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EmailMonday, November 9, 2009, 10:45 am, by DailyDigest
- Windfall Seen As Bank Bonuses Are Paid In Stock
- New Bill Would Keep Public In Dark About Threats To Financial System
- $300,000 Of Gold In The Palm Of My Hand
- Slouching Toward Sanity
- Zimbabwe's Economy Coming Back From The Dead
- We Rescued The Top, Left The Bottom To Fend For Itself
- Fresh Dollar Weakness
- Large Corporations Sitting On Piles Of Cash
- Franchises In A Tough Spot
- Britain And US Clash At G-20
- Spain reaches new wind record: 45.1% of Spain’s total electricity demand
- Tea Farmers struggle for survival in fields of gold
- Chickens Come Home To Roost In Backyards In America
Economy
Windfall Seen As Bank Bonuses Are Paid In Stock (M.W.)
The bonuses Wall Street received last year, billed as paltry at the time, are turning out to be among the most lucrative payouts ever. The stock payouts strike some experts as a way to simply defer windfalls into the future.
New Bill Would Keep Public In Dark About Threats To Financial System (M.W.)
Members of Congress and the general public may not be told of "potential emerging threats to the stability of the financial system," thanks to a Thursday vote by a House panel.
$300,000 Of Gold In The Palm Of My Hand (M.W.)
Below Wall Street, five stories down into the solid bedrock underneath the New York Fed, 30 feet below the level of the New York subway system and 50 feet below sea level, the New York Fed has a vault containing about $300 billion in gold bars.When you are inside, you are in a water-tight, air-tight room half the size of a football field stacked to the rafters with gold bricks weighing 27 pounds each.
Slouching Toward Sanity (M.W.)
What would the world economy look like today if we hadn't bailed out the banks?
Zimbabwe's Economy Coming Back From The Dead (M.W.)
Prices were doubling every 24 hours, a feat matched only by Hungary's hyperinflation in 1946. Schools and hospitals were shut. Confiscatory exchange policies had caused almost every mine, mill, and factory to close. Yet somehow the economy is coming back from the dead. "The fundamental change is that we have stopped printing money to cover our deficit," said Tendai Biti, the MDC's finance minister.
We Rescued The Top, Left The Bottom To Fend For Itself (M.W.)
Elizabeth Warren, the chair of the Congressional Oversight Panel charged with monitoring the bank bailout, was on 'Morning Joe' Friday morning to dig in to the newly released unemployment report.
Fresh Dollar Weakness (M.W.)
A meeting this weekend of top finance ministers failed to address China's currency, which could drive money flows away from the U.S. dollar.
Large Corporations Sitting On Piles Of Cash (M.W.)
Between Jan. 1 and Nov. 2, U.S. corporations overall raised $740.8 billion by issuing bonds, up from the $522.2 billion raised during the same period last year and almost as much as the $779.8 billion raised in 2007.
Franchises In A Tough Spot (M.W.)
To get to the root of why the U.S. is facing a jobless recovery, look no further than the state of franchising.
Britain And US Clash At G-20 (M.W.)
Gordon Brown of Britain told G-20 finance ministers that the world needed a system to force banks, not taxpayers, to cover future bailouts.
Energy
Spain reaches new wind record: 45.1% of Spain’s total electricity demand (Joemanc, Samuel A.)
Wind energy in Spain reached a new record last night, providing at its peak 45.1% of Spain’s total electricity demand – 2.1% greater than the previous record set in November last year. The Spanish Wind Energy Association said the sustained peak in wind powered electricity production proves that “wind energy is no longer marginal”. By 2020 Spain is expected to double its wind-power producing capacity from the current level of 16 gigawatts to 40 GW. “With this expected growth in capacity we could envisage wind meeting the vast majority of demand during times of peak supply by 2020,” Moccia said.
Environment
Tea Farmers struggle for survival in fields of gold (Joemanc)
The villagers of Thatarber Manihatty in south India knew they had no choice but to mortgage their small plots of farmland when they found they could not afford to bury dead relatives or send children to school without the generosity of neighbours. Six thousand feet up in the breathtaking Nilgiri hills of Tamil Nadu, hope was thin on the ground until Sumani Subramani, a 30-year-old former office clerk, drew a line in the brick-red soil.
Chickens Come Home To Roost In Backyards In America (M.W.)
A trend in backyard chicken farming is taking hold as urbanites discover how easy it is to get started.
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"Nov. 9 (Bloomberg) -- The U.S. unemployment rate may rise to a post-World War II high of 13 percent in the aftermath of the recession, said David Rosenberg, chief economist at Gluskin Sheff & Associates Inc. in Toronto.
"Nov. 9 (Bloomberg) -- Stocks and commodities rallied and the dollar plunged after the Group of 20 nations agreed to maintain measures to boost economic growth and remained silent on the U.S. currency’s weakness. Gold advanced to a record."
(Look at the number for the 52 week low and compare to today's low)
"JAMES CHANOS, THE FAMED SHORT SELLER who was among the first to foresee the collapse of Enron, recently sounded the alarm on the municipal-bond market -- in the hallowed halls of the New York Historical Society, no less.
The "cracking of state and local municipalities is coming," he predicted at a recent meeting attended by Barron's staffer Susan Witty, adding that he wouldn't touch munis."
"Distress among commercial real estate mortgages in New Jersey is intensifying, with more properties in the state going back to the lenders. Some industry insiders say a crisis may be in the works if the economy continues to falter."
"New Jersey currently has nearly $3.6 billion of distressed commercial assets, according to Real Capital Analytics, a New York-based research and consulting firm. Distressed assets include those in foreclosure or bankruptcy, have been restructured or modified, or have been taken back by the lender through foreclosure."
"NEW YORK (Reuters) - The joint venture that borrowed heavily to buy Stuyvesant Town and Peter Cooper Village in 2006 could be among the first to take advantage of changes in U.S. tax law that let borrowers seek payment relief, when it said last week that it could not keep paying interest on a $3 billion loan."
"Slammed by huge investment losses in last year's meltdown of financial markets, the nation's largest public retirement plan faces questions about its long-term ability to make good on the benefits it owes more than 1.6 million workers, retirees and their families.
All Californians have a stake in the fund's performance: If CalPERS' $200-billion portfolio comes up short, and state and local governments refuse to cut workers' benefits, the bill falls to taxpayers -- many of whom have no guaranteed pension benefits of their own.
Already, CalPERS has notified state and local government authorities that their contributions to the fund will have to rise beginning in 2011 or 2012, reflecting the steep drop in the system's assets during the markets' crash."
"Montgomery County officials, reeling from what could amount to a $500 million budget shortfall next year, have started to point fingers."
"HARTFORD -- Plummeting income tax revenues are threatening to undermine the already shaky foundations of the state budget.
This downward trend is a disconcerting development for Gov. M Jodi Rell and the legislature because the income tax represents one-third of this year's $18.6 billion budget.
"We are all very concerned about it," said Rep. Cameron C. Staples, D-New Haven, the House chairman of the tax-writing Finance, Revenue and Bonding Committee.
The income tax raised nearly $1.3 billion less than budgeted in the last fiscal year, which ended in a record $925.6 million deficit. The state government is covering that shortfall with borrowed money.
The current year is showing no signs of improvement."
"A $76 million budget deficit, a standoff between the University of Hawaii's administration and its faculty union, and fears of massive cuts to programs, departments and schools have longtime professors calling the situation at UH the worst money and morale crisis they have known.
"This is far and away the worst I've seen — I'm not exaggerating. For the first time, we are simply looking at the real possibility of damage to the whole institution," said professor David Stannard, chairman of the American studies department. He has been at UH since 1979, and his views reflected those of several colleagues."
"West Virginia officials are predicting deficits in the Medicaid program of $95 million in fiscal year 2013 and another $169 million in 2014 unless the economy improves and enrollment goes down."
"Advanta's bankruptcy comes just one week after another top small business lender, CIT Group, filed its own bankruptcy petition. Both companies were hit with a sharp rise in defaults as the recession deepened. Advanta's default rate reached 24% in September, up from 11% one year ago, according to the company's financial filings."
"U.S. citizens are joining immigrants in store parking lots
In the latest sign of the Las Vegas Valley’s economic free fall, U.S. citizens are starting to show up in the early mornings outside home improvement stores and plant nurseries across the Las Vegas Valley, jostling with illegal immigrants for a shot at a few hours of work.
Experts say the slow-starting but seemingly inexorable trend is occurring nationwide."
"Back in August of this year I did an article that showed how bad the math was with the unemployment system ( Unemployment Benefits – More Math that Just Doesn’t Work/ More Data Hiding? ). Well, the math is just getting worse… back in August the total 2009 outlays had already hit a record but were well under $60 billion. Now they are approaching $100 billion, already almost 5 times the amount paid out in the year 2000"
..........Come on, Nate! These guys have experts doing the math for the Unemployment Trust Fund!
Just a quick reminder, in case you were lacking an identity in this economy.
Captain Sheeple
"Now recasts are starting to come due for the first wave of option ARMs and there is some evidence the first wave of defaults is ahead of schedule. In a highly publicized report last September, Fitch Ratings predicted roughly $29 billion worth of loans would recast to higher monthly payments by the end of 2009 and an additional $67 billion would recast in 2010 and would not abate until 2012. Borrowers will find themselves paying an additional $1,053 on average each month. Fitch also found that many of the option ARMs taken out in 2004 and 2005 are resetting at much higher payment schedules — often to the astonishment of people who thought the low installments were fixed for at least five years. In July, about 40 percent of borrowers with option ARMs were already delinquent, and “many” of the others will start missing payments before their obligations change, according to analysts at Barclays."
"According to Retro Appraisals, 70 percent of appraisals made for mortgage financing between 2005 and 2007 were overstated and inflated. They added that mortgage brokers, real estate agents, and lenders had close contact with appraisers, and most appraisal order forms have a line item asking the borrower or agent to write down the value that was needed from the appraiser."
"With no Home Valuations Code of Conduct (HVCC) and no appraisal management companies, Retro Appraisals alleged that the entire chain of the loan process from broker to lender was geared to closing as many loans as quickly possible. Additionally, the company said lenders’ risk management was non-existent in most cases, claiming most lenders sold off their loans in a very short period of time so the risk of holding too many loans with low values on their subject properties was minimal."
.........I wonder what those resets for the overvalued properties will do to the holders of the loans??
It would be hard to imagine that the average mortgage adjustment on the option ARM loans will be $1053. a month. That amount will bring a whole new wave of foreclosures. I am in Phoenix, AZ. I am sure a lot of those loan resets will happen here.I have no idea what people will do then.
I live in a decent neighborhood and the house two doors down has five guys living there renting and the house across the street has three people renting. My neighbor two doors down the other way bought his house for $618,000 in July of 2006 and it recently appraised for $339,000. He won't be moving anywhere soon. People are on the edge.
I wanted to believe we are at the economic bottom in 2009 and skipping along the bottom, but now with the pension funds going bust and the city governments underfunded, and more mortgage defaults on the way...looks like there is stormy weather ahead in 2010.
Great article on the backyard chickens. I have 9 chickens!! Just gotta get a goose to lay a golden egg now.
http://www.evwind.es/noticias.php?id_not=2168
Had to Adjust the Sails in the Spanish WInd Link
how many percentage points is the US behind.....
http://www.evwind.es/noticias.php?id_not=2168
Had to Adjust the Sails in the Spanish WInd Link
how many percentage points is the US behind.....
Account deactivated per user's request.
What will happen if things continue on as they are? I am assuming that world governemnts will continue to print money to stop or hide economic problems, so at what point will that cease to be effective? Seems to me that once that happens everything will go downhill fast so I'm always wondering what are the warning signs of an immenent collapse.
More Peak Oil validation
http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency
Very good insight from Nate today:
http://economicedge.blogspot.com/2009/11/technical-update.html
He isn't the only one pointing out the extreme divergence between different indicators. And I love the line, "I guarantee you I have more patience than Goldman has quant computers"!
Gold production is going down and dollar production is going up... isn't there only one thing that can happen? Gold is money.
You beat me to it Sunshine, was just about to post that link.
Scary stuff, I keep hoping C.M. has got it wrong, but deep down I know we're being lied to by the very people who should be looking out for us. It'll be interesting to see what happens to the price of oil!
BTW I'm really interested in setting up a shop selling all the niche eco products such as cargo bikes, they'll be in every high street soon, it'd be good to get ahead of the game. Is there anyone out there who would like to get involved ? (UK southeast)