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Reggie
Joined: 21 Sep 2009
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 Posted: Wed Oct 28, 2009 10:30 am Post subject: |
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| I keep reading people saying the failure of the Latvian economy is going to have a large ripple effect on larger countries like Sweden, Switzerland, Hungary, and others. Is the situation really that dire and, if so, how did a little nobody country like Latvia become so important in the scheme of things? |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Wed Oct 28, 2009 10:39 am Post subject: |
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Tim Geither, Don't you Dare Bailout GMAC Again
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Tim Geithner's getting ready to shovel more taxpayer money down the rat hole, this time to GMAC.
GMAC, in case you're in understandable denial, has been bailed out twice already.
And now Tim Geithner wants to shovel another $2.8 billion in. |
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Pluto
Joined: 19 Dec 2006
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| Posted: Wed Oct 28, 2009 12:09 pm Post subject: |
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Oh he dared! And it's on:
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| GMAC, the car financing company, is set to receive up to $5.6bn in a new capital injection from the Treasury, filling a hole identified in the �stress tests� earlier this year and paving the way for the government to become the majority shareholder. |
See, it's not so bad. Society is now the majority shareholder.
http://www.ft.com/cms/s/0/55463ab6-c3ca-11de-a290-00144feab49a.html
Moreover, the US economy is just oozing with green sharts.
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1) According to the Labor Department, the U.S. unemployment rate was at a 26-Year High of 9.8% in September 2009. Since the recession began in December 2007, over 7,600,000 jobs have been lost.
There are currently over 15,100,000 Americans unemployed, and according to the Plain Dealer on 9/23/09, 2) roughly 5,000,000 have been unemployed over 6 months - the highest number since data was first collected in 1948 � plus there are currently six unemployed people for every single available job.
While normal 26-week unemployment compensation programs have been extended to 79 weeks in many states, 3)over 1,500,000 people are expected to exhaust their benefits by year�s end, with the first big wave of 540,000 falling out of the program at the end of September, according to the nonprofit National Employment Law Project.
In May 2008, the number of people using food stamps was 27,000,000. In December 2008, the number surpassed 30,000,000 for the first time. 4) According to the U.S. Department of Agriculture, in August 2009 there were 34,000,000 Americans on food stamps and in September there were over 35,000,000, a jump of over 1,000,000 in one month.
As of September 2009, a full 12% of the total U.S. population was on some form of Food Stamp assistance, the highest since records began in 1969.
5) Household debt peaked at $13.9 trillion in 2008, almost double the figure from 2000. With all of the cutbacks in consumer spending in 2009, debt has been �slashed� all the way down to $13.8 trillion, according to the Federal Reserve.
6) The collapse of both the housing and stock markets has erased more than $12 trillion in wealth since 2007. Between June 2007 and December 2008, inflation-adjusted personal wealth fell by 22.8% - the most since the Federal Reserve began collecting data almost 60 years ago.
7)According to CNN Money, there were more than 360,000 foreclosure filings in July 2009, an increase of 7% from June 2009 and an increase of 32% from July 2008, marking the third time in the previous five months that a new record for foreclosure activity had been set.
8 ) Moody�s Investor Service reported on 9/23/09 that the U.S. credit card charge-off rate - which was 10.52% of balances in July - rose to a record high of 11.49% in August.
According to Automated Access to Court Electronic Records, from January to August 2009, 9) national bankruptcy filing reached 954,911, up from 703,732 in the same period of 2008, and is expected to exceed 1,450,000 by the end of December. In August 2009 alone, the America Bankruptcy Institute reported 119,874 filings, a 24% increase over August 2008.
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1)According to the Labor Department, the U.S. unemployment rate was at a 26-Year High of 9.8% in September 2009.
2) Roughly 5,000,000 have been unemployed over 6 months - the highest number since data was first collected in 1948.
3) over 1,500,000 people are expected to exhaust their benefits by year�s end, with the first big wave of 540,000 falling out of the program at the end of September.
4) According to the U.S. Department of Agriculture, in August 2009 there were 34,000,000 Americans on food stamps and in September there were over 35,000,000, a jump of over 1,000,000 in one month.
5) Household debt peaked at $13.9 trillion in 2008, almost double the figure from 2000.
6) The collapse of both the housing and stock markets has erased more than $12 trillion in wealth since 2007. Between June 2007 and December 2008, inflation-adjusted personal wealth fell by 22.8% - the most since the Federal Reserve began collecting data almost 60 years ago.
7) According to CNN Money, there were more than 360,000 foreclosure filings in July 2009, an increase of 7% from June 2009 and an increase of 32% from July 2008.
8 ) Moody�s Investor Service reported on 9/23/09 that the U.S. credit card charge-off rate - which was 10.52% of balances in July - rose to a record high of 11.49% in August.
9) National bankruptcy filing reached 954,911, up from 703,732 in the same period of 2008, and is expected to exceed 1,450,000 by the end of December. In August 2009 alone, the America Bankruptcy Institute reported 119,874 filings, a 24% increase over August 2008.
Fundamentals, you see. However, there is one fundamental the pundits keep telling us to worry about:
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So-called �experts� in the media continue to talk about the importance of �Consumer Confidence,� suggesting that if only Americans would think happy, optimistic thoughts that everything would be okay. Hello? Did you read that first section? Do you see the pattern? Have you watched the data points and reports coming in from Wall Street? The preponderance of homes sold are discounted (foreclosure, short sales, or homes under $250,000), the preponderance of retail success is limited to discounters (Wal-Mart, Dollar General, Family Dollar), and preponderance of restaurant success is also limited to discounters (McDonald's and the like, and now grocery stores).
The problem is not Consumer Confidence, the problem is Consumer Over-Confidence. Do you know how much confidence you need to muster to take out a 40-year loan on a $600,000 house with no money down, with an interest-only loan � on spec � when you�re earning $45,000? Do you know how much confidence it takes to max out all of your credit cards and home equity loans and student loans and car loans? |
http://seekingalpha.com/article/169390-america-uncoupled-wall-street-and-main-street-at-a-fork-in-the-road
Fear not, however. One of the World's worst governments and one of the World's most loony economies is presenting an arbitrage opportunity:
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| Judging by the break-even rates on inflation-protected bonds, the United Kingdom is home to the highest future inflation of any major nation. And that means shorting � or betting against � British gilts (government bonds) will probably rank as one of the smartest speculations over the next five years. |
Good luck with that!
http://seekingalpha.com/article/169107-u-k-gilts-could-be-world-s-best-short?source=hp |
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Pluto
Joined: 19 Dec 2006
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mises
Joined: 05 Nov 2007
Location: retired
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Oct 29, 2009 6:18 am Post subject: |
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American GDP numbers out today:
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Oh what a tangled web we weave....
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.5 percent in the third quarter of 2009, (that is, from the second quarter to the third quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.7 percent.
Looks good, right?
Hmmmm.... or is it?
Motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change.
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Real federal government consumption expenditures and gross investment increased 7.9 percent in the third quarter, compared with an increase of 11.4 percent in the second.
Ok, from this we can compute a few things.
3.5 - 1.66 - (7.9 * 30%) = -0.53%
Now let's adjust for inventories:
The change in real private inventories added 0.94 percentage point to the third-quarter change in real GDP after subtracting 1.42 percentage points from the second-quarter change.
-0.53% - 0.94% = -1.47%.
Ok, that's bad but not catastrophic and is an actual improvement compared to the second quarter. But....
Current-dollar personal income decreased $15.5 billion (0.5 percent) in the third quarter, in contrast to an increase of $19.1 billion (0.6 percent) in the second.
Personal current taxes increased $4.8 billion in the third quarter, in contrast to a decrease of $119.1 billion in the second.
Eeeeehhh... those are both going the wrong way. Taxes up, income down. And...
Disposable personal income decreased $20.4 billion (0.7 percent) in the third quarter, in contrast to an increase of $138.2 billion (5.2 percent) in the second. Real disposable personal income decreased 3.4 percent, in contrast to an increase of 3.8 percent.
That's worse. A lot worse. Disposable personal income decreased in nominal terms q/o/q by 5.9% while in real terms (inflation adjusted) it decreased q/o/q by 7.4%! That is an enormous swing in purchasing power and not in the right direction!
Personal outlays increased $148.2 billion (5.8 percent) in the third quarter, compared with an increase of $8.2 billion (0.3 percent) in the second. Personal saving -- disposable personal income less personal outlays -- was $364.6 billion in the third quarter, compared with $533.1 billion in the second.
The personal saving rate -- saving as a percentage of disposable personal income -- was 3.3 percent in the third quarter, compared with 4.9 percent in the second.
You cannot have an economic recovery when on a q/o/q basis real disposable income is contracting at a 7.4% annual rate and worse, the spread between nominal and real income is widening, indicating that mandatory purchases such a food, energy and health care - are increasing.
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http://market-ticker.denninger.net/archives/1550-GDP-Is.....-Better-Than-Expected.html
Smoke and mirrors. I guess GDP has been such since deindustrialization.
The rest of the post above is good. KD points out some naked BS.
http://network.nationalpost.com/np/blogs/fpmagazinedaily/archive/2009/10/29/fed-s-indepence-threatened.aspx
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| Paul Volcker: Where Are You Now? |
He's been given the tax code. Larry Summers, he of Latvian suicide rates, Russian oligopoly and collapsing Harvard endowments, has been handed the economy instead.
http://www.businessweek.com/bwdaily/dnflash/content/oct2009/db20091028_283152.htm?ref=patrick.net
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| New-Home Sales in Surprise Decline |
Why "surprise"? The Cash for Casa's brings demand forward. There is only so much demand to be brought forward. Like the complete Armageddon after Cash for Clunkers ended.
Weekly job numbers in a -530k.
So, there you have it. The depression rolls on despite what the GDP numbers say. Things are being held together by bailouts.
Here's the thing with a stimulus. Neoclassical economics (voodoo) teaches that you use a stimulus to hold an economy together while conducting the necessary structural reforms that will create the real growth of the future. The American's are just blowing their stimulus load on maintaining asset prices without any reforms. But as the Sprott Asset Management article I posted above (the scribed link) makes clear, the American's have a very short leash left. What will be the final disaster is when they've blown their whole load on stimulus, have nothing left to spend, and now the reforms have to go forward without any cushion. I've always supported an increase in both the value and duration of unemployment benefits to smooth the edges during a period of reform. They won't even be able to afford this. Sad, really. |
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bacasper
Joined: 26 Mar 2007
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| Posted: Thu Oct 29, 2009 7:04 am Post subject: |
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| mises wrote: |
American GDP numbers out today:
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Oh what a tangled web we weave....
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.5 percent in the third quarter of 2009, (that is, from the second quarter to the third quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.7 percent. |
Looks good, right? |
Yay! The recession is over 
Economy grows in 3Q, signals end of recession
OK, so that wasn't so bad now, was it? Who was talking all that doom and gloom?
OK, nice thread while it lasted. I guess you can end it now. Maybe the recession really is over - in Wonderland. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Oct 29, 2009 7:14 am Post subject: |
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It's odd, no? The Cash for Clunkers convinced people who own their cars to go into debt (pull consumption forward). The Cash for Casa's convinces people to go into debt. The government is going into debt. All that has really been created is debt. Sure, a few cars get built and a few new houses built (because what America needs is more cars and McMansions). Anyways, what happened is that the society expanded the level of indebtedness. And this registers as growth. Which I guess it kinda is, at least using how GDP is modeled. But this isn't a recovery. It is just a period of time in a larger period of time.
Japan's lost decade, in chart form:
http://static.seekingalpha.com/uploads/2009/2/19/saupload_jap_gdp.png
http://www.marketoracle.co.uk/images/2009/Jan/lost-decade-japan.png
Up and down. But more down than up. That's the trend. |
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Pluto
Joined: 19 Dec 2006
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| Posted: Thu Oct 29, 2009 7:18 am Post subject: |
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Lead headline from the WSJ today:
Slump Sinks Visa Program
Despite the government and its pundit supporters' propaganda, those with a worthwhile university degree would be at least critical enough to think that something is still wrong. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Oct 29, 2009 8:00 am Post subject: |
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Turkey to use national currencies in trade with Iran, China
ANKARA, October 28 (RIA Novosti) - Turkey is switching to national currencies in trade with Iran and China, ending dependence on the U.S. dollar and the euro for about 20% of its commodity turnover, local media reported on Wednesday.
Turkey has already switched to settlements in national currencies with Russia amid weakening confidence in the greenback as the world's major reserve currency. The move was initiated by Turkish President Abdullah Gul during his visit to Moscow in February.
Turkey's decision to make settlements with Iran and China in national currencies was announced during a visit to Iran by Turkish Prime Minister Recep Tayyip Erdogan. The Turkish premier told a Turkish-Iranian business forum on Tuesday that the countries had prepared a legal framework for transition to settlements in national currencies.
"We have adopted a necessary legislative act and are prepared for the transition," the Turkish newspaper Milliyet quoted Erdogan as saying.
According to the paper, Turkey's trade with Russia, Iran and China exceeds $65 billion a year. Russia is Turkey's largest trade partner, with $37.8 billion commodity turnover registered last year. |
http://en.rian.ru/business/20091028/156617011.html
The golden-egg laying goose is running on fumes.
http://www.nakedcapitalism.com/2009/10/saudis-drop-wti-oil-contract.html |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Thu Oct 29, 2009 9:03 am Post subject: |
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http://www.scribd.com/doc/21708457/Sprott-Oct-2009-Comment
Thanks Mises. Interesting.
They call for gradual abolition of Social Security by closing enrollment for new retirees.
Semi privitization of Medicare and Medicaid - and no national health care bill.
Repeal of all Federal Taxes replacing them with a single consumption tax - a national sales tax of some kind.
Sounds like these people could work out some compromise with my own proposals. Interesting coming from a branch of the FED itself. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Thu Oct 29, 2009 9:07 am Post subject: |
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5 Reasons Why the Recession Isn't Over
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Investors with an affinity for historical data know that the stock market has never reached a true bottom unless dividend yields are driven sky-high by falling prices, and P/E ratios are driven down to rock-bottom readings, also due to falling 'P' (prices). Once this valuation reset happens, the market will give a green signal for the next bull market.
Unfortunately, this reset did not happen at the 2002 lows. It also didn't happen in March 2009, and we are certainly far away from those levels with the Dow around 10,000 and P/E ratios of 138. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Oct 29, 2009 9:08 am Post subject: |
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| If you search around you can find Sprott's other commentaries. They are always excellent reads. Zero Hedge often posts them. I really enjoy investment newsletters from fiercely independent sources. |
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mises
Joined: 05 Nov 2007
Location: retired
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Reggie
Joined: 21 Sep 2009
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| Posted: Thu Oct 29, 2009 4:36 pm Post subject: |
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Icelanders can no longer afford McCheeseburgers or Happy Meals. http://www.guardian.co.uk/world/2009/oct/27/mcdonalds-to-quit-iceland
Maybe it's all just a ruse. Some say the Vikings named their green territory Iceland and their icy territory Greenland to keep raiders away from their good land. With Goldman Sachs rampaging through Europe, using their bonuses to buy away prostitute wives from old European men, perhaps Iceland closed down McDonald's so no Americans would have a place to eat and wouldn't come and buy up the women. Those clever Vikings. |
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