Fed, which is responsible for market operations. “We believe that opting for transparency is a greater good,” he said. “If we didn’t have transparency, we’d be criticised on other grounds.”However, another official familiar with the matter said the central bank “has heard that dealers load up on securities to sell to the Fed. There is concern, but policy goals override other considerations.”Barney Frank, chairman of the House financial services committee, said the potential profiteering may be part of the price for stabilising the financial system.“You can’t rescue the credit system without benefiting some of the people in it.” Still, Mr Frank said Congress would be watching. “We don’t want the Fed to drive the hardest possible bargain, but we don’t want them to get ripped off.”….Larry Fink, chief executive of money manager BlackRock, has described Wall Street’s trading profits as “luxurious”, reflecting the banks’ ability to take advantage of diminished competition.“Bid-offer spreads have remained unusually wide, notwithstanding the normalisation of financial markets,” said Mohamed El-Erian, chief executive of fund manager Pimco in Newport Beach, California.Spreads narrowed dramatically during the years of the credit bubble.Brad Hintz, an analyst at AllianceBernstein, said he doubted that spreads would ever return to those levels, a development that could be pleasing to the Fed.“They want to help Wall Street make money,” he said.Additional reporting by Brooke Masters in WashingtonCopyright The Financial Times Limited 2009
China’s exports down 80% YOY for June 2009, see article in part:”…China’s global trade surplus narrowed to just $8.2 billion, its second-smallest gap in many years after February’s $4.8 billion. Last year’s trade gap was as high as $40 billion a month.Stronger imports suggest China’s appetite for iron ore, industrial components, consumer goods and other products is picking up as companies buy supplies for stimulus-financed projects….”The rest of the URL:http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/07/10/financial/f024034D41.DTLPerhaps the dollar is safer, America’s trade deficit is way down…LOL
Further On GDP – And Stocks | Sudden DebtAugust 3, 2009 –Delving deeper into the GDP numbers just released it becomes quite easy to discern a pattern and possibly make a prediction about the direction of corporate profits.The following figures are in current dollars, at seasonally adjusted annual rates.During the first two quarters of 2009..· Personal consumption expenditures (that’s about 70% of GDP): -$21 billion.· Non-residential fixed investment (that’s structures, equipment, software, etc.): -$481 billion.=> Businesses slashed their investment far faster than consumers reduced their spending. Corporate profits (finance excluded) benefited from cost-cutting, not growth in sales.Furthermore, in the same period…· Private inventories were slashed by a cumulative: -$283 billion.Businesses sold a lot out of inventory already in stock, as opposed to making new items. That’s another short-term boost to the bottom line.Both of the above positive effects cannot, and will not, last long. Therefore, the crucial question is what happens with consumer spending. My thinking is not to expect a turnaround any time soon; indeed, I think things are going to get significantly worse in the next several quarters. Jobs are being lost in the hundreds of thousands each month and hours worked for those still employed are at the lowest level (33 hours/week) since at least 1964.Bottom line: corporations can “save” earnings for a few months by slashing spending but in the end the consumer’s behavior will determine the top line (sales). And that’s where it all plays out.http://suddendebt.blogspot.com/
You buy US bonds if you buy the conventional wisdom that it is still the ultimate safe haven, otherwise, as you point out, there seems to be little appeal these days. Q4 of last year gave a good example of this, as investors fearing the financial end and not knowing where to go piled into US Treasuries across the entire curve like a child grabbing his security blanket.The bigger question is, have global investors realised that there is a post-dollar world, and if so, does that mean that in the next melt-down that there won’t be a similar reach for the UST blankie?As for stocks, well gee, stocks, gold and oil are all up in dollar terms and that is what gets reported, so everyone becomes a bull. The increase in those is somewhat disproportionate to the devaluing dollar, but that could simply be a temporary supply-demand matter.
Well, I wouldn’t say that America has embraced Czars, but certain elements of its government have. The question is, what are the people going to do about it?
Reductio ad absurdum, if they just stop making things altogether, then profits will approach infinity. Seriously, they will have to start making stuff again sometime. It could very well be that all the good press will finally kick-start consumer confidence and thereby purchasing, and everything will be rosy again.Look at the Cash for Clunkers fiasco … it suggests that given enough incentive, even after massive job-losses over the past seven months and continued poor prospects on that front in the foreseeable future, people will gladly trade in what is most likely a fully-paid asset and take on new debt at a time when one would ordinarily be scaling back on risk. Decompose that a little more, and you have to wonder how much of this is the result of sending a somewhat clear signal that no one is really responsible for their debts and therefore they gladly sign up for any new credit thrown their way if some sucker is willing to extend them credit?
There is only ONE opinion allowed in this fascist state:Geithner loses his cool at regulators meeting-WSJNEW YORK, Aug 3 (Reuters) – U.S. Treasury Secretary Timothy Geithner blasted top U.S. regulators in an expletive-laden tirade amid frustration over President Barack Obama’s faltering plan to overhaul financial regulation, the Wall Street Journal said on Monday, citing people familiar with the meeting. Geithner told regulators that “enough is enough,” the newspaper said, citing one person familiar with the meeting last Friday with Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Schapiro and Federal Deposit Insurance Corp Chairman Sheila Bair.The Treasury Secretary said regulators had been given a chance to air their concerns, but that it was time to stop, the newspaper said, citing the person.The Treasury Department could not immediately be reached for comment.Obama in June unveiled a financial regulatory overhaul, sometimes called the biggest since the 1930s. Among other things, the plan would give the Fed added powers, award the government more power to break up troubled companies, and create a new agency to oversee consumer finance.Many major banks and industry trade groups however have criticized the plan, as have some regulators wary that any redistribution of power would reduce their own.According to the newspaper, Friday’s roughly hour-long meeting was unusual because of Geithner’s repeated obscenities and his aggressive posture toward regulators generally deemed independent of the White House.Geithner told attendees that the administration and Congress set policy, the newspaper said.(Reporting by Jonathan Stempel; editing by Carol Bishopric) Keywords: USA TREASURY/GEITHNER MEETING (email@example.com +1 646 223 6317; Reuters Messaging: firstname.lastname@example.org)http://www.iii.co.uk/news/?type=afxnews&articleid=7457110&action=article
If Timothy Geithner is as bad at handling the economy as he is at picking bathroom tiles, he won’t need to sell his house.http://www.thedailyshow.com/watch/wed-july-29-2009/home-crisis-investigation
That was good.
Stay calm dear “amacfly”! I recognize your plein merit. YOU ARE THE FIRST!But, all you are tracking the USD Index – tendences and intraday! There are something more in the air, more then planes! I think that we´re nearing a decisive moment for the global monetary sistem. If the USD cross this torment, it will stay as reference by more 6 or 12 years (global cycle duration: approximately 6 years).Mis besosobs: Excuse my poor English.
http://globaleconomicanalysis.blogspot.com/2009/08/federal-tax-revenues-suffer-biggest.htmlreason i dont believe what this lunatic guy said? inflation is expansion of credit not increase of price? tell that to ordinary consumer that depend on food, water, utility, shopping, dinning out, internet, and iphone. if price of these thing that they enjoy everyday is climbing, they gonna say is inflation regardless what happen to credit.currently, people are living with their mean, repairing their balance sheet. they clearly still spending if they find good deal. ISM manufacturing # starting to go up. forget deflation crap talk, it is inflation we need to worry about.
Bow and pay, I suppose?
After spending twelve years testing nerve gas successfully, I decided to change careers. I looked for a job that allowed me to try things and fail, yet still be rewarded handsomely; something quite the opposite of what Ayn Rand would have me do. The only jobs with these characteristics were found in government, but I wanted to stay in the private sector. I decided to become an economic prognosticator. I looked back at events of the past ten years, and boldly proclaimed that I had seen them all coming, but no one listened to me then. Next, I gave my predictions for the next two years, making sure I told people what they wanted to hear. “The price of bubble gum will drop like a rock. Short bubble gum!” “The S&P will definitely reach new heights unless it reaches new lows or stays the same.” I exhorted.Offers for speaking engagements came rolling in. The president urged me to join his economic team, but I declined in order to maintain my objectivity and independence. My ship really came in when I began to speak internationally. No matter what I said, there was some place in the world where what I said was true. My credibility soared and with it, my speaking stipends.Financial reporters are pressing me for my latest predictions. They know that what I say can move markets. Let them know this: 2010 will be known as the “Year of the death of the twist tie.” “Health care costs will drop dramatically due to the creation of an unecessary testing czar. The czar will automatically order unecesary tests for all Medicare and Medicaid patients, thereby saving doctors time and effort.” My final prediction involves China. “The Chinese will attempt to consume what they used to send to the U.S., domestically. Since they have so little experience with the unintended consequences of so much consumption, they will soon be buried under tons of crap in their houses, landfills and public buildings. This will add fuel to their building boom as they attempt to accomodate the build up of crap that they formerly exported to the U.S. The U.S. will export prefabricated buildings to China and erase the balance of trade deficit. We will then begin to buy their bonds, manufacture cars to sell to them and bake fortune cookies cheaper with better fortunes inside them.”I wish I started this career earlier. It’s so much more rewarding than the nerve gas factory.
Shorten your links. the link you posted almost blew up the page.
On Deck, GE Capital, which will make GMAC look like small potatoes. Why is GMAC even in Biz still? Makes no sense to me. General Electric could be the one big Company, that when GE Cap implodes, because its GE, people will finally relaize we are in a Depression.GMAC Posts Wider Quarterly Loss as Loan Defaults Rise (Update2)By Ari LevyAug. 4 (Bloomberg) — GMAC Inc., the lender that received $13.5 billion in government bailout funds, reported a $3.9 billion second-quarter loss tied to rising loan defaults and said part of its insurance operations may be sold.The loss, GMAC’s seventh in the past eight quarters, rose from $2.48 billion a year earlier. Results included a $1.2 billion tax charge caused by converting to a corporation, the Detroit-based company said today in a statement. The auto- finance unit’s loss increased to $727 million from $717 million, while the deficit from mortgage operations shrank to $1.84 billion from $1.9 billion, GMAC said.The recession drove up defaults on home and auto loans, and operations will be trimmed to save $1 billion annually by 2010, GMAC said. The U.S. took a 35 percent stake earlier this year, enabling GMAC to keep lending to customers of General Motors Corp. and Chrysler Group LLC after the automakers entered bankruptcy. While government incentives boosted car sales and GMAC’s revenue, losses on older loans are hobbling profit.“On balance, there hasn’t been any sort of dramatic improvement,” said Sean Egan, president of Egan-Jones Ratings Co. in Haverford, Pennsylvania, which upgraded GMAC’s debt six levels to B- in May because of the bailout. “The company lives and dies by its federal government support.” Egan commented before results were released.Mortgage Asset SalesExcluding one-time charges, GMAC’s quarterly loss was about $400 million. The company had a $1.6 billion loss from selling international mortgage assets at a discount, and on provisions, impairments and reserves on non-bank mortgage assets in the U.S. The mortgage operations, which include Residential Capital LLC, boosted originations to $18.5 billion from $13.2 billion in the previous period.The company took a $607 million goodwill impairment on its consumer property and casualty insurance business related to a “strategic review” of the operation, which may include a sale, GMAC said. Chief Financial Officer Robert Hull said during a conference call with analysts today that GMAC will continue support for ResCap if it’s in the interests of stakeholders, while adding that all options will be considered.GMAC’s 6.625 percent notes maturing in 2012 rose 2 cents, or 2.3 percent, to 91 cents on the dollar yesterday, to yield 10.4 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. They’ve climbed 57 percent since March. GMAC doesn’t have publicly traded stock.Bank StatusGMAC, which was permitted to become a bank holding company in December, is counting on added deposits at its Ally Bank unit to help fund new loans. Deposits climbed 13 percent to $25.4 billion at the bank and assets jumped 17 percent to $42.5 billion. The bank’s one-year, 2 percent certificates of deposit, while less than half the 4.05 percent yield a year ago, are among the highest in the country, according to Bankrate.com.GMAC’s worldwide cost of borrowing, which has been above 5 percent since 2005, was helped in the second quarter by a $4.5 billion debt sale backed by the Federal Deposit Insurance Corp. The total cost of borrowing increased to 6.27 percent from 6.21 percent because of other debt expenses. GMAC has $40.9 billion of bonds outstanding, with more than half maturing by the end of 2011, according to Bloomberg data.New vehicle originations, while higher than in the previous two quarters, slumped to $5.6 billion from $12.5 billion a year earlier. GMAC has financed about $320 million of new Chrysler originations through July 20, with the lender handling 10 percent of the automaker’s retail sales in June.Auto SalesThe annual sales pace for U.S. automobiles last month was 11.2 million, the first time this year it’s topped 10 million, according to Autodata Corp. in Woodcliff Lake, New Jersey. The government’s so-called cash-for-clunkers incentive helped GM pare sales declines, bringing more financing business to GMAC.While new business is increasing, so are delinquencies. Contracts more than 30 days past due rose to 3.4 percent from 2.4 percent a year earlier, GMAC said. The company may struggle to boost profit amid the highest unemployment in 26 years and near-record home foreclosures.“Consumer credit will continue to weaken throughout the rest of the year, so that will continue to be a problem,” said Christopher Wolfe, an analyst at Fitch Ratings in New York, before results were released.
Where’s the beef?I like the Donald, but this is what makes the world go around these days. Go bankrupt, hang for a while and buy back what you ran into the ground on the cheap after ypu screwed your investors or stock holders. Is’nt that what is happening with banks and mortgages, auto companies, AIG, etc? He has been screwing bond holders of Trump Ent for over 20 years… One big ponzi scheme. They are all like Whimpy on Popeye “I’ll gladly pay you Tuesday for a hamburger today”.Donald Trump, Beal Bank to Buy Trump Entertainment (Update1)Aug. 4 (Bloomberg) — Donald Trump and an affiliate of lender Beal Bank Nevada agreed to invest $100 million in bankrupt Trump Entertainment Resorts Inc. and buy the casino company he founded out of bankruptcy.Beal Bank agreed to restructure $486 million in secured debt to extend the maturity to December 2020 from 2012, Atlantic City-based Trump Entertainment said yesterday in a statement. Shareholders and holders of debt securities will receive nothing under the plan, which requires court approval.“We’re going to invest $100 million initially and that won’t be the end of it,” Trump, 63, said today in a telephone interview. “Now that we’ll be running the company, it will be a wonderful company after we intelligently spend money to fix it.”Trump Entertainment filed for Chapter 11 bankruptcy in Camden, New Jersey, on Feb. 17, days after Donald Trump quit as chairman and said he was severing ties. This is the third trip to bankruptcy court for the company’s three Atlantic City casinos. At the time of the filing, Trump Entertainment listed assets of $2.06 billion and debt of $1.74 billion as of Dec. 31.
Dear Santa, Oh! Please change my standing wish for that Christmas pony, can you can you please?Because this year I really really really need this book!Richard Wilkinson and Kate Pickett, The Spirit Level: Why More Equal Societies Almost Always Do Better. The Penguin Group: Allen Lane, 2009, 331 pp.Huge numbers of people in the United States hold prescriptions for anti-depressants. Huge numbers of other Americans “self-medicate” — through illegal drugs and alcohol. Huge numbers of Americans, in other words, are feeling plenty of pain. Why? What’s causing all this anguish?Our conventional wisdom blames the grind of our always-on-the-go modern existence, the stresses and strains of life in the fast lane. The conventional wisdom, suggests this splendid new book, has that half-right. Stress is indeed doing us in. But that stress doesn’t come from “modern life.”That stress comes from inequality, the vast gaps in income and wealth that so divide us.How can the authors of The Spirit Level, Richard Wilkinson and Kate Pickett, be so sure? They’ve crunched the numbers. All of them, you might say.These two distinguished epidemiologists have identified nearly every social problem where reliable data let us compare how well — or poorly — the major nations of the developed world are delivering a decent quality of life.Epidemiologists study the health of populations, and Wilkinson and Pickett have, naturally enough, included in their comparisons all the basic health yardsticks. In which developed nations, they ask, do people live the longest? What nations show the highest levels of obesity? Where in the developed world do people suffer the most mental illness?But the comparisons don’t stop there. In which nations, Wilkinson and Pickett wonder, do children do the best in school? Where do people born at the bottom of the economic ladder have the best shot at climbing up? Which nations send the most people to prison? Have the most teenage moms? Exhibit the highest levels of trust? Tally the most homicides?Wilkinson and Pickett answer all these questions — and many more. And their answers fascinate. The nations of the developed world, so alike on the trappings of daily life, turn out to differ enormously on the markers that measure how well we lead our lives.People in some developed nations, the data show, can be anywhere from three to ten times more likely than people in other developed nations to be obese or get murdered, to mistrust others or have a pregnant teen daughter, to become a drug addict or escape from poverty.And the nations that do the best, on yardstick after yardstick, all turn out to share one basic trait. They all share their wealth.“If you want to know why one country does better or worse than another,” as Wilkinson and Pickett note simply, “the first thing to look at is the extent of inequality.”The United States, the developed world’s most unequal major nation, ranks at or near the bottom on every quality-of-life indicator that Wilkinson and Pickett examine. Portugal and the UK, nations with levels of inequality that rival the United States, rank near that same bottom.Japan and the Scandinavian nations, the world’s most equal major developed nations, show the exact opposite trend line. They all rank, on yardstick after yardstick, at or near the top.And we see the same pattern within the United States. America’s most equal states — New Hampshire, Minnesota, North Dakota, and Vermont — all consistently outperform the least equal, states like Mississippi and Alabama.People in more equal societies simply live longer, healthier, and happier lives than people in more unequal societies. And not just poor people in these societies, Wilkinson and Pickett emphasize continually, but all people.If you have a middle class income in an unequal society, you’re going to be more stressed and less healthy — mentally and physically — than someone with the same income in a more equal society.So what makes inequality so potent a curse? Wilkinson and Pickett explore the impact of inequality from all sorts of angles. Sociologically, for instance, they explain how “the stresses of a more unequal society — of low social status — have penetrated family life and relationships,” how inequality undercuts the sense and reality of community and fosters, in their place, suspicion and fear.“We tend to choose our friends from among our near equals and have little to do with those much richer or much poorer,” the two authors note. “And when we have less to do with other kinds of people, it’s harder for us to trust them.”The wider the economic gaps between us, The Spirit Level helps us understand, the more social status matters. The more social status matters, the more likely we will be to feel shame and humiliation. The more stress these emotions evoke in us, the weaker we get.“Chronic stress,” The Spirit Level observes, “wears us down and wears us out.”Want the biochemistry behind that wearing down? The Spirit Level has it for you, in passages you don’t have to be a biochemist to comprehend. Wilkinson and Pickett can speak academese as well as anyone. But they don’t speak that here. They’ve attempted instead to make a generation’s worth of scholarship on inequality accessible to the general public. And they’ve succeeded.The Spirit Level appeared earlier this year in Britain. Wilkinson and Pickett, one British daily noted, may have produced “the most important book of the year.” They have. Anyone can order the British edition, right now, online. An American edition will appear the end of this year.“In the past,” Wilkinson and Pickett note as they close this remarkable book, “when arguments about inequality centered on the privations of the poor and on what is fair, reducing inequality depended on coaxing or scaring the better-off into adopting a more altruistic attitude to the poor.”But that’s all changed, the authors point out, now that “we know that inequality affects so many outcomes, across so much of society.” Reducing inequality, they add, has become “a project in which we all have a shared interest.”If you share that interest, get this book. Give this book to others. We need a movement to make the world more equal. This book can help create it.Interested in getting a more in-depth sense of what Richard Wilkinson and Kate Pickett have to offer? Check out the Equality Trust, a new Web portal on inequality that highlights their data and insights.www.toomuchonline.orgToo Much is published by the Council on International and Public Affairs, a nonprofit research and education group founded in 1954.(I cannot recommend this free online weekly highly enough. You can subscribe to free Monday emails at the site. They are timely, short, and sweet, and packed with live links to information and sources you’re not otherwise likely to find!)
Great! if this is true, what next? “Bank risk levels have increased, too, and in some cases, beyond pre-crisis levels.”Economic Stabilization Does Not Indicate RecoveryBotanical commentators are finding “green shoots.” The astronomically minded have seen “glimmers.” The meteorologically minded have spoken about the storms “abating.” Strong rallies in equity and debt markets have confirmed the recovery for the “true believers.” The Global Financial Crisis (GFC) is over! (See also: Key Lessons From the Financial Crisis.)It’s useful to remember Winston Churchill’s observation after the British expeditionary force’s escape from Dunkirk: “[Britain] must be very careful not to assign to this deliverance the attributes of a victory.” There may be confusion between “stabilization” and “recovery.The “green shoots” theory is based on a slowdown in the rate of decline in key economic indicators, improvements in the financial system, unprecedented government support for the banking system, near-zero interest rates, and large fiscal stimulus packages. The recovery of emerging markets and a renewed belief in Decoupling (Release 2.0) also underpin hopes of a swift return to growth.Shooting MessengersThe puzzling thing is that real economy indicators continue to be poor. Growth forecasts for 2009 have steadily deteriorated with world growth expected to be negative 2.00-3.00% with especially poor prospects for Japan and the Euro Zone. Industrial output, employment, consumption, investment, and global trade continue to be weak. Even China, expected to grow between 6% and 8% in 2009, experienced a fall in exports of over 20% over the last year.The “wealth effects” of the GFC on economic activity are unclear. In the US alone, $30 trillion of value has been destroyed. Combined with declines in housing prices and reduced dividends and investment income, the sharp decline in wealth may not be ready to fully flow through into consumption.The financial system has stabilized but not returned to the “rude good health” that current executive compensation demands within banks would suggest.Good results for Goldman Sachs (GS) and JPMorgan (JPM) are offset by less impressive performances by Bank of America (BAC), Citigroup (C), Morgan Stanley (MS), and Deutsche Bank (DB). The problems at CIT Group (CIT) also highlight the problems for the financial system and the threat to availability of credit to small- and medium-sized businesses.Profitability is patchy and reliant on risky trading income and large underwriting revenues from capital raising by financial institutions and companies who are de-leveraging aggressively. Asset quality remains vulnerable to more bad debts from the normal recessionary credit cycle that is working through the economy.Bank risk levels have increased, too, and in some cases, beyond pre-crisis levels. Goldman Sachs’ second-quarter earnings showed an increase in risk levels as measured by Value-at-Risk (VAR). The increase in risk is probably understated as it takes into account diversification benefits that may be overstated under conditions of market stress. It’s probably also understated because of assumption of trading liquidity that may be optimistic given recent experience. The higher levels of risk-taking reflect increasing comfort in central bank support of financial institutions’ liquidity and their ability and willingness to intervene to limit price risks.rest at: http://www.minyanville.com/articles/GS-C-jpm-bac-ms/index/a/23840
“I wish I started this career earlier. It’s so much more rewarding than the nerve gas factory.”Bwahaha! A romantic fiction writer. Good on you “Harley Quinn”.That’s so Ayn Randy of you.
and from the Dept. “Greed at a Glance”, from this week’s Too Much online:Lobbyists for America’s awesomely affluent spent last week slipping in and out of congressional offices, doing their best to scuttle any move to tax the rich to pay for health care reform. But their work has suddenly become more complicated. On Tuesday, a brand-new group of high-net-worth Americans launched a campaign to raise taxes on people who share their high-net-worth status. The initiative announced last week — Wealth for the Common Good — is asking for an immediate repeal of the Bush-era tax cuts that benefit households making over $235,000 a year. Among the campaign’s supporters: former Connecticut lawmaker and Norwalk mayor Bill Collins, who made his fortune in real estate. Says Collins: “Those of us who have the greatest ability to pay are not being asked to. I am not keen on being part of the freeloader class.”The Houston Chronicle recently asked an assortment of big-time local CEOs to name the business person “you most admire.” Peter Kinnear, the chief exec at FMC Technologies, listed Peter Drucker, the founder of modern management science who passed away four years ago. A strange pick. Drucker went to his grave protesting excessive executive pay. He believed top execs should make no more than 20 or 25 times what their workers make. Pay above that level, Drucker wrote, “destroys mutual trust between groups that have to live together and work together.” Kinnear, the Chronicle reports, took home $14.5 million last year, or 725 times the compensation of a worker making $20,000 a year . . .Calling Denny Hecker an auto dealer a few years ago would have been like calling Bill Gates a computer salesman. The Minnesota-based Hecker ran an auto sales and leasing empire that brought in as much as $6.8 billion a year. Hecker parked a good chunk of that revenue in his own pockets, and a bankruptcy hearing last month gave the Twin Cities public a look inside. Among Hecker’s collectibles: four personal watercraft, nine snowmobiles, and two $30,000 guard dogs. Authorities will later this month start auctioning off the $18.5 million of assets still in Hecker’s name. He owes $767 million. But you have to feel for the guy. Asked by a lawyer why he hadn’t originally listed his $30,000 guard dogs as assets, Hecker had a heartstring-tugging answer. He saw the dogs, Hecker explained, as family pets . . .
NO JOBS=NO RECOVERY. What a shame when you look at this chart. How do they expect hoosuing or Jobs to recvover when their is massive WAGE DESTRUCTION occuring and thats for thsoe still working.Housing affordability and minimum-wage earnersBy Chris Morris (contact), Alex Richards (contact)Monday, Aug. 3, 2009 | 2 a.m.The map shows the percentage of monthly income a minimum-wage earner in each county would spend on housing, based on the HUD-determined fair market rent of a two-bedroom dwelling and the minimum wage in each state, which ranges from the $7.25 per hour federal minimum to $8.55 per hour in Washington. The Bureau of Labor Statistics estimates that 2.2 million of the 75 million hourly workers in the U.S. earn minimum wage and that roughly one in six U.S. workers are employed part time.http://media.lasvegassun.com/media/img/photos/2009/08/02/bythenumbers.jpg
I paid 3.05 yesterday in California… Who needs a new car when you cant afford to put gas in it?Pump prices are on the riseRetail gasoline prices jumped 6.7 cents to $2.896 a gallon in California over the last week. Escalating oil and fuel prices could hurt the U.S. and global economies at an sensitive time, slowing the pace of recovery.By Ronald D. WhiteAugust 4, 2009Those slowly swelling pump prices aren’t done yet, energy analysts said, as crude oil futures jumped back above $70 a barrel Monday to close near the year’s trading high.With the economy showing signs of life, energy costs are responding. Rising oil and fuel prices could damage U.S. and global economies at a particularly delicate time, economists warned.
This guy finally hit it… The program was about trying to raise prices or in fact rasing them. Are they really this stupid to think they can raise prices?Clunker program in overdriveConsumers love the deals, but fallout could include higher pricesExplore relatedCHICAGO (MarketWatch) — Consumers have embraced the “cash for clunkers” program, lending a big boost to car sales and perhaps setting the stage for a stronger rebound down the road.But the stimulus may have some unintended consequences as well, skewing the mix of new- and used-car sales and driving up prices on the fuel-efficient vehicles most in demand as clunker replacements.ReutersCash-for-Clunkers program used cars sit on Ted Britt Ford dealership storage lot in Fairfax, Va.”The reality is this is a brilliant stimulus package,” said AutoNation Chief Executive Mike Jackson on the company’s second-quarter earnings call last week. “This is exactly what stimulus programs are supposed to do.” AutoNation is a network of new- and used-car dealers.The $1 billion federal stimulus program, which provides payments of $3,500 or $4,500 for trade-ins of older, fuel-inefficient cars, kicked off July 24 and in just a week was in danger of running out of funding, forcing Congress to consider slapping another $2 billion into it. On Friday the House approved the additional money and the Senate could take it up as early as Monday. Read more on congressional action on the clunker program.The effect of the program was evident immediately, as carmakers Monday reported better-than-expected July sales. Cash for clunkers was “icing on the cake” for the automakers reporting July sales, industry analyst Lincoln Merrihew of TNS Compete told MarketWatch Radio. See more on July car sales.”It’s not what’s driving all sales — that’s more a function of confidence — but it may be pulling some people into the market who would have bought later in the year or people who would not have been in the market at all,” he said.Merrihew says a more confident consumer had already started steering sales in the right direction when the popular government program kicked in.”And the news of better sales may in and of itself get consumers more confidence to buy cars,” he said. Listen to more of MarketWatch’s interview with Merrihew.At AutoNation, for example, traffic surged 35% in the first week of the program and the company is expecting a 10% year-over-year jump in new-car sales for July. Credit scores for clunkers buyers were “better than normal,” and the program did not hurt the company’s used-car business, according to Mike Maroone, AutoNation’s president.Stimulating higher prices?Jeremy Anwyl, chief executive of Edmunds.com, the auto-buying-guide Web site, said consumers knew the clunker program was in the works and held off many car purchases waiting to jump on the deals.”We’ve seen three or four months worth of clunker activity compressed into a one-week period,” he said. But “what are we really accomplishing? We’re forking over $1 billion to get consumers to do something that they would likely do anyway.”"This isn’t signaling an economic recovery,” he added. In fact, he said, this “artificial boost” is leading to a shortage of cars. Plug in the laws of supply and demand and the result will be higher prices on cars.Already the costs on some vehicles are inching up. AutoNation’s Jackson talked about “price recovery” with analysts, noting that trucks and SUVs are now getting sold for 25% higher than they did a year ago when the sharp hike in gas prices put a big dent in sales.”We could see a buyer’s strike in October,” Anwyl said. “As car prices rise, consumers who have been buying pretty aggressively during the summer are just going to stop.”The auto industry has seen a similar pattern before: In 2001, after the terrorist attacks, General Motors introduced 0% financing with the Keep America Rolling program. Four years later, GM offered consumers the same discounts it gave employees. Both times sales zoomed. But they have been weak for most of the last two years.’Deal happy’Still, cash for clunkers proves American consumers will still respond to great deals and it may signal a pickup in broader spending down the line, one analyst said.”As consumers, we’re deal happy,” said Michael Belcher, a marketing professor and consumer behavior expert at San Diego State University. “If people can afford to spend, they will on a good deal.”"From a psychological standpoint, it’s going to be a good boost,” said Belcher who believes this program might help consumers loosen up on the purse strings elsewhere. But it won’t sustain higher sales for long. “It is what it is — a promotion,” he said.What’s more, Anwyl said that things could get worse because the auto industry has been cutting capacity this year by stopping production on certain models, closing down production plants and laying off tens of thousands of workers.”This is not a fundamental recovery of the car business,” he added. “It’s an exaggeration of the normal seasonality.”Anwyl also thinks there’s another backlash from this. “Here’s the irony,” he said. “As pricing on fuel-efficient cars increases because of this artificially created shortage, then consumers who can’t participate are going to be influenced to buy less fuel-efficient cars” — the opposite of the cash for clunkers goal
Good article that hammers home the “WAGE DESTRUCTION” occuring. So, Obama whats your plan to fix this problem that now affects 30 Million U6 workers. Oops, I forgot first you have to create the jobs…Income Loss Persists Long After LayoffsRIVIERA BEACH, Fla. — Chuck Dettman said he had not really considered the notion back in 2001 that he and his friends in a job-search support group would never recover from being laid off.Josh Haner/The New York TimesJim Clark, 60, made $20,000 a year as a cantor at a Catholic church after being laid off as an engineering assistant pulling in about $49,000.The country was in a recession then, as now, and the professionals who had just lost their jobs met weekly at a local job center to network and trade advice. Despite the national economic problems, they remained confident that they would not only find work but would also be compensated as they had been in the past.Eight years later, however, most of the people who formed the core of Mr. Dettman’s group have not made it back to their old income levels, even if they eventually landed jobs.“I think there’s maybe only one or two that have been successful in making what they did then,” Mr. Dettman said.Taken together, their struggles are stark illustration that it can take years for a worker’s earnings to bounce back after a layoff, and that it can take even longer for a layoff during a recession. Economists, in fact, say income losses for workers who are let go in a recession can persist for as long as two decades, a depressing prognosis for the several-million people who have lost their jobs in the current recession.“On average, most workers do not recover their old annual earnings,” said Till von Wachter, an economics professor at Columbia University, who recently completed a working paper with two other economists that examined the long-term earnings of workers who lost their jobs in the recession of the early 1980s.Mr. Wachter studied workers who had been with their companies at least three years, then lost their jobs when their employers reduced their work forces by at least 30 percent. He found that even 15 to 20 years later, most on average had not returned to their old wage levels. He also concluded that their earnings were about 15 percent to 20 percent less than they would have been had they not been laid off.One of the main reasons for the drop-offs, according to economists, is that workers who endure a layoff are more likely to be laid off again.“What tends to happen is the worker has to start over with a new employer, sometimes in a new industry,” said Ann Huff Stevens, an economics professor at the University of California, Davis. “You’re at the bottom of the totem pole again.”(Although some unqualified workers are undoubtedly laid off, Mr. Wachter said he tried to correct for that possibility in his study. He focused on large-scale layoffs to ensure he was following mostly workers who lost their jobs through no fault of their own.)The largest wage losses are typically for workers who had long tenures at their previous companies. The stability often allows them to build up skills specific to their employers or their industries and to accrue corresponding wage increases, but those skills can be worth less to other companies.Older workers’ wages usually slide more than those of younger workers. Those with college degrees do slightly better than those without.The networking group that Mr. Dettman helped form in 2001 was initially made up mostly of former colleagues of his from Pratt & Whitney, the jet engine maker, which laid off hundreds at the end of 2000 in a restructuring. The group members were all in their 40s and 50s.Interviews with seven early members of the group found that many had been forced to drastically change their lifestyles to cope with lower incomes. Several have struggled with long bouts of unemployment. Some were laid off several times. Many have been forced to lean heavily on spouses’ incomes.Mr. Dettman, who was a business analyst and earned just over $50,000 after nearly 20 years with Pratt, spent almost four years looking for work, exhausting his savings and his 401(k). He finally took a job as the chief financial officer of a drug and alcohol detox clinic run by his daughter and his son-in-law, getting paid three-quarters of what he used to make, without benefits. He quit two years ago to start his own Christian counseling service but has yet to draw a paycheck.Jim Clark, 60, a former engineering assistant at Pratt who made about $49,000 a year, went back to school to earn a bachelor’s degree in organizational management but has still not found full-time paid employment. He now scrapes together about $20,000 a year as a cantor at his Roman Catholic parish on Sundays and by singing at weddings and funerals.The only former group member interviewed who is now earning more than she did before is Karen Carron, a 19-year Pratt veteran and computer programmer. Ms. Carron, 49, who has a master’s degree in computer science, made about $69,000 a year as part of a team producing software for the F-35 Lightning II fighter jet.About a year-and-a-half after being laid off, she found herself doing almost exactly what she had done before, only this time for a Pratt contractor. She now earns $80,000 a year.Ms. Carron said she was not familiar with other programming languages that are more broadly used, so she was lucky to have found a job working on the same project. Otherwise, she said, she would almost certainly have had to take a pay cut.In contrast, others in the group who managed to land steady paychecks have had to struggle to get back on track.David Himmelheber, 58, worked more than 20 years at Pratt in the graphics department, earning about $54,000 a year at the end. He was one of the first members of the group to find a job, but it was in an entirely new field, as a business liaison for a vocational school, making about half his old salary. He eventually moved to teaching social studies at the school and now makes about $40,000 a year. He also found work as an adjunct professor at a local college. The two teaching assignments combined, however, bring in less than what he used to make at Pratt.Bill Sankey, 62, a computer programmer, earned about $55,000 a year for a company that owned Pizza Hut franchises, before being laid off in 2001 when the company was sold. Since then, Mr. Sankey has been hired and laid off twice. At one point, he was making more than he did before his 2001 layoff. At his latest job, he is back to making about the same, though with inflation factored in, he is probably making less.“I really haven’t progressed anywhere financially in eight years,” he saidhttp://www.nytimes.com/2009/08/04/us/04layoffs.html?_r=1&ref=business
here’s the link to Wealth for the Common Goodcool site – check out the quotes!
Stiglitz wrote”The fall of the Berlin Wall, in 1989, marked the end of Communism as a viable idea. Yes, the problems with Communism had been manifest for decades. But after 1989 it was hard for anyone to say a word in its defense. For a while, it seemed that the defeat of Communism meant the sure victory of capitalism, particularly in its American form. Francis Fukuyama went as far as to proclaim “the end of history,” defining democratic market capitalism as the final stage of social development, and declaring that all humanity was now heading in this direction. In truth, historians will mark the 20 years since 1989 as the short period of American triumphalism. With the collapse of great banks and financial houses, and the ensuing economic turmoil and chaotic attempts at rescue, that period is over. So, too, is the debate over “market fundamentalism,” the notion that unfettered markets, all by themselves, can ensure economic prosperity and growth. Today only the deluded would argue that markets are self-correcting or that we can rely on the self-interested behavior of market participants to guarantee that everything works honestly and properly.”I have a question, Dr. Stiglitz:Can a central-banking oligarch based system be considered free-market?With a genuine free-market interest rates (the price of money) would be determined by the market and not by Greenspan or Bernanke FED. Excuse me but this system is not a free market but an aristocracy based fraudulent capitalism. “AIGs + Fannies + Fractional Banks” = all profits for “the friends” all the costs for the people.Why people do not think about FDR 1933 licence = banks create money out of thin air? Is this a fair proposition?
From the same article, I could say Stiglitz replies:”Among critics of American-style capitalism in the Third World, the way that America has responded to the current economic crisis has been the last straw. During the East Asia crisis, just a decade ago, America and the I.M.F. demanded that the affected countries cut their deficits by cutting back expenditures—even if, as in Thailand, this contributed to a resurgence of the aids epidemic, or even if, as in Indonesia, this meant curtailing food subsidies for the starving. America and the I.M.F. forced countries to raise interest rates, in some cases to more than 50 percent. They lectured Indonesia about being tough on its banks—and demanded that the government not bail them out. What a terrible precedent this would set, they said, and what a terrible intervention in the Swiss-clock mechanisms of the free market.The contrast between the handling of the East Asia crisis and the American crisis is stark and has not gone unnoticed. To pull America out of the hole, we are now witnessing massive increases in spending and massive deficits, even as interest rates have been brought down to zero. Banks are being bailed out right and left. Some of the same officials in Washington who dealt with the East Asia crisis are now managing the response to the American crisis. Why, people in the Third World ask, is the United States administering different medicine to itself?”
Something does’nt add up with numbers like this on the federal lever and simialar declines, or worse on the States and local levels. Why would’nt the % of Unemployment be higher? If nayone doesnt think BIG TAX INREASES are not coming, think again. 95% of middle class america, Average Joe American, is about to get slammed. Looks the the Medciare and SS train wreck could be coming a lot faster than anyone ever thought possible. As it is Medicare (50 Trillion underfunded)was going to be bankrupt by around 2018-2020 and SS around 2035. Now both could be upon us faster than anyone ever imagined. Like I have been saying, all the current fixes are nothing but Ponzi fixes and jsut buying time, hoping to fight another day and more likely, hoping for a miracle.US Tax Revenues Post Biggest Drop Since DepressionThe recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab. The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever. The last time the government’s revenues were this bleak, the year was 1932 in the midst of the Depression. “Our tax system is already inadequate to support the promises our government has made,” said Eugene Steuerle, a former Treasury Department official in the Reagan administration who is now vice president of the Peter G. Peterson Foundation. “This just adds to the problem.”While much of Washington is focused on how to pay for new programs such as overhauling health care – at a cost of $1 trillion over the next decade – existing programs are feeling the pinch, too. Social Security is in danger of running out of money earlier than the government projected just a few month ago. Highway, mass transit and airport projects are at risk because fuel and industry taxes are declining. The national debt already exceeds $11 trillion. And bills just completed by the House would boost domestic agencies’ spending by 11 percent in 2010 and military spending by 4 percent.For this report, the AP analyzed annual tax receipts dating back to the inception of the federal income tax in 1913. Tax receipts for the 2009 budget year were available through June. They were compared to the same period last year. The budget year runs from October to September, meaning there will be three more months of receipts this year. Is there a way out of the financial mess? A key factor is the economy’s health. Thefuture of current programs – not to mention the new ones Obama is proposing – will depend largely on how fast the economy recovers from the recession, said William Gale, co-director of the Tax Policy Center.”The numbers for 2009 are striking, head-snapping. But what really matters is what happens next,” said Gale, who previously taught economics at UCLA and was an adviser to President George H. W. Bush’s Council of Economic Advisers. “If it’s just one year, then it’s a remarkable thing, but it’s totally manageable. If the economy doesn’t recover soon, it doesn’t matter what your social, economic and political agenda is. There’s not going to be any revenue to pay for it.”A small part of the drop in tax receipts can be attributed to new tax credits for individuals and corporations enacted in February as part of the $787 billion economic stimulus package. The sheer magnitude of the tax decline, however, points to the deep recession that is reducing incomes, wiping out corporate profits and straining government programs. Social Security tax receipts are down less than a percentage point from last year, but in May the government had been projecting a slight increase. At the time, the government’s best estimate was that Social Security would start to pay out more money than it receives in taxes in 2016, and that the fund would be depleted in 2037 unless changes are enacted.Some experts think the sour economy has made those numbers outdated. “You could easily move that number up three or four years, then you’re talking about 2013, and that’s not very far off,” said Kent Smetters, associate professor of insurance and risk management at the University of Pennsylvania. The government’s projections included best- and worst-case scenarios. Under the worst, Social Security would start to pay out more money than it received in taxes in 2013, and the fund would be depleted in 2029.The fund’s trustees are still confident the solvency dates are within the range of the worst-case scenario, said Jason Fichtner, the Social Security Administration’s acting deputy commissioner.”We’re not outside our boundaries yet,” Fichtner said. “As the recovery comes, we’ll see how that plays out.” The recession’s toll on Social Security makes it even more urgent for Congress to address the fund’s long-term solvency, said Sen. Herb Kohl, D-Wis., chairman of the Senate Aging Committee. “Over the past year, millions of older Americans have watched their retirement savings crumble, making the guaranteed income of Social Security more important than ever,” Kohl said.President Barack Obama has said he wants to tackle Social Security next year, after he clears an already crowded agenda that includes overhauling health care, addressing climate change and imposing new regulations on financial companies. Medicare tax receipts are also down less than a percentage point for the year, pretty close to government projections. Medicare started paying out more money than it received last year.Meanwhile, the recession is taking a toll on fuel and industry excise taxes that pay for highway, mass transit and airport projects. Fuel taxes that support road construction and mass transit projects are on pace to fall for the second straight year. Receipts from taxes on jet fuel and airline tickets are also dropping, meaning Congress will have to borrow more money to fund airport projects and the Federal Aviation Administration.http://theautomaticearth.blogspot.com/
Tax Facts, found at Wealth for the Common Good:The top 1 percent of America’s households — families with incomes over $450,000 in 2008 — will receive 31 percent of the benefits from the Bush 2001 and 2003 tax cuts over the next ten years if these tax cuts are made permanent.-Center for Budget and Policy Priorities, The 2001 and 2003 Tax Cuts, March 5, 2009In 2009, 70.4 percent of the tax savings from the Bush tax rate cuts on capital gains and dividend income will go to the nation’s top 1 percent, taxpayers who report $1,661,900 in average income. Just 2.9 percent of the tax savings in 2009 will go to households who make under $75,000. These households make up 81.6 percent of the taxpaying public.-Citizens for Tax Justice, Capital Gains and Dividends Tax Cuts Offer Almost No Benefit to Middle-Income Americans and Add to the Nation’s Fiscal Problems, May 13, 2008.Between 1986 and 2006, the top 1 percent of U.S. households almost doubled their share of the nation’s income, from 11.3 percent of the total to 22.1 percent. Over that same span, the share of top 1 percent income paid in federal income tax dropped by nearly a third, from 33.1 to 22.8 percent.-Source: Kyle Mudry and Justin Bryan, Individual Income Tax Rates and Shares, 2006, Statistics of Income Bulletin, Winter 2009, Internal Revenue ServiceBetween 1986 and 2006, the top 1 percent of U.S. taxpayers saw the share of their income paid in federal income taxes drop 32.1 percent. The bottom 99 percent of Americans, in those same years, saw the share of their incomes paid in federal income tax drop just 20.1 percent.-Source: Kyle Mudry and Justin Bryan, Individual Income Tax Rates and Shares, 2006, Statistics of Income Bulletin, Winter 2009, Internal Revenue ServiceIn 2006, the most recent year with complete IRS statistics available, taxpayers with incomes over $2 million paid 23 percent of their incomes, on average, in federal income tax. A half-century earlier, in 1955, taxpayers who made the equivalent of over $2 million, after adjusting for inflation, paid 49 percent of their incomes in federal income tax.-John Cavanagh, Chuck Collins, Alison Goldberg, and Sam Pizzigati, Tax Day 2009: Reversing the Great Tax Shift, Institute for Policy Studies and Wealth for the Common Good, April 2009.In 2004, America’s most affluent 10 percent paid, on average, 17.1 percent of their income in federal, state, and local taxes. The next highest 10 percent paid 19.1 percent of their incomes in total taxes.-Source: Ajit Zacharias, Edward N. Wolff, and Thomas Masterson, New Estimates of Economic Inequality in America, 1959–2004, The Levy Economics Institute of Bard College, April 2009America’s 400 most affluent taxpayers in 1955 reported incomes that averaged, in today’s dollars, $12.3 million. These 400, after loopholes, paid 51.2 percent of their total incomes in federal income tax. In 2006, the top 400 averaged $263 million in income — and paid just 17.2 percent of that in federal tax.-Too Much, Is Taxing the Super Rich a Waste of Time? March 9, 2009In 2010, the top marginal income tax rate in Britain will rise to 50 percent. The top rate in the United States, unless Congress and the White House repeal Bush-era tax cuts for the wealthy, will remain at 35 percent. Last year, the United States had the lowest top tax rate among the world’s major industrial nations. No other major economic power had a top rate under 40 percent.-Source: KPMG, Individual income tax rate survey 2008, October 2008Overall, after taxes, America’s very rich — the top 0.01 percent — have nearly quadrupled their share of the nation’s income since 1979. This top 0.01 percent averaged $24.3 million, after taxes, in 2005. Between 1979 and 2005, the after-tax share of the nation’s income that went to middle-income Americans — households that made between $45,200 and $67,400 in 2005 — dropped by 12.7 percent.Congressional Budget Office, Historical Effective Tax Rates, 1979 to 2005: Supplement with Additional Data on Sources of -Income and High-Income Households, December 23, 2008In 2008, taxpayers in the nation’s poorest 20 percent — average income, $12,000 — paid 11.9 percent of their incomes in state and local taxes. Taxpayers in the top 1 percent averaged $1,445,000 and paid 8.2 percent of that in state and local taxes.-Incomes and Federal, State, and Local Taxes in 2008, Institute on Taxation and Economic Policy Tax Model, April 2009Got that? The poor guy with $12,000 paid 11.9 percent while the millionaire paid 8.2and then of course there is all that hidden offshore secret tax haven wealth being untaxed, and it sure isn’t that guy with the $12,000 hiding it
I was wondering the same things this past weekend. What makes wall Street and bankers and the traders and all the workers receiving Billions in compensation so important. Are they more important then Doctor’s, Scientists, Teachers, Dentists, Engineers? The answer is NO! All they do is fugure out ways to keep GS and Wall Street afloat and how to keep AVERAGE JOES money. At the end of the day where actually do thier so called profits come from? They come form Average Joe. When did average Joe vote to share so much of thier hard earned money? If it its not that, then it is one big Ponzi scheme where they are in cohots with the Gov’t and FED. As he says below, no one, let alone AVERAGE JOE can understand this, other then what they see with thier own 2 eyes happening.Q and A with Michael Lewis (Part 2): There’s a Real Chance There’s Going to Be an UprisingI recently interviewed Liar’s Poker author Michael Lewis. After talking about his new book, Home Game: An Accidental Guide to Fatherhood, we discussed the financial meltdown and the bailout. This is Part 2 of some excerpts. You can hear the full podcast at terrencemcnally.net.In Part 1, we talked about how the rules of the game were “totally screwed up” – for individual traders, firms, and ratings agencies. In Part 2, we look at some implications for American society at large.TM: In 1970 only about 5% of men graduating from Harvard went into finance. By 1990, 15%, and by the class of 2007, 20% of the men and 10% of the women planned to go into investment banking.ML: And half of the other ones applied, they just didn’t get jobs. This is a radical misallocation of human talent. You can say it’s faith in the free markets, but it’s caused by the huge growth of a culture of financial manipulation.TM: For years people have been saying that the U.S. was shifting from a manufacturing to a service economy. I suspect people thought of services as fast food, IT, health care, maybe lawyers. I don’t think many really saw the huge role played by the financial sector.ML: That’s right. And let me draw an analogy. With the sub-prime mortgage racket generating lots of fees, the people within each big Wall Street firm who create that business acquire enormous power. So when the business gets decreasingly sane, when the loans get shakier and shakier, and the leverage gets bigger and bigger, they’re the ones who say we’ve got to keep doing this. Even though people not directly implicated in the business might have said, “No, it’s time to stop.”TM: So there were people within the firms who were sane and conservative …ML: There were, and they got driven out.The plot thickens. Lewis sees the same dynamic at play among our country’s leadership.ML: I want to draw an analogy between what happens inside Merrill Lynch and what happens inside the United States. Here we have our little company, the United States of America. For thirty years the people who have had the most money to throw around were engaged in financial manipulation. Now they have outsized influence over the way the company is run.TM: The company being the United States, the U.S. government…ML: We are at a point right now where we should be radically reforming the financial system, and no Wall Street person with an actual interest should have a great deal of influence on that reform. Instead, the Obama administration is sort of half-heartedly reforming things, with little radical change — and Wall Street people are instrumental in designing the new rules.I think they think nobody’s going to say anything to them about it, but I think it’s politically risky. There’s a real chance that there’s going to be an uprising about this, and they’re going to have trouble controlling the process.TM: Do you mean they’ll face trouble when what they pass doesn’t work?ML: Right. It won’t work, and the mess they’ve created is going to have slow-burning economic consequences. We’re going to be living in a very soft economy for a long time, and it’s going to create disillusionment and anger. I expect there’s going to be a crashing down of Wall Street’s influence. It’s just amazing it hasn’t happened yet. And it hasn’t happened yet because for thirty years their influence has become part of the air we breathe.TM: It doesn’t look like it’s due simply to financial contributions to political candidates — although there’s certainly plenty of that — but it’s more that the best and the brightest…ML: — want to go work on Wall Street. That’s the out.If you’re in Washington right now and you’re engaged in public policy around Wall Street, if you’re a regulator at the SEC, or you’re at the Federal Reserve or the U.S. Treasury, and you’re thinking what do I do next — after I stop doing my poorly paying public service job — there is an out. You get paid millions of dollars a year to go work at Goldman Sachs.I don’t think people engaged in trying to fix the problem are necessarily conscious of this, of how corrupt it all is. It’s just in the air they breathe.The existing institutional structure rewards those who are making the decisions, so they don’t want to change it. In fact, they can’t imagine a different institutional structure. They can’t imagine a completely tamed financial sector that actually exists to serve the productive economy.TM: They never ask, “How do we save the folks?” They never get past, “How do we save the banks?”ML: The premise of the bailouts wasn’t even really “How do we save the banks?” There are lots of banks, not all of them were involved in sub-prime mortgages. If you were going to start giving money to banks, you’d think you’d give it to the ones who didn’t do dumb things. But instead the money goes to bankers who did do dumb things, because they’re the ones who are about to go out of business.What’s even more interesting, the starting point for dealing with this problem – for both the Bush and Obama administrations — was to say, one, we can’t nationalize these banks, and two, the creditors of these banks can’t take any sort of haircut, they can’t take any losses.TM: — for making these terrible investments.ML: So it leaves you, as a matter of public policy, with only one solution: to give money to the banks until they “earn their way out of it”. Congress wrote a check for 700 billion dollars six or seven months ago. Then they lost the appetite for giving money to the banks, so now the banks are being gifted money, kind of sneakily, in the form of zero interest rate loans from the Federal Reserve. They can reinvest it in government securities, continue to run their high leverage, and keep the spread.You take a step back and say, “What kind of society is this, where you have socialism for careless bankers and capitalism for everybody else?” Capitalism for everybody but the capitalists. That’s not sustainable.I think people generally don’t completely understand what’s going on, but it’s a political issue.TM: People say to themselves, “This is too complex for me…”ML: — and “They must know what they’re doing.”But the fact is, they haven’t known what they were doing, so there’s no reason to suspect they know what they’re doing now.They’re trying, I guess, but with a double standard that in these places alone, profits are privatized, and losses are socialized. That’s a disaster. That they have not taken a more punitive approach to Wall Street amazes me, but I think the Obama administration is going to be forced to.TM: When?ML: Couple of years out.It’s hard to guess what’s happening, but Obama probably looked at the problem and said, “If I do what actually needs to be done right now, it would consume the first two years of my administration. I could get one thing done — radical reform of the financial industry, but I wouldn’t get healthcare, climate change, anything else. So I’m going to put a band-aid on that problem, and do the other things I want to do. Then we’ll come back to it.TM: You’re giving him the benefit of the doubt.ML: Maybe. I think he deserves the benefit of a lot of doubt. He’s earned it with me. That’s the only thing I can think.TM: You do see a day of reckoning…?ML: Yes I do.TM: And the question is, “Will society get really ugly before that happens?”ML: Yes, that’s the problem.If you accept that what caused the financial crisis was totally screwed up rules of the road, totally screwed up incentives…then you claim you’re reforming things, but you don’t change those rules, you’re just going to get the same problem all over again. I think that’s the issue. Eventually we’re going to have to change the rules of the gamehttp://www.huffingtonpost.com/terrence-mcnally/qa-with-michael-lewis-par_b_249538.html
Revenue And EPS Deterioration Continues As Earnings Season ProgressesSubmitted by Tyler Durden on 08/03/2009 19:36 -0500Earnings Expectations Green Shoots StellarIt was a short 5 days ago that we wrote about CNBC’s misrepresentation of this earnings season as a stellar success for companies. Earnings and revenues were down 32.4% and 15.1% then. Since then the economic situation has deteriorated even more: as of today earnings were down 33.4% and sales have declined 17.4%, respectively, quarter over quarter. And while earnings are now supposed to increase by 114.9% in two quarters by inhaling green shoots and what not, more curious is out of what hat will revenues stage a dramatic 22% increase in just 6 months. If anyone held a gun to my head to indicate when disappointment with guidance/analyst expectations would finally set in, i would have to say middle of February 2010 when miss after miss, both top and bottom line, will demonstrate just what an unjustified joke this rally truly is.
Personal Income Drops, Personal Saving Rate Slides From 6.2% To 4.6%Submitted by Tyler Durden on 08/04/2009 09:35 -0500Deflation GDP Gross Domestic Product Inflation Personal Consumption Personal Income Personal Saving Rate PonziThe personal saving rate declined by over 1.6% in just a month. This is relevant as the consumer isn’t levering up: savings exhaustion is likely coming at the expense of paper profits in Schwab and 401(k) accounts. Unless the Ponzi can be maintained in perpetuity, when the house of cards falls, the doulbe whammy from savings increase will have a dramatic adverse impact on the economy. Bottom line: another one-time plug to Q2 GDP.
Whatever happened to shame? If I declared bankruptcy I would be embarrassed. Instead, we have serial bankrupts who are considered business leaders. No wonder the average person overextends himself and does not pay his bills.
Who needs gas when you can’t pay for food?
Might makes right. Its the same sense of entitlement seen with the bankers applied on an international scale.It is the banks God given right to make a lot of money because..that’s what their job is.The US has the God given right to have the best standard of living, even at the expense of the other countries, and therefore the world must do as it says, not as it does.Inflation v Deflation?Someone on this blog said it best:Things you NEED- food, energy, health care, education will rise in actual cost along with inflation.Things you OWN: house, car, stocks, bonds will decrease in value, i.e. deflation.The candle is burning at both ends.
I would bet that it happens in November 2009. So many companies are living off of inventories right now, eventually they will have to start producing again soon.
Oyez. Paulson is so-o-o interested in the “environmemt.” Isn’t it nice that in his retirement, he can indulge his passion and we all can benefit from his benevolence and charity and caring? It’s sort of like tithing to one’s country, isn’t it? We all should be so proud.
Cash for trash is no way to run a recovery, an economy or a country.AS FAMC says: Who wins? Who loses?Whose cash paid for the clunker? Whose cash paid the automaker to make the auto? Whose cash went to the bank? Whose cash was devalued? Whose cash put the $8000 down for the wannabe’s first home? Whose cash paid the investment bankers for their toxic waste?A. The loser’s–the taxpayer, the saver, the wage earning producer.How much is the loser’s bill? Well, let’s see…that’s a billion and growing for clunkers; only GAO knows for homes for couples earning up to $150 grand; and Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP), totted up his bill for banker relief and says at last count it could reach up to $23,700, 000,000,000.Millions, billions, trillions, quadrillions, quintillions and sextillions. It boggles the mind. It was meant to.Q. Who knows what $1,000,000,000,000,000,000,000 is other than a sextillion and some zeros on Bernanke’s keypad? Yes, hand in the back?A. It’s the road sign, on the way to Serfdom!Class dismissed.
Thats Classic guest! but true as evidenced by the almsot 40 million on food stamps these days.
Now that the news is out, I might as well come clean. The scenario I described is actually a business strategy initiated by Goldman Sachs. It’s known to insiders as the Egg Role Reversal Operation. For more information, you must subscribe to my newsletter for premium members. This month’s issue features an in depth investigation of the role of Chinese Checkers with regard to export quality control.
But who will buy? and produce what and buy what?
A DIRTY HARRY STOCK MARKETStock market to shorts: “I know what you’re thinking. “Did he fire six shots or only five?” Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is a .44 (Goldman) Magnum, the most powerful handgun (market pump) in the world, and would blow your head clean off, you’ve got to ask yourself one question: Do I feel lucky? Well, do ya, punk? “
American Express is advertising its “1.85% APY High-Yield Savings Account” today for your savings on the WSJ.com. website. Don’t you just hate these greedbag bankers and their “all-for-me-24.51%-charges-for-use-of-their-money-but-peanuts-for-you-1.85%-for-their-use-of-your-money”?To make the subtraction worse, they get trillions in taxpayer bailout for their debts: we get jail and deeper in debt.
Essentials. Or did folks stop eating and wiping their you-know-what?
Check out rates at your local credit union. Some are paying 5% on high yield checking accounts and offering 3.95% on auto loans. Forget banks.
I beleive tommorrow on fox business, Elizabeth MaCdonald is going to rip into the banks and the next BIG Financail collapse/disaster coming. I beleive a big part of it will be GE Capital. She is one of the few who I respect on the airwaves. Hust my guess, but GE’s time is running short.
Us bottom-feeders have had to resort to dumpster-diving. To borrow a phrase from Maggie Thatcher “there is no alternative” (TINA).Forget expiry dates! Some of this stuff is actually still edible, even if not chock-full of the doctor’s daily recommended dose of vitamins.Sad.
YEP, THE RECESSION IS OVERHigher Costs Spur Rise in U.S. Consumer SpendingThe broader economy may be testing the bottom, but for American consumers, there appears to be no end yet in sight for falling wages and higher living expenses.That was the picture painted Tuesday by the government’s monthly report on personal incomes and consumer spending. While consumers spent more in June, they did so because prices of food and energy were rising, and not because they were ready to spend freely again.Personal incomes sagged as employers continued to cut wages and reduce working hours. And the personal saving rate, which had been rising, dropped sharply from a month earlier as one-time transfer payments from the government stopped arriving in people’s bank accounts.“Consumers are not spending any more money,” Steven Ricchiuto, chief economist at Mizuho Securities, said. “They’re still consolidating.” Personal income fell back 1.3 percent in June, just a month after a one-time $250 payment to Social Security recipients lifted it by the same amount. And in a sign of continuing troubles for American workers, private wages and salaries fell for a fourth month, slipping a seasonally adjusted $28.6 billion after a $11.3 billion drop a month earlier.Private wages and salaries have fallen for each of the last 10 months as businesses trimmed costs by freezing pay, imposing salary cuts and reducing the work week. Personal income has dropped by a seasonally adjusted $372 billion since September.“Wage and hour cuts are big right now,” Adam York, an economist at Wells Fargo, said. “The economy remains fairly weak, and the labor market even weaker. We’ve lost 6 million jobs, and unemployment is rapidly heading toward 10 percent. There’s just not a lot of wage pressure out there right now.”The Commerce Department’s report showed that while consumer spending was no longer falling precipitously, shoppers were still extremely cautious with their money. Personal spending rose by a seasonally adjusted 0.4 percent in June, but factoring in price changes, real consumer spending slipped 0.1 percent.Economists said a strong response to the government’s “cash for clunkers” auto purchase program was likely to lift spending in July.http://www.nytimes.com/2009/08/05/business/economy/05econ.html?_r=1&partner=rss&emc=rss&pagewanted=print
Gloomy, what’s this ‘Cash for Clunkers’ tell ya about our politicians?Consumer debt is over $1.6T higher than normal and these clowns want them to add more.I, for one, think our policitians are not only gnorant but just plain scared!
Unfortunately, insanity rules the day. Try explaining this to the middle-class majority and a large segment of the working poor. The majority of citizens in the US have been conditioned by a relentless barrage of disinformation to fight against anything that’s in their own best interest.Americans glorify, and repeat the mantra of the uber wealthy, at their own peril. It’s a bizarre phenomenon that I don’t believe exists in any other developed world nation. What are you going to do?It’s like living in bizarro-world.
WAGE DESTRUCTION in over drive. Have to agree to about prices in general. Food, Energy, Gas, Basic Neccessities, etc. are going up and there has been no letup in the increases. So are taxes and fees at local and state levels. I guess they figure they can charge whatever they want for basic neccesisties, since the consumer is’nt spending on things they dont need. I will say that when it comes to things we dont need, there have been price declines, but thats just to clear the inventory. Food especially is becoming one big scam, lower sizes, lower amounts, less weight, fancy packageing to decieve, yet higher prices for less.So we have inflation on the stuff we need and deflation on the crap we dont need.Bend over AVERAGE JOE AMERICAN, they will get you one way or the other. And you better like it… NOTCash for Clunkers, CFC= Cash for Corruption. Waht BS lie and way of funneling more money to Buysiness models that are completely broken.
One thing’s for sure: if you’re betting on a “W” recession, you’ll never lose at the roulette wheel.If it get’s worse, its because the second downturn occurred. The safest recession bet is a “W W” recession….LOL?We simply can’t afford overpopulation health care socialism and I’m an old fashion liberal.Reducing Medicare promises to our retirees is in the health care deform bill, check it out….I imagine Medicaid payments to our legal citizen disabled will be butcher axed for the illegal aliens too.IRS recepts for 2008 were already down 44% from 2007 and now 2009′s receipts are horrifyingly worse, welcome to Great Depression II bloggers. The proof article in part:”…Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.The last time the government’s revenues were this bleak, the year was 1932 in the midst of the Depression.”Our tax system is already inadequate to support the promises our government has made,” said Eugene Steuerle, a former Treasury Department official in the Reagan administration who is now vice president of the Peter G. Peterson Foundation.”This just adds to the problem.”…”The rest of the URL:http://news.yahoo.com/s/ap/us_plummeting_taxesThe only reason we don’t call this present overpopulation economic mess in America an official depression; is the rich and elite minority [Dems and Reps] still have temporary jobs, for now; and we don’t have a dust bowl, so the food banks still get enough outdated foodstuffs, keeping mass unemployed bums off the streets in America today.
TO: Gloomy, FYI: a major paper on MARKET MANIPULATION (see link for charts)FM: Guest (my personally typed copy…with this caveat: From 1923 forward, the Federal Reserve’s open-market operations have been carried out by the New York Federal Reserve Bank. The money trust has always been in control: in short, the Federal Reserve (FR) is controlled by the FRNY. Bernanke is merely chairman of the Federal Reserve Board, the spokesman and political representative, of the money trust.)RE: A GRAND UNIFIED THEORY OF MARKET MANIPULATION | August 2, 2009 | Complements to Zero Hedge by Precision Capital Management | August 3, 2009_________________________________________________________________There is much speculation and anecdotal information regarding the rally that began March 6 2009, which have suggested the gains are the result of massive manipulation on the part of the Federal Reserve (FR) and the large institutions that dominate Treasury securities dealing, program trading and the derivatives markets. Traders have reported that traditional indicators and metrics used for market analysis stopped working for periods of time or altogether, and that correlations among markets have been erratic and quick to change. Record program trading by Goldman Sachs as reported by the NYSE, heightened focus on high frequency trading (HFT), outsized profits by the large and well-connected banks, along with unprecedented intervention by the FR in the markets only fuel the manipulation speculation.If we had a big picture model (a Grand United Theory, or G.U.T.) that described the intentions, motivations and actions of the influential players, we could attempt to predict future market direction. A limiting factor is that the rules of the game have changed quickly, and what we believe is important to the major players now may not necessarily have been important twelve or even six months ago. Accordingly, while we will present as much supportive data as possible, our sample sizes will be small and we will rely on educated conjecture when necessary. As such, we would expect to be at worst, self-referentially coherent and, at best, correct in our predictions for the coming weeks and months.The POMO EffectThe theory for which we have the greatest supporting evidence of manipulation surrounds the fact that the Federal Reserve Bank of New York (FRNY) began conducting permanent open market operations (POMO) on March 25, 2009 and has conducted 42 to date. Thanks to Thanassis Stathopoulos and Bily O’Nair for alerting us to the POMO Effect discovery and the development of associated trading edges. These auctions are conducted from about 10:30 am to 11:00 am on pre-announced days. In such actions, the FRNY permanently purchases Treasury securities from selected dealers, with the total purchase amount for a day ranging from about $1.5 B to $7.5 B. These days are highly correlated with strong paint-the-tape closes, with the theory being that the large institutions that receive the capital injections are able to leverage this money by 100 to 500 times and then use it to ramp equities.To wit, the following charts are Time Profiles that we created to show the net point accumulation in the eMini S&P 500 (with other statistics) for each hour of a trading day that meets selected criteria (except that the last “hour” of the day is only 45 minutes). For an explanation of Large Player Effective Volume ™, please see the creator’s website at http://www.effectivevolume.eu.The first chart covers the rally from the date of the first POMO on March 25, 2009 to present (through July 31, 2009) and shows only those 42 days on which POMO were conducted.CHART 1: Time Profile Mar 25 09 to July 31 09/ POMO Days 42…The enormous 68.25 net points gained cumulatively in the S&P 500 in the final 45 minutes of trading (15:30 to 16:15 EDT) on POMO days is immediately obvious. As an aside, the dip into the 12:30 to 13:30 EDT hour is generally a tradable intraday low. There are also other tradable edges on which we update readersThe FRNY also conducts POMO in Agency (Freddie/Fannie) securities with usually only a day’s notice as opposed to the one or two week’s notice for Treasury POMOs. We call these Agency POMO days POMO(A). There is also a tape-painting effect on these days (not shown), but it is less pronounced. Following is a chart of those days on which “neither” POMO nor POMO(A) were conducted.Chart 2: Time Profile Mar 25 09 to Jul 31 09/Non POMO & NON POMO(A) (n = 32…Note there is very little average edge in any given hour on the days in which the FRNY “doesn’t” flood the large banks with liquidity.Finally, here is a chart of all the days in March 16, 2008 to May 19, 2009 rally, which is the last comparable rally (in our opinions) in terms of length and strength.Chart 3: Time Profile Mar 16 08 – May 19 08…Noe that most of the gains were made on average in the first half of the day with nearly no tape-painting.From here forward, we must adopt a more conjecture and theory-oriented approach.Bernanke vs. the New York FedIt is easy to assume that the Federal Reserve headed by Bernanke and the regional FR banks (especially the Federal Reserve Bank of New York) operate with the same motivations, ambitions and desires. However, we hope to demonstrate here that their interests, though sometimes aligned, do not always converge and that, in fact, there may be an outright tug of war on between Bernanke and FRNY that is playing out in violent fashion in the equities and Treasury markets. It is important to note here that we identify Bernanke by name because his upcoming re-nomination bid (next January 2010) imparts political aspirations that transcend his title. There are also other major players involved that we don’t mention (Larry Summers) because it is beyond the scope of this report.High Yields the Biggest Threat. We believe the largest problem facing Bernanke is high and rising long term interest rates. With record funding requirements by the Treasury, looming refinancing disasters in commercial real estate (CRE), massive upcoming defaults in prime, Alt-A and credit card, and waning enthusiasm for the US Dollar, he can ill afford the economic meltdown that a massive repatriation of US Treasuries and Dollars would have. Once long term yields reach a critical level (which we cannot know and would be difficult to even estimate), the FR becomes locked in a money printing cycle that will ultimately become hyperinflationary and result in the FR having to buy every US Bond, Note and Bill in order to prevent the economic Armageddon that comes with a panicked exodus from US debt and currency. Such a meltdown would be a 10 on a scale of 1 to 10 whereas last Fall was perhaps a 2 or 3, at best. As economist Robert Wenzel points out:“And keep this is mind, we have never seen a collapse of a currency like the dollar. Even the hyperinflation during Germany’s Weimar Period cannot serve as an example. Since the dollar is the reserve currency of most of the world, a panic out of the dollar means more dollars will return to the U.S. shores than any country has ever experienced.“Other countries have had collapsed currencies, but never in the history of world of finance has so much currency been held outside a country of issue that that could come flying back, almost on a moment’s notice. If the panic out of the dollar starts, even if Bernanke stops printing money (unlikely), all the dollars flying back into the U.S. could cause a huge price inflation all on its own.”Killing the Stock Market to Lower Long Term Yields. If Bernanke’s biggest threat is high long term yields, the easiest way to prevent or postpone a yield ramp is to kill the stock market and create a flight to safety situation that lowers long term yields. As the 30 Year yield started rapidly advancing in May of this year, we became increasingly vocal that this was a likely scenario. When it hit 4.83% on June 10 (and the 10 Year broke 4.00%), and we became aware that M2 non-seasonally adjusted (M2 NSA) was on the decline as it had been the previous summer preceding the fall meltdown, we become open to the possibility of a large correction, perhaps to retest the 666 low in the S&P 500. Previously, we had been very bullish because of the inflationary money printing. Indeed, the S&P 500 corrected about 32% of its gains from its June 11 high and Treasuries had a sizable rally. On the break of the widelywatched head and shoulders neckline in the S&P 500 in early July, we speculated there would be another failed rally that would finally reverse and take equities much lower. What happened, of course, was the monster rally that rose to new highs.During this time, we revised our theory and became open to the possiblity that there would not be an intentional market crash, but that Bernanke and the FRNY would engage in a dance that would see equitities rise, then correct just as Treasuries were in danger of picking up downward momentum (and yields upwards momentum), then correct again just when it appeared that equities were in danger of crashing. In retrospect, this was the more logical choice because the FRNY, with the large member banks on its board, would not have permitted another major equities downturn if it could help it. Nor would the administration have permitted this, as it needs as much political capital as possible to achieve its massive reform agenda (including healthcare). Such political capital would evaporate in an instant with another major hit to 401(K)’s. Not to say that Bernanke prefers a falling stock market (which would hurt his chances of re-nomination), but it is the lessor of two evils. For those who wonder why Bernanke, an expert in depressions, is operating from the Japanese playbook that resulted in their “lost decade,” we submit that it is intentional and preferred to financial apocalypse.As we have written often, this clash of the Titans, equity vs bonds games, is a very dangerous one with much to go wrong. However, to date, it has worked. We have seen one short covering rally after another that has resulted in a materially higher stock market and long term yields under apparent control. We should also note here that we are intentionally painting a binary picture to emphasize probablities when, in fact, there are many shades of gray. If the stock market crashed, it would severely jeopardize Bernanke’s ability to be re-nominated as Fed Chairman. Similarly, the FRNY does not want economic Armageddon as a result of skyrocketing interest rates. In fact, the long term interests of Bernanke and FRNY are closely aligned, while the short term interests have Bernanke favoring Treasuries over equities, and the FRNY vice versa. Unfortunately, long term interests seldom carry great weight in politics.How to Ramp Treasuries. So far, we have discussed POMO as the preferred means of equities ramping. Likely there are many other things at play, but POMO is the most obvious. On the flip side, we need to discuss what goes on in the Treasuries side that allows them to gain (and yields abate). To test the theory of whether POMO money was simply being diverted from equities into Treasuries by the large banks, we created Time Profiles (not shown) of POMO vs non POMO days during the June Treasuries rallies, and found there was not a noticeable edge that would suggest as much. Also, there is no reason to assume that large financial institutions would willingly participate in a stock market decline when their short term interests are so heavily weighted in favor of rising stock markets. Instead, we believe (1) that the Treasury auctions, beginning in June have been rigged to demonstrate heavy interest in long term US Treasuries, and (2) money supply volatility (as measured by the 13 week % change in M2 NSA) has been whipsawed from a historic high to a near-historic low, with the intent by Bernanke of cooling equity rallies (and encouraging Treasuries recovery). We wrote a detailed analysis of this latter phenomenon last week and summarize it after the next paragraph.Record Treasury Auction Participation. As to (1), above, we do not believe it was a coincidence that the June 2009 auction in the 2,5 and 7 Year (all for record amounts) went off spectacularly, with high bid to cover ratios and high non-primary dealer interest. 30 Year bonds were able to push through resistance on this strength after having retraced to the critical 61.8% level from the prior high (which was the first leg up in the 30 year since its drubbing temporarily on June 11). We will get to the importance of technical levels in the 30 year later. We do not know the exact meanes of how these particular auctions could go so well while prior months’ (for lesser amounts) had not. All we can measure is the effect, which is all too perfect for us to believe it was an accident.The M2 Volatility Facotr. As we wrote last week, M2 NSA has a seasonality that typically peaks in the third week of April, then declines into the third week of July. We found a strong correlation between the degree of whipsaw of M2 (M2 Volatility) and the likelihood of a large stock market correction or crash into the third week of October, with corresponding high volatility during such time. Historically, the FR does not have much ability to directly influence M2, with its effect typically confined to the monetary base (M1). However, the Fed has now historic “emergency” powers, including the congressionally approved ability to pay interest rates on excess reserves, and we believe the record M2 Volatility is an intentional act by Bernanke. Exactly how and the speed with which effects can be induced by Bernanke on M2 are unknown to us (another point for future exploration). Another possible side effect of a shrinking supply of Dollar (in the form of M2) is that, with excess money sidelined or otherwise tied up, it is easier to steer money from equities to Treasuries and, correspondingly to have a tight leash on yields. Unfortunately, with record M2 volatility comes a greatly increased risk of a stock market crash, that even record POMO operations and other innovative FRNY machinations may not be able to avert.Charting the Rebound in Treasuries with the 30 Year BondThe 30 Year bond continuous futures contract has been behaving technically the best in our opinion (as oposed to the 10 Year Note or other ETF based proxies), and we will use it to demonstrate the sequence of events in its recovery Also shown is the S&P 500 continuous futures contract.Chart..1. June 11, 2009—the low is (to date) in for the 30 Year and the high is in for the S&P 500. Both post strong reversal candles. At this point, the 30 Year had the critical 5% yield target in sights (high of 4.82% intraday). Equities had had a nice run and could afford a correction.2. June 19, 2009—the last Friday before the dreaded record Treasury auction week ahead, the 30 Year retraced to critical 61.8% support from the high posted two days prior, but closed strong enough to abate fears of a gap down on Monday. That following week, the 30 Year would post new highs for the month into Thurday’s 7 Year auction and equities also had a higher week led by a huge rally on June 25 for no apparent reason (which was, though a POMO day).3. July 8, 2009—As equities resumed their downward direction in the following weeks, the 30 Year eventually posted its high on this date, which was also the low for the S&P 500 that broke the neckline of the head and shoulder pattern. This would be “the” July low for the S&P.4. July 13, 2009—The rally in the S&P really began with the strong short covering on this date, led by the record earnings announcement by Goldman. Further outsized gains were made two days later on the JP Morgan earnings that allowed the S&P to clear most of the difficult mid-range resistance.5. July 20, 2009—With the S&P 500 within a hair of punching through to new highs, the 30 Year had retreated again to its 61.8% resistance intraday, but very successful 3 and 6 month auctions allowed for a strong close.6. July 27, 2009—One week later, on the start of another record auction week, the 30 Year actually pierces the 61.5% resistance intraday and closes dangerously low, but just above it. The 3 Month, 6 Month and 20 Year TIPS auctions had strong demand and saved a likely return of the 30 Year to contract lows as the S&P continued to make new highs. The continuous futures contract for Gold (not shown) precisely hits its 61.8% resistance. A break to the upside, would warn of an inflationary retest of the 1,000 level and would be a disaster for Treasuries7. July 28, 2009—Gold reverses to the downside sharply overnight and the EuroYen forex cross (not shown) posts an equally large reversal to the downside, indicating an aversion to risk (supportive of Treasuries as a safe haven). We believed at the time that these markets had been manipulated to intentionally send a signal that the Treasury auctions would be successful overall this week and that upside action in equities was limited. Equities would make higher gains on Thursday after Wednesday’s poor 5 Year auction, but Treasuries were short term spared, even after the poor results of the 2 Year auction on the day prior date (which we wrote at the time we thought was a head fake). What surprised us was the worse showing at the 5 year the following day.8. July 30, 2009—Demand had been spared for Thursday’s 7 Year auction, which saved the entire week and allowed for the next day’s (Friday) huge (nearly 2 big points) gain in the 30 Year that broke through prior swing high resistance. At this point, the Bernanke has averted disaster and has a week before facing another round of Treasury auctions (the 3,10 and 30 Year) and an FOMC meeting.Signals from Leading MarketsAs we suggested in (7) above, leading markets, such as gold and the EuroYen can be manipulated as key points to generate signals that savvy market participants can read. We find it no coincidence that FRNY has large holdings of gold and exactly two currencies, the Euro and the Yen. These markets turn or break through important support and resistance levels all the time; however, looking to whether Treasuries or equities are in jeopardy at a particular moment can give clues as to whether an actual signal is being given as opposed to normal market movements.Putting It All Together—the Weeks AheadThe stakes could not be higher for the week of August 10 to August 14, 2009. What is troubling is that, as we mentioned in (8) above, demand had to be saved for July’s 7 Year auction as opposed to the prior month where all the auctions fared well. We don’t doubt that Bernanke will pull out all the stops to ensure a decent showing of demand in the 10 and 30 years on August 12 and 13, especially in light of the August 12 FOMC meeting (and his assumed desire to be reappointed after next January). However, we are not so sure he will be entirely successful. If, as we suspect, the results have the potential to disappoint, the 30 Year will need to have advanced further (ideally to a safe level above the July high) to absorb the disappointing auction news without leading to a prolonged selloff in Treasuries. With the 30 Year having closed just over its 61.8% resistance Friday, it is in a bullish stance to do just this, though it is a bit overbought. While equities and Treasuries can both advance or decline in semi-lock-step temporarily, even for as long as a week, a move that strong in Treasuries through resistance requires a hit to equities, and we would expect a moderate to strong down move into next Monday (August 9) if Treasuries were able to end up pushing through the early July highs.If, on the other hand, Bernanke has locked in excellent support for the 10 and 30 Year auctions, then Treasuries merely need to tread water and not violatae the 61.8% retracement of last week’s range (currently 116’18). In this case, we would see only a minor decline or a continued nominal upward push in equities. There are other variations on this theme, but the logic and methodology should be clear by now. And, while it is a bit early to favor one side or the other, we are currently leaning toward a nervous Bernanke and the need to ramp Treasuries at the expense of equities into August 9. Equities have had more than a nice run and can suffer a bit of correction. Key will be watching the close on Wednesday. A failed POMO paint the tape close could signal that an equities correction of at least a few weeks has gotten underway.ConclusionNothing would please Bernanke and the FRNY more than to see both low longer term yields and higher highs in equities for perpetuity. However, the juggling act required to ramp both equities and Treasuries is unprecedented in both consequence and complication. In the end, we have low expectations of success. Hopefully, with this framework, we will be able to better navigate the markets and steer clear of the next major crisis, should it arise. As always, we will be monitoring markets within the framework of these ideas in real time and will report findings to our reader, beginning with our analysis of overnight action this morning.– A weekend supplement to The Precision Report, August 2, 2009—complements to Zero Hedge of Precision Capital Management.http://www.zerohedge.com/article/guest-post-grand-unified-theory-market-manipulation
I was watching the U.S. House of Represetative’s Financial Services Committee hearing where they were grilling the CEO of PIG, the beleaguered insurance giant. Congressman after congressman held forth in outrage, demanding an accounting for the huge bonuses paid to PIG’s executives while the corporation was receiving bailout money from the American taxpayer.Wayward N. Giddy, PIG’s CEO, sweated and squirmed as razor sharp questions were hurled at him. It was a brutal scene. Only the most cold-hearted, cynical observer could watch those proceedings without feeling compassion for the hapless CEO. The politicians outdid themselves, putting on a display of verbal pyrotechnics that skewered the CEO and pinned him back in his seat. He sat there slumped in his chair with nowhere to hide as the representatives railed on about Americans out of work while his company continued to pay dividends, heaped huge bonuses on its administrators and redecorated its corporate bathroom. It was a bloodbath, I tell you.Then an amazing thing happened. The CEO straightened up in his chair and stood up. He threw back his shoulders, glared at the congressman, placed his right thumb on his nose and wiggled his fingers. There was a hush in the chamber for a few seconds. Then the committee chairman slammed his gavel and sputtered: “I should cite you for contempt.”“Why?” Giddy responded, “We didn’t do anything you guys didn’t do. In fact, we took our lead from you. That’s why we expressed our gratitude so tangibly with our campaign contributions, equally distributed to both sides of the aisle.”Giddy was on a roll now. He was like a different man. He heroically lambasted them with iron clad arguments until the representatives screamed for the Sergeant of Arms to shut him up.One representative accused PIG of rewarding dangerous risk taking and disastrous results. Giddy answered: “You all voted yourself pay raises while spending us into oblivion, not to mention generous benefits that most Americans will never see.”“But you gave your employees millions!”“You did the same. You just spread it out over more government workers. The average government worker makes 50% more than his counterpart in private industry, and you are still hiring more, while the deficit is bankrupting the country. How is that any different than what we did?”“But what about the bathroom renovations?”“What about your new gym?”“What about paying dividends to your stockholders when you are losing money?”“What about giving no bid contracts to your buddies?”And so it went. Every criticism of PIG was answered in kind by Giddy. He fought them to a standstill until the chairman pounded his gavel until it splintered. Suddenly it was quiet for a while.The chairman stared hard at Giddy and said: “You are not playing by the rules. We take your lobbying money and vote legislation favorable to your firm. If you get in trouble, you are supposed to come here and act sheepish while we excoriate you for the sake of our constituents. You aren’t supposed to take us to task. The fact that your firm did what we always do is irrelevant to these proceedings. Now, either you follow the rules and act contrite or I’ll call these hearings to a close.”Giddy slumped back in his chair and looked morose. The chairman nodded his approval and the whole silly circus started up again. What a great country. I so glad our representatives take their job so seriously. Where would we be without them.
Dr. R,You said that you would be the first to call a recovery! You’ve now called a recovery. Were you the first?
When was this? Have a video link?
The food is better than expected. Should be cause for a market rally.
Has he truly called a recovery?
Thank you, thank you for posting this. I was looking for it.Th Obama Administration’s attempts to push for more Fed power in the name of “overhauling financial regulation,” IMO, is shaping up to be one of Capitol Hill’s most critical battles, an unbelievable fight. If Obama wins, the Fed will have the power even to break up corporations.Opposition to the Fed’s power grab is building, especially from a lot of corporations and banks not in the in-crowd. Opposition’s even gaining political traction in Congress. Smaller banks and corporations have grown increasingly more worried about the domination of the Fed and are putting on the pressure.But Little Boots, aka Geither, who apparently can’t stand the heat in the verbal kitchen, lost round one, IMO, by lashing out at opponents like a sloven, physically taking an aggressive stance and spitting out expletives like broken teeth. He and the Fed oppose a new federal agency that would oversee consumer relations; they don’t want any power taken from the banking cartel and John Dugan, the Comptroller of the Currency.This latest power grab must seem like old home week to the bankers with Larry Summers back in the White House. It was Summers, Robert Rubin, Greenspan and Bill Clinton, after all, who orchestrated the repeal of Glass-Steagall, enabling America’s big bankers to go hog wild until they were “too big to fail.”On July 2, 1999, Robert Rubin retired as Secretary of the Treasury and passed the baton and his work to dismantle G-S to Larry Summers. In October, Rubin joined Citigroup where he would eventually be paid over $115 million.Wrote Robert Scheer on November 2, 1999 for the LA Times:“Only last week, as the bill (to repeal G-S) was being pushed through a congressional conference committee, Treasury Secretary Lawrence H. Summers rushed back from a trip to China to huddle with lobbyists representing Citigroup, Goldman Sachs, Merrill Lynch and other financial giants. The meeting was closed to the media and public, but one participant told the New York Times that Summers lectured the lobbyists on how to spin this bill so it appears to be in the public interest. ‘He said it would be very unfortunate if any financial institution were to suggest that they do not see the broad public purpose of this legislation,’ the lobbyist reported.”The first week of November, S.900, the Gramm-Leach-Bliley Act, was reported out of committee and passed in the Senate 90-8 and in the House 362-57. Glass-Steagall was dead.As to the current fight, true to banker form and not to miss a chance to cook the accounts, according to the NY Times yesterday, “Mr. Dugan has charged that small and community banks, primarily the province of the F.D.I.C., played a role in the meltdown. Ms. Bair has responded with thinly veiled contempt.“A more low-key figure than Ms. Bair, Mr. Dugan has also worked as a lawyer representing some of the largest banks. He derives much of his influence from his close relationship with Mr. Geithner, reinforced when they worked on the banking crisis last year under the Bush administration.”
As Sibel says in the interview:I have information about things that our government has lied to us about… those things can be proven as lies, very easily, based on the information they classified in my case, because we did carry very intimate relationship with these people, and it involves Central Asia, all the way up to September 11.Summaryhttp://www.globalresearch.ca/index.php?context=va&aid=14595.Bombshell: Bin Laden Worked for US Until 9/11Sibel Edmonds on the Mike Malloy radio showby Lukery…”The bombshell here is obviously that certain people in the US were using Bin Laden up to September 11, 2001.It is important to understand why: the US outsourced terror operations to al Qaeda and the Taliban for many years, promoting the Islamization of Central Asia in an attempt to personally profit off military sales as well as oil and gas concessions.The silence by the US government on these matters is deafening. So, too, is the blowback.”..then there was this . h. melville , m.d., 1851..Chapter 19 – The Prophet”Shipmates, have ye shipped in that ship?”Queequeg and I had just left the Pequod, and were sauntering from the water, for the moment each occupied with his own thoughts, when the above words were put to us by a stranger, who, pausing before us, levelled his massive forefinger at the vessel in question. He was but shabbily apparelled in faded jacket and patched trowsers; a rag of a black handkerchief investing his neck. A confluent smallpox had in all directions flowed over his face, and left it like the complicated ribbed bed of a torrent, when the rushing waters have been dried up.”Have ye shipped in her?” he repeated.”You mean the ship Pequod, I suppose,” said I, trying to gain a little more time for an uninterrupted look at him.”Aye, the Pequod- that ship there,” he said, drawing back his whole arm and then rapidly shoving it straight out from him-, with the fixed bayonet of his pointed finger darted full at the object.”Yes,” said I, “we have just signed the articles.”"Anything down there about your souls?”"About what?”"Oh, perhaps you hav’n't got any,” he said quickly. “No matter though, I know many chaps that hav’n't got any,- good luck to ‘em; and they are all the better off for it. A soul’s a sort of a fifth wheel to a wagon.”"What are you jabbering about, shipmate?” said I.”He’s got enough, though, to make up for all deficiencies of that sort in other chaps,” abruptly said the stranger, placing a nervous emphasis upon the word he.”Queequeg,” said I, “let’s go; this fellow has broken loose from somewhere; he’s talking about something and somebody we don’t know.”"Stop!” cried the stranger. “Ye said true- ye hav’n't seen Old Thunder yet, have ye?”"Who’s Old Thunder?” said I, again riveted with the insane earnestness of his manner.”Captain Ahab.”"What! the captain of our ship, the Pequod?”"Aye, among some of us old sailor chaps, he goes by that name. Ye hav’n't seen him yet, have ye?”"No, we hav’n't. He’s sick they say, but is getting better, and will be all right again before long.”"All right again before long!” laughed the stranger, with a solemnly derisive sort of laugh. “Look ye; when Captain Ahab is all right, then this left arm of mine will be all right; not before.”"What do you know about him?”"What did they tell you about him? Say that!”"They didn’t tell much of anything about him; only I’ve heard that he’s a good whale-hunter, and a good captain to his crew.”"That’s true, that’s true- yes, both true enough. But you must jump when he gives an order. Step and growl; growl and go- that’s the word with Captain Ahab. But nothing about that thing that happened to him off Cape Horn, long ago, when he lay like dead for three days and nights; nothing about that deadly skrimmage with the Spaniard afore the altar in Santa?- heard nothing about that, eh? Nothing about the silver calabash he spat into? And nothing about his losing his leg last voyage, according to the prophecy. Didn’t ye hear a word about them matters and something more, eh? No, I don’t think ye did; how could ye? Who knows it? Not all Nantucket, I guess. But hows’ever, mayhap, ye’ve heard tell about the leg, and how he lost it; aye, ye have heard of that, I dare say. Oh, yes, that every one knows a’most- I mean they know he’s only one leg; and that a parmacetti took the other off.”"My friend,” said I, “what all this gibberish of yours is about, I don’t know, and I don’t much care; for it seems to me that you must be a little damaged in the head. But if you are speaking of Captain Ahab, of that ship there, the Pequod, then let me tell you, that I know all about the loss of his leg.”"All about it, eh- sure you do? all?”Pretty sure.”With finger pointed and eye levelled at the Pequod, the beggar-like stranger stood a moment, as if in a troubled reverie; then starting a little, turned and said:- “Ye’ve shipped, have ye? Names down on the papers? Well, well, what’s signed, is signed; and what’s to be, will be; and then again, perhaps it won’t be, after all. Any how, it’s all fixed and arranged already; and some sailors or other must go with him, I suppose; as well these as any other men, God pity ‘em! Morning to ye, shipmates, morning; the ineffable heavens bless ye; I’m sorry I stopped ye.”"Look here, friend,” said I, “if you have anything important to tell us, out with it; but if you are only trying to bamboozle us, you are mistaken in your game; that’s all I have to say.”"And it’s said very well, and I like to hear a chap talk up that way; you are just the man for him- the likes of ye. Morning to ye, shipmates, morning! Oh! when ye get there, tell ‘em I’ve concluded not to make one of ‘em.”"Ah, my dear fellow, you can’t fool us that way- you can’t fool us. It is the easiest thing in the world for a man to look as if he had a great secret in him.”"Morning to ye, shipmates, morning.”"Morning it is,” said I. “Come along, Queequeg, let’s leave this crazy man. But stop, tell me your name, will you?”"Elijah.”Elijah! thought I, and we walked away, both commenting, after each other’s fashion, upon this ragged old sailor; and agreed that he was nothing but a humbug, trying to be a bugbear. But we had not gone perhaps above a hundred yards, when chancing to turn a corner, and looking back as I did so, who should be seen but Elijah following us, though at a distance. Somehow, the sight of him struck me so, that I said nothing to Queequeg of his being behind, but passed on with my comrade, anxious to see whether the stranger would turn the same corner that we did. He did; and then it seemed to me that he was dogging us, but with what intent I could not for the life of me imagine. This circumstance, coupled with his ambiguous, half-hinting, half-revealing, shrouded sort of talk, now begat in me all kinds of vague wonderments and half-apprehensions, and all connected with the Pequod; and Captain Ahab; and the leg he had lost; and the Cape Horn fit; and the silver calabash; and what Captain Peleg had said of him, when I left the ship the day previous; and the prediction of the squaw Tistig; and the voyage we had bound ourselves to sail; and a hundred other shadowy things.I was resolved to satisfy myself whether this ragged Elijah was really dogging us or not, and with that intent crossed the way with Queequeg, and on that side of it retraced our steps. But Elijah passed on, without seeming to notice us. This relieved me; and once more, and finally as it seemed to me, I pronounced him in my heart, a humbug.
The Obama opiate: Crisis deepens, crowds cheerby Larry Chin.http://www.globalresearch.ca/index.php?context=va&aid=14604.and/or.. with more links..http://onlinejournal.com/artman/publish/article_4974.shtml
The iceburg has already penetrated the hull of good ship America. When will we start to see migration out of America?
Errr….”Commodities May Correct in H2:2009 Due to Excessive Chinese Stockpiling But Rise in 2010 as the Global Economy Starts a Growth Recovery”…sounds like he’s calling a recovery to me, IMHO.
Interestingly, the disappearance of tax receipts does not yet seem to be factored into the value of the dollar. Although the dollar is declining slowly, most of the thinking is that the large deficits and QE are the basic cause. There has been no discussion that I am aware of concerning the impact of lower tax receipts on the value of the dollar. Why is that?
Harley, I think you’ve created a new surreal American hero—Wayward N. Giddy, PIG’s CEO, sort of a private slob to catch a public slob, the Congressional Op. You had me on the edge of my seat, cheering for Giddy, nearly fainting in ecstasy, Oyez-ing myself hoarse, screaming, You can take this job and shove it, I ain’t workin’ for you no more, you suckers, now you’re gonna pay. Lord, I can’t wait to see their faces… It was just too good to be true! Like Johnny Paycheck. Alas.You’re good, Harley. You’re good!
I’m not leaving…SWK
It may be a fool’s chore to defend a bought and sold political system, but what is the future a tea partier envisions? One suspects it involves a great deal of starvation and illiteracy.
I picked up this week’s copy of Barron’s today—the cover artwork is a big “ebuy” in four-color transparent letters in soft orange, plum, lemon and lime. The headline underneath reads: “EBay’s core e-tailing business is rising, while its PayPal and Skype units thrive. The auctioneer’s stock, up 50% this year, is still cheap. Look for another 30% jump before the gavel comes down.”A few hours later, a friend in Silicon Valley called. The gavel came down, all right, early. EBay had just laid him off. There were others, he said. I don’t know how many. I can’t find the news.
This post last fall from WHATEVER ties Pelosi and Biden to the current financial crisis:bill clinton’s repeal of glass-steagall at heart banking crisis ( 26 September 2008 )the glass steagall act passed during the depression era, tightly regulated the u.s. banking system. it stood the country in good stead for about 70 years –until bill clinton signed the bill in 1999 which repealed the glass steagall act.according to an article in the new york times, from 1995, robert rubin, treasury secretary at the time, is on record as saying the clinton ‘administration continues to favor allowing banks to merge with insurance companies as well as securitites firms.’the 1999 financial services modernization act, written by phil gramm, who had been advising john mccain up until this past july, was passed by both houses of congress and signed by bill clinton in the same year, the new law effectively repealed glass steagall and the bank holding act of 1956 which prohibited financial companies from owning banks and insurance companies.glass steagall prohibited the merging of banks, securities firms, and insurance companies, while the financial services modernization act allowed for huge financial conglomerates.both nancy pelosi and joe biden voted yes on repealling glass stegall on november 4, 1999 and bill clinton signed the bill into law one week later. barack obama was in the state senate at the time, so his hands are clean. and john mccain abstained from voting…it is important for people to know where the blame lies. and it is squarely on the shoulders of congressional members from the 90s and especially bill clinton.http://thekrays.wordpress.com/2008/09/26/bill-clintons-repeal-of-glass-steagall-at-heart-banking-criss/
m,but he also said some stuff about commodities rising killing a recoveryand a rock hard place, damned if you do damned if you don’t terminalpoint the fed will hit re: monetary policy that will impact anyemerging growth recovery.so , is he really just excluding america from the projected “global economy growth recovery” or is the start in 2010 a false start?tune in next week for further details.we don’t know the past, cannot comprehend the present, but expectsomeone to be able to predict the future,” that is why i love mankind.”randy newman, almost.
The Royal Scam and the Deflation Head-Fake Using the book And the Money Kept Rolling In (and Out): Wall Street, the IMF, and the Bankrupting of Argentina, comparisons between Argentina and the current state of the US show the same framework:In a single stroke you:a) lose the burden of external debtb) by devaluation lose your internal debtc) Make the nation competitive as a manufacturing power.d) Scare the people back into compliance, even exultation with their low wages.e) With the renewal of manufacturing, re-cast the power that your military rests onf) During a time of Peak Oil, radically reduce unnecessary consumption while insuring strategic (military) supply.g) By doing that, suck in the oil powers of Russia, Iran, and Venezuela enough to knock them off-base, first with high prices, then low prices.h) Club China into submission to the G-8 money powers again – and best of all:i) Enrich insiders beyond their wildest dreams, insuring their dominance for a generation to come.http://www.oftwominds.com/blogaug09/KaPoom2CHS.htmhttp://www.amazon.com/Money-Kept-Rolling-Out-Bankrupting/dp/1586482459
God’s Song (That’s Why I Love Mankind)Artist: Randy NewmanAlbum: Sail Away.Cain slew Abel Seth knew not whyFor if the children of Israel were to multiplyWhy must any of the children die?So he asked the LordAnd the Lord said:Man means nothing he means less to meThan the lowliest cactus flowerOr the humblest Yucca treeHe chases round this desert’Cause he thinks that’s where I’ll beThat’s why I love mankindI recoil in horror from the foulness of theeFrom the squalor and the filth and the miseryHow we laugh up here in heaven at the prayers you offer meThat’s why I love mankindThe Christians and the Jews were having a jamboreeThe Buddhists and the Hindus joined on satellite TVThey picked their four greatest priestsAnd they began to speakThey said, “Lord, a plague is on the worldLord, no man is freeThe temples that we built to youHave tumbled into the seaLord, if you won’t take care of usWon’t you please, please let us be?”And the Lord saidAnd the Lord saidI burn down your cities-how blind you must beI take from you your children and you say how blessed are weYou all must be crazy to put your faith in meThat’s why I love mankindYou really need meThat’s why I love mankind.
Bernanke’s Exit Dilemma | WSJ | Opinion Journal | Aug 4 by George Melloanhttp://online.wsj.com/article/SB10001424052970203517304574306401079643202.htmlDoes anyone really believe the Fed will contract the money supply as the economy starts to show growth?Federal Reserve Chairman Ben Bernanke assured readers of this page (“The Fed’s Exit Strategy,” July 21) that he has the tools to prevent the huge reserves he’s pumped into the banks from generating an inflation that would abort an economic recovery.But does the Fed have the guts to use those tools? Will it risk censure from Congress and the Obama administration if it tightens money at the crucial juncture when inflationary omens accompany a reviving economy? Mr. Bernanke signaled the probable choice by writing that “economic conditions are not likely to warrant tighter monetary policy for an extended period.”…[T]he Fed’s continued easing of interest rates during the 2003 economic recovery created the credit bubble that collapsed last year with such devastation…With its federal-funds interest rate target at near zero, the spigots are now wide open. And as Mr. Bernanke promises, they will likely remain that way for an “extended period.”Quite apart from the question of the Fed’s will, there is another large issue. Mr. Bernanke’s assurances to the contrary, there can be doubts about whether his tools are really adequate to deal with the powerful inflationary pressures the politicians are in the midst of creating in the form of a mountainous and rising federal deficit…The federal budget deficit is projected at an incredible $1.8 trillion for the fiscal year ending Sept. 30, almost half of proposed federal spending. The Treasury’s financing needs will be even higher than that when you count in the various “investments” the government has made in auto, housing and other dubious ventures…nationalized health…would yet add hundreds of billions more to the deficit.The Fed has been financing a significant part of the government’s profligacy, and it is riding a runaway horse. Even if it has the means to cope with present financing needs, will it be able to do so when, and if, the economy actually recovers and it has to finance both a recovery and a spending-crazed government?…The Treasury (and Congress) has been depending on the Fed’s massive buying of Treasury bonds to keep the government’s financing costs within reasonable bounds—as weakening international demand puts downward pressure on bond prices and upward pressure on the interest rate the Treasury must pay. The yield on the 10-year Treasury bond is below where it was a few weeks ago but well above early this year when investors world-wide were seeking the safety of U.S. Treasurys. Even massive Fed support hasn’t been enough to prevent slippage in bond prices this year.The Fed has more than doubled the size of its balance sheet in the last year to over $2 trillion. As of July 30, it held $695 billion in Treasurys, up $216 billion from a year earlier. In addition, it has added nearly half a trillion of mortgage-backed securities it purchased to keep Fannie Mae and Freddie Mac, now wards of the government, afloat.Adjusted reserve balances of member banks exploded in late 2008, soaring to $950 billion from $100 billion in four months as the Fed has pumped liquidity into the banking system. They peaked at nearly $1 trillion in May. The reserves provide banks with a shield against runs but they also are high-octane fuel for bank lending, which means they can touch off another credit bubble, and the accompanying inflation, when credit demand picks up again…With the huge volume of Treasury financing coming down the road, the Fed will have plenty of bonds to sell (it already has, in fact). But the Fed buys Treasurys primarily by creating new money, or in other words by inflating the money supply. Will it have the nerve or even the capacity to “sterilize” inflation by reselling the bonds to soak up bank liquidity? Again, there are those political pressures. Will the Fed’s admittedly bright money managers be able to strike a balance between warding off inflation and leaving the banks with sufficient liquidity to finance an economic recovery?As to that huge volume of mortgage-backed securities the Fed is now holding, what is to be done with them? They are “toxic,” which is why the Fed bought them as a means of keeping Fannie and Freddie solvent. They are “guaranteed” by Fannie and Freddie, which means they now are guaranteed by the U.S. Treasury. So they are yet another liability to add to all the other liabilities being piled on the Treasury. The Fed already has financed them once; will it have to finance them again when they come up for redemption?In short, there are very good reasons to doubt that the Fed can cope with the political problems of avoiding inflation. The technical problems don’t look very easy either.Mr. Melloan is a former deputy editor of the Journal editorial page. His book, “The Great Money Binge,” will be published in November by Simon & Schuster.
Thanks. I will!
That’s no surprise … so what’s your plan?Best -
A True American Hero: Joseph E. Stiglitz | Zero HedgeOne theme that has taken hold of modern literature is that of the wise and yet credulous teacher unintentionally giving rise to magnamious destruction and evil at the hands of his students.Think Obi-Wan / Darth Vader of Star Wars or Dumbledore / Voldemorte of Harry Potter.Professor Joseph Stiglitz, 2001 Nobel Laureate and globally renowned economist, unfortunately discovered that literature all too often mirrors reality this year as the Obama administration, filled to the brim with former disciples of Stiglitz, has proceeded to back the Fed / Treasury strategy of “deference to the financial sector.”The very policy that Stiglitz has been an outspoken and stalwart critic of.Bloomberg: “Stiglitz also mentored several members of Obama’s economic team, including budget director Peter Orszag, 40, and Jason Furman, 38, deputy director of the National Economic Council.Still, Stiglitz is critical of the president’s plans to rescue the economy and questions his appointment of Summers as his top economic adviser.”Also from Bloomberg:“The Roaring Nineties” [a book by Stiglitz] argued that the deregulation and market excesses of the 1990s laid the seeds of later crises. It inspired a speech by Obama a year ago, said a top aide from the Obama campaign, who spoke on the condition he wouldn’t be identified. The address laid out the president’s plan to reinstate and modernize regulation of Wall Street to avoid further crises.”So Obama and his financial advisors (Stiglitz-trained) used Stiglitz’s words to ramp up anti-Wall Street spirit and win election… And then signed a blank check to the Fed. And will soon hire Larry Summers, a proponent for deregulation and key figure in the design of the 1999 Gramm-Leach-Bliley Act, which repealed longstanding banking regulations.The same Larry Summers that Stiglitz has openly criticized: “It’s “a real concern” that people such as Summers, “who have been openly on the side of deregulation,” are back in positions of power, said Stiglitz”—For those who are unfamilliar with Stiglitz, broadly speaking he is to “Liberal” politics/economics what Ron Paul is to “Conservative” poltiics/economics. In fact, the more you read/listen to Stiglitz, the more you understand that his theories are not mutually incompatible with Austrian economics.Indeed, listening to Stiglitz make a speech reminds us that there are still rogue scholars out there who emanate honesty, wisdom, frankness and compassion, much like Ron Paul.The paper that won him the Nobel prize proved that informational asymmetries in a market set-up will result in a less-than-desirable outcome for society. In other words, in the face of cronyism / insider information / market imperfections / Flash Order Systems / etc, there will be no optimizing free market ‘invisible hand.’Although I have never seen him explicitly recognize Austrian economics, Stiglitz has proferred harsh criticisms of overly lax monetary policy, ‘inflation-targeting’ Fed policy, and has insisted on letting banks fail and restructure themselves independently of government should have even the most dogmatic Ron Paul fan out there listening (search YouTube for examples).What Stiglitz advocates is a ‘third way’ of thinking about economics. One that recognizes the power of free markets, the powerlessness of governemnt oversight in many cases, but also the requirement for regulation to level the playing-field of capitalism or to at least ensure partially ethical results.He also believes regulation to ensure sustainability of the financial system is sorely needed in today’s convluted, systemically risky, interlinked and crony-filled (his words not quite so harsh but with similar intent) financial markets. I am not sure what his stance is on fractional-reserve banking, but it seems like he would be against it (or at least in favor of stricter regulation on excessive leverage for banks).If you are still skeptical of the vast insight that this Moral Economist has to offer us in these dark hours, simply search his name on Youtube and decide for yourself.In closing, I note Stiglitz’s remarks about being forced to resign from his position as the World Bank Chief Economist (for harsh criticism of IMF lending policies):“Remaining silent when people are pursuing wrong ideas would have been a form of complicity,” the New York Times quoted Stiglitz as saying of his departure.“Rather than muzzle myself, or be muzzled, I decided to leave,” he said, according to the Times.http://www.zerohedge.com/article/true-american-hero-joseph-e-stiglitz
“It is no surprise, yet is should be a total shock, that the correlation between market volume and price moves has gotten to a 7 year low of -0.81!“Aside from a few machines that allegedly provide liquidity yet really just buffer the complete lack of volume, nobody has been buying into the rally. Statistically – this amount of incredulity was last seen in 2002. And in the absence of real buyers and sellers, gunning the market is easier than taking candy from a baby… and avoids those 202 caller IDs.“Another way to describe the data: large volumes on major down days, nominal volumes on increasingly lighter up days.”—Tyler Durden, Zero Hedge 08/04/09http://www.zerohedge.com/article/ramping-market-disappearing-volume-volume-price-correlation-81
g,some did, some will and less frequently for some.
The Fed has a new tool to soak up the liquidity from the banking system. They now pay interest on bank reserves held at the Fed. By increasing the rate of interest, they can cause banks to park ever increasing amounts of cash with the Fed, thus slowing lending and draining dollars. (At least, that’s the theory).The above article makes clear why the Fed felt they needed this tool. Obviously they will not in our lifetime, be able to sell the bonds that they’ve been buying back onto the market. They know there is no chance that the deficit will get under control as we move forward, and therefore there will never be a chance for the Fed to sell back bonds onto the market without causing a total crash of the bond market. They also know that they won’t be able to sell the mortgage backed securities to drain liquidity since those “toxic assets” are worth very little. By the time they get to market, the Fed would be lucky to get anything for them at all.So, the idea of paying banks to pull money out of circulation and park it back with the Fed was born.In reality, this tool is basically the same thing as the Fed issuing its own Bonds – which is essentially the same thing as the Fed selling US Treasury Bonds back onto the market; however, there is more finesse with paying interest on bank reserves. The bond market won’t crash because it perceives the Fed as adding new supply. It’s a confidence thing.In the end, there is no way such a scheme can actually work long-term. Interest on parked funds compounds. The Fed would need to keep the interest rate they pay for these reserves high enough to out-compete the value to the banks of loaning it out to the private sector (which is the whole point). Thus, banks must be paid higher than the market-rate for interest, which means they are paid above the rate of inflation plus margin – which means this is a ponzi scheme, because eventually the money parked at the Fed under this plan would scale to infinity both in Real and Nominal terms.But, despite this totally obvious flaw, the scheme will fool many people for a period of time; and at this point, we are living on borrowed time anyway, so any postponement is a good postponement I guess….–Brian
You just don’t get it … you don’t need gas if you have no job to go to, and the days of simply driving around for pleasure are gone in the New America. So take your food stamps and go home and watch the next installment of O on TV like the good little dependent you are supposed to be. We’ll send the bus when it’s time to vote again.
Chalk up another victory for central planning.
Kind of takes me back to the 1970′s, when the 1-pound can of coffee became the 12-ounce can of coffee and my 25-cent candy bar was about two-thirds the size of what used to be my 10-cent candy bar. It’s the last-gasp of trying to assert pricing power where by all rights there should be none. But it is inflationary nonetheless, and I must say that the last time I was in the US the things I needed were indeed ticking up in prices, so I find it difficult to buy all that talk about deflation.Note to self: Try to find that old WIN button.
Yep, that Argentina is such a powerhouse that we would be well served to follow their lead.I kind of feel for the poor Chinese (not the government, the real poor Chinese people), who laboured and toiled to give the US hard goods in exchange for dollars that are worth less and less every day. You have several hundred million people who were climbing out of poverty and into the middle class, and that seems to be on the verge of going by the wayside. I tell you, the last thing the US wants to do is club the Chinese this way, because having several hundred million people sitting on the sidelines with all the time in the world and little to do is going to make it that much more attractive for the regime to consider militarily foreclosing on the assets backing their worthless dollars.The mighty Argentines felt their oats and took the Malvinas from the Brits, and we all know how that ended.
I would think you would see higher commodity prices in any case in the coming year. If there is indeed recovery (isn’t everything just coming up roses these days?), you get demand-pull inflation. In absence of recovery, you have little to no CAPEX going into most of the sources of the commodities, and as things creak along and break down, you get cost-push inflation. And if your functional currency is the USD, you get a loss of purchasing power parity as your currency continues to slide.
Bloomberg retracted earlier reports that Treasury Secretary Timothy Geitner had contracted hydrophobia. An updated report stated that the foaming observed from his mouth was the result of having it washed out with soap by Shiela Bair
I notice there is no discussion of the dollar. The dollar has taken a hit while equities have gone up. The euro has also gone up against the dollar, breaking through resistance at 140.30.”We do not know the exact meanes of how these particular auctions could go so well while prior months’ (for lesser amounts) had not. All we can measure is the effect, which is all too perfect for us to believe it was an accident.” Perhaps this is due to the “daisy chain” scenario of London Banker? Central banks mutually scratching each other’s backs to rig markets?Interesting also to see the role played by gold and the euro/yen cross in this article.
There should be little doubt that having the Fed regulate “systemically risky” financial institutions after the poor job it’s done would make as much sense as putting FEMA in charge of national security after its performance following Hurricane Katrina.”It’s consistent with rewarding incompetence and failure,” Ritholtz told me.http://www.marketwatch.com/story/ritholtz-gets-to-the-roots-of-bailout-nation-2009-08-04?pagenumber=2But Timmy still didn’t get it, or didn’t want to get it.
Very interesting insight! Reminds me of some of the stuff Antal Fekete has been saying about in terms of his Iron Law of the Burden of Debt. Seehttp://www.professorfekete.com/articles.aspHow this affects the arguments pro and con for inflation vs deflation would be interesting to know.
“information asymmetries”–have to look this one up on Wikipedia.For those who remember Rocky and Bullwinkle, the following gets at the concept:Boris: But Fearless Leader, the newspaper reports that I am dead!Fearless Leader: Oh, not to worry, Boris. That’s tommorrow’s newspaper.
i see fall in dollar as greater economic justice and greater good for USA and globally. fall in dollar is the ultimate economic norm that should be un-manipulated.
Brian,Very well put. Thanks.
Nissan: Demand Will Fall Off A Cliff After ‘Clunkers’ Runs Out
Judging by comments, not a single one of you has yet figured out what has been and still is going on:There is a MUCH bigger picture you are all still oblivious to
WHAT YOU DON’T KNOW CAN’T HURT THEM. GO. READ READ READ FOR YOUR CHILDREN’S SAKE. WISE YOURSELF UP OR BE PART OF THE PROBLEM. ALL THE EVIL YOU CAN SEE IS BUT THE TIP OF THE ICEBERG…
We took all those evil, polluting but mostly paid-for clunkers off the road and replaced them with nice, not-so-polluting and mostly financed new cars. And really threw our friends abroad a bone, no doubt to thank them for buying our Treasuries.I don’t know about you, but I feel better, and after all, isn’t how we feel what is really important?
This statement represents how skewed the markets are becoming: “The resulting profits represent a relatively hidden form of support for banks, and Wall Street has geared up to take advantage. Barclays, for example, e-mails clients with news on the Fed’s balance sheet, detailing the share of the market in particular securities held by the Fed.”When do we get our e-mails “detailing the share of the market, in particular securities, held by the Fed”? And we wonder why the investment bankers are so much more “savvy” than we, the “retail investors” who neither are privy to the bankers’ insider information, nor their handout/bailouts, nor are we able to spend every working hour watching and trying to figure out their manipulated movements to fleece our 401(K)’s, and if we could, we can’t afford their HFT machines to beat their moves.Frankly, I don’t see the stock market as a form of “investing” anymore. It’s more a form of being taken to the cleaners.
Obama’s Revenge. Have you read, listened to, The New Wall Street Reality |Zero Hedge __________________________________________________________Submitted by Tyler Durden on 08/05/2009 Compliments of j-dubGM chapter 11 = PRICED IN125K+ jobs lost from GM chapter 11 = PRICED INunemployment @ 9% = BETTER THAN EXPECTEDunemployment @ 10% = DOW SOARSunemployment @ 11% = GREEN SHOOT RALLYunemployment @ 12% = ALREADY FACTORED INunemployment = 35% = DOW DROPS 100 POINTShousing price =1% = RECESSION ENDINGhousing collapses = GREEN SHOOTHousing falls 20% = STABILIZATIONGovernment spends 1 trillion of OUR dollars = STIMULUSNorth Korea fires nuke = RALLYIsrael bombs Iran = 30 MINUTE END OF DAY RALLYworld explodes = ASIA RALLIESPMI crashes = HUGE RALLYNo jobs are created = RECESSION ALMOST OVERU.S. debt overwhelming = TOO BUSY RALLYING TO CAREConsumer stops spending = RETAIL RALLYBanks are insolvent = SIGNS OF STABILIZATIONAmerican auto industry BK = GOOD THINGBanks pass scam stress tests = HUUUUUUUUGE RALLYBanks “only need 75 billion = OUT OF THE WOODSBanks pass a real stress test = NEVER WOULD HAPPENBanks pay back tarp = LATE DAY SURGEBanks can’t pay back TARP = EARLY MORNING SURGE12% mortgage delinquency = GOOD FOR STOCKSHundreds of thousands of mortgages underwater = HOUSING BOTTOMEDDollar rises = RALLYDollar crashes = RALLYInflation = BULL MARKETDeflation = BULL MARKET CONTINUESREFLATION = MASSIVE SHORT COVERING RALLYGold rises = STOCKS RALLYGold falls STOCKS RALLY BIGBanks’ fake earnings = SIGNS OF STABILIZATIONCRE stabilizing= 1000 POINT RALLYCRE CRASHING = STOCKS SHAKE IT OFF TO RALLYCONSUMER INSOVENT = CONSUMER IS SPENDINGOIL @ 50 = BULL RALLYOIL @ 60 = GREEN SHOOTOIL @ 100 = IMPORTANT RECOVERY SIGNOIL @ 20 = TAX BREAKAnd the one we should all interpret correctly:NO ONE IS BUYING STOCKS = BILLIONS ON THE SIDELINEShttp://www.zerohedge.com/article/new-wall-street-reality
‘Disaster Capitalism’ gone wild!Excerpt:Neoliberalism is “a particular organization of capitalism, which has evolved to protect capital(ism) and to reduce the power of labour. This is achieved by means of social, economic and political transformations imposed by internal forces as well as external pressure,” and it entails the “shameless use of foreign aid, debt relief and balance of payments support to promote the neoliberal programme, and diplomatic pressure, political unrest and military intervention when necessary.” Further, “neoliberalism is part of a hegemonic project concentrating power and wealth in elite groups around the world, benefiting especially the financial interests within each country, and US capital internationally. Therefore, globalization and imperialism cannot be analysed separately from neoliberalism.”Joseph Stiglitz, former Chief Economist of the World Bank, wrote in his book, Globalization and its Discontents, “In the 1980s, the Bank went beyond just lending for projects (like roads and dams) to providing broad-based support, in the form of structural adjustment loans; but it did this only when the IMF gave its approval – and with that approval came IMF-imposed conditions on the country.” As economist Michel Chossudovsky wrote, “Because countries were indebted, the Bretton Woods institutions were able to oblige them through the so-called ‘conditionalities’ attached to the loan agreements to appropriately redirect their macro-economic policy in accordance with the interests of the official and commercial creditors.”The nature of SAPs is such that the conditions imposed upon countries that sign onto these agreements include: lowering budget deficits, devaluing the currency, limiting government borrowing from the central bank, liberalizing foreign trade, reducing public sector wages, price liberalization, deregulation and altering interest rates. For reducing budget deficits, “precise ‘ceilings’ are placed on all categories of expenditure; the state is no longer permitted to mobilize its own resources for the building of public infrastructure, roads, or hospitals, etc.”Joseph Stiglitz wrote that, “the IMF staff monitored progress, not just on the relevant indicators for sound macromanagement – inflation, growth, and unemployment – but on intermediate variables, such as the money supply,” and that “In some cases the agreements stipulated what laws the country’s Parliament would have to pass to meet IMF requirements or ‘targets’ – and by when.” Further, “The conditions went beyond economics into areas that properly belong in the realm of politics,” and that “the way conditionality was imposed made the conditions politically unsustainable; when a new government came into power, they would be abandoned. Such conditions were seen as the intrusion by the new colonial power on the country’s own sovereignty.”“The phrase ‘Washington Consensus’ was coined to capture the agreement upon economic policy that was shared between the two major international financial institutions in Washington (IMF and World Bank) and the US government itself. This consensus stipulated that the best path to economic development was through financial and trade liberalization and that international institutions should persuade countries to adopt such measures as quickly as possible.” The debt crisis provided the perfect opportunity to quickly impose these conditions upon countries that were not in a position to negotiate and with no time to spare, desperately in need of loans. Without the debt crisis, such policies may have been subject to greater scrutiny, and with a case-by-case analysis of countries adopting SAPs, the world would become quickly aware of their dangerous implications. The debt crisis was absolutely necessary in implementing the SAPs on an international scale in a short amount of time.The effect became quite clear, as the result “of these policies on the population of developing countries was devastating. The 1980s is known as the ‘lost decade’ of development. Many developing countries’ economies were smaller and poorer in 1990 than in 1980. Over the 1980s and 1990s, debt in many developing countries was so great that governments had few resources to spend on social services and development.” With the debt crisis, countries in the developing world were “[s]tarved of international finance, [and] states had little choice but to open their economies to foreign investors and trade.” The “Third World” was recaptured in the cold grasp of economic colonialism under the auspices of neo-liberal economic theory.
“Too Many Bad Apples”vast wealth and power go hand in hand with control and yet, those who are not possessed by these demons; ordinary hard working, trusting Americans, are continually manipulated and enslaved by the evil of the top 0.1%. While most Americans will gladly help their neighbor “with no strings attached”, the same cannot be said of our politicians and the elite who always act with ulterior motives. Aren’t both Republicans and Democrats against large deficits, high taxes, inflation, low paying jobs, etc? Doesn’t our govt have the power to make policy and enforce the laws? Then why do these same problems plague us generation after generation? This great experiment in democracy has been contaminated by a couple of thousand people who always tell us what we want to hear, but rarely deliver. It is either time for a new type of politician or a new system because the current one has become rotten to the core!
How many Henry Kissinger pals does it take to murder a planet and every species on it? Eh?Does this one illustration not cause readers to begin to comprehend the stratospheric level of consolidated, consummated wealthpower you are up against? You are here at RGE because you want to increase your money, but stop and think: money is only the means to the end of having happiness…it’s happiness everyone is going after – as indeed I argue they should – but human happiness is what’s at stake like never before in this pivotal time when WE are the adults alive. Can’t you see how ridiculous it is – what a waste of precious, limited time it is to tell ourselves a Pelosi or a CARS program is worth focusing on? What denial we are in – how unawares! We are collectively blind to 99% of the picture – just like TPTB want people, NEED people to be.After reading the above article, you tell me: What hope have the honest, busy working people of any country to ever even know, much less control, who and with what forces are playing daily double deadly dealing destruction behind the scene of our lives – playing with our very safety and happiness and survival – as if this was all just a video game?!The crucial vital essential point: even if Marvin the Martian came down here and vaporized every last elite wealthpower giant on this globe tomorrow, due to the very nature of transaction itself you would start re-growing elites-on-earth the very same day.The elite wealthpower giants are not the enemy or the problem, people: we only have them because the general human consensus is still believing in having them. This belief is killing us all and this planet, but the consensus CAN change, is changing – and MUST change. The enemy and the problem is our species’ fatal acquiescence to the WORST IDEA EVER…the bad idea of having, allowing, wealthpower giants on earth! No one has ever been able to get ahead of what they do behind our backs!Having wealthpower giants is a luxury this planet can no longer afford! IT DOESN’T WORK FOR ANYBODY.The enemy IS AN IDEA. Stop exhausting yourselves, humanity, forever and forever pulling leaves: it’s easier and quicker to do the one effective and efficient thing: dig the poisonous vine out by the root. Nothing less than digging the root will get you your best happiness!The world writhes in hell so needlessly – none of this madness polluting our world with violence and misery is necessary.WECANBESOMUCHHAPPIER!But not while the idea survives, to allow wealthpower giants to exist. Wealthpower giants are never going to stop doing what they do! Help rid your species of the idea to have wealthpower giants! Hurry!
That Americans have gorged themselves is a self-serving fabrication…their median defined contribution plan including 401(k)s is $26,578…pre-retirees’ $70kPLENTY OF REASON TO WORRY | Robert Powell, MarketWatch | Aug 4, 2009Despite market rally, retirement plans still have far to go to recover lossesBOSTON (MarketWatch) — Happy days are here again, right? After all, the markets are up, Americans are twittering happily about their 401(k) accounts, and life is good, right? Not so fast.The Employee Benefit Research Institute just rained on our parade.According to EBRI’s analysis of retirement plans in America, retirement security is anything but a given for the vast majority of Americans.”Americans have a great deal of work to do after the tremendous loss of wealth in 2008 to ensure financial security in retirement,” said Craig Copeland, an EBRI senior research associate, in a release. Here are some reasons to worry:· Defined-contribution plans, including 401(k)s and the like: Among all families with a defined-contribution plan, the median plan balance was just $26,578 in mid-June, down 16.4% from $31,800 in 2007. The losses were higher for families with more than $100,000 a year in income — their DC plans fell 22%. And those with a net worth in the top 10% saw their DC plans drop 28%. (Older savers have more in their accounts. Pre-retirees had about $70k in their plans. Assuming a 4% withdrawal rate that gives you $2,800 in annual income.)· IRA/Keogh plans: Among all families with an IRA/Keogh plan, the median value of their plan was $28,955 in mid June, down 15% from $34,000 in 2007. Pre-retirees had about $52,000 in their accounts.That’s bad, to be sure. But what’s even worse is that not enough Americans have retirement plans at work. According to Copeland’s analysis, just four in 10 families had a member participating in an employment-based retirement plan — either a traditional defined-benefit pension plan or a defined-contribution plan — from a current job. If my math is right, that means that six in 10 American workers don’t have an employer-sponsored retirement plan. How fast can you say automatic IRA plan?The other trends that Copeland confirmed are these: 1) Fewer and fewer workers have solely a traditional pension plan at work and that could spell trouble. Just 17.4% of workers had just a DB plan at work in 2007, down from 40% in 1992. And 2) an increasing portion of workers have 401(k) plans. The share of families participating solely in a DC plan rose to 60.3% in 2007, up from 37.5% in 1992. The percentage of families with both types of plans, by the way, was unchanged from 1992 to 2007 at 23%. Read EBRI’s report.Why is it bad to not have a traditional pension? Well, the poverty rate among older households lacking pension income is about six times greater than those with such income, according to “The Pension Factor: Assessing the Role of Defined-Benefit Plans in Reducing Elder Hardships.” …http://www.marketwatch.com/story/retirement-plan-recovery-still-far-off-2009-08-04
We ain’t seen nothing yet. It’s appalling to hear the Obama Administration spin, and previous to that the Bush Admiistration, when it’s obvious most of the U.S. population is facing a severe drop in their standard of living. I don’t blame Republicans or Democrats, I blame government all together. Damn right you better not flaunt your wealth GS employees! Cheers to social safety nets like food pantries and hand me down clothing… thier future looks bright!P.S. Hot stock tip: Invest in pitch forks and torches!
What happened in England when the Pound was no longer the world reserve currency? Bank accounts,assets,etc.
Here’s a thaught, signicantly increase social security benefits and pay for it by printing more money. Inflation! What inflation? Another option is to do the soilient green thing (spelling?) at around age 60ish, sparing the country “elite” of course. This option helps reduce medical care costs as well. Or, whip up a nice war using nukes to quickly reduce the population. Perhaps, go the socialism route to offer a decent life for most, but with a caveate that the current wallstreet elite can live in excess still. Further, take a cue from the Russians and distribute vodka to appease the masses. Decisions, decisions, awe shucks! Let’s just continue to play the financial shell game until one of these hands is called out for us. Mell was right, “It’s good to be the King”.
You’re right Alarmist.Oil use has dropped 42% since 2006; forget cash for clunkers, IMO Americans aren’t driving their cars because they don’t want to put maintenance/milage on them anymore.I like cash for clunkers for one reason, and its a selfish reason….once a bunch of these high ticket [you can bet the dealers are marking up their prices to absorb most of the tax credit...LOL] new cars are around for few years; a lions share of them will end up for sale on websites like autotrader for 50 cents on the dollar. More newer low milage newer used cars for depression vultures to scoop up [especially the higher quality ones that depreciate in price, like domestic brands]….LOL
I, the all powerfull Oz, envision a day when countries will merge, and derive benefits of efficiencies from their merger. A great nation, called the United Nations of North American, formely known as Canada, the U.S., and Mexico will emerge. In doing so, a period of growth, fueled by new found efficiencies will take hold. Yet, alas, this course will run dry, as the disparities grown from greed and decepiton hinders the new country. But, even further out, the United Nations of NA will merge with the United States of South American, United Asian Alliance and the European United Nation. Once again, benefits of efficiencies arise only soon to dissipate as an elite group hordes far too many resources for themselves. One last merger shall take hold. Enter the African Alliance. Wash, rinse, repeat… Finally, after no more desperate opportunities for merging… The self proclaimed global elite, sieze the global economy, monopolize the army, and create a distinct two class world. The haves and have nots. It is now crystal clear, the limited world resources shall be consumed, drunkenly by the minority world elite. The have nots are essentailly, in another world, to preferably serve the haves or die.
When the Dem/Rep elite/upper middle class start losing their temporary jobs too, then real change will occur.Right now the upper 5% of America is fat and happy, telling the bottom 95% of Americans that $250K per year is middle class and the “V” shaped recession has bottomed out….LOLWhat are they smoking?
Add bankrupt schools to your list too
I’ve noticed that too GuestWhen big job butcher axing occurs, stocks go upWhen oil goes up, stocks go upWhen the bleak job/tax base is ponderred, stocks go down…
It’s hard to tell because they were going through their own mad dalliance with socialism at the time. If you can remember the decay, dysfunction, and dolor that was 1970′s Britain, you might say it resulted from the tumble of the pound … or was it the other way around?
The Coming China Meltdown by Martin Hutchinson Prudent Bear | August 04, 2009Shares are trading at 35 times earnings. Banks in the last six months have lent more than the entire Gross Domestic Product for the period. Interest rates are below the inflation rate, while monetary growth is far above it. The seven largest bond transactions in the world in 2009 were domestic deals in this country.Looks like a bubble to me, and bound to end in tears. In a Western economy, one would be sure of it. So why should we think China’s different, and what would be the effects of a Chinese economic meltdown?Various very intelligent people have seen their hair turn grey waiting for a Chinese bubble to burst. Ever since 1998, it has been clear that the Chinese banking system has contained hundreds of billions of dollars in bad debts. A real estate boom in empty office buildings in 2003-04 pushed the assumed total of bad debts up further, and when Ernst and Young in 2006 estimated its total at $911 billion (and then retracted the figure under pressure) that seemed a reasonable estimate. Yet the Chinese economy has continued to grow almost as fast as the estimates of bad debts in the banking system and no signs of collapse have been seen. Indeed, the major Chinese banks did international Initial Public Offerings in 2006-07, all of which were outstandingly successful.So why are things different now? It has been clear for a decade that Chinese public figures overstate the country’s growth rate, so that the apparent 16% growth in the second quarter of 2009 is largely fictional. Indeed, income tax receipts data suggest that growth in the first quarter may have even been negative. However, that is hardly surprising; after all, the country’s exports were down around 30% at the peak of the trade recession of last winter. Even if China’s second quarter growth was really at an 8-10% annual rate, after, say, a 5% rate of decline in the first quarter, that is still a better growth rate than any other major economy in the world. So why should we image that China’s relative outperformance cannot continue?Here the example of Japan is instructive. From the 1950s to the 1980s Japan enjoyed apparently unstoppable growth. The global recession of 1974-75 brought only a brief interruption of that growth. That of 1980-82 (when the Japanese economy had adapted better to high energy prices) brought no interruption at all, although during the 1980s there was a noticeable slowing.Yet in 1990, after an incredible boom in real estate and stocks that took the theoretical value of the Emperor’s back garden higher than that of the state of California (it was admittedly better tended) it all stopped. The real estate bubble burst, the stock market bubble burst and Japan has now suffered almost two decades of negligible growth and relative economic hardship.Nobody now considers Japan to be the world’s great growth economy like they did in the 1980s. Yet the Japanese virtues of superb education, dazzling technology and a grinding work ethic are still as evident as ever.In some ways, the Japanese example should be encouraging to China. While some areas of China have enjoyed astonishing growth, its overall relative wealth is not even that of Japan in 1973, let alone that of 1990. Indeed, the Japanese example suggests China should enjoy several more decades of exceptional growth before its living standards get close to those in the West. At that point we may indeed see a crisis, but on that analogy, the crisis should not occur before 2030, at the earliest.Yet it is not inevitable that growth economies must almost catch up to western living standards before crisis intervenes. Thailand suffered crisis in 1997, after 30 years of excellent growth but far before it had reached Western living standards. Even South Korea at the time of its 1997 crisis was well behind the relative position Japan had reached in 1990. Thailand and South Korea have enjoyed some growth in this decade, but the intervening transition was painful indeed, involving a sharp drop in output and, in Korea’s case, the passage of the entire banking system through bankruptcy.On examination, China looks more like Thailand than Japan. Even 30 years ago, the Japanese economy was known for its transparency, with its own equivalent of the Glass-Steagall Act and a careful division not only between lending and brokerage, but even between different kinds of lending. National statistics were produced meticulously, according to norms laid down during the U.S. occupation. Politically, the same party won every election, but elections were properly contested democratic polls, and there was open competition between different factions in the ruling party as to whose policies would be followed. The state sector was small, and only a small fraction of the banking system was state owned. Much of the private sector dated back for centuries, and followed the stable traditions of family capitalism not dissimilar to Germany of the period.As its labor costs approached those of the West, inefficiencies in the Japanese system would become more apparent, and it was always likely that a crisis would intervene before Japan was fully modernized. But its education system was so superb, and the openness of it political and economic institutions so great that it was unlikely to reach a crisis before that point. Finally, in 1970 or so there was no great overhang of bad debts in the Japanese banking system, nor was real estate in any obvious excess. (The infrastructure excesses came later, in the 1990s.)China has none of Japan’s transparency. The government is undemocratic and a poor respecter of human rights; in this respect it is like Japan’s pre-World War II governments, aggressive and chauvinist. Unlike Japan, it maintains a huge military machine, which itself owns a plethora of companies. The state corporate sector is still gigantic and supported by state-owned banks. Savers are not permitted to take money out of China, and their huge savings prop up an overvalued stock market and a bond market that is comparable in size to the freely flowing international bond market. Private sector companies are either youthful fly-by-night operations or dubiously privatized state behemoths. Prices are still largely administered, and investment flows mostly to the politically connected rather than the economically attractive. Education is relatively poor outside the main population centers, and land ownership is still restricted.China is thus much more like pre-1941 Japan than post-1950 Japan and its economic inefficiencies are correspondingly greater. Because of those economic inefficiencies, the chances remain high of a meltdown far before China has achieved Western living standards. From the excesses in the Chinese economy currently, that meltdown appears now to be impending. Companies currently have more liquid assets than they can usefully invest and have been gambling with them in the stock market, a phenomenon last seen in size in Japan in the late 1980s. Shipments to retailers have increased by 15% in the first half of 2009, an increase reflected in the GDP statistics but not necessarily in sales to final consumers, although households without electricity or running water have reportedly been dragooned into buying washing machines.The most likely form of meltdown to occur is that of a banking system collapse, as the gigantic volume of recent loans goes bad and liquidity in the economy finally dries up. That would drain the huge Chinese savings pool and cause steep output contraction, particularly in the overleveraged and inefficient state-owned sector.The excess money in the system, with M2 money supply up 28.5% in the year to June, also suggests that a price explosion cannot be far away. Although official inflation is currently negative, the People’s Bank of China has already warned of a possible inflation resurgence. It must also be remembered that the social structure of China is now quite Latin American in nature, with a Gini (inequality) coefficient rising rapidly, already at 47 by 2007, well above its Asian neighbors and not far below Mexico (48) and Argentina (49). Thus an economic collapse is unlikely to be survived quietly, as was the case in Korea and Thailand.A Chinese economic collapse, which might well be accompanied by an Indian balance of payments crisis due to that country’s perpetual government overspending, would cause a sharp “second dip” in the global economy. The amount of foreign capital tied up one way or another in the Chinese economy is now so great that a Chinese market collapse would have global repercussions in an already weakened financial system. Furthermore, it is by no means certain that China would quickly resume its role of global growth engine; Japan didn’t, after all.China could be different – it always has been. But at some stage, the mysterious Chinese economy and its thoroughly opaque banking system must respond to the same constraints that affect the rest of us. Chinese economic policy has been more stimulative than ever before, its bank lending more reckless. If China’s run of apparently miraculous immunity from normal economic forces is finally about to end, the result will not be pretty for any of us.http://www.prudentbear.com/index.php/thebearslairview?art_id=10256
looking at 10/30years yield, people are more afraid of 10/30years bond than stock market. no surprise here, consider tsunami of wasteful cash for clunker alike program federal/state level, tsunami of bond origination by Treasury, tsunami of federal spending like ObamaCare.
THE GOVT PAYING the CONSUMER TO TAKE ON MORE DEBT— THE CASH FOR CLUNKERS PROGRAM.If you finance a car for scrap metal, we will pay 20-30 percent of the cost of the new car.I had said this before, when the govt saves failed institutions with taxpayers on the hook, the only way out is other forms of protectionism. To sell the glut of unsold inventory (because there isn’t demand), there is a cash for clunkers program now. Soon enough, foreign cars will be taxed when this cash for clunkers program fades, and then the locak cars subsidized. This is the problem with the too-big-too-fail problem, the govt gets more and more intertwined, freedom of enterprise gets increasingly curtailed, and there is no way back….because private demand creates supply, and there is a huge distortion when the govt decides who should buy what and why..
Good point Guest.Credit Unions are locally owned by their own members.Any profits not reinvested are turned back to members each year end.It is the only concrete way of keeping your money invested in the local community ,for the betterment of the community.Take a close look and see to what extent your money is guaranteed.Some Credit Unions have their own default insurance from a reputable firm.If you can ,do it.You wont be disappointed.