Weekend Economists: One for The Road September 17-19, 2010

[Demeter]

Knowing as little about the suggested topic to illustrate and elevate this WEE (Mayberry, Griffiths and Knotts), I have decided to pick up on a side theme of Friday's SMW: BOOZE.

Maybe it's because I envy people who can get blotto. I just fall asleep.

But it is certainly celebrated in song, film, art, etc., from the ancients to the teeny-boppers (if anyone uses that term anymore), alcohol has been the lubricant for social situations and sore muscles, the impetus for grand follies and the underminer of great plots.

So get in the spirit of Spirits, grab a cold one and join us as we celebrate the end of another in a series of horrible weeks.

TGIF!

http://www.youtube.com/watch?v=JpjKExBX0Ho

[Demeter]

1. BANK FAILS IN NJ TO START THE EVENING OFF

ISN Bank, Cherry Hill, New Jersey, was closed today by the New Jersey Department of Banking and Insurance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with New Century Bank (doing business as Customers Bank), Phoenixville, Pennsylvania, to assume all of the deposits of ISN Bank.

The sole branch of ISN Bank will reopen on Monday as a branch of Customers Bank...As of June 30, 2010, ISN Bank had approximately $81.6 million in total assets and $79.7 million in total deposits. New Century Bank did not pay the FDIC a premium to assume all of the deposits of ISN Bank. In addition to assuming all of the deposits of the failed bank, New Century Bank agreed to purchase essentially all of the failed bank's assets.

The FDIC and New Century Bank entered into a loss-share transaction on approximately $64.8 million of ISN Bank's assets...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be approximately $23.9 million. Compared to other alternatives, New Century Bank's acquisition was the least costly resolution for the FDIC's DIF. ISN Bank is the 120th FDIC-insured institution to fail in the nation this year, and the first in New Jersey. The last FDIC-insured institution closed in the state was First BankAmericano, Elizabeth, on July 31, 2009.



http://t0.gstatic.com/images?q=tbn:isP4AVdoUll28M:&t=1
Michelle Obama christens ship

http://www.boston.com/news/nation/articles/2010/07/23/michelle_obama_smashes_bubbly_for_ship_christening/

[Demeter]

34. FOUR LESS BOTTLES OF BEER ON THE WALL...

Community & Southern Bank, Carrollton, Georgia, acquired the banking operations, including all the deposits, of three Georgia-based institutions. The Bank of Ellijay, Ellijay, First Commerce Community Bank, Douglasville, and The Peoples Bank, Winder, were closed by the Georgia Department of Banking and Finance, and the FDIC was named receiver for each institution. The failed institutions were not affiliated with one another. To protect depositors, the Federal Deposit Insurance Corporation (FDIC) entered into a purchase and assumption agreement with Community & Southern Bank.

All of the branches of the three closed institutions will reopen as branches of Community & Southern Bank under their normal business hours, including those with Saturday hours. Depositors will automatically become depositors of Community & Southern Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Bank of Ellijay has two branches (including the branch called Bank of Canton, which is a division of the Bank of Ellijay) in Georgia, First Commerce Community Bank has two branches in Georgia, and The Peoples Bank has 14 branches in Georgia. Customers of the failed institutions should continue to use their former branches until they receive notice from Community & Southern Bank that it has completed systems changes to allow other Community & Southern Bank branches to process their accounts as well. Over the weekend, depositors can access their money by writing checks or using ATM or debit cards. Loan customers should continue to make their payments as usual.

As of June 30, 2010, Bank of Ellijay had total assets of $168.8 million and total deposits of $160.7 million; First Commerce Community Bank had total assets of $248.2 million and total deposits of $242.8 million; and The Peoples Bank had total assets of $447.2 million and total deposits of $398.2 million. Community & Southern Bank will pay the FDIC a premium of 1.0 percent to acquire all of the deposits of the Bank of Ellijay and First Commerce Community Bank. They also will pay the FDIC a premium of 1.25 percent to acquire all of the deposits of The Peoples Bank. Besides assuming all the deposits from the three Georgia institutions, Community & Southern Bank will purchase virtually all the failed banks' assets.

The FDIC and Community & Southern Bank entered into a loss-share transaction on approximately $602.5 million of the failed institutions' assets. Community & Southern Bank and the FDIC will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) for Bank of Ellijay will be $55.2 million; for First Commerce Community Bank, $71.4 million; and for The Peoples Bank, $98.9 million. Community & Southern Bank's acquisition of all the deposits the three institutions was the least costly option for the FDIC's DIF compared to alternatives. These failures bring the total number of failures to 123 for the nation and to 14 for Georgia. Prior to these failures, the last bank closed in the state was Northwest Bank & Trust, Acworth, on July 31, 2010.

Bramble Savings Bank, Milford, Ohio, was closed today by the Ohio Division of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Foundation Bank, Cincinnati, Ohio, to assume all of the deposits of Bramble Savings Bank.

The sole branch of Bramble Savings Bank will reopen on Saturday as a branch of Foundation Bank...As of June 30, 2010, Bramble Savings Bank had approximately $47.5 million in total assets and $41.6 million in total deposits. Foundation Bank did not pay the FDIC a premium to assume all of the deposits of Bramble Savings Bank...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $14.6 million. Compared to other alternatives, Foundation Bank's acquisition was the least costly resolution for the FDIC's DIF. Bramble Savings Bank is the 124th FDIC-insured institution to fail in the nation this year, and the second in Ohio. The last FDIC-insured institution closed in the state was American National Bank, Parma, on March 19, 2010.

[Demeter]

65. AND ANOTHER ONE FAILS

Maritime Savings Bank, West Allis, Wisconsin, was closed today by Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with North Shore Bank, FSB, Brookfield, Wisconsin, to assume all of the deposits of Maritime Savings Bank.

The nine branches of Maritime Savings Bank will reopen during normal business hours, beginning Saturday as branches of North Shore Bank, FSB...

As of June 30, 2010, Maritime Savings Bank had approximately $350.5 million in total assets and $248.1 million in total deposits. North Shore Bank, FSB did not pay the FDIC a premium to assume all of the deposits of Maritime Savings Bank. In addition to assuming all of the deposits of the failed bank, North Shore Bank, FSB agreed to purchase approximately $177.6 million of the failed bank's assets...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $83.6 million. Compared to other alternatives, North Shore Bank, FSB's acquisition was the least costly resolution for the FDIC's DIF. Maritime Savings Bank is the 125th FDIC-insured institution to fail in the nation this year, and the first in Wisconsin. The last FDIC-insured institution closed in the state was Bank of Elmwood, Racine, on October 23, 2009.

[Demeter]

93. Minimum losses for week: $347.6 Million

Not a record, but definitely the largest in nearly a month.

[Demeter]

2. HERE'S LOOKING AT U(SA), KID!

News on the US economy corralled here.



http://matthewclayfield.com/content/essays-and-articles/casablanca/

http://www.youtube.com/watch?v=7vThuwa5RZU

[Demeter]

3. US ‘back to school’ sales see growth

The “back-to-school” shopping season in the US was marked this year by slow but steady growth, rather than feared renewed sales declines, according to assessments from a number of leading US retailers.


Read more >>
http://link.ft.com/r/QM42II/TPZ5J5/YGZ3O/26IQHQ/NSLHYY/KI/t?a1=2010&a2=9&a3=16

MEANING MASSIVE DISCOUNTING?

[SarahB]

92. I think there might be something else going on, Demeter.

Massive slashing of budgets by school districts meant that parents and teachers had to foot more of the bill for supplies this year. Parents always complain about the cost of school supplies, but those complaints reached a fever pitch this year.

[Demeter]

94. Good Point!

I'm well past that point of parenthood.

[Demeter]

4. US banks braced for further bad news

Big US banks are nearing the end of another disappointing quarter for their trading businesses that has deepened fears over job losses on Wall Street.

The first two weeks of September failed to deliver a meaningful pick-up in trading activity on markets, hitting bank profits at a time when they are already under pressure from a sluggish economy.


Read more >>
http://link.ft.com/r/UXDMSS/PRCADH/YGZ3O/TP75SH/1875L0/E4/t?a1=2010&a2=9&a3=16

[Demeter]

23. Carter says Kennedy delayed health care years ago

http://www.google.com/hostednews/ap/article/ALeqM5hWndcQcqCX_fDIrt6NY_1OvqGZ1QD9I99IF00

Former President Jimmy Carter says Americans could have had comprehensive health care coverage decades ago if Sen. Edward M. Kennedy hadn't blocked a plan Carter had proposed.

Carter revisited the old spat in an interview with CBS' "60 Minutes" to be aired Sunday. Portions of the interview, prompted by the publication of his White House diary, were posted on the program's website Thursday.

"The fact is that we would have had comprehensive health care now, had it not been for Ted Kennedy's deliberately blocking the legislation that I proposed," Carter said in the interview. "It was his fault. Ted Kennedy killed the bill."

[Demeter]

25. Elizabeth Warren's Greatest Hits (video)

http://www.truth-out.org/jon-stewart-elizabeth-warrens-greatest-hits-video63342

[Demeter]

26. Senate Passes Small-Business Jobs Bill, Opening Tax Cut Battle

http://www.truth-out.org/senate-passes-small-business-jobs-bill-opening-tax-cut-battle63332

IT IS TO BARF.

[Demeter]

30. 1/3 Americans Lacked Income Needed to "Make Ends Meet" in 2009; Young Adults Hardest Hit

http://www.truth-out.org/one-three-americans-lacked-income-needed-make-ends-meet-2009-young-adults-among-hardest-hit63328

Today the Census Bureau released a report on trends in income, including median income, income inequality and income poverty, and health insurance coverage between 2008 and 2009. As expected given the increase in unemployment-which grew from 7.4 percent in December 2008 to 10 percent in December 2009-the report shows a substantial deterioration in Americans' economic security between 2008 and 2009.

The Census figures show that in 2009 one out of every three Americans had incomes that fell below the amount (roughly $45,000 for a family of four) that most Americans and various budget estimates show is needed to "make ends meet" at a basic level. Also, of particular note, the report shows substantial increases in the poverty rate and the rate of people without health insurance, as well as declines in median income for various demographic groups....

[Roland99]

75. Wait. What? But..but...but...Mitch McConnell said the rich were really hit hard!

Surely the Census was tilted by those evil marxists in D.C.

[ozymandius]

87. Yeah. On paper.

But not in the pocket. McConnell can kiss my ass. Time for a reprise:

[Demeter]

31. Obama Puts Bark in Consumer Watchdog: Elizabeth Warren

http://www.truth-out.org/obama-puts-bark-consumer-watchdog-elizabeth-warren63330

[Demeter]

57. College loan default rates rise as recession takes a toll

http://www.usatoday.com/money/perfi/college/2010-09-13-loan-default-rates-rise_N.htm?loc=interstitialskip

The number of college students who defaulted on their federal student loans climbed in the fiscal year that ended in September 2008, according to new government data released Monday. And once again, those who attend for-profit colleges and universities were the most likely to default.

The grim numbers are no surprise, given that the timeframe roughly aligns with the start of the recession. But they come at a politically charged time, as for-profit colleges fight proposed regulations that would cut off federal aid to some programs if too many students default on loans or don't earn enough after graduation to repay them.

Figures from the U.S. Department of Education show 7% of borrowers of federal student loans defaulted within two years of beginning repayment, up from 6.7% the previous year and 5.2% the year before that.

Default rates crept up in all sectors of higher education — from 3.7 to 4% for private nonprofit schools, 5.9 to 6% for public nonprofit schools, and 11 to 11.6% for for-profit schools.

The data covers borrowers whose first loan repayments came due between Oct. 1, 2007, and Sept. 30, 2008, and who defaulted before Sept. 30. 2009.

[Po_d Mainiac]

68. fugly chart

[Po_d Mainiac]

73. Some words from my hero E. Warren

Over the past several weeks, the president and I have had extensive conversations about the vital importance of consumer financial protection.

The president asked me, and I enthusiastically agreed, to serve as an Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau. He has also asked me to take on the job to get the new CFPB started -- right now. The president and I are committed to the same vision on CFPB, and I am confident that I will have the tools I need to get the job done.
<more>
http://www.huffingtonpost.com/elizabeth-warren/fighting-to-protect-consumers_b_720410.html

She knows Tiny Turbo for the puke he is..Them ain't eyes wide shut

[Po_d Mainiac]

79. How did this get missed in the SMW????

Date ET Release For Actual
Sep 17 08:30 CPI Aug 0.3%
Sep 17 08:30 Core CPI Aug 0.0%
Sep 17 09:55 Mich Sentiment Sep 66.6

http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm

[ozymandius]

86. I watched the Dow numbers after the Sentiment was released.

The numbers moved down by the second. If you're in the mood for worry - then worry about the CPI numbers. Deflation is on a hair trigger.

[Po_d Mainiac]

88. Oz...The number was............. 66.6

66.6 on a quad witching day....hmmmm

[Demeter]

101. The End of Social Security as We Know It By Ian Mathias

On September 30, America will quietly begin a generational shift. This will be the final day of the government’s fiscal year 2010, and consequentially, a very notable day for Social Security. September 30 will be the last day – maybe for a long time – that Social Security could possibly be operating at a surplus.

Back in March, the Congressional Budget Office (CBO) admitted that most Social Security funding projections were way off, and that sometime in 2010 the program would begin paying out more than it’s taking in. In August, the Social Security Board of Trustees said much of the same, that they too were drastically revising previous solvency projections. Just a year ago, both agencies forecast that the Social Security Trust Fund would stay out of the red until 2016. This year, they said 2010... As in, it’s probably already happened.

According to this year’s FICA/SECA tax receipts and benefit payouts, there’s reason to believe the SS fund dipped into deficit as early as February 2010. But since there’s no “official” government mandated date for when Social Security officially entered the red (we wonder if either agency actually knows) the end of the fiscal year will have to do, for now.

Though there will be some debate over when SS started losing money in 2010, there will be no such discussion in 2011, or the year after, or the year after that...or maybe ever again. Despite 2009 projections completely to the contrary, the CBO and Social Security Trustees now expect the fund to suffer deficits indefinitely. There may be two or three years of surplus if the US economy can avoid a double dip recession, but over the long term, in the words of the SS Board of Trustees, “program costs will permanently exceed revenues.”



CBO Revised Social Security Predictions

(Quick aside: That is one ugly revision. There’s nothing wrong with changing your mind, but someone at the CBO had quite an awakening in 2010.)

In summary of the CBO’s findings, the credit crunch and subsequent “Great Correction” moved a future Social Security crisis into the present tense. In fact, the whole issue is now worse. Stock market crashes and unemployment plights like those we’ve suffered lately have long term, arguably irreversible effects on wages, income inequalities, retirement plans and tax revenues...all of which will pile on top of Social Security at a time when it’s already bearing a heavy load.

But as you might remember, we’ve been here before. A not-so-dissimilar bout of high unemployment and lousy economic growth in the ’70s brought the Social Security fund to a sudden crisis in the early ’80s. By 1982, the powers that be weren’t just fretting over the program entering deficit...they had every reason to believe the Social Security would be out of money in as little as a year.

The Regan Administration’s solution was a bi-partisan study group called The National Commission on Social Security Reform (NCSSR). To lead the commission, Washington hired a man who has since proven to be one of the most unsuccessful monetary and fiscal planners in American history: Alan Greenspan.

Long story short, the Greenspan Commission marked “the end of Social Security as we know it”... or at least as we knew it in 1983. That year the Commission released its findings and recommendations, most of which were gradually implemented over the next decade. Here are some of the basic elements of their reform:

* Social Security tax rates (including Medicare taxes) rose from 9.35% in 1983 to over 15% by 1990.
* The minimum age to file for full benefits was slowly raised from 65 to 67.
* The cost of living adjustment (COLA) was re-engineered to track growth in wages or inflation, whichever is lower. Previously, COLA just rose with inflation.
* The taxable wage base rose dramatically. In 1983, all individual income over $32,400 was not subject to Social Security taxation. Today that base level is $106,800.
* Greenspan’s plan offered Social Security coverage (and colluded participation) for most tax-exempt and federal employees that were previously excluded.

Essentially, Greenspan’s fix for Social Security was to take in more money and pay less of it out at a later date. And with the help of a booming American economy through most of the ’80s and ’90s, it worked... until it didn’t. As noted above, we’re just about back to square one.

(The real irony here is that there’s reason to believe there was nothing long-term about Greenspan’s solution in the first place. The Greenspan commission was formed by President Regan’s chief of staff Jim Baker, and it’s an open secret Baker’s key objective was only to make Social Security a non-issue for the 1984 election. As with most administrations, the real crisis was left for the next guy to deal with.)

The current generation of leadership is now “that guy.” Worse yet, this Social Security crisis is larger than the one we faced in 1982, which was a combination of a cyclical economic downturn and SS rules and mechanisms in need of reform. Today we face a structural crisis...they’re called baby boomers.

76 million Americans were born between 1946-1964, the so-called baby boomers. On January 1, 2011, the oldest member of this demographic – the largest America has ever known – will turn 65. At present they make up about a third of the entire US workforce. Taking their place will be Generation X, about 46 million people strong. Forgive us for the back-of-the-envelope math, but that sounds like 30 million fewer contributors to the Social Security fund and tens of millions of new beneficiaries. Hmmm...

When the whole idea of Social Security was first brought to the table, way back in post-Depression FDR days, there were 16 Social Security contributors for every 1 Social Security beneficiary. Today, that ratio is closer to 4:1. By 2030, when America will be bearing the full brunt of retired baby boomers, that ratio will be 2:1. To accommodate that ratio, either recipients will have to get less, or workers will have to pay more. The current method of funding the program is simply no longer applicable.

And there’s a whole other “problem” with current or soon-to-be Social Security beneficiaries: They’ll likely live much longer (and expensive) lives than their parents. In 1935 the average life expectancy was 65, making the minimum age to collect SS almost a cruelly ironic death sentence. Today, the average American will live to around 77... yet the minimum age to collect full benefits has only risen by 2 years. And if you believe tech-savvy people like my colleague Patrick Cox, we are on the verge of generational medical breakthroughs that could expand our life expectancies into the triple digits.

So what happens when the largest demographic America has ever known taps into a fund already in deficit? And what will we do if they...well...won’t die on time?

You can whine about “paying into Social Security every month for the last 40 years and I deserve every penny” till the cows come home... But this is simple, cold math. If you’ve been in the working world that long, you must understand by now the difference between what’s fair and what’s reality. The reality of the moment is this: You must...

* Prepare to pay more Social Security taxes
* Prepare to receive less Social Security benefits

As it stands today, there’s just not enough money to fund the Social Security program as we know it. With $2.5 trillion left in the SS warchest, there is no immediate threat to the status quo. But as the SS Board of Trustees forecast in August, “Over 75-year period, the Trust Funds would require additional revenue equivalent to $5.4 trillion in present value dollars to pay all scheduled benefits.” That gap will be filled by borrowing from abroad, taxing at home or slashing the benefits of those yet to retire. Either way, it’s hard to picture a happy ending for Social Security. It’s in your best interest to build a substantial retirement fund of your own and – probably more importantly – one for your children.

Good luck,

Ian Mathias
for The Daily Reckoning

[Demeter]

104. Only 5% of Laid-Off Californians Have Found New Jobs

California this year has gained back just 5.4% of the jobs it lost during the recession. Increased hiring in the temporary workforce and in industries such as retail and tourism have barely made a dent in a state hit by far larger job cuts in print media and telecommunications, according to the UCLA Anderson Forecast's third-quarter presentation this week.

About 70,000 new jobs have been created in the most populous U.S. state through the first six months of the year, compared to the 1.3 million during the two years leading up to the end of 2009, the Anderson report said. About a sixth of this year's new jobs were in temporary staffing, with smaller gains in industries such as retail, education and logistics, said Jerry Nickelsburg, senior economist at the UCLA Anderson Forecast, in a presentation in Los Angeles on Sept. 15...

With California's approximately 37 million residents accounting for about 12% of the U.S. population, the state's economic challenges -- many of them created by prerecession residential overbuilding and the resulting absence of housing construction over the next few years -- both reflect and are a cause of a U.S. recovery that will take longer than previous rebounds, according to the Forecast.

Granted, California is showing faint signs of growth. Many of the temp jobs created during this year's first half were transferred into more permanent positions in June and July. Additionally, increasing U.S. exports have pushed shipping activity in Los Angeles and Oakland back to prerecession levels, benefitting the nearby logistics industry...

See full article from DailyFinance: http://srph.it/9U6W15

[Demeter]

107. Poverty Rises as Wall Street Billionaires Whine

http://www.huffingtonpost.com/les-leopold/poverty-rises-as-wall-str_b_720719.html

...Dwight D. Eisenhower was no radical, but he accepted the reality: If America was going to prosper -- and pay for its costly Cold War -- the super-rich would have to pony up. It was common knowledge that when the rich grew too wealthy, they used their excess incomes to speculate. In the 1950s, memories of the Great Depression loomed large, and people knew that a skewed distribution of income only fueled speculative booms and disastrous busts. On Ike's watch, the effective marginal tax rate for those earning over $3 million (in today's dollars) was over 70 percent. The super-rich paid. As a nation we respected that other important American value: advancing the common good...

[Demeter]

109. GOOD NEWS! Military Contractor With $100,000 Belt Buckle Is Found Guilty

http://www.nytimes.com/2010/09/15/nyregion/15brooks.html?_r=1&ref=nyregion



A former military contractor who made bullet-resistant vests and other body armor used in Iraq and Afghanistan was convicted on Tuesday of fraudulently enriching himself from company funds through the kind of extravagant spending exemplified by his purchase of a $100,000 belt buckle.

The contractor, David H. Brooks, the former chief executive and chairman of DHB Industries, was convicted of 17 counts, including insider trading and securities fraud, stemming from what prosecutors described as corporate looting and stock-trading schemes that made him more than $190 million.

The verdict, reached after 13 days of deliberation over five weeks by a federal jury in Central Islip, N.Y., capped a theatrical eight-month trial that stood out from other recent corporate malfeasance cases both because of the unusual details regarding Mr. Brooks’s once lavish lifestyle and because of his public unraveling since his arrest.

Mr. Brooks, 55, sat impassively as the verdict was read. His lawyer, Kenneth W. Ravenell of Baltimore, said he would appeal but declined further comment because Mr. Brooks still faces a hearing on Oct. 5, in front of the same jury, about possibly forfeiting the $185 million he was accused of making as an insider through an illegal sale of stock...

[Demeter]

118. The next bubble Book: Spike in PE-owned firm defaults ahead

It is late 2011, months before President Barack Obama will run for re-election. The US economy is gradually recovering from four years of hovering on the brink of disaster. Banks are lending money again, at least to strong companies, and employment is stabilizing.

President Obama has finally begun to breathe a bit more easily, when the Secretary of the Treasury walks into his office one day.

"You better sit down," the secretary says. "I've got bad news. First Data, the largest merchant credit card processor, has defaulted on $22 billion in loans. Clear Channel Communications, which owns more than twelve hundred radio stations, is on the brink. The other credit tsunami that we knew was out there has begun."

The Treasury Secretary is talking about private equity. It's not the private equity firms themselves but the companies they own that are defaulting. During the boom years of 2001-07, private investors bought thousands of US companies. They did it by having the acquired companies take on enormous loans using the same cheap credit that fueled the housing boom. That debt is now starting to come due.

"Considering what we have already been through, how bad can it be?" Obama asks.

"Well," says the Treasury Secretary, "PE firms own companies that employ 7.5 million Americans. Half of those companies, with 3.75 million workers, will collapse, between 2012 and 2015. Assuming that those businesses file for bankruptcy and fire only 50 percent of their workers, that leaves 1.875 million out of jobs.


Read more: http://www.nypost.com/p/news/business/the_next_bubble_xgWBulf5HcOUkkpsZz0WoN#ixzz101KpRkjv

[Demeter]

119. Economists Seek to Fix a Defect in Data That Overstates the Nation’s Vigor

FROM NOVEMBER LAST YEAR--

http://www.nytimes.com/2009/11/09/business/economy/09econ.html?ref=business

A widening gap between data and reality is distorting the government’s picture of the country’s economic health, overstating growth and productivity in ways that could affect the political debate on issues like trade, wages and job creation.

The shortcomings of the data-gathering system came through loud and clear here Friday and Saturday at a first-of-its-kind gathering of economists from academia and government determined to come up with a more accurate statistical picture.

The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country.

American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics...

[Demeter]

5. THE INSCRUTABLE ORIENT

Japan, China, India, and points east featured here.

[Demeter]

6. Japan's PM warns of further action on yen

Naoto Kan, Japan's prime minister, warned that his government was ready to take further "resolute action" in currency markets, despite complaints from US and European politicians about Tokyo's dramatic unilateral yen-selling intervention.

Speaking to the Japan Chamber of Commerce and Industry on Thursday, Mr Kan said the strong yen and weak stock market had “added to uncertainty” about the Japanese economy, which is still struggling to shake off the effects of its sharpest post-war recession.

“We will absolutely not permit precipitous moves in the yen,” Mr Kan said.

Read more >>
http://link.ft.com/r/73UJGG/WL5W45/NRHD3/A7N3YX/NSLHB8/AZ/t?a1=2010&a2=9&a3=16

[Demeter]

129. Pressure on Shinsei to limit senior pay

Shinsei Bankis under pressure from Japan’s regulator to cap pay, including bonuses, to about $230,000 in a move that is likely to spur further departures from the bank,

Read more >>
http://link.ft.com/r/19JYUU/8AJPNI/Q38E1/YHXY0Y/404KDG/82/t?a1=2010&a2=9&a3=17

[Demeter]

7. India hikes rates again to contain inflation

India has raised interest rates for the fifth time this year in a bid to contain fast-rising consumer prices and signalled that its accommodative monetary policy adopted during the global financial crisis had come to an end.

The Reserve Bank of India said on Thursday that it was moving closer to a neutral monetary policy by raising its repo rate – at which the central bank lends to commercial banks – by 25 basis points to 6 per cent. It increased the reverse repo rate 50bps to 5 per cent.

Read more >>
http://link.ft.com/r/CTBPCC/D4P1ND/CWSVD/JIG8NQ/LQULLV/HK/t?a1=2010&a2=9&a3=16

[Demeter]

55. India Considers Unlocking a Treasure Chest

http://online.wsj.com/article/SB10001424052748703376504575491110025390210.html?mod=dist_smartbrief

...The pension fund's money, the savings of 50 million workers from both the private and public sector, always has been locked away from the stock market. Instead, it has been invested in government securities and bonds sold by government-owned companies.

It wasn't long ago that India's stock markets wouldn't have been able to accommodate this. From 2002 to 2009, the market capitalization of India's two major exchanges has risen more than tenfold, to $2.5 trillion, according to the World Federation of Exchanges. But the absence of stocks in the fund's portfolio also reflects the historical importance of government relative to markets in India...

[Demeter]

29. Garment Strike in Phnom Penh Reaches Critical Mass: Will Adidas, Gap & Puma Pay Workers Living Wage?

http://www.truth-out.org/garment-strike-cambodia-reaches-critical-mass-will-adidas-gap-and-puma-pay-workers-a-living-wage6332

On Monday, following a wave of strikes across Asia, around 60,000 textile workers in Phnom Penh walked off factory lines, protesting pay that stands at around half the living wage. By Wednesday, according to Kong Athit, Secretary General of the Cambodian Labour Confederation, the number of strikers had swelled to over three times that. By some estimates, around two thirds of the 297,000 garment workers and 48,000 athletic-shoe makers refused to work in protest of low wages. (The Garment Manufacturers Association in Cambodia (GMAC), the organization that sets the minimum wage, has also seen an increase in protesters, but suggests a smaller number.) As protests hit a flashpoint Thursday, unions and government quickly agreed to renegotiate wages. A meeting will take place September 27.

As many as 210,000 young women walked off their jobs this week, according to union sources. The strike followed a string of protests and walkouts this summer, many of which ended in violence. In July, the four-year-old minimum wage of $55 was raised to $61, following the release of a report that a living wage for garment factory workers in Phnom Penh hovered around $91 per month. This pay hike, which will not go into effect until October, will then freeze wages until 2014. Between 3,000 and 4,500 workers protested what they considered a paltry raise at a July 25 demonstration at the National Assembly.

Two days later, a strike at PCCS Garments, a Malaysian-owned manufacturer of goods for Adidas, Gap, and Puma, ended when police used electric shock batons to beat the young women laborers. (Over 90 percent of the sector’s employees are female, and the majority of the goods produced are exported to the US. The bulk of the remainder go to German companies.) Police attempted to force 3,000 workers back into the factory with assault weapons and tear gas. Workers retaliated with plastic chairs and water bottles. Nine were injured.

Those on strike this week say $61 per month is insufficient compensation, and it’s easy to see why: Workers often share small rooms - occasionally in factory-owned housing - paying between $15 and $25 per month in rent. (Cambodia uses the US dollar nationally, instead of its own currency, the Riel.) Utilities can add another $10 per month, and food costs run about a dollar a day. This alone totals $55 to $65 per month. Yet workers are sent to the city to support farm families back in the provinces, so also send around $50 remittance back home every month. The UN estimated last year that the wages of factory workers keep about 1.6 million of the nation’s 14 million people afloat....

[Demeter]

47. China: Pressure on yuan 'may backfire'

http://www.chinadaily.com.cn/china/2010-09/17/content_11314565.htm#

China rejects US demands over currency

BEIJING/New York - China warned on Thursday that obsessing over yuan appreciation would not solve trade problems in the United States and "might make things even worse", while economists view US demands as a political ploy ahead of midterm congressional elections.

"Adding pressure will not resolve trade issues between China and the US the country's exchange rate reform will only be pushed forward in accordance with economic conditions and balance of international payments," Foreign Ministry spokeswoman Jiang Yu said at a media briefing.

Jiang's remarks came in response to earlier comments by US Treasury Secretary Timothy Geithner, who expressed dissatisfaction with the pace of the yuan's appreciation in testimony prepared for congressional hearings on China's currency policy.

The yuan was traded at 6.7181 against the greenback on Thursday, its highest level since June 19, when the central bank announced that it would deepen reform of the mechanism governing the yuan exchange rate to improve its flexibility.

The Chinese currency has gained 1.6 percent against the US dollar since that date. But the US still thinks it is not enough.,,

[Demeter]

49. Geithner to Signal Tougher Stance on China Currency

http://www.nytimes.com/2010/09/16/business/global/16yuan.html?hpw

...The currency issue is increasingly likely to be a focus when leaders of the Group of 20 nations meet in November in Seoul, South Korea. A bill with support from 143 House members from both parties would allow the United States to impose tariffs and other penalties on countries that undervalue their currencies.

But many economists believe that China is unlikely to yield to American pressure, and they have called on the Obama administration to do a better job of enlisting support from the European Union and Japan.

The Chinese Foreign Ministry said Thursday that the pressure from the United States would not help resolve the currency issue and could even backfire.

“I would point out that appreciation of the renminbi will not solve the U.S. deficit and unemployment problems,” a Foreign Ministry spokeswoman, Jiang Yu, said at news conference in Beijing...

BECAUSE BLAMING SOMEBODY ELSE IS EASIER THAN CLEANING UP YOUR OWN MESS...

[Demeter]

130. US turns up heat over renminbi

Tim Geithner, US Treasury secretary, encouraged the US Congress to pile pressure on China to force it to allow its currency to rise and said the administration was examining a range of tools to urge Beijing to act

Read more >>
http://link.ft.com/r/2SRI11/RN25U9/204L2/A7NUWL/6VXYD6/XL/t?a1=2010&a2=9&a3=17

[Demeter]

52. China Said to Consider 15% Capital Ratio for Biggest Lenders

http://www.bloomberg.com/news/2010-09-15/china-said-to-weigh-15-capital-ratio-for-systemically-important-lenders.html

China’s banking regulator may require the nation’s biggest lenders to boost their capital adequacy ratios to as high as 15 percent by the end of 2012, a person with knowledge of the matter said.

The regulator is drafting a plan that would call for Tier 1 capital of 8 percent, with the overall ratio set at 10 percent, the person said. The plan would add a buffer of up to 4 percent to protect against economic fluctuations, plus a further 1 percent for “systemically important” banks, the person said. The biggest banks must currently meet an 11.5 percent ratio.

China’s rules would be stricter than capital requirements announced Sept. 12 by the Basel Committee on Banking Supervision in response to the global financial crisis. The country has moved to rein in risk-taking among banks this year after last year’s record $1.4 trillion of new loans fanned concerns about the financial system’s ability to withstand future stress.

“This is quite onerous and I’m surprised they are going this far,” said Michael Werner, a Hong Kong-based analyst at Sanford C. Bernstein & Co. “Given the risks, maybe they feel they’d rather be erring on the conservative side.”

[Demeter]

61. In China, Foreign Banks Lag Behind

http://online.wsj.com/article/SB10001424052748704652104575493463528923210.html?mod=dist_smartbrief

Banks around the world are flocking to China because of its fast-growing economy. But their financial performance there so far isn't pretty.

Profits in China for banks based in other countries fell sharply last year, according to a report by accounting firm KPMG. At HSBC Holdings PLC, the largest foreign bank in China, after-tax profits declined 60% from 2008 to 718 million yuan ($106.5 million). In contrast, Chinese banks posted double-digit percentage gains in after-tax profits.

The report underscores the obstacles confronting non-Chinese banks as they try to establish or rev up operations in the world's second-largest economy. Foreign banks have long struggled to build a business of any scale, since they are reined in by Chinese regulatory limits on how much local banking operations can lean on foreign parents.

During the financial crisis, such restrictions helped China's banking regulator insulate the country's financial system. But non-Chinese banks are confined to a marginal role, while some of the largest homegrown banks in China have grown to rank among the world's largest. Those disadvantages kept foreign banks from fully capitalizing on China's robust economic growth of 8.7% in 2009, one of the few bright spots in the global economy...

[Joe Chi Minh]

103. Why, that's mean capitalism! Not cuddly at all. Our people are nice big, cuddly 'fat cats'.

Those Chinese are sharks.

[Demeter]

54. Australian Asset-Backed Bond Sellers Target Asia to Replace U.K. Investors

http://www.bloomberg.com/news/2010-09-16/australian-asset-backed-bond-sellers-target-asia-to-replace-u-k-investors.html

Australia’s asset-backed bond market needs to attract more Asian investors to boost liquidity and improve returns after freezing during the credit crisis, according to the Australian Securitization Forum.

Australia’s asset-backed bonds market, dominated by mortgage notes, froze in 2008 as the collapse of Lehman Brothers Holdings Inc. spurred investors to avoid all but the safest debt. There were 23 sales of asset-backed or mortgage-backed bonds in Australia this year compared with 43 in the same period of 2005, according to data compiled by Bloomberg.

“Asia will become an important source of capital over the next 10 years,” said Chris Dalton, chief executive officer of the industry body, in an interview in Singapore yesterday. Australian “investors need international investors to come back” so they can “take positions and actively trade,” he said.

Relative yields on such debt may narrow as much as 30 basis points in the next year if liquidity improves, Dalton said. The forum, which has about 85 members including fund managers, ratings firms, banks and building societies, doesn’t expect U.K.-based fund managers, the market’s traditional overseas investors, to return in the same volume as before the credit crunch, Dalton said.

[Demeter]

97. Soaring (Australian) dollar drives shoppers online

http://www.smh.com.au/business/soaring-dollar-drives-shoppers-online-20100915-15bz4.html

Australians have flocked to the internet to take advantage of a strong dollar to buy clothes, books and electronics from overseas.

“We have seen a massive increase,” said PayPal Australia spokesman Adrian Christie.

A one US cent increase in the value of the Aussie dollar translates roughly into another percentage point of volumes at the secure online payment services company, he said.

[Po_d Mainiac]

62. Japan’s Problem Is Bigger Than Yen

snip
Yen as Safe Haven
Sadly but truely, as dismal as Japan’s economic outlook seems, yen (along with Swiss Franc) is replacing the US dollar as the safe haven currency with the continuing unwind of risk trades. Investors see yen as “safe” due to the fact that Japan has a current account surplus and its government debt is mostly domestic instead of foreign.
snip
Global Race – Devalue to Prosperity
Some analysts are now worried about a possible global race of devalue-to-prosperity as other countries with appreciating currency may follow Japan’s lead.

Reuters reported that already Colombia's central bank said it was starting to buy at least $20 million daily to slow the rise in its peso currency, and Brazil indicated it wouldn't stand by if others weakened their currencies at Brazil's exporting expense.
snip
Intervention Track Record – Not So Good

So, will this yen intervention work for Japan?

Typically, market factors and forces behind a currency appreciation that's out of sync with fundamentals are too strong to be countered by the act of currency intervention alone, and often with unintended consequences.

Swiss National Bank (SNB), for instance, started buying euro earlier this year trying to halt the rise of the Swiss franc. Well, Franc has continued to appreciate regardless, and hit an all-time high against the euro in July. Since then the SNB has been offloading euros, pushing Franc even higher against the euro. There is speculation that SNB could intervene again, but cue to the lesson learned not long ago, SNB should be more inclined looking to other instruments to tamper the Franc.

more at link
http://dianchu.blogspot.com/2010/09/japans-problem-is-bigger-than-yen.html

The world may not be as eager to gobble up future U$ debt....Pain will happen

[Demeter]

102. Chinese Dollar Torture Byron King

Recently, the US Treasury Department released data showing an 11% decline in official Chinese holdings of US government bonds during the past year. For US dollar holders, this is a troubling trend. Not so much for those holding gold.

To put it simply, the Chinese government isn't adding to its US bond position, at least not in any meaningful way. Nor is it rolling over its previous purchases.

According to the latest Treasury International Capital report, China resumed net purchases in July for the first time in three months. China's US Treasury holdings rose $3 billion. Dollar bulls looking to cheer the modest purchase may first consider the following, longer-term trend: Between September 2009-July 2010, Chinese holdings of US bonds fell from $938.1 billion to $846.7 billion, a drop of over $91 billion over nine months.

In short, the Chinese are backing away from US debt. They're reducing their exposure to the US dollar, and by extension their vulnerability to a declining US economy.

What's going on? Is the decline in Chinese holdings of US bonds strictly an economic assessment? Or is there something else afoot? What factions are driving this decision? And what does all of this mean for precious metals?

First let's note how, in recent years, China has exhibited a newfound measure of international confidence, if not swagger. It's easy to understand why.

China's leaders see that the US suffers from a weak economy, hampered by chronic overspending on consumption and underinvestment in new capital. In the wake of the global financial crisis of the past few years, Chinese leaders have concluded that US-style democracy and Wall Street-style capitalism are discredited.

In other words, to use a Chinese term, the US is a "sunset power." China, on the other hand, sees itself as a "sunrise power." The Chinese are going places in this world. The Chinese have developed a different approach to development than other nations, and they have the economic statistics to back it up.

The Chinese are not afraid to trumpet their success, either. Recently, for example, the German magazine Der Spiegel noted, "All around the world, from Africa to Asia to South America, Beijing is trying to tout its model of authoritarian state capitalism as the better alternative."

One way to look at things is that we're watching historical waves unfold. China is on the rise, while US power and influence wanes. But in a nation and culture as complex as that of China, it's also useful to take a close look at how and why things happen.

One key source of influence within China is a hard-core military faction. The Chinese military offers a viewpoint that almost always holds sway on issues of supreme national importance. Such issues definitely include areas of so-called "core Chinese interests" that cover Taiwan and Tibet, as well as the South China Sea and the Yellow Sea.

It's common knowledge, for example, that Chinese military advisers are incensed over US arms sales to Taiwan. No amount of US diplomacy ever is enough to smooth the troubled waters that divide mainland China from Taiwan. Indeed, the Chinese view their relations with Taiwan as an "internal matter" and consider most US activities that touch on that relationship as "officious meddling."

In a new development this summer, the Chinese military expressed outrage over joint US-South Korean military maneuvers in the Yellow Sea.

That is, the US and South Korea announced plans to conduct military exercises in the waters west of South Korea where a South Korean warship was sunk - apparently by a North Korean torpedo - in March of this year. The Chinese military, in turn, went ballistic (so to speak).

One recent article on the state-run Xinhua news website warned the US not to move the aircraft carrier USS George Washington into the Yellow Sea. The author of the article took care in his choice of words, but left no room for doubt about the Chinese position:

Offending Chinese people is not in the fundamental interest of the US. Any activity aimed at pushing a country with a 1.3-billion populace with enormous potential would be inadvisable.

On another news site, People's Liberation Army Daily, Rear Admiral Yang Yi, former head of strategic studies at the Peoples' Liberation Army's National Defense University, was no less forceful, stating:

On the one hand, wants China to play a role in regional security issues. On the other hand, it is engaging in an increasingly tight encirclement of China and constantly challenging China's core interests.

Adm. Yang believes that the US threatens China. Earlier this year, he said:

The US is the only country capable of threatening China's national security interests in an all-round way... Japan has no such ability, while Russia has no such motivation and India is more worried about China.

In a recent editorial, Adm. Yang expressed dismay over US policies, stating, "Rarely has there been such wavering and chaos in US policy toward China." Adm. Yang expanded the point in another article in China Daily, China's main English-language newspaper: "Washington will inevitably pay a costly price for its muddled decision."

Not to be outdone - or perhaps simply to offer a consistent message - Maj. Gen. Luo Yuan, deputy secretary-general of the People's Liberation Army Academy of Military Sciences, added his authority to the discussion. In a scathing editorial in the Chinese newspaper Global Times, Gen. Luo said that moving the USS George Washington into the Yellow Sea was a "deliberate provocation" toward China and that the US should "think twice about the maneuver."

Gen. Luo followed up with this comment: "Imagine what the consequences will be if China's biggest debtor nation challenges its creditor nation." China is the "world's largest market," and "offending China means losing, or at least decreasing, market share."

I don't think we have to "imagine" the consequences at all. I believe we just have to look at the decline in Chinese holdings of US bonds - or "decreasing market share," like the man said.

Thus, I believe that in addition to the Chinese economic concerns about the future of the US economy and US dollar, the Chinese military is also pushing its leadership to back away from holding US dollars. There's a component of military strategy to the decline in Chinese bond holdings.

Then next question is if the Chinese are NOT buying US bonds, then who IS buying them?

My hunch is that it's the US Federal Reserve. That is, the Fed is covering China's retreat from the dollar. For reasons both economic and military, China is gradually exiting is dollar position. The Fed is allowing this to happen quietly, without causing a dollar panic.

Meanwhile, the consequence is that the Fed is monetizing the US national debt. Over the long term, this can only lead to the further decline of the U.S currency. Looking out over the medium and long terms, it can only mean higher prices for precious metals.

And that, for our money, is exactly where the sunrise investors will want to be.

Regards,

Byron King,
for The Daily Reckoning

[Demeter]

125. Vodafone balks at being ‘forced seller’

Vittorio Colao says that the sale of Vodafone’s stake in China Mobile is not in response to investor pressure, and called on shareholders to be patient on other possible disposals

Read more >>
http://link.ft.com/r/19JYUU/8AJPNI/Q38E1/YHXY0Y/72KIQ7/82/t?a1=2010&a2=9&a3=17

[Demeter]

128. Visa blocked in China after Unionpay dispute

Global payments group is blocked from starting any new business in China for almost one year after a disagreement with China Unionpay, the country’s state-backed bank card monopoly

Read more >>
http://link.ft.com/r/19JYUU/8AJPNI/Q38E1/YHXY0Y/D49RNQ/82/t?a1=2010&a2=9&a3=17

[Po_d Mainiac]

8. Hey gang...After running the SMW into the hopper today

What kinda damage can we do in this room?
:toast:

[Demeter]

9. EUROPA!

http://www.youtube.com/watch?v=vbLl2C3ChYY&feature=fvw

you have got to see this!

[Demeter]

10. Greece rules out possibility of default

Greece’s finance minister has strongly rejected the idea that Athens will be forced to restructure its debts, saying that a default would break the eurozone.


Read more >>
http://link.ft.com/r/6NPSBB/3OIIKN/NRHD3/5C9930/6VXX05/OS/t?a1=2010&a2=9&a3=15

http://t2.gstatic.com/images?q=tbn:XXrOiav_nnKnfM:&t=1

[Demeter]

53. Greek FinMin: Real Test For Greece Next year, Won't Default

http://imarketnews.com/node/19324

It is a good sign that foreign banks have bought into the recent T-bill auction but the real test for Greece still lies ahead, Greek Finance Minister George Papaconstantinou told CNBC on Thursday.

"The real test will be some time next year when we come to the market with normal syndicated deals," Papaconstantinou said.

In a separate interview with the Financial Times, Papaconstantinou strongly ruled out a default or restructuring of Greek debt, which markets have been fearing.

"Restructuring is not going to happen. There are much broader implications for the Eurozone should Greece have to restructure its debt," he said.

[Demeter]

96. Greek Treasury Bill Demand Climbs in 2nd Sale Since EU Bailout in May

Greece sold six-month Treasury bills in the second sale of the securities since the country accepted a European Union-led bailout in May, attracting stronger demand amid higher yields.

Greece sold 1.17 billion euros ($1.5 billion) and investors bid for 4.5 times the bills offered, compared with 3.64 times in the previous sale in July. The 26-week bills were priced to yield 4.82 percent, more than the 4.65 percent rate at the previous sale. That’s still less than the 5 percent charged by the EU for its bailout loans.

“While one could argue that the good result was likely driven by the attractive yield level and by the limited risk of the investment, still we regard today’s result as good, given that the auction came in a rather difficult environment for periphery paper,” Chiara Cremonesi, a fixed income strategist at UniCredit Research in London wrote in a note to investors after the auction.

The sale came a day after Greece received 6.5 billion euros from the EU, the second installment of the three-year bailout that aims to give Greece time to cut the EU’s second-biggest budget deficit before returning to the bond markets. Greece’s near-default prompted speculation about the breakup of the euro and drove up borrowing costs in other high-deficit nations such as Ireland, Spain and Portugal...

http://www.bloomberg.com/news/2010-09-14/greek-six-month-treasury-bill-yields-climb-in-second-sale-since-bailout.html

[Demeter]

11. Brussels unveils tough short-selling rules

The European Union has unveiled tough new rules to control derivative trading and restrict short-selling in response to the financial crisis.

The proposed rules covering “over-the-counter” derivatives will require standardised contacts to be cleared centrally – a move which officials hope will reduce risk in the market.

Read more >>
http://link.ft.com/r/4RNQTT/NSO6VW/CWSVD/C5P3QY/D499LR/7V/t?a1=2010&a2=9&a3=15

[Demeter]

22. Next steps on the road to financial stability

By Mario Draghi, chairman of the Financial Stability Board and governor of the Bank of Italy

Lehman was the first global systemically important institution that was allowed to fail during the crisis. It was also the last. The public will not, and should not, accept more such bail-outs. Addressing the problem of “too big to fail” is therefore the next central step in the reform programme.

Read more >>
http://link.ft.com/r/M2ZOXX/JIB63Z/LSLXF/EW1TQ0/A7IQL7/XL/t?a1=2010&a2=9&a3=16

IF THE ITALIANS CAN DO IT, WHY CAN'T WE?

[Tansy_Gold]

33. I love that clip!!

Have watched it many many times.

Thanks!

[Demeter]

58. WTO's Boeing ruling could fuel subsidy debate, make settlement more difficult

http://seattletimes.nwsource.com/html/businesstechnology/2012903753_boeingwto16.html

In a preliminary ruling Wednesday by the World Trade Organization (WTO), Boeing was found guilty of receiving illegal government subsidies. But according to people briefed on the report, the subsidies deemed impermissible appear to be just a fraction of the $24 billion the European Union had alleged — and far smaller than the aid to rival Airbus that the WTO has ruled improper.

If that interpretation is confirmed when the still-confidential ruling is made public, the outcome could be a major setback for the EU's claim that subsidies to Airbus and to Boeing are roughly in balance.

That may make a negotiated settlement of the long-running subsidy dispute even more difficult, and could further fuel the already contentious debate over which company should win the huge Air Force contract for refueling tankers.

The WTO, the Geneva-based international body responsible for policing global trade rules, said in its interim finding that Boeing has received "in excess of $5 billion in illegal subsidies," according to a trade official familiar with the report who spoke on condition of anonymity.

[Demeter]

60. Germany and EU mull IMF board deal - German official

http://uk.reuters.com/article/idUKTRE68E3RM20100915

Germany and other EU nations are ready to review the distribution of power on the International Monetary Fund board to give emerging economic powers greater representation, a German government official said on Wednesday.

A power struggle for seats on the 24-member board has developed with a tug-of-war between the United States and Europe over how to give more say to emerging markets threatening to throw the IMF into disarray.

The United States wants Europe to give some of its nine board seats to emerging market countries to reflect their growing global economic weight.

Rising economic powers such as Brazil, China and India have pushed for change at the IMF and other global institutions, which have long been dominated by the United States and Europe....

[Demeter]

12. BANKSTERS

http://www.thestar.com/living/article/554219

In London, a drunk tent for boozing bankers

A sure sign of Christmas at London's busiest commuter station is a tarp for treating partiers...

In London, we know it's really Christmas when the ambulance service erects the drunk tent at the rear of a platform in one of the British capital's busiest commuter train stations....

[Demeter]

13. BofA views Merrill Lynch gamble with new optimism

Synergies are putting Bank of America and Merrill Lynch in a better position to benefit from a recovery in the economy, writes Justin Baer.
Under the direction of Brian Moynihan, who succeeded Ken Lewis as chief executive in January, BofA is pressing ahead with plans to expand its investment banking and transaction services divisions abroad while aggressively pushing greater interaction between financial advisers and bankers domestically.

Read more >>
http://link.ft.com/r/5F39HH/C53JH3/4VXHZ/GKT1TA/ZBAVX5/PJ/t?a1=2010&a2=9&a3=14

[Demeter]

16. B of A searches for assets to sell

Bank of America plans to identify tens of billions of dollars in assets and businesses that it wants to sell or wind down, in the latest effort to ease investors’ concerns about its holdings of risky securities and loans.

Read more >>
http://link.ft.com/r/0QSDPP/LQ8U1R/FDFZE/5C9YMV/HDF93K/KI/t?a1=2010&a2=9&a3=13

[Demeter]

20. Liability of auditors for fraud faces court test

The legal liability of auditors for detecting corporate fraud is set to be tested in a New York court, potentially increasing the Big Four accountants’ exposure to multibillion-dollar shareholder claims for malpractice.

The New York Court of Appeals will on Tuesday be asked to rule on a key legal defence for auditors against such claims that has been deployed in two high-profile cases.

The first is a lawsuit brought on behalf of shareholders in AIG against PwC, the bailed-out insurer’s auditor. The second case relates to protracted litigation by the bankruptcy trustee of Refco
Inc, the failed futures broker, seeking damages from a number of the firm’s professional advisers, including its auditor, Grant Thornton.


Read more >>
http://link.ft.com/r/UXDMSS/8AJK6I/6ADGM/JIGLYJ/RNGL1G/9A/t?a1=2010&a2=9&a3=13

[Demeter]

21. Unwinding fees from Lehman to pass $2bn

Fees paid to lawyers and accountants for unwinding Lehman Brothers in the US and Europe are on track to surpass $2bn (€1.55bn) even after some of the legal services have been provided at discounted rates

Read more >>
http://link.ft.com/r/0QSDPP/D4PQO7/3CWTA/26IX2O/JI3J9G/E4/t?a1=2010&a2=9&a3=13

[Demeter]

48. Small TARP banks late on payments to miss $30 bln fund

http://www.marketwatch.com/story/tardy-tarp-banks-may-miss-out-on-30-bln-fund-2010-09-16

A quarter of the 500 small banks that have received funds from the Troubled Asset Relief Program may struggle to convert their stakes into a soon-to-be approved $30 billion program seeking to help community institutions lend to small businesses.

“One issue that may come up is the extent that there are some TARP recipients that have not been paying dividends, they may have some difficulty converting over into this program,” said Chris Cole, a vice president at the Independent Community Bankers of America.

Specifically, the legislation that was approved in a Senate vote Thursday would prohibit a TARP recipient bank that has been more than 60 days late on making a dividend payment to the government from refinancing into the new program. That legislation will need to go back to the House for final approval and will then need the signature of President Barack Obama, who has actively campaigned for the passage of the bill.

According to analysts at Keefe, Bruyette & Woods, 123 financial institutions failed to make TARP dividend payments, up from 98 in May, 80 in February and 55 in Nov. 2009. Read about Treasury getting tough on TARP deadbeats...

[Demeter]

50. ANALYSIS - EU, U.S. supervisors face derivatives test

http://in.reuters.com/article/idINIndia-51515320100915

Differences between new European Union and U.S. rules to crackdown on derivatives will be a key test of how well transatlantic regulators can coordinate to iron out loopholes banks may be tempted to exploit.

The United States has already approved a law to tighten supervision of the $615 trillion off-exchange derivatives markets and the EU published its own draft law on Wednesday.

Both implement pledges the EU and United States made as members of the Group of 20 countries (G20) to require central clearing of as many contracts as possible, reporting of trades to repositories and where appropriate, trading on an exchange.

"The crunch item to get right is for trade repositories to make sure every regulator has access to all the data they have," said Damian Carolan, a partner at Allen & Overy law firm...

THIS OUGHT TO BE INTERESTING :popcorn:

[Demeter]

56. The bankers who said 'hell no' to bailouts

http://money.cnn.com/2010/09/15/news/companies/thebuzz/

Two years after the collapse of Lehman Brothers, it seems safe to say that there is still a lot of resentment toward the financial sector.

Lehman's bankruptcy set into motion a chain of events that ultimately led to the creation of the government's controversial Troubled Asset Relief Program, or TARP. But some banks avoided bailout rage.

Meet the TARP refusers who said no to government support. Two years later, they remain elated that they never had to accept a dime from Washington.

"It was one of the best decisions of my adult life to say no to TARP. We never seriously considered taking bailout funds," said David Kemper, chief executive officer of Commerce Bancshares (CBSH), a Kansas City-based bank with more than $18 billion in assets....

[bread_and_roses]

70. "if Obama were serious about tipping the balance away from Wall Street and toward Main Street"

There Will Be "Hell to Pay" If Elizabeth Warren Does Not Have Real Power

by John Nichols

Clearly, the new bureau has a big job to do, and Elizabeth Warren is the right person to do it."

Unfortunately, the right person will not be doing it for awhile. As such, Obama is avoiding a fight that he should be waging.

By failing to formally install Warren in the position that economists and activists say she is uniquely prepared to fill, Obama is missing one of the most important opportunities of his presidency...

... if he really feared a filibuster would have prevented Warren from getting to the vital work of creating a muscular consumer protection agency, Obama could have made a recess appointment and put her in the position immediately. His critics would surely have screamed about Obama moving too aggressively to, um, protect consumers from being ripped off by Wall Street profiteers—a complaint that the president and his party would have been wise to invite.

There was a shorter version of this article posted a few days ago under a far more edgy title: "Obama Prepares to Sort of Appoint Elizabeth Warren to Something" LOL, how apt.

both at http://www.commondreams.org/

[Demeter]

99. Lehman Bros. and the Transformation of BarCap

http://blogs.wsj.com/deals/2010/09/14/lehman-bros-and-the-transformation-of-barcap/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fdeals%2Ffeed+%28WSJ.com%3A+Deal+Journal+-+WSJ.com%29&mod=WSJ_Finance_MIDDLEDealJournal

Two years ago, Lehman Brothers faced a stark choice — find a buyer over the weekend or file for bankruptcy protection the following Monday.

We all know the rest of the story. The Wall Street investment bank filed for bankruptcy and a few days later Barclays scooped up Lehman’s North American business for bargain price of $1.75 billion.

Lehman the firm might be all but dead, but its North American unit has transformed Barclays. The British bank’s investment-banking arm has gone from a second thought on Wall Street to a power player, as the WSJ reported at the end of July. Together Lehman and BarCap are performing better than either they fared on their own, leveraging Lehman’s investment-banking prowess with the U.K. bank’s $2.2 trillion balance sheet.

“At Lehman, we always had what I felt was a major league M&A business, but not necessarily a major league balance sheet,” Skip McGee, the head of Barclays Capital’s investment-banking division, told the Journal in July...

[Demeter]

105. Bailed-Out Banks Finance Predatory Payday Lenders

http://www.banksterusa.org/content/bailed-out-banks-finance-predatory-payday-lenders


...Wells Fargo, Bank of America, and JP Morgan Chase received $95 billion in Troubled Asset Relief Program (TARP) bailout funds in 2008 combined. These banks continue to be subsidized by the taxpayers, receiving near zero-percent interest funding via the Federal Reserve. While the big banks have been reluctant to invest in American factories and small businesses, they have decided to support the predatory payday loan industry which charges customers an average effective interest rate of 454 percent on small loans.

The Wall Street banks have extended $1.5 billion in credit over the last few years to publicly traded payday loan companies and almost double that when privately held payday loan firms are included. The estimated 22,300 payday loan stores nationwide make $30 billion in loans each year. Wells Fargo is the worst offender financing one third of the payday loan stores in America...

The biggest payday loan firm is the Orwellian-named Advance America, a publicly traded firm listed on the New York Stock Exchange with over 2,500 outlets in 32 states. Wells Fargo, Bank of America and U.S. Bank provide a $75 to 300 million line of credit to the firm at interest rates ranging from four to eight percent on the loans. In recent months, Advance America's booming profits have been noticed and it has been touted as a “good investment” by Wall Street insiders.

One former employee of Advance America explains some tricks of the trade. Speaking on the condition on anonymity (because he and other employees were forced to sign a confidentiality agreement upon leaving the firm), this former shop employee says that many of his clients were on disability or U.S. Social Security: “They would come in for a small loan and write a check to the company dated the 3rd of the month, when their government checks would arrive. All the Advance America employees were required to come in early on that day, so we could quickly cash their checks and wipe out their checking accounts.”

...Advance America admitted in a recent Securities and Exchange Commission filing, “If we are unable to maintain access to external sources of liquidity, our ability to finance our current operations and future dividends would be impaired.” That is why National People’s Action and affiliated groups are campaigning to force the big banks to cancel all lending agreements with payday loan operators. This work is starting to have an impact....

The Predators' Creditors: http://showdowninamerica.org/node/826

[Demeter]

108. Bank of America warns of new fees after financial reforms

http://www.breitbart.com/article.php?id=CNG.bb54d137200b27d4f18a20472252604a.10b1&show_article=1

Bank of America will charge clients new monthly fees if their accounts do not meet a minimum balance, the bank's CEO Brian Moynihan said on Tuesday.

"We will increase the account balance minimums or charge monthly fees in lieu thereof, which is the choice of the customer," Moynihan said at a Barclays Capital conference in New York.

These and other measures will allow the bank to compensate for revenue lost due to new regulations put in place following the 2008 financial crisis that led the US government to salvage many bank with massive bailouts, he said.

"Over the next 12 months, we will reset the entire product line." Bank of America has recently introduced a new account, called e-account, offering reduced fees for customers using automated services, while reducing the number of branches and staff in a bid to cut down costs, he added...

[Demeter]

120. Why Are Banks Holding So Many Excess Reserves?

http://www.aleablog.com/why-are-banks-holding-so-many-excess-reserves/

Reserves (sometimes called bank reserves) are funds held by depository institutions that can be used to meet the institution’s legal reserve requirement. These funds are held either as balances on deposit at the Federal Reserve or as cash in the bank’s vault or ATMs. Reserves that are applied toward an institution’s legal requirement are called required, while any additional reserves are called excess.

Fed paper by Todd Keister and James McAndrews

Why Are Banks Holding So Many Excess Reserves?



The quantity of reserves in the U.S. banking system has risen dramatically since September 2008. Some commentators have expressed concern that this pattern indicates that the Federal Reserve’s liquidity facilities have been ineffective in promoting the flow of credit to firms and households. Others have argued that the high level of reserves will be inflationary. We explain, through a series of examples, why banks are currently holding so many reserves. The examples show how the quantity of bank reserves is determined by the size of the Federal Reserve’s policy initiatives and in no way reflects the initiatives’ effects on bank lending. We also argue that a large increase in bank reserves need not be inflationary, because the payment of interest on reserves allows the Federal Reserve to adjust short-term interest rates independently of the level of reserves.

[Demeter]

126. Impact of bank rules likely to be 30% tougher

The impact of the new global bank capital rules announced at the weekend is likely to be 30 per cent tougher than the headline ratio suggests, regulators and industry participants say

Read more >>
http://link.ft.com/r/19JYUU/8AJPNI/Q38E1/YHXY0Y/72KIQM/82/t?a1=2010&a2=9&a3=17

[Demeter]

127. US banks braced for further bad news

Big US banks are nearing the end of another disappointing quarter for their trading businesses that has deepened fears over job losses on Wall Street

Read more >>
http://link.ft.com/r/19JYUU/8AJPNI/Q38E1/YHXY0Y/M91HGN/82/t?a1=2010&a2=9&a3=17

[Demeter]

14. THE OIL BIDNESS

There Will Be Beer – the drunk oil trader story

This week we need your help to produce the big-screen version of the story of the tired and emotional trader who sent the price of oil to its highest level in eight months...

We've all been there. You go for one quiet drink and the next thing you know it's Tuesday morning and you've woken to find it turned into a three-day bender. Your memory is, at best, patchy. But you've checked your phone and don't seem to have left messages for any ex-girlfriends, you still have trousers on, you haven't hijacked your best friend's pregnancy, nor acquired a baby or Mike Tyson's tiger, so you're thinking: phew, got off lightly, haven't mimicked the plot of the latest Jennifer Aniston romcom nor an obnoxious buddy comedy. Result!

Only then do you realise you might have bought 7m barrels of oil.

http://www.guardian.co.uk/film/filmblog/2010/jun/30/drunk-oil-trader-movie

[Demeter]

15. BP cited for safety lapses in North Sea

All but one of BP’s five North Sea installations inspected in 2009 were cited for failure to comply with emergency regulations on oil spills, raising questions about the company’s ability to manage a disaster in the area.

Read more >>
http://link.ft.com/r/YIQXNN/OJ0G2P/WH2F8/ZBKWI5/LQU3GV/D5/t?a1=2010&a2=9&a3=14

[Demeter]

17. Saudi reveals large unconventional gas reserves

Saudi Arabia has large reserves of unconventional gas that could help the kingdom to meet soaring domestic energy needs and leave more crude oil available for export, the head of its national oil company has said.

Read more >>
http://link.ft.com/r/4RNQTT/72SKA2/DXJ2Y/8ARQMR/187VVU/50/t?a1=2010&a2=9&a3=13

[Demeter]

24. California Braces for Showdown on Emissions

http://www.nytimes.com/2010/09/17/us/17pollute.html?_r=1&hp

A ballot initiative to suspend a milestone California law curbing greenhouse gas emissions is drawing a wave of contributions from out-of-state oil companies, raising concerns among conservationists as it emerges as a test of public support for potentially costly environmental measures during tough economic times...

[Demeter]

27. Senate Delays Talks on West Coast Drilling Bans

http://www.truth-out.org/senate-delays-talks-west-coast-drilling-bans63335

Plans by the Senate Interior Department to pass a bill that would have blocked West Coast offshore drilling have been delayed, according to a statement from the Senate Appropriations Committee.

The Senate Appropriations Committee had planned to mark up the annual Environmental Protection Agency (EPA) budget Thursday, introducing oil and gas drilling bans off the Pacific Coast. The bans would affect California, Oregon, and Washington, and allow committee members to debate whether to block upcoming EPA climate change regulations.

The mark-up was delayed to allow the committee to review the White House budget plan for off-shore oil and gas regulation. Senator Feinstein said in a statement, “In light of the fact that the Administration transmitted to Congress last night a $100 million budget amendment affecting the reorganization of the Department of the Interior Bureau of Ocean Energy Management, Regulation, and Enforcement, I have respectfully asked for a delay in marking up the Interior, Environment and Related Agencies Appropriations bill while we evaluate the Administration's proposal.”

A date for the next session has not been set...

[bread_and_roses]

69. "And malt does more than Milton can To justify God's ways to man."

A.E. Housman

Terence, This Is Stupid Stuff

"Terence, this is stupid stuff:
You eat your victuals fast enough;
There can't be much amiss, 'tis clear,
To see the rate you drink your beer.
But oh, good Lord, the verse you make,
It gives a chap the belly-ache.
The cow, the old cow, she is dead;
It sleeps well, the horned head:
We poor lads, 'tis our turn now
To hear such tunes as killed the cow.
Pretty friendship 'tis to rhyme
Your friends to death before their time
Moping melancholy mad:
Come, pipe a tune to dance to, lad."

Why, if 'tis dancing you would be,
There's brisker pipes than poetry.
Say, for what were hop-yards meant,
Or why was Burton built on Trent?
Oh many a peer of England brews
Livelier liquor than the Muse,
And malt does more than Milton can
To justify God's ways to man.
Ale, man, ale's the stuff to drink
For fellows whom it hurts to think:
Look into the pewter pot
To see the world as the world's not.
And faith, 'tis pleasant till 'tis past:
The mischief is that 'twill not last.
Oh I have been to Ludlow fair
And left my necktie God knows where,
And carried half way home, or near,
Pints and quarts of Ludlow beer:
Then the world seemed none so bad,
And I myself a sterling lad;
And down in lovely muck I've lain,
Happy till I woke again.
Then I saw the morning sky:
Heigho, the tale was all a lie;
The world, it was the old world yet,
I was I, my things were wet,
And nothing now remained to do
But begin the game anew.

Therefore, since the world has still
Much good, but much less good than ill,
And while the sun and moon endure
Luck's a chance, but trouble's sure,
I'd face it as a wise man would,
And train for ill and not for good.
'Tis true, the stuff I bring for sale
Is not so brisk a brew as ale:
Out of a stem that scored the hand
I wrung it in a weary land.
But take it: if the snack is sour,
The better for the embittered hour;
It should do good to heart and head
When your soul is in my soul's stead;
And I will friend you, if I may,
In the dark and cloudy day.

There as a king reigned in the east:
There, when kings will sit to feast,
They get their fill before they think
With poisoned meat and poisoned drink.
He gathered all that springs to birth
From the many-venomed earth;
First a little, thence to more,
He sampled all her killing store;
And easy, smiling, seasoned sound,
Sate the king when healths went round.
They put arsenic in his meat
And stared aghast to watch him eat;
They poured strychnine in his cup
And shook to see him drink it up:
They shook, they stared as white's their shirt:
Them it was their poison hurt.
--I tell the tale that I heard told.
Mithridates, he died old.

I couldn't resist posting the whole poem. Every stanza seems to have some applicability to our current state of affairs...

First stanza: the Ds total inability to tell a tune to dance to (due to their servitude to their corporate masters - since the tune would be whatever was sang along the route to FRSP - they'd have to tell the truth about the class warfare the rich are waging against the rest of us, and that's verboten - it would jeopardize their campaign contributions.

Second Stanza: the '08 election and its aftermath - at least, for some goodly few of us

Third stanza: SMW and WE

Fourth Stanza: The impotent poisoners are the Dems who thought to harness the Oligarchs' money to their own profit, and instead find themselves again and again with the poisoned cup in their own hands. And their courtiers are the Progressive insider leadership who thinks a seat at the table worth any sell-out. Only Mithradates dies wins.

[Demeter]

82. Thanks for That

I'm feeling much more educated...never read the entire thing, nor known where the bits came from.

[Demeter]

98. OPEC anniversary

http://www.ogj.com/index/article-display/4563634928/articles/oil-gas-journal/general-interest-2/economics-markets/2010/09/market-watch__energy0.html


Sept. 14 marks the 50th anniversary of OPEC, whose charter was signed in 1960 by its five founding nations at a conference in Baghdad.

“Creation of OPEC effectively signaled the beginning of the end of Western company dominance of the upstream oil industry as the cartel gained market power by using its excess capacity to manipulate world oil prices,” said Raymond James analysts. OPEC now has 12 member countries, which account for 40% of the world's oil supply and more than 75% of proved reserves.

Raymond James said, “Currently, OPEC is still able to support a floor for oil prices, but increasingly over the next several years, its goal will be to do the opposite—restrain future oil price increases to limit the incentives for significant oil substitution. As production growth slows, the OPEC of the next 50 years will certainly be a different—and generally weaker—organization than the one that marks its birthday today.”

On the other hand, OPEC Sec. Gen. Abdalla Salem El-Badri said OPEC celebrates its anniversary “with a feeling of achievement and satisfaction, together with the firm intention of remaining true to its principles well into the future, to the benefit of its own member countries' national development, international oil supply, world economic growth, poverty eradication, and the global community at large.”

[Demeter]

18. GENERAL WHACKINESS

Otherwise cannot be categorized--I think this will be a growing subthread....

http://www.youtube.com/watch?v=OCIoF4VeRj0

[Demeter]

19. Ryanair’s crews’ no-frills idea: Drop the boss

A senior pilot who trains other fliers at Ryanair’s Marseilles base, says he knows the airline is dedicated to keeping its costs as low as possible, so why not go one better – and replace Michael O’Leary with a junior flight attendant? He was responding to his CEO's insistemce that a flight attendant could do the job of a co-pilot

Read more >>
http://link.ft.com/r/UXDMSS/A7FY2B/Q38E1/TP7VGI/KEPRRQ/QR/t?a1=2010&a2=9&a3=13

[Demeter]

28. The Crackpot Gap by: Robert Reich

http://www.truth-out.org/robert-reich-the-crackpot-gap63336

...Many Americans these days don't like Congress and are cynical about government. The lousy economy has made almost all incumbents targets of the public's anger and anxiety. But if there's one thing Americans like even less it's people pretending to be legitimate politicians whose views are so far removed from those of ordinary Americans that they pose a danger to our system of governance.

In the latest Wall Street Journal/NBC News poll, a third of undecided voters had a negative view of the tea party movement. 13 percent of those who said they prefer Republicans to win control of Congress this fall also reported a negative view of the tea-partiers...

Some Democrats think all this is wonderful because it boosts the odds of Democratic wins, not only in the midterms but also in 2012 when the Republicans put up Palin, Gingrich, or someone equally bizarre.

I'm not as sanguine. Political discourse in America is important. What candidates say can legitimize hateful or extremist views that would otherwise never see the light of day.

We're in the midst of an ongoing economic emergency that requires clear thinking, intense work, and practical ideas. It also requires that we join together rather than be pushed apart. The loonies who are taking over the GOP pose a real and present danger.

[Tansy_Gold]

37. Bottle of Wine

http://www.youtube.com/watch?v=FfaxweaIj_Y&feature=related

[DemReadingDU]

66. OMG, no wine

do not have fond memories of this beverage
:(

[Tansy_Gold]

72. Aw, c'mon. It's the spirit of the thing (pun intended)

I loathe beer but I'll still tip a frosty cyber one with cyber friends.

:toast:



TG

[DemReadingDU]

77. I got a beer song posted down thread

:toast:

[bread_and_roses]

71. On mint juleps and Derby dreams - Oligarchs ride high again

On the Thoroughbred market the news is good:

http://www.bloodhorse.com/horse-racing/articles/58944/russell-market-at-september-sale-heartening

Russell: Market at September Sale Heartening

To Frank Taylor of Taylor Made Sales Agency, the results for the first week of the Keeneland September yearling sale were much better than he thought they would be.

“I was expecting a near disaster, and I think it turned out pretty good,” he said during the auction’s sixth session Sept. 17 in Lexington...

...The average price for the first six sessions combined was $150,890, an increase of 19.6% from a year ago. The median price of $100,000 was up 25%. In addition, the buy-back rate fell, from 33.4% in 2009 to 30.6%.

The cumulative gross of $141,987,500 was down only 5.9% even though the number of horses sold experienced a much sharper decline of 21.3% while falling to 941.

The Oligarchy is feeling more comfortable since they have "change" they can "believe in" (ie, no change in their power to control the big money and real power) and ready to play again.

[Roland99]

76. Wonder if there was some buying fever this year. What with the World Equine Championships in KY

- Roland99...with fall approaching, missing a bit of his old Kentucky home.

[bread_and_roses]

90. I think most - if not virtually all - these are Thoroughbreds intended for racing

Although some TBs are seen in other Equine events, when I watch various meets that I occasionally stumble on on TV, many of the horses seem to be Warmbloods. However, the first breed listed in this article (first one I found) is "The Anglo-Arabian combines attractive traits from both the Arabian (refinement and stamina) and Thoroughbreds (size and speed) bloodlines." http://www.theequinest.com/olympic-eventing-horse-breeds/
(bold added)

And while I'm sure eventers are quite valuable and can be sold or bought for a goodly sum, I have to doubt that many go for amounts in the hundreds of thousands - and in the recent past, sometimes a million or more. This year seemed a bit more modest - from same link as original:

Hip #1447, colt, Unbridled's Song - Sweet Nanette by You and I, sold for $560,000 to lead the 6th session of the Keeneland September yearling sale.

And from another recent story on the sales: http://www.bloodhorse.com/horse-racing/articles/58920/sheikh--hamdan-seeking-grass--runners-at-sale

Sheikh Hamdan, a member of Dubai’s ruling family, was the Keeneland September yearling sale’s biggest spender through the fourth session Sept. 15. He had paid $7,290,000 for 18 horses, including an $800,000 Bernardini -- Private Status colt. Most of them will be sent to Europe to race. Sheikh Hamdan also was the immediate underbidder on a $2.05 million Distorted Humor colt that was sold during the auction’s second session.

These people are looking for a Derby horse, or at least a "big horse" (winner of important races) who will have value-added as a stud or broodmare.

I love all horses and all breeds, though I have a particular soft spot for TBs. But what's interesting to me about this and why I posted it here is that for the past few years the sales have been "depressed" - from my sketchy reading anyway - the uber-rich were less willing to spend vast sums. That they are picking up now is equally interesting, and says to me that the Oligarchs are feeling more comfortable that they are not under any real threat. And that's significant for the rest of us.

edited to add link and formatting I forgot to put in

[Roland99]

91. Oh, I was just meaning perhaps a larger crowd, more diverse, deeper pockets.

[Demeter]

100. America's Decoupling From Reality by: Robert Parry MUST READ

http://www.truth-out.org/americas-decoupling-from-reality63356

A RIGHTEOUS SCREED--TOO MANY GOOD PARAGRAPHS TO CHOOSE JUST 4

[Demeter]

112. And Now, A Word from a Founding Father

"When shall it be said in any country of the world, my poor are happy,
neither ignorance or distress is to be found among them; my jails are empty
of prisoners, my streets of beggars; the aged are not in want, the taxes not
oppressive; the rational world is my friend because I am friend of its
happiness. When these things can be said, then may that country boast of its
constitution and government ." - Thomas Paine

[Viva_La_Revolution]

32. kick!

...so I can find this again when I wake up with a hangover...

:P

[Demeter]

35. Moderation in all things, I Always Say

[Demeter]

36. SOUTH OF THE BORDER

http://www.youtube.com/watch?v=Lrx4PrW1y5A

http://www.youtube.com/watch?v=mASncUd8d9o&feature=related

[Tansy_Gold]

38. The Champs w/ the Wolfman

http://www.youtube.com/watch?v=LMmRlgFe0cU

[Demeter]

40. Nice to See You Getting Into the Spirit of the Weekend, Tansy

since I'm not much of a drinker, either...

[Tansy_Gold]

45. I'm a very cheap drunk.

Two glasses of cabernet is about all I can handle for an evening, three if I'm having a really good time.

But I'm pretty well up on pop music of the 50s and 60s -- Bottle of Wine is a turn-the-volume-all-the-way-up sing along. It works best in a convertible, of course. . . . .




TG, NTY

[DemReadingDU]

78. Wine Glass Music

http://www.youtube.com/watch?v=phqymc8anO0

[Demeter]

39. Brazil Touts Record Job Creation

http://laht.com/article.asp?ArticleId=366790&CategoryId=14090

Brazil’s economy created a record 1.95 million new formal jobs in the first eight months of this year, according to Labor Ministry figures released Thursday.

That figure represents an 8.4 percent increase over the 1.8 million formal jobs created between January and August 2008 and is almost double the total for all of 2009.

It also topped the previous annual record of 1.61 million jobs created in 2007.

The statistic refers only to jobs with a signed contract and labor and social guarantees and therefore must be viewed independently of the official employment figures, which also include workers who are part of Brazil’s large informal economy...

[Demeter]

41. As Cuba gives capitalism a try, experts ponder future

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/16/AR2010091607381.html

As Cuba embarks on a bold new experiment - firing 500,000 state workers and letting them plunge into freer markets - experts in the region are watching to see whether the communist government and its baby entrepreneurs can salvage the economy without sacrificing the nation's "socialism or death" model....

[Demeter]

111. Cuba to cut 500,000 state jobs

http://english.aljazeera.net/news/americas/2010/09/201091320523592986.html

Raul Castro's government introduces reforms to a communist economy where 90 per cent of employees work for the state.

The Cuban government has announced plans to lay off at least half a million state workers by the middle of 2011 and to reduce restrictions on private enterprise to help them find new jobs, in one of the most dramatic steps yet to reform communist island's economy.

Raul Castro, the Cuban president who replaced his ailing brother Fidel, suggested in a nationally televised speech on Monday that nearly one million Cuban workers, about one in five, may be redundant.

The lay-offs will start immediately....Our correspondent said that Cuba will continue to provide its citizens with free health-care and education: social programmes which are widely seen as hallmarks of the 1959 revolution.

[bread_and_roses]

89. Haiti - the most unequal country in the world. & a parable for us -

http://www.commondreams.org/view/2010/09/17-11

Suffocating the Poor: A Modern Parable
They democratically elected a president to stand up to the rich and multinational corporations - so our governments have him kidnapped

by Johann Hari

... For over two centuries, Haiti has been effectively controlled from outside. The French enslaved the entire island in the eighteenth century and worked much of the population to death, turning it into the sugar and coffee plantation for the world. By this century, Western governments were arming, funding and fuelling the psychopathic dictatorship of the Duvalier family - who slaughtered 50,000 people - supposedly because they were "our friends" in the fight against communism...

... A tiny elite lives in vast villas in the hills, while below and all around them, the overwhelming majority of the population live in tiny tin shacks with no water or electricity, crammed six-to-a-room. Just 1 per cent own 50 per cent of the wealth and 75 per cent of the arable land. Once the Haitian people were finally able to rise up in 1986 to demand democracy...

... was elected in 1990 in a landslide in the country's first free and fair election, taking 64 per cent of the vote. He kept his promise to the Haitian people: he increased the minimum wage from 38 cents a day to $1, demanding the multinational corporations pay a less insulting wage. He trebled the number of free secondary schools. He disbanded the murderous national army that had terrorized the population. Even the International Monetary Fund had to admit that over the Aristide period and just after, Haiti's Human Poverty Indicator - a measure of how likely your kids are to die, starve or go uneducated - dropped dramatically from 46.2 per cent to 31.8 per cent...

... So after Haiti had experienced seven months of democracy, the US toppled Aristide.

... In 1994, the Clinton administration agreed to return Aristide to power - provided he castrate his own political program and ignore the demands of his people. They made him agree to privatize almost everything, freeze wages, and sack half the civil service...

More at link. I have mentioned before the "lightbulb moment" long ago, reading an article by Chomsky (my hero) in which he writes words to the effect that American citizens could learn what democracy means from the poor of Haiti. (He's given me many such moments over the years, an inestimable gift.)

I think of this when the Rah Rah Democrats start on the wonderful prosperity we had under his "benign" reign.

We are approaching Haitian levels of inequality:





What will happen here?

[Demeter]

95. Well Since Democracy Has Already Been Tumbled Here

I gotta think it's time for We the People get to work.

[Demeter]

110. Haiti's Disaster Capitalists Swoop In

http://motherjones.com/politics/2010/09/haiti-refugee-work-camps

Refugee evictions, private land grabs, disaster capitalism—you can't tell the story of Haiti without all this. Eight months after the earthquake, many of the 1.7 million Haitians living under tattered tarps in squalid squatter camps around Port-au-Prince are being forced to abandon the tent cities they've set up on privately owned land. Meanwhile, businesses—eager to slurp up the spoils of disaster—are swooping in to score major paydays by moving the refugees to new camps, some set to operate as industrial work zones. And there's no one stopping it.

In March, Haitian landowners and police authorities began kicking displaced Haitians out of their makeshift cities at the behest of the owners of the land on which the camps sat. International Action Ties, a grassroots community development agency working in Haiti, says authorities are regularly flushing out the camps. The International Organization for Migration, which heads up the international aid response to the quake, has been unable to prevent expulsions and has been relegated to playing mediator between landowners and camp occupants. A recent IAT report provides a vivid blow-by-blow of expulsions by Haitian police in the communes of Delmas and Cité Soleil: bulldozers demolishing flimsy shelters, policemen swinging batons and shooting their guns in the air, and several cases of sexual assault. IAT skewers the Haitian government and UN system, and blasts the aid community for not defending the refugees (for more, read this report from July).

And there's a twist: It's not even clear these landowners officially own the property that the displaced people are being expelled from. Murky titling laws have plagued Haiti since its early days, clouding landowners' claims with ambiguity and contributing to the country's current catastrophe. Post-colonial Haiti's first ruler, Jean-Jacques Dessaline, imposed dramatic land reforms in the early 1800s, apportioning plantation land among freed slaves. But after his assassination, subsequent efforts at reform failed, and military leaders appropriated old plantation land. Land titling gradually became more and more muddled as one dictator gave way to another. In the 1950s and '60s, François "Papa Doc" Duvalier meted out land to members of his death squads, or left property up for grabs. In the '80s, another attempt to formalize land holdings failed....

[Demeter]

115. Money Trickles North as Mexicans Help Relatives

http://www.nytimes.com/2009/11/16/world/americas/16mexico.html?_r=2&partner=MYWAY

During the best of the times, Miguel Salcedo’s son, an illegal immigrant in San Diego, would be sending home hundreds of dollars a month to support his struggling family in Mexico. But at times like these, with the American economy out of whack and his son out of work, Mr. Salcedo finds himself doing what he never imagined he would have to do: wiring pesos north.

Unemployment has hit migrant communities in the United States so hard that a startling new phenomenon has been detected: instead of receiving remittances from relatives in the richest country on earth, some down-and-out Mexican families are scraping together what they can to support their unemployed loved ones in the United States.

“We send something whenever we have a little extra, at least enough so he can eat,” said Mr. Salcedo, who is from a small village here in the rural state of Oaxaca and works odd jobs to support his wife, his two younger sons and, now, his jobless eldest boy in California.

He is not alone. Leonardo Herrera, a rancher from outside Tuxtla Gutiérrez in the southern state of Chiapas, said he recently sold a cow to help raise $1,000 to send to his struggling nephew in northern California.

[Demeter]

42. CAR TALK!

http://www.youtube.com/watch?v=qwm3FQhUaSU

DON'T DRINK AND DRIVE--THAT MEANS YOU!

[Demeter]

43. GM, in Shift, Sees U.S. Stake Lasting

http://online.wsj.com/article/SB10001424052748703440604575495491975425482.html?mod=dist_smartbrief

The U.S. government may take years to sell its entire stake in General Motors Co., the auto maker's new chief executive said Thursday, marking a change in the company's tone as it heads toward an initial public offering this fall.

In his first media appearance since taking over Sept. 1, Daniel F. Akerson said GM can function as a normal company while the U.S. Treasury gradually sells down its 61% stake in the auto maker.

"GM is run like any corporation in America," he told reporters at GM's headquarters here. "We just have a large shareholder that has a keen interest in what we're doing."

[Demeter]

44. HOUSE CALLS!

http://www.youtube.com/watch?v=AN3rN59GlWw

[Demeter]

46. Reluctant Realtors: Fannie, Freddie

http://online.wsj.com/article/SB10001424052748704652104575494123756247944.html?mod=dist_smartbrief

Two years after they were taken over by the federal government, Fannie Mae and Freddie Mac face a new challenge: The mortgage-finance giants are becoming two of the nation's largest home sellers at a time when the housing market shows new signs of softening.

Fannie and Freddie have already taken back nearly as many homes in the first half of the year as they did all of last year. They owned more than 191,000 homes at the end of June, double the year-earlier total. That number will grow because they are taking back homes faster than they sell them.

In recent weeks, Fannie Mae has warned that it could get tougher on lenders that are taking too long to reclaim homes once they have determined that the home is vacant or once they have exhausted foreclosure alternatives, such as modifications. Mortgage servicers, which collect fees from Fannie, could face fines if the process is unreasonably prolonged.

Fannie's recent reminder to banks signals a growing impatience with delays that have become "exaggerated and unmanageable," says Edward Delgado, a former Wells Fargo & Co. executive who is now chief executive of the Five Star Institute, a provider of training programs for mortgage professionals....

[Demeter]

59. Fannie Mae Began Buying $1,000-Down Mortgages Without Approval

http://www.bloomberg.com/news/2010-09-15/fannie-mae-began-buying-1-000-down-mortgages-without-approval.html

Fannie Mae agreed to finance loans to homebuyers putting as little as $1,000 down without getting the approval of the U.S. agency in charge of minimizing the costs of the mortgage company’s bailout.

While “any significant actions” taken by the Washington- based company and rival Freddie Mac must be “reviewed and approved” by their overseer, the Federal Housing Finance Agency, Fannie Mae began buying the so-called Affordable Advantage mortgages from state housing finance authorities without taking that step, Edward J. DeMarco, the FHFA’s acting director, said today.

“This one got away from us,” DeMarco told lawmakers at a House Financial Services subcommittee hearing in Washington.

Republican Representatives Spencer Bachus of Alabama and Judy Biggert of Illinois cited the loans in criticizing the government’s oversight of Fannie Mae and Freddie Mac during the hearing, which focused on the U.S.’s need to rework its mortgage-finance system and limit the costs of supporting the companies in the interim...

[Demeter]

106. Mish on Housing

Home Prices Drop in 36 States; Beazer Warns on Orders; 8 Million Foreclosure-Bound Homes to Hit the Market; Prices to Stagnate for a Decade

The small upward correction in home prices from multiple tax credit offerings died in July. Worse yet, inventory of homes for sale as well as shadow inventory both soared. 8 million foreclosure-bound homes have yet to hit the market according to Morgan Stanley.

Home Prices Drop in 36 States

CoreLogic reports Growing Number of Declining Markets Underscore Weakness in the Housing Market without Tax-Credit Support

CoreLogic Home Price Index Remained Flat in July

SANTA ANA, Calif., September 15, 2010 – CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services, today released its Home Price Index (HPI) that showed that home prices in the U.S. remained flat in July as transaction volumes continue to decline. This was the first time in five months that no year-over-year gains were reported. According to the CoreLogic HPI, national home prices, including distressed sales showed no change in July 2010 compared to July 2009. June 2010 HPI showed a 2.4 percent* year-over-year gain compared to June 2009.

"Although home prices were flat nationally, the majority of states experienced price declines and price declines are spreading across more geographies relative to a few months ago. Home prices fell in 36 states in July, nearly twice the number in May and the highest since last November when national home prices were declining," said Mark Fleming, chief economist for CoreLogic.

Methodology

The CoreLogic HPI incorporates more than 30 years worth of repeat sales transactions, representing more than 55 million observations sourced from CoreLogic industry-leading property information and its securities and servicing databases. The CoreLogic HPI provides a multi-tier market evaluation based on price, time between sales, property type, loan type (conforming vs. nonconforming), and distressed sales. The CoreLogic HPI is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time, which provides a more accurate "constant-quality" view of pricing trends than basing analysis on all home sales. The CoreLogic HPI provides the most comprehensive set of monthly home price indices and median sales prices available covering 6,208 ZIP codes (58 percent of total U.S. population), 572 Core Based Statistical Areas (85 percent of total U.S. population) and 1,027 counties (82 percent of total U.S. population) located in all 50 states and the District of Columbia.

...disagree with Herb Blecher. I see little advantage stretching this mess out for a decade, and that is what the government seems hell-bent on doing. Everyone wants the government to "do something". Unfortunately tax credits stimulated the production of new homes, ultimately adding to inventory. Prices need to fall to levels where there is genuine demand.

The short-term rise in the Case-Shiller home price index and the CoreLogic HPI was a mirage that will soon vanish in the reality of an inventory of 8 million homes that must eventually hit the market...

Last Bubble Not Reblown

After the bottom is found, remember the axiom: the last bubble is not reblown for decades. Look at the Nasdaq, still off more than 50% from a decade ago.

The odds home prices return to their peak in 10 years is close to zero. Houses in bubble areas may never return to peak levels in existing owner's lifetimes. Zandi is way overoptimistic in his assessment of 3% annual appreciation after the bottom is found.

Price Stagnation

I expect small nominal increases after housing bottoms, but negative appreciation in real terms as inflation picks up in the second half of the decade. Yes, deflation will eventually end. Alternatively the US goes in and out of deflation for a decade (depending on how much the Fed and Congress acts to prevent a much needed bottom). Either way, look for price stagnation in one form or another.

Thus, if you have come to the conclusion there is no good reason to hold on to a deeply underwater home, nor any reason to rush into a home purchase at this time, you have reached the right conclusions.

Hyperinflation? Please be serious.

[Demeter]

116. When did the housing bubble begin?

http://bubblemeter.blogspot.com/2009/11/when-did-housing-bubble-begin.html

[Demeter]

121. Bank of America Foreclosure Shenanigans? FROM NOVEMBER 2009

http://www.nakedcapitalism.com/2009/11/bank-of-america-foreclosure-shenanigans.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

About a week ago, I got this message from a reader:

I heard a rumor from a very well placed source that BOFA will foreclose 500,000 houses over the next 10 months. They plan to move these houses very aggressively; they will go to auction 90 days from foreclosure if they are not sold by then. Someone else, very highly placed in Fanny Mae, confirmed this and said there are at least that many again in the rest of the banking system.

Now I will be honest, I have no idea whether this is true, and when I ran it by my investors buddies, the reaction I got was incredulity “Why would BofA want to shoot itself in the foot?” was typical.

But what does “BofA” mean in the message? Is it “BofA as lender who holds the mortgages on its books” or is it “BofA as servicer, who profits handsomely from foreclosures?” Remember, the rationale for buying Countrywide was to get hold of its servicing operation. And there has a good deal of evidence that regulators are tolerating some lax valuations on mortgages. Moreover, more aggressive liquidations might be seen, at least initially, as a plus by investors. Recall when banks first started taking subprime-related writedowns, the assumption was they were putting the losses behind them. And ironically, it seemed that with each quarter, the writeoffs kept getting bigger, yet the party line each time was, “Ah yes, they have really cleaned house, now haven’t they?”

Today, I got this message from a contact in Texas:

When I went to the bankruptcy / foreclosure auctions here a few weeks ago I found out that the whole thing is a charade. Bank of America (for instance) auctions off houses that have gone into foreclosure for the amount owed plus any carrying costs which usually makes the auction price higher than what was owed. A pre-bid was submitted by Bank of America Home Loan Servicing (the rename for Countrywide) in the exact amount of the auction minimum (mortgage owed plus carrying costs). No one else bids so the house is “sold” by Bank of America to Bank of America Home Loan Servicing. In essence, the property is simply transferred from one division to another so that clear title is established. But this is counted as an existing home sale which artificially inflates existing home sales numbers. This is what was happening for most of the 102 BAC mortgages and the 130 Wells Fargo mortgages. For the house I “rent” where the original mortgage was with Countrywide (and then transferred to B of A when B of A bought the property) this is simply a process for getting the house off of B of A’s books and back on Countrywide’s books (now BAC Home Loan Servicing). As I said, it is all charade or smoke-and-mirrors or a shell game.

Later Bank of America Home Loan Servicing will contact a realtor who will eventually put the house on the market for sale. Let’s say that the auction price was $200,000 but the house is now worth only $150,000. Of course when this house is sold by the realtor it is again counted as an existing home sale.

Note that the second strategy applies ONLY to homes already foreclosed upon; it does not establish an intent (or reason) to step up foreclosures. But the fact that the second process will artificially boost existing home sales is worth watching.

Update 11/18, 2:30 AM. Wish I had seen this reader message sooner, it explains this situation:

Intersting story on your blog today regarding BofA foreclosure pipeline. Makes sense that they would try and blow out the REO properties into the current bid, as servicer they’ve been advancing scheduled principal and interest on these dead mortgages into the REMIC trusts for prob 1-2 years now. Once they liquidate a property they are repaid those advances first, and any remaining monies goes back into the trust to pay down the notes. 2 years of P&I (remeber, the “I” they are advancing is very high, 7-9%) plus foreclosure costs could easily encompass the sale proceeds of an REO property (esp a SoCal subprime shitbox), so they are highly incentivized to recoup their money. The interesting part about this is that it causes subprime mortgage loss severities (from the point of view of the mortgage bond holders) to approach 100%. The only winners are the subordinate bonds, who got 1-2 years of credit IO flows and have yet to be written down. There has also been a lot of secured financing to servicers lately, where the securitiy for the loan is the P&I advances that are technically still owed to them. At some point I expect mass capitulation as these servicers will simply be forced to liquidate the REO properties in order to get their advances repaid (and in turn repay their financing). Principal modifications don’t work for servicers, as they need to generate cold hard cash. Distressed sale is their only option given the advances they are owed. I really feel bad for the folks that used the first-time homebuyer credit to try and “catch the falling knife”, they’ll prob be underwater this time next year.

[alterfurz]

51. "well ya see, Norm, it's like this...

...a herd of buffalo can only move as fast as the slowest buffalo. And when the herd is hunted, it is the slowest and weakest ones at the back that are killed first. This natural selection is good for the herd as a whole, because the general speed and health of the whole group keeps improving by the regular killing of the weakest members. In much the same way, the human brain can only operate as fast as the slowest brain cells. Excessive intake of alcohol, as we know, kills brain cells. But naturally, it attacks the slowest and weakest brain cells first. In this way, regular consumption of beer eliminates the weaker brain cells, making the brain a faster and more efficient machine. That's why you always feel smarter after a few beers." -- Cliff Clavin

[DemReadingDU]

67. Beer Song

http://www.youtube.com/watch?v=ATBl4qH9I54&feature=related

[Roland99]

74. Back at ya!

http://www.youtube.com/watch?v=f5zXMokthgE

[jotsy]

63. Juiced and jilted!

<http://www.youtube.com/watch?v=XhQHpjmkwJo&feature=related>

I rec this thread every weekend, I just don't always say so.

Guess the hiatus for bank closures is over.

How many message soldiers to you think it will take to silence the new 300.

[Tansy_Gold]

81. And betrayed!

I listened to half a dozen versions of this -- it's so much better in person -- and chose this over some better known.


http://www.youtube.com/watch?v=jvLcLLIzTwI

[Demeter]

64. I'm Getting Tired, Folks

Two more days of subbing on the NYT route and I'm done for the year...

Carry on! (I know you will, even without an invitation!)

Here is my FAVORITE drinking song:

http://www.youtube.com/watch?v=jvbpiX3dBR8

14. In taberna quando sumus (When we are in the tavern)
In taberna quando sumus When we are in the tavern,
non curamus quid sit humus, we do not think how we will go to dust,
sed ad ludum properamus, but we hurry to gamble,
cui semper insudamus. which always makes us sweat.
Quid agatur in taberna What happens in the tavern,
ubi nummus est pincerna, where money is host,
hoc est opus ut queratur, you may well ask,
si quid loquar, audiatur. and hear what I say.
Quidam ludunt, quidam bibunt, Some gamble, some drink,
quidam indiscrete vivunt. some behave loosely.
Sed in ludo qui morantur, But of those who gamble,
ex his quidam denudantur some are stripped bare,
quidam ibi vestiuntur, some win their clothes here,
quidam saccis induuntur. some are dressed in sacks.
Ibi nullus timet mortem Here no-one fears death,
sed pro Baccho mittunt sortem: but they throw the dice in the name of Bacchus.
Primo pro nummata vini, First of all it is to the wine-merchant
ex hac bibunt libertini; the the libertines drink,
semel bibunt pro captivis, one for the prisoners,
post hec bibunt ter pro vivis, three for the living,
quater pro Christianis cunctis four for all Christians,
quinquies pro fidelibus defunctis, five for the faithful dead,
sexies pro sororibus vanis, six for the loose sisters,
septies pro militibus silvanis. seven for the footpads in the wood,
Octies pro fratribus perversis, Eight for the errant brethren,
nonies pro monachis dispersis, nine for the dispersed monks,
decies pro navigantibus ten for the seamen,
undecies pro discordaniibus, eleven for the squabblers,
duodecies pro penitentibus, twelve for the penitent,
tredecies pro iter agentibus. thirteen for the wayfarers.
Tam pro papa quam pro rege To the Pope as to the king
bibunt omnes sine lege. they all drink without restraint.
Bibit hera, bibit herus, The mistress drinks, the master drinks,
bibit miles, bibit clerus, the soldier drinks, the priest drinks,
bibit ille, bibit illa, the man drinks, the woman drinks,
bibit servis cum ancilla, the servant drinks with the maid,
bibit velox, bibit piger, the swift man drinks, the lazy man drinks,
bibit albus, bibit niger, the white man drinks, the black man drinks,
bibit constans, bibit vagus, the settled man drinks, the wanderer drinks,
bibit rudis, bibit magnus. the stupid man drinks, the wise man drinks,
Bibit pauper et egrotus, The poor man drinks, the sick man drinks,
bibit exul et ignotus, the exile drinks, and the stranger,
bibit puer, bibit canus, the boy drinks, the old man drinks,
bibit presul et decanus, the bishop drinks, and the deacon,
bibit soror, bibit frater, the sister drinks, the brother drinks,
bibit anus, bibit mater, the old lady drinks, the mother drinks,
bibit ista, bibit ille, this man drinks, that man drinks,
bibunt centum, bibunt mille. a hundred drink, a thousand drink.
Parum sexcente nummate Six hundred pennies would hardly
durant, cum immoderate suffice, if everyone
bibunt omnes sine meta. drinks immoderately and immeasurably.
Quamvis bibant mente leta, However much they cheerfully drink
sic nos rodunt omnes gentes we are the ones whom everyone scolds,
et sic erimus egentes. and thus we are destitute.
Qui nos rodunt confundantur May those who slander us be cursed
et cum iustis non scribantur. and may their names not be written in the book of the righteous.

[Dr.Phool]

80. Looks like I picked the wrong week to quit drinking.

I'll save it up for the Browns game on Sunday.

[ozymandius]

85. But you still have smoking, sniffing glue, intravenous drugs...

One thing at a time... as the saying goes.

[Demeter]

83. OPINIONS--chacun à son goût

http://www.youtube.com/watch?v=WtTnCeuYkgI

wish I could get you a translation of this

[Demeter]

84. Another Lehman will come — and should fail too

http://blogs.reuters.com/columns/2010/09/14/another-lehman-will-come-and-should-fail-too/

...Only the next Lehman will show whether lessons have been learned. Restructured bank pay mechanisms could make excessive risk slightly less rewarding, but bankers won’t stop their boundless quest for riches. If Son of Lehman has more capital and a better match between its assets and liabilities, failure will be less likely. And if financial euthanasia becomes an option as intended, the repercussions won’t spread as far.

But authorities must remain vigilant and skeptical, over and above enforcing new rules. After all, in mid-2008, Lehman would have comfortably exceeded new Basel III capital standards.

The Fed will have to lead the way. Invested with more supervisory clout than ever, it needs to show a clear willingness to shutter failing institutions, even if it means eliminating perceived major providers of liquidity. For watchdogs insulated thinly, at best, from politics, this will be the real test. Flunking will only confirm the morally hazardous idea that the government, armed with taxpayers’ money, will always blink first.

[Demeter]

113. As Recession Bites Deeper, Obama Has Discovered People Can't Eat Hope

http://www.guardian.co.uk/commentisfree/cifamerica/2010/sep/13/recession-obama-fantasists-initiative

...Democrats should be careful what they wish for. Just because Republicans are becoming more extremist doesn't mean they can't win. Two Tea Party candidates have already been selected in safe Senate seats and five are on the ticket in tight races. Of these, two hold double-digit leads and the remaining three are in dead heats.

Indeed, the first of two certainties come November is that the Congressional Republican caucus in both houses will emerge even further to the right than it went in. For the foreseeable future, the republicanism of George Bush Jr will be understood as a period of relative moderation. The birthers and Ground-Zero mosquers who use "Muslim" as a slur and compare Obama to Hitler have broken through. Their politics may not be credible, but their potency as an electoral force certainly is.

The second is that the Democrats will emerge with less (FEWER! YOU CALL YOURSELF AN ENGLISHMAN?--DEMETER) seats than they went in with. The current prognosis is that they are likely to lose the House of Representatives and could possibly lose the Senate.

**********************************************************

The most convenient explanation for this would be to blame Republicans. The only route map they have been able to imagine for their own success has been through Obama's failure. To that end they have conducted themselves, for the most part effectively, as a solid, obstructive bloc to virtually every measure Obama has put forward, including some that they actually believe in.

But the truth is the Democrats really only have themselves to blame. For the best part of a year they had a veto-proof majority in the Senate and still boast a sizeable majority in the House. They could have passed any legislation they wanted. But what they have had in numbers they lacked in solidarity and conviction. The votes Obama went scavenging for were usually Democratic ones.

For some Democrats this was an electoral calculation that they could not get re-elected if they supported Obama's agenda. Unfortunately for them, they got their sums wrong. According to the non-partisan Cook Political Report, 23 of the 39 Democrats who voted against the healthcare bill are in seats the Republicans have a good chance of winning.

[Demeter]

114. The Hyperinflation Mirage By Mike Whitney

http://www.informationclearinghouse.info/article26355.htm

The Fed can create as much money as it likes without any risk of inflation provided the money is tucked away where no one can spend it. And this, in fact, is what the Fed has done. They have exchanged $1.7 trillion in reserves for non performing loans and mortgage-backed securities with the banks. But the banks loan book continues to shrink. In other words, the Fed has increased the money supply, but in real terms, the money supply has shrunk. Thus, the Fed's so called quantitative easing (QE) program has failed to stimulate spending or lead to a credit expansion. Had the Fed chosen to take the $1.7 trillion and bury it in a hole on the White House lawn, the effect would have been exactly the same.

The reason the government increases the money supply during a recession is to reduce unemployment, stabilize prices and increase economic activity by stimulating demand. And, increasing demand should be fairly easy. It merely requires that consumers have enough liquid reserves (cash) that they feel comfortable spending at levels that will grow the economy. Naturally, full employment helps to increase spending and, thus, strengthens demand. The government can help to speed the process along through targeted fiscal interventions. (aka--stimulus)

At present, demand is weak because working people lost $8 trillion in equity when the housing bubble burst. They also lost another $2 trillion in retirement funds from the correction in equities. That means, it will take a long time before they recover and are able to spend as they did before the crisis. Fortunately, the government is not limited in the same way as everyone else. Consumers cannot print their own money, but a sovereign government (that pays its debts in its own currency) can. The government can print as much money as it likes; it is not capital constrained. And, the government should exercise that privilege when there is a compelling reason to do so, such as, when when the output gap is wide, unemployment is soaring, the economy is sputtering, and the risks of deflation are high.

But increasing government spending also increases the deficits, which creates an opportunity to scare people about future obligations. But deficit scaremongering is politics not economics. What really adds to the deficits are the governments fixed costs (that go up during a recession) and the shortfall in revenues which dwindle because people pay less in taxes. Stimulus is just a small part of the deficits. So, the best way to reduce the deficits is to increase employment, restore consumer spending to prior levels, and grow the economy.

Keep in mind, investors vote every day as to whether they think the deficits are a problem or not (through their purchases of US Treasuries) And, every day, they vote "No"; the deficits are not a problem. The 10-Treasury is currently under 3% (2.82%) while the 2-year is a paltry .57%. The appetite for risk-free liquid assets on the part of the public is so great that they will commit their money to an investment that yields less than 3% over a 10-year period of time. Think about that. That alone should prove that hyperinflation is a mirage invented by demagogues.

The Fed's QE program has not put money in the hands of the people who will spend it and thereby lower unemployment and generate growth. It has stabilized asset prices to some extent which has helped to shore up the stock market and reduce the amount of red ink on bank balance sheets, but the real economy is still flatlining because demand remains weak.

So what was the purpose of the Fed's QE program?

At present, the banks are purchasing significant amounts of US Treasuries which push down long-term yields making it cheaper for the government to finance its deficits. It's a circular trade; the Fed provides extra reserves for the banks, and the banks, in turn, buy heaping amounts of Treasuries. One hand washes the other. But while process may suit the banks and the government, the broader economy continues to languish as the vital flow of liquidity is cut off. Remember, extra bank reserves have not increased the flow of credit to the economy nor have the Fed's low interest rates meant lower rates for consumers--who still pay 18% or higher on the credit cards. They have merely improved the situation for the banks. So, as Obama's fiscal stimulus dissipates, working people will face a tougher economic environment as the flow of liquidity is gradually reduced. Whether this tips the economy back into recession or not, no one knows. But absent additional government spending, deflationary pressures will build as the "real money supply"---not the bogus reserves the Fed has stuffed in the bank vaults--progressively shrinks.

Once again, the government has the ability and the resources to remedy this situation by increasing its budget deficits in a way that reduces unemployment, stabilizes prices, increases economic activity, and stimulates demand. The solutions are known and they work. Unfortunately, policymakers have rejected the conventional remedies because they are afraid of the political backlash. So the suffering of millions of unemployed workers and struggling homeowners will continue for the foreseeable future. Fear and ignorance are a lethal combo.

Federal Reserve chairman Ben Bernanke is a very intelligent man who knows how to read the data. He knows that disinflation is turning to outright deflation, that bond yields are falling, that unemployment is soaring, and that GDP has slipped to 1.6%. He knows that the economy is crying out for more stimulus, but he refuses act. Why? This is the point at which economics and politics intersect.

According to economist David Rosenberg, "We are currently experiencing the recession with the slowest job creation in history. And based on our prior estimates, the recession will last around 85 months before we regain the unemployment rate seen at the onset in December 2007."

So why is Bernanke sitting on his hands?

And, this is from economist Albert Edwards (via zero hedge): "One should follow the leading indicators closely. These are variously pointing either to a hard landing or, at best, a decisive slowdown. In my view we are poised to slide back into another global recession: the data is slowing sharply but, just like Japan in its Ice Age, most still touchingly believe we are soft-landing. But...already in Q2, US productivity growth fell 1.8% - the steepest fall since Q3 2006.....If we plunge back into recession, do not place too much confidence in the Central Banks having control of events."

Bernanke knows the dangers that face the economy. He knows the prospect of a double dip is real.

Finally, this is from Goldman's chief economist Jan Hatzius:

"One important reason why we expect the economy to remain weak is that the household sector is likely to deleverage its balance sheet further. This will require households and the private sector more broadly to run a large financial surplus, which will keep demand weak unless offset by substantial fiscal (and monetary) stimulus.....The still-high ratios of debt and debt service to disposable income suggest that the household sector and the private sector more broadly will need to continue running financial surpluses in coming years. Unless fiscal and monetary policy provide a strong counterweight, this is likely to imply only sluggish growth, with risks tilted to the downside." (zero hedge)

Exactly. Who doesn't know that consumers are retrenching and patching their balance sheets? The deleveraging process could take years which will divert more money away from consumption and create a drag on growth. What's needed is sustained fiscal and monetary support until the the private sector regroups and can spend at precrisis levels.

Ben Bernanke is a brilliant academic and an expert on the Great Depression. He knows what's ailing the economy and he knows how to fix it. He simply chooses not to.

[Demeter]

117. HORRIFYING VIDEOS In Case Someone Says You Couldn’t See This Coming

http://www.nakedcapitalism.com/2009/11/in-case-someone-says-you-couldnt-see-this-coming.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

[Demeter]

122. WELL, TIME TO START SOBERING UP

I'm calling that a wrap, with one last drinking song: Champagne!

http://www.youtube.com/watch?v=JgBS3ehiOas

an English version at last!

http://www.youtube.com/watch?v=R7DQR1LBaEg&feature=related

[bread_and_roses]

123. Homily for Sun eve: "Economics as if People Mattered"

http://www.commondreams.org/view/2010/09/19-0

Economics as if People Mattered, by Grace Lee Boggs
.... "Buddhist Economics" by E.F. Schumacher.

... By contrast, Buddhist economics is based on recognizing the role that Work plays in human development: "to give man (sic) a chance to utilize and develop his faculties; to enable him to overcome his ego-centeredness by joining with other people in a common task; and to bring forth the goods and services needed for a becoming existence."

Therefore, "to organize work in such a manner that it becomes meaningless, boring, stultifying, or nerve-racking for the worker would be little short of criminal; it would indicate a greater concern with goods than with people, an evil lack of compassion and a soul-destroying degree of attachment to the most primitive side of this worldly existence. Equally, to strive for leisure as an alternative to work would be considered a complete misunderstanding of one of the basic truths of human existence, namely, that work and leisure are complementary parts of the same living process and cannot be separated without destroying the joy of work and the bliss of leisure."

[Demeter]

124. To which I can only reply: AMEN!