Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 02.01.2010
''Iran will deliver telling blow to global powers on Feb. 11th Iranian President Mahmoud Ahmadinejad says the nation will deliver a harsh blow to the "global arrogance" on this year's anniversary of the Islamic Revolution. "The Islamic Revolution opened a window to liberty for the human race, which was trapped in the dead ends of materialism," Ahmadinejad said during a cabinet meeting on Sunday.
US raises stakes on Iran by sending in ships and missiles Chris McGreal - Guardian Pentagon says Patriot shield will deter strike on American allies in the Gulf Tension between the US and Iran heightened dramatically today with the disclosure that Barack Obama is deploying a missile shield to protect American allies in the Gulf from attack by Tehran. The US is dispatching Patriot defensive missiles to four countries – Qatar, United Arab Emirates, Bahrain and Kuwait – and keeping two ships in the Gulf capable of shooting down Iranian missiles. Washington is also helping Saudi Arabia develop a force to protect its oil installations.
U.S. expanding missile defenses in Gulf WASHINGTON (Reuters) - The United States has expanded land- and sea-based missile defense systems in and around the Gulf to counter what it sees as Iran's growing missile threat, U.S. officials said. The deployments include expanded land-based Patriot defensive missile installations in Kuwait, Qatar, UAE and Bahrain, as well as Navy ships with missile defense systems in and around the Mediterranean, officials said. General David Petraeus, who as head of U.S. Central Command is responsible for military operations across the Middle East, said this month that the United States has stationed eight Patriot missile batteries in four Gulf countries, which he did not identify.
US boosts missile presence in Gulf as warning to Iran By James Sturcke - Guardian Pentagon expands Patriot missile programme across Middle East after Tehran repeatedly spurns hand of diplomacy The Obama administration is intensifying pressure on Iran by increasing its missile defences in the Middle East to defend against potential missile strikes in the region by Tehran, it emerged today. The US military has boosted the capability of land-based Patriot defensive missiles in several Arab nations in the Gulf, and one official told the Associated Press the navy was also increasing the presence of ships capable of knocking out hostile missiles in flight
Fears that US missiles move may be exploited by Iran's hardlinersDeployment may strengthen repressive regime in Tehran and could lead to action against US interests in region By Robert Tait - Guardian - Iran greeted news of the US plans to station missile defences in neighbouring Arab states with a stony official silence today. While the development went unreported by the two official news agencies, IRNA and Fars, the closest thing to a government response was a comment from a hardline MP, Hassan Sobhani-niya, that the matter would "probably" be discussed by the parliament's national security and foreign policy committee on Tuesday.
China, Iran Prompt U.S. Air-Sea Battle Plan in Strategy Review By Viola Gienger and Tony Capaccio Feb. 1 (Bloomberg) -- The U.S. military is drawing up a new air-sea battle plan in response to threats such as China’s persistent military build-up and Iran’s possession of advanced weapons, according to the Pentagon’s latest strategy review. The Air Force and Navy are seeking more effective ways of ensuring continued access to the western Pacific and countering potential threats to American bases and personnel, according to the Quadrennial Defense Review to be released later today.
#11:Florida Community Bank, Immokalee, Florida Florida Community Bank, Immokalee, Florida, is the 11th FDIC victim of 2010. The agency estimates that the cost to its deposit insurance fund (DIF) will be $352.6 million.
#15:American Marine Bank, Bainbridge Island, Washington American Marine Bank, Bainbridge Island, Washington, is the 15th FDIC-insured institution to fail in the nation this year. The FDIC closed the ailing bank at an estimated cost of $58.9 million to the Deposit Insurance Fund (DIF).
US banks face insider trading probe By Tom Braithwaite in Washington Neil Barofsky, the special inspector-general overseeing the US government’s financial rescue efforts, is to probe allegations of insider trading among bank executives and their associates. Eight of the largest banks in the US received between $2bn and $25bn in October 2008 under a programme to prop up the financial system led by Hank Paulson, then Treasury secretary. Dozens more institutions followed and Mr Barofsky, who examines the troubled asset relief programme, is looking into whether information improperly made its way to trading rooms during a feverish period in which the government and banks were frequently exchanging information.
Bankers in favour of paying global fee [TAX] By Patrick Jenkins, Tom Braithwaite - FT Some of the world’s most prominent bankers have come out in favour of a global bank wind-down fund, a concession from the industry after weeks of fighting proposals for new taxes in the US and Europe. Josef Ackermann, chief executive of Deutsche Bank, told the Financial Times on Friday : “To help solve the too-big-to-fail problem I’m advocating a European rescue and resolution fund for banks. Of course, the capital for this fund would have to come from banks to a large degree.”
Herbert Hoover Obama by Peter Schiff - Lew Rockwell The Precarious State of Our Union In this week's much anticipated State of the Union address, President Obama again demonstrated his poor understanding of the fundamental problems that confront our nation. By following the advice of the same people who helped guide our economy to the precipice of total collapse, Obama now threatens to push it over the edge.
'Walking away' not immoral, prof says by J. Craig Anderson - The Arizona Republic He expands defense of homeowner in default Arizona law professor Brent White says the only thing standing between many "underwater" homeowners and a better financial future is a misguided sense that walking away from a loan commitment is morally wrong. White, an associate professor at University of Arizona's James E. Rogers College of Law, has spent the past few months presenting his argument to other lawyers, real-estate professionals and the national media. It started with a 50-page discussion paper he published in October, in which White argues that underwater homeowners, those whose unpaid loan balance exceeds the value of their home, are being manipulated into picking up the tab for a real-estate crash that borrowers and lenders created equally. "I'm all for a society where people must take personal responsibility, but that should also apply to the banks and financial institutions," he said.
Growth spurt expected to slow this year By Patrice Hill - Washington Times Jobs, credit remain tight After the best quarterly growth in six years at the end of 2009, the economy is expected to settle down in 2010 to a more subdued state that reflects underlying difficulties with jobs and credit still weighing on consumers. Investors were pleasantly surprised on Friday by a report showing sizzling growth at a 5.7 percent annual rate in the final quarter of 2009 — more than doubling the 2.2 percent growth rate in the summer, when the economy emerged from recession. But the growth spurt was almost entirely fed by one-time events — in particular, a slowdown in a massive liquidation of overstocked goods by businesses that held back the economy throughout 2009.
Rising Corporate Debt Could Bankrupt Firms, Crash Market by 2013 By MATTHEW SCOTT - Daily Finance Wall Street's love of leverage is threatening to turn around and bite it in the assets, as many companies find their issuance of debt could potentially become their undoing. Massive amounts of corporate debt issued between 2003 and 2007 will come due over the next four years, and companies' inability to refinance their debt will leave them stuck with high interest payments, dragging down corporate earnings and forcing some companies into bankruptcy. Standard & Poor's estimates that 807 speculative grade issues were originated in the U.S. from 2006 through 2009, and while only 82 (11%) of those bonds have defaulted, an alarming number of these issues still have below investment-grade ratings and are very much at risk of default.
Gold the Only Best Bull Market in Town Gold is trying to carve out a bottom, as it fell 11.20 for the week, closing at $1081.50 (-1.02%). Downside momentum has lessened from last week’s 3% decline. The big question now is: where is gold going to from here? No one knows for sure, but let’s take a look at where it is, and where it has come from, in order to determine the most probable scenario going forward. The following chart gives a long term perspective on gold – covering the start of its bull market until the present. It is a monthly chart that rises from the lower left to the upper right: a bullish signature.
Why no one can defeat gold By Jim Sinclair There is no boom. I am in the one business which has proven since 1985 when I started it, as the perfect forecasting indicator. I am in food wholesale. It relates to food service (restaurants) and retail stores. In every past downturn, I do well about 6 months before the statistics point towards a nice up tick in conditions in terms of my sales to food service. When things look iffy, my sales to retail pick up just prior to the numbers coming out that things look not so cool. It has worked like clockwork for me in ‘knowing’ the future.
Are Precious Metals Melting or Firming Up? by Chris Vermeulen The past two months have been tough on the precious metals sector. We saw precious metals lead the market higher all of last year until December 2009 when prices plummeted as the US Dollar started to bounce. The continued rise in stocks indicated an extreme overbought condition and alerted us that a sharp pullback was going to take place.
Will a Threatened Euro Affect the Gold Price by Julian D. W. Phillips Claude Trichet, head of the European Central Bank dismissed talk of Greece exiting the Euro as their national currency. The fact that he felt it necessary to issue such a statement meant that the prospect was being discussed outside the E.C.B. Instead, the EU is considering sanctions against the country to bring it into line with the E.U. The stress is high in the Eurozone!
Why dollar decline is a boost for gold By Jim Sinclair WARNING: In the last two days you have received two emails, both more than likely unsolicited by you, yet not unwelcome. There are some misassumptions concerning their argument for the US dollar and gold in both communications. The first is: "Fed’s Currency Swap Lines: A BIG deal for the Dollar" This article written in good faith, I am sure, but fails on three points. 1. It properly defines the basic currency swap between central banks but fails to follow the money through the transaction to its final destination. The swaps done with the ECU, Swiss, British and other non-US central banks were for the purpose of bailing out those non-US banks that were the losing debit counter party to major US derivative dealers.
The Ultimate Bubble and the Mother of All Carry Trades Among the many opinions expressed by billionaire investor George Soros over the course of the 2010 World Economic Forum in Davos, Switzerland was his statement on January 28 in an interview with Maria Bartiromo, host of CNBC's Closing Bell, that "When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold." New York spot gold closed at $1085.40 down $1.80, but the price of gold is not as much about gold as it is about the value of currencies, particularly the US dollar.
China, Gold, the Dollar and the Dow By CHARLES HUGH SMITH When the Dow Jones Industrial Average fell over 500 points last week and global markets dropped 5% in a matter of days, investors everywhere began pondering the question: Is this just a brief dip in the uptrend, or a more ominous change of trend? Investors and money managers are trying to assess which markets and commodities might be topping out and which are still rising. If one market is topping out, then common sense suggests moving money from that position into an investment that is still trending up.
China is new gold king China has emerged as the gold king in 2009 as far as production and consumption are concerned. China’s gold output reached 313.98 tonnes in 2009, up 11.34 per cent year-on-year. This was the first time that China’s gold output had exceeded 300 tonnes, setting a new record. So far, China’s gold output has been first in the world for 3 consecutive years. In 2009, the industrial output value of China’s gold industry reached 137.53 billion yuan, up 18.56 per cent year-on-year.
On the Edge with Max Keiser - 29 January 2010 (1/3)
On the Edge with Max Keiser - 29 January 2010 - (2/3)
On the Edge with Max Keiser - 29 January 2010 - (3/3)
Roubini Sees ‘Dismal’ Growth as Summers Rues ‘Human Recession’ By Simon Kennedy and Erik Schatzker -- Feb. 1 (Bloomberg) -- Nouriel Roubini, the New York University professor who anticipated the financial crisis, said the U.S. growth outlook remains “very dismal” and White House economic adviser Lawrence Summers said the economy is still mired in a “human recession.” Speaking at the World Economic Forum’s annual meeting in Davos, Switzerland, after the U.S. reported the fastest growth in six years, their comments underscored concern that that emergency measures to rescue banks and fight the recession may be withdrawn too soon.
Brace yourselves for the next wave of the bear market Brian Milner - The Globe & Mail If the ‘January barometer' proves accurate, the next 11 months will see stock slide further People who believe the old saw that whatever the markets do in January sets the pattern for the rest of the year must be battening down the hatches for stormy times ahead. The world's leading stock indexes all finished the first month of 2010 in the red. Investors – especially those who never quite bought the bull-is-back story but didn't want to miss the great rally of 2009 –pulled more money out of U.S. equity funds in the last days of January than in any single week since mid-2008. Emerging-market equity funds suffered their worst withdrawal symptoms in six months.
Second leg crash, what's next in 2010? Christopher Laird A lot of people realize that the world financial and commodity markets have rocketed around 60 pct since March 2009. Around the summer/fall people realized that the markets got ahead of the world economy, which is still terrible. Unemployment is still rising and one day this month there were US job losses of 50,000 announced. Hey if jobs are again going to tank (they are) then this gig of so called recovery is over. I had told subscribers that we expected December retail sales to be dismal, and that US economic stats in early 2010 would highly disappoint.
Brutal economy of 1700s has an eerie similarity Neil Reynolds - The Globe & Mail A central bank and a brilliant central banker, easy credit and novel financial investments, high taxes and expansive state debt Robert Prechter, the iconoclastic Atlanta market analyst (publisher of the Elliott Wave Theorist), says the world remains in a bear market of "supercycle" degree - meaning that the world's current economic troubles will be "the deepest and longest since the 1700s." Assume for a disturbing moment that he is right. What went wrong in the 18th century? In what way are we replicating the wrong? What consequences should we anticipate?
Obama's $3.8 trillion budget heading to Congress By Martin Crutsinger AP WASHINGTON — The Obama administration on Sunday endorsed spending an additional $100 billion to attack painfully high unemployment as it prepared to send Congress a $3.8 trillion budget that would provide billions more to pull the country out of the Great Recession while increasing taxes on the wealthy and imposing a spending freeze on many government programs. White House spokesman Robert Gibbs said the administration believed "somewhere in the $100 billion range" would be the appropriate amount for a new jobs measure made up of a business tax credit to encourage hiring, increased infrastructure spending and money from the government's bailout fund to get banks to increase loans to struggling small businesses.
Obama's Rail Plan: A Drop in the Bucket By BRUCE WATSON - Daily finance On Thursday, President Obama and Vice President Biden announced the recipients of almost $8 billion in stimulus grants that are designed to begin development of high-speed rail (HSR) networks. The money will go to 13 "travel corridors," and will include lines in Oregon-Washington-Canada, California, Wisconsin-to-Chicago, Iowa, Detroit-to-Chicago, St. Louis-to-Kansas City, St. Louis-to-Chicago, Cleveland-to-Cincinnati, Texas, Tampa-to-Orlando, Charlotte-to-Washington, and the Northeast Corridor.
Gerald Celente on Financial Sense News Hour January 16, 2010
Bailout cop: TARP's not working By David Ellis - CNNMoney The watchdog charged with monitoring the government's $700 billion bailout unleashed one of his harshest criticisms of the program to date, questioning its overall effectiveness. In his latest quarterly report to Congress, special inspector general Neil Barofsky said that the Troubled Asset Relief Program, or TARP, has failed to boost bank lending as well as halt the spread of foreclosures -- two key aims of the sprawling program.
TARP overseer says bank bailout program has mixed results By Ronald D. Orol, MarketWatch TARP stabilized system, but bailed out banks lend less; more foreclosures soon The government's $700 billion bank bailout bill has met its goal of helping bring the financial markets back from the brink, but has so far failed to increase lending from the banks who received the taxpayer assistance, a key government overseer reported Sunday in a generally critical review of the program. "On the positive side, there are clear signs that aspects of the financial system are far more stable than they were at the height of the crisis in the fall of 2008," according to a quarterly report to Congress submitted by the office of the Special Inspector General for the government's $700 billion Troubled Asset Relief Program.
Volcker on Big Banks: ‘Structural Changes’ Needed Clearly making his mark as the chief proponent of separating big banks from their lucrative-but-riskier speculative investment operations, former Federal Reserve chairman Paul Volcker said “structural changes” are needed to avoid repeating history with another crippling financial crisis. In an opinion piece – “How to Reform Our Financial System” – published today on the New York Times website, Volcker gave his rationale for supporting capital markets trading restrictions on the biggest commercial banks where a significant portion of Americans keep their money.
How to Reform Our Financial System By PAUL VOLCKER - NY Times PRESIDENT OBAMA 10 days ago set out one important element in the needed structural reform of the financial system. No one can reasonably contest the need for such reform, in the United States and in other countries as well. We have after all a system that broke down in the most serious crisis in 75 years. The cost has been enormous in terms of unemployment and lost production. The repercussions have been international.
Why Politics Makes It Hard to Fix the Banks By JAMES CULLEN Bank earnings season is under way, and with the financial results will come disclosures about average per-employee compensation that politicians seeking support for additional regulations or taxes on big banks will pounce on. Some of the proposals may make their way in some form into President Obama's financial reform plan. At the same time, the banks' decreased lending will be portrayed as a sign that banks are ungrateful to the American public for the generous bailouts they received -- and that they're unwilling to help restart the economy. Each of these arguments is based on a truthful data point.
Bernanke May Have Harder Fight Defending Fed After Confirmation By Scott Lanman Jan. 29 (Bloomberg) -- Ben S. Bernanke, who won Senate approval for a second term as Federal Reserve chairman over a record number of opponents, may now have a tougher fight against threats to the central bank itself. Lawmakers are considering legislation to remove a shield from congressional audits of monetary policy and strip the Fed of bank-supervision powers, measures that Bernanke opposes.
Kohn Says Predicting Fed Policy Impact Especially Hard By Joshua Zumbrun Jan. 29 (Bloomberg) -- Federal Reserve Vice Chairman Donald Kohn said predicting the impact of a monetary policy tightening on interest rates is difficult because of “historically low” borrowing costs and the Fed’s unprecedented expansion in assets. “We are in uncharted waters for monetary policy and the financial markets,” Kohn said today to a symposium in Arlington, Virginia. “The response of interest rates across the maturity spectrum to an actual or expected tightening of monetary policy is always hard to predict, but is especially so in current circumstances.”
At A.I.G., Risky Trading Wasn’t Just on the Fringe By MARY WILLIAMS WALSH - NY Times Ever since the American International Group nearly collapsed, the conventional wisdom has been that the exotic derivatives that drove it to the brink were the product of a lone, unregulated subsidiary in London. The Federal Reserve chairman, Ben S. Bernanke, called the London branch “a hedge fund, basically, attached to a large and stable insurance company.” But the suggestion that A.I.G.’s core insurance business did not dabble in derivatives is not quite true. One of its biggest insurance units, incorporated in Delaware, was also dealing in the derivatives known as credit-default swaps, according to regulatory filings with the state.
Is Geithner In or Out? Geithner bashing not seen threatening job--for now WASHINGTON (Reuters) - Those seeking clues on whether U.S. Treasury Secretary Timothy Geithner will keep his job after another congressional scolding got a big one for the "yes" column on Wednesday night -- a warm embrace from the boss. As a grinning President Barack Obama made his way to the podium in the Capitol building to deliver his State of the Union address and he stopped to put his hand on Geithner's shoulder, chatting with him longer than others he greeted. "They arranged it right at the end of the aisle, perfect for the cameras," said Larry Sabato, director of the Center for Politics at the University of Virginia.
1/27/10 Ron Paul on Fox Business: Geithner and AIG
U.S. Can't Afford Not to Have a Second Stimulus Package By LITA EPSTEIN Mark Zandi, chief economist at Moody's Economy.com, and Rudolph Penner, a fellow at the Urban Institute and former Congressional Budget Office director, both said Friday that an additional stimulus package would be required to improve the U.S. economy and allow the nation to avoid a double-dip recession. The two spoke during a conference at the Urban Institute titled "Does the Economy Need – and Can We Afford – Another Jolt of Stimulus?"
Reining in Wall Street's "casino culture" Banking insiders are skeptical about President Obama's plan to cut risk-taking. But others say the new rules will go a long way in reining in Wall Street's cowboys. Obama last week proposed a law that would bar banks from betting in financial markets with their own money, known as proprietary trading. Called the "Volcker rule," after Obama advisor Paul Volcker, the law aims to prevent banks from taking risks that drag them to the brink of failure. No sooner did Obama propose the idea than analysts and bank officials criticized the attempt to limit proprietary trading, in part because of the gray area between banks taking risk and helping customers.
Warning: Capt Bernanke's sinking U.S.S. Titanic By Paul B. Farrell, MarketWatch Cheap money's again blowing new 'icebergs' Let's call it "Titanic II," a classic remake. The Fed's the new Titanic. Bernanke, the egomaniacal captain. His character reminds me of Bogart playing the paranoid, obsessive Captain Queeg in "The Caine Mutiny." Remember that threatened Navy captain who navigates into a fog, panics, nearly rams a battleship? That's "Capt. Ben" in "Titanic II." And given his handling of our banking system and the global economy, he'll sink the Titanic. Capt. Ben's a tragic figure.
Deputies serving more evictions during recession, but most people leave without a fight By Jennifer Squires - Santa Cruz Sentinel The attempted eviction of a renter Tuesday led to an hours-long police standoff and closed roads before sheriff's deputies decided to leave the man inside the Vienna Drive home and seek an arrest warrant. That situation was an extreme example of something deputies are doing more and more often in Santa Cruz County: evictions. "Those spiked when the recession started," Sgt. Dan Campos said, adding it's "notable" how busy the civil service unit at the Sheriff's Office is. Eviction orders handled by deputies rose 25 percent in the past two years and of the 367 orders served in 2009, one-third of the homes were being vacated because of foreclosure, according to Colleen O'Reilly, the civil process supervisor at the Sheriff's Office.
Knives Are Drawn for Proposed Cuts By GREG HITT And NEIL KING JR. - WSJ WASHINGTON—President Barack Obama's plan to reduce the deficit faces a tough battle on Capitol Hill, and prospects for a rapid return to fiscal austerity remain slim. Mr. Obama, responding to growing public concern over deficit spending, will propose as part of his fiscal 2011 budget to freeze basic government spending, outside of national security programs. He also plans to appoint a commission to recommend ways to reduce the deficit. But Republicans are skeptical. Special-interest groups are lining up to protect their own share of the budget. And even some top Democrats are breaking with their president to float their own ideas on how to tackle the deficit.
AMERICA DIDN'T BUY IT By Ezra Klein - Washington Post Few are as good at delivering a high-stakes speech as President Obama, something he proved again in Wednesday's State of the Union. The speech, which focused on jobs and the economy, was feisty, confident and -- rare for presidential addresses -- funny. The insta-poll numbers were great. Joe Klein called it "Obama at his best." It was so good, in fact, that virtually nobody noticed that Obama had already lost the argument.
We've Been Neo-Conned by Ron Paul - Lew Rockwell The modern-day, limited-government movement has been co-opted. The conservatives have failed in their effort to shrink the size of government. There has not been, nor will there soon be, a conservative revolution in Washington. Political party control of the federal government has changed, but the inexorable growth in the size and scope of government has continued unabated. The liberal arguments for limited government in personal affairs and foreign military adventurism were never seriously considered as part of this revolution.
Wages and benefits rise in 2009 by smallest amount on records going back 27 years MARTIN CRUTSINGER - AP -- Wages and benefits paid to U.S. workers posted a modest gain in the fourth quarter, ending a year in which recession-battered workers saw their compensation rise by the smallest amount on records going back more than a quarter-century. The anemic gains have raised concerns about the durability of the economic recovery. The fear is that consumer spending, which accounts for 70 percent of economic activity, could falter if households don't have the income growth to support their spending.
Henry Paulson's book offers a glimpse inside the economic crisis By Zachary A. Goldfarb - Washington Post -- The Washington memoir, typically published after a calamitous event or the end of a political campaign, often brings a nugget or two of news. But that's a tall order for Henry M. Paulson Jr.'s "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System," as many authors have already published thick tomes examining the financial crisis of fall 2008. As Treasury secretary, Paulson helped oversee the government's intervention, and his memoir is the first lengthy account of the crisis from a key decision-maker. The book offers a look at Paulson's thinking during those scary days, as well as his sometimes unvarnished opinions of other Washington characters, many of whom had central roles in managing the government's response.
Paulson Says Russia Urged China to Dump Fannie, Freddie Bonds By Michael McKee and Alex Nicholson Jan. 29 (Bloomberg) -- Russia urged China to dump its Fannie Mae and Freddie Mac bonds in 2008 in a bid to force a bailout of the largest U.S. mortgage-finance companies, former Treasury Secretary Henry Paulson said. Paulson learned of the “disruptive scheme” while attending the Beijing Summer Olympics, according to his memoir, “On The Brink.”
The Places They Go When Banks Say No By ANDREW MARTIN - NY Times IN the glory days of the digital photo frame business, when his products were still a novelty and shoppers were flush with cash, getting a bank loan to manufacture them was a cinch, Michael Levy says. “We would say: ‘We got a $1 million order from the Sharper Image. We need financing. With a snap of the fingers, the guy drove down to my office, we’d sign a document, he’d give us the money,” Mr. Levy recalls, sitting in the Deer Park, Long Island, office of the Media Street Group that he runs with his brother, Norm.
In tough economic times, shoppers take haggling to new heights By Michael S. Rosenwald - Washington Post The price tag on the smooth pair of Cole Haan loafers at Macy's said $148. I considered that a fair opening bid. Standing across from the salesman and the cash register, I said, "Can you knock off 25 percent?" The salesman said, "Can't do it." But I pressed on: "I'll get them on the Internet or at one of your competitors, so let's just do this here." Salesman: "Geez. You're like the second person who has tried to do this today." We stared at the shoe box. I liked what was inside. The loafers fit well, but they would feel even more comfortable with a discount.
Crisis of the Government Party by Patrick J. Buchanan - Lew Rockwell President Obama is in a dilemma from which there appears to be no easy or early escape. Democrats are the Party of Government. They feed it, and it feeds them. The larger government grows, the more agencies that are created, the more bureaucrats who are hired, the more people who become beneficiaries, the more deeply entrenched in power the Party of Government becomes. At the local, state and federal level, there are 19 million to 20 million government employees. And if one takes only Social Security, Medicare, Medicaid, food stamps and earned income tax credits, we are talking of scores of millions who depend on government checks for the necessities of their daily life.
Overseer Sheds Doubt on TARP Helping Small-Biz, Foreclosures A somber and pessimistic assessment of the government’s bailout program has been issued by the official overseer of the $700 billion Troubled Asset Relief Program (TARP) – concluding that the fundamental problems in the U.S. financial system are still in place for another crisis. The report also pointed out that TARP has yet to provide increased loans to small businesses, despite the announced creation of such a plan 10 months ago.
Obama’s $30B Plan for Small Businesses May Not Work In his State of the Union speech, President Barack Obama proposed taking $30 billion out of the bailout money returned by big banks and injecting the funds into community banks to generate more small business loans. But the plan will likely fall short in a lending arena where low demand matches low access to credit. Moreover, the small-biz bailout has already generated enough opposition to place it in doubt – particularly if a full vote by Congress is required.
Obama Housing Rescue Threatened by Foreclosures, Unemployment By Kathleen Howley -- Jan. 29 (Bloomberg) -- President Barack Obama’s efforts to bolster the U.S. housing market, the trigger of the worst recession since the 1930s, may be undone by record unemployment and repossessions by lenders. Foreclosures probably will reach 3 million this year, surpassing the record of 2.82 million in 2009, according to Irvine, California-based RealtyTrac Inc. That would more than offset an estimated 448,000-unit rise in home sales, based on the average forecast of the National Association of Realtors, the Mortgage Bankers Association and Fannie Mae.
Bottom In Home Prices, a Decade Away MKC Global Humans are an optimistic breed by nature. There are some pessimists (or “realists” as they prefer to be called) among us; but on balance humans believe in a better future. This ensures that investment professionals will continue to track investor psychology for many years to come. When the naturally optimistic demographic becomes a group of Doom and Gloomers (or vice versa), we take notice. The same is true for participants in the real estate as well as stock markets.
Flipping Foreclosures: Will 90-Day Rule Waiver Ease Crisis? U.S. Housing officials hope to ease the impact on communities hardest hit by foreclosures with a one-year waiver of its rule against providing FHA-insured mortgages on homes resold within 90 days. Beginning Monday, Feb. 1, its good news for flippers – investors who acquire below-market properties that often need improvements, then quickly attempt to sell for a profit. They will now have a much larger pool of potential buyers – those first-time homebuyers or others who need the backing of the Federal Housing Administration, FHA, to qualify for a mortgage.
Lenders Pursue Mortgage Payoffs Long After Homeowners Default By Kathleen M. Howley -- Jan. 28 (Bloomberg) -- When John King stopped making payments on his home in Coral Gables, Florida, two years ago, he assumed the foreclosure ended his mortgage contract, he said. Last month, a Miami-Dade County court gave collectors permission to pursue him for $44,000 stemming from the default. King is among a rising number of borrowers who are learning that they can be on the hook for years after losing their homes. Amid a crisis that stripped $6.4 trillion, or 28 percent, from the value of U.S. residential real estate since the 2006 peak, lenders are exercising their rights to pursue unpaid mortgage balances. To get their money, they can seize wages, tap bank accounts and put liens on other assets held by debtors.
Obama Says Republicans Can Help End Washington’s ‘Sour Climate’ By Nicholas Johnston and James Rowley -- Jan. 30 (Bloomberg) -- President Barack Obama engaged in an unusual public debate with House Republicans yesterday, challenging them to help end the “sour climate” in Congress and defending his agenda for the economy and health care. Obama delivered remarks to the Republicans’ annual retreat, then answered sometimes pointed questions from the lawmakers over almost 90 minutes at a hotel in Baltimore, a session that was televised at the administration’s suggestion.
Colorado's share of stimulus so far: $3.36 billion Denver Business Journal Colorado was awarded $3.36 billion in federal stimulus funds during 2009, the U.S. government reported Saturday. The amount received to date, however, is considerably less: $953 million. The stimulus package was signed into law by President Barack Obama in Denver nearly a year ago. The data just released covers Feb. 17 through Dec. 31. Colorado recipients of stimulus funds received 738 contracts valued at $1 billion, 2,079 grants worth $2.36 billion and two loans for $584,000.
Turning union cash to ash By Nolan Finley Union greed has dismembered Michigan Legend has it that during a brutal contract bar -gaining session, Harry Bennett, Hen-ry Ford's enforcer, attempted to break the tension by passing around snapshots taken during a visit to Maxon Lodge, a gorgeous hideaway in the woods of northern Michigan. Walter Reuther, architect of the United Auto Workers' rise, looked over the photographs, tossed them on the table and said to Bennett: "Come the revolution, we'll own that place." It was no idle threat. In 1967, flush with cash from a bulging membership, the UAW purchased the lodge and 1,000 acres on Black Lake.
Tesla to stop selling electric sports car next year It sounds like the initial public offering of electric-car maker Tesla is already being greeted with skepticism, but some of the fine print about its plans may give potential investors even greater cause for concern. A reading of the fine print by Wired's Autopia blog uncovers some disturbing product-planning news. To wit, the company's only product, the first true freeway-capable, mass-produced electric car of the modern age, will go bye-bye next year.
Detroit bomb attempt alters sports security By Howard Fendrich AP The massive, multimillion-dollar security operations for the Super Bowl and Winter Olympics are being adjusted in light of recent breaches such as the attempted Christmas Day bombing of an airliner and the White House party crashers. Sports and government officials say such lapses -- where individuals got past guards on the ground -- are leading to increased screening efforts at major upcoming events, including the NFL championship game between the Indianapolis Colts and New Orleans Saints in Miami next Sunday and the Winter Olympic Games, which start Feb. 12 in Vancouver, British Columbia.
Peres' Iranophobia rhetoric begins to sway IAEA chief Israeli President Shimon Peres has verbally attacked Iran during his first meeting with the new chief of the UN nuclear watchdog, claiming that it poses a threat to the entire world. Peres made the remarks on Saturday in a meeting with International Atomic Energy Agency Director General Yukia Amano on the sidelines of the World Economic Forum in Davos, Switzerland, the Israeli daily Haaretz reported.
Bankers at Davos Face Global Ire By MARCUS WALKER And EMMA MOODY - WSJ DAVOS, Switzerland—Not so long ago, financiers ruled the roost at the glitzy annual gathering of the global economic elite here in the Swiss Alps. At this year's of the World Economic Forum, the unofficial theme seems to be "First, kill all the bankers." The ire directed at bankers from all sides is palpable, acknowledged Donald Moore, chairman of Morgan Stanley in Europe, as he stood alone reading some charts amidst the hubbub at the forum's Global Village cafe. Asked which other groups of people have been similarly unpopular in Davos in the past, he said: "terrorists." The quip reflects the mounting alarm with which bankers have come to view their besieged profession—even in Davos, a usually cozy gathering.
Should Germany bail out Club Med or leave the euro altogether? By Ambrose Evans-Pritchard - Telegraph -- Germany faces a terrible dilemma. Either Europe's paymaster agrees to underwrite a Greek bail-out and drops its vehement opposition to a de facto EU economic government, treasury, and debt union, or the euro will start to unravel, and with it Germany's strategic investment in the post-war order. The spike in yields on 10-year Greek bonds to 400 basis points above German Bunds has been shockingly swift – a warning to Britain, too, that markets can suddenly strike any country that takes creditors for granted. We can argue over whether Greece, Portugal, or Spain are at risk of being forced out of the euro. But there is another nagging question: whether events will cause Germany and its satellites to withdraw, bequeathing the legal carcass of EMU to the Club Med bloc.
Clinton to work with Russia on European security PARIS (Reuters) - Secretary of State Hillary Clinton on Friday recommitted the United States to the defense of Europe and pledged to work with NATO allies and former foe Russia to boost security in the face of new threats. "European security remains an anchor of U.S. foreign policy," Clinton told a conference during a visit to France, which last year rejoined the command structure of the North Atlantic Treaty Organization (NATO). Clinton's speech was aimed at reassuring Washington's European allies of continued U.S. commitment in the face of a sometimes strained relationship with Russia, which still sees the former Soviet bloc as part of its sphere of influence.
China Bosses Davos as Nobody Discusses What Happened to Google By Rob Delaney and Ari Levy -- Jan. 30 (Bloomberg) -- Google Inc.’s opposition to censorship in China was the one topic left off the table in Davos -- at China’s request. “China didn’t want to discuss Google,” Josef Ackermann, chief executive officer of Deutsche Bank AG and a co-chairman of this year’s World Economic Forum, said in an interview. China’s Vice Premier Li Keqiang made that clear, he said. “Google has backed off a little bit.”
U.S.-China Relations Cool on Arms Deal By ANDREW BROWNE And JASON DEAN - WSJ BEIJING—China's suspension of military exchanges with the U.S. in retaliation for a $6.4 billion arms sale to Taiwan heightens the risk of friction between Beijing and Washington at a time when they are already at loggerheads over a host of security and economic issues. China announced the freeze on military exchanges Saturday, and summoned the U.S. ambassador to Beijing for a formal complaint, following the Obama administration's announcement Friday that it is proceeding with the sale of antimissile systems, helicopters and other arms to Taiwan.
Aerospace sector fears China sanctions Beijing’s reaction to Taiwan arms deal stirs US concern By Kevin Brown in Singapore, Kathrin Hille in Beijing and Daniel Dombey in Washington - Reuters -- Aerospace executives and the US government reacted with concern on Sunday to a Chinese threat to impose sanctions on American groups involved in a $6.4bn arms deal with Taiwan. Giovanni Bisignani, director-general of the International Air Transport Association, the global airline industry body, called for fresh talks between Beijing and Washington to avert a crisis over the arms package.
U.S. Starts to Push Back Against China in Growing Rift By HELENE COOPER - NYTimes WASHINGTON — For the past year, China has adopted an increasingly muscular position toward the United States, berating American officials for the global economic crisis, stage-managing President Obama’s visit to China in November, refusing to back a tougher climate change agreement in Copenhagen and standing fast against American demands for tough new Security Council sanctions against Iran.
Taiwan has guns, beef — and politics By Sol Sanders - Washington Times President Obama's Chinese New Year's gift, an arms purchase offer even with a $6.4 billion price tag, couldn't be more welcome to Taiwanese President Ma Ying-jeou. Last March his Kuomintang swept back into office with anti-corruption slogans, promising better relations with the Gigantest Panda across the Taiwan Strait. That peaceful transition reconfirmed for 23 million Taiwanese the first representative government in Chinese civilization's vaunted 5,000-year history. But now the Mandarin-accented, Hong Kong-born, sleek politician's polls are drooping.
Davos Dispute Escalates as Policy Makers, Bankers Square Off By Simon Kennedy and Christine Harper -- Jan. 30 (Bloomberg) -- Policy makers pushed back at bankers who have warned of excessive and uncoordinated attempts to toughen financial regulation as they jostled for control of an industry that required an unprecedented government bailout. Bank chief executive officers, led by Josef Ackermann of Deutsche Bank AG, are scheduled to meet privately today with finance ministers and central bankers to keep talks on track and assert their influence on the penultimate day of the World Economic Forum annual meeting in Davos, Switzerland.
No chance of Greek default: EU Clara Ferreira-Marques - Reuters Almunia says Greece will not leave euro zone A top European Union official said on Friday there was no risk that Greece would default or leave the euro zone and the country's finance minister said he was not aware of any bailout talks. “No, Greece will not default. Please. In the euro area, the default does not exist because with a single currency the possibility to get funding in your own currency is much bigger,” monetary affairs commissioner Joaquin Almunia told Bloomberg TV. “There is no bailout problem.”
Dollar to Rally as Greece’s ‘Stone Age’ Looms By Inyoung Hwang Jan. 29 (Bloomberg) -- The dollar will benefit as a potential “financial stone age” for Greece and other nations threatens to break up the euro, according to Walter J. Zimmermann Jr., chief technical analyst at United-ICAP. The greenback may rise to a level last reached more than six years ago against the currencies of major U.S. trading partners as the European budget crisis reduces demand for higher-yielding assets, according to Zimmermann, whose firm is a technical research unit of ICAP Plc, the world’s largest inter- dealer broker.
How the Greek leader forgot about his debt crisis By Edmund Conway - Telegraph What do you do if your country is in economic crisis, when you have a self-acknowledged “credibility deficit”, when you may have to resort to an emergency International Monetary Fund loan – oh, and you happen to be in Davos – the ideal place to meet world leaders and bankers to sort it out? If you’re George Papandreou, the answer is you hole yourself up in a small cinema watching clips from Avatar for two hours.
Nato chief: more casualties and violence in Afghanistan in 2010 By Rosa Prince - Telegraph The newly-appointed Nato civilian representative in Afghanistan has warned that 2010 will bring "many more" casualties and an “awful lot of violence” in the fight against the Taliban. But Mark Sedwill, the senior British diplomat who will represent the coalition in non-military matters, predicted that this year would also see a turning point in the conflict, as Nato beefed up its strategy politically and in terms of its fighting force. Predicting that troops would be fighting for between three and five more years, he told the BBC’s Andrew Marr show: "This year will be another very challenging year.
The Quigley Formula - Part 1 of 8 A lecture by G. Edward Griffin on the New World Order. He explains in detail how they are organized, and how they have infiltrated all of the power centers of the Western world and are the real people that control our countries. They are quickly moving us into a one world government. This is a truly eye opening presentation
Senate agrees to record increase in debt limit to $14.3 trillion By Lori Montgomery - Washington Post The Senate agreed Thursday to raise the legal limit on government borrowing to $14.3 trillion, a historic high that would permit the Treasury Department to cover the nation's bills through early next year. The vote fell along party lines, with all 60 Democrats supporting and 39 Republicans opposing a plan to increase the cap by a record $1.9 trillion. The 40th Republican, Sen. Mike Enzi of Wyoming, said his no vote was accidentally unrecorded. If lawmakers had approved a smaller increase, Democrats would have had to revisit the deeply unpopular topic of the soaring national debt before facing voters in November.
Experts See Another Global Dip Ahead By MARCUS WALKER Davos Attendees Pin Hopes on Emerging Economies, Saying Debt and Deficits Will Trouble U.S.; Sparring Over Bank Rules DAVOS—The global economic recovery could lose pace later this year, dashing hopes for a rapid escape from the deepest downturn of the postwar era, economists and investors said at the World Economic Forum's annual meeting at this Swiss ski resort. Heavy debts will weigh on governments and households in the U.S. and Europe for some time, while hopes for global growth will continue to rest on fast-developing countries such as India and China, predicted participants at the meeting's opening debate on the economy.
The Daily Show with John Stewart Elizabeth Warren, January 26, 2010 Congress' chief economic watchdog talks about her work overseeing the bank bailout.
Bullion coin sales fetch $1.7 bn for US Mint WASHINGTON (Commodity Online): The sale of bullion coins by US Mint reached a record high in FY 2009 when it approached $1.7 bn, nearly 80% of the last year's sales revenue, according to Edmund C Moy, United States Mint Director. US Mint in its annual report pointed out that bullion coins accounts for 58% of sles revenue in 2009 compared to 34% in 2008. The Mint was able to meet the demand for 22-karat gold and silver one-ounce bullion coins by the third quarter of FY 2009, the annual report said.
Why Buffett and Soros hate gold By Jim Sinclair Today I have received many emails concerning Mr. Soros’ dislike of gold. You may have noticed that Mr. Buffett and Mr. Soros seem to be in a PR contest for the position of spokesperson for the future of the USA. Many Americans erroneously see gold as anti-American and those that do not see a major future for the US dollar as traitors. You will recall Mr. Buffett’s recent entry into the railroad business was deemed by him and others as being a vote of absolute confidence in America’s continued economic recovery and its sustainability. It is sort of a quasi-competition for economic President of the USA.
Russia’s gold, Forex reserves dip by $5.8 billion MOSCOW (Commodity Online): Russia’s gold and foreign-exchange reserves for the first time in this year fell by $5.8 billion to $435.6 billion in the week ended January 22, said Central Bank. Reserves rose $500 million to $441.4 billion in the previous week. After reaching a record high of $597.5 billion in August 2008, reserves sank dramatically in late 2008 and early 2009 as the central bank spent more than $200 billion to support the struggling ruble.
Win With Silver Jeff Nielsen With the Olympics just days away, and with precious metals sitting at very attractive prices (following this utterly absurd move lower), this is the perfect time to point out that when "going for gold" one can often be better off taking home silver. As with many of the greatest, long-term investment opportunities, the reasons for investing in silver are numerous and obvious - and will (like all things) become much more obvious, in hindsight. The simplest place to start is with the patterns in price movement, and the reasons for those patterns.
Investors embracing platinum, palladium David Pett, Financial Post All hail the new king in the world of precious metals: platinum. After a year in which everyone seemed to be backing the truck up for gold, investors are turning their attention to platinum, an outperformer versus gold in 2009 that continues to offer better prospects for price appreciation. In the past month alone, platinum and its near cousin palladium have climbed as much as 12% and 15%, reaching a peak last week after getting a huge boost from the launch of two exchange-traded funds in the United States.
The Pelosi Fed Is the Dollar’s Worst Nightmare by Caroline Baum Jan. 28 (Bloomberg) -- Within days of the Republican upset in the Massachusetts special election for the late Ted Kennedy’s seat, Barbara Boxer saw the way forward. “It is time for a change -- it is time for Main Street to have a champion at the Fed,” the three-term California Democratic senator said on Jan. 22. “Dr. Bernanke played a lead role in crafting the Bush administration’s economic policies, which led to the current economic crisis. Our next Federal Reserve chairman must represent a clean break from the failed policies of the past.”
Chavez Dangles Better Exchange Rate, With Caveat Jan. 28 (Bloomberg) -- Venezuelan President Hugo Chavez, offered to give private companies a preferential exchange rate to import goods provided they form joint ventures with his government. Chavez, seeking to boost production to emerge from an economic recession, said firms willing to work with the government can get a rate of 2.6 bolivars per dollar. Companies that don’t align with his administration will import finished goods and raw materials at 4.3 per dollar.
Bill Clinton Says Reward Bernanke, Advance Overhaul By Alison Vekshin and Ryan Chilcote Jan. 27 (Bloomberg) -- Former U.S. President Bill Clinton said the Senate should confirm Federal Reserve Chairman Ben S. Bernanke to reward him for responding to the financial crisis and owning up to mistakes. “Bernanke’s decisions have been very good, they have kept the American economy going and given us a chance to heal,” Clinton said today in an interview at the World Economic Forum in Davos, Switzerland. “I think the beginning is to confirm and reward both his acknowledgement of past lax regulation and his service since the financial meltdown.”
State of the Union
Senate OKs 2nd term for Bernanke as Fed chief The Senate on Thursday handed Federal Reserve Chairman Ben S. Bernanke a second term after a week of contentious and sometimes suspenseful debate. Easily approving the nomination with a 70-30 vote, the Senate rejected arguments by senators mostly at the political extremes on the left and right that Mr. Bernanke made fatal mistakes that led to the global financial crisis and great recession of the past two years. The Senate's action ensures that the former Bush administration economist, mild-mannered Princeton professor and expert on the Great Depression will steer the world's most powerful central bank for another four years.
Bernanke May Have Harder Fight Defending Fed After Confirmation By Scott Lanman Jan. 29 (Bloomberg) -- Ben S. Bernanke, who won Senate approval for a second term as Federal Reserve chairman over a record number of opponents, may now have a tougher fight against threats to the central bank itself. Lawmakers are considering legislation to remove a shield from congressional audits of monetary policy and strip the Fed of bank-supervision powers, measures that Bernanke opposes.
Bernanke agonistes By William F. Shughart II - Washington Times Fed chairman's job is to manage money supply, period Bernanke repeating mistakes of the Great Depression President Obama pulled out all the stops to clinch Senate approval of his nomination of Ben S. Bernanke to a second four-year term as chairman of the Federal Reserve. Now that the president seems to have enough votes for his nominee in hand, news of yet another "Louisiana Purchase" may be grabbing headlines soon.
Save the Middle Class While Fixing Banks for Good Michael Pento While I'm disgusted with the level of banker's bonuses and with the obscene leverage practices financial institutions undertook, I do not think the answer to how we clean up them up now is to pile on yet more regulation. To be sure, banks that helped bring down the world economy and then subsequently got bailed out by the taxpayers should not be making billions of dollars in bonuses, especially while the middle class is suffering so greatly. And if we're going to keep the FDIC in effect, a certain amount of regulation is required to protect taxpayer-backed deposits. But the real remedy does not rest with government, as it was their consistent meddling with markets that engendered the crisis to begin with.
Blackstone CEO Says Banker Bashing Risks Recovery By Anne-Sylvaine Chassany and Eric Schatzker Jan. 28 (Bloomberg) -- Banks may start to rein in lending, putting the economic recovery at risk, if politicians keep attacking them and regulatory uncertainty persists, Blackstone Group LP Chief Executive Officer Steven Schwarzman said. “Financial institutions will feel under siege and they will retreat,” Schwarzman said in an interview with Bloomberg Television at the World Economic Forum in Davos, Switzerland. “Their entire world is being shaken and they’re being attacked personally,” he said. “We don’t need those financial institutions insecure.”
Obama's "Venezuelan-style" Policies Will Cause Stock Market Crash, Dick Bove Says by Peter Gorenstein - To paraphrase Miller Tabak equity strategist Peter Boockvar, a political science degree on Wall Street may be more important than a finance degree these days. Since the crisis created the need for unprecedented government intervention, stocks are influenced just as much by policy decisions as they are by fundamentals and valuations. Last week's announcement of the "Volcker Rule" and President Obama's digs at the "banker [who] puts the rest of us at risk for his own selfish gain" in the State of the Union address are just the latest examples. Be afraid, Be very afraid.
Fed nods to Hill's economy concerns By Patrice Hill Treasury chief defends moves The Federal Reserve acknowledged concerns on Capitol Hill about consumers who are out of jobs and short on credit, saying Wednesday that it may continue programs to support mortgages, small businesses and consumers loans this year if financial conditions don't improve. The Fed's nod to senators, who say they have demanded that it pay more attention to middle-class problems in closed-door meetings with Chairman Ben S. Bernanke in recent days, came as prospects for Mr. Bernanke's confirmation to a second term continued to improve, with a vote on shutting off debate in the Senate scheduled for Thursday.
The Fed's Anti-Inflation Exit Strategy Will Fail By ALLAN H. MELTZER - WSJ Sooner or later the pressure to lend out excess bank reserves will be unstoppable. Federal Reserve Chairman Ben Bernanke has explained his exit strategy to prevent future inflation. The Fed recently began to pay interest to banks on the reserves they hold in their vaults. Using this new tool, it claims the ability to get banks to keep the money instead of lending it out, thus containing the money supply and inflation. I don't believe this will work, and no one else should. The exit strategy is incomplete. Proponents are guilty of practicing economics without prices. They never say what the interest rate on reserves must be to get banks to hold the approximately $1 trillion of reserves above the minimum they're legally required to hold. That's the critical question.
Senate permits gov't to borrow $1.9T more WASHINGTON (AP) -- Majority Democrats in the U.S. Senate muscled through legislation Thursday that would allow the government to go $1.9 trillion deeper in debt. Democratic leaders were able to prevail on the politically volatile 60-39 vote only because Republican Sen.-elect Scott Brown of Massachusetts has yet to be seated. Republicans had insisted on a 60-vote, supermajority threshold to pass the measure. An earlier test vote succeeded on a 60-40 vote. The measure would put the government on track for a national debt of $14.3 trillion, or about $45,000 for every American, and it served as a vivid reminder of the United States' dire fiscal straits.
What the New York Fed Bought in A.I.G.’s Bailout One more secret of the American International Group’s bailout became public on Wednesday: a list of the tens of billions of dollars in toxic assets that the Federal Reserve Bank of New York bought for 100 cents on the dollar from A.I.G.’s trading partners. Representative Darrell Issa of California, the ranking Republican on the House Oversight and Government Reform Committee, released the list after the committee’s hearing on the A.I.G. bailout, even though he said the New York Fed wanted to keep it under wraps until 2018. But Mr. Issa said it made little sense to keep the information private.
Geithner draws fire defending Fed on AIG bailout By TOM RAUM and DANIEL WAGNER - AP Democrats and Republicans alike pummeled Treasury Secretary Timothy Geithner on Wednesday over his role in the $180 billion bailout of insurance giant AIG Inc., venting public anger over Wall Street's return to prosperity while 10 percent of Americans are still jobless. Geithner, one of the original architects of the government's 2008 response to the financial crisis as president of the Federal Reserve Bank of New York, defended the use of taxpayer money as necessary to head off "potentially catastrophic damage to the economy." But members of the House Committee on Oversight and Government Reform hammered away at why regulators allowed American International Group to pass on billions of the bailout money to big Wall Street banks that were business partners.
Note to Congress: You Gave Geithner a Pass by Peter Gorenstein Treasury Secretary Timothy Geithner probably wouldn't characterize Wednesday's congressional testimony on the AIG bailout as "fun." Yet, it wasn't as grueling as it should have been. And, that's the fault of Congress. The Secretary spent much of the House hearing defending the decision to rescue the insurance giant, saying he takes "full responsibility, and great pride" in making the tough choices in those dark days. Many agree; saving AIG was, as he describes it, "terrible" and "tragic," yet necessary.
Geithner: 'I'll carry the burden' of AIG forever By David Goldman NEW YORK (CNNMoney.com) -- A day after facing furious lawmakers on Capitol Hill, Treasury Secretary Tim Geithner told CNN on Thursday that he would forever "carry the burden" of the decision to bail out AIG but defended it as the government's only option. AIG was on the brink of collapse in September 2008 when Geithner, then the president of the Federal Reserve Bank of New York, captained the troubled insurer's bailout.
The Danger behind the Fed's Exceptional Profits Mises Daily: by Mateusz Mac A few days ago, the Fed announced that it had "earned" a record-high amount of money in 2009. Then it turned $46 billion over to the Treasury. Here we are in the midst of a serious recession, with the unemployment rate high, the housing market still in a slump, and the stock market making only small steps toward recovery. In this climate, the Fed is making profits. That's impressive, isn't it? Unfortunately, the Fed's huge earnings are a signal that the economy is still in terrible shape and that its condition is worsening.
Obama pledges $8B for high-speed rail By Joseph Weber President Obama on Thursday awarded $8 billion in federal grants to start a nationwide high-speed rail system he hopes will create jobs and speed up U.S. travel. "There's no reason Europe or China should have the fastest trains when we can build them right here in America," the president said at a town-hall meeting at the University of Tampa's Bob Martinez Sports Center in Florida, one 31 states that will receive grant money. The money is part of the American Recovery and Reinvestment Act and is the largest investment in U.S. infrastructure since the Interstate Highway System was begun in the 1950s.
And So The Great Recession Continues
The Coming Obama Retirement Trap Has Started! Ron Holland . . . . Reports out of Washington indicate that new retirement annuities may be promoted by Obama aides. This is just the beginning! The question every successful American with substantial retirement assets must ask is "what will you do if our retirement funds are forced to become the buyer of last resort for US treasury obligations?" Unless you believe Congress and Washington bureaucrats will do a fair job of allocating and distributing your personal retirement assets between yourself and others, you must begin now to protect your assets.
Capitalist Fools Megan McArdle Commercial real estate is dominated by financial professionals, not hustlers looking for a quick flip. So why is the market about to melt down? Few places in New York are less likely to inspire grand dreams than Stuyvesant Town and Peter Cooper Village, the twin housing projects that sprawl across 80 acres of the Lower East Side. Built by MetLife in the 1940s, the project encompasses block after block of boxy brick apartment buildings and stolid public spaces, entirely barren of inviting corners or eye-catching detail. The critic Lewis Mumford dubbed it "the architecture of the Police State"; a slightly kinder motto might have been "What do you expect for $68.50 a month?"
U.S. 2009 Foreclosures Go Beyond Sun Belt States U.S. foreclosure actions firmly centered around Sun Belt states in 2009 but activity spread to previously insulated areas, and unemployment became the biggest driving factor, RealtyTrac said on Thursday. Cities in four Sun Belt states accounted for all top 20 foreclosure rates in 2009 among metropolitan areas with a population of 200,000 or more, the Irvine, Calif.-based real estate data company said. California accounted for nine of the top 20 metro foreclosure rates, followed by Florida with eight, Nevada with two and Arizona with one, the company said in its Year-End 2009 Metropolitan Foreclosure Market Report.
Yet another try at foreclosure rescue By Tami Luhb NEW YORK (CNNMoney.com) -- Under fire for the low number of people receiving long-term mortgage help, the Treasury Department on Thursday announced new guidelines that will require applicants to provide all paperwork before getting a trial modification. The new policy will make it harder for troubled homeowners to start the process, but it should make it easier for them to qualify for permanent assistance under President's Obama foreclosure prevention plan.
House Price Recovery Just A Head Fake, Says Alpert, Especially In New York by Peter Gorenstein In the second half of 2009, house prices staged a surprising recovery, leading many to conclude that the housing bust was done. Keep dreaming, says Dan Alpert of Westwood Capital. The rise in the second half of 2009 was mainly the result of pent-up demand combined with a tax-break, subsidized mortgage rates, and other incentives. The housing market is still awash in excess inventory, and Alpert says this will eventually drive prices down to 8%-10% below the lows of early last year. The good news?
Las Vegas: Most foreclosures of any city in 2009 By Les Christie NEW YORK (CNNMoney.com) -- Cities in the so-called Sand States dominated the foreclosure rankings in 2009, with the 20 worst-hit metro areas residing in Nevada, Florida, California and Arizona. Las Vegas had the largest number of foreclosure filings of any city last year, with 12% of its households receiving at least one during the year, according to RealtyTrac, the online marketer of foreclosed homes. That was more than five times the national average.
RealtyTrac: S. Florida among top 10 for foreclosures in 2009 South Florida Business Journal The Miami-Fort Lauderdale metropolitan area ranked among the top 10 U.S. metro areas with the highest foreclosure rates in 2009, according to a newly released report by RealtyTrac, the Irvine, Calif.-based online marketplace for foreclosures. The report found there were 172,894 properties with foreclosure filings in the local metro area, or one in every 14 homes. The rate was up 43.5 percent from 2008 and up nearly 200 percent from 2007. Florida accounted for eight of the top 20 metro foreclosure rates. Only California, with nine, had more.
Calif. had most metros with high foreclosures in 2009 Silicon Valley / San Jose Business Journal California accounted for nine of the top 20 metro foreclosure rates during 2009, according to a report released Thursday by RealtyTrac. The Irvine company said California was followed by Florida with eight, Nevada with two and Arizona with one.
Obama to unveil new tax breaks to spur jobs growth, hike wages By Michael A. Fletcher - Washington Post In an effort to spur job creation, President Obama plans on Friday to unveil a $33 billion package of tax breaks aimed at encouraging businesses to hire new workers and give employees raises. The proposal would provide a $5,000 tax credit for each new worker hired in 2010, while subsidizing wage increases by reimbursing Social Security tax increases for businesses that expand their payrolls. The tax breaks would be capped at $500,000 per business, meaning that they would mostly benefit small firms, according to senior administration officials who briefed reporters on the plan. The tax break on pay increases would apply only to workers making $106,800 or less.
Obama Aid Plans for `Strained' Middle Class Limited in Reach By Mike Dorning Jan. 28 (Bloomberg) -- President Barack Obama vowed last night to help “strained but hopeful” middle-class Americans prevail over adversity. The aid programs he unveiled will be modest in scope and limited in impact, analysts said. These initiatives were a centerpiece of Obama’s first State of the Union address, which was aimed at helping him regain political momentum as he contends with an unemployment rate hovering at 10 percent and voter disaffection that cost his Democratic Party a Senate seat in Massachusetts this month.
$5,000 tax credit for each new job a big part of Obama's plan By Richard Wolf, USA TODAY President Obama's new effort to give tax credits to companies that create jobs is getting a cool reception from the nation's job creators. One sentence from his State of the Union address Wednesday night will become the focus of his visit to Baltimore today: a $5,000 tax credit for each job created on a net basis in 2010, up to $500,000 per company. The idea is to prod companies to hire more workers. They also can increase wages or hours and be reimbursed for their share of the additional Social Security payroll taxes. There's only one problem: Business groups say the credit won't do much to boost hiring.
Pelosi suggests maneuver to pass healthcare overhaul By Noam N. Levey - LA Times The speaker says the House should pass the Senate's version of the plan and then use 'budget reconciliation' to make changes that some lawmakers want. The procedure could circumvent a GOP filibuster. Reporting from Washington - Laying out a possible path to approving healthcare legislation, House Speaker Nancy Pelosi (D-San Francisco) said Wednesday that the House should pass the Senate's version and then use a process known as "budget reconciliation" to make the changes some lawmakers are demanding.
Rally For The Republic - Tom Woods Speaks! (Part 1/2)
Rally For The Republic - Tom Woods Speaks! (Part 2/2)
Wal-Mart reorganizes U.S. operations to help spur growth By Mae Anderson, AP NEW YORK — Wal-Mart Stores, the world's largest retailer, said Thursday it is realigning its U.S. operations in an effort to give more autonomy to executives in regional markets and reinvigorate U.S. growth. Wal-Mart is combining its U.S. realty, store operations and logistics divisions and reorganizing operations under three geographic business units headed up by regional presidents: West, South and North.
Appliance World shutters Denver-area stores Denver Business Journal - by Renee McGaw and Mark Harden Appliance World stores in the Denver area have been closed in the wake of the chain's parent company filing for bankruptcy protection three months ago. "Effective immediately, Appliance World stores are permanently closed," a notice on the retailer's website said Thursday. The chain has five metro-area stores, in Denver, Arvada, Aurora, Littleton and Highlands Ranch, plus one in Colorado Springs, according to the website.
Toyota's Tylenol moment By Alex Taylor III NEW YORK (Fortune) -- In the midst of its biggest recall ever, Toyota is grappling with an existential crisis. By suspending production and sales of eight models in the U.S. and recalling millions of vehicles, it is putting its business on hold for an indefinite amount of time while it attempts to correct its twin problems of sticky accelerators and faulty carpets. This is an especially difficult dilemma for the company, because it has built its reputation not on looks or performance or great deals, but upon quality and dependability.
Ford Halts Production of Vehicle in China By MATTHEW DOLAN - WSJ Ford Motor Co. has stopped production of a full-size commercial vehicle in China after discovering that the gas pedal used came from the supplier involved in the recall at Toyota Motor Co. The production halt affects the diesel version of its full-size Transit Classic commercial vehicle that Ford makes in China with one of its joint-venture partners, Jiangling Motors Corp., according to Ford spokesman Said Deep.
Tea Party Herds the Angry, Lands in Hot Water by Margaret Carlson Jan. 28 (Bloomberg) -- The Tea Party activists claimed a huge victory in Massachusetts when Scott Brown, a former Cosmopolitan centerfold driving a pickup, captured the hallowed seat of Ted Kennedy. In November, they claimed the scalp of Dede Scozzafava, the mainstream Republican forced to drop out of a special congressional election in New York when the tea partiers found her insufficiently conservative. Florida state senator Marco Rubio happily credits tea partiers for helping him pull ahead of the once-popular governor, Charlie Crist, for the Republican nomination for U.S. Senate in Florida.
Why Class Warfare Will Dominate Obama's Presidency Rick Newman There are always haves and have-nots in America, and the poor always envy the rich. That means there's an ambient level of class warfare, even when times are good. The hostility intensifies when times are tough, which is obviously the case now. And we should probably get used to it, because Americans have good reason to get more angry, not less. The outrage makes sense. Since World War II, living standards have mostly risen, with each generation better off than the one that came before. The rising tide has continually lifted the middle class, and a lot of people felt satisfied as long as they felt they were getting ahead.
Geothermal-power site withdrawn again from BLM auction Denver Business Journal A 799-acre parcel of federal land in Colorado that’s slated for geothermal development will not be offered as planned in a scheduled lease auction on Feb. 11, the Bureau of Land Management’s Colorado state office said Thursday. The tract is near Buena Vista and Mount Princeton Hot Springs. “The parcel will undergo additional environmental review and analysis,” Greg Shoop, BLM Front Range District Manager, said in a statement. “We received several substantive comments in writing after our Jan. 14 public information meeting in Buena Vista that caused us to decide to further review the current stipulations on the parcel.”
The President's Nuclear Vision By JOE BIDEN - WSJ We will spend what is necessary to maintain the safety, security and effectiveness of our weapons The United States faces no greater threat than the spread of nuclear weapons. That is why, last April in Prague, President Obama laid out a comprehensive agenda to reverse their spread, and to pursue the peace and security of a world without them. He understands that this ultimate goal will not be reached quickly. But by acting on a number of fronts, we can ensure our security, strengthen the global nonproliferation regime, and keep vulnerable nuclear material out of terrorist hands. For as long as nuclear weapons are required to defend our country and our allies, we will maintain a safe, secure and effective nuclear arsenal. The president's Prague vision is central to this administration's efforts to protect the American people—and that is why we are increasing investments in our nuclear arsenal and infrastructure in this year's budget and beyond.
Environmentalism Not About the Earth But About Control, 2 By Frederick Meekins - CHCoffeehouse Those still not convinced should ask themselves before they run off and join such groups how much control they want to cede over their lives to the beneficence of the collective. For once one signs over the very right to ownership to one’s dwelling and possessions, where does it end? Willing to relinquish rights to the conjugal affections of your spouse to the group? Don’t snicker. In many cults, those not willing to surrender their spouses to the group are labeled as being insufficiently devoted to the group or “too individualistic” in orientation. Interestingly this allegation is invoked increasingly in the churches of today as they totter ever closer to the edges of apostasy and unbelief.
UN in secret peace talks with Taliban Julian Borger - guardian.co.uk Kabul envoy met top commanders in Dubai this month to discuss terms Taliban commanders held secret exploratory talks with a United Nations special envoy this month to discuss peace terms, it emerged tonight. Regional commanders on the Taliban's leadership council, the Quetta Shura, sought a meeting with the UN special representative in Afghanistan, Kai Eide, and it took place in Dubai on 8 January. "They requested a meeting to talk about talks. They want protection, to be able to come out in public. They don't want to vanish into places like Bagram," the Reuters news agency quoted a UN official as saying, referring to the Bagram detention centre at a US military base outside Kabul.
EU signals last-resort backing for Greece By Tony Barber in Brussels and David Oakley in London The European Union made clear on Thursday it would not abandon Greece and let Athens’ mounting debt crisis jeopardise the eurozone, even as Germany and France played down suggestions they had already formulated an emergency rescue plan. “It’s quite clear that economic policies are not just a matter of national concern but European concern,” José Manuel Barroso, European Commission president, told reporters in Brussels. According to high-level EU officials, Greece would in the last resort receive emergency support in an operation involving eurozone governments and the Commission but not the International Monetary Fund.
Greek Bonds Show Waning Faith It Can Avoid Bailout By Matthew Brown and Keith Jenkins Jan. 29 (Bloomberg) -- Greece bonds and credit-default swaps show investors are starting to doubt that the nation can reduce the largest budget deficit in the European Union without help from outside. The nation’s government bonds are the world’s worst performers in January, losing 4.19 percent in local currency terms and extending their decline over the past three months to 10 percent, Bloomberg/EFFAS indexes show. Credit-default swaps tied to Greece trade at about the same levels as Dubai when it got a $10 billion bailout from Abu Dhabi in December.
Funds flee Greece as Germany warns of "fatal" eurozone crisis By Ambrose Evans-Pritchard - Telegraph Germany has triggered a near-panic flight from southern European debt markets by warning that there will be no EU bail-outs, even though it fears the region's economic crisis has turned dangerous and could prove "fatal" for the entire eurozone. The yield on 10-year Greek bonds blasted upwards by over 40 basis points to 7.15pc in a day of wild trading. Spreads over German Bunds reached almost four percentage points, by far the highest since Greece joined the euro, and close to levels that risk a self-feeding spiral. Contagion hit Portuguese, Spanish, Irish, and Italian bonds. George Papandreou, the Greek premier, said in Davos that his country had been singled out as the weak link in a "attack on the eurozone" by speculators and political foes. "We are being targeted, particularly by those with an ulterior motive."
No EU bailout for Greece as PM promises to 'put house in order' Greece's embattled prime minister, George Papandreou, has said his country must solve its deep-rooted budgetary problems itself, and warned that speculators were targeting Greece as the weak link in the eurozone. With Greek bonds again under ferocious pressure on the financial markets today, Papandreou said Athens was not expecting to be bailed out by the other 15 members of the single currency. "The problem we have is home-made," he said in a discussion on the future of the eurozone at the World Economic Forum in Davos. "We Greeks are responsible for putting our own house in order."
German bank chief rules out aid for crisis-hit Greece The head of the German central bank, Axel Weber, said that any aid for crisis-hit Greece at the European level would be counterproductive and impossible to justify politically. Weber, among the most influential members of the European Central Bank (ECB) board and one of the favourites to take over the presidency of the bank next year, said the ECB could not help one state when others were also struggling. "Politically, it would not be possible to tell voters that one country is being helped out so that it can avoid the painful savings that other countries have made," Weber told the Boersen Zeitung financial paper.
Europe Lays Plans for How to Bail Out Greece By STEPHEN CASTLE and MATTHEW SALTMARSH BRUSSELS — France, Germany and other European countries have begun discussing privately how they can come to the aid of fellow euro-zone member Greece, as doubts intensify over the country’s ability to get its budget under control. Despite public attempts to discourage such expectations, discussions are under way, although the shape or scale of a possible bailout package has yet to be determined, according to officials in several capitals, all speaking on condition of anonymity.
Obama promises jobs, deficit control in new focus Caren Bohan and Ross Colvin WASHINGTON (Reuters) - President Barack Obama will promise Americans on Wednesday that he will revive jobs growth and curb exploding deficits, as he seeks to recalibrate his agenda after his worst political setback since taking office. Obama's State of the Union address, which begins shortly after 9 p.m. (0200 GMT Thursday), will include a call for a bipartisan panel to address the surging federal debt. The speech follows the loss by his Democratic party of a pivotal Senate seat in Massachusetts. Obama will aim to tap into public discontent, stemming mainly from the still-struggling economy and a stubbornly high 10 percent unemployment rate, while buying time for his administration to regroup.
Text: Obama’s State of the Union Address Following is the prepared text of President Obama's State of the Union address, delivered Jan. 27, 2010, as released by the White House: Madame Speaker, Vice President Biden, Members of Congress, distinguished guests, and fellow Americans: Our Constitution declares that from time to time, the President shall give to Congress information about the state of our union. For two hundred and twenty years, our leaders have fulfilled this duty. They have done so during periods of prosperity and tranquility. And they have done so in the midst of war and depression; at moments of great strife and great struggle.
CNN's Ali Velshi interviews Congressman Ron Paul On the economy, the state of the union and the Federal Reserve
Investing in Gold? Pay close attention to Dollar By Sol Palha - Commodity Online The theme for the past few years has been to diversify into overseas markets. This theme has been taken too far. Money has flowed into these markets at stunning rates (especially China) and if the dollar should surprise everyone by mounting a strong rally, the biggest markets to get hit will be the developing markets. The theme being pumped now in these markets is that this is where the growth is (long term yes, but in the intermediate time frames these markets are more than ready to mount a strong correction). This mantra is especially true of China, where several sectors are simultaneously experiencing bubble like formations.
Dollar Near Six-Month High Against Euro on Fed Rate Outlook By Yoshiaki Nohara and Ron Harui (Bloomberg) The dollar traded near a six-month high against the euro on speculation the Federal Reserve will relax its low-interest rate stance amid signs the U.S. economy is gathering momentum, boosting demand for the nation’s assets. The dollar was near a four-month high against the Swiss franc after Kansas City Fed President Thomas Hoenig said the time has come to change the promise to keep rates low and before a report forecast to show the U.S. economy expanded at the fastest pace in almost four years. The euro was near its weakest in nine months against the yen on concern that budget deficits in the 16-nation region will widen, backing the case for the European Central Bank to keep interest rates low.
Monetary Unwinding and Secondary Recession by Gary North - Lew Rockwell Officials at the Federal Reserve System insist that the FED will unwind its more than doubled monetary base. They do not say when. They do not say how. But they insist that they will do this when the economy recovers. The FED has begun this process. The press has not paid any attention to this, but the evidence is unmistakable. Any time you want to monitor any of this, search Google for "Federal Reserve charts." You can see for yourself.
First, there has been a decline of the adjusted monetary base. This began in early December. This is the major indicator of Federal Reserve policy.
Second, M1 has also fallen in recent weeks.
Third, the M1 multiplier has yet to recover.
A Day Before Vote on Bernanke, Fed Leaves Rates Alone By SEWELL CHAN - NYTimes The Federal Reserve decided not to rock the boat on Wednesday. At its first meeting of the year, which came on the eve of a Senate vote that will determine whether Ben S. Bernanke can continue as Fed chairman, the central bank’s policy-setting committee voted to keep short-term interest rates near zero. But it offered a slightly more optimistic assessment of economic activity than it had in December. In fact, many economists are predicting much stronger growth in the fourth quarter, more than double the 2.2 percent annual rate of expansion in the third quarter.
Fed nods to Hill's economy concerns By Patrice Hill Treasury chief defends moves The Federal Reserve acknowledged concerns on Capitol Hill about consumers who are out of jobs and short on credit, saying Wednesday that it may continue programs to support mortgages, small businesses and consumers loans this year if financial conditions don't improve. The Fed's nod to senators, who say they have demanded that it pay more attention to middle-class problems in closed-door meetings with Chairman Ben S. Bernanke in recent days, came as prospects for Mr. Bernanke's confirmation to a second term continued to improve, with a vote on shutting off debate in the Senate scheduled for Thursday.
Geithner: 'I had no role' in an AIG cover up Treasury Secretary Timothy Geithner told lawmakers Wednesday that he had no involvement in an apparent attempt by government regulators to withhold crucial information about AIG's bailout from the public. "I had no role in making decisions regarding what to disclose," Geithner testified at a hearing held by the House Oversight Committee Wednesday.
Paulson: Geithner Recuse himself NY Fed - WTH is Dan Jester Goldman Sachs TARP FED Treasury Ties
See Who Was Paid Off In The AIG Bailout A key question at the heart of the controversial bailout of AIG is just how much money the government lost. The Federal Reserve and Treasury Department have worked to keep that number secret and to conceal who was on the winning end. An unredacted document obtained by the Huffington Post list the damage in detail. Goldman Sachs alone, for instance, got $14 billion in government money for assets worth $6 billion at the time -- a de facto $8 billion subsidy, courtesy of taxpayers. The list was produced as part of a congressional investigation led by the House Oversight and Government Reform Committee into the federal bailout of AIG.
Geithner AIG Recusal Was 'After the Fact,' Issa Says By Lizzie O'Leary and Andrew Frye - Bloomberg U.S. Representative Darrell Issa said he wasn't satisfied with Timothy F. Geithner's explanation that he was recused from matters involving American International Group Inc. in his last weeks running the Federal Reserve Bank of New York. Geithner, now Treasury secretary, is scheduled to testify today before the House oversight committee on the September 2008 bailout of AIG and efforts by the New York Fed to limit what the insurer made public about the rescue. Geithner was recused from "working on issues involving specific companies," including AIG, after he was nominated on Nov. 24, 2008, for the cabinet post, a spokeswoman for the Treasury Department said this month.
Geithner Says A.I.G. Rescue Prevented a Depression By MARY WILLIAMS WALSH and SEWELL CHAN - NYTimes WASHINGTON - In questioning that at times took on the air of a cross-examination, the Treasury Secretary Timothy F. Geithner on Wednesday defended the government actions in bailing out the American International Group, saying Washington did what was necessary to prevent "a second Great Depression." But Mr. Geithner said he was not involved in withholding information about deals that sent billions of taxpayer dollars from the bailout of A.I.G. , the insurance giant, to big banks. "I withdrew from monetary policy decisions," Mr. Geithner said, "and day-to-day management of the New York Fed."
Geithner Says AIG Rescue Avoided ‘Utter Collapse’ Treasury Secretary Timothy F. Geithner said American International Group Inc.’s bailout helped repair the U.S. economy, and that regulators didn’t have “the luxury of time” to get concessions from banks that benefited from the insurer’s rescue. The Federal Reserve Bank of New York, led by Geithner when AIG was aided in 2008, was motivated to “get the best deal for the American taxpayer,” he said today at a hearing of the House Oversight and Government Reform Committee.
AIG Hearing: It Wasn't My Job, Paulson Says
Why the markets hate Washington By Paul R. La Monica NEW YORK (CNNMoney.com) -The markets might be a heck of a lot calmer if everybody in Washington would just shut up. Of course, that's not going to happen anytime soon. Treasury Secretary Tim Geithner is testifying in front of Congress Wednesday about the government's mishandling of the AIG "rescue." Later on, the Federal Reserve will release its latest statement about the economy and interest rates.
Fed renews vow to keep rates low, with a dissent Emily Kaiser and Pedro da Costa WASHINGTON (Reuters) - The Federal Reserve on Wednesday offered a guardedly upbeat view of the U.S. economy and renewed its pledge to keep interest rates near zero despite the objection of one policy maker. The decision to hold rates steady by the Fed's policy-setting Open Market Committee was 9-1, with Kansas City Federal Reserve Bank President Thomas Hoenig dissenting because he wanted the central bank to eliminate a phrase vowing to keep rates exceptionally low for "an extended period." The FOMC statement reflected a somewhat brighter tone than previously and appeared to put more faith in the sustainability of a nascent economic rebound.
Bernanke bad for limited government and the little guy by JONATHAN WITT - Acton Institute This week's reappointment vote for Fed Chairman Ben Bernanke has created some strange bedfellows in Washington. A muddled middle of Republicans and Democrats supports the Keynesian's reappointment, but the real odd couples are among the opposition. For different if overlapping reasons, free market proponents and far-left figures such as democratic-socialist Bernie Sanders of Vermont are both convinced that Bernanke has done much to hurt our economy, particularly those in the bottom half of our economy.
Bernanke Met With 24 Senators After Renomination as Fed Chief By Craig Torres and Christopher Anstey (Bloomberg) Federal Reserve Chairman Ben S. Bernanke had conversations with 18 of the 23 legislators on the Senate Banking Committee prior to their 16-7 vote this month to recommend that the full Senate confirm him to a second term. The Fed chief had contact with 24 senators between August 4 and Nov. 30, almost all at congressional office buildings, after his Aug. 25 nomination to another four-year term as chairman by President Barack Obama. The meetings and phone calls were listed in a daybook provided by the Fed yesterday in response to Freedom of Information Act requests by Bloomberg News.
“This is unprecedented political contact for a Fed chairman in such a short period,” Thomas said, “especially considering Bernanke’s vow before his first Senate confirmation hearing that ‘I will be strictly independent of all political influences.’”
As Bernanke awaits 2nd term, Fed mulls exit plan By JEANNINE AVERSA, AP Now that the economy is on the mend, the Federal Reserve this year can focus on how and when to pull back the stimulus money pumped out to fight the financial crisis. With his prospects for another term brightening, Ben Bernanke will lead that effort. At their first meeting of the year, Fed policymakers are likely weighing such matters, including which tools to use. The officials resumed discussions Wednesday morning and are slated to issue a policy statement in the afternoon when they wrap up their two-day session. No major changes in rates or economic support programs are expected to be announced. The big question is whether Fed policymakers will signal their timing and strategy to reverse course.
Senate Should Reject a Second Term for Bernanke By Desmond Lachman - Amer Enterprise Institute This week the Senate should not shy away from rejecting President Obama's nomination of Ben Bernanke for a second term as Federal Reserve chairman. To be sure, Wall Street's knee-jerk reaction to such a rejection must be expected to be negative. However, the Senate should base its decision not on how Wall Street might initially react but rather on what is in the U.S. economy's longer-term interest. A careful examination of Bernanke's highly checkered record as Fed chairman over the past four years would reveal that there have to be better candidates than Bernanke to head the Fed at this difficult juncture for the economy.
The Bernanke Deception and the Stirring of American Populism Chris Whalen captures an interesting aspect of change that not only the august US Senators are missing, but most of the mainstream media in the States as well, at least judging by the discussions on their Sunday political shows. All of them seem equally out of touch, arrogantly aloof and insulated from the mood of the nation. It is interesting also to hear the financial princes growling from lofty Davos about 'Obama's outburst' regarding the Volcker Rule and the impertinence of the Americans in daring to set national regulations for their banks.
Stunned Wall Street Firms Don't Want to Wage War on Obama By Robert Schmidt (Bloomberg) When Treasury Secretary Timothy F. Geithner and White House adviser Valerie Jarrett hosted a private dinner with the leaders of six banks to discuss financial regulation on Jan. 20, the bankers soon changed the subject. The president needed to stop demonizing Wall Street, they told Jarrett, according to three people familiar with the meeting. What the executives, including Brian Moynihan, the chief executive officer of Bank of America Corp., and Robert Kelly, the chief executive of Bank of New York Mellon Corp., didn't know was that President Barack Obama, who had proposed a new tax on the biggest banks six days earlier, was about to strike again.
French Were Willing to Negotiate AIG Discounts By Jody Shenn, Bob Ivry and Alan Katz (Bloomberg) A French regulator was willing to discuss allowing lower payments to retire American International Group Inc.'s obligations to the country's banks, according to congressional testimony that undermines part of the rationale the Federal Reserve Bank of New York gave for paying full value. France's regulator was "open to further negotiations" to discuss the possibility of concessions by AIG counterparties Societe Generale SA and Credit Agricole SA's Calyon unit, in November 2008, Neil Barofsky, the special inspector general for the Treasury Department's Troubled Asset Relief Program, said in prepared remarks for a House oversight committee hearing today.
UK economy lies 'on bed of nitroglycerine' Jill Treanor and Patrick Wintour - guardian.co.uk Bill Gross deals blow to government with warning to his investors that Britain's debt makes it a 'must to avoid' The government's hopes of claiming credit for reviving the British economy suffered a severe blow today when the world's biggest buyers of bonds warned that the UK was a "must to avoid" for his investors as its debt was "resting on a bed of nitroglycerine". The intervention by Bill Gross, co-founder of California-based fund managers Pimco, came on the day official figures confirmed that Britain had emerged from the deepest recession since the 1930s – but only by the narrowest of margins.
Why No Presidental Wrath Aimed at Greedy Lawyers? By John Lillpop Capitol Hill Coffee House Everyone knows that President Obama has made health care reform his signature issue. He walks, talks, eats, and sleeps health care reform, all the while preaching that the entire American economy faces ruin unless soaring medical costs are contained. He has even stated that the issue is of such personal significance that he would be willing to leave the presidency after one-term, if needed to enact meaningful reform. Given Barack Obama's alleged passion, just why is it that the president has steadfastly refused to take on greedy trial attorneys, those ambulance-chasing barristers who are largely responsible for out-of-control jumps in health care costs?
Why the Government Wants to Hijack Your 401(k) BY KEITH FITZ-GERALD, Chief Investment Strategist, Money Morning - It's bad enough that we've been forced to bail out Wall Street. But now the Obama administration is hatching plans to raid our retirement savings, too. To say that I'm "outraged" doesn't come close to describing the emotions I experience every time I think about the government's latest hare-brained scheme. According to widespread media reports, both the U.S. Treasury Department and the Department of Labor plan are planning to stage a public-comment period before implementing regulations that would require U.S. savers to invest portions of their 401(k) savings plans and Individual Retirement Accounts (IRAs) into annuities or other "steady" payment streams backed by U.S. government bonds.
Marc Faber: The Real Value of GOLD vs Paper in Troubled Times - 1/2
U.S. May Retool Loan Program for Underwater Borrowers The Obama administration's $300 billion Hope for Homeowners program may be retooled to help the growing number of Americans who owe more than their properties are worth as current anti-foreclosure efforts fail to account for these "underwater" borrowers. The changes would be at least the third lease on life for the program, which began in October 2008 during the Bush administration and has so far helped just 96 of the 400,000 homeowners originally targeted.
Double Standard: Of Morals and Mortgages You've probably heard that a high-profile realty group that had agreed to pay $5.4 billion for a New York City housing complex just announced it was not going to make good on its loans. You might describe the (former) owners as misguided, stupid, or unfortunate. You probably wouldn't think of calling them immoral. So why is the average homeowner's decision to walk away or keep up with the payments on an underwater mortgage considered a moral issue?
Dean Baker: We're Still In a Housing Bubble By Nick Timiraos - WSJ Home prices have posted six months of gains, according to the Case-Shiller home price index, released this morning. But some housing bears say that the fundamentals don't support those price gains and that, even once the market finds a bottom, home prices aren't likely to show significant appreciation for many years to come. Housing economist Dean Baker, the co-director of the Center for Economic and Policy Research, laid out his case at a risk conference last week for why we still have a housing bubble. Adjusted for inflation, home prices are still 15-20% higher than they were in the mid-1990s. "There's no plausible fundamental explanation for that," he says.
Housing recovery could take a decade, economists warn By Renae Merle - Washington Post Even as the housing market shows signs of improvement, including in new data released Tuesday, economists warn that it could take up to a decade for many homeowners to regain equity in their homes, while some people in the hardest-hit regions of the country may not see a recovery during their lifetime. Home prices have fallen 30 percent since reaching their peak in 2006, and many economists think they will take another tumble this year as more foreclosures pile on the market. The pace of recovery will vary throughout the country, with homes in the most battered markets taking the longest to regain value.
Fed May Take Risk MBS Program End Won't Hurt Housing By Steve Matthews and Vivien Lou Chen - Bloomberg The Federal Reserve may take a chance the housing market can stage a comeback without its support by announcing today it will stick to the plan to end a $1.25 trillion program of mortgage-debt purchases in March. Fed Chairman Ben S. Bernanke and other policy makers meet as a government report showed sales of new homes unexpectedly dropped in December. With financial markets rebounding, the central bank has said it plans to end emergency aid to bond dealers and money markets by Feb. 1.
Buffett's Berkshire to be added to S&P indexes Company will replace Burlington railroad after acquisition deal is done OMAHA, Neb. - Warren Buffett's Berkshire Hathaway Inc. will soon join the S&P 500 and S&P 100 stock indexes after it acquires Burlington Northern Santa Fe Corp., Standard & Poor's said Tuesday. Buffett's company will replace BNSF in both indexes after shareholders approve Berkshire's acquisition of the railroad company next month.
Main Street frustration: 'Everything is going to banks' By Catherine Clifford NEW YORK (CNNMoney.com) -- In his State of the Union speech Wednesday night, President Obama is widely expected to tout a slew of federal initiatives aimed at stimulating small business hiring and growth. Again. Small companies employ around half of America's workers and drive most of the country's job growth. Obama talks frequently in his speeches about the vital role small companies play, and his administration has launched several efforts to bolster struggling Main Street businesses. But most of the president's small business proposals remain in limbo, caught in bureaucratic logjams and the Great Black Hole of Congress.
Marc Faber: The Real Value of GOLD vs Paper in Troubled Times - 2/2
Americans hate their jobs more than ever Satisfaction level hits new low, especially among younger workers Americans hate their jobs more than ever before in the past 20 years, with fewer than half saying they are satisfied. The trend is strongest among workers under the age of 25, less than 39 percent of whom are satisfied with their jobs. Workers age 45 to 54 have the second lowest level of satisfaction (less than 45 percent), according a survey conducted by The Conference Board, a market information company that also puts out the Consumer Confidence Index and the Leading Economic Indicators.
Record foreclosure filings threaten housing recovery posted by Mathew Padilla - OCRegister The total of outstanding foreclosure auction notices on Orange County homes hit 10,513 at the end of December, the highest in this housing downturn, reports http://ForeclosureRadar.com . The total has more than doubled in the nine months since March, when it was 4,573. ForeclosureRadar tracks outstanding notices of trustee's sale, which announce a house or condo will be sold at auction. Such notices are usually good for only one year. Sean O'Toole, head of ForeclosureRadar, said although foreclosure filings overall decreased at the end of 2009, the backlog of delinquent loans keeps growing.
U.S. Cattle Herd Falls to 1958 Low as Losses Climb By Whitney McFerron Jan. 27 (Bloomberg) -- The U.S. cattle herd may have shrunk to the smallest size since 1958, as mounting losses during the recession spurred beef and dairy producers to cull animals, analysts said. Wholesale choice-beef prices averaged $1.4071 a pound last year, the lowest level since at least 2004, as U.S. job losses climbed and meat demand waned. Corn, the main ingredient in livestock feed, jumped to a record $7.9925 a bushel in 2008 on the Chicago Board of Trade, and prices averaged about $3.79 last year, the third-highest annual average since at least 1959.
GM offers $1,000 incentive to Toyota owners by Peter Valdes-Dapena NEW YORK (CNNMoney.com) General Motors is offering incentives of $1,000 and low financing rates specifically for Toyota customers worried about their recalled vehicles, beginning Wednesday. "We decided to make this offer after receiving many e-mails and calls from our dealers, who have been approached by Toyota customers asking for help," GM said in a statement. The offers will run through the end of February.
Ex-attorney pleads guilty in $1.2B Ponzi scam Scott Rothstein, 47, pleads guilty to all five counts against him FORT LAUDERDALE, Fla. - A disbarred attorney who courted politicians and star athletes and led a flamboyant lifestyle even by South Florida standards pleaded guilty Wednesday to federal charges that he ran a $1.2 billion Ponzi scheme. Scott Rothstein, 47, pleaded guilty to all five counts against him, including wire fraud, money-laundering conspiracy and a racketeering charge commonly used to take down Mafia chieftains. The charges carry a maximum potential sentence of 100 years in federal prison. Sentencing is set for May 6.
Oregon says yes to taxing wealthy, businesses By TIM FOUGHT - AP PORTLAND, Ore. - Oregon has set aside its history of shooting down tax increases on statewide ballots, with voters endorsing higher taxes amid a brutal economic slump. Democrats in the Oregon Legislature made it as easy as they could for the voters to raise taxes on somebody else, and the electorate responded Tuesday by approving Measures 66 and 67. The increases approved Tuesday will hit people with taxable income upward of $125,000 - estimated at fewer than 3 percent of filers. Many businesses who had been paying an annual $10 minimum will see that rise to at least $150.
The Democrats' Communication Problem By KATE PICKERT - Time Health Reform: Did the Dems Misread the Public Mood? Democrats are still smarting from Scott Brown's upset victory in Massachusetts last week. Health reform seemed inevitable and then, suddenly, it wasn't. As Karen pointed out, Democratic lawmakers are still searching for a path forward that might include reconciliation. They may succeed, but certainly not because the American people got on board with their plans. No, if Democrats manage to squeak by comprehensive health care reform legislation, they will do it in the face of polls showing that the majority of the American people oppose their efforts. Most Republicans would no doubt argue that the public is rejecting the Democratic plan for reforming the U.S. health care system, but a report released yesterday shows the Democrats came up short in a far more fundamental sense. They failed to convince the public that the system is flawed enough that it needs fixing.
Home-schoolers win asylum in U.S. By Ben Conery Germans fled 'persecution' A U.S. immigration judge's decision to grant political asylum to a German family with "a well-founded fear of persecution" for home-schooling their children should send a powerful message to the German government to change its stance on home schooling, the family's attorney said Wednesday. "Home-schoolers are not a threat to German society," said Michael Donnelly, one of the Home School Legal Defense Association's team of lawyers representing Uwe Romeike; his wife, Hannelore; and their five children.
Embrace Tea Party to Win Back N.Y. By John LeBoutillier - C H Coffehouse Last week’s stunner in Massachusetts holds a lesson for the New York GOP. Sen.-elect Scott Brown, though running on the Republican ticket, never mentioned his party in his campaign speech. Instead, he campaigned as an independent and a proud member of the tea party movement. He knew that the palpable anger of voters is directed against both major political parties.
It is not only Christians who are oppressed by the control freakery of the House of Commons By Gerald Warner - UK Telegraph - Last night's defeat by the House of Lords of the aggressively anti-Christian provisions in Harriet Harman's Equality Bill should not be allowed to gloss over the malevolent intent of the House of Commons in promoting this legislation. The impertinently intrusive provisions of the Bill demonstrated that the state has acquired pretensions far beyond its legitimate scope and urgently requires to be cut down to size.
Environmentalism Not About the Earth But About Control, Part 1 By Frederick Meekins - Capitol Hill Coffee House - For decades, American motorists have been subjected to propaganda insisting that they either need to drive less or give up safe, comfortable automobiles in favor of what amount to motorized coffins in order to preserve natural resources and environmental quality. Now that this policy goal is pretty much on the road to being implemented, the elites running our lives are not content to sit back in the glow of their accomplishment but are rather laying the groundwork for the next phase in their grand dream of limiting the free movement of the American people.
Blankfein Avoids Apology as London Risks Suicide: Mark Gilbert When almost every media mention of your institution is accompanied by the nickname “vampire squid,” you might think it prudent to learn a little humility. Not, it seems, if your name is Lloyd Blankfein. The Goldman Sachs Group Inc. chief executive officer missed another opportunity to express contrition when he appeared before the U.S. Financial Crisis Inquiry Commission earlier this month. While his answers weren’t quite belligerent, he offered little in the way of an apology.
As China Rises, Conflict With West Rises Too By KATRIN BENNHOLD DAVOS, Switzerland —As recently as 2008, when China was still an emerging economy eager to put its best foot forward for Western consumers, it lifted censorship, at least temporarily, on several Web sites before the Beijing Olympics. At the same time, it responded to pleas from U.S. and European politicians to cooperate on several other fronts.
In Davos, Signs of Shift in Global Power By KATRIN BENNHOLD and ALISON SMALE - NY Times AVOS, Switzerland — For years, the power brokers who gathered in the Swiss Alps to mull over the state of the world worried collectively about an outdated system of global governance. From the United Nations Security Council and the International Monetary Fund to the Group of 8, the arguments went, international institutions were unfit to solve global problems because they no longer represented the balance of power in the world.AL
China Reigns in Davos The 40th World Economic Forum started working in Davos on January 27. Russia’s Vladimir Putin opened the forum last year, but neither Russian, nor US leaders are going to attend the event this year. This year the forum pays special attention to developing countries – over 30 impressive delegations arrived in Davos to take part in the forum.
History repeats itself and it could happen again:
Part 1| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
Part 2| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
Part 3| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
Part 4| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
Part 5| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
Part 6| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
"Fear the Boom and Bust" a Hayek vs. Keynes Rap Anthem
Gold Prices Tick Up Despite Dollar's Rise Gold prices were rising Tuesday despite a stronger U.S. dollar as bargain hunters bought gold as an alternative asset. Gold for February delivery was adding $1.90 to $1,097.60 an ounce at the Comex division of the New York Mercantile Exchange. Prices have traded as high as $1,103.20 and as low as $1,085.20. The U.S. dollar index was rising 0.43% to $78.53. Risk appetite for commodities was on shaky ground Tuesday after Standard & Poor's announced it may lower its debt rating on Japan unless "measures can be taken to stem fiscal and deflationary pressures." There is also increased fear among investors that China could further restrict lending.
How gold created liquidity in 1907 market crash By Clif Droke In their timely look at the panic of 1907, Robert Bruner and Sean Carr focus attention on what they believe to be the underlying causes of the ’07 stock market crash and recession, drawing parallels between it and the credit crisis of more recent times. Their book, “The Panic of 1907: Lessons Learned from the Market’s Perfect Storm,” is now available in soft cover published by John Wiley & Sons (2007). The authors list seven contributing factors to the 1907 crisis:
Complexity
Buoyant economic growth
Inadequate safety buffers
Adverse leadership
Real economic shock
Undue fear and greed and other behavioral aberrations
Failure of collective action
Financial Elite's Behaviour Has Opened Floodgates for Gold by Lorimer Wilson In spite of philosophical differences in many areas of politics and economics, Ron Paul and Simon Johnson agree that the cosiness that exists between the U. S. Congress and the financial elite has not worked, and is not working, in the best interest of the average American. They both suggest that major changes must be made in that relationship to strengthen the American economy. Is it too late, however, to avoid the repercussions of an even weaker greenback, rising inflation and the opening of the floodgates in the price of all investments related to gold and silver?
Gold Advances on Speculation Dollar to Drop, Boosting Appeal Gold advanced on speculation the dollar may slip against major currencies, boosting the metal’s appeal as an alternative asset. Gold for immediate delivery climbed 0.3 percent to $1,101.35 an ounce at 9:36 a.m. in Singapore. Bullion for April delivery added 0.2 percent to $1,101.70 an ounce in New York. The Dollar Index, a six-currency gauge of the greenback’s value, shed 0.1 percent to 78.447 after strengthening as much as 0.6 percent yesterday. Gold has gained 22 percent in the past year as the dollar dropped 7.1 percent.
The Case for Commodities in 2010 (And Beyond) By Frank Holmes The biggest emerging economies have ambitious plans that require a greater share of the world's limited commodities. This trend is spurring profound and permanent disruptions in how these resources are allocated now and in the future. For investors, these disruptions present opportunities. Simply put, an investment in natural resources is a vote of confidence in global economic growth. Rapid urbanization and industrialization, better infrastructure and growing consumption in emerging markets are among the key themes in the global growth story. They are also key drivers in the rising demand for oil, steel, copper, cement and other resources.
Chinese dig deep to join the gold rush Tania Branigan in Beijing The assistant pushed the red velvet sacks across the counter discreetly. The customer quickly slipped them into her bag. With a brief, nervous look around, she walked briskly from the shop, already clutching her car keys. Few people feel comfortable lugging around a kilo of pure gold bars. But that doesn't stop Chinese shoppers from thronging to Caibai, the number one place for buying the precious metal. The Beijing store's 5,000 daily customers are at the forefront of a new gold rush.
The Fort Knox Conundrum: Chinese say they received bogus bars of gold traced to U.S. By Pat Shannan Could over 1 million bars of gold, much of which is still held in Fort Knox, Ky., be counterfeit? An October 2009 discovery that suggests this may be true has been suppressed by the mainstream media but has been circulating among the “big money” brokers and financial kingpins. It is just now being revealed to the public. Gold is regularly exchanged between countries to pay debts and to settle the so-called balance of trade. It is often also used as a hedge against a falling currency. Gold is regularly traded and stored in vaults under the strict supervision of a special organization based in London, known as the London Bullion Market Association (LBMA). That’s why news of counterfeit gold bars was a surprise to many experts.
China's Credit-Tightening Moves Could Boost the Dollar and Yen China's decision to rein in credit may help to strengthen both the yen and the dollar as investors look to avoid risk. The chairman of China's Banking Regulatory Commission, Liu Mingkang, said last week that he expects new yuan lending in 2010 to be around 7.5 trillion yuan ($1.1 trillion). That's down from 9.59 trillion yuan ($1.4 trillion) in 2009, but still more the double the 2008 level.
Volatility and Politics Are Feeding Fears of a Market Correction Javier C. Hernandez Brace yourself for another wild ride on Wall Street. Worries about the strength of the global recovery and proposals from Washington to clamp down on banks have sent fresh jitters through financial markets, prompting chatter among traders that stocks could be poised for that rare but alarming phenomenon: a correction. Such a development would mean a 10 percent or greater sell-off in everything from high-powered Nasdaq technology shares to bread-and-butter Dow industrials.
Jim Rogers on Bloomberg: Bernanke is Part of the Problem, Not the Solution!
Bernanke: Too big to fail Just a year after he unleashed a flood of dollars in a bid to prevent a second Great Depression, Ben Bernanke's job is on the line. More than a dozen senators have said they will oppose the Fed chairman's reappointment after his first term ends on Jan. 31. The rest of the vote counting is still in question. "Bernanke is caught in a crossfire, because bashing Wall Street is awfully popular politically right now," said Desmond Lachman, a resident fellow at the American Enterprise Institute in Washington. "That's the way the winds are blowing this month."
Bernanke's Job Is Done. Now the Fed Needs a Jobs Creator It's time to send Fed Chair Ben Bernanke back to Princeton University. Bernanke is an expert in Depression-era economics, and his decision to flood financial markets with cash probably saved the U.S. from the fate the nation suffered in the 1930s. But Bernanke lacks the know-how the U.S. needs now -- how to use Fed policy to create job growth. That's why I'd replace him with an economist who understands something about how to generate employment.
Gerald Celente anybody calling this a hearing is deaf
Questions Geithner Cannot Escape Please consider The Question Geithner Can’t Escape: Why Pay Off AIG’s Partners? Not only is Bernanke coming under attack, questions keep popping up about treasury secretary Tim Geithner. The latest political clamor over AIG, poised to combust next Wednesday at a House hearing on backdoor payments to banks that made risky deals with the company, centers on the Federal Reserve’s effort to conceal details of those payments. But senior officials, including Treasury Secretary Timothy Geithner, have so far evaded a key question: Why were AIG’s trading partners fully paid with taxpayer money instead of being told to take a loss?
At NYFed, Geithner was told of benefit to banks in AIG bailout By Hugh Son NEW YORK -- Timothy F. Geithner, who has denied that the financial condition of American International Group Inc.'s bank counterparties was a consideration in structuring the insurer's bailout, was told by a senior colleague that the rescue was a way to remove "uncertainty" for the firms. Buying mortgage-linked assets from banks was better "from a financial-stability perspective" than other plans to shield AIG from losses on contracts guaranteeing the bonds, Margaret McConnell, then a Federal Reserve Bank of New York vice president, wrote in an e-mail to Geithner on Oct. 22, 2008. Geithner, now Treasury secretary, led the New York Fed at the time of AIG's rescue and McConnell's e-mail.
Goldman Sachs Drove Most Costly Bargain for AIG, BlackRock Document Shows Goldman Sachs Group Inc. was the most aggressive bank counterparty to American International Group Inc. before its bailout, demanding more collateral while assigning lower values to real estate assets backed by the insurer, documents obtained by lawmakers show.
AIG and NY Fed under fire for hiding bailout facts AIG and the Federal Reserve Bank of New York have become targets of an investigation into whether the overseer had instructed the troubled insurer not to disclose certain key information to the public. Neil Barofsky, special inspector general for the $700 billion bailout, is set to tell the House Oversight Committee on Wednesday that he has initiated an investigation into whether the New York Fed instructed AIG (AIG, Fortune 500) not to disclose more than a dozen controversial counterparty transactions to the Securities and Exchange Commission.
Tom Woods on Freedom Watch w/ Judge Napolitano 1/22/10
The Never-Ending Goldman-AIG Saga Suspicions of malfeasance without much evidence. Even among those who usually find themselves in agreement, much screaming and fighting has centered on Goldman and the AIG bailout. The controversy will be the subject of yet another potentially inflamed congressional hearing today. At issue is whether the New York Fed (proprietor, Tim Geithner) engaged in shameful and scurrilous activity in OK'ing terms that fully covered Goldman Sachs and other counterparties on certain AIG commitments to cover losses on mortgage-related derivatives.
'It All Came Together': Emails Reveal Fed Staffers During AIG Crisis By MICHAEL R. CRITTENDEN And SERENA NG At 10.47 p.m. on Nov. 9, 2008, the culmination of a frenetic week in which government officials hatched a deal to prevent American International Group Inc. from a major ratings downgrade and possible bankruptcy, a senior Federal Reserve official sent a congratulatory email. "it all came together....amazing to watch it happen over the course of the day," wrote Sarah Dahlgren, the Federal Reserve Bank of New York's point person on AIG, in an email titled "busy day" to several of the Fed's outside advisers. "can't believe what's happened in just under eight weeks...and there's a long road ahead..." she added. "please share with your team.....this is a milestone on the journey."
Judge Napolitano: Could Geithner Face Criminal Charges over AIG Coverup?
Helicopter Ben Bernanke: Understanding the Chairman By: Dr. Jeffrey Lewis When it comes to precious metals investing, there is no entity as important as the Federal Reserve. The Federal Reserve, which sets monetary policy and has a direct impact on the purchasing power of the greenback, has virtually complete control over inflation, deflation and the price of your metals. In the coming weeks, Ben Bernanke, the current Fed chairman, will be up for reappointment by the Senate of the United States. Bernanke's reappointment is virtually guaranteed, with enough lawmakers on either side of the aisle willing to give him a second term. Many lawmakers, happy with his swift actions following the financial crisis, have said they will absolutely vote to reappoint him as head.
'Daunting' outlook will mean bulging deficits The U.S. government's fiscal outlook is "daunting," with deficits averaging at least $600 billion a year over the next decade, the Congressional Budget Office said Tuesday. The debt accrued over the next 10 years will top $6 trillion -- $1.35 trillion of which will hit this year. And that's the optimistic projection: The agency's forecast assumes that lawmakers don't adopt the very expensive policies everyone expects them to adopt.
No Brakes on This Train Things are so bad in Congress these days that it can’t even outsource the tough decisions. The Senate today rejected a proposal to create a bipartisan commission to come up with a plan to address the federal government’s mountain of debt. Under the legislation, the commission would come up with a plan to reduce future deficits—some combination of spending cuts and tax increases—and submit it to Congress for an up-or-down vote after this year’s congressional elections. Only 53 senators voted for the commission—seven short of the 60 needed to create it. Many Democrats feared the commission’s plan would lead to cuts in entitlements like Social Security and Medicare, while many Republicans didn’t want to open the door to tax increases.
Creating the Next Great Depression
White House, Democratic lawmakers cut deal on deficit commission Faced with growing alarm over the nation's soaring debt, the White House and congressional Democrats tentatively agreed Tuesday to create an independent budget commission and to put its recommendations for fiscal solvency to a vote in Congress by the end of this year. Under the agreement, President Obama would issue an executive order to create an 18-member panel that would be granted broad authority to propose changes in the tax code and in the massive federal entitlement programs -- including Medicare, Medicaid and Social Security -- that threaten to drive the nation's debt to levels not seen since World War II.
Obama to Call for Three-Year Freeze on Some Spending By Roger Runningen President Barack Obama will call in his State of the Union address for a three-year freeze on spending for many domestic programs as part of his strategy to rein in the federal budget deficit. The proposal, which wouldn’t affect spending on national security, would save an estimated $250 billion over a decade and reduce the deficit by $10 billion to $15 billion in 2011, according to two officials, who briefed reporters on the plan. Last year’s budget shortfall was a record $1.4 trillion, and the Congressional Budget Office today forecast this year’s will be $1.35 trillion, second-highest ever.
Is the president panicking? by Robert Reich His spending freeze invokes memories of Clinton's shift right in '94. It's worse because it could doom the recovery President Obama today offered a set of proposals for helping America’s troubled middle class. All are sensible and worthwhile. But none will bring jobs back. And Americans could be forgiven for wondering how the president plans to enact any of these ideas anyway, when he can no longer muster 60 votes in the Senate. The bigger news is Obama is planning a three-year budget freeze on a big chunk of discretionary spending. Wall Street is delighted. But it means Main Street is in worse trouble than ever. A spending freeze will make it even harder to get jobs back because government is the last spender around. Consumers have pulled back, investors won’t do much until they know consumers are out there, and exports are minuscule.
Senate nixes debt commission The Senate on Tuesday rejected a proposal to create a bipartisan commission charged with reining in the country's debt. The goal was to create a framework to force Congress to make some tough choices -- specifically tax increases and spending cuts. Had it passed, Congress would have been required to take speedy votes on the commission's recommendations. The recommendations would have gone up for a vote by the end of this year.
Debt limit: What's the fuss? Before closing shop for the year, the Senate on Thursday raised the debt ceiling by $290 billion. That's good: The government needed to act so it can keep borrowing the money it needs to pay the bills. And $290 billion sounds like a lot of money. But it's not really. In fact, it's only expected to cover the Treasury's borrowing needs through mid-February.
$4.8 trillion - Interest on U.S. debt Here's a new way to think about the U.S. government's epic borrowing: More than half of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest. More than half. In fact, $4.8 trillion. If that's hard to grasp, here's another way to look at why that's a problem. In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.
Deficit: What caused it, why it matters The government is spending more than it's bringing in. A lot more. The result is a deficit. Here's why that gap must be brought under control. When George Bush took office at the beginning of 2001, the federal government was running a substantial budget surplus and projected rising surpluses "as far as the eye could see." Now, the United States is facing massive current deficits -- as a share of the economy, the largest since World War II -- and an increasingly dire and unsustainable outlook over the next 10 years and beyond.
The Founding of the Federal Reserve
With a Recovery Like This, Who Needs Enemies? By Bill Bonner What a recovery! If the economy keeps recovering like this we’ll soon all be busted… House sales are falling…unemployment is rising…and people are getting poorer! The Dow rallied a piddly 23 points yesterday. Oil is selling for less than $75 this morning. Stocks are in trouble. As we said yesterday, this could be the beginning of the end for this bear market. We’ve seen the first leg down. We’ve seen the rally. We’re ready for the next big plunge. Yesterday, the latest numbers on existing house sales for December came out. They were disappointing – nearly 17% lower than the year before.
Japan's debt at risk. Is U.S. next? Credit rating agency Standard & Poor's raised the prospect of a downgrade in Japan's sovereign debt rating Tuesday. That's reigniting fears that the U.S. could be next. The agency said it is concerned about large deficits and a sluggish growth outlook in Japan -- which currently ranks as the world's No. 2 economy. S&P lowered its outlook on Japan's debt to negative from stable. The reduced outlook signals the risk of an actual downgrade in its debt in the future. S&P's rating on Japan's debt is AA, one step below its best possible rating.
Congressional Budget Office Sees 2010 Budget Deficit of $1.35 Trillion Washington (AP) - The latest congressional budget estimates out Tuesday predict a $1.35 trillion deficit for this year as the economy continues to slowly recover from the recession. The Congressional Budget Office report predicts a sluggish economic recovery and continued high deficits that present twin political problems for President Barack Obama and his Democratic allies.
On the Edge with Max Keiser - 22 January 2010 (1/3)
Fed Weighs Interest on Reserves as New Policy Rate Federal Reserve policy makers are considering adopting a new benchmark interest rate to replace the one they’ve used for the last two decades. The central bank has been unable to control the federal funds rate since the September 2008 bankruptcy of Lehman Brothers Holdings Inc., when it began flooding financial markets with $1 trillion to prevent the economy from collapsing. Officials, who began a two-day meeting at 2 p.m. today in Washington, have said they may replace or supplement the fed funds rate with interest paid on excess bank reserves.
The Federal Reserve Is Inflating Another Bubble By Thomas Brewton Stock market exuberance is symptomatic of a rapidly expanding money supply’s corrosive effect. In the last two trading days of the week ending January 23rd, the Dow Industrial Index plummeted 430.170 points, the worst decline in a year. Major factors, according to Street gossip, were continuing weakness in corporate sales and growing fears that Helicopter Ben Bernanke might not be re-appointed Fed chairman.
Obama's deficit-reduction plan - State of the Union President Obama's State of the Union address will raise the curtain on how he plans to tackle the unsustainable growth in U.S. debt over the next decade. At the same time, he'll be engaged in a tough balancing act: Laying out how he'll close the gap while making proposals to boost hiring and help the middle class. Obama is set, for instance, to offer a number of sweeteners such as nearly doubling the child care tax credit. How can he square the circle? For one thing, the expectation is that most deficit-related measures he proposes wouldn't be implemented before the economy regains a stronger footing.
On the Edge with Max Keiser - 22 January 2010 (2/3)
Obama Puts Social Security on the Chopping Block Hope for lasting liberal change was washed away on Tuesday-not just with the loss of the Democrats' super-majority in the Senate, but with a closed-door deal that would lead to cuts in bedrock liberal programs such as Social Security, Medicare, and Medicaid. While Massachusetts voters were casting their ballots to install Republican Scott Brown in Ted Kennedy's Senate seat, President Obama was hammering out an agreement with Democratic leaders to support a commission on the deficit with the power to propose reductions to entitlement programs. This proposal represents a capitulation to conservatives in both parties, and leaves liberals surrendering not only on health care, but on the core achievements of the New Deal and the Great Society.
Double Standard: Of Morals and Mortgages You've probably heard that a high-profile realty group that had agreed to pay $5.4 billion for a New York City housing complex just announced it was not going to make good on its loans. You might describe the (former) owners as misguided, stupid, or unfortunate. You probably wouldn't think of calling them immoral. So why is the average homeowner's decision to walk away or keep up with the payments on an underwater mortgage considered a moral issue?
Renters Market by Katie Kuehner-Hebert Commercial and residential rents are dropping across the U.S., creating big problems for small property owners. The weak economy has hammered many of the mom-and-pop stores that rent commercial space from Robert Phillips, whose company owns and manages property in San Diego. In some cases he has helped them through tough times by offering them as much as four free months of rent. “The retail sector especially is really struggling, so everybody’s looking for help,” says Phillips, president and chief executive officer of Pacific Coast Commercial Asset Management.
The Dead Loan Zone by Charles P. Wallace The economy is starting to show signs of recovery, but deep exposure to bad commercial real estate loans coupled with ongoing joblessness will hit small banks for years to come. As 2009 draws to a close, the banking industry is reeling from one of its worst years ever. There were 133 bank failures in the U.S. as of mid-December, up from 25 the year before. The bank-failure problem is straining the resources of the Federal Deposit Insurance Corp., which has demanded a bailout of sorts for itself from larger, more stable lenders. Even as the economy returns to slow growth mode, the troubled job market begins to stabilize and the systemic risk within the financial system appears to subside, the banking industry will continue to suffer. The aftershocks of the two-year-old financial crisis will continue to be felt in 2010. While most of the troubles in the residential real estate market have washed through bank balance sheets, problems in the commercial real estate market are still cresting.
On the Edge with Max Keiser . . . and Chris Cook
Home Depot to cut 1,000 staffers as it consolidates jobs, ends some pilot programs By: MAE ANDERSON AP Home Depot Inc., the largest U.S. home-improvement retailer, said Tuesday it is laying off 1,000 staffers as it cuts three pilot programs and cuts some support positions. An internal memo sent to staffers by CEO Frank Blake said about 900 of the cuts stem from consolidating some support functions in its human resources, finance and other divisions. The rest come from the company closing a small-format pilot store in Wilson, N.C.; a temporary hurricane recovery outlet in Waveland, Miss.; and a clearance outlet in Austell, Ga. Blake said in the memo there were no plans to close any full-size Home Depot stores.
Senate Democrats Said to Consider $80 Billion Jobs Legislation Lawmakers are set to consider a jobs-stimulus package totaling about $80 billion that would provide tax credits to small and medium-sized businesses that hire workers, a Democratic senator said. The plan, to be presented today to Senate Democrats, would include aid to state governments to prevent layoffs and additional funding for infrastructure projects, said the senator, who asked not be identified. The package also will likely include energy-related provisions such as incentives to weatherize homes, a Senate aide said.
Manchurian Candidates: Supreme Court allows China and others unlimited spending in US elections In Thursday's Supreme Court decision in Citizens United v. Federal Election Commission, the Court ruled that corporations should be treated the same as "natural persons", i.e. humans. Well, in that case, expect the Supreme Court to next rule that Wal-Mart can run for President. The ruling, which junks federal laws that now bar corporations from stuffing campaign coffers,will not, as progressives fear, cause an avalanche of corporate cash into politics. Sadly, that's already happened: we have been snowed under by tens of millions of dollars given through corporate PACs and "bundling" of individual contributions from corporate pay-rollers. The Court's decision is far, far more dangerous to U.S. democracy. Think: Manchurian candidates
Dr. Bill Deagle - Financial Armageddon 2010
Record number of young Americans jobless CHICAGO (Reuters) - The U.S. economic recession has taken a particularly heavy toll on young Americans, with a record one out five black men aged 20 to 24 neither working nor in school, according to research released on Tuesday. Teenagers have found it significantly harder to get a job since the recession began in late 2007, with black youths and young people from low-income families faring the worst, wrote Andrew Sum of Northeastern University in Boston, a employment researcher commissioned by the Chicago Urban League and the Alternative Schools Network. "Low-income and minority youth, who depended on part-time jobs as a significant stepping stone to future employment, have been forced out of the job market and economically marginalized," Herman Brewer of the Chicago Urban League said in a statement.
Verizon to Cut 13,000 Jobs, Posts Loss By ROGER CHENG Verizon Communications Inc. swung to a fourth-quarter loss as a result of heavy charges, and announced plans to cut 13,000 more jobs as executives cast a downbeat note on the economic recovery. While the New York telecommunications giant's wireless arm remained resilient in the face of lower consumer spending, its legacy wireline segment wasn't so fortunate. Verizon said there haven't been any indications of a pickup in spending on the business side, while the number of new FiOS customers disappointed Wall Street.
Murray Rothbard: The Railroading of the American People (American Economy Lecture #2)
Foreclosure relief program riddled with flaws Latest effort to save homes having only limited impact, faces challenges By John W. Schoen Millions of Americans who are struggling to save their homes from foreclosure are trapped in a labyrinth of disappointment and misinformation created by the very institutions they've been told are trying to help them. Ten months into the government's third program in two years to stop a record wave of foreclosures, homeowners, housing counselors, consumer advocates and attorneys working with borrowers report that the latest effort is falling far short of its goal. In many cases, lenders are moving to foreclose even after homeowners get approved for loan modification, housing counselors and attorneys say.
GM to build electric motors in Maryland Betting that hybrid and electric vehicles will play a growing role on American highways, General Motors is expected to announce Tuesday a $246 million investment to add production of electric motors at its White Marsh, Md., manufacturing plant. The decision reflects confidence at GM and other automakers that the "electrification" of the U.S. fleet is not far away, with GM officials likening the importance of electric-motor technology to that of engines in gasoline cars.
General Motors says it has agreed to sell Saab to Dutch carmaker Spyker By: TOBY STERLING AP AMSTERDAM - General Motors Co. said Tuesday it has reached an agreement to sell its struggling Saab Automobile arm to the small Dutch luxury carmaker Spyker Cars NV. GM has not specified terms of the deal, but a Wall Street Journal report citing anonymous sources says the sale price is roughly $74 million, and GM will retain preferred shares in Saab worth $326 million. As part of the deal, the Swedish government will guarantee a euro400 million ($566 million) loan from the European Investment Bank to Spyker, the Journal reported.
After Three Months, Only 35 Subscriptions for Newsday's Web Site Web site redesign and relaunch cost the Dolans $4 million In late October, Newsday, the Long Island daily that the Dolans bought for $650 million, put its web site, newsday.com, behind a pay wall. The paper was one of the first non-business newspapers to take the plunge by putting up a pay wall, so in media circles it has been followed with interest. Could its fate be a sign of what others, including The New York Times, might expect? So, three months later, how many people have signed up to pay $5 a week, or $260 a year, to get unfettered access to newsday.com? The answer: 35 people. As in fewer than three dozen. As in a decent-sized elementary-school class.
The Dark Side of Inspiration: Avatar’s Suicide Hotline In 1977, I stood up and cheered along with my fellow moviegoers, as Luke Skywalker destroyed the Death Star in that summer’s visionary blockbuster Star Wars. Our joyful reaction was involuntary. And I remember how energetic I felt following the movie when we stepped out of the dark theater into the bright sunshine: infused with youthful energy and hope for all the things I would do in my life. Many viewers of this year’s blockbuster Avatar are experiencing the opposite response to the film – that is, entering the darkness as they exit the theater – a response that now has Avatar suicide hotlines and depression forums set up worldwide to support them. People are looking around at their world, our world, and struggling with feelings of depression and hopelessness, including suicidal thoughts. They long for the beauty of Pandora, the film’s utopian world, and – importantly – they feel that attaining that world in this one is impossible.
Oliver Stone: bankers helped Hitler Oscar-winning director adds to storm he kicked up earlier this month over his upcoming TV documentary, The Secret History of the United States Adolf Hitler was aided in his rise to power by western bankers who appreciated his tough line on communist agitators and worker power, Oliver Stone told reporters in Bangkok yesterday. Following on from the comments he made to TV critics in Pasadena earlier this month about his upcoming 10-hour TV documentary on The Secret History of the United States, the film-maker said the German dictator had seduced the nation's military industrial complex with his ambitious promises. In the Thai capital to deliver a lecture to high-school students on the role of film in peace-building, Stone said: "Hitler is a monster. There is no question. I have no empathy for Hitler at all. He was a crazy psychopath.
Murray Rothbard: The Civil War and Its Legacy (American Economy Lecture #1)
With Apple Tablet, Print Media Hope for a Payday by Brad Stone and Stephanie Clifford With the widely anticipated introduction of a tablet computer at an event here on Wednesday morning, Apple may be giving the media industry a kind of time machine - a chance to undo mistakes of the past. Almost all media companies have run aground in the Internet Age as they gave away their print and video content on the Web and watched paying customers drift away as a result. People who have seen the tablet say Apple will market it not just as a way to read news, books and other material, but also a way for companies to charge for all that content. By marrying its famously slick software and slender designs with the iTunes payment system, Apple could help create a way for media companies to alter the economics and consumer attitudes of the digital era.
1983 Apple Event Bill Gates and Steve Jobs
Internet companies voice alarm over Italian law By Daniel Flynn Draft law alarms Internet companies and civil groups Internet companies and civil liberty groups have voiced alarm over a proposed Italian law which would make online service providers responsible for their audiovisual content and copyright infringements by users. The draft, due to be approved next month, would make Internet Service Providers (ISPs) like Fastweb and Telecom Italia, and Web sites like Google's YouTube, responsible for monitoring TV content on their pages, industry experts say.
Pentagon Report Calls for Office of ‘Strategic Deception’ By Noah Shachtman The Defense Department needs to get better at lying and fooling people about its intentions. That’s the conclusion from an influential Pentagon panel, the Defense Science Board (DSB), which recommends that the military and intelligence communities join in a new agency devoted to “strategic surprise/deception.” Tricking battlefield opponents has been a part of war since guys started beating each other with bones and sticks. But these days, such moves are harder to pull off, the DSB notes in a January report (.pdf) first unearthed by InsideDefense.com. “In an era of ubiquitous information access, anonymous leaks and public demands for transparency, deception operations are extraordinarily difficult. Nevertheless, successful strategic deception has in the past provided the United States with significant advantages that translated into operational and tactical success. Successful deception also minimizes U.S. vulnerabilities, while simultaneously setting conditions to surprise adversaries.”
US not ready to cope with biological terror attack, report warns Obama administration lax in preparing measures to protect large numbers of Americans at risk, says commission Barack Obama is planning to announce new proposals to respond to any bioterrorism attack after a government commission today warned that the US was ill-prepared for such an event. The commission on the prevention of weapons of mass destruction proliferation, set up by Congress to monitor the government's readiness for a nuclear or biological attack, said the Obama administration had been lax in preparing measures to protect the large numbers of Americans at risk from the release of deadly viruses or bacteria.
Gen. Petraeus: Afghan War Will Take Longer Than Iraq CENTCOM Commander Hasn't Heard Any Talk of a Timetable In an in-depth interview with the Times of London gearing up for the London Conference on Afghanistan later this week, CENTCOM commander General David Petraeus again cautioned that the war was going to "get harder before it gets easier." Likening the January 2007 surge in Iraq to President Obama's December escalation, the general said he thought that the war in Afghanistan was going to take longer than the war in Iraq.
Mediterranean Union - Barcelona Process to have Barcelona meeting today The Barcelona Process was officially launched in Barcelona, Spain on November 27-28, 1995 by Javier Solana. Fifteen EU nations and twelve North African and Middle East nations (Libya excluded) participated. Javier Solana was given sole credit for the diplomatic accomplishment. The USA was denied participant status at that meeting and was given "observer status only." The goals were to:
Battle religious fundamentalism, world-wide.
Favorable trading terms for the participants leading to a Mediterranean Free Trade Zone by 2010.
Get the USA out of the Mediterranean and/or greatly reduce its presence there.
Behind the scenes, Javier Solana and friends have been intensely busy with various hidden manifestations and d/b/a's (doing business as) of the Barcelona Process entity. It has been variously known as:
European Neighbourhood Policy
Union for the Mediterranean (UfM)
MFTZ (Mediterranean Free Trade Zone)
Euro-Mediterranean Free Trade Zone
EU-MEFTA (European Union - Mediterranean Free Trade Association)
Solana director of Spanish Security Strategy -- Just in time for Spanish EU/WEU joint presidencies! Well, maybe Acciona, the ESADE Business School, etc. aren't enough. Looks like our very good friend is back -- this time as director of the Spanish Security Strategy. This sounds so very much like his carefully crafted European Security Strategy. More important, this new appointment for Javier Solana comes JUST IN TIME for the Spanish EU - WEU joint presidencies to begin in just a few days. His alter ego, Cristina Gallach has been named the spokesperson for those Spanish presidencies. The next six months should be very interesting, perhaps disturbing, and most revealing. In addition to the link on the headline, here's another place to practice your Spanish by reading about it in that language from very current news.
Roubini Never More Pessimistic on Euro Area, Calls Spain a Risk By Simon Kennedy and Thomas R. Keene New York University Professor Nouriel Roubini said he’s never been more pessimistic about the future of European monetary union, saying Spain poses a looming threat to the euro region holding together. “Down the line, not this year or two years from now, we could have a breakup of the monetary union,” Roubini said in a Bloomberg Radio interview from the World Economic Forum’s annual meeting in Davos, Switzerland. “It’s a rising risk.”
Fears of Greek debt crisis ease as investors rush for bonds Concerns over a possible debt crisis in Greece eased yesterday after huge demand for the Greek Government’s first bond issue of this year. Greece had planned to sell €5 billion (£4.4 billion) of new five-year bonds to investors, but, after about €25 billion of demand emerged, it decided to issue €8 billion. The auction had been seen as a key test of investors’ appetite for Greek government debt and was heralded as a triumph by the authorities in Athens. “There was a lot of interest,” Spyros Papanikolaou, head of Greece’s public debt management agency, said. “This proves the trust [that] investors have in Greece’s economy. Greece [has] proved [that] it can raise the funds it needs for 2010 without a problem.”
Greece’s Near Miss, Spending Reform, Volatility Returns, The New Oil Frontier and More! by Addison Wiggin & Ian Mathias We can hear the sigh of relief all the way across the Atlantic. The euro survived its gravest test since inception early this morning. Greece, nation of olive groves and ancient myths, successfully issued about $13 billion in debt at auction. In a foreshadowing event for all nations with heavy debt loads, the Greek treasury will have to pay 6.2% interest on the notes -- half a point higher than when the auction began and nearly three points higher than the German equivalent.
Davos Too Big to Fail as Bankers Recoil in Political Backlash For a sign of how the mood has changed at the World Economic Forum in Davos this week, consider the speakers at an invitation-only client lunch hosted by Paul Calello, who runs Credit Suisse Group AG’s investment bank. Last year’s panel on “Financial Market Dynamics” featured senior executives from financial companies JPMorgan Chase & Co., Blackstone Group LP, hedge fund Eton Park Capital Management and NYSE Euronext. This year clients will learn about “Leadership, Responsibility and the Recovery of the Financial System” from U.K. and Swiss regulators and Laura D’Andrea Tyson, an economics professor who has served in the U.S. government.
DAVOS-Head of Davos security dead, police suspect suicide DAVOS, Jan 26 (Reuters) - The police commander heading security at the World Economic Forum in Switzerland was found dead on Tuesday, local authorities said, adding that his death appeared to be suicide.
Koreas exchange fire near sea border, markets drop North and South Korea on Wednesday exchanged what appeared to be artillery fire near a disputed sea border with the South off the west coast of the peninsula, Yonhap news agency reported government officials as saying. South Korea's presidential Blue House said both sides were firing into the air and there were no casualties, according to Yonhap. It has called a meeting of top national security officials. The rare exchange of fire rattled markets, with Seoul's main stock exchange extending losses and the won wiping out early gains against the dollar.
Two Koreas trade fire, spooks markets By Jack Kim SEOUL, Jan 27 (Reuters) - North and South Korea exchanged artillery fire near their disputed sea border on Wednesday, the second time in three months the rivals have clashed and briefly sending prices down on jittery Seoul financial markets. Analysts doubted the latest clash would escalate and saw it more as an attempt by Pyongyang to stress the instability on the Korean peninsula and press home its demand for a peace deal that would open the way to international aid for its ruined economy.
North Korea may be readying missile test SEOUL (Reuters) - North Korea has declared a no-sail zone off its west coast, indicating it may be readying to test-launch missiles in the area, South Korean news broadcaster YTN on Tuesday quoted a military official as saying. The area is near a contested sea border with the South that was the site of a brief naval clash in November between the states, technically still at war, that left a South Korean ship pockmarked with bullet holes and a North Korean vessel limping back to port in flames. About a month before that clash, North Korea rattled regional security by firing short-range missiles off its east coast.
Dubai Helps Iran Evade Sanctions as Smugglers Ignore U.S. Laws On a sweltering mid-October evening, horns blare as pickup trucks at Dubai Creek wharf jockey to deliver cargo bound for Iran. Televisions, cartons of toothpaste, car parts, refrigerators and DVD players stretch for about a mile on the dock along the murky waterway that snakes to the Persian Gulf.
In the Next Industrial Revolution, Atoms Are the New Bits By Chris Anderson The door of a dry-cleaner-size storefront in an industrial park in Wareham, Massachusetts, an hour south of Boston, might not look like a portal to the future of American manufacturing, but it is. This is the headquarters of Local Motors, the first open source car company to reach production. Step inside and the office reveals itself as a mind-blowing example of the power of micro-factories. [note- he used an iMac to design the chip]
Americans' love affair with motorhomes By Kevin Connolly It was the Germans who invented the motor car and steered us all towards the boundless possibilities and endless problems of the age of internal combustion. But it took the genius of America to recognise that with a little extra hammering and spannering the motor car could readily be converted into the motor home. I am told it was a matter of days - weeks at most - before someone had converted the first horseless buggy into the first recreational vehicle (RV). It was a clumsy-looking behemoth whose passengers rode - very slowly - high above the road surface on what was essentially a four-wheeled roof garden, complete with balcony. But practicality was not the point. The point was Americans had brought their restless love of the open road and their romantic affinity for far horizons into the motor age.
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Tues 01.26.2010
The Scary Budget Numbers By David Walker The recession and attendant financial shock appear to be easing as I write this. But in Washington, financial imprudence is part of the fabric of government. You can see that in a single document that gets updated every year: the US budget. In putting together the budget, the president and Congress set our national priorities and allocate resources among them. The results have been pretty consistent. Over the forty years ending in 2008, revenues have averaged about 18.3 percent of our economy and spending has averaged over 20.6 percent, resulting in an average deficit of about 2.4 percent.
Marc Faber on the debt threat
The push for a debt commission The Senate on Tuesday is likely to vote on a proposal that would create a bipartisan commission charged with reining in the country's debt. The goal: Create a framework for forcing Congress to make some tough choices -- specifically tax increases and spending cuts. In a surprise move Saturday, President Obama issued his support for the fiscal commission proposal, which was introduced as an amendment to legislation that would raise the country's legal debt limit by $1.9 trillion.
We Are All Speculators Now n·vest (n-vst) v.in·vest·ed, in·vest·ing, in·vests v.tr.1. To commit (money or capital) in order to gain a financial return
When the Keynesian fractional reserve fiat banking model was sold to the public, the idea was that the citizens would accumulate wealth and prosper, furthering wealth and prosperity among the many and building the nation from the ground up. Using hindsight, we now know it was all a fraud. The American Dream was sold on the idea that a citizen could work hard and save. You could "invest" your savings and earn a rate of return greater than the increase in the cost of living, thus increasing your real wealth over time with the magic of compound interest. That was the incentive to save.
A Simpleton’s Trade: Sell US Stocks and Buy Gold Bill Bonner The yen is falling. It's down 5% against the dollar since November. Investors are finally noticing. With a deficit of 50% of GDP, the Japanese government walks where angels fear to tread. Americans aren't far behind. To make a long story short, our money is on the angels. Only an economist would dare to look 10 years ahead. Only a fool would put money on it. Today, we do both. But our new "Trade of the Decade," is not so much a look into the future as it is a look at the past.
Gold is in long term bull market The timing for an intermediate low for gold has arrived. January 21st is day number thirty-three in the originally anticipated window of 31 to 37 trading days from the December 3rd high. The magnitude of the past two day’s action (down $53) likely did a good job of shaking out many long speculators. If prices stabilize and then turn higher in the coming weeks we will have enough participants back on the sidelines to support the next rally. We continue to categorize the break as merely a correction in what will be viewed as a pause in the longer term bull market.
Expect gold to gain more than 30% this year Gold ended 2009 on a disappointing note as a sharp correction resulted in by far the worst December performance since the bull market began in 2001. The yellow metal, nevertheless, posted its ninth consecutive higher year-end close and enjoyed its third best year out of the past nine by appreciating 25 per cent. However, what transpired in December deserves closer examination.
Bernanke, Freddie & Fannie, tax cuts and student loans
Next decade is all for gold In the coming decade, nobody can stop the rise of gold, that is what the opinion of Owen Hegarty, an Australian expert in mineral resources. He told a Chinese news agency that gold prices are expected to remain on an upward track in a decade to come despite recent fluctuations. For the foreseeable future, or at least in this decade, all reasons to buy gold are positive, he said.
Gold advances as dollar dips Gold prices recovered in Asian trade Monday as the dollar dropped, reviving demand for the precious metal as an alternative asset. Spot gold was seen trading at $1,099.81 an ounce at 12.00 noon Singapore time while February delivery in New York was at $1,099.20 an ounce at the same time.
Gold unlikely to fall below $1000: Jeff Nichols Gold gained over 24% in 2009 recording a high of $1226 in December which led analysts to predict the yellow metal to zoom to $1500 and beyond in 2010. But dollar strength and tight liquidity conditions due to monetary policies announced in China and banking restrictions on risk taking by US President Obama have cast shadows in the commodities sector.
Chinese Dragon Rattles Commodities, Gold, Brazil Although the US remains the world's #1 economy it's increasingly feeling the heat of a Chinese dragon, breathing down its neck. At the beginning of the twenty-first century, the US-economy was eight-times larger than China's - a decade later the figure was down to four-times. China's $4.9-trillion economy has already passed Germany's to become the world's third largest, and is on course to overtake #2 Japan this year. China has emerged to become the world's largest exporter, shipping $1.2-trillion of goods abroad last year, and overtaking Germany, which held the title of world's biggest exporter since 2002. Factories employing low-paid workers to assemble iPods, computers, shoes, and toys are leading the boom.
For 9 years, no stopping gold Gold has gained some new status in 2009 with more and more investors putting their money on gold. In 2009, gold price surged 24.6% to close at $1,096 per ounce after breaking through the $1,000 psychological resistance level. 2009 marked the 9th uninterrupted gain in gold price. Prior to that gold price fell for 20 years. Between 2004-2008, 60% of the gold came from mines, 28% from recycling of gold from scrap and another 12% from sales by central banks.
U.S. gold ends higher, but investors cautious U.S. gold futures ended higher Monday on a combination of a dollar drop, crude oil gains and renewed physical buying after last week's sharp losses. Gold for February delivery GCG0 settled up $6 at $1,095.70 an ounce on the COMEX division of the New York Mercantile Exchange.
US Mint Silver Eagle Sales Top 3 Million, Best Ever January US Mint American Silver Eagle sales have already scored their best ever January. Who would have thought? After all, there is still a full week left in the month. On top of that, the bullion coins are rationed, they were unavailable for seven days, and U.S. silver futures tumbled 8.1 percent last week (6.7 percent in London). Yet, January 2010 is now in the history books. It is the best starting month of a year for the series that dates back to 1986. Despite all the aforementioned obstacles, authorized buyers scooped up 3,090,500 Silver Eagles from the United States Mint as of Friday, Jan. 22.
Art Cashin: Bank-Bashing May Cause Bear Market US markets rose Monday, after logging the worst week since March 2009. What's driving today's stock action and what's next? Art Cashin, director of floor operations at UBS Financial Services, offered CNBC his stock market insights. Cashin said the main factor lifting markets is "the Bernanke Bounce": optimism arising from hopes that Ben Bernanke is closer to winning a second term as Federal Reserve chairman.
Legalize Competing Currencies Dr. Ron Paul, U.S. Congressman Much has been made recently about the supposed economic recovery. A few blips in a few statistics and many believe our troubles are all over. Of course, they have to redefine recovery as “jobless” to account for the lack of improvement on Main Street. But the banks have money, Wall Street is chugging along, and the administration would like to get on with other agendae. They have even set up a commission to investigate the crisis as if it were all in the past.
Dollar May Resume Fall, JPM Says: Technical Analysis The dollar may resume its long-term decline because it failed to break through key resistance levels even after a two-month rally, JPMorgan Chase & Co. said. The Dollar Index, which InterContinental Exchange Inc. uses to gauge the strength of the greenback against a basket of six currencies, needs to break through 79.02, a 38.2 percent retracement of its decline to a 15-month low of 74.17 in November from 86.871 in April, to “seriously question” the currency’s long-term slide, wrote Niall O’Connor, a technical strategist in New York.
Dollar Value Sent to the Corn Fields Maybe this is the next leg down. Maybe it isn’t. In either case, we don’t want to be holding a lot of stocks and real estate when we find out. If we’re right about the depression/deleveraging… And if we’re right about the bear market… You’re probably going to see stocks lose another half of their value. Remember, a correction is equal and opposite to the deception that preceded it. That deception is almost a hundred years old…and has added trillions of (largely fictitious) dollars to the nation’s wealth. An Everest of mistakes has been made. Can all this deception be corrected in 2 years…with the feds fighting every inch of the way? Can problems caused by too much credit be cured by more credit? Can a generation’s worth of mistakes be hidden under the carpet of bailouts? Can the boondoggles be washed away by more boondoggles?
Dollar slides as stocks gain Orders for Greek bonds support the euro The U.S. dollar slumped versus the euro on Monday, though the buck was mixed versus other major counterparts, as fiscally troubled Greece found strong demand for its five-year syndicated bond issue. The move lower retraced some of its advance from last week, when several factors revived investors' desire to shift away from riskier assets, including stocks, toward the perceived relative safety of the dollar.
Insights from the Wall Street Journal I spend a lot of time on these pages explaining why I see more hard times ahead. Aside from the fact that I believe what I write -- unlike many of those who've decided that gloom-and-doom is the new black (and a good way to make a buck) -- I genuinely detest the shills, charlatans, and pseudointellectuals who permeate Washington, Wall Street, and segments of the mainstream media, and who've made it their mission to mislead people about the way things are.
Stock market on alert over commercial real-estate exposures FDIC: commercial loans losses behind majority of bank failures so far this year U.S. stock-market analysts are pointing to a growing divide between banks, with regional players especially vulnerable to blow-ups in commercial real estate, as illustrated by the latest round of bank failures. Regulators on Friday shut down five more banks in New Mexico, Oregon, Washington, Florida and Missouri, bringing to nine the count of U.S. bank failures so far this year.
Fed bashers: Washington's odd couple The anti-fed stances of Ron Paul (left) and Bernie Sanders resonate with many on Main Street . "These are vulgar, obscene people who, in many cases, I really do believe, have serious emotional problems. In this country we have people who have drug problems, people who have alcohol problems." Just who are the addicts that Bernie Sanders, his white hair mussed, is getting all worked up about on this frigid Washington afternoon? "Compulsive moneymakers," he says. And Sanders, Vermont's independent junior senator and a onetime college radical who still pockets an authentic 1920 EUGENE DEBS FOR PRESIDENT key chain, is just getting started.
Where will the next crisis hit? Commentary: This market is filled with land mines It's official: The worst of the financial crisis is over. That's what the World Bank said in its 2009 annual report, released Wednesday. But that doesn't mean it's completely behind us. The after-shocks of the subprime meltdown and the collapse of Lehman Brothers in September 2008 continue to ripple through the financial system and the global economy. Two weeks ago, I predicted that there would be a "financial mini-crisis or two that ignites investors' fears" in 2010. It would be "worse than Dubai, but nowhere near as bad as the fall of Lehman," I wrote. Read Six big predictions for 2010.
Economic Black Hole: 20 Reasons Why The U.S. Economy Is Dying And Is Simply Not Going To Recover Even though the U.S. financial system nearly experienced a total meltdown in late 2008, the truth is that most Americans simply have no idea what is happening to the U.S. economy. Most people seem to think that the nasty little recession that we have just been through is almost over and that we will be experiencing another time of economic growth and prosperity very shortly. But this time around that is not the case. The reality is that we are being sucked into an economic black hole from which the U.S. economy will never fully recover.
Bonds & Zombies that ate America Two weeks ago we noted that the biggest factor which was holding down the yields in US and European bond markets was the price-insensitive buying by three investors groups: Asian central banks, Western pensions and insurance funds and, most importantly, Japanese private investors. This paper will explore in greater detail the bizarre behaviour of these seemingly brain-dead "zombie investors", who gobble up whatever paper the US government may throw towards them, regardless of value or price.
Obama targets middle class with new plan President Obama trained his sights on the sagging economy Monday, outlining a series of proposals to ease the burden on middle-class families, such as expanding the child tax credit and easing student loan bills, that will be included in his second federal budget next week. A week after Mr. Obama took on some of Wall Street's biggest players, Monday's announcement is another preview of the more populist tone expected to dominate Mr. Obama's State of the Union address to Congress on Wednesday. Aides say the president will focus in his speech on ways to restore economic security for struggling families at a time of 10 percent national unemployment.
Debt panel called 'easy way out' Obama-backed commission faces vote amid criticisms A federal debt commission backed by President Obama and a bipartisan group of Senate budget hawks faces a long-shot bid in a vote Tuesday amid concern that it would raise taxes and cut federal programs. Advocates, including the top Democrat and top Republican on the Budget Committee, argue that Congress has been fiscally irresponsible as the nation's debt hovers about $12 trillion and the annual deficit reached a record $1.4 trillion last year.
Obama rolls out initiatives to help middle-class families Promising repeatedly to "keep fighting" for average Americans, President Obama rolled out new proposals Monday to help struggling middle-class families, setting the stage for his first State of the Union address Wednesday night. "Unfortunately, the middle class has been under assault for a long time," Obama told a gathering of his Task Force on Middle Class Families at the Eisenhower Executive Office Building adjacent to the White House. "Too many Americans have known their own painful recessions long before any economist declared that there was a recession."
Paul on Future of Fed Rep. Paul Kanjorski (D-PA) and Rep. Ron Paul (R-TX) share their opposing views of the Fed and Chairman Ben Bernanke.
Obama to propose freeze on government spending Under mounting pressure to rein in mammoth budget deficits, President Obama will propose in his State of the Union address a three-year freeze on federal spending that is not related to national security, a concession to public concern about government spending that could dramatically curtail Obama's legislative ambitions. The freeze would take effect in October and limit the overall budget for agencies other than the military, veterans affairs, homeland security and certain international programs to $447 billion a year for the remainder of Obama's first term, senior administration officials said Monday, imposing sharp limits on his ability to begin initiatives for education, the environment and other areas of domestic policy.
Obama Proposes New Financial Regulations, Declines to Tell Administration Financial Officials What They Mean Last week, President Obama announced a major new proposal for regulating financial sector activities. The proposal, which is expected to significantly alter the way large financial institutions like Goldman Sachs do business, would... uh... it would... well, as Clusterstock's John Carney reports, the administration hasn't quite gotten around to figuring that out yet: The Treasury Department has been scrambling to figure out what the new proposals unveiled by Barack Obama last week limiting the size and scope of banks. The proposals came out of the White House rather than the Treasury Department. Inside of Treasury there is the feeling that the basis of the plan came from “political people” instead of “economic policy experts,” according to a person familiar with the matter.
Market Crash if US Policies Continue: Dick Bove Some worry Washington actions may create a new bear market. But Dick Bove, financial strategist at Rochdale Securities, fears the worst: He warns that America's government may instigate a full-fledged market crash. Bove offered CNBC his insights — and named bank stocks that are still strong investments. "We all agree the market is driven by money. If the money supply increases, the money gets into the market and stock prices go up," Bove noted. "But last week, what we saw was a shot at both of the areas where money creation occurs in the United States."
Obama Seeks Freeze on Many Domestic Programs President Obama will call for a three-year freeze in spending on many domestic programs, and for increases no greater than inflation after that, an initiative intended to signal his seriousness about cutting the budget deficit, administration officials said Monday. The officials said the proposal would be a major component both of Mr. Obama’s State of the Union address on Wednesday and of the budget he will send to Congress on Monday for the fiscal year that begins in October.
Chief TARP investigator to open two AIG probes The special inspector general for the government's $700 billion Wall Street rescue plan is opening a pair of probes into the government's rescue of American International Group Inc., including efforts to slow public disclosure of all of the terms of the deal. Special Inspector General Neil Barofsky disclosed the existence of the investigations in testimony prepared for a Wednesday hearing before the House Committee on Oversight and Government Reform. Barofsky, who can conduct criminal and civil investigations, said he is investigating whether there was "any misconduct relating to the disclosure or lack thereof" surrounding the November 2008 transactions to pay off the insurer's counterparties.
SEC mulled national security status for AIG details U.S. securities regulators originally treated the New York Federal Reserve's bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security, according to emails obtained by Reuters. The request to keep the details secret were made by the New York Federal Reserve -- a regulator that helped orchestrate the bailout -- and by the giant insurer itself, according to the e-mails.
Not your father's FDIC
Obama sees Geithner, Summers staying on President Barack Obama on Monday said he expects Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers to stay in their jobs, and called them "terrific advisers." "You know, we haven't had the conversation because my presumption is that they are staying. There's a lot of 'hue and cry' in Washington because this is what happens," Obama said in an interview with ABC News. Some liberal supporters of Obama have criticized Geithner and Summers as being too cozy with Wall Street. And it raised some eyebrows when former Federal Reserve Chairman Paul Volcker was the one standing at the president's side when he announced new bank rules.
If Geithner Goes, The Top Two Contenders Tim Geithner will soon find himself on the hot seat again, as he’s summoned to Congress. Considering the mood in DC, could his job be on the line? The latest storm of controversy stems from Geithner’s role involving AIG payments to banks when he headed the New York Federal Reserve. Specifically, lawmakers want to hear about his decision to pay banks in full to retire $62.1 billion in credit default swaps sold by AIG, and whether Geither disclosed information about those payments properly.
Bank tax 'strictly political,' but popular President Barack Obama's proposed new tax on large financial institutions has a good chance of passing Congress, despite objections that it is unfair and could make credit even harder to get. The president wants to slap a tax on financial institutions with more than $50 billion in assets as a way to ensure that taxpayers recover “every single dime” of the federal government's $700 billion financial rescue program.
Bernanke likely to win second term as Fed chief: analysts A firestorm of doubt that erupted late last week over whether lawmakers' support for Federal Reserve Chairman Ben Bernanke was eroding has been all but extinguished almost as quickly, with key members of the Senate saying it looked like he has the votes to be confirmed for a second four-year term. "When it comes to Bernanke, the adults have taken over," said Greg Valliere, chief policy strategist at Potomac Research group. Bernanke could get up to 70 votes in the Senate, Valliere said, a number that would be comfortably above the 60 votes that he needs to overcome determined opposition.
A bailout for Bernanke Republicans find something to be in favor of Ben Bernanke's future as the leader of the Federal Reserve was in doubt late last week, but he's been bailed out by a strange coalition: The White House and the Senate Republican leadership. On Friday, it appeared that Bernanke's confirmation to a second term as Fed chairman was in trouble, with several liberal Democrats declaring their opposition. Senate Democratic leader Harry Reid was also wavering.
Bank of China's Ambiguous Plans The first concrete plans from a major Chinese bank to raise new capital have yielded more questions than answers. Bank of China wants to sell up to $5.9 billion in convertible bonds, and is considering—eventually—selling stock equivalent to 20% of its existing share capital, either in Shanghai or Hong Kong. Investors have been worried about the coming capital issuance; the bank's Hong Kong-listed stock is down 23% since mid-November. Of all the top Chinese banks, BOC was the most zealous in pushing loans out last year, with its lending book growing 38%.
China May Consider One-Time Yuan Gain, Goldman's O'Neill Says China will probably let its currency appreciate by at least 5 percent in a one-time move and raise interest rates to cool the economy and curb inflationary pressures, Goldman Sachs Group Inc. Chief Economist Jim O'Neill said. The Chinese government may allow the yuan to have "a bigger one-off move than people talk about, at least 5 percent, maybe more," O'Neill said in an interview today at the London School of Economics. "They may also consider having a wide band to let it move more frequently on the daily basis to stop speculative players."
Tell Senate “No” on Bernanke Cloture The Administration put on a full court press this weekend to shore up Bernanke’s confirmation vote, which was looking increasingly doubtful as of Friday. Over the weekend, Democratic and Republican leaders in the Senate said they were confident that Bernanke would be confirmed. The media took up the call, with stories appearing in virtually every MSM outlet blaring that Bernanke was in. But how seriously should we take this declaration of victory? Contrary to the efforts to present the confirmation vote as sealed, it is not in the bag: Of senators who made statements or were contacted by Bloomberg yesterday and today, 27 said they would vote for or were leaning in favor of Bernanke, while 16 were opposed or leaning against him, and 30 were undecided.
Economy Flounders, Despite the Stimulus by Ron Paul A year after a nearly $800 billion stimulus package was passed, the U.S. economy still finds itself mired in mediocrity. Economic growth is stagnant, unemployment remains higher than almost any time since the Great Depression and millions of Americans are upset that trillions of taxpayer dollars have been committed to numerous government bailout programs with no improvement of the economy within sight. They question, rightfully, where this money is going and why it hasn't been as helpful as the government has claimed.
Obama Would 'Rather Be Really Good One-Term President' Obama Tells Diane Sawyer That Health Care Bill Had Political Cost President Obama, buffeted by criticism of his massive health care reform bill and election setbacks, said today he remained determined to tackle health care and other big problems despite the political dangers to his presidency. "I'd rather be a really good one-term president than a mediocre two-term president," he told ABC's "World News" anchor Diane Sawyer in an exclusive interview today.
Obama: 'I'd Rather Be Good One-Term President Than Mediocre Two-Termer' - Brit Hume: Really?
Bond Rally on Borrowed Time as Options Foresee Tightening January's surprise rally in Treasuries may prove fleeting, as options traders bet on bigger price swings in bonds and waning volatility in stocks for the first time since 2006. Barclays Capital indexes show interest-rate volatility rose from a six-month low in November on speculation borrowing costs will increase as the improving economy allows the Federal Reserve to remove the unprecedented cash it pumped into the financial system. At the same time, confidence in the outlook for profits helped push the Chicago Board Options Exchange Volatility Index to an almost two-year low this month.
Treasuries Fall, Yields Rise From One-Month Low, Before GDP Treasuries fell, pushing yields up from a one-month low, on speculation a government report this week will show the U.S. economy expanded in the last quarter of 2009 at the fastest pace in almost four years. Government securities also dropped as traders bet Federal Reserve Chairman Ben S. Bernanke will win Senate confirmation for a second term this week to pursue his policies for spurring the U.S. economy. The Treasury Department prepared to auction a record-tying $118 billion of two-, five-and seven-year notes in three sales starting tomorrow.
Wall Street Firms Cut Pay, ‘Buckling’ to Washington Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.’s investment bank slashed their compensation in the fourth quarter, responding to political pressure that will probably persist as details of bonuses for their top executives emerge in coming weeks. The three Wall Street firms set aside $39.9 billion for pay in 2009, below the 2007 record of $44.7 billion. The total fell short of the $46.1 billion five analysts expected this month and is almost $10 billion less than what some analysts estimated in October.
Nomura’s Sheard Says China to Pick Up Slack of U.S. Consumer Developing countries led by China and India will supplant the American consumer as the source of “natural growth” for the global economy, according to Paul Sheard of Nomura Securities International Inc. There will be “less exuberant and robust consumption than we had in the past few years” in the U.S. because the American household will continue to “tighten its belt,” New-York based Sheard, global chief economist at Nomura, said in a Bloomberg Television interview in Hong Kong today. “There are other parts of the world, though, that can take up some of that slack,” such as China and India, he said.
Chief of Staff Draws Fire From Left as Obama Falters President Barack Obama's liberal backers have a long list of grievances. The Guantanamo Bay prison is still open. Health care hasn't been transformed. And Wall Street banks are still paying huge bonuses. But they are directing their anger less at Mr. Obama than at the man who works down the hall from him. Chief of Staff Rahm Emanuel, they say, is the prime obstacle to the changes they thought Mr. Obama's election would bring.
We' The People By: CAPTAINHOOK That’s quite the title, no? But without making it even longer, because it covers a vast and complicated subject, it encapsulates what I think will be the most important event that could become apparent to the masses this coming year, which means process would accelerate to a more recognizable end. Let me explain what I mean now that all this confusing stuff is up in the air and in need of some grounding; like our currencies. In the first place one needs to understand the difference between currency and money.
Stiglitz pinpoints 'moral' core of crisis By Henry CK Liu Nobel Laureate economist Joseph Stiglitz, a Roosevelt Institute senior fellow and its chief economist, said on CNBC on January 19 that the US is infested with "ersatz capitalism", a flawed, unfair system that socializes economic losses and privatizes the gains. He decries the "moral depravity" that has led to the current financial crisis. Stiglitz served in the Bill Clinton administration as chairman of the Council of Economic Advisers (1995-97) before moving to the World Bank as its chief economist, where he developed a Pauline epiphany against the very neo-liberalism he helped promote in the form of "the Third Way", to criticize belatedly but rightly and vocally policies of the International Monetary Fund (IMF).
Peter Schiff: Barack Obama’s Wall Street Reforms Are Doomed To Failure . . . . Once again, President Obama completely missed the mark on the causes of and solutions to the financial crisis. In his speech this morning, the President outlined a major initiative to increase regulation of banks. He claims the financial crisis was caused by reckless speculation by greedy bankers in search of quick profits. What he fails to acknowledge is that this behavior was the direct result of the cheap credit supplied by the Federal Reserve and the moral hazard supplied by government regulations and subsidies.
Bill Gates Supports Bank Fees, Expects Tax Increases Gates on the U.S. Economy, the Importance of Innovation and Why He Joined Twitter Billionaire businessman and philanthropist Bill Gates said he isn't surprised by the sluggish economic recovery, adding that tax increases are needed to balance the federal budget. "The budget is very, very out of balance," Gates said on"Good Morning America" today. "Without changes in taxes or entitlement policies, it won't get back into balance. Taxes are going to have to go up and entitlements are going to have to be moderated."
1,336 mutual funds cease to exist in 2009 The mutual fund universe continues to get smaller. Activia Growth didn't grow enough. Dreyfus Passport is among the departed. HealthShares Cancer lost its long struggle. All told, 1,336 mutual funds — counting each share class separately — were liquidated last year, says fund-tracker Lipper. Counting each individual portfolio, about 425 funds died last year. In 2008, fund managers liquidated 826 funds, or 145 individual portfolios.
No Mortgage, Still Foreclosed? Bank of America Sued for Seizing Wrong Homes In the Last Four Months, Three Homeowners Have Sued Bank of America for Mistakenly Foreclosing on Their Homes Some 2.8 million homeowners faced the threat of foreclosure last year, but it wasn't supposed to happen to Charlie and Maria Cordoso. In 2005, the New Bedford, Mass. couple paid in full -- in cash -- for a house in Springville, Fla., and rented it out with plans eventually to use the home as a retirement getaway. They said they were shocked to learn earlier this month that Bank of America had locked them out and removed their clothing and furniture from the property. "All the love I put in that house -- I fix things up every time I go there," Charlie Cordoso, a construction worker, told ABC affiliate WCVB Boston. "Bank of America or somebody should apologize."
Peter Schiff on CNBC 22 January 2010
Cash Strapped Illinois Accelerates Property Tax Collections In a futile attempt to stay solvent, the state of Illinois has resorted to a trick I have not seen before, accelerating property tax collections. Until this year, property taxes have been collected in two equal installments. This year it's 55% in the first half, 45% in the second half. Here is an Email from "Abundance" describing what has happened. It must be getting bad here in Illinois. I opened up my first tax installment and was surprised to see that it was $300-$350 more than I expected.It turns out that taxes were in fact NOT raised. There was a note that said that "the Illinois Assembly voted to require that 55 percent of annual real estate taxes be collected during the first installment."
Business owners brace for another rough year Do you have any idea if the economy will rebound in 2010? Small business owners don't, and it's the single biggest challenge they face in planning for the year ahead, according to a recent survey by the National Small Business Association. The industry trade group polled 450 small business owners around the country for its year-end report. Economic uncertainty is their biggest challenge, respondents said: 64% called it a threat to the growth and survival of their business. More than 70% said their sales dropped or stayed flat in 2010, with just 22% reporting revenue growth.
What If the Goverment Cuts Its Lifeline for Housing? If the government carries through with its plans, major support for the housing industry could end by April, leaving the sector to fend for itself. That could happen because of two critical decisions: The Federal Reserve plans to stop buying mortgages by the end of March, and the tax credit for home purchases will end with contracts signed by April 30 (buyers have until June 30 to complete their purchases).
The Worst Housing Flip of All Time Back in the height of the bubble, just three short years ago, this plot of land, glass and concrete represented the biggest real estate deal in US history: This morning, we filed it in our bulging “signs of the times” folder… Witness one of the worst housing “flips” of our time: The busted owners of NYC’s Stuyvesant Town and Peter Cooper Village returned the city-within-a-city to their creditors today.
Biggest Real Estate Deal in History Goes Belly-Up On Monday, Tishman Speyer Properties announced its decision to give up ownership of Manhattan's massive Peter Cooper Village (PCV) and Stuyvesant Town housing complexes. As this project, the biggest single-property real estate deal in history, imploded, it became a symbol of an overloaded real estate market bloated on a glut of hype, money and boundless optimism.
Existing Home Sales Plunged 16.7% in December The nearly year-long, positive trend in the U.S. housing sector ended 2009 on a sour note, as existing home sales plunged 16.7% in December to a 5.45 million-unit annualized rate, the National Association of Realtors announced Monday. Sales fell as the federal government's original tax credit program expired. December's existing sales tumble was the largest one-month drop since the NAR started keeping records for this statistic.
Signs Of The Apocalypse: The Return Of The Layoff Layoffs in unrelated industries, even when close together in time, are just that—unrelated. That is until they begin to grow rapidly in number. Three of America’s largest firm announced firings or signaled them during the last week. Wal-Mart cut the deepest, which is frightening because it is the most financially healthy company in the world. In a surprise announcement, the world’s largest retailer said it would cut 10% of its Sam’s Club division, which means nearly 12,000 workers will get axed. The news cannot be good for the staggering retail sector. Christmas was weak, but Wall St. assumed that Wal-Mart was doing as well as if not better than its smaller competitors. The Wal-Mart move will give other retail firms “permission” to take fresh looks at their staff levels without the stigma of announcing firings ahead of other large store chains.
Sad Violins: Philadelphia Orchestra May File for Bankruptcy The recession has undermined the pilings supporting many once-stable organizations, ranging from financial institutions to restaurants to newspaper publishers. Now the economy may claim another victim: The Philadelphia Orchestra. The 110-year old cultural mainstay may declare bankruptcy after ticket sales dwindled this season and its endowment failed to meet its goal, according to the Philadelphia Inquirer.
Sugar Hits 29-Year High Strong demand for sugar catapulted prices above 30 cents a pound in intraday trading to a 29-year high. The tight global supply situation was illustrated by news Monday that Indonesia expected a 530,976-metric-ton production shortfall at the end of April, which will be met largely through imports totaling 500,000 tons. Efforts to import white sugar have been stymied by soaring world prices and a lack of sellers.
Oil rises over $75 on weaker dollar, Wall St gains Oil prices rose to $75 a barrel on Monday as support from a weaker dollar, higher U.S. stocks, and an oil spill in Texas which limited crude oil deliveries to some U.S. refiners. Still, oil prices were still near a one-month low of $74 a barrel after having fallen by almost $10 a barrel over the last two weeks since hitting a 15-month peak of $83.95 on January 11.
900 auto dealers file to appeal shutdown About 900 General Motors and Chrysler dealerships that got the ax as the Detroit giants went through bankruptcy have filed notice that they will appeal their shutdown, according to the American Arbitration Association. The nearly 3,000 dealerships the auto manufacturers scrapped have until Monday to file with the AAA for an independent arbitration of their case. But applications from dealers are still rolling in, so it's hard to tell what the final count will be, said India Johnson, senior vice president of AAA.
Full-strength beer in Colorado convenience stores? A Colorado Springs Republican introduced the first of what is expected to be a full menu of proposals this year to expand liquor sales in Colorado. House Bill 1186, sponsored by Rep. Larry Liston, would let convenience stores of less than 5,000 square feet sell beer with an alcohol content of more than the currently allowed 3.2 percent maximum, just as liquor stores can do. The bill does not allow sales of wine or spirits at the stores and does not touch on whether grocery stores can sell full-strength beer or wine.
20 years later, greed's still good for Douglas in 'Wall Street' sequel NEW YORK — Gordon Gekko, that cutthroat swashbuckler of a corporate raider who once sneered "Lunch is for wimps," is holding sway over a table at a jammed Manhattan restaurant. No, it's not an '80s flashback but a scene being shot for Wall Street: Money Never Sleeps, a sequel to the 1987 original due this spring that takes place more than 20 years later. Instead of the ambition-served-raw atmosphere of the 21 Club depicted in the first film, the locale is Shun Lee, an Upper West Side institution where decorative demon-eyed monkeys dangle above the bar like mute witnesses. And rather than coercing a would-be high-stakes player into doing his shady bidding, Gekko is focused on reconnecting with Winnie, his estranged daughter whom he hardly knows after serving a hefty 14-year jail sentence for insider trading.
Beijing accuses U.S. of cyberwarfare By Bill Gertz China's government and state-run media stepped up criticism of the United States on Monday over the issue of computer network cyber-attacks. The Chinese accused the Pentagon of boosting cyberwarfare efforts, and suggested Washington both covertly used electronic social networks to foment recent protests in Iran and was behind recent computer attacks on the Chinese Internet-search engine Baidu.
Greece's Line In The Sand Greece has drawn a line, albeit an expensive one, in the sand. The success of its 8 billion euros ($11.3 billion) five-year bond sale, for which orders reached 25 billion euros, means the market should step back from a trade that was starting to price in the unthinkable: an imminent default by a euro-zone sovereign. But while Greece passed this test and its bonds should rally, the market now will expect Greek authorities to be similarly proactive in cutting spending and raising taxes to rein in the country's runaway budget deficit.
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Mon 01.25.2010
# 5 - Premier American Bank, Miami, Florida The fifth bank failure of the new year is Premier American Bank, Miami, Florida. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $85 million.
#6 - Bank of Leeton, Leeton, Missouri Bank of Leeton, Leeton, Missouri is the sixth FDIC-insured institution to fail in the nation this year, and the first in Missouri.
#7 - Charter Bank, Santa Fe, New Mexico Charter Bank, Santa Fe, New Mexico, becomes he seventh FDIC-insured institution to fail in the nation this year, at an estimated cost to the Deposit Insurance Fund (DIF) will be $201.9 million.
#8 - Evergreen Bank, Seattle, Washington Evergreen Bank, Seattle, Washington, becomes the eighth FDIC-insured institution to fail in the nation this year, and the agency estimates that the cost to the Deposit Insurance Fund (DIF) will be $64.2 million.
#9 - Columbia River Bank, The Dalles, Oregon Columbia River Bank, The Dalles, Oregon, is the ninth FDIC-insured institution to fail in the nation this year. The agency estimates that the cost to the Deposit Insurance Fund (DIF) will be $172.5 million.
Volcker Rule is necessary to prevent bank failures turning into a crisis Obama's bold action should lead to a new Glass-Steagall Act, writes Terry Smith You heard it here first. On September 20 2008 The Daily Telegraph ran an article entitled "Strong medicine needed to cure ills of cheap money" in which I wrote: "I think US regulators should re-impose the Glass-Steagall Act." Last week President Obama announced the Volcker Rule, named after Paul Volcker - a central banker of undoubted integrity and ability. This almost certainly means that in substance we are going to get a new Glass-Steagall Act.
Seven things about the economy that everyone should be more worried about than they are As a coda to Hanrahan’s series, here is a list of seven things all of us should be more alarmed by than we currently are, going forward. A common theme underlying them all is that while our leaders -- and the voices of conventional wisdom -- treat our current recession as cyclical in nature, and are essentially mostly just waiting around for growth to pick up again, there is plenty of reason to believe that this crisis was instead an expression of structural problems. And if that is so, and we don’t take the proper action, then the wait could be a long one.
The middle class may never be the same again
The recovery could take a really long time
The recovery could only be temporary
Then what? This time, we don’t have the tools to get out of a recession
The ‘very serious’ people in Washington are still obsessed about the deficit
Whatever is making the stock market go up could go away
The hugely irresponsible financial sector remains unchastened
State of the Republic Address Part 1 of 3
Is America a failed state? Barack Obama won the Democratic nomination and then the presidency by offering the same program that Peter Pan gave the Darling children: Close your eyes, think happy thoughts, and you will be able to fly. "Yes we can" in the meantime has changed to "No he can't," as America lost five million jobs in 2009 and its effective unemployment rate, including so-called long-term discouraged workers, rose to 22%, a level unseen since the Great Depression.
Scandal: Albert Edwards Alleges Central Banks Were Complicit In Robbing The Middle Classes We apologize in advance for the NY Magazine-style headline, but this is a report that has to be read by all Senators who are preparing to reconfirm Bernanke for a second term. When voting for the Chairman, be aware that all of America will now look at you as the perpetrators who are encouraging the greatest inter and intra-generational theft to continue, and as prescribed by Newton 3rd law, sooner or later, an appropriate reaction will come from the very same middle class that you are seeking to doom into a state of perpetual penury and a declining standard of living. America spoke in Massachusetts, and will speak again very soon if you do not send the appropriate signal that you have heard its anger - Do Not Reconfirm Bernanke. You have been warned.
Obama's Bank Bashing May Ignite M&A While bull markets and easy financing are critical for strong M&A, another important factor is government action. For example, the Telecommunications Reform Act of 1996 led to a surge in M&A activity, as the government allowed competition in local and long-distance communications. This is why President Obama's recent statement on finance reform is so important, especially to the private equity and hedge fund sectors. He declared: "No bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund."
Populist backlash puts Federal Reserve Chairman Ben Bernanke under siege The populist brushfire that has burned through Democratic fortunes this week threatened Friday to claim Federal Reserve Chairman Ben S. Bernanke, imperiling his nomination for a second term and sending an unsettled stock market tumbling for the third straight day. Once viewed as the rock at the center of the government's response to the financial crisis, Bernanke has become a target for mounting anti-Wall Street fervor with two Democratic senators registering their opposition Friday and other support softening
Obama Sharpens His Populist Tone ELYRIA, Ohio—President Barack Obama tried to relaunch his political agenda Friday with a populist attack on banks and insurance companies that signaled he would fight for his priorities going into the fall elections rather than give ground to Republicans on key issues. Mr. Obama's campaign-style speech here capped one of the most bruising weeks of his year in office. The president traveled to this swing-state manufacturing town ostensibly to deliver a speech about jobs and the economy, but instead he repeatedly veered off-script to interject pledges to battle his political foes over health care and other issues "so long as I have breath in me."
WSJ's Personal Columnist Jason Zweig discusses President Obama's plan to curb excessive risk taking at big banks. He also tells Kelsey Hubbard his proposals for better financial regulation.
Fannie Mae, Freddie Mac Should Be Eliminated, Frank Says A top House Democrat on Friday said his committee was preparing to recommend "abolishing" mortgage-finance giants Fannie Mae and Freddie Mac and rebuilding the U.S. housing-finance system from scratch. "The remedy here is...as I believe this committee will be recommending, abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance," said Rep. Barney Frank (D., Mass.), the chairman of the House Financial Services Committee.
The Secret Bank Bailout There's one method that the Federal Reserve has been employing to shovel money to the bank elite that is rarely mentioned, though I hear the sums that have been shoveled are in the billions and they are showing up on the books of firms like Goldman Sachs as pure profit. It's really pure scam. Here's what went on for months, according to traders familiar with the situation. When the Federal Reserve buys and sells Treasury securities it does so through primary dealers. Goldman Sachs and JPMorgan are among the select elite firms that, naturally, got into this club.
Geithner's phone logs count down AIG bailout The Treasury secretary, then head of the New York Federal Reserve, had conversations with more than 30 business and political leaders on the day the insurance giant secured its federal lifeline. Treasury Secretary Timothy F. Geithner spoke with more than 30 business and political leaders on the day American International Group Inc. was bailed out by the U.S. government, his phone logs show. At the time, Geithner ran the Federal Reserve Bank of New York, which helped organize AIG's rescue, on Sept. 16, 2008, when the calls took place. The logs were submitted by the New York Fed in response to a subpoena last week from the House Oversight and Government Reform Committee.
BAIR MUST RESIGN: Conflict Of Interest What the hell is THIS? Sheila Bair, one of the chief regulators overseeing Bank of America’s federal rescue, took out two mortgages worth more than $1 million from the banking giant last summer during ongoing negotiations about the bank’s bailout and its repayment. It gets better... Mortgage documents for that 14-room home include a provision, known as a second-home rider, stating that Bair and her husband must keep the house for their “exclusive use and enjoyment” and may not use it as a rental or timeshare.
Liz Warren and Paul Volcker: “Break Up TBTF Banks,” but Geithner Says “No” When President Obama announced additional measures to deal with too-big-to-fail (TBTF) banks, yesterday, it was Paul Volcker standing behind him, not the usual economic team of Tim Geithner and Larry Summers. Volcker has been a strong champion of breaking up the TBTF banks and sharply curtailing the casino activities of traditional depository banks. So does Obama mean it?
MSNBC's Rachel Maddow - TARP oversight Chair Liz Warren on Obama's tough stand
Uncertainty on Bernanke Vote Raises Economic Fears A Bernanke defeat could raise risk of 'double dip' recession, but approval seems more likely A defeat of Federal Reserve Chairman Ben Bernanke's quest for another four-year term could raise the risk of a "double dip" recession if political jousting over a successor were to drag on for months, economists warn. But Bernanke's prospects appeared to brighten Sunday, with three more senators, including Republican leader Mitch McConnell of Kentucky, predicting he'll be confirmed. A vote is expected later this week.
Opposition To Bernanke Growing In Wake Of Mass. Vote One day after indicating that he had not decided on whether to support Ben Bernanke's renomination, Senate Majority Leader Harry Reid (D-Nev.) announced late Friday afternoon that he will support giving the Federal Reserve chairman another term. His full statement: Every decision I make about our economy is governed by the goal of putting Nevadans and Americans back to work, helping them keep their homes, and strengthening the middle class. My vote to confirm Ben Bernanke for a second term as Chairman of the Federal Reserve is no different.
Bernanke Vote: 'Unthinkable Has Become a Possibility' Ben Bernanke's nomination for a second term as U.S. Federal Reserve chairman, once seen as a sure thing, appeared in jeopardy on Friday after two more Senate Democrats said they would vote against it. "I believe there will be the votes to confirm him. But it's going to be very close," a senior Democratic leadership aide said. See the latest tally of announced voting decisions in the chart on page 2 of this story. With the U.S. job market in disarray and voters angry at Wall Street, members of Congress facing mid-term elections in November have come down hard on the central bank and its leadership.
Dodd, Gregg Predict Bernanke Will Win Confirmation Vote Sen. Christopher Dodd (D., Conn.), chairman of the Senate Banking Committee, and Sen. Judd Gregg (R., N.H.), a member of the committee, said they expect Ben Bernanke to win Senate backing for a second term as chairman of the Federal Reserve despite substantial opposition in the Senate. "In the last few days there have been a flurry of media reports on Chairman Bernanke's confirmation prospects, highlighting a very vocal opposition," the two senators said in a statement Saturday. "Chairman Bernanke has done an excellent job responding to one of the most significant financial crises our country has ever encountered. We support his nomination because he is the right leader to guide the Federal Reserve in this recovering economy. Based on our discussions with our colleagues, we are very confident that Chairman Bernanke will win confirmation by the Senate for a second term."
Support for Bernanke confirmation The White House says it is confident of Ben Bernanke's confirmation as Federal Reserve chairman for a second term. The top Republican in the US Senate, Mitch McConnell, also said that he believed Mr Bernanke would be confirmed with bi-partisan support. However Mr McConnell did not say if he would be voting for Mr Bernanke. There has been opposition from senators in both parties to Mr Bernanke's second term. Critics say he did not do enough to prevent the economic crisis.
Bernanke's Doom Loop Two Bank of England economists have written one of the most perceptive and forthright papers in the history of central banking: "Banking on the State." Compared with any of the dozens of deadly dull, equation-filled, narrowly focused, recommendation-avoiding, career-enhancing, résumé-padding, utterly useless academic exercises published in the dozen regional Federal Reserve bank journals every month, this paper stands out like a diamond in an immense dung hill.
State of the Republic Address Part 2 of 3
After the Welfare State, what? Hugo Salinas Price Raising the price of gold to $20,000 dollars an ounce would imply a corresponding devaluation in the value of all paper money. In the 40's and 50's of the last century, about 70% of reserves of central banks were in the form of gold at $35 US dollars an ounce. At the present time, reserves of central banks, excluding gold, are about $8 Trillion dollars (not all of which, however, are dollars). If these imaginary digital reserves (for such they are) were to once again amount to not more than 30% of total central bank reserves, the price of gold would have to increase substantially. We can calculate the approximate price of gold that would be necessary in order to have the gold component of reserves resume the proportion it at one time took up of total central bank reserves, 70%.
Volatility: Fasten your seat belt in gold When in the history of the United States has there been a credible movement to remove both the Chairman of the Federal Reserve and the Secretary of the US Treasury? The answer is never since the invention of the private bank, the US Federal Reserve. I have been telling you for months that there is a war going on between the Banksters and Daddy Warbucks. This is best understood as the desire to bring the power of the Federal Reserve into the Oval office, not by trusting an appointee but by absolute control over the appointee. Failing that the plan is to emasculate the Fed.
Gold prices to behave like a roller-coaster ride Gold prices will continue to witness an uptrend in 2010 but investors should expect continued high volatility-resembling an amusement park roller coaster ride, according to Jeffrey Nichols, Senior Economic Advisor to Rosland Capital. In his latest commentary on market trends, Jeffrey Nichols said that gold prices won't move up higher without interruption.The two main sources of gold price volatility will continue to be the investment demand for the yellow metal and volatility in dollar's exchange rate.
The mad, mad world of gold! Investors are now acting very cautiously as far as gold is concerned. They are not certain where is the metal headed for. So, they read almost all literature published in business magazines, newspapers and internet. But, it seems, even God can’t predict the future of gold. Because, every market analyst has a different opinion as far as gold is concerned. Some of them say the price of gold has risen more than four-fold since 2001 and was up another 24 per cent in 2009, hitting an all-time high of $1,228 last December. But it has dropped $100 recently, in tandem with a rally in the US dollar. Gold bugs argue that a growing risk of inflation and questions about how the US will pay off its massive debt means gold could be headed to $5,000 or higher, while sceptics see a golden bubble waiting to burst. Is the great gold rush of the past decade about to end?
Gold remains volatile on Obama plans Gold prices remained highly volatile in Asian trade Friday mainly on US president Obama’s plans to restrict risk taking by banks. US gold futures for February delivery was seen trading at $1094.80 per ounce at 11.30 a.m Singapore time while spot gold was at $1094.80 an ounce at the same time. On Thursday, March delivery settled at $1103.20 on the COMEX division of the New York Mercantile Exchange while Spot gold closed at $1094.20 an ounce.
January 20, 2010 Competing Currencies
Gold Price: Don't create false bubbles Yes, yes, David, the elites want to pry gold from the naive, so they stage a bear market. And yes, gold price is dominated by speculative buyers. But none of the three reasons you suggest for a bear gold market are more than transient. Where the value of an ounce of gold is in question is the surprising lack of overwhelming public demand in the face of many buy recommendations and the rationale that if paper money fails, there will be a gold rush that will be too late -- by then gold supply would evaporate.
Central Banks bet on gold reserve In 2009, almost all central banks showed an increased love for gold. In the recent past, Russia’s central bank added 800,000 ounces of gold to its reserves last month, increasing its holdings of the metal to $22.4 billion. The bank’s gold reserves climbed to 20.5 million ounces from 19.7 million the previous month. And, India’s central bank also purchased gold in 2009 to increase its foreign reserves.
Dude, Is That Gold Bar for Real? As the 10-year gold bull continues its stunning run, rumors of fakery seem to be cropping up as fast as new Eagles can be minted. Should you be worried? Do you need to run to the coin shop for a home test kit? Well, the counterfeiters are out there, and have been for millennia, but how to counter them? You probably remember movies about the Old West, wherein a shady-looking character would offer to exchange a gold coin for a horse, and the nag's owner would bite down on the coin. That was about all you could do, if you lacked proper assaying equipment and had to make a snap judgment on the fly: depend on your teeth to tell you whether the metal in your hand was sufficiently soft to be genuine gold.
Silver: The Race Is On Ed Zimmer What do the following items tell you? Price of silver falls by nearly 5% in one day. In less than 11 days the available stock of silver to cover paper shorts falls by nearly 15%. In the first few minutes of oveseas trade, silver begins to recover it's losses. The answer is that the race to own silver is on. From the US Government saying that it can't get enough blanks to make the silver eagle to the fact that silver stocks are continuing to decline rapidly since the first of the year, the signs are all pointing to an increase in the future. Allow me to point out what I am seeing and you can make up your own mind.
Dollar gains as uncertainty swirls The dollar extended its recent gains Friday against the euro and the pound as possible changes in U.S. financial regulations, tightening of monetary policy in China and credit turmoil in Greece drove investors to the perceived safety of the U.S. currency. The 16-nation euro tilted higher in overnight trading, moving up from the 6-month low of $1.4028 reached in Thursday's trading. But in morning trading in New York, the euro dropped to $1.4092 compared to $1.4103 late Thursday. The British pound tumbled to $1.6084 from $1.6209 late Thursday. But the dollar slipped to 90.14 Japanese yen from 90.38 yen.
Euro is an orphan against US Dollar In the last two weeks of December we made the following comments In the short to intermediate time frames, we would like to point to several new factors, which suggest that Gold could potentially pull back more, the dollar could mount a stronger than expected rally which should lead to a rather strong pull back in the Euro and other competing currencies. Certainly, the dollars rapid move from 74.57 to a high of 78.50 has caught a lot of traders with their trousers down.
Cramer: Could Obama Cause 1,000-Point Correction? Cramer’s Game Plans most often use earnings, analyst meetings and industry conferences as key catalyst, but President Obama’s crackdown on the banks has changed all that. Now investors have to take into account a new factor – politics – when deciding whether to buy or sell a stock. Case in point: Friday’s 217-point loss in the Dow and the S&P 500’s 2% decline following the president’s continued talk of increased regulation. And it’s more than just Obama. There’s speculation that Treasury Secretary Timothy Geithner could be replaced, and Federal Reserve Chairman Ben Bernanke’s reconfirmation is by no means a sure thing. The loss of either man could cause the first serious correction since the bottom in March, Cramer said – “a thousand points, minimum.”
Anger Over Bankers' Pay Obscures More Critical Issues When the talk turns to changing banking regulation, the American public appears to be fixated on executive pay. Following the British decision to tax bonuses in excess of £25,000, or about $40,000, bankers in the United States are wondering what action Congress may take if payouts this year stoke a burst of public fury. After all, the House of Representatives passed a bill in March that would have taxed employees of American International Group at 90 percent on any amount they earned exceeding $250,000. That died when the Senate did not take it up, but it illustrated the depth of anger against high bonuses at companies that took government bailouts.
State of the Republic Address Part 3 of 3
The Take: A sea change in Obama's demeanor The populist drumbeat emanating from the White House is a predictable reaction to the shellacking Democrats took in Massachusetts last week and the drop that began some months ago in President Obama's poll numbers. It is at best a partial answer to what ails the president and Democrats in Congress. The president's rhetoric over the past week suggests he has decided to try to fight anger with anger. If Americans are fed up with bank bailouts and bonuses going to their top executives, Obama wants people to believe that he resents them just as much.
Obama Endorses Deficit Task Force Obama endorses task force to recommend ways to battle spiraling budget deficits President Barack Obama Saturday endorsed a bipartisan plan to name a special task force charged with coming up with a plan to curb the spiraling budget deficit, though the idea has lots of opposition from both his allies and rivals on Capitol Hill. The bipartisan 18-member panel backed by Obama would study the issue for much of the year and, if 14 members agree, report a deficit reduction blueprint after the November elections that would be voted on before the new Congress convenes next year. The 14 would have to include at least half of the panel's Republicans — a big obstacle.
PAUL VOLCKER TO THE RESCUE President Barack Obama might have done well to keep former Federal Reserve Chairman Paul Volcker in closer reach during his first year of office rather than rely on the dubious advice of Timothy Geithner and Lawrence Summers. Too late for that—but hopefully not too late for Volcker to help the president in his future dealings with Wall Street.
Many are rejecting loan modifications Homeowners are opting to flee rather than accept loan modifications that might still leave them underwater on their mortgages. Desperate homeowners scrambling to get a loan modification through federal foreclosure relief programs are beginning to shun the offer, opting for a strictly business approach to the dilemma -- walking away. Because the majority of modifications don't reduce the principal payment on loans made during the overpriced boom years, people with underwater mortgages could still be drowning 10 years out.
Lessons from the Panic of 1907 by Clif Droke In their timely look at the panic of 1907, Robert Bruner and Sean Carr focus attention on what they believe to be the underlying causes of the '07 stock market crash and recession, drawing parallels between it and the credit crisis of more recent times. Their book, "The Panic of 1907: Lessons Learned from the Market's Perfect Storm," is now available in soft cover published by John Wiley & Sons (2007). The authors list seven contributing factors to the 1907 crisis:
Complexity
Buoyant economic growth
Inadequate safety buffers
Adverse leadership
Real economic shock
Undue fear and greed and other behavioral aberrations
Failure of collective action
Congress Sacks Samoan Economy . . . . For generations, American Samoa offered strong advantages for tuna canners. The close proximity to vast Pacific tuna schools, the islands' good port facilities, political association with the United States, and an abundance of relatively inexpensive labor (by American standards) enticed StarKist and Chicken of the Sea to locate their primary canning facilities in American Samoa. Although the workers were paid, in recent years, wages that were below the U.S. minimum, given the low taxes and living costs, these wages were enough to offer the average worker a standard of living that was superior to the denizens of other islands in that area of the Pacific. But then, in 2007, Washington came to the "rescue." As part of its efforts to provide a "living wage" for all Americans, Congress passed a law to step up the minimum wage to $7.25 per hour across all U.S. states and territories by 2009.
Bank of China to sell up to $5.8 billion in bonds Bank of China plans to sell up to 40 billion yuan ($5.8 billion) in bonds to replenish its capital and meet government standards following a record surge in lending last year amid Beijing's stimulus measures, a state-run news agency reported. Bank of China plans to sell up to 40 billion yuan ($5.8 billion) in bonds to replenish its capital and meet government standards following a record surge in lending last year amid Beijing's stimulus measures, a state-run news agency reported. Regulators have warned some banks that they have fallen below minimum capital requirements after handing out some 9.5 trillion yuan in loans last year.
The Unforeseen Consequences of Credit Legislation A hallmark of state failure is its incapacity to predict the market's response to the policies it puts forth. Indeed, on many levels the state is powerless to change the market's ends, instead only serving to redirect its means. Credit-card legislation passed last December sets forth a glut of regulations governing the ways in which credit-card agencies may transact with their customers. Various rules set to come into effect in July 2010 will
The Bill Comes Due for Socialism By Alan Caruba "The problem with socialism is that you eventually run out of other people’s money.” -- Margaret Thatcher, former British Prime Minister It began as a beautiful cruise to a land of “hope and change”, but it has become a nightmare in which the ship of state is being deliberately steered toward a whirlpool of debt from which, if Obama is successful, the nation cannot escape. One of the primary reasons the U.S. economy has grown over the years has been the confidence in its innovation and productivity. It has generated investment from around the world from those who wanted to profit from our success story. There was a time when U.S. securities were the safest in the world, but that is no longer the case.
Prepare Now to Escape Obama's Retirement Trap As the United States moves into a new decade of military overreach abroad and national bankruptcy at home, Washington is in a desperate search for more revenue and a solution to the future financing of the trillions in national debt obligations currently held by foreign central banks and investors. Economists, politicians and smart investors know the dollar's days as the world reserve currency are numbered as is our ability to finance the national debt.
450,000 at risk in foreclosure-prevention program Hundreds of thousands of troubled homeowners who are making lower mortgage payments on a trial basis are at risk of being kicked out of President Obama's foreclosure-prevention program. Companies that service the mortgages have until Jan. 31 to review all trial modifications that have been underway for several months under the Home Affordable Modification Program (HAMP), according to a Treasury Department guideline issued late last month. The Treasury Dept. said it would issue new guidelines next week, but wouldn't give details.
Thoughts on the End Game . . . . As I wrote in my 2010 forecast, this year is a waiting game. There are so many choices we must make, and the paths we will take from those choices vary wildly. But make no mistake, we are coming close to the end game. Some countries and economies are closer to that point than others, but the entire developed world is lurching, in almost drunken fashion, towards our economic denouement.
Taking Tea with the Lizards Joe Bageant The Republican Party will beat the living piss out of anybody for a buck. The Democrats will fly the flag of FDR, even as they pirate the public coffers on behalf of Wall Street. Don't think the American people have not noticed these things. After thirty years of pistol whipping and emptying of their wallets, they've started to figure out there just may be a public robbery underway, with both parties as accomplices. And so Americans at both ends of the political spectrum are finally wising up to the need for a third party.
Sam’s Club Cuts 11,200 Jobs SAN FRANCISCO (Reuters) - Sam's Club, the warehouse club division of Wal-Mart Stores Inc is cutting roughly 11,200 jobs, or about 10 percent of its workforce, as it outsources in-store product demonstrations and eliminates new business membership representative jobs. Sam's Club Chief Executive Officer Brian Cornell said on Sunday that the retailer would outline charges associated with the job cuts in February, when it releases fourth-quarter results. He said he did not expect any "material impact" on its financial results. "We look at this as an investment in the in-club experience," Cornell said in an interview. "This is not a cost-cutting move for us in the short term. We really hope it will be cost neutral for our operation. It's an investment in building loyalty, enhancing the member experience and driving future growth."
District unemployment reached 12.1 percent in December Unemployment reached a record 12.1 percent in the District in December, keeping the city's jobless rate well above national levels and much higher than in Virginia and Maryland. The District's unemployment rate rose from 11.8 percent in November, according to a Bureau of Labor Statistics report released Friday, even as the nation's jobless rate stabilized at 10 percent in December. Maryland's unemployment level increased to 7.5 percent from 7.3 percent, and Virginia's rose to 6.9 percent after staying at 6.6 percent for four straight months.
California's unemployment rate stays flat at 12.4% The jobless rate remains unchanged from November's revised figure as employers lay off 38,800 workers in December, capping a dismal year in which the state lost more than half a million jobs. California employers cut more workers from their staffs in December, capping a dismal year in which the state lost more than half a million jobs. Payrolls shrank by 38,800 jobs last month, while the unemployment rate remained flat at 12.4% from the revised figure in November, which previously was pegged at 12.3%
Unemployed in an Abnormal Business Cycle Fear. You can almost smell it. So far, there's just a whiff of it...a faint odor...a little trace in the air...like the smell in a subway car after a bum has left. Yesterday, the Dow fell 213 points. Oil dropped to $76. Gold lost $9. What caused it? What sets off a crash? Yesterday was hardly a crash. But our Crash Alert flag still flies. Because this is a market in danger. It is a market looking for a reason to crash. You never know for sure when or why markets crash. At a certain point, markets become like drunks who want to play a game of Russian roulette. First, they have to find the revolver. Then, they find the trigger.
Health Care Is Dead—Just Don't Tell the Left If you needed any additional evidence that health-care-reform-as-we-know-it has gone the way of the Dodo, look no further than Obama's remarks on the subject today: "We've gotten pretty far down the road, but I have to admit, we've run into a bit of a buzz saw along the way. The long process of getting things done runs headlong into the special interests, their armies of lobbyists, and partisan politics aimed at exploiting fears instead of getting things done. And the longer it's taken, the uglier the process has looked."
What Would a Tea Party-Led United States Look Like? Although post-election research may ultimately reveal that the Democrats, Independents, and Republicans who voted for Scott Brown did not consider themselves Tea Partiers, let's, for the sake of argument, say that the Massachusetts U.S. Senate race was another election won by the Tea Partiers, and the values and planks they stand for.
Oil in Haiti - Economic Reasons for the UN/US occupation There is evidence that the United States found oil in Haiti decades ago and due to the geopolitical circumstances and big business interests of that era made the decision to keep Haitian oil in reserve for when Middle Eastern oil had dried up. This is detailed by Dr. Georges Michel in an article dated March 27, 2004 outlining the history of oil explorations and oil reserves in Haiti and in the research of Dr. Ginette and Daniel Mathurin. There is also good evidence that these very same big US oil companies and their inter-related monopolies of engineering and defense contractors made plans, decades ago, to use Haiti's deep water ports either for oil refineries or to develop oil tank farm sites or depots where crude oil could be stored and later transferred to small tankers to serve U.S. and Caribbean ports. This is detailed in a paper about the Dunn Plantation at Fort Liberte in Haiti.
Haiti: An Unwelcome Katrina Redux by Cynthia McKinney George W. Bush, massive military deployment, logistical snags and slow aid delivery are evocative of the Hurricane Katrina debacle. Cynthia McKinney draws attention to the construction of the U.S. fifth-largest embassy in the world in Port-au-Prince, the discovery of oil resources in Haiti, the existence of decade-old plans to exploit Haiti’s deep water ports for oil-related activities. From the beginning, in fact, U.S. assistance to Haiti has looked more like an invasion than a humanitarian relief operation.
[UK] Terrorist threat level raised to 'severe' Britain's terrorist threat level was raised tonight from “substantial” to “severe” - meaning that counter-terrorism agencies believe an attack is “highly likely”. The measure was approved at a meeting of the Government’s Cobra emergency committee and announced by Alan Johnson, the Home Secretary. The Times understands that the decision to raise the threat level is connected to the conference on Afghanistan taking place at Lancaster House, London, next Thursday.
Bolivia, Costa Rica hit by strong earthquakes Bolivia and Costa Rica were struck by strong earthquakes with magnitudes of up to 5.3 on the Richter scale on Saturday, the US Geological Survey reported. Bolivia was hit by two quakes within an hour, one with a magnitude 5.3 and other 5.2, the Virginia-based earthquake monitoring centre reported. The border region of Costa Rica and Panama experienced two quakes in the same time period, one a magnitude of 5.2 and the other 4.7.
Venezuela oil 'may double Saudi Arabia' A new US assessment of Venezuela's oil reserves could give the country double the supplies of Saudi Arabia. Scientists working for the US Geological Survey say Venezuela's Orinoco belt region holds twice as much petroleum as previously thought. The geologists estimate the area could yield more than 500bn barrels of crude oil. This assessment is far more optimistic than even the best case scenario put forward by President Hugo Chavez.
One quarter of US grain crops fed to cars - not people, new figures show New analysis of 2009 US Department of Agriculture figures suggests biofuel revolution is impacting on world food supplies One-quarter of all the maize and other grain crops grown in the US now ends up as biofuel in cars rather than being used to feed people, according to new analysis which suggests that the biofuel revolution launched by former President George Bush in 2007 is impacting on world food supplies.
Bin Laden claims Christmas bombing attempt CAIRO — Osama bin Laden claimed responsibility for the failed attempt to bomb a Detroit-bound airliner on Christmas in a new audio message released Sunday threatening more attacks on the United States. The United States said there was no indication to suggest that bin Laden or any of his top lieutenants had anything to do with the attempted attack and that the claim may have been motivated by the wish of the terror network's leaders to appear in control of al Qaeda's offshoots.
Bin Laden Says "Hi" to American President . . . . In a message carried by the Al Jazeera Arabic news channel, Bin Laden addressed President Barak Obama saying there would be no peace for America unless there was security for Palestinians. He described the attempt by Nigerian Umar Farouk Abdulmutallab to detonate a bomb on plane on Christmas day as a "confirmation" of previous attacks, including September 11. He promised further attacks if the US continued to support Israel.
U.S. appears to lower expectations in Middle East Reporting from Jerusalem - As U.S. envoy George J. Mitchell wrapped up his Mideast trip Friday with little to show for his efforts to kick-start peace talks, the Obama administration was signaling a growing pessimism that Israelis and Palestinians would return to negotiations any time soon. In his first visit since November, Mitchell met separately with Israeli Prime Minister Benjamin Netanyahu and Palestinian Authority President Mahmoud Abbas. But officials on both sides said little progress was made toward restarting talks that collapsed a year ago.
War Looms Between Israel and Hezbollah It looks like a hop, skip and a jump. There’s the first electrified fence, then the dirt strip to identify footprints, then the tarmac road, then one more electrified fence, and then acres and acres of trees. Orchards rather than tanks. Galilee spreads beyond, soft and moist and dark green in the winter afternoon—a peaceful Israel, you might think. And a peaceful Lebanon to the north, tobacco plantations amid the stony hills, just an occasional UN armoured vehicle to keep you on your toes. “Major Pardin says you cannot take pictures,” a Malaysian UN soldier tells me. Then a second one says the same. Then along comes a Lebanese army intelligence officer and stares at our papers. “OK, you have permission,” he declares, and I snap away with my old 36-frame real-film Nikon; the fields, the frontier fence, the high-tech surveillance tower on the horizon. This must be the most photographed border in the world.
Putin warns against despotism, chaos in Russia Russian Prime Minister Vladimir Putin on Friday warned against the dangers of totalitarianism and despotism but said Russia must not adopt a similar political system to its neighbour Ukraine. "We shouldn't allow the 'Ukraine-ization' of political life in Russia but we should on no account slide in the other direction, towards totalitarianism and despotism," Putin said.
---- more news on situation in Greece ----
ECB president: Greece must put finances in order BERLIN -- Greece and other euro-zone countries with excessive budget deficits must do everything they can to put their finances in order, the president of the European Central Bank said in an interview published Saturday. The European Union has been pressing Athens to implement a strict austerity plan and plug its deficit, which stands at more than four times the EU-mandated limit of 3 percent of gross domestic product. "Not only Greece, but also other countries - that goes without saying - must do everything they can to put their national finances in order, bringing them fully into line with the provisions of the Stability and Growth Pact," ECB President Jean-Claude Trichet said in an interview with the German weekly Focus.
Greeks fret about faulty data ATHENS, Greece -- Greece is greeting European outrage over its dubious economic data with repentance, defensiveness and fear that no one will believe them again - even if they do clean up the statistics and accounting agencies slammed by an EU report for faking growth and deficit figures. "Right now, even if everything they say is correct, they are not going to believe it," Manolis Kontopirakis, who headed Greece's statistics agency between 2004 and 2009, told the AP. Kontopirakis quit shortly after Prime Minister George Papandreou's Socialists took over from the conservative New Democracy government in October. He angrily refuted claims his agency had knowingly forwarded the faulty data, which he said had hurt Greece's standing abroad.
Analysts wary of Greece's debt crisis plan
ECB Provopoulos: Greek Economy 'Unwaveringly Tied' To Euro: Greece's economy is "unwaveringly tied" to the euro, and the country will make the "bold" adjustments needed to fix its problems and remain in the single currency union, European Central Bank Governing Council member and Bank of Greece Governor George Provopoulos said Friday. Writing in the Financial Times, Provopoulos insisted that the idea Greece will leave the eurozone and create its own national currency is "based on flawed reasoning."
Greece's Economy Discussing Greece's economic state with Ulrich Leuchtmann, head of FX research at Commerzbank and CNBC's Silvia Wadhwa
Greek prime minister urges protesting farmers to end roadblocks, says no room for handouts ATHENS, Greece - The Greek prime minister has urged protesting farmers to end their eight-day roadblock campaign, saying Friday that Greece's debt crisis left no room for handouts. Prime Minister George Papandreou said it would be "a crime against Greeks' prosperity and security" if the government caved in to demands from pressure groups. The farmers are blocking highways and border crossings to demand payment of delayed aid and new subsidies, in what is seen as a major test for the center-left government elected in October.
Papaconstantinou Expects Greek Debt to Peak Next Year
Greece's Austerity Plan is 'Decade-Long Project' Airtime: Wed. Jan. 20 2010 | 5:00 ST ET The euro dropped to a 5-month low versus the dollar Wednesday as concerns about Greece's fiscal problems nagged investors. Michael Massourakis from Alpha Bank called the country's austerity plan "a decade-long project" in that after the proposed three-year period "the debt-to-GDP ratio will still remain at around 113%."
Analysts wary of Greece's debt crisis plan
Greece Remains a Concern: Fitch Airtime: Wed. Jan. 20 2010 | 5:00 ST ET Greece remains a concern for rating agency Fitch, which says that after two downgrades it will continue to keep the country on negative watch. CNBC's Stephane Pedrazzi spoke to Brian Coulton from Fitch to find out why the agency is so concerned.
Big Banks Have Already Figured Out The Loophole In Obama’s New Rules Big banks have already begun poking the holes in Obama’s new rules—holes they expect their banks to pass through basically unchanged. The president promised this morning to work with Congress to ensure that no bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund, or proprietary trading operations unrelated to serving customers for its own profit.
Opposition To Bernanke Growing In Wake Of Mass. Vote: Sanders HuffPost's Jeff Muskus and I polled as many senators as we could find Thursday after posting this story.The question: Would they commit to reconfirming Federal Reserve Chairman Ben Bernanke. We found 26 senators in all. Half were undecided; one wouldn't say; three were outright nays; only nine were firmly in the aye column. Sen. Barbara Mikulski (D-Md.) summed it for many of her colleagues: The decision, she said, "gives me heartburn."
Hyperinflation, Money Demand, and the Crack-up Boom In the early 1920s, Ludwig von Mises became a witness to hyperinflation in Austria and Germany — monetary developments that caused irreparable and (in the German case) cataclysmic damage to civilization. Mises's policy advice was instrumental in helping to stop hyperinflation in Austria in 1922. In his Memoirs, however, he expressed the view that his instruction — halting the printing press — was heeded too late: Austria's currency did not collapse — as did Germany's in 1923. The crack up boom did not occur. Nevertheless, the country had to bear the destructive consequences of continuing inflation for many years. Its banking, credit, and insurance systems had suffered wounds that could no longer heal, and no halt could be put to the consumption of capital.
Stimulating Depression Through Government Spending “China’s lending curb sparks a rush for safety.” That’s how The Financial Times describes what happened yesterday. Investors were more moved by fear than by greed. Dow sold off 112 points. Gold dropped $27. The dollar and bonds were up. The first thing we note is that investors are idiots. They’re looking for safety in the wrong places. Sell gold? Buy the dollar? And bonds? It may be a good move in the short run…but this kind of safety is too dangerous for us. The second thing that comes to mind is a question: is this the beginning of the end? Today, stocks in Asia are still falling…presumably for the same reason. China is reporting such hot growth that the authorities will be forced to throw a bucket of water on it. At least, that’s what a lot of investors are thinking.
Geithner aired concern on bank limits-sources U.S. Treasury Secretary Timothy Geithner has expressed some skepticism behind closed doors about the broad bank limits proposed on Thursday by his boss, President Barack Obama, according to financial industry sources. The sources, speaking anonymously because Geithner has not spoken publicly about his reservations, said the Treasury chief is concerned the proposed limits on big banks' trading and size could impact U.S. firms' global competitiveness.
Obama's 'Volcker Rule' shifts power away from Geithner For much of last year, Paul Volcker wandered the country arguing for tougher restraints on big banks while the Obama administration pursued a more moderate regulatory agenda driven by Treasury Secretary Timothy F. Geithner. Thursday morning at the White House, it seemed as if the two men had swapped places. A beaming Volcker stood at Obama's right as the president endorsed his proposal and branded it the "Volcker Rule." Geithner stood farther away, compelled to accommodate a stance he once considered less effective than his own.
The ‘Volcker Rule’ as a modern-day Glass-Steagall Reform could shake markets’ boom-and-bust cycle For Glass-Steagall in the 1930s, read the Volcker Rule for a new decade. Instead of the crude separation of commercial and investment banking, we will now see an equally crude split of the banking business from proprietary trading, hedge funds and private equity. Some salient points on Glass-Steagall are often missed. First, for decades, it worked. The US financial reforms of the 1930s helped to deliver decades of stable economic growth and reasonably stable growth in equity markets.
Senate Proposes Increasing U.S. Debt Limit to $14.3 Trillion The U.S. debt limit would be raised by $1.9 trillion to $14.29 trillion under an amendment proposed in the Senate. The chamber began debate yesterday on raising the debt ceiling for the fifth time in two years after lower tax revenue from the recession and higher stimulus spending boosted the calendar-year budget deficit to an all-time high last year. “If Congress does not enact this legislation, and soon, then the Treasury would default on its debt for the first time in history,” said Senate Finance Committee Chairman Max Baucus, a Montana Democrat.
GOP, Dems in "Death Embrace": U.S. Budget "About to Go Off a Cliff," Cal Prof Says Raise taxes or cut spending? Washington must take action on both fronts to curb U.S. debt or run the risk of a dollar crisis, according to a report by the Committee on the Fiscal Future of the United States, a panel of bipartisan experts. "The Republican and Democrats are in a death embrace and about to go off a cliff," says Alan Auerbach economist at University of California at Berkeley. Not a member of the panel, Auerbach has studied the government debt for 15 years. He tells Tech Ticker the near-term "challenge is to take credible action on the deficit without damaging the economic recovery.
It's going to be tough when Chinese families have American house-boys Ah, Mr. Obama, there's that pesky will of the people again. The people of Massachusetts gave President Obama and his socialistic, government-takeover plans what amounted to a boot-kick to the groin. In a shocking upset, a senate seat in Mass. which had literally been "owned" by the Democrats for half a century went to a relatively unknown Republican named Scott Brown. Clearly, the Democratic majority in both houses are in jeopardy, particularly since many disheartened Dems will now retire. Two underlying reasons were responsible for the shocking Democrat defeat - unemployment and a fierce dislike of the Obama administration's bungling takeover of everything in sight, with emphasis on the puzzling private health system.
Is there gold in Fort Knox? Buried inside a 109,000-acre U.S. Army post in Kentucky sits one of the Federal Reserve's most secure assets and its only gold depository: the 73-year-old Fort Knox vault. Its glittering gold bricks, totaling 147.3 million ounces (that's about $168 billion at current prices), are stacked inside massive granite walls topped with a bombproof roof. Or are they? It's hard to know for sure. Few people have been inside Fort Knox, a highly classified bunker ringed by fences and multiple alarms and guarded by Apache helicopter gunships. When the U.S. finished building Fort Knox in 1937, the gold was shipped in on a special nine-car train manned by machine gunners and loaded onto Army trucks protected by a U.S. Calvary brigade. And the fort has been pretty much off limits since then. A U.S. Mint spokesman said in an email statement to MoneyWatch that the accounting firm KPMG, which audits the Mint, "has been present in the vault at Fort Knox." The Mint won't comment on exactly how much gold is in there, though.
US Mint Sales: 2010 Silver Eagles Explode on Release In what has become almost a weekly routine of late, the United States Mint again reported unimpressive sales according to their latest figures. A few bright spots did emerge, however. The most impressive gains come not from a numismatic item, but from the US Mint’s bullion coins. Recall that the bullion 2009 American Silver Eagles sold out on January 12th, with 2010-dated coins not appearing for sale until this last Tuesday. The situation left authorized purchasers with no silver bullion options for almost a full week.
Gold slides on dollar rise, fear that China may cool growth Gold futures extended their loss into a second session Thursday, pressured as Chinese inflation data fed expectations Beijing was moving to slow the country's growth, and by a rise in the U.S. dollar. Sapping demand for precious metals, often seen as an alternative to paper currencies, investors throughout much of the metals session bid up the U.S. dollar on concerns about sovereign debt and proposed U.S. bank restrictions.
Why Deflation Is Good for Precious Metals Among the myths being constantly circulated by gold-bears is that gold (and silver) only perform well in high-inflation environments. As with many of the pronouncements of the gold-bears, this is another case of them drawing conclusions based upon their own, faulty understanding of markets, history, and precious metals, themselves. To properly understand this issue requires understanding the true nature of money. While I have covered this issue in a previous commentary, this concept is so important, and so few people understand it that it is worth explaining this point again. The starting point is to list the four properties which all good “money” must exhibit.
A store of value
Evenly divisible
Uniform
Rare (or “precious”)
Gold: Something's Brewing Lease rates in the London bullion market have risen precipitously. Well, it's not so much that lease rates are rising - they're pretty cheap compared with their year-ago levels - it's more that forward rates are at historic lows. Forward rates determine the pricing of bullion transactions in the over-the-counter market. A decline in forward rates implies one of two things: There's either a scarcity of metal available for swap or lease transactions, or there's heavy forward selling. So, which is it? Well, we can gather some clues from the COMEX market. The latest Commodity Futures Trading Commission data show commercial accounts engaging in heavy selling and long liquidation. To boot, money managers have built their largest short position since August 2009 (and, if you're a contrarian, small speculators have taken up their strongest long position in a year and a half).
Money Magazine Still Hates Gold, So Buy It Over the last decade, it would have been possible for investors to make lots of money doing exactly the opposite of what Money Magazine has been telling their readers to do and one of the best examples of this can be found in their very consistent advice about gold. Put simply, the yellow metal has no place in a Money Magazine reader's investment portfolio, that is, if they want to RETIRE RICH like the happy couple in the magazine cover below.
Paper gold can not produce bullion: Jim Sinclair Because of paper gold, market games can be played. What cannot be done is for paper gold to produce bullion. The bullies can attack the paper gold market in unison, but they cannot create supply in real bullion with the ease of highly leveraged paper. The pros depend on the under-financed public to stampede under the pressure of fear of loss. Believe me, I used to run the locals (pros) all over the lot, and on occasion I got significant paybacks.
No bull stops for silver in 2010 It seems bullion analysts are now going for silver as they believe that silver will outperform gold in 2010. A report in I-Net Bridge, said if silver continues its upward trend, it could easily outperform gold during 2010. While the price of gold increased by more than 30% last year, silver prices increased by more than 60%. Many analysts said it is important for investors to include some silver as well as gold in their precious metals portfolio. In fact, at current levels silver looks extremely undervalued and it may trade as high as $25 per ounce in 2010.
Silver: The Race Is On What do the following items tell you? Price of silver falls by nearly 5% in one day. In less than 11 days the available stock of silver to cover paper shorts falls by nearly 15%. In the first few minutes of oveseas trade, silver begins to recover it's losses. The answer is that the race to own silver is on. From the US Government saying that it can't get enough blanks to make the silver eagle to the fact that silver stocks are continuing to decline rapidly since the first of the year, the signs are all pointing to an increase in the future. Allow me to point out what I am seeing and you can make up your own mind.
Celente: Banks gambling with taxpayer money
Inflation 101 We want all our readers to understand that inflation is a disaster for society and it only benefits the elite. In fact, we will go even further by stating that inflation is a hidden tax, an insidious crime against the public. It is the easiest way for any government to confiscate the savings of the public and for generations, wealth has been transferred in this manner. In our opinion, inflation is evil and the sole reason why human beings have become modern-day slaves. Remember, money is supposed to be a store of value, however due to reckless central bank-sponsored inflation, it can no longer fulfill this critical role.
Russia diversifies into Canadian dollars Russia’s central bank announced on Wednesday that it had started buying Canadian dollars and securities in a bid to diversify its foreign exchange reserves. Analysts said the move could be a sign of increased diversification of emerging market central bank assets away from the dollar and into investments denominated in other commodity-linked currencies, such as the Australian dollar.
China Statement’s Missing Words May Signal Shift on Stimulus Seven missing words in a statement issued yesterday by China’s statistics bureau fueled speculation that the government will officially change its fiscal and monetary policy stance. The agency’s fourth-quarter economic growth announcement omitted a reference to maintaining a “moderately loose monetary policy” and a “proactive fiscal policy” in its outlook section. While Ma Jiantang, who heads the bureau, later cited the “moderately loose” pledge in a question-and-answer session with journalists, the written statement mirrored the same omission by Premier Wen Jiabao in a Jan. 19 report.
Japan, China, Greece and Geithner The bankruptcy filing of the Japanese -formerly national- airline JAL gets surprisingly little press beyond a litany of numbers. This may not be so wise, since the fact that the Japanese government lets the carrier go down is not exactly without meaning. Tokyo sends a message. And while that can vary from a strong message (we won't pay anymore) to a weak one (we can't pay anymore), there can be little doubt that the intended signal is that Japanese industries, even those too big or too beautiful to fail, may find themselves all alone when they get into trouble. And that is not what they've gotten used to over the past 20 years.
Roubini says China can't bring recovery alone Noted economist Nouriel Roubini said Thursday that expectations China can buoy the global economy on its own will meet with disappointment, adding that a glut of worldwide industrial capacity threatens recovery from the financial crisis. Roubini, who gained fame by predicting the current global recession, told a financial forum in Hong Kong that it would take "a decade if not a generation" before Chinese consumers are in a position to have a meaningful impact. "China cannot be the only engine of global economic growth," though its frenzied pace of development is offering some support for regional economies and commodity markets, he said.
The Risky Rich . . . (sovereign nations) Nouriel Roubini Today’s swollen fiscal deficits and public debt are fueling concerns about sovereign risk in many advanced economies. Traditionally, sovereign risk has been concentrated in emerging-market economies. After all, in the last decade or so, Russia, Argentina, and Ecuador defaulted on their public debts, while Pakistan, Ukraine, and Uruguay coercively restructured their public debt under the threat of default. But, in large part – and with a few exceptions in Central and Eastern Europe – emerging-market economies improved their fiscal performance by reducing overall deficits, running large primary surpluses, lowering their stock of public debt-to-GDP ratios, and reducing the currency and maturity mismatches in their public debt. As a result, sovereign risk today is a greater problem in advanced economies than in most emerging-market economies.
Goldman Expects to Keep Cake, Eat Same, Stick Public with Tab Dick Bove says that Obama's proposal will be good for Goldman Sachs because it will take away the prop trading from banks that have deposits, but will not affect Goldman Sachs who will once again eliminate more competition. So buy the stock. Hard to imagine anything short of Armageddon that would cause the word 'sell' to emanate from his bloviateness when he is talking his book. And Goldman Sachs says that it is 'unrealistic' to take away their place at the Fed's teats as a subsidy sucking bank holding company
Welcome back, Glass-Steagall In honor of the latest banking overhaul proposed by President Obama (with inflation fighter Paul Volcker to boot) I give you the following ditty. Sing it along to the tune of "Welcome Back, Kotter" -- a TV show that was popular just before Volcker became the chairman of the Fed! I call it "Welcome back, Glass-Steagall." I guess that makes Citigroup, JPMorgan Chase and Goldman Sachs some of the Sweathogs. And poor Bank of America has to be Horshack.
Wall St's rout seen as onset of correction The sharp slide in U.S. stocks this week portends more trouble for Wall Street in the days ahead as investors worry if the recent rally is sustainable. With major indexes breaching key technical support levels on Wednesday, market technicians said Wall Street was likely to see the onset of a long-anticipated correction following a 70 percent run-up in the benchmark S&P 500 from March 2009. "This is the beginning of a correction. It's been brewing for months," said John Kosar, market technician and president of Asbury Research in Chicago. "There's more risk on the downside than opportunity on the upside here until we get a correction."
Wall Street's worst day in months Stocks tumbled Thursday after the Obama administration announced a proposal to increase regulation of the nation's biggest financial firms, including limiting the size and scope of their trading operations.
Lawmakers angry over bank closure Federal regulators received a verbal lashing Thursday from House lawmakers over the shutdown of a Chicago bank strongly tied to the local community and the government's handling of bank closings. Picking over the carcass of Park National Bank — a relatively healthy institution closed by regulators last October — were a House Financial Services subcommittee, bank executives and federal agency officials. Park National and tiny Citizens National Bank, based in Teague, Texas, were in comparatively good financial shape but were shuttered along with seven severely troubled banks under the same corporate umbrella, a bank holding company called FBOP Corp. The other banks were mostly in the West; the nine had combined assets of $19.4 billion.
Obama hammers Wall Street banks President calls for the biggest regulatory overhaul since the 1930s The global banking industry was thrown into turmoil on Thursday after President Barack Obama , responding to public rage over the financial crisis, proposed the most far-reaching overhaul of Wall Street since the 1930s. In reforms that could force the restructuring of some of the biggest names in US finance, including JPMorgan Chase and Goldman Sachs, Mr Obama promised that “never again will the American taxpayer be held hostage by a bank that is too big to fail”.
New bank regulations, China, and the dollar.
Paul Volcker Prevails Paul Volcker, legendary central banker turned radical reformer of our financial system, has won an important round. The WSJ is now reporting: President Barack Obama on Thursday is expected to propose new limits on the size and risk taken by the country's biggest banks, marking the administration's latest assault on Wall Street in what could mark a return -- at least in spirit -- to some of the curbs on finance put in place during the Great Depression.
The Return of the Safety Trade Barely a week ago, we called it the China Sneeze Play. Once again, world markets catch cold after China starts sniffling. Rumors abounded yesterday that the China Banking Regulatory Commission asked several banks to stop making loans. The CBRC’s chairman denied it, but then the Bank of China — one of the country’s biggest banks — announced it is curbing its lending.
Message of the Markets: Inflation Will Force the Fed's Hand, Crippling Recovery Until the past 24 hours, the stock market appeared to be pricing in a V-shaped economic recovery, an outlook also supported by a very steep yield curve. Jim Bianco, president of Bianco Research, says these indicators speak to the recovery of the financial sector far more than that broader economy, where the message is still "indeterminate." The yield curve recently hit a record for steepness, meaning the difference between short- and long-term Treasury rates was as wide as it's ever been.
Obama Calls for Limiting Size, Risk-Taking of Banks President Barack Obama, tapping into voter anger over bank bailouts, called for limiting the size and trading activities of financial institutions as a way to reduce risk-taking and prevent another financial crisis. The proposals, to be added to an overhaul of regulations being considered by Congress, would prohibit banks from running proprietary trading operations solely for their own profit and sponsoring hedge funds and private equity funds. He also proposes expanding a 10 percent market-share cap on deposits to include other liabilities such as non-deposit funding to restrict growth and consolidation.
Is Obama the physician, or the embalmer? The gentlemen of the press (and the ladies, too) are mostly a decent sort, often a bit prideful and sometimes with not very much to be prideful about. They're comfortable only by running in a herd. Trying to think alone gives them a migraine. A fortnight ago, Scott Brown was merely a footnote to the ritual of selecting a successor to Teddy Kennedy, not worth the attention of respectable reporters, pundits or pollsters. Everyone in the herd was sure that "the Kennedy mystique," though tattered and frayed, would produce a suitable substitute to fill Teddy's size twelves.
Bank Supervisors in U.S. Impose Tougher Rules Without Overhaul U.S. banking supervisors are using existing authority to raise standards for capital, liquidity and risk management without waiting for the Obama administration and Congress to hammer out a new regulatory structure. Agencies led by the Federal Reserve and the Office of the Comptroller of the Currency this year are set to propose rule revisions that would increase the amount of capital large banks must set aside against the risk of trading losses, according to government officials. The revisions would follow recommendations of the Basel Committee, the global coordinator for banking regulations based in Switzerland.
Obama in declaration of war on Wall Street Dangerous populist flirtation with Glass-Steagall Markets nosedived on Thursday when Barack Obama set out broad new measures on financial regulation. The most significant of them is banning deposit-taking banks from proprietary trading that is “unrelated to serving customers”. This activity has generated politically incendiary profits for banks and bonuses for bankers. The timing was political: the president spoke on the day that Goldman Sachs announced fourth-quarter earnings of $4.95bn. Those of a more populist nature than Mr Obama – both on the left and on the right – will say that he comes late to the game.
Supreme Court Rolls Back Campaign Finance Restrictions By a 5-4 decision, the Supreme Court on Thursday rolled back restrictions on corporate spending on federal campaigns. The decision could unleash a torrent of corporate-funded attack ads in upcoming elections. "Because speech is an essential mechanism of democracy -- it is the means to hold officials accountable to the people -- political speech must prevail against laws that would suppress it by design or inadvertence," wrote Justice Anthony Kennedy for the majority.
Whitney Tilson makes a pretty simple, yet solid point against U.S. homebuilders. The U.S. has a massive oversupply of housing right now, as evidenced by the collapse of housing prices. Millions of additional foreclosures are on the way as well. Thus until the U.S. works off its massive oversupply of housing, it won't need any new houses for a long, long time. Thus there will be little work for homebuilders and their employees even if the economy is recovering.
FDIC’s WaMu role under investigation by Senate subcommittee A congressional subcommittee is investigating the Federal Deposit Insurance Corp.’s role in the seizure and sale of Seattle-based Washington Mutual Bank in September 2008, a court document shows. A document recently filed in U.S. Bankruptcy Court in Delaware as part of the Washington Mutual bankruptcy case shows that the Senate Permanent Subcommittee on Investigations (PSI) has subpoenaed the FDIC for documents related to the resolution of WaMu.
FDIC Chief Got Bank of America Loans While Working On Its Rescue Agency Grants Sheila Bair Retroactive Ethics Waiver on Mortgages Sheila Bair, one of the chief regulators overseeing Bank of America’s federal rescue, took out two mortgages worth more than $1 million from the banking giant last summer during ongoing negotiations about the bank’s bailout and its repayment. In the weeks between the closings on her two mortgage loans, Bair met with Bank of America’s chief negotiator in the bailout talks.
FDIC geared up for busy year of bank failures FDIC says expects failure rate to remain high in 2010 The U.S. agency charged with dismantling or selling off failed banks said it is equipped to deal with what it sees as a busy 2010, according to remarks to be delivered before Congress on Thursday. The Federal Deposit Insurance Corp expects that bank failures will remain elevated this year, said Mitchell Glassman, director of the FDIC's division of resolutions and receiverships.
Walking Away From Your Mortgage Is Morally Wrong And Financially Stupid, Says McArdle As millions of Americans begin to realize that it will be years if not decades before their houses are worth what they owe on them, there has been lots of talk about whether it's okay to just voluntarily walk away from your mortgage. I argued last week that, in some circumstances, it is okay -- because your mortgage is a business contract between you and a bank. As the contract makes clear, if you stop paying, the bank gets the house, and you lose your equity and credit rating. That seems like a fair trade, especially if you have tried to renegotiate the mortgage first. Our guest Megan McArdle, economics editor for The Atlantic, thinks this argument is wrong. First, Megan says, walking away from your mortgage voluntarily is often financially stupid: There are plenty of fees and costs associated with defaulting, and your credit rating will be destroyed for years.
Homebuilders Turn to Private Equity for Financing More than 40 U.S. homebuilders have teamed up with private equity firms to acquire and complete unfinished subdivisions as banks cut construction lending. The investments will pay off for the builders and their investors if the prices are low enough and the locations are in areas where demand is recovering, said Megan McGrath, a home building industry analyst at Barclays Capital Inc. in New York.
Small wonders Home sizes fall as builders, buyers embrace economic reality New-home buyers responded to the tough times in 2009 by opting for smaller houses, driving down the average size of a house built in the U.S. for the first time in 27 years. Data released Wednesday by the National Association of Home Builders found the average size of a new home that was completed in 2009 fell to 2,480 square feet from 2,520 square feet in 2008. The last time the average completed-home size fell by a statistically significant amount was 1982.
Pelosi: House won't support Senate health care bill, at least for now The Senate health care bill has too many unpopular provisions to win approval from the House at this time, House Speaker Nancy Pelosi said Thursday. Pelosi's comment to reporters appeared to dash the chances that Democrats will take the easiest route for passing a health care bill: having the House approve the Senate version unchanged. "I don't think it's possible to pass the Senate bill in the House," Pelosi said. "I don't see the votes for it at this time."
Pelosi doesn't have votes to pass health bill House Speaker Nancy Pelosi said Thursday that she doesn't have the votes to pass the Senate's health reform bill as some rank-and-file Democrats signaled support for a scaled-down measure - one that deletes parts of both bills or breaks them into pieces, such as insurance industry reforms and Medicaid expansion. The comment marks a serious setback in efforts to pass President Obama's top legislative priority now that Democrats are one vote shy of enough to overcome a Republican filibuster in the Senate.
Rise in jobless claims signals bump in recover A surprising jump in first-time claims for unemployment aid sent a painful reminder Thursday that jobs remain scarce six months into the economic recovery. The surge in last week's claims deflated hopes among some analysts that the economy would produce a net gain in jobs in January and help fuel the recovery.
Jobless Claims in U.S. Unexpectedly Rise on Backlog More Americans than anticipated filed claims for unemployment benefits last week, reflecting a backlog of applications from the year-end holidays. Initial jobless claims rose by 36,000 to 482,000 in the week ended Jan. 16, the highest level in two months, from 446,000 the prior week, Labor Department figures showed today in Washington. The jump was due to an “administrative” accumulation from late December and early January holidays, and did not reflect “economic” reasons, a Labor Department spokesman said.
Jobless claims up, regional manufacturing dips The number of U.S. workers newly applying for unemployment benefits unexpectedly rose last week and regional manufacturing slipped in January, hinting at some slowing in the pace of economic recovery. The Labor Department said on Thursday initial claims for state unemployment benefits rose 36,000 to 482,000 last week as a backlog of applications from the holidays was processed. It was the third straight week that claims rose. Analysts had expected new claims to slip to 440,000. Separate data showed factory activity in the Mid-Atlantic region slowed in January to a three-month low, while a gauge of economic prospects scaled a record high last month.
Tech job cuts hit 4-year high Planned job cuts at tech companies rose in 2009 for the second straight year, hitting the highest level in four years, according to a report released Tuesday. Outplacement firm Challenger, Gray & Christmas Inc. reported that tech sector employers announced 174,629 job cuts in 2009. That's a 12.3% increase from cuts announced in 2008, and the highest total since 2005.
Toyota recall: 2.3 million cars Toyota Motor Sales USA is recalling 2.3 million vehicles to correct a problem that could cause the vehicles' gas pedals to stick. This new recall is separate from an on-going recall of 4.2 million Toyota and Lexus vehicles to correct a problem in which the pedals could become stuck under a loose floor mat.
Cost of gas up 14 cents in the last three weeks Nationally, the average cost of a gallon of regular has risen to $2.74 The average price of regular gasoline in the United States is up 14 cents over a three-week period to $2.74. That's according to the national Lundberg Survey of fuel prices released Sunday. Analyst Trilby Lundberg says the average price for a gallon of mid-grade was $2.86. Premium was at $2.97.
The Greatest Threat of the 21st Century: Not AGW but Eco-Fascism As you freeze your butt off in a winter whose severity the politicised weather forecasters of the Met Office utterly failed to predict, and as you wonder how you can afford gas and electricity bills which have been grotesquely inflated by taxes and legislation designed to “combat global warming”, spare a thought for a fellow victim of eco-fascism who’s even worse off than you. In a week or so this poor man could be dead.
Air America Radio closing, filing for bankruptcy Air America Radio, a radio network that was launched in 2004 as a liberal alternative to Rush Limbaugh and other conservative commentators, on Thursday shut down abruptly due to financial woes. The network once boasted hosts such as Al Franken and Rachel Maddow, but struggled from the outset, including multiple management shake-ups, a bankruptcy in 2006 and sale for $4.25 million the following year. Air America ceased airing new programs Thursday afternoon and said it will soon file to be liquidated under Chapter 7 bankruptcy. It began broadcasting reruns of programs and would end those as well Monday night.
Liberal talk radio Air America shuts down Air America, the liberal talk-radio network that launched with much fanfare in 2004, ceased operation on Thursday, whipped by the “difficult” economic climate that led to a drop off in local and national advertising revenue. The network, best known for hosting a show by Al Franken, a comedian who was elected as a US senator in 2008, was positioned as a counter to the strength of conservative radio embodied by well-known radio hosts including Rush Limbaugh.
Why Americans Should Care About the Debt Crisis in Greece Is Greece about to go bust? The Greek government says they don't need a rescue package but they are exploring all options to claw out of a mounting debt crisis to cover their near-term budget shortfall. Investors are still skeptical. Yields on Greece's benchmark 10-year bond are trading near record premiums to comparable German debt after briefly touching a record high on Wednesday. The cost of insuring that debt through credit default swaps is also near unprecedented levels. European Union officials say they are not worried about Greece defaulting and have refused to discuss talks of a bailout.
Sarkozy’s Three-Way NATO Bet France’s return to NATO’s integrated military structure after a 43-year absence last year brought to an end one of the exceptions françaises. It also helped frame the growing debate over whether to develop European defense more effectively or to seriously reform the Atlantic alliance. At first glance, it may seem that France chose NATO at the expense of the ten-year-old European Security and Defense Policy (ESDP). But that interpretation takes too pessimistic a view of ESDP’s achievements over the past decade, and is based on a flawed understanding of the relationships between NATO and the European Union.
Haiti wants to move 400,000 out of capital Suburb picked to start; aid still backed up with 1,400 flights waiting PORT-AU-PRINCE, Haiti - Haiti's government on Thursday unveiled plans to move 400,000 earthquake victims to new settlements outside the destroyed capital. The first wave of 100,000 people were to be sent to transitional tent villages of 10,000 each near Croix Des Bouquets, a suburb north of Port-au-Prince, Interior Minister Paul Antoine Bien-Aime told reporters.
Haiti to move 400,000 quake survivors to temporary camps Haiti says it will resettle 400,000 earthquake survivors from its stricken capital to temporary camps outside town. The chief of staff to President Rene Preval tells The Associated Press that the government is concerned about sanitary conditions in the hundreds of tent cities that have sprung up in Port-au-Prince since the Jan. 12 quake. Doctors have warned of outbreaks of disease among the hundreds of thousands in the overcrowded camps.
Russia says to start Iran nuclear plant in 2010 MOSCOW, Jan 21 (Reuters) - Russia will start up the reactor at Iran's Bushehr nuclear power plant this year, the chief of Russia's state nuclear corporation told reporters on Thursday. "2010 is the year of Bushehr," Rosatom chief Sergei Kiriyenko told reporters after a cabinet meeting in Moscow. "There is absolutely no doubt that it will be built this year. Everything is going according to schedule," he said. (Reporting by Darya Korsunskaya, writing by Guy Faulconbridge, editing by Conor Humphries)
Russia vows quick completion of Iran atom plant Russia's energy minister pledged Sunday a quick completion of Iran's first nuclear power station, two weeks after announcing the latest delay, but refrained from giving a specific time for its launch. The comment from Sergei Shmatko came after talks with Iranian Oil Minister Massoud Mirkazemi and as Iran's government announced plans to build 10 new uranium enrichment plants, in a major expansion of its disputed nuclear program. In mid-November, Shmatko said that technical issues would prevent engineers from starting up the reactor at Bushehr -- being built by Russian state contractor Atomstroyexport -- by the end of the year as previously planned.
Distrust could dampen census count With the start of the nation's decennial census just weeks away, nearly one in five persons might decline to participate in the high-stakes head count, citing mostly a lack of interest but also a broader distrust of the federal government. A poll released Wednesday by the Pew Research Center highlighted the challenges as the U.S. Census Bureau prepares to begin its tally in March. The findings come as some groups question whether the agency's $300 million outreach effort is doing enough to reach hard-to-count communities.
Identifying Sure Signs Of The Final Economic Plunge Many researchers, including those here at Neithercorp, have projected that the third and final stage of the economic collapse will begin sometime in 2010. Barring some kind of financial miracle, or the complete dissolution of the Federal Reserve, a snowballing implosion should become visible by the end of this year. Data indicates that the dollar and the Dow are running on nothing but false promises and fiat bailouts, and that this game is slowly winding down. The Fed cannot sustain its current rate of liquidity injections without raising the ire of foreign nations heavily invested in U.S. debt, especially when banks have refused to loosen their lending practices as promised, thereby hoarding all bailout funds made available to them and stifling any chance of a credit market recovery.
Gold And Dollar Decoupling
Price Inflation Of Oil
Dollar Loses World Reserve Currency Statu
U.S. Treasury Dump
Simultaneous Dow / Dollar Drop
Jobs And Housing
Grocery Store Peculiarities
Bank Holiday
Terror Attack / New War
$8 million in assets - and can't get a mortgage The wealthy have money problems, too -- yeah they do. Even refinancing a mortgage for their fancy digs or getting a new loan can be near impossible these days thanks to skittish lenders. And the higher the loan value, the more they worry. Still, that people with high six-figure incomes, stellar credit histories and gobs of assets get mortgage requests turned down seems weird. "It's amazing really," said Susan Bruno, a financial planner with Beacon Wealth Consulting in Rowayton, Conn., "but it makes sense when you think about it."
BofA: Attitudes Changing Towards Default Within the next couple of years, probably somewhere between 10 million and 20 million U.S. homeowners will owe more on their homes, than their homes are worth. (See Homeowners With Negative Equity) One of the greatest fears for lenders (and investors in mortgage backed securities) is that it will become socially acceptable for upside down middle class Americans to walk away from their homes. "There's been a change in social attitudes toward default," Mr. Lewis says. Bankers typically have believed that cash-strapped borrowers would fall behind on their credit cards, car payments and other debts -- but would regard mortgage defaults as calamities to be avoided at all costs. That isn't always so anymore, he says.
Now, Even Borrowers With Good Credit Pose Risks Kenneth Lewis acted far ahead of the competition in 2001, when he got Bank of America out of the business of issuing subprime mortgages. While profit margins on these loans to risky borrowers seemed tempting, the bank's chief executive believed the default risks were too hefty to justify. It took a while for Mr. Lewis to be proved right, but BofA's payoff has been huge. The big Charlotte, N.C., bank has largely sidestepped the subprime mess, emerging -- despite taking some hits on investments it made in securities tied to subprime loans -- with the highest net income of any U.S. commercial bank this year. Meanwhile, some of its rivals have sustained multibillion-dollar losses from subprime lending.
'Greater Depression is going to be really serious' Louis: So, what's on your mind this week, Doug? I understand you've had a "guru moment." Doug: Well, it's nothing but a gut feeling, but I think the stock market is riding for a big fall this year. Everyone was afraid the world was going to come to an end a year ago, and it almost did. But governments all around the world stepped in and printed up trillions of their various currency units - it's not just the United States. And still, retail price inflation hasn't blossomed. It seems that governments are bent on keeping asset prices up to avert panic. They focus on controlling perception instead of fixing the problem. It stems from an economic version of the theory that all we need to fear is fear itself. As long as we have the right psychology, everything is going to be okay - total nonsense.
Is there gold in Fort Knox? Buried inside a 109,000-acre U.S. Army post in Kentucky sits one of the Federal Reserve's most secure assets and its only gold depository: the 73-year-old Fort Knox vault. Its glittering gold bricks, totaling 147.3 million ounces (that's about $168 billion at current prices), are stacked inside massive granite walls topped with a bombproof roof. Or are they? It's hard to know for sure. Few people have been inside Fort Knox, a highly classified bunker ringed by fences and multiple alarms and guarded by Apache helicopter gunships. When the U.S. finished building Fort Knox in 1937, the gold was shipped in on a special nine-car train manned by machine gunners and loaded onto Army trucks protected by a U.S. Calvary brigade. And the fort has been pretty much off limits since then. A U.S. Mint spokesman said in an email statement to MoneyWatch that the accounting firm KPMG, which audits the Mint, "has been present in the vault at Fort Knox." The Mint won't comment on exactly how much gold is in there, though. That's why U.S. Rep. Ron Paul, R-Texas, a 2008 presidential candidate known for his libertarian streak, wants to have a look around. Paul introduced a bill to audit the Federal Reserve, which includes Fort Knox's gold. "My attitude is: Let's just find out what's there," he says.
Gold steady a day after slump, China data eyed TOKYO, Jan 21 (Reuters) - Gold steadied above $1,100 per ounce on Thursday after falling more than 2 percent the previous day, when investors became risk averse as the dollar rose and China's tightening bank lending capped economic optimism. Market participants were eagerly awaiting a set of Chinese economic indicators on Thursday, including CPI and gross domestic product data.
Gold prices to go higher from here A leading industry analyst has revealed that he believes diminishing global gold mine returns will underpin a continuance in Gold Price rises. Writing for Forbes India, Evy Hambro, managing director and portfolio manager with the natural resources team at Blackrock Mutual Fund, says that reduced supplies in conjunction with weakened economies has created attractive Gold Investment opportunities. He said: "Market fundamentals suggest that Gold Prices could continue to trend higher from here."
'Real interest rates are the prime driver of gold price' Pinetree Capital Resource Analyst Craig Stanley sheds some light for The Gold Report on how real interest rates are driving gold's rise. Although the 10-year real rate is positive now, he says if it goes negative, and stays negative, "Look out. The gold price could really spike." In this exclusive Gold Report interview, he discusses some of the junior exploration and development companies in Pinetree's portfolio.
Don't bet against gold with the dollar Each crash and economic downturn has been followed by another freedom-elimination, another axe-chop into the constitution, another new law courtesy of the Gman. So it all "never happens again". Risk isn't going away regardless of the promises made to you by the Gman, the banksters, the golf ball advisors, and self-appointed master traders. Which is why the foundational gold pyramid generator that I use extends to zero. Many of you still don't really understand risk properly. I keep telling you to get "out there," to go visit at least one factory owner, preferably several of these risk/reward experts.
Gold rush grips Australia Bullion lovers have been reading the fantastic stories that have been coming out of China in the last one year on the gold buying frenzy and the gold production momentum that is going on in the dragon country. China is today the largest producer of gold. China has beaten India to emerge as the largest consumer of gold. China now wants to emerge as the No 1 country in the world with the largest deposit of gold reserves.
Lower Lows Coming in Gold A forecast for Comex Gold sent out to subscribers Monday night came within a dime of nailing the low of yesterday’s $33 plunge. That’s the good news, and some subscribers evidently were able to make hay with the prediction. The bad news is that it looks doubtful that the 1106.80 print that marked the February contract’s intraday low will hold, given the recent strength in the U.S. dollar. You can see how powerful the greenback’s uptrend is in the chart, below, of the NYBOT Dollar Index. Yesterday the index scored its most impressive gain in six weeks, rallying to within a hair of a “Hidden Pivot resistance” at 78.69. The actual high was 78.45, and although it could turn out to be an important top, this looks doubtful given the shallow pullback that has occurred so far. If the resistance point is decisively exceeded today, however – say, by 0.10 points or more – or if it is exceeded on a closing basis for two consecutive days, we’d infer that the rally is bound for at least 80.78 -- roughly three percent above current levels.
Gold Pares Advance as Dollar Rallies on China Economic Data Gold pared gains as the dollar rebounded after China’s economy in the fourth quarter expanded at the fastest pace since 2007. China’s gross domestic product climbed 10.7 percent from the same period a year ago, more than the median forecast of 10.5 percent in a Bloomberg News survey, adding to speculation the world’s third-largest economy will limit lending and raise borrowing costs to curb inflation and accelerating asset prices.
US Dollar (DX) Longer Term Charts Here is the longer term view of the US Dollar as measured by a basket of currencies. Can it 'break out' here? Yes, certainly. Europe and Japan have their problems, and in the world of fiat, the grading of the paper is done 'on a curve.' The central banks and their mavens, who intervene at least indirectly in the currency markets with a certain obsessiveness these days of non-stop financial engineering, like to shove their manipulation around the plate as well. They don't 'tweak' the economy; they are the economy, at least at the margins.
Debt and Deleveraging: The global credit bubble and its economic consequences. In this report, we analyze in detail how debt and leverage have evolved in the public and private sectors in ten mature economies and four emerging economies. We also built an extensive database covering 45 episodes since 1930 in which an economy deleveraged, or significantly reduced its total debt-to-GDP ratio. With this database, we were able to identify four typical paths, or “archetypes,” for the deleveraging process. This enabled us to analyze the macroeconomic channels for deleveraging and the economic consequences of the process in the past. Finally, we have identified the practical implications of our work for policy makers, financial regulators, and business executives.
Deflation in Everything But the Cost of Living THEY WERE SUPPOSED to avert depression. The Bank of England continues to tout their "success". But it looks like the best that money-printing and zero rates might now deliver is '70s-style stagflation, plus '30s-style wealth destruction and a glacé cherry on top. Giving Britain its "stag" – as in stagnation – are economic output, wages, capital investment, real estate prices and now, perhaps, a return of the bear market in London shares. Whether or not GDP shows an uptick for the end of 2009, this is the deepest British recession since 1931. Business investment sank to a 6-year low on the last quarterly data, and the number of people out of work for 12 months or more has risen by two-thirds since Northern Rock was bailed out, breaking the dam of bail-outs worldwide in late 2007.
Why Deflation Is Not Inevitable (Sadly) Over the past month, I have written seven lengthy articles on the totally erroneous theory that consumer price deflation is inevitable, no matter what the U.S. government and the Federal Reserve System do. I would like to believe that this will end the debate. It won't. Why not? Because there are people in the hard money movement who reject the Austrian theory of the business cycle. They reject the views of central banking offered by Ludwig von Mises and Murray Rothbard. Incredibly, some of them claim to be followers of Mises. If so, they do not understand what he wrote. Yet Mises was easy to understand on monetary theory.
New IMF, Same Old Problems For the past couple of years, the International Monetary Fund has been thumping its chest that it has changed and is ready to take the lead on global economic issues. A report by the IMF’s independent evaluation office, which is charged with critiquing the institution, suggests the IMF still has a long way to go. Only a minority of officials in the richest, most powerful countries, found the IMF’s analyses “compelling,” the evaluation group found.
Merkel Calls for Global Exit Strategy BERLIN--Chancellor Angela Merkel said Wednesday exports will remain crucial for Germany's economy and warned that European Union countries' efforts to return to sound finances needed to be coordinated with the U.S. and Japan. Ms. Merkel said finding an "internationally coordinated exit strategy" is possibly the "biggest challenge" to overcoming the global financial crisis that peaked in late 2008. Germany debt-limit rules won't matter if a "very different policy" is being pursued in the U.S., Japan, or elsewhere, she said. "The crisis, which hasn't mainly originated in Europe, has taught us that if one big player in the global competition doesn't stick to rules, all others have to pay for the consequences," Ms. Merkel said.
Greece Debt Default Could Take Eurozone Down With it Don Miller writes: As the European Commission holds its regular monthly meeting in Brussels this week, ministers find themselves debating what to do about the Greek debt crisis -- the biggest credibility test the Eurozone has faced since the single currency was created. The question is whether the 16 countries that share the European Union's (EU) currency can force a rogue member with a weak economy to take drastic measures to cut its budget deficit without calling in the International Monetary Fund (IMF) or sparking social unrest.
Leaders Prepare For Disappointment in Europe LONDON -- With warnings of another slowdown in the euro-zone economy and powerful head-winds in the U.K., policy makers this week appeared to be preparing consumers and investors for disappointment. Juergen Stark, a member of the European Central Bank's policy council, said that the recovery in the 16-country euro zone could lose traction in the first part of this year. "It is likely that the first half of 2010 will go more slowly than in the second half of 2009," Stark said Wednesday at an economics seminar in Leipzig, Germany. "This doesn't mean a double-dip recession, but more in the character of a gradual and bumpy economic recovery over the next quarters," Mr. Stark said.
Stocks get knocked back Stocks slumped Wednesday as a strong dollar and questions about China's lending practices slammed commodities, one of the leaders of the recent rally. IBM dragged on the tech sector as investors picked apart the company's outlook one day after sending the stock higher.
Hedge Funds Hold Investors ‘Hostage’ After Rebound Hedge funds’ best year in a decade is giving little comfort to Jason D. Papastavrou. The founder of New York-based ARIS Capital Management LLC, which has about $250 million invested in hedge funds, is still waiting to get back $155 million from 22 managers that restricted withdrawals in 2008. “We don’t object to the illiquidity,” Papastavrou said in an interview. “We object to how some managers are abusing the situation and holding investors’ money hostage to generate fees.”
Fed’s Dudley: Banking System Remains Under Strain Federal Reserve Bank of New York President William Dudley flagged the uneven recovery of the financial system Wednesday, in comments that also said central bank policy was aimed at trying to help that healing process continue. “The capital markets have recovered” but “the banking system is still under quite a bit of strain,” Dudley said. For banks, “it is a healing process, it will take some time,” and that’s “one of the reasons why we have our monetary policy setting where it is,” Dudley said.
China May Buy Less U.S. Debt, CASS Researcher Says China, which cut Treasury holdings by the most in five months in November, may scale back purchases of U.S. debt on concern the dollar will decline, said Liu Yuhui, an economist at the Chinese Academy of Social Sciences. The Asian nation’s investors, the biggest foreign holders of U.S. government debt, trimmed holdings by $9.3 billion in November to $789.6 billion, a Treasury Department report showed yesterday. The decline came even as Chinese foreign-exchange reserves swelled $61 billion in the month.
China Curbs Bank Loans as Asset Bubble Worries Grow Unemployment is in the double digits in the United States. China, meanwhile, is expected to expand its GDP at near double-digit rates again. Given the starkly different scenarios, it's easy to be envious of the emerging giant's seemingly comfortable position in the global economy. But China is actually in the midst of a high-stakes balancing act. And Wednesday's announcement that China is planning to further curb bank lending -- the latest in a series of maneuvers to deflate potential asset bubbles -- sheds more light on the tough choices the country is now facing.
China’s GDP Growth Accelerates to Fastest Since 2007 China’s growth rate accelerated to the fastest pace since 2007 in the fourth quarter, signaling a need to rein in credit growth that threatens to destabilize the world’s fastest-growing major economy. Gross domestic product rose 10.7 percent from a year before, more than the median forecast of 10.5 percent in a Bloomberg News survey, a statistics bureau report showed in Beijing. Asset-price gains, particularly in property, are creating problems for the government to guide the economy, Ma Jiantang, who heads the bureau, told reporters after the release.
Mexico Peso Falls the Most in 2010 as China Curbs Bank Lending Mexico’s peso fell the most in 2010 on concern China’s move to curb bank lending will slow the global economic recovery, reducing demand for higher-yielding, emerging-market assets. The MSCI Emerging Markets Index of 22 nations lost 1.8 percent after Liu Mingkang, China’s chief banking regulator, said some banks were asked to pare lending after a record 9.59 trillion yuan ($1.4 trillion) in new loans in 2009.
World Bank sees risk of recovery losing steam The global economic crisis is largely over and a modest recovery is under way but it could quickly lose steam as governments pull back some of the extraordinary liquidity they pumped into markets, the World Bank said on Wednesday. The World Bank’s annual Global Economic Prospects report for 2010 said the fragile recovery posed special risks for developing countries including stiffer borrowing costs, reduced credit and capital flows. To deal with tighter financial conditions, which could impede investment, the World Bank said there was “considerable scope” for countries to cut domestic borrowing costs and promote local capital markets.
No New Normal on Wall Street as Economists Dismiss Pimco’s GDP “New normal” may not be the new norm after all. Wall Street economists aren’t buying the theory propounded by Bill Gross and Mohamed El-Erian, co-chief investment officers at Pacific Investment Management Co., that the U.S. will be mired in long-term sluggish growth averaging 2 percent a year. They see potential real growth, or the rate of expansion at which inflation is steady, at 2.5 percent, matching the average quarterly rate of the past 20 years, according to the median forecast in a Bloomberg News survey of 46 economists.
The Source of America's Imperial Presidency By William Pfaff The imposingly versatile Garry Wills, Northwestern University historian, political polemicist, sometime philosopher, theologian and church historian, has a new book inspired by liberal disappointment with President Barack Obama, blaming Obama's faults as well as other U.S. presidential disorders on the atom bomb. He argues in "Bomb Power" that possession of the bomb-a product of an enormous and a secret scientific undertaking, the Manhattan Project, launched by Franklin D. Roosevelt-has ever since given U.S. presidents an intoxicating degree of unchecked personal power, so that there is "no constitutional check on his actions ... [which amounts to] a violent break in our whole governmental system."
'Scott Brown' candidates rising up As Washington struggled to discern a meaning from Massachusetts' special election, candidates outside the Beltway said one message is clear: Outsider, grass-roots campaigns that tap voters' anger at Washington arrogance will win in 2010. Republican Scott Brown, who outhustled his opponent Tuesday to win a Senate seat that Democrats had held since 1953, became an instant brand name, with Republicans claiming to be "Scott Brown" candidates in their own races and Democratic candidates trying to heed the lessons of his shocking victory.
Three Nagging Questions About Barack Obama By Ruth Marcus Since the start of his presidency, I've been wrestling with three questions about Barack Obama: Did he take on too much? Is he too hands-off in his dealings with Congress? And the biggest, which puzzled me throughout the campaign as well-where is he, exactly, on the political spectrum? These are questions without certain answers. For one thing, the counterfactual can never be fully known: What if he hadn't chosen to press health care and climate change and financial reform? What if he had been more clear about his bottom line on health reform earlier in the process? For another, the story of Obama's presidency is unfolding. The first chapters do not presage the outcome.
Obama's Domestic Agenda Needs a Reset I think Massachusetts Republican State Senator Scott Brown's victory in the election to replace the late Senator Ted Kennedy is 40% a result of his far superior campaign -- his defeated opponent was a painfully inept campaigner -- and 60% a bolt of lightning delivered to the White House's nervous system from voters in what had previously been thought of as the safest Democratic state in the union. The message traveling down that bolt of lightning was that perennial favorite -- it's the economy, stupid.
Republicans Want the Senate Back With Just One Win For the weight given yesterday’s Senate race in Massachusetts, you would think the Democratic majority status in the Senate hung in the balance. It didn’t. But its supermajority status did, and that’s what counts these days, sad to say. Without 60 votes to kill a threatened filibuster, it might take a legislative trick to get health-care reform passed, for example. This isn’t just about health care. Not long ago, either party would have considered itself on solid ground with 59 votes in the 100-member Senate. Filibusters aimed at killing bills were rarely undertaken or even threatened when a strong majority supported the measure.
Massachusetts Message: Democrats Must Create Jobs, or Else Massachusetts Republican Scott Brown's stunning win over Democrat Martha Coakley for the U.S. Senate seat vacated by the passing of Edward M. Kennedy both reshapes the public policy landscape and puts President Barack Obama and Congressional Democrats on notice: Fix the economy and bring back job growth -- or face large seat losses in the November Congressional election.
Democrats Propose $1.9T Increase in Debt Limit Senate Democrats propose $1.9 trillion increase in federal debt limit Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion. The unpopular legislation is needed to allow the federal government to issue bonds to fund programs and prevent a first-time default on obligations. It promises to be a challenging debate for Democrats, who, as the party in power, hold the responsibility for passing the legislation.
Bank of America losses grow to $5.2 billion Losses at Bank of America widened to $5.2 billion in the fourth quarter, as its results were squeezed by the company's decision to return bailout money owed to the government. Even as consumer loan troubles again ate away at profits, much of the decline was prompted by its repayment of $45 billion the company received through TARP, or the Troubled Asset Relief Program.
Cautious about the economy, big banks report slow lending Two of the nation's largest banks said Wednesday that loan losses generally have stopped increasing but that relatively few customers are seeking new loans, reports that are in broad agreement with other indicators showing that the economy remains weak. Bank of America and Wells Fargo posted starkly different annual results. Bank of America said it lost $2.2 billion during 2009, its first annual loss in at least 20 years, and Wells Fargo reported an $8 billion annual profit, among its largest ever.
Obama to Nationalize Student Lending with Pending Budget Bill A bill currently before the Senate would empower the Obama administration to nationalize the student lending industry, eliminating the federally subsidized private loans millions of university students rely on to finance their educations. The Student Aid and Fiscal Responsibility Act – currently being considered by the Senate Health, Education, Labor, and Pensions (HELP) Committee – would eliminate the Federal Family Education Loan (FFEL) program. FFEL loans are federally subsidized and make up approximately 80 percent of the student lending industry.
Loan Troubles Bedevil Banks Wells Fargo swings to profit, adding to round of improved results a year after meltdown The loan troubles of many U.S. consumers weighed down fourth-quarter results at Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp, but bank executives predicted loan losses are near a peak. The three banks hold a combined 24% of all U.S. deposits and operate more than 15,000 retail branches, making them important barometers of consumer sentiment and the health of the U.S. banking industry.
States urge action on foreclosures Cut loan principal for borrowers whose homes are worth much less than their mortgages. Attack the problem of option adjustable rate mortgages. Cut down on red tape. Those are some of the ideas in a plan issued Wednesday by a group of state officials who have been working for more than two years to stem the foreclosure tide. The state attorneys general and banking regulators urged the Obama administration and loan servicing firms to step up their efforts.
Cold Weather Chills Housing Starts New-home construction fell in December, as bad weather kept construction crews from breaking ground. But an increase in newly issued building permits suggested the decline was only temporary. Separately, inflation at the wholesale level was muted last month, as higher food prices were offset by a decline in energy prices. The number of new-home starts in December fell 4% from November to a seasonally adjusted 557,000 annual rate, the Commerce Department said Wednesday.
Obama Cracking Down On Contractor Tax Cheats President Barack Obama is ordering a new crackdown on federal contractors who don't pay their taxes. He was signing an executive order Wednesday telling federal agency chiefs to take steps to bar those companies from receiving new government contracts. Obama was also directing the IRS to review contractor filings to ensure the companies are not lying about the taxes they've paid. "It is simply wrong for companies to take taxpayer dollars and not be taxpayers themselves," Obama said in his prepared remarks. "We need to insist on the same sense of responsibility in Washington that so many of you strive to uphold in your own lives, in your own families and in your own businesses."
Rocky mountain coming down The Democratic West under threat AT A beer distributor’s in Loveland, Colorado, Scott McInnis, the front-runner in the race for the state’s Republican gubernatorial nomination, was talking about Bill Ritter, the state’s Democratic governor. At the end of the previous Republican administration, he reckoned, there were plenty of jobs, and Colorado was known as a business-friendly state. But Mr Ritter had slapped punitive regulations on the oil and gas industry, and failed to compete effectively for big military projects. Recent polls had shown Mr Ritter trailing in a matchup with Mr McInnis. The next day, January 6th, Democrats were stunned when Mr Ritter announced that he would not stand for re-election this year after all.
Housing starts fall, producer prices rise New U.S. housing starts unexpectedly fell in December, likely the result of unusually cold weather, while producer prices rose for a third straight month. The Commerce Department said on Wednesday housing starts fell 4 percent to a seasonally adjusted annual rate of 557,000 units, pulled down by a drop in groundbreaking activity for single-family dwellings. Analysts polled by Reuters had expected housing starts to rise to 580,000 units. Building permits, however, soared in December. "At first glance housing starts were disappointing. But, they were offset by a huge jump in building permits. The data is suggestive of a continued gain in housing construction over the next several months," said Michelle Meyer, economist at Barclays Capital in New York.
‘Tranche Warfare’ Erupts as Property Owners Slide Into Default When Lightstone Group bought Extended Stay Hotels Inc. in June 2007, it relied on more than $7 billion in debt financing to complete the $8 billion deal just weeks before the leveraged-buyout market imploded. Today, Extended Stay’s creditors are battling each other after the company filed the largest bankruptcy case by a U.S. hotel owner. A company reorganization plan, which includes financing from Centerbridge Partners LP and Paulson & Co., may be challenged by a proposal from Starwood Capital Group LLC that is backed by some so-called mezzanine lenders.
Harder to get an Uncle Sam mortgage It's going to be harder to get a government-backed mortgage from now on. Looking to shore up its weakening finances, the Federal Housing Administration is set to announce stricter standards on Wednesday. The agency, which insured nearly a third of new mortgages in 2009, will increase the premium it charges for its mortgage insurance and require those with weaker credit scores to come up with larger down payments.
FHA Raises Premiums, Down Payments as Mortgages Sour The cost of a government-guaranteed mortgage will be more expensive for U.S. homebuyers as the Federal Housing Administration raises insurance rates and tightens credit- score rules to combat a rise in delinquencies. The premiums FHA charges to insure mortgages will rise to 2.25 percent from 1.75 percent this year, the agency said in a statement today. Borrowers who have credit scores below 580 will also have to make down payments of at least 10 percent, up from 3.5 percent, and allowable seller concessions will be cut by half.
Jobs bill: New Senate math means rough road The road for another stimulus bill just got tougher following Tuesday's election of Republican Scott Brown to the Senate in Democratic stronghold Massachusetts. After health care, Congress' next big priority is to pass something that shows voters in an election year that they're on top of the nation's unemployment scourge.
Study: Unemployment to Stay High Through 2013 Unemployment rates will likely peak in most U.S. cities in 2010, but it will be many more years before jobless rates hit their lows of the last decade, a report released by a U.S. mayors group shows. In some areas, such as California's central valley and cities in Nevada, unemployment rates will stay at or above 10 percent through 2013, according to the report published on Wednesday by the U.S. Conference of Mayors and research group Global Insight. The mayors group released the report a day ahead of a meeting with U.S. President Barack Obama in which it will seek federal financial aid for small and large cities.
Sioux City John Morrell Plant to Close The city of Sioux City issued a written announcement Tuesday evening regarding the future of the John Morrell Plant. John Morrell employees roughly 1,400 workers. Sioux City Economic Development Director Marty Dougherty shared the following: "Mayor Mike Hobart was contacted by phone late Tuesday afternoon by John Morrell Plant Manager Dan Pacquin indicating the Sioux City plant would close April 20. The City is awaiting Economic development and the Siouxland Chamber of Commerce. More information will be provided tomorrow [Wednesday] after meeting with Morrell officials."
Jobless rates seen high for many more years Unemployment rates will likely peak in most U.S. cities in 2010, but it will be many more years before jobless rates hit their lows of the last decade, a report released by a U.S. mayors group shows. In some areas, such as California's central valley and cities in Nevada, unemployment rates will stay at or above 10 percent through 2013, according to the report published on Wednesday by the U.S. Conference of Mayors and research group Global Insight. The mayors group released the report a day ahead of a meeting with U.S. President Barack Obama in which it will seek federal financial aid for small and large cities. "What is just as alarming as the double-digit unemployment in many of the nation's major metro areas is the lethargic rate at which it will recede once the job market turns around," the report said.
Man fired for bringing dog to work PetSmart eventually offered Eric Favetta his job back "We love to see healthy, happy pets" is PetSmart's motto — but apparently the policy doesn't apply to pets belonging to employees. Eric Favetta, a 31-year-old PetSmart employee, was fired for "theft of services" after bringing his dog to work during an overnight shift he'd picked up as a favor to his manager, according to the Newark Star-Ledger. (The Secaucus, N.J., store added an overnight shift in order to prep the store for a visit by officials from Martha Stewart's company, who wanted to discuss selling products at PetSmart.)
Accidental entrepreneurs on the rise Unable to find work, some simply start their own business Andy Owen never thought he’d go into business for himself. “I was dragged in kicking and screaming,” he said. “I like working for other people.” Things changed when he was laid off from his job at a Michigan school district in June 2008 amid the nation's worst recession in decades. He quickly found that he was unable to land another job that paid enough to afford child care for the baby he and his wife were expecting.
Oil tumbles 2% on China worries Oil prices plunged Wednesday on a stronger dollar and amid investor concern that the Chinese government will continue to tighten its credit policy. What prices are doing: Oil fell $1.87, or nearly 2%, to settle at $77.62 a barrel, after dipping as low as $76.96 a barrel earlier in the session. On Tuesday, oil rose for the first time in six days, recovering from its lowest level so far this year. What's driving prices: Reports that China has asked major banks to cease lending until the end of the month in order to tighten the country's credit market spooked investors. The news comes a week after the Chinese government raised bank reserve requirements for the first time since 2008.
Detroit auto show: A dose of reality hits the Motor City Dream cars and exotic concepts have been in short supply during this year’s Detroit auto show. Reality has set in, with mega horsepower motors and flamboyant styling giving way to small cars and speeches about fuel efficiency. But the harsh economic realities that sent car sales tumbling – and brought Chrysler and General Motors to the brink of collapse – have provided some welcome surprises during this year’s show.
POPULAR MUSIC: A KEY ILLUMINATI TOOL Music is a powerful influence, both for good and evil. In The Republic, Plato recognized its potential as a disintegrating force and advocated its control. In the modern era, Antonio Gramsci recognized that Communism (an Illuminati movement) could succeed only if the traditional culture, including music, was first subverted. For the past two generations, popular music has become openly hostile to traditional values. While some forms, such as country, have resisted this trend, most popular music is a purveyor of drugs, rebellion, perverted sex, the primitive and the occult, and Satanism. Traditional values always rest upon a religious foundation, so the most powerful attack in a culture war is an attack upon the underlying faith. Satanism, which inverts the Judeo-Christian tradition -- calling evil good and good evil -- is the sharpest possible attack.
New York Times to Charge for Some Web Content in 2011 New York Times Co. will begin charging users for some content on its namesake Web site in 2011, its second attempt in four years to make online readers pay amid slumping circulation and advertising sales. The New York-based publisher said in a statement today that it will give users access to a set number of articles a month for free on NYTimes.com and charge a fee for further reading. Subscribers to the New York Times print edition won’t be charged for Web access.
What Massachusetts Got Right By Robert Scheer The president got creamed in Massachusetts. No amount of blaming this disastrous outcome on the weaknesses of the local Democratic candidate or her Republican opponent's strengths can gainsay that fact. Obama's opportunistic search for win-win solutions to our health care concerns and our larger economic problems is leading to a lose-lose outcome for the president and the country. The two issues that mattered on Election Day were the economy, which Obama has sold out to Wall Street-as quite a few disgruntled voters pointed out-and his plea to save health care reform, which the voters who had backed him for the presidency with a huge majority now spurned.
The Surveillance Society: Trading Freedom For The Illusion Of Safety Governments, regardless of their political structure or historical background, have always striven to not only control information, but also to gather it from the people by covert means. Often, this secretive observation of the citizenry escalates into a completely open and full-fledged surveillance state. The U.S. in particular stands on a precarious edge: the line between abhorring invasion of privacy, and embracing invasion of privacy as necessary for the “greater good.” Many people assume that such a mindset is forced on the masses by the elite, that strength of arms is somehow required to make them accept the conditions of a police state, but this is not always so. It is very difficult for governments, despite any technological developments or resources they may have, to enforce and maintain a fascistic political construct. In order to retain control, they must build a “Surveillance Culture;” a society in which the people watch each other, and where individuals censor themselves instead of being censored by the authorities. In the end, a police state cannot exist without the help of the people it means to dominate. By spying on each other, we destroy ourselves.
America is More Like Haiti than We'd Like to Think The recent earthquake in the island nation of Haiti illustrates the fragility of all societies. While Haiti is unusual in its lack of infrastructure and its high dependence on foreign aid--more than half of its annual government budget comes from foreign aid--it is still similar in many ways to other nations: From the 1960s to the turn of the 21st century, as in many other nations, Haiti became an urbanized nation. Before the 1960s a substantial portion of Haitian society still lived on rural semi-self sufficient farmsteads. But as urbanization and specialization went on, fewer and fewer people lived off the land and more and more citizens became dependent on foreign aid and a scant number of industrial jobs. This trend has been repeated around the globe, making nearly all societies increasingly vulnerable to disasters, man-made or natural. The resiliency of traditional agrarian societies has sadly become a thing of the past. Here in America, 2% of the population now feeds the other 98%. This is now something that First, Second, and Third World nations have in common. America is more like Haiti than we'd like to think. Human nature is the same in every culture and nation: fundamentally sinful.
Pope criticizes the ‘cruelty’ of capitalism In a new book, Benedict XVI decries power of rich over the poor VATICAN CITY - Benedict XVI criticizes the “cruelty” of capitalism and colonialism and the power of the wealthy over the poor in his first book as pope released on Friday. Benedict began writing his personal meditation on Jesus Christ’s teachings, entitled “Jesus of Nazareth,” in 2003 when he was still Cardinal Joseph Ratzinger. He stressed that the book is an expression of his “personal search for the face of the Lord” and is by no means official Catholic Church doctrine. “Everyone is free, then, to contradict me,” he wrote.
UN abandons climate change deadline The timetable to reach a global deal to tackle climate change lay in tatters on Wednesday after the UN waived the first deadline of the process laid out at last month’s fractious Copenhagen summit. Nations agreed then to declare their emissions reduction targets by the end of this month. Developed countries would state their intended cuts by 2020: developing countries would outline how they would curb emissions growth. But Yvo de Boer, the UN’s senior climate change official, admitted that the deadline had in effect been shelved.
Lord Monckton Questions Global Warming Science
Increased “Risk of Secession” in European Union 01/20/10 Stockholm, Sweden – Ambrose Evans-Pritchard has recently pulled some noteworthy quotes from the European Central Bank’s December 2009 guide on expulsion from the EU, such as, “recent developments have, perhaps, increased the risk of secession…” The new document is part of a legal working paper series and is entitled, “Withdrawal and expulsion from the EU and EMU: some reflections” (PDF). With the ongoing economic upheaval throughout the industrialized world, and especially in the PIGS (Portugal, Italy, Greece, and Spain) nations, it’s looking like an increasingly useful resource for EU leaders to have on hand.
It was less corrupt under the Taliban, say Afghans Corruption in Afghanistan has become so entrenched that the population is being forced to pay out the equivalent of a quarter of the country's GDP in bribes, according to a UN report published yesterday. Six out of 10 Afghans view corruption as a bigger problem than violence, the dossier, compiled by the UN Office of Drugs and Crime (UNODC), found. It showed that many illicit payments – totalling $2.5bn (£1.5bn) – were made to officials in order to obtain essential public services.
Israel deports US journalist News editor for Palestinian agency put on flight to New York Israeli authorities today deported an American journalist who was working as an editor for a Palestinian news agency. Jared Malsin, who is Jewish and in his late 20s, was detained at Tel Aviv's Ben Gurion airport eight days ago as he returned from a holiday in Prague. His girlfriend, a Lutheran church volunteer who flew back with him, was deported two days later., but Malsin was held in detention at a cell in the airport while he began a legal challenge to his deportation order.
The peace process will resume, but why? Israeli-Palestinian final status talks will be renewed because the international community -particularly the United States but also the moderate Arab states - wants this to happen. Probably sooner rather than later a formula will be found for sitting the two sides' negotiating teams down with US envoy George Mitchell.
Iran to unveil three new home-built satellites: report TEHRAN — Iran will unveil three new satellites in February, a report said Wednesday, amid Western concerns that Tehran is using its nuclear and space industries to develop atomic and ballistic weapons. ISNA news agency quoted Communications Minister Reza Taghipour as saying that one of the three home-built communications satellites is still under construction. Taghipour named the three satellites as Toloo (Dawn), Ya Mahdi and Mesbah-2, but did not elaborate on exactly when they would be launched.
U.S. to deploy missiles near Russia President Obama sent two of his top national security officials to Moscow on Wednesday to clear the last hurdles to a new nuclear pact, but a revelation that U.S. missiles will soon be deployed near Russian territory could complicate the talks. The White House said that National Security Adviser James L. Jones and Joint Chiefs of Staff Chairman Adm. Mike Mullen will meet with Russian officials "primarily to discuss the remaining issues left to conclude" a follow-on to the 1991 Strategic Arms Reduction Treaty (START), which the U.S. ambassador to Moscow predicted will be completed within weeks.
Iran in billion-euro gas deal with Germany TEHRAN — Iran has signed a one-billion-euro (1.44-billion-dollar) deal with a German firm to build 100 gas turbo-compressors, an industry official said in newspapers on Wednesday. The contract provides for the unnamed German firm to transfer the know-how to build, install and run the equipment needed to exploit and transport gas, said Iran's Gas Engineering and Development Company head, Ali Reza Gharibi. The German company has already delivered 45 such turbo-compressors to Iran, Gharibi said, according to Iran Daily. Industry experts said he was apparently referring to Siemens. But the National Iranian Gas Company (NIGC) denied the signing of a deal.
Republican Brown Wins Massachusetts Senate Election Republican Scott Brown won the Massachusetts Senate seat of the late Democrat Edward Kennedy, a political upset that imperils health-care legislation in Congress and sends a warning shot to Democrats ahead of November’s elections. Brown was leading Democratic state Attorney General Martha Coakley 52-47 percent with 92 percent of the state’s precincts reporting, according to the Associated Press, which projected Brown as the winner. Independent candidate Joseph Kennedy, no relation to the late senator, had about 1 percent of the vote.
Government is Too Big to Succeed Ron Paul Last week, the Financial Crisis Inquiry Commission kicked off their first round of hearings on the causes of the economic meltdown on Wall Street. The commission is being compared to the the Pecora Commission launched in 1932 to investigate the causes of the Great Depression. The Pecora commission is beloved by those who believe the solution to every problem is more laws because it was used to justify a number of new laws, including Glass-Steagall. Of course, none of those laws addressed the real causes of the Great Depression. It was the introduction of unsound monetary policy and central economic planning pursued by the Federal Reserve that really threw everything off balance. The Fed was founded in 1913 to stabilize the economy and prevent a recurrence of the short-lived Panic of 1907, but instead it promptly produced the Great Depression which lasted more than 15 years.
Marc Faber on Central Banks Blowing Ever Larger Debt Bubbles
Is The U.S. Economy Being Tanked By Mistake or By Intent? The government wants Americans to believe the greatest economic collapse in history was the result of ineptness and mistakes yet still have confidence in their financial institutions. Should American bankers be let off the hook because they self-declare, before an investigational panel, that the failure of their newly invented risk swaps and other highly leveraged investment schemes was simply due to "mistakes"? Not malfeasance - just every-day mistakes? Bankers just fell asleep at the helm at a critical juncture in American history. Is that what we are being led to believe?
Gold Price Holds at $1,132 as Inflation Risks Weigh on Gold The gold price opened the week near unchanged at $1,132 per ounce as rising concerns of inflation kept a lid on the price of gold and the rest of the commodity complex. The gold price also fought off strength in the U.S. Dollar Index (DXY), which traded higher by 0.69% to 77.599 as the opening bell rang. Gold mining stocks, as represented by the Market Vectors Gold Mining ETF (GDX), also opened relatively unchanged alongside the price of gold. As the global economy recovers, investors and traders continue to grapple with the question of whether the massive infusions of money into the system from central bankers will spark inflation. The potential policy response to this question has implications for the price of gold and gold mining stocks as well as the broader investment landscape.
A $1,600 Gold Price in 2010? Gold to Rise as System Collapses Gold price volatility has picked up in the past few weeks as diverging views about the next move in the price of gold have intensified. The gold price declined $152 off its early December high of $1,226.50 before rallying to move comfortably back above $1,100 per ounce. While gold has seen violent daily and monthly oscillations, the longer-term trend has been decidedly positive over the past decade - with investors driving up the gold price 281% over the past ten years. The events of the last 18 months have further strengthened the fundamental investment case for gold as conveyed to Barron's by their all-star panel of money managers and investment strategists. No longer relegated to the backwater of the investment landscape, gold-related investments have slowly but surely entered into the mainstream.
Gold "Set to Break Higher" as UK Inflation Jumps, Eurozone Faces "No Good Solution" to Greek Deficit THE PRICE OF GOLD slipped against the US and UK currencies on Tuesday but rose to a one-week high for Euro investors as the single currency fell on a series of poor data. Construction output in the 16-nation Eurozone shrank 8% in Nov. from the same month in 2008, new figures showed. Economic sentiment in Germany also fell on the ZEW survey. Consumer-price inflation here in the UK meantime jumped at a record pace during Dec., nearing the 3.0% level at which the Bank of England must publicly defend its policies. Bank interest rates for UK savers have now lagged inflation since June 2008.
The Future of Gold & Silver . . . . Although it is true that both gold and silver have been subjected to the grossest and most egregious manipulation of any commodity in history, I fully understand the necessity of these actions over the past 40 years. No fiat monetary system could have survived this long without the secret computer price control mechanisms in place...especially in gold and silver as they ARE the only true competition to fiat money.
2010 To Mark Dollar Demise Well, that was another year, and decade, one that was characterized by exacting prices for almost a century of easy money led by the Fed. And it continues today with bubble dynamics in economies and markets considered a normal expectation these days, explaining why gold was top performer over the past 10-years, and should remain in that spot moving forward as well baring silver’s remonetization. That is to say, anybody, like Time Magazine, expecting smooth sailing over the next 10-years is most likely barking up the wrong tree with all the problems that still lie ahead for us, problems ranging from increasingly unmanageable debts and deficits, which are a result of the big turn in the credit cycle in 2008, to the pending demise of the dollar ($) as the world’s reserve currency.
Sound Familiar? In 1933 Roosevelt decided that the key to ending the depression was to create inflation. To that extent he took the US off the gold standard. Actually he just arbitrarily revalued gold from $20.00 to about $35.00. The value of the dollar quickly dropped about 40%. By this time Europe was already off the gold standard and competitive currency devaluation was already well underway on the continent. In order to compete the US followed suit. So what was the result of Roosevelt's inflation scheme? Initially the economy saw a small uptick. Employment picked up slightly although it still remained high all the way into WWII. But there are always unintended consequences when the government meddles in the market and this time was no different.
Howard Ruff: Reprising (and Preparing for) Rough Times TGR: You have written quite a bit about the U.S. government's growing debt and unfunded liabilities, heading toward an even more aggressive printing of money and inflation. How convinced are you that this is the only outcome? Howard Ruff: I am basically staking my reputation on it. I guess I can't do any more than that. I am convinced that we're moving into a socialist age, and the Obama Administration is deliberately trying to create European socialism here in America. All of their objectives require creating money. Until we have a new administration with a new philosophy—which isn't going to be printing all this money—I think inflation is in our future.
Hyperinflation Nation Part 1 of 2
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4 Reasons Why Bernanke Will Refuse to Fight Inflation With recent news of inflation rising in Australia we turn an eye to the same eventuality at home in the US. Despite overwhelming growth in the monetary base, little inflation has yet to appear in government measures. Not that we’re one to trust those… Inflation’s unlikely to keep at bay much longer. To date, banks have been hoarding new money pumped into the system as excess reserves (to protect themselves against grotesque losses like the $7.6 billion Citigroup reported losing last quarter). However, banks will again begin to lend once they feel there’s room to maneuver, and the resulting burst of growth in the money supply will lead to rapid inflation.
China, Asset Bubble, And Jim Rogers News reports about dangerous asset bubbles in China are now reaching a crescendo as the government continues to take steps to rein them in. Bloomberg has a number of reports today about soaring home prices, soaring stock prices, and one famous investor who now sees a bubble. First up, a story about the bubblicious property market China property sales jumped 75.5 percent to 4.4 trillion yuan ($644 billion) last year, led by the eastern cities of Zhejiang and Shanghai, as record new loans boosted buying.
The Message of Massachusetts A crisis is a terrible thing to exploit. Whether or not Republican Scott Brown wins today in Massachusetts, the special Senate election has already shaken up American politics. The close race to replace Ted Kennedy, liberalism's patron saint, shows that voters are rebelling even in the bluest of states against the last year's unbridled pursuit of partisan liberal governance. Tomorrow marks the anniversary of President Obama's Inaugural, and it's worth recalling the extraordinary political opportunity he had a year ago. An anxious country was looking for leadership amid a recession, and Democrats had huge majorities and faced a dispirited, unpopular GOP. With monetary policy stimulus already flowing, Democrats were poised to get the political credit for the inevitable economic recovery.
Obama 'Surprised and Frustrated' and 'Not Pleased' by Massachusetts Senate Race President Barack Obama is "surprised and frustrated" and "not pleased" with the Senate race that will conclude in Massachusetts today, White House Spokesman Robert Gibbs told reporters during Tuesday's press briefing. During the briefing, Gibbs fielded several questions about the special U.S. Senate election between Republican state Sen. Scott Brown and Democratic Attorney General Martha Coakly. Recent polls show the Republican Brown leading in the race to fill the seat long held by the late Sen. Edward M. Kennedy.
Coakley adviser memo: D.C. Dems 'failed' Coakley The Coakley campaign is bridling at finger-pointing from the White House and Washington Democrats, and an outside adviser to the campaign has provided to POLITICO a memo aimed at rebutting the charge that Coakley failed and making the case that national Democrats failed her. The adviser, who made the case to my colleague Jonathan Martin on the condition of anonymity in response, he said, to "the current leaking coming out of the White House and the DNC that is chalking all of this up to a "bad candidate".
Japan Airlines announces bankruptcy Its debt reaches 16.5 billion dollars. It is the largest bankruptcy in the postwar history of Japan. Under state control, the company will continue to fly, but will fire 15700 people. At a cost to taxpayers of 44 billion yen. Japan Airlines (JAL) today announced bankruptcy. The largest airline in Asia, hit by the global crisis, now has a debt that is about 16.5 billion U.S. dollars. Yesterday, the company's shares fell to their lowest point in 59 years of history, pulling down the value of JAL is now estimated at 150 million U.S. dollars, more or less the price of a new jumbo jet.
Marc Faber Says Worry about Portugal, Ireland, Italy, Greece, and Spain Soverign Debt Defaults After every financial crisis there's a sovereign debt crisis, Marc Faber says. Countries that borrowed too much during the boom times start struggling to pay their competitors back, and eventually some of them default. The countries most likely to blow up this time around are the "PIIGS": Portugal, Ireland, Italy, Greece, and Spain. One ore more of them, Faber says, will likely default in the next couple of years. And, that could result in the death of the Euro currency. Longer-term, Faber says, Japan and the US are in line for the same fate.
Bernanke Yields To Pressure, Welcomes 'Full Review' Of AIG, Copies Boilerplate Language From Prior Testimony Ben Bernanke has yielded to increasing public pressure to finally disclose all the details surrounding the AIG: 28.22, 0.16 bailout, and in a letter to Acting Comptroller General Gene Dodaro, Bernanke said he would welcome a full review of the AIG taxpayer bailout by the GAO and will make available "all records and personnel necessary to conduct this review," emphasizing that a review should give taxpayers "the most complete understanding of our decisions and actions." One wonders why stop at AIG? Why not open up the Fed to a GAO audit on all bank bailout activities undertaken in the period commencing with the GSE nationalization, and culminating with the Lehman bankruptcy. Surely that would provide an ever more "most complete" understanding of just who got what and how much taxpayer capital was put just so Wall Street could enjoy another record bonus season.
Bernanke, Hoping to Quiet Critics, Seeks Review of Fed's A.I.G. Bailout The Federal Reserve chairman Ben S. Bernanke asked a government auditor on Tuesday to review the Fed's actions in bailing out the American International Group, as controversy persisted over the central bank's role in extending billions in credit to the insurer. Mr. Bernanke, in a letter to the acting comptroller general Gene Dodaro, said the Fed would make available to the auditor, the Government Accountability Office, all documents and personnel necessary to conduct the review.
Federal Reserve No Longer To Keep Its Secrets about AIG Bailout The Federal Reserve is giving up on the fight to keep some of its bank bailout dealings secret. Federal Reserve Chairman Ben Bernanke (pictured) sent a letter to the General Accountability Office inviting the congressional auditors to conduct a "full review" of the Fed's aid to struggling insurance giant AIG (AIG), according to a report from Bloomberg. "The Federal Reserve would welcome a full review by GAO of all aspects of our involvement in the extension of credit to AIG," Bernanke said Tuesday in a letter to Gene Dodaro, acting head of the Government Accountability Office. A copy of the letter was released by the Fed. Geithner: Not Aware Of Secrets Pact
AIG bailout probe widens to include Paulson House committee also calls N.Y. Fed chair Friedman to testify A House of Representatives committee is broadening its investigation of secretive bank bailouts to include former Treasury Secretary Henry Paulson and former Federal Reserve Bank of New York Chairman Stephen Friedman. The Committee on Oversight and Government Reform has invited Paulson and Friedman to testify about their roles in the bailout of American International Group Inc., according to the committee's chairman, Democratic Rep. Edolphus Towns.
New York Fed Says AIG Phrase Marked for Deletion Was Inaccurate The Federal Reserve Bank of New York said its attorneys suggested American International Group Inc. not disclose information about full-value payouts to banks because it wasn’t “precisely accurate.” “The counterparties ultimately received slightly less than 100 percent of par value,” the New York Fed said in a statement today on its Web site. The central bank said it “sought to ensure” that AIG had the “greatest possible precision” in its securities filings. E-mails released this month showed that the New York Fed asked the company to withhold information from the public about payments to banks. The New York Fed indicated it made 250,000 pages of documents available to Congress as lawmakers seek information on the Fed’s oversight of AIG.
A "Bloodbath" By Any Other Name: More Pain Ahead for Big Banks, Whalen Says A big week of bank earnings accelerates midweek with results expected from Morgan Stanley, Bank of America, US Bancorp and Wells Fargo on Wednesday, followed by Goldman Sachs, American Express and Capital One Financial on Thursday. So what should investors expect? More revenue disappointments, such as those already posted by JP Morgan and Citigroup, according to Chris Whalen of Institutional Risk Analytics. "Right now the total egg - credit -- is shrinking," Whalen says. "The bank side is not a source of growth. Can you pull it out on the capital market side? Maybe, but I'm not sure where that comes from" given many of the big banks have loaded up on low-risk securities in the aftermath of 2008's bloodbath.
Big, in Banks, Is in the Eye of the Beholder Jamie Dimon, chief of JP Morgan Chase, may have strong arguments that banks should be able to grow as big as they want, but there is a swelling chorus of leaders in the United States and abroad who are more concerned about the risk that such huge banks present to the rest of the economy, Andrew Ross Sorkin writes in his latest column in The New York Times. Where Mr. Dimon and his opponents seem to agree, however, is on the advantages of a "resolution authority," which would give the government the ability to put a too-big-to-fail financial company into a conservatorship in much the same way the Federal Deposit Insurance Corporation is able to unwind a commercial bank without putting it into bankruptcy, Mr. Sorkin writes.
Souring Mortgages, Weak Market Put Loan Agency on a Tightrope David Stevens bought his first home almost 25 years ago, paying just 3% down with a loan backed by the Federal Housing Administration. "I had no money in the bank," he says. "If it weren't for the FHA, I wouldn't have gotten that home." Now, as FHA commissioner, Mr. Stevens has to decide how many others to let through that door. Souring FHA-insured mortgages are threatening the agency's finances. Congress is pressuring him to tighten the easy-money standards that once helped people like him, and he is expected to announce revisions as early as this week.
TARP Tax Trickery: Banks Won't Really Pay Back All $90 billion Remember that story last week about the new tax proposed by President Obama, which will be designed to recoup $90 billion in lost TARP money from the nation's largest financial firms? Well, there's a catch: The banks won't actually be repaying $90 billion. They'll only have to pay $58.5 billion, because the "Financial Crisis Responsibility Fee" will be tax deductible. Henry Blodget, who writes the Clusterstock blog for Business Insider, made that little tidbit public today. And his source for the claim that the fee will be tax deductible? The Treasury Department, which he says emphasized it during a conference call with Wall Street. I guess Treasury is trying to mute financial industry opposition to the new fee by saying "Hey, it won't be as bad as it sounds."
Secret bill-writing on the rise The civics books say the House and Senate produce a final bill by sitting around a table where the public can watch them work out their differences. It's a quaint idea, but a different modern reality has been on display this month. Democrats are refusing to open to the public the end-stage negotiations on how the government is going to change the delivery of health care. And it's not just on the high-profile health care bill; the trend on much legislation is to shut the door and keep the minority party, cable TV and other media on the outside.
Waterboard JP Morgan and The Mortgage Bankers Assn How to give an economics writer a coronary: Recommend something that has been done twice before, and both times led to disaster, including being a major contributor to The Great Depression. Well guess what: JP Morgan and the other banks are doing exactly that. Oct. 13 (Bloomberg) -- Banks will push the Obama administration to expand its mortgage-modification program to allow interest-only periods on reworked loans, seeking to bring more homeowners into the initiative while recognizing concern that it may only postpone defaults, according to JPMorgan Chase & Co.
MBS, R.I.P.? A Treasury rule on loan modifications riles the securities market. The $1.7 trillion mortgage securitization market is still a mess, despite (or in part because of) the Federal Reserve's $700 billion splurge into the market. But another reason may be Treasury's decision to undermine private mortgage-backed securities (MBS) contracts. BlackRock Inc. Chairman Laurence Fink went so far recently as to call this "one of the biggest issues facing American capitalism." He's worried that to protect banks from billions of dollars more in writedowns on bad second liens (a.k.a., home-equity loans), Treasury is trashing private contracts. "There is modification going on protecting our banks, protecting their balance sheets" and "I'm just very worried about it." Until that issue is cleared up, he says, we won't "get a vibrant securitization market back."
New York Fed Told AIG To 'Stand Down' On All Counterparty Discussions In one week, Tim Geithner will testify before Congress on his involvement in the AIG disclosuregate scandal, which, in late 2008 sought to prevent material information about AIG counterparty make-whole arrangements from seeing the light of day. Of course, in March of 2009, following political pressure, AIG: 28.22, 0.16 and the FBRNY caved and disclosed that $27 billion in taxpayer capital had been used to yield to the bankers' every whim and to take them out at par, while their underlying AIG CDOs were priced 50% lower, if not more. Zero Hedge previously wondered when will Goldman be approached by the SEC with questions on whether or not they sold their direct AIG protection in the form of CDS to parties under a "big boy" letter, or did Goldman transact on a $2.5 billion notional position while in possession of material, non-public information. This, of course, in addition to having absolutely no impairments on their actual CDOs, thereby providing the firm with material excess returns over and above what their total capital at risk would have been. With Goldman's Stephen Friedman accompanying Geithner in the hearings, he hope that someone in authority will finally ask the right questions.
Could Geithner Face Criminal Charges?
Do Obama and Geithner Have the Same Flaw: Accommodation Instead of Moral Action? A lot of us have been wondering, despondently, why the Hell Barack Obama is keeping Timothy Geithner on the job as Treasury Secretary, given his central role in the plunder of trillions of dollars from American taxpayers, and his record of subverting democracy in the service of Wall Street billionaires. Geithner's the guy that drove the getaway car in the heist -- so why was he hired to run the Treasury? You'd expect to see a guy as corrupt as Geithner serving as the Finance Minister in some Central Asian autocracy -- but not in Barack Obama's government, not after all he promised in the campaign.
Two More Reasons to Sell Treasury Bonds Two more reasons to sell US Treasury bonds: Fannie Mae and Freddie Mac. These two giant mortgage lenders are poster children for the dangers of wrapping government guarantees around the credit markets. With help from the state-sponsored banking system, these two government-sponsored entities (GSEs) perverted the process of credit intermediation and artificially suppressed the cost of mortgage loans over many decades.
A Cadillac Tax Exemption From an Edsel Administration By David Limbaugh This past Sunday marked the first time President Barack Obama graced a Washington, D.C., church with his presence since Oct. 11, but apparently it was not to sit in a pew and worship. Instead, he was doing the sermonizing and politicking -- gloriously intermingling church and state as only liberals are allowed to do in this country. Don't get me wrong; I'm no scold when it comes to the church-state separation mania, which I think has been grossly expanded by liberals not to preserve the constitutional protection of religious liberty, but to selectively suppress it. But here I am digressing before I've even gotten started on the main focus of today's rant.
Markets Decoupling 1/19/10 Pay close attention to the relationship between different asset classes and even different commodities, i.e dollar, oil, and metals. Our second objective at $77 in February Crude was reached today but prices did not stay there for long as oil reversed closing above $79/barrel. We suggest covering all remaining shorts and have yet to get clients long but we may have some bullish strategies to come. We still want to see a lower print in natural gas before issuing any buy recommendation, for those brave souls who remain short stay the course. For all energy contracts start following March as February goes off this week. All losses in Equities were gotten back today on the major indices?? As we said in last week's blog and this morning's commentary we think a correction is long overdue but look for a close below the 20 day MA to confirm.
More Market Infintalism, High Unemployment, Shrinkage Fed credit report says Americans now borrowing a lot less, Goldman Sachs fingered for causing the economic crisis, personal bankruptcies soar, mortgage market shrinking, vacancies grow, tax collections shrink, banks create extraordinary means to keep afloat Americans borrowed less for a 10th consecutive month in November with total credit and borrowing on credit cards falling by the largest amounts on records going back nearly seven decades. The Federal Reserve said yesterday that total borrowing dropped by $17.5 billion in November, a much bigger decline than the $5 billion decrease economists had expected.
Senate GOP calls for cutting public workers' pay 5 percent, hiking health care costs LANSING, MICH. - Senate Majority Leader Mike Bishop said Tuesday the pay of teachers, professors and state and local government workers should be cut by 5 percent and held at that level for the next three years to save money. The Rochester Republican told reporters he is proposing a constitutional amendment to go to the voters in August that would suspend collective bargaining rights and allow the pay cut to take effect.
Fail Britannia? If the United Kingdom collapses, it will be impossible to stop America from crumbling too. BY ROBERT MORLEY Addicted to debt and devoid of industry, Great Britain faces economic catastrophe. But if Britain crashes, it will not crash alone. It won't be the story of an isolated island fading into history, but of 200 years of Anglo-Saxon dominance coming to an abrupt end. Even though it's not even on the radar screen for most Americans, Great Britain is headed toward a debt crisis, and thus a currency crisis. On January 8, the Telegraph reported that Neil Woodford, head of Invesco Perpetual, said there was a "high probability" of Britain losing its aaa credit rating-something that has never happened before.
Risks to Sustained Economic Recovery (With Lessons Learned from Winston Churchill and Teddy Roosevelt) Remarks before the Annual Meeting of the Waco Business League - speech by Richard W. Fisher . . . . These are times that try men's and women's souls: They are not particularly felicitous economic times. The Federal Reserve has worked tirelessly for the past two years to rescue the financial system and the economy from plunging into the abyss of depression and chaos. As last year came to a close, we saw our efforts begin to bear some fruit: Interest rates and spreads between the yields on various key financial instruments have come down significantly. The markets for bonds and stocks have come back to life, and the economy-while subject to taking one step back for every few it takes forward-has nonetheless begun a palpable, if tepid, recovery. We are not yet out of the woods.
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