Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Wed 12.30.2009
Patriot Radio News Hour Guest Host: Mark Call Radio show call-in # 877-254-7524
Trying to Revive an Economic Corpse We're coming to the end of the year… What have we learned? Here's how we would put it, a four-word lesson that applies to almost everything: "It's Not That Simple." We were on pretty solid ground - at least as far as understanding what was going on in the markets and the economy - up until the middle of 2009. The Bubble Epoque led to the Bust Epoque…just as we thought it would.
Tech Ticker's Best of 2009: Fan Favorite, Howard Davidowitz Davidowitz is a straight shooter who always tells it like he sees it. Whether it's his bearish predictions on the economy or his criticism of the government's bailouts, Davidowitz is always an impassioned observer.
All Eyes On Dollar As 2009 Comes To An End With a slow trading day expected today, investors will likely keep there eyes on the U.S. Dollar and whether it can maintain its recent upswing going into the New Year. Set to be released later today, the U.S. Consumer Confidence report should give traders a good idea about the general direction of the greenback as 2009 draws to a close.
FDIC Moves to Seize Slice of Bank-Stock Rallies The government has auctioned off more than 100 failed banks this year to other financial institutions. Now, it wants a bigger cut of the action. Starting next year, the Federal Deposit Insurance Corp. will ask bidders for some seized banks to offer the agency a chance to profit if the deal is well-received by the buyer's shareholders.
U.S. Economic Disaster Worse Than Weimar or Zimbabwe Interviewed by Louis James with Doug Casey L: So, Ben Bernanke just got named “Person of the Year” by Time magazine. I know you must have some thoughts in response to this auspicious event? Doug: I just don’t know where they find these people... On the other hand, Slime magazine has always said that those named Person of the Year are not necessarily the most laudable people, but those who’ve had the greatest impact on the events in a given year. That would explain Hitler’s achievement of the same honor, and Stalin getting the nod twice. L: Not to mention Bin Laden. Doug: Yes, let’s not mention him. This is different: Bernanke isn’t being held up as a villain, but as a hero
The Worldwide Crack Up Boom, According to Ludwig Von Mises Bill Bonner, June 2007 . . . . What is a "Crack-Up Boom?" Von Mises explains (with thanks to Ty Andros for reminding us): "'This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.'
Testing the Deflationist There are a handful of newsletter writers - but not one economist - who predict deflation. Why no economists? There is an old line, "where there are four economists, there will be five opinions." You would think that there would be at least one Ph.D-holding economist out there somewhere who is predicting price deflation. Maybe there is, but I have not found him yet. Note: nobody is predicting monetary deflation. The deflationists are predicting monetary inflation and price deflation. So, when you read someone who says that price deflation is just around the corner, you can be 99% sure that he is not an economist. That doesn't mean that he's necessarily wrong. It does mean that he can't find any back-up among the hordes of specialists who are paid to forecast such matters. He therefore has a problem in directing you to evidence.
2009 Review: Bulls Bet Big on Bernanke, Batter Bears What a difference a year makes: If 2008 was all about what went wrong on Wall Street, 2009 was characterized mainly by what went right, at least for the financial markets. Stocks sure didn't start the year on the right foot, tumbling into early March amid the ongoing fallout from the September 2008 Lehman Brothers bankruptcy and fears of bank nationalizations. But from the depths of the March lows, major averages mounted a historic and pretty much unrelenting rally. In the past 12 months, the Dow and S&P are each up more than 20% while the Nasdaq is up more than 40%.
The Debt Bomb Make no mistake; the developed world is drowning in debt and there are only two viable options – a global economic depression or very high inflation. It is our contention that the policymakers have chosen the latter option and over the following years, we will experience the trauma of severe inflation. Look. The American government is staring at total obligations of US$115 trillion, America’s debt-to-GDP ratio is off the charts and the American public is also up to its eyeballs in debt. Under this scenario, you can bet your bottom dollar that the American establishment will try to reduce this debt overhang through a process known as monetary inflation. If you have any doubt whatsoever, take a look at the chart below, which captures the incredible expansion in America’s monetary base.
We're on the Path for Fireworks in 2010 Many commentators have over the past few days churned out lists of 2010 predictions. Although never one to produce best and worst lists at the turn of the year, Richard Russell, 85-year-old doyen of newsletter writers and author of the Dow Theory Letters, did express a major concern, as quoted below: I’m thinking that we’re on the path for fireworks in 2010. The reason I say that is because the federal deficits are running into the trillions of dollars. The roll-over of debt coming up in the next two years defies comprehension. For instance, in the next two years the U.S. must roll over $2.5 trillion. Worldwide, banks during the coming two years will have to roll over $7 trillion. On top of that commercial real estate in the U.S. has $750 billion to roll over.
Leading the American Middle Class Through a Lost Decade As people prepare to pop champagne corks at midnight on New Year’s Eve, I see media hype about the years 2000-2009 being the "lost decade" in America. Those years overall were bad ones for Wall Street, but not for Main Street. So what if 401k portfolios became "201k" in and around the 2001 recession? House prices still went up. Jobs disappeared primarily in computer technology sector. The American middle class directly or indirectly measures its economic well being first by jobs and second by home ownership. All the other factors combined don't equal to either of these factors. Just because the stock market performed poorly over the zeroes doesn't mean it was a lost decade in suburbia. Middle America did just fine all the way through 2007 when the unemployment rate last stayed below 5%. Too bad Main Street’s lost decade didn't start on an even number nicely packaged for media spin and public consumption.
String of investment bubbles marked 2000-09 The bubble decade: Get-rich-quick lure of stocks, oil, mortgages led to trillion-dollar losses A string of exploding investment bubbles that started with the dot-coms and ended with mortgages and oil dominated the years from 2000 to 2009. And it looks like the next decade will be no different. It doesn't seem to matter to many hedge fund traders and other professional investors that the Standard & Poor's 500 index has turned in its first losing performance over the course of a decade, having fallen 23 percent from 1,469.25 at the start of 2000 to its current 1,126.20. Or that they or other investors helped create and then destroy the bubbles that left stocks worth $2.5 trillion less today than when the decade began -- and that's before adding in the effects of inflation.
Two hedge-fund managers predict the economy’s next leg down Shorting Goldman Sachs. PERHAPS ONE OF THE greatest failings in the run-up to the financial meltdown was a lack of perspective — an inability by many market participants to see the big picture. Not so with Kevin Duffy and Bill Laggner, principals of the Dallas-based hedge fund Bearing Asset Management. With the help of their proprietary credit-bubble index, developed in 2004, the managers sounded early warnings on housing and credit excesses, and capitalized handsomely on their forecasts by shorting Fannie Mae, Freddie Mac, money-center banks and brokers, builders, mortgage insurers and the like. Students of the Austrian school of economics, which espouses a free-market philosophy that ascribes business-cycle booms and busts to government meddling with interest rates, the pair is solidly in the contrarian camp, believing that the worst for the markets may be yet to come.
Pimco CEO: We're Trained to Think the "Farther You Fall, The Higher You'll Bounce Back. We're Hostage to the V"-Shaped Recovery Model Barton Biggs and Marc Faber think that investors should move out of bonds and back into stocks. On the other hand, the chief executive officer of bond giant Pimco - Mohamed El-Erian - says that most financial managers, investment officers and economists are erroneously assuming this will be a V-shaped recovery because they are "fighting the last war" instead of looking at what is really happening in the economy:
Poll: 70 Percent of Firms to Cut Jobs or Not Hire U.S. employers expect to hire more new workers in 2010 than they did in 2009, a sign the U.S. recession may be easing its grip, research showed on Tuesday. One-fifth of employers plan to add full-time, permanent employees next year, up from 14 percent in 2009, according to CareerBuilder.com, an online jobs site that surveyed more than 2,700 hiring managers and human resource professionals. Just 9 percent said they plan to cut head count in 2010, down from 16 percent in 2009, according to the nationwide survey.
Gold, silver to explode with 2010 treasury issuance Now that 2009 has come to a close, investors are looking forward to the happenings of 2010. One of the most important events is the issuance of nearly $2.2 trillion in Treasury bonds to fund government spending. Although $2.2 trillion seems relatively small compared to a federal debt just over $12 trillion, the size is magnified when you consider its impact on the markets.
2010: Deciding Year for Gold Is it prudent for investors to continue banking on gold in 2010 also after the unprecedented surge in prices of the yellow metal in 2009? Analysts are divided over this issue. With 2009 coming to an end and the global economic scene looking bright with India and China posting surprise economic growth, gold’s doomsday value has certainly come down. But still the yellow metal prices are on the rise showing no signs of a price correction. Gold closed at a record high of $1,215.30 in December, well up from its low of about $817 per ounce in January 2009.
Will gold boom again in 2010? AFTER the strengthening of the gold price by more than 20% – at one stage by 40% – since January, pundits are split over just how well the precious metal will fare next year. But three top experts do agree that it will be well above the price of just under $875 at which it began this year. This is despite gold failing to meet some expectations that it would enter the new decade at fresh highs. The yellow precious metal has climbed steadily through the year to end at 24% stronger than it began. Starting the year at a London fix of $874,50 an ounce, gold rallied through $1200/oz to hit a high of $1226,60 early this month.
Marc Faber on Economy Gold and Silver Part 1 of 3
Gold prices hold up as demand exceeds supply Gold has soared to record highs and there is no shortage of those wanting to get exposure to the precious metal, but will it all end in tears for investors? Gold shone brightly this year, but analysts are divided on whether 2010 could see some of the gloss fade. Gold closed at a record high of US$1215.30 (NZ$1715.73) in local trade on December 2, well up from its low of about US$817 an ounce in January.
Gold dips back below $1,100 as dollar rises Gold and other metals fell Tuesday in response to a stronger dollar, while energy futures eked out small gains. The price of gold ended a three-day winning streak, falling back below $1,100 as the dollar rose against other currencies. Gold for February delivery lost $9.80 to settle at $1,098.10 an ounce on the New York Mercantile Exchange. Gold is seen as a hedge against a weak dollar, so when the greenback rises, investors often sell the metal.
Gold's Volatility is Your Free Leverage "Gold is a high risk investment." Dec 27, 2009 - Martin Feldstein, former Chairman of Ronald Reagan's council of economic advisors and professor at Harvard. Gold is not a high risk investment. Martin is dead wrong. Gold is the lowest risk investment in the world. He is correct that the gold price is volatile, although it can be argued that the price volatility is because of the successful efforts of most world governments and the banksters to convince everyone that gold IS a high risk investment and an irrelevant asset.
US Mint Provides 2009 Fractional Gold Eagle Sell Out Figures 2009 Fractional American Gold Eagle bullion coins are in the history books with leading sales figures, despite their late launch and quick sell out. Having only been released on Dec. 3, 2009, the coins in the fractional sizes of one-half ounce, one-quarter ounce, and one-tenth ounce weights recorded smashing release day sales — 345,000 were sold for a total of 58,000 ounces of gold. On the very next day, the United States Mint announced that the supply of the smallest size was depleted, and that the other two sizes were nearly exhausted. It offered the remaining bullion coins in an allocated process, and then suspended sales until the final 2009 inventory was produced from available in house blank supplies.
Gold prices driven by huge investment demand . . . . Investment demand has been the main driver behind prices over the past couple of years and more so over the past several months. I think investors continue to be concerned over financial markets, economic conditions and political conditions as well. So I think with weak economic growth, with high unemployment, with what’s going on in Afghanistan, Iran, etc., you have increased concern. And investors continue to rush to safe-haven assets such as gold.
Peak Gold Pushes Prices Since 1999, global gold production has fallen 19% while gold prices have jumped 400%. Many analysts believe one of the contributing factors to prices' meteoric rise is the constriction of above ground gold stock. Above ground stock grows by 2,400 tons a year but as central banks shift from being net sellers of gold to net buyers and investor demand increases, gold supply tightens. If this trend continues, gold prices could see another spike up.
Marc Faber on Economy Gold and Silver Part 2 of 3
Gold rush grips China as people on buying spree As the year nears to a close and 2010 is all set to shine, there is gold glittering in the Chinese landscape. There is a mad gold rush going on across China as people are on the streets, swarming gold jewelry shops to buy coins, bars and ornaments during an year-end shopping spree. China is today the world's largest gold market. China recently overtook India and emerged as the largest gold consumer in the world. The dragon land is the largest global gold producer.
No full stops for central banks’ gold race In October this year, Reserve bank of India triggered a new wave among central banks across the globe, resulting in huge purchases of gold by them. With India leading the way with a 200 tonne gold purchase from the International Monetary Fund (IMF), other banks also followed suit by purchasing the yellow metal in bulk. Now, to add to that in 2009 European Central Bank (ECB) has decided to downsize its annual gold sale to 155 tonne. This move has further boosted the central banks’ crave for the yellow metal. Before this, Sri Lanka and Russia had purchased gold through their central banks.
U.S. Dollar and Gold Trends into 2010 The dollar finally broke through resistance at 23, which has turned into support. Price is backing up and testing support. The CCI index at the bottom of the chart has gone from overbought (+200) to 89. When an asset moves from being this overbought to back below 100, it often signals a consolidation/correction is likely. As reported last week, some commodities have been harder hit than others: gold and oil receiving the short end of the stick. This week, however, oil spiked up almost 5%, while gold stabilized. The daily USO (oil) chart shows a positive MACD crossover with the histograms turning up into positive territory as well.
U.S. Dollar, Gold Stocks and Inflation 2010 In his most recent work, Martin Armstrong postulates that because of accelerating inflation, possibly leading to hyperinflation, a falling dollar ($), cycles associated with his Economic Confidence Model (ECM), and a move away from immovable assets by the investing public, stocks are destined to hit new highs as measured by the various indices around the world, and that such a move could begin in earnest at any time. And while he does allow for an alternative scenario, one where stocks could most pessimistically test the March lows in 2011 (an ECM low), using the Dow for discussion purposes, according to Martin a more likely scenario is that allowing for volatility, 2010 should be characterize by a trading range between 12,500 and 8,800, with new highs possible as early as 2011, the inverse of the possible low discussed above.
Why is the U.S. Dollar Rising, Treasury Bond Market Failure 2010? Now am not a trader nor do I rely on charts but those who do, tell me that dollar has broken a “falling wedge” and is all set to rally a great deal in the coming weeks. Most research houses have put in dollar targets of anywhere between 78 and 83.
JP Morgan: 78
Morgan Stanley 82
CLSA 83
GS: They still cant believe dollar is rallying let alone leaving a target.
USD collapse 2012 and the end of the world as we know it Devolution of the USD 2012? - As the first public article for me just before 2010, it seems appropriate for me to comment on one of the biggest stories we will be all facing – that is an end game of events leading to the end of the USD. The implications for the world are no less than Armageddon – like. I mean it. Before we get into some details, I have been working on forecasts for 2010, and my study of the USD situation and how much time it has left. I first came to the conclusion that it was roughly (and I am getting close here on timing, I’m sure of this) two years from 2010. Actually, the calculation is two more years of relative USD functionality before the world realizes in about a shocking week’s time that the USD is just about to really go belly up. It’s not 5 years out anymore in my calculations, we have roughly two more years left.
In God We Trust I'm not here to preach today. Well, maybe I better take that back. I do want to persuade you of something. But we're not going to talk about religion. Unless you consider having faith in fiat a religion. I would call that having faith in False God's. If the dollar is your almighty god, then Pilgrim, I am here to convert you. Having faith in the dollar is not going to save you when hyperinflation hits.
Marc Faber on Economy Gold and Silver Part 3 of 3
U.S. Dollar Takes Temperature of Troubled World How is one to explain the wild gyrations in the international exchange value of the U.S. dollar in recent times over the past year or so? During one month it is falling fast, in another it is rising just as fast. Since early December, it has risen about 5 percent against the yen -- not a weak currency these days -- and almost as much against the euro. Some older-fashioned bankers must be yearning for the days of fixed exchange-rates, for a time when a national currency was attached to the steady price of gold. Alas, no more. So it is not just the U.S. dollar and other currencies, but also the spot prices of oil, gold and other commodities that fluctuate wildly in the world markets.
Elvis Has Left The Building In his most recent work, Martin Armstrong postulates that because of accelerating inflation, possibly leading to hyperinflation, a falling dollar ($), cycles associated with his Economic Confidence Model (ECM), and a move away from immovable assets by the investing public, stocks are destined to hit new highs as measured by the various indices around the world, and that such a move could begin in earnest at any time. And while he does allow for an alternative scenario, one where stocks could most pessimistically test the March lows in 2011 (an ECM low), using the Dow for discussion purposes, according to Martin a more likely scenario is that allowing for volatility, 2010 should be characterize by a trading range between 12,500 and 8,800, with new highs possible as early as 2011, the inverse of the possible low discussed above. Such an outcome would be predicated on 2009 finishing above 10,800 (1140 on the S&P 500[SPX]), and 12,000 next year. Without a doubt, if such an outcome were to unfold, I would also have few reservations about probabilities in this regard, this, and the likelihood of continued $ weakness.
Astonishing Inflation Data from the BLS I’m talking about inflation data courtesy of the Bureau of Labor Statistics (BLS). I find the stats startling because it’s proof positive that inflation is far from dead. And as I just mentioned, even more so because the BLS’s inflation data is contrived and manipulated to almost always show less inflation than there really is. Consider the following price increases which have occurred since the beginning of the financial crisis in October 2007. In the 24 month period since then, a time when deflation was supposedly striking everywhere …
Food and beverage prices increased an average of 5.6%
Cereal and bakery prices jumped 11.5%
Sugar and sweets prices, up 11.8%
Cooking oils, up 11.6%
Meanwhile …
The cost of medical care increased an average of 6.7%
Medical care services, up 7.1%
Hospital services, up 14.0%
The cost of education (tuition) at private schools jumped 10.7%
Educational books and supplies, up 14.9%
The bubble decade: Get-rich-quick lure of stocks, oil, mortgages led to trillion-dollar losses A string of exploding investment bubbles that started with the dot-coms and ended with mortgages and oil dominated the years from 2000 to 2009. And it looks like the next decade will be no different. It doesn't seem to matter to many hedge fund traders and other professional investors that the Standard&Poor's 500 index has turned in its first losing performance over the course of a decade, having fallen 23 per cent from 1,469.25 at the start of 2000 to its current 1,126.20. Or that they or other investors helped create and then destroy the bubbles that left stocks worth $2.5 trillion less today than when the decade began - and that's before adding in the effects of inflation.
John Hussman Says Stock Market Bulls Dancing on the Edge of a Cliff Last week, the dividend yield on the S&P 500 dropped below 2%, versus a historical average closer to double that level. While part of the reason for the paucity of yield in the current market can be explained by the 20% plunge in dividend payouts over the past year, as financial companies have cut or halted dividends to conserve cash, the fact is that current payouts are not at all out of line with their historical relationship to revenues, and even a full recovery of the past year's dividend cuts would still leave the yield at a paltry 2.5%. The October 1987 crash occurred from a yield of 2.65%, which was, at the time, the lowest yield observed in history, matched only by the 1972 peak prior to the brutal 1973-74 bear market.
Small Chinese Company Tells Goldman To Take A Hike, Refuses To Pay $80 Million In Derivative Losses It appears that even after thoroughly dominating the US legislative, judicial and executive branches, the long tentacles of the squid have been no better than the Mongolian hordes at overcoming the Chinese Wall (which is ironic seeking how easy it is to ignore the same construct internally between the firm's prop and flow traders...and yes, we will be posting our response to Goldman shortly, we have not forgotten). In the meantime, half a world away, a small Chinese power generator, Shenzhen Nanshan Power, is blatantly refusing to honor contracts with Goldman Subsidiary J. Aron for $80 million in derivative losses, and it appears that China itself has decided to stand behind the small company.
Liberty, Fannie & Freddie, Fed, housing
Are Banks Scamming Fannie? You remember the announcement that Fannie and Freddie would have an "unlimited" credit line from Treasury to cover shortfalls and buy-outs of defaulted loans from MBS, right? Well then, read this from the forum: After the Fannie news came out this weekend, a friend called me and his brother works for Chase Mortgage. He told me that Chase is redoing stated income loans and instead of actually appraising the home, they are going back 3 years on the homes valuation in order to get the loan processed. Then they are selling these mortgages to Fannie Mae. Yes, that's an anecdotal claim, but if true can someone explain to me how this isn't out-and-out fraud? Is Fannie requiring the actual appraisal with the loan package information they buy, or is the entire "verification" nothing more or less than a checkbox that says "yes, we have an appraisal"? Toxic waste dumping ground? Maybe.
Moody's: November credit card payments slip More U.S. credit card users fell further behind on their payments in November, Moody's Investor's Services said Tuesday. The charge-off rate on U.S. credit cards, as measured by Moody's Credit Card Index, rose to 10.56% last month after falling for the two previous months. October's charge-off rate was 10.04%. The charge-off rate measures those credit card account balances written off as uncollectible, as an annualized percentage of total outstanding principal balance. The record-high of 10.76% was reached in June.
Credit Card Writeoffs Rise, Could Get Worse U.S. credit card debts written off as uncollectible rose in November, following two consecutive months of decline, though early stage delinquencies dropped for the month, Moody's Investors Service said Tuesday. Credit card charge-offs rose by about one-half percentage point in November to 10.56 percent, and is likely to continue to rise to a peak of between 12 percent and 13 percent in mid-2010, Moody's said in a statement.
Ky. budget shortfall could exceed $1.5 billion Kentucky governor warns budget shortfall could surpass $1.5 billion over next 2 years Kentucky could be facing a budget shortfall of more than $1.5 billion over the next two years because of the economic recession, Gov. Steve Beshear said Tuesday. "We face a challenge much greater than many had anticipated," Beshear said at a Capitol news conference. "Obviously, this is going to require, more than ever before, a cooperative, bipartisan working relationship between the legislature and the governor's office if we are going to continue to move this state forward." The Democratic governor didn't rule out the possibility of furloughs or layoffs among the state's nearly 34,000 employees.
Local tax coffers fall lower nationwide In another ominous sign for state budgets nationwide, state and local governments reported another drop in overall tax revenue on Tuesday. General sales tax, individual income tax and corporate income tax were all down in the third quarter of 2009, resulting in an overall 6.7% drop in total tax revenue, compared to the same quarter in 2008, according to the U.S. Census Bureau. This is the fourth consecutive quarter in which tax revenue collection has fallen.
The Mother of All Balance Sheets Motrgage Backed Madness The Federal Reserve’s balance sheet has quietly ballooned back to near-record highs. The Fed announced yesterday that it’s balance sheet expanded to $2.22 trillion last week, it’s grossest level in nearly a year and just a hair from an all time high. Hmmm… if Mr. Bernanke assures us the recession is “very likely over,” then why is the Fed balance sheet in crisis mode? What are they worried about? Here’s the answer:
Shoplifters? Studies Say Keep an Eye on Workers Gift cards are just so easy — so easy for dishonest employees to exploit, that is. At the Saks flagship store in Manhattan, a 23-year-old sales clerk was caught recently ringing up $130,000 in false merchandise returns and siphoning the money onto a gift card. “Gift card fraud is spiking,” said Joshua Bamfield, author of the Global Retail Theft Barometer, an annual international survey of retailers. “To employees, this is like currency. It’s almost as good as the U.S. dollar.”
Illinois AG to Fed: End Incentives for High-Risk Mortgages Illinois’ attorney general Lisa Madigan urged the Federal Reserve to end financial incentives for loan officers and mortgage brokers for the types of loans written for borrowers. According to a statement from Madigan’s office, federal law allows lenders to receive bonus compensation based on the type of loan issued, meaning loan officers who place borrowers in higher risk, adjustable-rate mortgages may actually receive incentives to do so. An inquiry to the Fed was not immediately returned.
Atlanta home prices off 8.1 percent from last year Georgia home prices were essentially flat in October from a month earlier, but are still off significantly from the same period last year, according to a report issued Tuesday. According to the Standard & Poors/Case-Shiller Home Price Index, the price of a home in Atlanta declined 0.2 percent following monthly rebounds in price over the summer months. Still, prices overall are off 8.1 percent from October 2008, though that figure has narrowed. The report comes a week after the National Association of Realtors said the sales prices of existing homes in November rose 2.4 percent from the same period last year.
Stable Home Price Data Can't Dash Double Dip Fears U.S. home prices were unchanged in October, according to the widely watched Standard & Poor's/Case-Shiller indexes released on Tuesday, indicating stabilization in the hard-hit housing sector though the figures dashed hopes for a sixth straight monthly increase. The S&P composite index of home prices in 20 metropolitan areas was flat in October, falling short of expectations for a rise of 0.2 percent according to a Reuters survey. September's index was revised upward to a gain of 0.4 percent, from a previously reported 0.3 percent.
Home Prices Mask Signs of Weakness Just as the economy is finally beginning to strengthen, the real estate market is showing new signs of deterioration. Prices slipped in many cities in October, new figures show, despite low mortgage rates and a generous tax credit meant to spur sales. Now rates are starting to rise, making it harder for many buyers to afford a house, and the tax credit seems to be losing its capacity to lure them into the market.
Bad news for housing: Prices flattening Home price gains earlier this year flattened out in October, according to a report issued Tuesday. The S&P/Case Shiller Home Price index, covering 20 of the largest metropolitan areas in the nation, was unchanged in October, after four consecutive months of gains. The index is down 7.3% from 12 months earlier. "The turnaround in home prices seen in the spring and summer has faded," said David Blitzer, chairman of the Index Committee at Standard & Poor's, in a statement. "Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip," he said.
Mortgage Rate Jump Could Choke Off Housing-Led Recovery As the 2010 approaches, a mix of housing market factors are falling into place which could lead to a very nasty start to the New Year for the U.S. economy. If predictions of soaring fixed mortgage rates come true and damper any nascent housing recovery, the United States could experience the double-dip recession many experts have warned is possible. Morgan Stanley now predicts 10-year Treasury bond yields will jump more than 40 percent next year, while 30-year fixed mortgages may surge more than 50 percent. The exploding budget deficit will do the damage, David Greenlaw, Morgan Stanley’s chief fixed income economist, told Bloomberg News.
What Soviet Medicine Teaches Us In 1918, the Soviet Union became the first country to promise universal "cradle-to-grave" healthcare coverage, to be accomplished through the complete socialization of medicine. The "right to health" became a "constitutional right" of Soviet citizens. The proclaimed advantages of this system were that it would "reduce costs" and eliminate the "waste" that stemmed from "unnecessary duplication and parallelism" — i.e., competition. These goals were similar to the ones declared by Mr. Obama and Ms. Pelosi — attractive and humane goals of universal coverage and low costs. What's not to like?
Health Care Nullification: Things Have Just Gotten Underway“The several States composing the United States of America, are not united on the principle of unlimited submission to their General Government.” ~ Thomas Jefferson For the past few days, I’ve received loads of e-mails urging me to get active regarding the healthcare vote – most of which had a subject line similar to: “Last Chance to Stop National Healthcare!” Well, if you believe the only way to protect your rights is by begging federal politicians to do what you want, then these e-mails are certainly right. The vote went as expected, and so will the next.
Consumer confidence rises, but still weak Americans are ending 2009 feeling better about the economy than when the year began, buoyed by optimism that job prospects will improve in the first half of 2010. Consumer expectations for the job market reached their highest level in two years, but most people remain downbeat about their current prospects, according to a monthly survey released Tuesday. The survey also showed that fewer people plan to buy automobiles and homes in the next six months, compared with November.
As defense agencies hire, other government workers get incentives to retire Uncle Sam may be hiring, but he's also trimming staff in some corners of the government, as agencies suffer through a budget squeeze or shift their focus. The federal government hired 97,445 people in the first nine months of 2009, mostly for the departments of Defense, Homeland Security and Veterans Affairs, according to the Office of Personnel Management. But just as new faces show up at some offices, seven agencies or departments hope to cut about 37,000 workers with buyouts and early-retirement offers.
GM offers dealers incentives on Pontiacs, Saturns General Motors is sweetening the deal to help blow out dwindling stocks of discontinued Pontiac and Saturn models. GM just told dealers that it will give them a $7,000 incentive for every leftover vehicle from either brand that they move into their rental or service fleets. They could then sell the vehicles to consumers and pass along some or all of the savings.
GMAC Said to Discuss $3 Billion or More in U.S. Aid GMAC Inc., the home and auto lender that counts the U.S. government as the largest stakeholder, is discussing with the Obama administration a third bailout of $3 billion to $4 billion, said a person familiar with the matter. The size of the assistance is under negotiation, the person said on condition of anonymity because the talks are private. A deal may be reached in days as Detroit-based GMAC incorporates losses from its home-loan businesses, the person said.
Japan: Slowly Going Broke We reported that the US government would need to roll over $2.5 trillion worth of debt next year. We probably erred. The number was right, but it was meant to be over the next two years. During the next two years also, worldwide, banks need to roll over $7 trillion. Whether it is over one year or two years, we’re talking big money. Most people who bother to think about it are coming to the conclusion that this is very inflationary…and very bullish for gold. They think the Fed will need to “monetize the debt” directly, or indirectly. One way or another, they say, the central bank will have to increase the volume of money so that the government can finance its deficits.
Estate tax set to expire Thursday Benjamin Franklin's maxim that "nothing is certain but death and taxes" remains true. But a congressional stalemate has left the federal estate tax, the levy on assets left to heirs, in doubt for at least part of 2010. The tax is poised to expire Thursday, though the House and Senate are expected to pass a reauthorization, possibly retroactive to Jan. 1, next year. In the meantime, what might seem like a potential tax savings has become a guessing game for taxpayers, accountants, estate planners and tax lawyers. The impasse also could mean capital gains taxes on more inheritances.
Is There a Constituency for Liberty in the U.S. Media? When I was a journalism student at the University of Tennessee 35 years ago, one thing we were told over and over again was that journalism served a "watchdog" role in keeping tabs on government. I had assumed (naïvely, of course) that the term "watchdog" meant serving as a counterforce against the predations of the state. Alas, what I have found that it really means is that modern journalists and their mainstream organs like the New York Times, Washington Post, Vanity Fair, Time and Newsweek, not to mention a gaggle of numerous smaller wannabe publications, are making sure that the state is using all of its powers and then some to push people into line. As a college professor who works on a faculty that is overwhelmingly left-liberal, the one thing I hear time and again from my colleagues is that people need a tough, "kick-ass" government to make them behave.
Ron Paul on Terrorism Congressman Ron Paul gives his thoughts on Yemen, the attempted airline bombing, the motivations of Al Qaeda, the radicalization of the Middle East, and the negation of our liberties to government provided "security."
Putin threatens new missiles to counter U.S. shield Russian Prime Minister Vladimir Putin warned Tuesday that Russia will have to go ahead with a new class of advanced offensive nuclear missiles if the United States continues with plans to develop a defensive missile shield. The powerful ex-president said in Vladivostok that the dispute was the main issue holding up negotiations on a new Strategic Arms Reduction Treaty (START).
US readying paralyzing Iran sanctions The US administration is heading towards placing "paralyzing" sanctions on Iran, Israeli Ambassador to Washington Michael Oren said Tuesday. Speaking to Army Radio, Oren added that although it was "too early," the US had also not yet abandoned the military option. "The Americans attribute the highest importance to the Iranian issue," he said during the interview. "The US, along with other countries, is preparing to impose paralyzing sanctions on [Iran], and preparations are happening even now."
Afghans Increasingly Turning to Taliban’s Shadow Govt NATO: Taliban Has 'Government in Waiting' Reports of a Taliban “shadow government” complete with its own court system are not new. Indeed, we’ve been covering the phenomenon for well over a year, and it has only grown as the group’s influence has gained. But to appreciate just how big and how credible this alternative government has gotten, one needs to closely examine its inner workings, particularly in regions where it has replaced the NATO-backed government for all intents and purposes.
Yemen: the new front in the fight against terror The trail of the foiled terrorist attempt to blow up a packed Northwest Airlines flight to Detroit on Christmas Day appears to lead to Yemen. At least the suspected attacker, Umar Farouk Abdulmutallab, 23, of Nigeria, has said in initial interrogation that al-Qaeda had trained him in Yemen and provided him with the explosive device. The poorhouse of the Arab world has suddenly come to the centre of international media attention. Will Yemen become the next front in the so-called "War on Terror?" With its impenetrable mountain ranges and rocky deserts, its tribes and clans following ancient laws of honour, Yemen does indeed provide an ideal terrain for terrorist training camps.
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