click here for audio
Saturday, January 30, 2010
Obama Housing Rescue Threatened by Foreclosures, Unemployment
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.
The housing industry remains a challenge for Obama as he enters his second year of office and government assistance programs near expiration. Data this week showed home sales tumbled after the expected end of an $8,000 tax credit for first-time buyers boosted transactions the prior month. (more)
Forget Gold, It's Time to Think Platinum
When it comes to investing in precious metals, most investors tend to focus on gold and silver. With gold in the midst of a multi-year bull market, the yellow metal gets most of the media attention. Headlines like ‘Gold to Hit $2000 an Ounce’ and ‘Invest in Gold to Cash in on US Dollar Demise’ have appeared almost relentlessly over the past couple of years.
While gold has been the media darling, it’s actually one of the worst performing metals over the last year. Rising gold prices have been less about economic fundamentals, such as rising demand, and more about speculation. For most non-day trading investors, the last thing that you want to do is invest in a market driven by speculators. Before you know it, the speculators have moved on to some other asset, sending the value of your investment plunging, all while you are left holding the proverbial bag, without even knowing what happened. (more)
Rogers: Markets Will Tank Any Day Now
Global equities are "vulnerable to correction" after rallying from their March lows and as governments around the world withdraw stimulus measures, says investor Jim Rogers.
"We're overdue for a correction" Rogers says.
"Stock markets around the world have been going up for the past 10 months," he told Bloomberg.
Also, Rogers says central banks need to tighten the money supply further. (more)
"We're overdue for a correction" Rogers says.
"Stock markets around the world have been going up for the past 10 months," he told Bloomberg.
Also, Rogers says central banks need to tighten the money supply further. (more)
A Growing Share of Americans' Income Comes From the Government
While most eyes were focused on the better-than-expected gross domestic product data for last year's fourth quarter, this week's report from the Commerce Department's Bureau of Economic Analysis also included details on U.S. personal income.
Along with wages and salaries, dividends and interest income, this category includes personal current transfer receipts, which the BEA defines as "income payments to persons for which no current services are performed and net insurance settlements." That is, government social benefits (and, to a very minor extent, net transfers received from businesses).
As you can see from the following graph, while the relationship between personal income and GDP has not changed all that much over the course of the past six decades, the share of income accounted for by transfer payments has jumped more than 200 percent. (more)
List of countries by current account balance
This is a list of countries and territories by current account balance (CAB), based on the International Monetary Fund data for 2007, obtained from the latest World Economic Outlook database (October 2008).[1] Numbers for 2008 should become available in April 2009. Estimates are highlighted. (more)
Greece denies bailout deal as Darling promises to 'provide whatever assistance' is appropriate
Greece and the European Union were last night scrambling to quash fears that the crisis-struck country will need a financial bailout.
Prime minister George Papandreou and EU officials denied reports that European governments were preparing a rescue operation, stressing Greece will take draconian steps needed to cut its budget deficit.
But privately, officials admitted informal talks have been held over a possible bailout. (more)
Friday, January 29, 2010
McAlvany Weekly Commentary, Jan 27, 2010
Bahamas 2010: An Interview With Bert Dohmen
About the Guest:
Our goal is to provide you, the investor, with fresh, current and useful content to help you make the right choices and decisions on how to invest your money and make profits over both the short and long-term. Serious investors will find a wealth of investment information, including Bert Dohmen’s own fundamental and technical analysis of the economy and markets included in each of his service. http://www.dohmencapital.com/
The Wal-Mart Model of Self-Destruction: Lowest Prices, Always
The Wal-Mart Model of Self-Destruction is simple: low prices are all that matters.
The devolution of the American citizen into a self-destructing consumer starts with the devolution of a value system into an monomaniacal obsession: "the only thing that matters is the lowest price," regardless of the true costs or consequences.
The propaganda of marketing has so hollowed out American culture that most citizens cannot recall a time that "Consumerism" wasn't the unofficial religion of American society. And what is the First Commandment of "consumerist religion"? The lowest price is all that matters.
Quality doesn't matter; we're going to move/throw it away anyway. (more)
Capitalist Fools
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?”
Yet when MetLife spruced up the complex and put it on the market in 2006, real-estate moguls jetted in for the sale. A joint venture put together by Tishman Speyer and BlackRock carried the day through its willingness to, as The New York Times noted, “pay up—way up—to unlock future profits in the sprawling Manhattan properties.” At $5.4billion, their winning bid made the sale the most expensive real-estate deal of all time. (more)
Chanos: Global Recovery Ends If China Bubble Bursts
Legendary short seller James Chanos says a bubble is building in China’s financial system that could derail the global economic recovery.
“China is the engine of growth that will hopefully pull us out of the morass that we find ourselves in,” he said in a recent speech.
“But the closer you look at that engine, the more you begin to see that it may throw a piston rod soon.”
Chanos, founder of Kynikos Associates, stresses that he doesn’t expect a crash in China anytime soon. (more)
“China is the engine of growth that will hopefully pull us out of the morass that we find ourselves in,” he said in a recent speech.
“But the closer you look at that engine, the more you begin to see that it may throw a piston rod soon.”
Chanos, founder of Kynikos Associates, stresses that he doesn’t expect a crash in China anytime soon. (more)
Gartman: Dollar Rise May Trigger Big Stock Drop
With the dollar’s strength increasing, investors should be wary of the market correcting itself, says Dennis Gartman, founder of The Gartman Letter.
Stocks could easily tank, he said.
“You should be aware of the fact that a correction is probably setting in (and) that this could be a bit more than a two or three percent correction, that perhaps something along the lines of five to ten percent is upon us, and I think you need to be very, very careful," Gartman told CNBC.
Investors expecting more good news to arise from the earnings season will likely be disappointed, he said. (more)
Stocks could easily tank, he said.
“You should be aware of the fact that a correction is probably setting in (and) that this could be a bit more than a two or three percent correction, that perhaps something along the lines of five to ten percent is upon us, and I think you need to be very, very careful," Gartman told CNBC.
Investors expecting more good news to arise from the earnings season will likely be disappointed, he said. (more)
Game Over for the American Middle Class – Inflation Adjusted Wages up 20 Percent in Last 20 Years While Housing Costs are up 56 Percent and Healthcare
The struggle for average Americans to keep up is largely becoming an act of will power and force in this current grand recession. Now you wouldn’t think that there is a definite war raging against the middle class if you simply follow the mainstream media but the facts speak to a more distilled and corporatized method of debt slavery. Americans are working more hours trying to stay in the same place that they believe would keep them on pace to having the American Dream. And this dream is merely the ability to afford a home, provide your children with a good education (public or private), and save enough to have a retirement that doesn’t require you to eat cat food after a lifetime of working. That is at the root of what most average Americans would want after a full working career. (more)
Senate permits gov't to borrow an additional $1.9T
The Democratic-controlled Senate has muscled through a plan to allow the government to go a whopping $1.9 trillion deeper in debt.
The party-line 60-40 vote was successful only because Republican Sen.-elect Scott Brown has yet to be seated. Sixty votes were required to approve the increase. The measure would lift the debt ceiling to $14.3 trillion. That's about $45,000 for every American.
Democrats had to scramble to approve the plan, which means they won't have to vote on another increase until after the midterm elections this fall. To win the votes of moderate Democrats, President Barack Obama promised to appoint a special task force to come up with a plan to reduce the deficit. The House must still vote on the measure before it's sent to Obama for his signature. (more)
Thursday, January 28, 2010
Fitch: U.S. Retail Credit Card Defaults Hit Near-Record Levels with No Relief in Sight
U.S. consumers defaulted on store-branded credit cards at near-record levels during the holiday shopping season, with 2010 likely to bring more of the same trend, according to Fitch Ratings.
Fitch's December Retail Credit Card Index results show that more than one in every eight dollars of receivables was written off as uncollectable during the November collection period on an annualized basis. Taken with the recent delinquency trends and Fitch's expectation for unemployment, Fitch expects retail card chargeoffs to remain elevated throughout first half-2010. (more)
Bill Miller: Most Big Stocks Are Undervalued
Fund management icon Bill Miller says stocks are undervalued, particularly shares of the 10 biggest companies in the Standard & Poor’s 500 Index.
“I think there's a lot of value in the overall market right now,” he told CNBC.
That’s because the economic recovery has just begun, Miller says.
He expects GDP growth to have totaled 4 percent in the fourth quarter, and he sees the economy expanding as much as 4.5 percent in 2010.
Corporate profits will soar 25 percent this year, Miller predicts. (more)
“I think there's a lot of value in the overall market right now,” he told CNBC.
That’s because the economic recovery has just begun, Miller says.
He expects GDP growth to have totaled 4 percent in the fourth quarter, and he sees the economy expanding as much as 4.5 percent in 2010.
Corporate profits will soar 25 percent this year, Miller predicts. (more)
See Who Was Paid Off In The AIG Bailout
It appears that of the roughly 38 Goldman CUSIPs which have data available, there are exactly zero rated A or higher by Moody's (we ignore the rating from the other rating agency as they apparently have long stopped rating most of these securities). There are 9 CUSIP issued after 2006, 21 between 2005 and 2006, and 8 issued before 2005. As Matt Goldstein points out, of the 25 or so deals that had CDS written on them after January 1, 2006, Goldman accounts for 40% of this late (post 2005) issuance. Goldstein notes: "that’s critical because in December 2007, former AIG Financial Products head Joseph Cassano had said AIG largely got out of the CDS business by the end of 2005." Some more reasons to finally indict the man who, more so than anyone, cost taxpayers hundreds of billions with horrendous risk management practices. (more)
Computer-driven trading raises meltdown fears
An explosion in trading propelled by computers is raising fears that trading platforms could be knocked out by rogue trades triggered by systems running out of control.
Trading in equities and derivatives is being driven increasingly by mathematical algorithms used in computer programs. They allow trading to take place automatically in response to market data and news, deciding when and how much to trade similar to the autopilot function in aircraft.
Trading in equities and derivatives is being driven increasingly by mathematical algorithms used in computer programs. They allow trading to take place automatically in response to market data and news, deciding when and how much to trade similar to the autopilot function in aircraft.
Analysts estimate that up to 60 per cent of trading in equity markets is driven in this way.
Concerns have been highlighted by news that NYSE Euronext, the transatlantic exchange operator, has fined Credit Suisse proprietary trading arm for the first time for failing to control its trading algorithms. In the Credit Suisse case, its system bombarded the NYSE’s systems with hundreds of thousands of “erroneous messages” in 2007, slowing down trading in 975 shares. (more)
A New Moral Hazard in the Banking System
One commonly hears the argument that the FDIC creates moral hazard in the banking system, because depositors aren't worried about the soundness of their banks. I find this argument broadly dubious, since I have no idea how the vast majority of depositors could possibly be expected to have informed opinions on the soundness of their banks. Moreover, during the Great Depression, local wealthy people--who did have quite a lot of knowledge about the banks, and the local economies into which they lent--got hammered along with the rest of America.
But this suggests that there is a different, more plausible form of moral hazard operating right now: (more)
But this suggests that there is a different, more plausible form of moral hazard operating right now: (more)
Central banks end US dollar emergency swap lines
The Bank of England said Wednesday that it and other major central banks are ending emergency lending arrangements put in place with the U.S. Federal Reserve in the wake of the global credit crisis, citing improvements in financial markets.
The decision marks the first unified retraction by central banks around the world of extraordinary support measures to boost lending after credit markets seized up in late 2007, causing the global economic downturn. (more)
Wednesday, January 27, 2010
Brazil at 26% Discount to Global Stocks Lures Mobius
The biggest decline in the Bovespa index in three months has turned Brazilian stocks into Latin America’s best bargain, according to Templeton Asset Management and Emerging Markets Management LLC. The Bovespa retreated 7.4 percent from a 19-month high on Jan. 6, the most since an 11 percent decline in the second half of October. The 63-company gauge trades for 20.3 times reported earnings over the past 12 months, a 26 percent discount to the 27.5 times for the MSCI AC World Index of emerging- and developed-nation shares, according to Bloomberg data.
“The most attractive market in Latin America is Brazil,” Mark Mobius, who oversees about $34 billion of developing-nation assets as chairman of Templeton Asset Management, said in an interview in Bangkok yesterday. “Its valuation is not excessive.” (more)
Top Fed Official: Housing Is a Terrible Investment
Homeowners have been told for years that their abode represents the best investment they’ll ever make.
Karen Pence, head of the Federal Reserve’s household and real estate finance research group, begs to differ.
At a recent economic meeting she offered five reasons why homes are a miserable investment, The Wall Street Journal reports.
And Pence has her money where her mouth is: she’s been a renter for years, though her husband’s need for more space may drive her to homeownership. (more)
Karen Pence, head of the Federal Reserve’s household and real estate finance research group, begs to differ.
At a recent economic meeting she offered five reasons why homes are a miserable investment, The Wall Street Journal reports.
And Pence has her money where her mouth is: she’s been a renter for years, though her husband’s need for more space may drive her to homeownership. (more)
Commercial Real Estate and Tishman and Blackrock Walking Away from a $4.4 Billion CRE Deal. How to Lose 66 Percent on an 11,000 Unit Property
It is becoming more of a preferred strategy to systematically walk away from commercial real estate debt. We have now had two large Wall Street organizations in Morgan Stanley and Tishman and Blackrock Inc. deciding, by voluntary choice, to walk away from their contractual obligations on commercial real estate. Now much has been made regarding the commercial real estate debacle because some $3.5 trillion in commercial real estate debt is outstanding. This number is enormous and many of the bank failures that we’ll be seeing on Fridays this year will come from bad loans in the commercial sector. (more)
Economy flounders, despite the stimulus
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. (more)
Loonie will hit parity with U.S. dollar in few months: analysts
The Canadian dollar is on track to hit parity with the U.S. dollar, a rise that would underscore the strength of Canada's economy compared with that of the United States, as well as the country's vulnerability to swift changes in commodities prices.
Analysts are forecasting that the Canadian dollar will trade on equal footing with the U.S. dollar within the next few months, largely based on investor demand for assets linked to rising commodities prices.
The loonie, the nickname for the gold-colored coin that replaced the paper dollar in 1987, is now trading at 94.11 U.S cents. It would have to rise about 6% to trade at one American greenback, or at parity.
"Our forecast is for [the loonie] to hit parity by the end of the first quarter," said David Watt, currency strategist for RBC Capital Markets. "There's a chance it could hit before that." (more)
Oil slumps on expected rise in supplies, China worries
Crude oil futures finished lower Tuesday, pressured by concerns over demand from China as it attempts to cool its growth, while traders readied themselves for data expected to show rising U.S. crude supplies.
Futures had briefly come off earlier lows after a report showed U.S. consumer confidence jumped in January.
But "China is really the driving force in this market," said Dan Flynn, energy trader at PFGBest.
Crude oil for March delivery fell 55 cents, or 0.7%, to end at $74.71 a barrel at the New York Mercantile Exchange. Earlier, the contract hit an intraday low of $73.82 a barrel. (more)
Futures had briefly come off earlier lows after a report showed U.S. consumer confidence jumped in January.
But "China is really the driving force in this market," said Dan Flynn, energy trader at PFGBest.
Crude oil for March delivery fell 55 cents, or 0.7%, to end at $74.71 a barrel at the New York Mercantile Exchange. Earlier, the contract hit an intraday low of $73.82 a barrel. (more)
Tuesday, January 26, 2010
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: (more)
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. (more)
Whalen: Banking Bloodbath Is Still Ahead
Chris Whalen, of Institutional Risk Analytics, says a bloodbath in the banking industry is still dead ahead.
“Loss rates for the industry will be very high," Whalen says, forecasting record charge-off rates, higher loan loss reserves and a lot of "minus signs" for banks' bottom lines.
"Right now the total egg — credit — is shrinking," Whalen told Tech Ticker. "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. (more)
“Loss rates for the industry will be very high," Whalen says, forecasting record charge-off rates, higher loan loss reserves and a lot of "minus signs" for banks' bottom lines.
"Right now the total egg — credit — is shrinking," Whalen told Tech Ticker. "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. (more)
Pakistan Collapse Could Trigger Global Great Depression and World War III
During 2009 the 2600 terrorist attacks resulted in the number of deaths soaring to more than 12,000 casualties in Pakistan, compared to the number killed in Iraq falling to 2,800 from the 2008 total of 5,900. The U.S. War in Afghanistan pushed the Taliban and Al-Qeeda over the border into Pakistan that has sparked an escalating insurgency and Pakistan's own U.S. backed un-popular "War on Terror" which is going just as badly as that in Afghanistan, only without the deep financial pockets to embark up on an never ending war that is increasingly sapping what little strength the Pakistan Economy had out of it and now seriously risks the collapse of the state due to the stress of the conflict on the economy and society. (more)
Why Did the ‘Stimulus’ Fail to Help the Economy?
When Congress was debating President Obama’s proposed “stimulus” last year, two of the watchwords for the near-trillion-dollar boondoggle were “jobs” and “shovel-ready.” Now, given what comes out of Washington, one needs a shovel to clean up the muck, and I appreciate the politicians and the media telling us we needed to have our shovels ready.
Now that the numbers are in, however, it seems that money spent had no appreciable effect on lowering unemployment:
A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama’s first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an “urgent need to accelerate job growth.”
An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed. (more)
Happiness in Slavery
Think you’re free? Think again, slave!
This week the Federal government will attempt to auction off 118 billion dollars in U.S. debt to anyone who thinks the U.S. dollar is a great place to be. Of course if you ask liars like Fed Chief Ben Bernanke or his young sidekick “tiny” Tim Geithner, they will most certainly assure you that the dollar is strong and that the U.S economy is on a miraculous rebound. But this is fiction.
Lets do our own risk assessment, shall we? After all, barring any foreign investors stupid enough to take the bait, it’s going to be you and I… and several generations of our descendants left holding the check as the fat gluttons on Wall Street lick their plates before dashing out of the restaurant. But I warn you; what you are about to read is nothing short of horrifying and should convince you – once and for all – that we are in the final stages of a freefall spiral into outright despotism. (more)
Nobel economist Stiglitz: "US privatized profits, socialized losses is not capitalism." It’s fascism
Joseph Stiglitz understands half the US economic disaster when he explains current policy is “no way to run an economy that’s going to work,” “there’s moral hazard everywhere,” and newly-invented and unregulated financial markets have only increased risk, not decreased it.
The Nobel Laureate, former chief economist for the World Bank, and current Columbia university economics professor understands fully that US economic policy is designed to benefit an elite-class of financial market “traders.” He accurately articulates that gambling losses in fraudulent credit default swaps, collateralized debt obligations, and leveraged investments/bets without the capital to back their losses are socialized by the TRILLIONS in an unprecedented transfer of wealth from taxpayers to a financial oligarchy. And Mr. Stiglitz understands the consequences of a shattered economy on near-record unemployment in the US most accurately measured at 22%. (more)
U.S. Heading for Hyperinflationary Collapse, Ruling Elite Preparing for Civil War
This country achieved greatness because Americans took chances, had the freedom to succeed or fail, picked themselves up when they failed, and lived their lives within a moral framework of fairness and honesty. That flame of independence and freedom is dying out. Americans no longer believe in shared sacrifice, working hard, honoring a sense of civic duty, morality, or modesty. A private banking cartel controls the purse strings and protects its bank owners and its protectors in Congress. The President wages wars across the globe without Constitutional approval from Congress that is required. Agencies of government operate in secret, assassinating foreign enemies, fomenting unrest in other countries, and spying on Americans. Look at the fear we’re feeding. Look at the lives we’re leading. (more)
Monday, January 25, 2010
Technically Precious With Merv, Jan 22, 2010
FREE weekly precious metals investment newsletter click here
SEC May Approve Restrictions on Short Sales When Stocks Plunge
Concern that short-sellers accelerate stock declines may prompt the Securities and Exchange Commission to adopt a rule next month aimed at curbing bearish bets when equities are plunging.
The regulation would require the trades be executed above the best existing bid in the market when shares fall 10 percent in a day, said Brian Hyndman, the senior vice president in transaction services at Nasdaq OMX Group Inc. In a short sale, an investor borrows an asset and sells it, hoping to profit from a decrease by repurchasing it later at a lower price. (more)
Platinum Overtaking Gold as Metal of Choice With Auto Rebound
Even after a record 57 percent rally last year, platinum is cheap relative to gold, signaling more gains as demand grows from carmakers and exchange-traded funds. An ounce of platinum buys 1.42 ounces of gold, down 42 percent from the record 2.43 ounces in 2001 and 23 percent less than the 10-year average, data compiled by Bloomberg show. Automakers, the biggest buyers, will expand output 20 percent this year, said Evan Smith, who helps manage $2 billion at U.S. Global Investors. Hedge funds raised their bets 163 percent in 2009, about twice gold’s increase. ETF Securities Ltd. funds lifted holdings to a record 594,465 ounces. (more)
Los Angeles Heading for Bankruptcy, Mayor Tries to Prevent Bond Market Panic
When a politician says something is "not an option" that generally means it is (or soon will be). Sometimes it means it is all but certain. With that in mind, please consider Mayor Villaraigosa says no bankruptcy for the city. (more)
HUMOR- THE ECONOMY IS SO BAD....
–I got a pre-declined credit card in the mail.
–I ordered a burger at McDonald’s and the kid behind the counter asked, “Can you afford fries with that?”
–CEOs are now playing miniature golf.
–If the bank returns your check marked “Insufficient Funds,” you call them and ask if they meant you or them.
–Hot Wheels and Matchbox stocks are trading higher than GM.
–McDonald’s is selling the 1/4 ouncer.
–Parents in Beverly Hills fired their nannies and learned their children’s names.
–A truckload of Americans was caught sneaking into Mexico .
–Cheney took his stockbroker hunting.
–Motel Six won’t leave the light on anymore.
–The Mafia is laying off judges.
–Exxon-Mobil laid off 25 Congressmen.
–Congress says they are looking into this Bernie Madoff scandal. Oh Great!! The guy who made $50-Billion disappear is being investigated by the people who made $1.5-Trillion disappear!
–And, finally… the best for last
–Last night, I was became so depressed thinking about the economy, wars, jobs, my savings, Social Security, retirement funds, etc., I called the Suicide Lifeline. I got a call center in Israel, and when I told them I was suicidal, they got all excited and asked if I could drive a truck!
Walmart to lay off 11,200 workers at Sam's Club
Walmart Stores Inc. said Sunday that it is cutting about 11,200 jobs at its Sam's Club warehouse division as it outsources its product-sampling department to marketing company Shopper Events in an effort to win more customers and boost lagging sales.
The terminations represent about 10 percent of the warehouse club operator's 110,000 staffers across its 600 stores. About 10,000 members of the demonstration department, most part-time workers, were let go. Employees were told the news at mandatory meetings on Sunday morning. (more)
Saturday, January 23, 2010
Ten companies flashing financial danger signs.
Is the recession over? Is Corporate America out of the woods? Some indicators on Wall Street seem to say yes. Yields on junk bonds are way down. A lot of companies that were on the brink a year ago have refinanced, pushing maturities of debt out to 2014 or later. And if last March you had bought an assortment of shares in the shakiest borrowers you probably would have made a huge profit. Auto parts maker ArvinMeritor ( ARM - news - people ) was trading at 32 cents at its low on Mar. 11. It has since climbed 3,503% to $11.53.
But financial risk is not out of the system. Last year saw 207 bankruptcies of publicly traded companies. If there's a double-dip recession, this year's count could easily be as high. Leverage is still a big feature of American business. (more)
Options Indicate 3% S&P 500 Retreat as VIX Advances
Traders are speculating the Standard & Poor’s 500 Index will fall as much as 3 percent, according to options bets on the benchmark gauge for stock market volatility during the last two days.
Wagers that the Chicago Board Options Exchange Volatility Index will jump 46 percent to 32.5 were the most-active contract, data compiled by Bloomberg show. A surge to that level may herald a decline to about 1082 for the S&P 500, said Randy Frederick, director of trading and derivatives at Charles Schwab & Co. The stock gauge slipped 2.9 percent to 1,116.48 since Jan. 20, while the VIX advanced 27 percent to 22.27, the biggest two- day gain since November 2008. (more)
TV cash-for-gold firms 'offer fraction of true value'
Companies offering cash for gold jewellery in a recent flurry of TV adverts are paying a fraction of the items' true worth.
The firms, which have latched on to increases in the price of gold, are 'shockingly bad value', according to consumer group Which?
Three pieces of new jewellery purchased by Which? for a total of £729 drew offers from the firms of as little as £38.57 for the lot.
One company refused to return a £399 necklace free of charge, as promised, on the inaccurate pretext that it was not gold at all. (more)
Doug Casey Says Bet Against Wall Street, Bonds, and after a few months the U.S. Dollar
L: Doug, I saw a Wall Street Journal headline a few days ago that boldly proclaimed, "Car Makers May Hire Soon." Be still, my trembling heart! It’s hard to believe the WSJ would stoop to such a meaningless headline, but I guess they are just trying to give their desperate customers what they want: some hope, whether valid or not. What do you make of the unemployment situation?
Doug: Well, they say that during the depression of the 1930s, unemployment went as high as 25%. That’s interesting, in that at the time, half the people in the country were still farmers. They knew how to make the things they used in daily life with their own hands, and how to grow their own food. There was less specialization in the economy, and people were more self-sufficient. That made them better able to cope with an economic depression. (more)
Doug: Well, they say that during the depression of the 1930s, unemployment went as high as 25%. That’s interesting, in that at the time, half the people in the country were still farmers. They knew how to make the things they used in daily life with their own hands, and how to grow their own food. There was less specialization in the economy, and people were more self-sufficient. That made them better able to cope with an economic depression. (more)
Goldman Sachs Had Bomb-Sniffing Dogs, Police Barricades At Its Headquarters Before Earnings Announcement
As Goldman Sachs prepared to announce its fourth quarter earnings and employee compensation levels yesterday, the bank had bomb-sniffing dogs and police barricades on hand at its New York City headquarters, the New York Post reports.
The decision to boost security as its offices was apparently driven by growing fervor over the bank's huge profits and bonuses. Yesterday, the bank announced that it earned $13.4 billion for the year, and set aside $16 billion for employee compensation. Goldman was widely expected to set aside approximately $20 billion for employee pay, but CFO David Viniar suggested yesterday in a call with reporters that the bank wasn't blind to the "pain and suffering in the world" and "wasn't deaf to the calls for restraint." (more)
20% VAT 'looming' as ministers face mounting debt crisis
A hike in VAT is ‘inevitable’ after the election as the government grapples with a mounting debt crisis, experts warned yesterday.
The Treasury will have to lift the tax from 17.5 per cent to 20 per cent to raise an extra £12 billion of revenue a year, according to analysts at consultancy Oxford Economics.
The next Government may also have to delay the state retirement age to 68 in order to cope with the biggest debt crisis since the Second World War, the report said.
The warning came as official figures revealed the UK government has borrowed almost £330 million a day so far in the current financial year - the most on record. (more)
Friday, January 22, 2010
Better Off Deadbeat: Craig Cunningham Has a Simple Solution for Getting Bill Collectors Off His Back. He Sues Them.
Unlike his neighbors' homes, Craig Cunningham's house in Northeast Dallas looks abandoned. The grass is dried out. The concrete slab under the front door is lopsided and cracked. The green exterior has faded to a toxic-looking shade. Yellow Pages pile up near the front door, and the black mailbox is stuffed full. Maybe the home has been foreclosed on. That wouldn't be a surprise in this economy.
But no, that's not the case. Inside, the 29-year-old Cunningham hunkers his 6-foot-2-inch frame on a dumpy couch. His heavy arms extend from his sides, palms up, so two Chihuahuas, Angel and Chuay, can curl under them. Although it's 10 a.m. on a weekday, he's wearing slippers. (more)
An Interview With Don McAlvany: Countdown to Financial Armageddon
January 20th, 2010
Call 1 800 525 9556 for a FREE copy of the January and February McAlvany Intelligence Advisor
Roubini Says Stock Rally May End Amid Muted Recovery
A global rally in stocks may end in the second half of the year amid a muted recovery in the world’s largest economies and as deflationary pressures limit gains in corporate earnings, Nouriel Roubini said. Failure to restrain asset-price bubbles in emerging markets, fueled by loose monetary policies in the U.S. and around the world, may also cause an “unraveling and a significant correction of asset prices which will be damaging to global and regional economic growth,” Roubini, the Harvard- schooled New York University professor who in 2006 foresaw the financial crisis, said in Hong Kong today. (more)
Mankiw: Wild Inflation May Make Bonds Look Irrational
Economist and Bush administration economic adviser Gregory Mankiw says hyperinflation could make today's bond market look like an irrational bubble.
"Is galloping inflation around the corner?” Mankiw writes in The New York Times.
“Without doubt, the United States is exhibiting some of the classic precursors to out-of-control inflation."
Investors snapping up 30-year Treasury bonds paying less than 5 percent are betting that the Federal Reserve will keep these inflation risks in check, notes Mankiw. (more)
"Is galloping inflation around the corner?” Mankiw writes in The New York Times.
“Without doubt, the United States is exhibiting some of the classic precursors to out-of-control inflation."
Investors snapping up 30-year Treasury bonds paying less than 5 percent are betting that the Federal Reserve will keep these inflation risks in check, notes Mankiw. (more)
New jobless claims rise unexpectedly
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. (more)
How Can Localities Cope if the Dollar Crashes?
A “run on the dollar,” or any currency, for that matter, takes place when the currency is losing its value. This happens when a country’s debt becomes so great that there is danger of a major default–that is, large scale or even national bankruptcy. At that point, people whose wealth is in that currency, or in relatively liquid assets denominated in the currency, try to get rid of them as fast as they can. Today, that includes foreign countries like China or Russia that are holding large quantities of U.S. government bonds.
The U.S. currently is at risk. We see it in personal and business bankruptcies and foreclosures. One result can be a high rate of inflation in certain products like food or gasoline, even while asset prices, as with homes and stocks, are going down. The question is now whether the “recovery” that is underway can be sustained or will there be another crash like there was in late 2008 to early 2009. (more)
Thursday, January 21, 2010
Time to cage inflation tiger, say experts
Economy chugs along at good pace, but some red lights ahead
Even as China is set to achieve its targeted goal of 8 percent growth in gross domestic product (GDP) for 2009, economists have stressed that tackling high inflation should be the top priority for policymakers this year.
Inflation is likely to accelerate to more than 5 percent before the middle of this year and reach 8 percent in the second half, Erwin Sanft, head of mainland and Hong Kong equities research at BNP Paribas, was quoted by Bloomberg as saying yesterday. (more)
Shilling: Buy Bonds Before Home Prices Fall
Uber bear economist Gary Shilling thinks the financial crisis is still unfolding, and advises to buy Treasuries and the dollar and dump commodities.
First, the consumer is on a big saving tear and as long as that’s the case, we’re not going to see an economic rebound that amounts to anything, Shiller says.
It isn’t just that consumers are on a saving spree, it’s that they are reversing a 25-year trend, Shilling told Bloomberg. (more)
First, the consumer is on a big saving tear and as long as that’s the case, we’re not going to see an economic rebound that amounts to anything, Shiller says.
It isn’t just that consumers are on a saving spree, it’s that they are reversing a 25-year trend, Shilling told Bloomberg. (more)
Taipan Daily: Caution Warranted by Lessons of 1932
So 2009 is finally over. A new year, full of promise and peril, stretches out ahead. Now what?
The Dow Jones Industrial Average (DJIA) – to use a commonly cited barometer – is up roughly 65% (as of this writing) from the ugly depths of the 2009 March lows. Going off that data point alone, it is no real surprise that investors are optimistic.
Trouble being, investors had even more cause to be optimistic in 1932, if stock market rallies are the measure du jour.
In a matter of months, the Dow rocketed a most impressive 94% – almost a clean double – off its 1932 lows. After a stunning, multi-year fall from the heights of 1929, some surely thought that rally to be the “all clear” signal. (more)
US housing starts unexpectedly fall in Dec
The Commerce Department said housing starts fell 4 percent to a seasonally adjusted annual rate of 557,000 units. Analysts polled by Reuters had expected housing starts to rise to 580,000 units. November's housing starts were revised upwards to 580,000 units from the previously reported 574,000 units. The drop in housing starts was likely the result of unusually cold weather last month.
Groundbreaking activity dropped a record 38.8 percent to an all-time low of 553,000 units for the whole of 2009. (more)
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. (more)
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. (more)
Wednesday, January 20, 2010
50% of consumers cut vital spending
Almost half of people in Northern Ireland face cutting their food or household bill budgets to pay for Christmas debt, a survey has claimed.
With 15% of men having no repayment plan whatsoever spending on holidays is also expected to be reduced, the study for the Post Office said.
Almost 400,000 people had to increase their debts to cover Christmas. (more)
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?
Oh well, it’s just 18 million American homes that now lay empty in the wake of unprecedented foreclosures, and the bankers have collected obscene bonuses for reckless lending of their depositors’ money. It’s like the captain and crew of a ship saying, not to worry, twenty-percent of the passengers were lost overboard, but this was due to unavoidable mistakes, and then being rewarded with bonuses when they reach port. (more)
More and More States on Budget Brink
California is hurtling into the budgetary abyss — and it’s not alone.
Across the nation, state tax collections in the first three quarters of 2009 posted their steepest decline in at least 46 years, according to a report this month from the public policy research arm of the State University of New York.
At least 30 states raised taxes in their most recently completed fiscal year — which ended in most cases in mid-2009. Even more cut services. All told, states raised $117 billion to fill last year’s budget gaps, the Pew Center on the States estimates.
Yet despite all those new taxes and deep cutbacks, pressure on state finances continues to build. Economists warn that without a new round of federal stimulus spending, states could face another round of layoffs that could kneecap an already shaky economic recovery. (more)
Forecast: Debt to dwarf GDP
A blue-ribbon panel that includes three former heads of the Congressional Budget Office is telling President Obama and the Democrat-controlled Congress that the federal deficit must be cut now or the national debt within about two generations will be 600 percent of the gross domestic product. "The debt level of the United States is unsustainable, something has to give," said Rudolph Penner, former head of the CBO and co-chairman of a report issued last week by the National Research Council and the National Academy of Public Administration. (more)
Credit Card Companies Pulling Back Credit Offers to American Households: Those Zero Percent Offers have now Turned into 30% Offers with Annual Fees
Credit cards are ubiquitous like air in the American economy. Virtually every American that can qualify for a credit card has one (or many) in their wallet. Credit card companies have flooded the market with millions of plastic rectangles that have now come back to bite many American consumers. If we rewind back to the early days of this crisis, (so much has happened since that time) we will remember that the banking bailout involved some necessity of keeping credit alive. At least this is how it was presented to the American public. No bailout equaled no access to credit. Yet since that time we have seen consumer credit simply collapse on a record pace. Part of this is due to the extinguishing of debt via bankruptcy but also the fact that credit card companies (aka big banks) are not making loans accessible to the public. (more)
CFTC: the Common Fraud Training Committee
If you ever write to someone, like me, to say that you disagree with them, you should at least be able to say why. I do, and I will. Here's an example: I think futures contracts are a form of fraud because there are more paper contracts than real silver, and I think "regulating" fraud is simply fraud on top of fraud.
So far, nobody has demonstrated any capacity to explain how new position limits on metals, even applied to short sellers, would end the endless short selling. Nobody has explained how the Commodity Futures Trading Commission (CFTC) would be able to detect, and/or catch, and/or prevent an entity like JP Morgan from setting up many dummy shell corporations to short all the silver contracts that they wanted to avoid and get around any new regulation.
Therefore, my view is that new position limits contemplated by the CFTC would be irrelevant. CFTC regulation of short positions is impossible and a waste of time. What the CFTC has been capable of doing so far is to criminalize and outlaw "excessive" long positions, as if it's somehow criminal to spend your money on what you want. (more)
So far, nobody has demonstrated any capacity to explain how new position limits on metals, even applied to short sellers, would end the endless short selling. Nobody has explained how the Commodity Futures Trading Commission (CFTC) would be able to detect, and/or catch, and/or prevent an entity like JP Morgan from setting up many dummy shell corporations to short all the silver contracts that they wanted to avoid and get around any new regulation.
Therefore, my view is that new position limits contemplated by the CFTC would be irrelevant. CFTC regulation of short positions is impossible and a waste of time. What the CFTC has been capable of doing so far is to criminalize and outlaw "excessive" long positions, as if it's somehow criminal to spend your money on what you want. (more)
Tuesday, January 19, 2010
The Decade 2010 – 2020: Towards a knockout victory by gold over the Dollar
The US Federal Reserve is no longer able, in reality, to continue its multi-decade combat against the « barbarous relic » in order to guarantee the supremacy of the US currency at the centre of the international monetary system. For LEAP/E2020 the decade which has just begun will be clearly marked by a complete KO of the Dollar (and the fall of most major international currencies) by gold.We have often reminded readers in different GEAB issues that gold constitutes both a medium/long term investment intended to protect one’s capital against the risk of a loss in value of paper currencies and financial assets, and an eventual means of payment in the event of a very serious monetary crisis. In these two cases the choice of placing a portion of one’s assets in gold is a response to anticipating events and risks in the coming years (and not the coming weeks or months). For this GEAB N°41, a special edition at the beginning of a new decade, it seems opportune to LEAP/E2020 to put forward its anticipations on gold’s progress for 2010 – 2020, completing what the team wrote in issue N°34 of the GEAB in April 2009. (more)
Platinum, palladium ETFs a big hit in US
The recently launched platinum and palladium exchange traded funds (ETFs) in the US have witnessed a huge buying and within a week’s time the ETFs have a holding of over 200,000 ounces.
This week ETFS physical platinum shares PPLT was holding 89,948 ounces of platinum, while the ETFS physical palladium shares PALL had 99,977 ounces of palladium,
according to ETF Securities’ website.
The new exchange products are expected to give US investors easier access to the industrial metals, which have already rallied on hopes of more fund-based stockpiling. (more)
This week ETFS physical platinum shares PPLT was holding 89,948 ounces of platinum, while the ETFS physical palladium shares PALL had 99,977 ounces of palladium,
according to ETF Securities’ website.
The new exchange products are expected to give US investors easier access to the industrial metals, which have already rallied on hopes of more fund-based stockpiling. (more)
Roubini: Sovereign Debt Crisis Will Sweep Globe
The weak economic recovery is likely to increase the debt burden of many advanced economies, including the United States, Britain, Japan and several euro zone countries, writes former White House economist Nouriel Roubini.
In his weekly column in Forbes, along with his collaborator, Arpitha Bykere, a research analyst, Roubini, now a professor of economics at New York University, said that the decisions by governments in 2008 and 2009 to do "whatever it takes" to be a backstop their financial systems and keep their economies afloat temporarily eased investor concerns.
“But if countries remain biased toward continuing with loose fiscal and monetary policies to support growth, rather than focusing on fiscal consolidation, investors will become increasingly concerned about fiscal sustainability and gradually move out of debt markets they have long considered safe havens,” writes Roubini. (more)
In his weekly column in Forbes, along with his collaborator, Arpitha Bykere, a research analyst, Roubini, now a professor of economics at New York University, said that the decisions by governments in 2008 and 2009 to do "whatever it takes" to be a backstop their financial systems and keep their economies afloat temporarily eased investor concerns.
“But if countries remain biased toward continuing with loose fiscal and monetary policies to support growth, rather than focusing on fiscal consolidation, investors will become increasingly concerned about fiscal sustainability and gradually move out of debt markets they have long considered safe havens,” writes Roubini. (more)
Rogoff Fears Junk Bond Bubble Will Soon Pop
High-yield, or junk, bonds soared last year, and many experts anticipate the rally will continue this year.
But Harvard economist Ken Rogoff isn’t so sure.
Sustained low interest rates may well spark a bubble in the junk bond market, the former IMF chief economist told Bloomberg.
“I care when there’s massive borrowing, especially short-term borrowing, that’s fueling asset-price rising. That I think is a big cause for concern.”
Junk bonds returned 57.5 percent last year, and many junk bond fund managers see more gains ahead. (more)
But Harvard economist Ken Rogoff isn’t so sure.
Sustained low interest rates may well spark a bubble in the junk bond market, the former IMF chief economist told Bloomberg.
“I care when there’s massive borrowing, especially short-term borrowing, that’s fueling asset-price rising. That I think is a big cause for concern.”
Junk bonds returned 57.5 percent last year, and many junk bond fund managers see more gains ahead. (more)
2010: Giant Gathering Storm Clouds
The year 2008 bore my mark as the year the system broke. A public article addressed the issues, laid out before the breakdown occurred in September of that year. The consequences for the many failures, the desperate nationalizations, the hasty scrambles to put financial sewage under USGovt ownership, the realization of TARP as a vast slush fund for illegitimate bank rescues, the official monetization plans put forth to prevent bond implosions, and much more occurred in the year 2009 as a recognized aftermath. Here we are in 2010 and the threats must again be laid out. A prelude was offered in an mid-December article entitled "Full Circle of Govt Debt Default" (CLICK HERE) where a global sovereign debt ruin in vicious circle was displayed the sequence that started in the Untied States and will end in the Untied States. Rather than make specific forecasts of extreme events, a list is presented much like a smorgasbord. The odds are 100:1 in favor at least one extreme event occurring in this current calendar year in my view. The odds are very high in favor of several events taking place this year. (more)
The RRSP Mirage
Can Canada restitch the fraying financial safety net citizens count on when we stop working?
On Dec. 17, federal and provincial finance ministers will meet in Whitehorse for talks focussing on retirement and pension reform. Hopes are high for an historic moment -- the dawn of "Pensioncare."
Fears are equally high -- that the history will have more to do with squandered opportunities and fumbled balls.
Triggering this confab is the growing consensus that Canada needs to figure out a way to get pensions for people who don't have them, and to shore up the retirement savings for people who aren't accumulating what they expected. (more)
Monday, January 18, 2010
Technically Precious With Merv, Jan 16, 2010
FREE weekly precious metals investment newsletter, click here
How Goldman Sachs Made Tens Of Billions Of Dollars From The Economic Collapse Of America In Four Easy Steps
Investment banking giant Goldman Sachs has become perhaps the most prominent symbol for everything that is wrong with the U.S. financial system, but most Americans cannot even begin to explain what they do or how they have made tens of billions of dollars from the economic collapse of America. The truth is that what Goldman Sachs did was fairly simple, and there may not have even been anything "illegal" about it (although they are now being investigated by the SEC among others). The following is how Goldman Sachs made tens of billions of dollars from the economic collapse of America in four easy steps.... (more)
2010 Market Outlook
At the start of every year we put together our best research and analysis and then formulate a forecast based on the most likely outcomes. Unlike others who simply say what they think will happen, we sit down and analyze the fundamental, technical and sentiment evidence and opine on what is most likely to happen, what might happen and what won't happen. We take a lot of pride in this, as we believe we are one of the few that puts forth actionable research and makes it available to the public.
Heading into 2010 we've seen a range of forecasts and opinions. The econo-bears like Michael Panzner and David Rosenberg, while very prescient on the economy, continue to expect new lows or a retest of 2009 lows. Some bulls see the strong recovery as a sign that we are in a new bull market and that the market is leading the economy. Few seem to take the middle ground. Maybe that is because such a forecast isn't worth reporting in the media. That being said, before we think what is likely, let us think what is not likely. (more)
UK’s Only Options are “Default, Inflation or Belt-Tightening”
Yesterday, McKinsey released a new report showing that the combined public and private debt in the UK is now 449 Percent of GDP. It’s actually the biggest debt to GDP jump of any western nation over the span of the past ten years.
Given that recently-imploded Dubai World is still top of mind, and the Iceland meltdown was really not so long ago, it must make a mighty bitter pill for them to swallow.
According to the Financial Times: (more)
US Crosses the Bernholz Line -- Hyperinflation Early Warning Signal
Economic historian Peter Bernholz has identified that inflation starts to take on hyperinflationary characteristics some time after the deficits of a country as a share of government expenditure rise above a third and stay there for several years.
According to Bernholz, the great hyperinflations of France, Germany, Poland, Brazil, and Bolivia all occurred after deficits reached that magic percentage or higher (In Bolivia, it reached 91%). The United States crossed over the Bernholz line last year.
Japan is even deeper into the warning despite concerns of many that it has a deflation problem. Ambrose Evans-Pritchard writes: (more)
According to Bernholz, the great hyperinflations of France, Germany, Poland, Brazil, and Bolivia all occurred after deficits reached that magic percentage or higher (In Bolivia, it reached 91%). The United States crossed over the Bernholz line last year.
Japan is even deeper into the warning despite concerns of many that it has a deflation problem. Ambrose Evans-Pritchard writes: (more)
US Trading Holiday Monday
Due to the Dr. Martin Luther King Jr. day in the USA today is a trading holiday.
Saturday, January 16, 2010
Subscribe to:
Posts (Atom)