The Housing Bubble

Congress Is the Drunk at the Fed’s Punch Bowl: Roger Lowenstein

(Bloomberg) — The U.S. Congress wants to ride herd over the Federal Reserve. It wants the power to scrutinize the Fed’s interest-rate decisions. It wants to look into how the Fed decides to lend to individual banks.

Like a lot of their constituents, legislators are angry at the Fed’s handling of the financial crisis. They want to know why the Fed permitted such a huge financial bubble to develop — and why, when it burst, it bailed out so many banks.

Many of the criticisms of the Fed are valid. Former Fed chief Alan Greenspan, who oversaw the economy during the boom years, has admitted he placed too much faith in the ability of bankers to monitor their risks. Ben Bernanke, the current chairman, has been overhauling regulatory policy in the hope of preventing a repeat.

But here’s the thing. The changes that Congress is urging would make things worse. If anything, the Fed has been too sensitive to public opinion. And in the recent past, it was too eager to satisfy the public with an easy-interest-rate and easy- mortgage policy.

Last week, when Bernanke testified before the Senate Banking Committee, which is deliberating whether to confirm him for a second term, senators let him have it. Jim Bunning of Kentucky, more famous for throwing a perfect game in his baseball career than for his central banking expertise, called Bernanke “the definition of a moral hazard.” Bernard Sanders of Vermont, a state with fewer bankers than cows, is vowing to block Bernanke’s reconfirmation.

Serious Threat

Bernanke will surely be approved. But the threat to rein in the Fed’s power is serious. The Fed was created as an independent agency precisely so it could make politically unpopular decisions. A Bernie Sanders is unlikely to push for higher interest rates when they are needed. And history shows that political meddling in the Fed has led to serious problems for the nation’s economy.

William McChesney Martin Jr., who headed the Fed longer than anyone else, famously declared that the role of the chairman is “to take away the punch bowl just as the party gets going.”

Appointed by President Harry Truman, Martin served from 1951 to 1970. Even he succumbed to pressure. Toward the end of his tenure, he knuckled under to Lyndon B. Johnson and failed to raise interest rates as inflation was heating up. Johnson wanted cheap money to finance his domestic agenda as well as the war in Vietnam.

Japan Releases Stimulus Package as Recovery Weakens (Update3)

(Bloomberg) — The Japanese government unveiled a 7.2 trillion yen ($81 billion) economic stimulus package amid signs the recovery and Prime Minister Yukio Hatoyama’s popularity are waning.

Hatoyama’s first stimulus plan includes 3.5 trillion yen to help regions, 600 billion yen for employment and 800 billion yen on environmental initiatives, the Cabinet said today in a statement in Tokyo. The measures had been delayed because of haggling within the coalition government.

The package came a week after the Bank of Japan released a 10 trillion yen credit program in response to government calls for it to counter deflation and a surging yen. Analysts said today’s measures may provide at least a temporary boost for the world’s second-largest economy, which emerged from its worst postwar recession in the second quarter.

“I give it 50 points out of 100,” said Masaaki Kanno, chief economist in Tokyo at JPMorgan Securities Japan Co. and a former central bank official. The package “will be effective in easing strains on an economy struggling with deflation and a lack of demand, but it won’t boost growth potential in the medium to long term.”

79% Now Favor Auditing the Fed

Federal Reserve Board Chairman Ben Bernanke on Thursday voiced his opposition to legislation calling for regular audits of the Fed’s monetary policies, but 79% of Americans think auditing the Fed is a good idea.

A new Rasmussen Reports national telephone survey shows that just seven percent (7%) of adults oppose auditing the Federal Reserve and making those results available to the public. Fourteen percent (14%) are not sure.

The new findings mark a four-point increase in support for auditing the Fed from July . The audit - to be conducted by the General Accounting Office, Congress’ investigative agency - was first proposed by Republican Congressman Ron Paul and is now part of the House’s version of a bill putting more regulatory controls on the financial sector. The Senate is more skeptical of the audit proposal.

But Bernanke himself is under the gun this week as Senate confirmation hearings began on his nomination by the president to serve a second four-year term as Fed chairman. Just 21% of Americans favor Bernanke’s reappointment, while 41% are opposed .

Yahoo Sells Your Account Info to The Government - Surprised?

After earlier reports this week that Yahoo had blocked an FOIA Freedom of Information release of its “law enforcement and intelligence price list”, someone helpfully provided a copy of the Yahoo company’s spying guide to the whistleblower web site Cryptome.org.

The 17-page guide, which Yahoo has tried to suppress via legal letters to the Cryptome.org site run by freedom of information champion John Young, describes Yahoo’s policies on keeping the data of Yahoo Email and Yahoo Groups users, as well as the surveillance and spying capabilities it can give to the U.S. government and its agencies.

The Yahoo document is a price list for these spying services and has already resulted in many people closing down their accounts in protest. However, closing a Yahoo account is not as easy as one might expect: users have reported great difficulty in finding the link to delete their account, and, Yahoo will still keep data for another 90 days.

Threat Level reported Tuesday that muckraker and Indiana University graduate student Christopher Soghoian had asked all agencies within the Department of Justice, under a Freedom of Information Act (FOIA) request, to provide him with a copy of the pricing list supplied by telecoms and internet service providers for the surveillance services they offer government agencies. But before the agencies could provide the data, Verizon and Yahoo intervened and filed an objection on grounds that the information was proprietary and that the companies would be ridiculed and publicly shamed were their surveillance price sheets made public.

Yahoo wrote in its objection letter that if its pricing information were disclosed to Soghoian, he would use it “to ’shame’ Yahoo! and other companies — and to ’shock’ their customers.”

“Therefore, release of Yahoo!’s information is reasonably likely to lead to impairment of its reputation for protection of user privacy and security, which is a competitive disadvantage for technology companies,” the company added.

The price list that Yahoo tried to prevent the government from releasing to Soghoian appears in one small paragraph in the 17-page leaked document. According to this list, Yahoo charges the government about $30 to $40 for the contents, including e-mail, of a subscriber’s account. It charges $40 to $80 for the contents of a Yahoo group.

Facebook, Twitter, MySpace and other U.S. “social networking” sites are at minimum providing information in similar fashion to U.S. agencies, and in some cases have also received substantial funding by U.S. government related entities as a most efficient and cost-effective means of spying on their users around the world.

Expect the MSM to focus on the Government managing “expectations”, rather than the Government producing “results” managing the economy:

NEW YORK (AP) — Consumers are expected to further improve their credit management in 2010, but unemployment will hamper the efforts of many Americans to make their credit card payments on time.

Credit card delinquencies are expected to continue falling through next year, but at a much slower rate than in the past two years, according to a prediction from credit reporting agency TransUnion due out Tuesday.

By the end of next year, TransUnion expects 90-day delinquencies on credit cards issued by banks — mostly those bearing MasterCard and Visa logos — to drop to 1.04 percent.

The rate was 1.1 percent in the third quarter of 2009 and is expected to fall to 1.07 percent by the end of this year.

TransUnion uses payments that are three months behind as its predictor of default, because it would be so difficult for struggling consumers to make up those payments.

While the decline predicted for next year is a positive sign, it would be just a fraction of the drop seen over the past two years. Delinquencies peaked in the third quarter of 2006, at 1.42 percent.

TransUnion culls its figures from data found in more than 27 million individual consumer credit reports.

Ezra Becker, director of consulting and strategy in TransUnion’s financial services group, noted that delinquencies lag behind other statistics like the jobless rate. Until more people are back at work, he said, there won’t be any dramatic improvements in payments being made on time.

Arizona, one of the states hardest hit by the mortgage crisis and the recession, is the only state expected to see delinquencies rise next year, to 1.34 percent from a forecast of 1.33 percent for 2009’s fourth quarter. California, Florida, and Nevada — the other states that felt the subprime meltdown the most — are expected to remain on top of the delinquency statistics. North Dakota and South Dakota will most likely continue to have the lowest delinquency rates.

Becker said the credit card reforms that take effect in February will have a “material impact on the credit card industry” next year. He expects it to be harder to access consumer credit as banks keep a tight rein on lending, but predicts new types of cards and other new products will become available as the industry adapts to the rules.

The new regulations “will force lenders to be more innovative in the products that they offer and how they manage customers,” he said.

Nice to see how the crisis has contributed to more bank consolidation and more risk.

I’ve said before and I’ll say it again - I honestly don’t think this bubble and even the subsequent crash were an accident. The big banks are making out like bandits, and taking out the competition in the process. Note the graph in the article showing how the top 10 banks in the world have seen their market share grow by a quite huge amount in just the past year - from 60% to 70%. That’s just in two years’ time.

Nice to see that house flipping is making a comeback.

SCOTTSDALE, Ariz. — Four years after the collapse of the U.S. housing bubble, flipping homes is back in fashion.

The minimum bid, as set by a unit of Citigroup Inc., which had a $1.3 million mortgage on the home, was $379,900. After several minutes of bidding among investors and their representatives, some wearing shorts and flip-flops, Mr. Mirmelli won the home for $486,300. A week later, he agreed to sell it for $690,000 to a woman who moved in this month.

Cripes.

Copenhagen’s Hidden Agenda: The Multibillion Trade in Carbon Derivatives

Architect of Credit Default Swaps behind the Development of “Carbon Derivatives”

by Washington’s Blog

Bloomberg notes that the carbon trading scheme will be centered around derivatives.

The banks are preparing to do with carbon what they’ve done before: design and market derivatives contracts that will help client companies hedge their price risk over the long term. They’re also ready to sell carbon-related financial products to outside investors.

[Blythe] Masters says banks must be allowed to lead the way if a mandatory carbon-trading system is going to help save the planet at the lowest possible cost. And derivatives related to carbon must be part of the mix, she says. Derivatives are securities whose value is derived from the value of an underlying commodity — in this case, CO2 and other greenhouse gases…

Who is Blythe Masters?

She is the JP Morgan employee who invented credit default swaps, and is now heading JPM’s carbon trading efforts. As Bloomberg notes, Masters, 40, oversees the New York bank’s environmental businesses as the firm’s global head of commodities…
As a young London banker in the early 1990s, Masters was part of JPMorgan’s team developing ideas for transferring risk to third parties. She went on to manage credit risk for JPMorgan’s investment bank.

Among the credit derivatives that grew from the bank’s early efforts was the credit-default swap.

Some in congress are fighting against carbon derivatives:

“People are going to be cutting up carbon futures, and we’ll be in trouble,” says Maria Cantwell, a Democratic senator from Washington state. “You can’t stay ahead of the next tool they’re going to create.”

Cantwell, 51, proposed in November that U.S. state governments be given the right to ban unregulated financial products. “The derivatives market has done so much damage to our economy and is nothing more than a very-high-stakes casino — except that casinos have to abide by regulations,” she wrote in a press release…

Even George Soros, the billionaire hedge fund operator, says money managers would find ways to manipulate cap-and-trade markets. “The system can be gamed,” Soros, 79, remarked at a London School of Economics seminar in July. “That’s why financial types like me like it — because there are financial opportunities”…

Hedge fund manager Michael Masters, founder of Masters Capital Management LLC, based in St. Croix, U.S. Virgin Islands [and unrelated to Blythe Masters] says speculators will end up controlling U.S. carbon prices, and their participation could trigger the same type of boom-and-bust cycles that have buffeted other commodities…
The hedge fund manager says that banks will attempt to inflate the carbon market by recruiting investors from hedge funds and pension funds.
“Wall Street is going to sell it as an investment product to people that have nothing to do with carbon,” he says. “Then suddenly investment managers are dominating the asset class, and nothing is related to actual supply and demand. We have seen this movie before.”

Many environmentalists are opposed to cap and trade as well. For example:

Michelle Chan, a senior policy analyst in San Francisco for Friends of the Earth, isn’t convinced.

“Should we really create a new $2 trillion market when we haven’t yet finished the job of revamping and testing new financial regulation?” she asks. Chan says that, given their recent history, the banks’ ability to turn climate change into a new commodities market should be curbed…

“What we have just been woken up to in the credit crisis — to a jarring and shocking degree — is what happens in the real world,” she says…

Friends of the Earth’s Chan is working hard to prevent the banks from adding carbon to their repertoire. She titled a March FOE report “Subprime Carbon?” In testimony on Capitol Hill, she warned, “Wall Street won’t just be brokering in plain carbon derivatives — they’ll get creative.”

All I want for Christmas are two good comps.

At a dinner party on October 19, 2007 I was pressed for my opinion on where house prices were headed for the preferred class of local housing amongst those in attendance - condos. My answer, “I think we need to be prepared for a drop of fifty percent or more” - was met with chuckles and gasps of “never”, “no”, “not here” - the typical stuff.

That was a way point in my little corner of this epic adventure. A few weeks later another way point came when one of those in attendance sold his unit for $125,000. As it turned out that sale marked the peak as far as I was concerned since his unit was in the same building and same tier as my own. He promptly plowed his gains into a bigger unit, but that’s another story.

Fast forward to yesterday, December 7, 2009, when I learned of the closed sale on another unit in the same tier as mentioned above. Price? $60,000. Other direct comparisons in my neighborhood and my building are just as steep and confirm that the above example is NOT an outlier or aberration.

So there it is, the housing bust in my lap. In trying to give a fair reckoning of my own situation I estimate that my unit is now down 30% to 40% from my summer 2003 purchase price and 50% down from the October 2007 peak transaction. Prices seem headed for the pre-bubble levels of circa 1995. That would mean 60% to 70% off peak.

This information is invaluable to me as it’s concrete evidence of what is occurring and no one can dispute that it’s a “different neighborhood” or “different building” or even a “different unit”. It’ll probably take a while to filter through the collective psyche of my peer group, but those I’ve told so far have had their faces turn ” a whiter shade of pale”.

Bank of America: 2/3 of Borrowers May Lose Government Mods. ~ CNBC

Tomorrow the House Financial Services Committee, under the leadership of Chmn. Barney Frank, will grill mortgage servicers as members examine the “response to the mortgage foreclosure crisis.” This is all about how banks are converting all those trial modifications under the government’s Home Affordable Modification Program into permanent modifications.

Today, as a little precursor, the servicers were called over to Treasury for some browbeating and sandwiches, sorry, “to discuss the urgent need to convert eligible homeowners in trial modifications to permanent modifications,” according to a Treasury spokesperson.

After the meeting, I sat down with Jack Schakett, of Bank of America He used to be chief of operations at Countrywide, which B of A inhaled after the crash of the banking system as we know it. Now Mr. Schakett is “credit loss mitigation strategies executive” at B of A.

Mr. Schakett told me that of the 65 thousand trial modifications set to expire Dec. 31st with B of A, a full two thirds of the borrowers, while current on their payments, have not submitted the full documentation required to turn a trial mod permanent under the HAMP guidelines.

“We don’t really know the major reason why the customers are not returning the documentation,” Schakett claims. Well I can tell you why (and I’m sure he knows this too). The trial modification process only requires oral verification of income to begin, but to go permanent, you need to prove your income, submit your tax returns, and basically come clean with all your finances. I’m guessing a lot of folks who took out their initial loans with false or non-existent documentation, aren’t eager to let the government know that.

There’s a house going up for auction Saturday. Cape cod, in a good neighborhood and in the school district I want to stay in.

Original owner - little old lady - died a year ago. Her family was very distraught and spent the last year going through her items and, I guess, deciding what to do. Looks like they went auction route (why would someone do that as opposed to putting on the market?).

The general rules of the auction are: Inspection allowed 1 hour prior to auction; Winning bidder will need to have $5000 cash or certified check that day; 10% of final price to be paid to auctioneer. I feel like this is waaaaaay over my head. I asked my realtor if he had any experience in house auctions and he does not - so no help.

Does anyone have any insight to share?

Global Warming: ‘Fixing the Climate Data Around the Policy’
The Multibillion-Dollar carbon-trading System

The carbon-trading system is a multibillion money-making bonanza for the financial establishment. The stakes are extremely high and the various lobby groups on behalf of Wall Street have already positioned themselves.

According to a recent report, “the carbon market could become double the size of the vast oil market, according to the new breed of City players who trade greenhouse gas emissions through the EU’s emissions trading scheme… The speed of that growth will depend on whether the Copenhagen summit gives a go-ahead for a low-carbon economy, but Ager says whatever happens schemes such as the ETS will expand around the globe.” (Terry Macalister, Carbon trading could be worth twice that of oil in next decade, The Guardian, 28 November 2009)

The large financial conglomerates, involved in derivative trade, including JP Morgan Chase, Bank America Merrill Lynch, Barclay’s, Citi Bank, Nomura, Société Générale, Morgan Stanley and Goldman Sachs are actively involved in carbon trading. (FACTBOX: Investment banks in carbon trading | Reuters, 14 September 2009)

The legitimacy of the carbon-trading system rests on the legitimacy of the Global-Warming Consensus, which views CO2 emissions as the single threat to the environment. And for Wall Street the carbon-trading system is a convenient and secure money-making safety-net, allowing for the transfer of billions of dollars into the pockets of a handful of conglomerates.

http://www.lewrockwell.com/orig10/chossudovsky2.1.1.html

Bank of America: 2/3 of Borrowers May Lose Government Mods.
Diana Olick ~ CNBC Real Estate

Tomorrow the House Financial Services Committee, under the leadership of Chmn. Barney Frank, will grill mortgage servicers as members examine the “response to the mortgage foreclosure crisis.” This is all about how banks are converting all those trial modifications under the government’s Home Affordable Modification Program into permanent modifications.

Today, as a little precursor, the servicers were called over to Treasury for some browbeating and sandwiches, sorry, “to discuss the urgent need to convert eligible homeowners in trial modifications to permanent modifications,” according to a Treasury spokesperson.

After the meeting, I sat down with Jack Schakett, of Bank of America. He used to be chief of operations at Countrywide, which B of A inhaled after the crash of the banking system as we know it. Now Mr. Schakett is “credit loss mitigation strategies executive” at B of A.

Mr. Schakett told me that of the 65 thousand trial modifications set to expire Dec. 31st with B of A, a full two thirds of the borrowers, while current on their payments, have not submitted the full documentation required to turn a trial mod permanent under the HAMP guidelines.

“We don’t really know the major reason why the customers are not returning the documentation,” Schakett claims. Well I can tell you why (and I’m sure he knows this too). The trial modification process only requires oral verification of income to begin, but to go permanent, you need to prove your income, submit your tax returns, and basically come clean with all your finances. I’m guessing a lot of folks who took out their initial loans with false or non-existent documentation, aren’t eager to let the government know that.

Board to Propose More Flexible Accounting Rules for Banks.

Facing political pressure to abandon “fair value” accounting for banks, the chairman of the board that sets American accounting standards will call Tuesday for the “decoupling” of bank capital rules from normal accounting standards.

His proposal would encourage bank regulators to make adjustments as they determine whether banks have adequate capital while still allowing investors to see the current fair value — often the market value — of bank loans and other assets.

In the prepared text of a speech planned for a conference in Washington, Robert H. Herz, the chairman of the Financial Accounting Standards Board, called on bank regulators to use their own judgment in allowing banks to move away from Generally Accepted Accounting Principles, or GAAP, which his board sets.

“Handcuffing regulators to GAAP or distorting GAAP to always fit the needs of regulators is inconsistent with the different purposes of financial reporting and prudential regulation,” Mr. Herz said in the prepared text.

We have the wrong mix these days .

What do I mean by this ?

Examples :

(1) We mix legal with illegal labor in this country .
(2)We mix American labor with outsourced labor and competition with
slave labor World wide .
(3)Wall Street will mix unregulated systems of investment (gambling/high leverage )with regulated systems of gambling .
(4) Health care Industry mixes government funding(Medicare ) with Private Health Company monopolies tied to employers .
(5) We mix no usury laws with consumer protection laws rendering
protection for consumers void because they can still gouge .
(6) Politicians mix justice with lack of justice rendering Law and Order
a joke .
(7) Politicians mix contract law with retroactive null and void contract law ,rendering Contract Law something meaningless .
(8) Powers mix transparency with lack of transparency rendering any
transparency silly because the hidden facts change all facts .

One thing that enables the Powers to thrive is that whatever meaningful reform that comes on the table is undermined by the mix that won’t fix the problems that enables the Power Elite to continue with the same old games . The great middle class and upper middle class has no more to fleece ,but that doesn’t stop the POWERS from wanting to transfer their mistakes to this group that can no longer prosper under
the Corrupt rigged systems of a stacked deck in favor of the Fat Cats .

What happened to the HBB’s pet troll? Is it that we weren’t feeding him enough?

Cramdown returns to Congress…

From Mandelman Matters. Warning, this blog has a lib bias, which I tried to filter out. But this blog post has some good info, and a link to the actual amendment.

Amendment Allowing Judges to Modify Mortgages to be Included in H.R. 4173 – Wall Street Reform and Consumer Protection Act

(Mandelman) An amendment allowing judges to modify mortgages on primary residences for homeowners in bankruptcy will finally find a home as part of the Wall Street Reform and Consumer Protection Act (H.R. 4173).

The amendment, which is being offered by Representatives Conyers (D, MI), Turner (R, OH), Lofgren (D, CA), Marshall (D, GA), Cohen (D, TN), Miller (D, NC), Nadler (D, NY), Delahunt (D, MA) and Waters (D, CA), is potentially the best news homeowners and our economy have had in quite some time.

The amendment is essentially the same as H.R. 1106, a bill passed by the House on March 5, 2009, by a vote of 234-191, but subsequently defeated in the Senate by a vote of 51-45.

Okay, so what are we talking about? We’re talking about a reform to the bankruptcy code that will allow judges to modify a mortgage on a homeowner’s primary residence so they can keep paying for it, as opposed to the home being foreclosed on, and therefore serving to lower the value of all the other homes in the neighborhood. Bankruptcy judges are already allowed to modify just about any other type of loan, and this new rule would expand that power to primary residences. Seems pretty straight forward, doesn’t it?

And here’s the real truth of the matter: If judges are allowed to modify mortgages in bankruptcy, they’d likely never be given the chance… the banks would modify the loans themselves, again… like they’re supposed to, remember.

H.R. 4173, the Wall Street Reform and Consumer Protection Act will be considered by the full House of Representatives beginning this Wednesday, December 9th.
——–

I’ll post the linky in a moment.

The environmental wackos at the EPA seem hell bent on driving a final stake through the heart of the U.S. economy. At the culmination of three decades of environmental extremism, they just might succeed in their mission.

EPA CO2 Decision Cheered And Jeered
December 8, 2009 7:54 a.m. EST
David Goodhue - AHN Reporter

Washington, DC (AHN) - The U.S. Environmental Protection Agency declared carbon dioxide and other greenhouse gases dangerous to the public health, a move that could let the Obama administration regulate CO2 even if a measure to do so in Congress fails.

The move was also seen as a signal that the Obama administration takes climate change seriously as world nations meet in Copenhagen to discuss efforts to reduce emissions of certain gases that many scientists say are responsible for global warming.

The EPA said in a statement that greenhouse gases “are the primary driver of climate change, which can lead to hotter, longer heat waves that threaten the health of the sick, poor or elderly; increase ground-level ozone pollution linked to asthma and other respiratory illnesses; as well as other threats to the health and welfare of Americans.”

Industry groups and those skeptical of the science behind the theory of climate change were quick to criticize the decision, especially in light of the historical economic recession and the leak of e-mails that suggest some climate change data may have been manipulated.

“This action poses a threat to every American family and business it leads to the regulation of greenhouse gases under the Clean Air Act,” American Petroleum Institute President Jack Gerard said in a statement. “It could chill job growth and delay business expansion.”

Gerard questioned the timing of the EPA decision.

“There was no compelling deadline that forced EPA’s hand on this decision. It is a decision that is clearly politically motivated to coincide with the start of the Copenhagen climate summit,” he said.
…

The credit crunch phase of the financial panic seems to be morphing into the sovereign debt phase. And Uncle Buck is still smiling…

Currencies

Dec. 8, 2009, 9:53 a.m. EST

Dollar up as credit concerns weigh on stocks
Moody’s warning casts cloud over British pound

By Deborah Levine & William L. Watts, MarketWatch

NEW YORK (MarketWatch) — The U.S. dollar gained versus the euro, British pound, Canadian dollar and other major currencies on Tuesday, as worries about credit in Greece and Dubai weighed on equities and helped the dollar extend gains that began Friday.
…

During lunch, one of my coworkers said:
“I am not ready to drop the price yet; I am not giving my house away”

Oh this has to hurt. From todays Wash Post

Vornado Realty Trust has halted plans to sell an 8.6 acre tract of land in Arlington (the property is in the Pentagon area). An undisclosed purchaser forfeited a $27 million deposit. Vornado will record the $27m as income, and also write down the value of the land from $108m to $83m

The nice thing about a parabolic runup in gold prices is that the dollar can steadily strengthen on each one percent drop from the temporarily high plateau. In other words, a gold bubble is very consistent with a strong dollar policy.

By Ken Sweet
FOXBusiness
Credit rating agency Moody’s (MCO) said Tuesday that the United States, along with 16 other countries, could lose their AAA credit rating if fiscal deficits and heavy debts are not effectively managed.

While Moody’s analysts emphasized that the United States’ AAA rating is not under immediate threat, it did say the rating could be downgraded in 2013 if the fiscal position does not improve.

“AAA governments with stretched balance sheets will find themselves under pressure to announce credible fiscal plans and — if markets start losing patience — to start implementing them,” said Pierre Cailleteau, managing director of Moody’s Sovereign Risk Group, in a statement.

The AAA credit rating of the United States is both a point of pride and financial importance. If the U.S. were to lose its AAA credit rating, even by one notch, it would significantly increase the government’s cost of borrowing.

Moody’s said that the biggest issues for the U.S. and other AAA-rated countries will be the ability to have sustained economic growth coming out of this recession while also reducing fiscal deficits. The U.S recorded a record $1.42 trillion national debt for 2009, which raised the total amount of debt held as a percentage of the nation’s GDP to 53.8%, according to the Congressional Budget Office.

The U.S.’s debt as a percentage of GDP is expected to rise to 67% by 2018, the CBO said.

According to Moody’s, the U.S. and other major AAA-rated countries are not at risk and retain the “characteristics necessary for a AAA rating,” but have “lost altitude” in the AAA space.

Austan Goolsbee, a member of the President’s Council of Economic Advisers, disputed Moody’s report, saying that “it’s rather obvious that the U.S. government is not in danger of default.”

“The deficit in the short run is big because we confront the worst economic crisis since 1929,” he said. “In the medium run, the fiscal situation is dramatically better and we need to have fiscal responsibility, but the argument that we’re going to be a higher risk of default I find close to absurd.”

Report: Homeless population in Norfolk increases 15 percent.

In the past year, Norfolk’s homeless population has grown faster than in any of the other two dozen cities surveyed in a national assessment of homelessness and hunger.

According to the report, released by the U.S. Conference of Mayors this morning, Norfolk saw a 15 percent increase in its overall homeless population, and a 32 percent increase in the number of people requesting emergency food assistance.

It was the only Hampton Roads city to be surveyed by the study, which asked 27 cities – including Boston, Chicago, Los Angeles, Detroit and Miami – to self-report data from October 2008 to September 2009. According to the report, during that time Norfolk saw the greatest percentage increase of any of the cities in the numbers of individuals who were homeless. Norfolk also recorded a 7 percent increase in homeless families.

Memo: Goldman Sachs Christmas, er… Holiday Party.

Black Tie only: Pick your tux and gown up inside the door (wear “street clothes” while approching).

Secret-Santa gifts are to be restricted to a $100 million maximum to avoid accusations of lavishness.

Fun for All: Bobbing for bailouts, Pin the tail on Barney, Guess Timmy’s Taxes, and an auction where an actual Senator will be sold for charity!

Bonuses and merriment for all!

anyone care to add anything…?

AARP will never talk about this fatal flaw in Social Security/Medicare funding:

“When revenues flow into the four Social Security and Medicare trust funds, the money is instantly handed over to the Treasury, which issues non-marketable long-term IOU’s to the trust funds. These IOU’s are listed as assets by the funds. But, through the wonders of government accounting, they are not listed as liabilities on the government’s on-budget budget. They are liabilities only on the off-budget budget, which most Americans are unaware of. This chicanery has been going on ever since the Johnson Administration (Lyndon’s, not Andrew’s).”

Social Security Going Bust.

Congress must either raise the FICA tax rate in 2010 or increase the earnings ceiling to keep the Social Security game afloat.

Gary North puts it this way:

“We are floating down the fiscal river of no return. We are moving faster and faster. Some of us can hear the falls ahead. The sound gets louder and louder. But our companions on board say, ‘Let’s party!’ They head for the dining room. After that, they will head for the slot machines.

“Americans respond favorably to these words: ‘Free’ and ‘all you can eat.’ That is what politicians promise.

“Either the falls will get us (deflationary depression) or else an explosion of the overheated engine will (hyperinflation). Our companions are still in the dining room or heading toward the slot machines. You and I should begin to move toward the lifeboats.”

Anyone still want to have a debate about “deflation”?

BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)

American Express Zync:

“Here’s the pitch: With a charge card like the American Express Green, Gold or Platinum card, you generally have to pay your balance in full each month. As a result, you don’t run up any interest charges. Plus, there are no overdraft fees, as there can be with debit cards. Finally, charge cards allow you to build a credit history, while debit cards don’t.

Those old-fashioned cards, however, don’t attract many young people. So today Amex introduced the Zync card, a charge card aimed at people in their 20s.”

NYT, By RON LIEBER Dec 8th

Dangerous Blizzard Lashes Plains, Midwest.
Accuweather

A major storm dumped up to 3-4 feet of snow in the mountains of California on Monday before ravaging much of the Four Corners with near-blizzard conditions overnight. The storm will move on as an all-out dangerous and disruptive blizzard with high winds, fierce cold and paralyzing snow from the central Plains to the Upper Midwest by later today and tonight. The storm will affect travel from Denver to Chicago and many other areas of the nation as the “December to remember” gets into full swing. The worst lake-effect snow event will follow the storm, burying some communities barely brushed by the storm itself.

I’ll show John & Cindy McSame, if they can have x7 homes, by golly, so can I…you betcha!

I really miss being Governor of Alaska, I’m so sorry I was “forced to quit”…but at least I have the time & skills to write a book…

Palin/Jeb lll 2012!

Is she safe? Tomatoes tossed at Sarah Palin on book tour:
By Marjorie Kehe CSM Dec 8th 2009

“…So far, “Going Rogue” has sold more than 1,000,000 copies and has now been on top of the New York Times bestseller list for two weeks. More than 700,000 copies were sold in the first week, putting Palin ahead of both President Obama, whose 2006 book “The Audacity of Hope” sold only 100,000 copies in its first week of release, and Hillary Clinton, whose “Living History” sold about 600,000 copies in 200″

“Palin this week characterized herself as “an everyday, working-class American” who knows how it feels when the stock market takes a hit.

“The Palins’ total income last year was split almost evenly between Sarah Palin’s white-collar job and her husband’s blue-collar work. Sarah Palin’s salary as governor was $125,000; Todd Palin took in $46,790 as a part-time oil production operator for BP Alaska in Prudhoe Bay, plus $46,265 in commercial fishing income and $10,500 in Iron Dog snowmachine race winnings. These figures do not include nearly $17,000 in per diem payments Palin received for 312 nights spent in her own home since she was elected governor; she also has received $43,490 to cover travel costs for her husband and children.

In addition, each member of the Palin family received $1,654 in state oil royalties paid to all Alaskans.”

Anyone know the whereabouts of the Iraqi “shoe-thrower” ?

Say it ain’t so! Of course their debt ‘problems’ are going to swell, the old domino’s just warming up.

Dubai’s Debt Problems May Swell, Morgan Stanley Says.

Dec. 8 (Bloomberg) — Debt restructuring by Dubai state-run companies may almost double to $46.7 billion as more of the emirate’s businesses could need help making payments, Morgan Stanley said.

Dubai Holding LLC, Dubai Holding Commercial Operations Group LLC, Borse Dubai Ltd. and Dubai Sukuk Center Ltd. may join Dubai World in restructuring debt, Morgan Stanley analysts Mohamed W. Jaber and Paolo Batori wrote in a report. Government- controlled Dubai World said last week that it’s in talks to renegotiate $26 billion of loans.

It’s likely that other state companies will “announce debt restructuring plans over the near term,” Jaber and Batori wrote. “We believe that a haircut on the external debt at risk in the area of 40-50 percent is necessary to have a notable long-term favorable impact on public debt dynamics.”

Islamic bonds issued by Nakheel PJSC, Dubai World’s property unit, that mature Dec. 14 fell to 51.5 cents on the dollar from 53 cents yesterday, heading for the lowest closing price on record, according to Citigroup Inc. prices.

Who is Blythe Masters?

She is the JP Morgan employee who invented credit default swaps, and is now heading JPM’s carbon trading efforts. As Bloomberg notes (this and all remaining quotes are from the above-linked Bloomberg article):

Masters, 40, oversees the New York bank’s environmental businesses as the firm’s global head of commodities…
As a young London banker in the early 1990s, Masters was part of JPMorgan’s team developing ideas for transferring risk to third parties. She went on to manage credit risk for JPMorgan’s investment bank.

Among the credit derivatives that grew from the bank’s early efforts was the credit-default swap.

Some in congress are fighting against carbon derivatives:

“People are going to be cutting up carbon futures, and we’ll be in trouble,” says Maria Cantwell, a Democratic senator from Washington state. “You can’t stay ahead of the next tool they’re going to create.”

http://www.nakedcapitalism.com/2009/12/guest-post-woman-who-invented-credit-default-swaps-is-one-of-the-key-architects-of-carbon-derivatives-which-would-be-at-the-very-center-of-cap-and-trade.html

Neal Boortz:

“[The Social Security/Medicare debt we're piling up on posterity] won’t matter a bit to a huge percentage of Americans. As I’ve said before, we have three basic classes of people in our society. There are the producers that create the wealth. Then there are the moochers that seek to consume the wealth created by the producers; and finally we have the looters who seize the wealth from the producers to transfer to the moochers in exchange for votes … which is the same thing as saying ‘in exchange for power.’

“There are tens of millions of Americans out there right now who do not give a flying fornication what sort of debt we’re piling up for future generations of American to pay. They’re not going to be around to help pay that debt off, so it means nothing to them. What they do so earnestly care about is their free ride. They can’t give you one good logical reason why anyone other than themselves should be responsible for their health care, but as long as the Democrats are willing to relieve them of that burdensome responsibility, they’re more than willing to go along. Too many of these people it’s just more money for iPhones and PlayStations.

“This country is being killed by the moochers and the looters who pander to them.”

“Coffee May Reduce Risk of Deadly Prostate Cancer ”

URL: http://www.bloomberg.com/apps/news?pid=20601124&sid=alAhmT2SZ8Yg

excerpt: “In research involving 50,000 men over 20 years, scientists led by Kathryn Wilson at Harvard’s Channing Laboratory found that the 5 percent of men who drank 6 or more cups a day had a 60 percent lower risk of developing the advanced form of the disease than those who didn’t consume any. ”

I knew it! The Elixer of Health!

excerpt: “People shouldn’t start changing their coffee consumption based on one study,” Wilson said in a phone interview on Dec. 5. “It could be chance, and we really need to see whether it pans out in other studies.”

Sure they should! I have a LARGE CUP of espresso every morning. No, no wimpy espresso shots for me. I mean a LARGE CUP. Yummers!

Roidy
P.S. I stop the heavy vibrations at just pass two in the afternoon most days.

I’m sure the folks at the Brookings Institution were aw struck by Barry’s ability to read aloud. Not to mention his vast economic understanding. At some point the whiny Prez. is going to need to get some new writers.

New Obama plans: ’spend our way out’ of downturn
Obama outlines new stimulus and jobs plan, says US must still ’spend our way out’ of recession.

WASHINGTON (AP) — President Barack Obama outlined new multibillion-dollar stimulus and jobs proposals Tuesday, saying the nation must continue to “spend our way out of this recession” until more Americans are back at work.

Without giving a price tag, Obama proposed a package of new spending for highway, bridge and other infrastructure projects, deeper tax breaks for small businesses and tax incentives to encourage people to make their homes more energy efficient.

“We avoided the depression many feared,” Obama said in a speech at the Brookings Institution, a Washington think tank. But, he added, “Our work is far from done.”

For the third time in a week, Obama sought to focus on job creation, noting that the unemployment rate was still at 10 percent in November, though down slightly from its 10.2 percent peak. He said “a staggering” 7 million Americans have lost jobs since the recession began two years ago.

NY Times

Indeed, people inside the Treasury told me that the No. 1 reason offered by the firm during weeks of back-and-forth — even when it was discussed indirectly — was compensation. Bank of America was so desperate, in fact, that it diluted its own shareholders by selling new shares worth $18.8 billion to replace some of the funds it is returning.

Just read the notes from research analysts the day that Bank of America announced the $45 billion payment.

Virtually none of them focused on the idea that there was a sign of strength at the firm; instead they focused, as Morgan Stanley did, on how “it eliminates the competitive disadvantage relative to peers who had already repaid TARP.” External candidates may be “more likely to talk” now that the bank is no longer restricted by the pay czar.

That may be all well and good, but what about the health of the bank — and any continuing risks to the system? Wasn’t the purpose of the bailout program to put the financial system on a much steadier foundation? And wasn’t repayment supposed to be

Why can’t shareholders take these CEO’s to court. They dilute shareholders in order to get their giant pay check.

The most used word in finance/industrial reports…”Unexpectedly”

German Industrial Production Unexpectedly Declines (Update2)

Dec. 8 (Bloomberg) — German industrial output unexpectedly fell for the first time in three months in October, led by a drop in production of energy and investment goods such as machinery.

Output decreased 1.8 percent from September, when it advanced 3.1 percent, the Economy Ministry in Berlin said today. Economists forecast a 1 percent gain, according to the median of 38 estimates in a Bloomberg survey. From a year earlier, production declined 12.4 percent when adjusted for the number of work days.

Germany’s recovery from its worst recession since World War II may slow as the impact of government stimulus measures, such as the now-expired cash-for-clunkers program, wane and a stronger euro damps exports. Factory orders unexpectedly fell for the first time in eight months in October, the ministry said yesterday, led by a decline in sales abroad.

“It will be really difficult to keep the strong recovery going next year,” said Costa Brunner, an economist at Natixis in Frankfurt. “Orders in the auto industry will disappoint and the effect of inventory restocking is now disappearing.”

Venture Fund Uses Lottery Model.

BOSTON (TheStreet) — At first blush, the business model of new investment firm Revolutionary Angels appears like a lottery. All it takes is $5,000 and a dream.

Based in the innovation hotbed of Cambridge, Mass., the firm, launched last month, has a pay-to-play plan that works like this: As many as 100 startups each pay $5,000 to compete for a maximum $250,000 initial round of funding. The runner-up gets $50,000. The rest get feedback.

“This does not seem kosher,” says Emily Mendell, vice president of the National Venture Capital Association, in an e-mail message, upon hearing about the firm. “Real angels would never do this.”

Founder and Chief Executive Officer Chris Hurley says Revolutionary Angels offers novice entrepreneurs a shot at financing as well as advisory services at a time when they’re hard-pressed to find funding through traditional routes.

“If you’re a first-time entrepreneur or an early-stage company, there are a lot of challenges to get investments,” says Hurley, who previously worked in corporate development at Sun Microsystems(JAVA Quote). “You can spend a lot of time chasing your tail, and with an early-stage company, time is money.”

No argument there. For starters, even bank loans are hard to come by, thanks, in part, to the downfall of CIT Group. And while total venture funding increased 17% to $4.8 billion in the third quarter from a year earlier, first-time financing fell 20% to $633 million, according to the quarterly MoneyTree Report from PricewaterhouseCoopers and the NVCA. That’s the least amount for first-time deals in the survey’s history.

So I spent the weekend in Austin. I had been there a few times on business, but wanted to check out the neighborhoods a bit more in depth.

My impressions:

“Old West” and “Deep Eddy” are very livable and attractive - and central. However, I nearly choked on the asking prices. Examples:

http://www.neighborcity.com/property/1500-Bluebonnet-Ln-Austin-TX-78704-6126836-3536038/

http://www.trulia.com/property/1064122493-2411-Pruett-St-Austin-TX

I am pretty much resigned to bachelorhood, so these places are about 500-700 square feet more than I really want or need. These prices are LA-ish circa 2004. I was really quite shocked.

Neighborhoods such as South Congress and Travis Heights are quirky and all, but I found several new/remodeled $500,000+ houses that were surrounded by crap shacks - one example had a rusted out Ford Pinto in the side yard. Not the kind of neighbor I would want if I was going to drop half a mil.

On the flip-side, rentals in Austin are astonishingly low - less that $1 a square foot for great locations. I heard a radio ad that actually touted renting as “a much cheaper alternative to a mortgage” - never mind the 3%+ property tax and maintenance costs.

My guess is that the bubble arrived late in Austin (due to Californicators). Charming city and all, but not at those prices. Love the TX 0% income tax (I am freelance).

Won’t be long before we can do away with all of our nasty/evil energy plants. We’ll just use sunshine and whirligigs for energy when the U.N.& EPA say it’s OK.

CONSOL idling two plants, may lay off nearly 500 workers
Pittsburgh Business Times ~ December 8, 2009

CONSOL Energy Inc. announced Tuesday that it plans to idle two West Virginia plants in February, a move which could mean layoffs of nearly 500 employees.

The Pittsburgh-based company Tuesday issued notice under the Worker Adjustment and Restraining Notification (WARN) Act that it is idling its operations near Bickmore, W.Va. Approximately 104 employees working at Little Eagle Coal Co. and 378 working at the Fola Coal Co. could be affected. The layoffs are expected to occur on Feb. 7-21.

CONSOL (NYSE:CNX) said it is idling the plants due to environmentalist lawsuits filed against its permits to mine. The Ohio Valley Environmental Coalition had filed an appeal against already approved permits to mine the coal at the plants, according to CONSOL. Following the appeal, a judge with the United States District Court for the Southern District of West Virginia issued an order suspending Fola’s Clean Water Act permit for the Ike Fork portions of Fola’s operations, effective Jan. 23. Without the permits, neither Fola nor Little Eagle can satisfy required specifications of coal sales contracts, according to CONSOL.

“It is unfortunate that, at a time when reliable and affordable energy is so desperately needed to reinvigorate our economy, that the nation’s energy industries are coming under repeated assault from nuisance lawsuits and appeals of environmental regulations,” CONSOL COO Nicholas J. DeIuliis said in a statement.

Commodities, gold, stocks down. Dollar slightly up. It’s all good. I pray that this continues. But it won’t if unemployment rises.

Neighbors say house still reeks even after cleanup.

SUNRISE, Fla. – Residents of a South Florida neighborhood are plagued by a horrible stench. It’s coming from inside the home of their neighbor. City officials have already investigated homeowner Debra Jean Higgins, after a utility worker stopped by and called police because he thought someone had died inside. The 55-year-old Higgins, who lives with two dogs, seven cats and piles of rotting garbage, was alive and well. She has been fined $600,000 for code violations, but that apparently hasn’t made a difference.

The city finally cleaned up the yard, but neighbors said the stench remains.

Mark Sierens said he can’t walk by without gagging. “The entire house is a litter box,” he says.

Sunrise’s police chief said building inspectors found the home structurally sound, so there’s not much the city can do.

Pa. police arrest Amish man in buggy for DUI. (AP)

LANCASTER, Pa. – Police in central Pennsylvania arrested an Amish man on drunk driving charges over the weekend after he was found asleep in his moving buggy. Police said a 22-year-old man was slumped over and asleep in a slow-moving buggy on Sunday night.

An off-duty officer from nearby reported seeing the horse pulling the buggy at a walking pace as it straddled the center line.

Police said a breathalyzer test showed the man’s blood-alcohol content was 0.18, more than twice the 0.08 legal limit for drivers.

Robbers steal $6 million during football finale.

RIO DE JANEIRO (Reuters) – Robbers took advantage of Brazil’s passion for football to steal about $6 million (3.7 million pounds) from a cash delivery firm, as the nation was transfixed on championship games, media reported on Monday.

Police suspect the thieves tunnelled into the firm’s building in Sao Paulo and waited until Sunday afternoon, when the final games of the national championships were played, to break in and steal more than 10 million reais.

A security guard working at the firm on Sunday reported hearing loud noises but thought they were from fireworks lit by excited football fans, the Globo news network’s web site reported Sao Paulo police as saying.

Police said the thieves rented a nearby house several months ago and painstakingly dug a 150-metre (490-foot) long tunnel, Globo reported. They disguised themselves as residents, even putting a Christmas tree in the window, it said.

Gambler loses case against Australian casino.

Melbourne~(AFP) – A compulsive gambler who wagered close to 1.4 billion US dollars during a 16-month betting spree lost his lawsuit against Australia’s largest casino Tuesday when a judge ruled he was not exploited.

High-flying property developer Harry Kakavas claimed Melbourne’s Crown Casino facilitated his pathological betting, despite knowing he had a problem that was so severe he had already been banned from one establishment.

Kakavas, 42, who police had barred from entering Sydney’s Star City casino, had sued Crown, claiming it “lured” him with gifts and free flights on a private jet to bring him to Melbourne.

But judge David Harper ruled the casino had not preyed on the baccarat-loving Kakavas and ordered him to repay one million dollars (913,347 US) in debts.

“He was not a person so helplessly entrapped by his love of cards that he found it impossible to resist Crown’s attentions,” Harper told the Victorian Supreme Court.

“He was the highest of this country’s high rollers,” added the judge.

“He enjoyed some spectacular wins. In the end, however, he lost all he won, and more.”

Hitler Tries Financial Blogging

Headline: Taxpayer-funded foreclosure mitigation programs have been an abject failure,” said Rep. Jeb Hensarling, R-Texas, at a hearing on the program. “Throwing more money at programs that do not work is absolutely insane.”

K. Denninger: Loan Modifications are a JOKE

“I have often commented, going back the start of The Market Ticker, that the only solution to the housing mess is for house prices to contract to, on average, three times average incomes or less.

Every program from the government - literally every one - has been aimed at preventing this.

The reason is simple: Those who funded the bubble machine would be rendered insolvent - in some cases many times over - if the truth about home values was to be recognized.

Therefore, every program has been one sort of “extend, pretend and lie” or another. All of them.

Loan-to-value ratios are too high, and until they fall, foreclosures will continue.

What regulators and lawmakers need to understand is this: Prices will fall - one way or the other. We are only able to determine who bears the loss of making these unsound loans, not whether the losses are ultimately recognized.

Let me make a few things clear:

•I fully understand that forcing recognition of true value in these homes - that is, principal reduction so that the outstanding amount on the loan(s) reflects market value, not the pumped bubble value, will result in huge losses and bankrupt many institutions, probably including so-called “Too Big To Fail” banks.

•However, the choice is between forced cramdowns and workouts within the current loan structures or continued foreclosures. Both end in the same place for home values, but the latter results in larger losses, as a loss delayed is a loss that grows larger for multiple reasons. Some of those include “homeowners” who trash their foreclosures on the way out the door, vandalism and simple rehab-and-resale expenses.
More than two years into this mess it should now be clear that the approach taken by our government has been and is bankrupt - and will not work, no matter how many different ways it is repackaged and re-sold.

These losses must be recognized and the bad debt forced from the system. It is essential in order to return our economy to a sound and stable footing. Those who make these loans and bought these securities either through false representations or their own lack of diligence must suffer their losses even if it bankrupts them, and if they have a claim at law to bring for fraudulent marketing or misrepresentations then let them sort it out in court - where it belongs.”

Gold bubble, we barely knew thee.

Gold’s luster continues to fade

Prices for the precious metal fall for the third day in a row as the U.S. dollar pushes higher.

NEW YORK (CNNMoney.com) — Gold prices fell for the third day in a row on Tuesday as the U.S. dollar continued to strengthen.

February gold fell $32 to settle at $1,131.40 an ounce. Gold prices have tumbled 7% since hitting an all-time high of $1,218.30 on Thursday.

The retreat came as the U.S. dollar regained ground against rival currencies, undermining demand for gold as an alternative investment.

“The dollar is strong today, and gold has been trading against the dollar,” said Joe Foster, portfolio manager for the Van Eck Global International Investors Gold Fund. He said prices could continue to decline for the next few weeks before climbing anew next year.
…

Dubai World loses control of New York hotel.
Dec 8
NEW YORK (AP) - Dubai World’s investment arm, Istithmar, lost ownership of the W Union Square New York hotel in a foreclosure auction Tuesday.

One of the hotel’s interim lenders, a private equity firm called LEM Mezzanine, acquired the 270-room hotel for $2 million, according to Dow Jones. The sale was another financial blow to Istithmar, which acquired the hotel in October 2006 for $285 million, according to Real Capital Analytics, a data tracking firm.

Calls to Dubai World and LEM Mezzanine were not immediately returned. LEM said in a statement it plans to continue to operate the hotel and hopes to “take full advantage of any market recovery.”

New York hotels have struggled in the wake of the national recession and financial downturn that have curbed business and leisure travel. Many properties have slashed their rates to attract business.

At the beginning of December, owners of eight New York hotels worth a total of $985 million were in financial distress, including a Courtyard Marriott and The Time Hotel, according to Real Capital Analytics.

The W was not the only Dubai World hotel in trouble. The Fontainebleau in Miami Beach is also in financial straits. The property’s $660 million loan was due in August. Contractors also claim the owner of the historic hotel owes them $60 million.

The New York auction comes almost two weeks after Dubai World revealed it was seeking at least a six-month delay on repaying $60 billion in debt. The news rattled world financial markets and credit agencies slashed the debt ratings on Dubai’s state companies, saying they might consider the plan a default.

BusinessWeek
December 8, 2009, 4:04PM EST

Greek Debt Threatens the Euro

Europe’s economy is improving, but Greece’s public debt is so high that the country could default—with potentially dire results for the common currency

http://www.businessweek.com/globalbiz/content/dec2009/gb2009128_445076.htm

I was at a restaurant tonight and there were some people in a stir over an old man — I asked the waiter about it and he’s somewhat of a celebrity because he worked on the Fat Man. I’m posting this because there are a lot of scientists that post here. Does anyone know the name(s) of any living scientists that worked on Fat Man?

I want to know, because this guy may have worked with my great uncle. If so, I need to by the guy a drink.

I’ve discovered the difference between people here and many of the Joe Six Packs out there:

I recently heard a radio ad to buy laptops on an installment plan. That’s going to push the price of laptops up for others. Those with the greatest appetite for debt won’t hesitate to go into debt further, pushing up prices of laptops (very similar to what happened with home prices).

That’s what people like us hate - debt. A Damocles sword hanging over our heads, forcing us to labor until we die, in order to pay our creditors. It repels those of us who are disciplined enough to save money and hopefully gain a modicum of financial freedom, if not outright financial freedom.

The debt slaves are like oxen, too dumb to care about their yoke, just slobbering for more, more, more, unable to see that their burden becomes heavier. We too might be oxen, but we want our freedom and at minimum, a light yoke. And our government is fighting us relentlessly to keep a basic purchase - housing - out of our reach, by propping up the prices and offering us a Hobson’s choice: go massively into debt, or forego the purchase, which, at a good price, is a good way to improve one’s net worth in the long run.

I never really understood serious anti-government sentiment, until these bailouts started. It’s been eye-opening.

$700 Billion Bailout LAW - YOU WERE ROBBED

Bunning Grills Bernanke To A Crisp

Found this for Step, when he checks in…

http://zardozz.com/zz/2009/01/australia-to-islamic-sharia-law-get-out-of-our-country.html

Bunning said the Federal Reserve Act only allows Fed purchase of securities “backed by the government.” He hence asserts Fed purchases of other assets besides Treasury debt were illegal.

Wouldn’t federal guarantees summarily slapped on myriad asset classes make Fed purchases thereof legal, given they now qualify as “backed by the government”?

HR1207 - Audit The Fed - The Hearing

Who got the money???

Why can’t the Fed explain itself, given its newfangled glasnost policy?

Bernanke Perjury?

CAUTION: Monetary System Collapse

Advice to Market Ticker Guy: DON’T EXTRAPOLATE EXPONENTIAL TRENDS.

Trees don’t grow to the sky.

‘Tis a mere flesh wound!

Silicon Valley home values fall $9.3 billion

By Sue McAllister

smcallister@mercurynews.com
Posted: 12/08/2009 09:01:00 PM PST

It’s been a tough year in many corners of the Silicon Valley real estate market, and a report set for release today attempts to put a price tag on just how much value homes in the area have collectively lost since January: $9.3 billion.

That sounds dreadful, but it’s practically a comfort compared with last year, according to Zillow.com, the real estate valuation and marketing company that generated the estimate. In 2008, the company calculated, homes in the San Jose metro area lost a total of $60.6 billion in value.
…

Wife’s cousin Rob, computer wonk who supports wife’s aunt and uncle, has been out of work for five months running.

Where is the bailout for Main Street to match the gazillions in helicopter drops of cash that the Bernanke/Paulson PPT showered on Wall Street???

This pretend wealth has legs…as the American economy gets stimulated all the way to fascism.

* REVIEW & OUTLOOK
* DECEMBER 9, 2009

Stimulus III
Democrats want TARP to become a revolving line of political credit.

If at first fiscal stimulus doesn’t succeed, spend, spend again. That’s the motto President Obama embraced yesterday, even if he didn’t use the word “stimulus,” which has managed to set a political record in the speed with which it has become unpopular with voters. This time, the spending is being called “Proposals to Accelerate Job Growth and Lay the Foundation for Robust Economic Growth.”

But wasn’t that also supposed to be the point of last February’s $787 billion stimulus, or for that matter of the Nancy Pelosi-George W. Bush $165 billion stimulus of February 2008?

Nearly two years after that first Keynesian stimulus that was supposed to prevent a recession, and nearly a year after the second that the White House said would keep the jobless rate below 8%, the President now feels obliged to propose a third. Like the joke about Paul Krugman having predicted seven of the last two recessions, sooner or later the White House is bound to get the political timing right.

This time around, the President is at least suggesting a couple of good ideas. One proposal would revive his 2008 campaign promise for a zero capital gains tax on new investments in small business stock. Mr. Obama dropped the idea from his first stimulus because liberals on Capitol Hill hate the words “capital gains,” but yesterday he proposed a zero rate for one year.
…

The evidence that the global economy is decoupled just keeps piling up, deeper and deeper all the time. It reminds me of my junior high English teacher’s definitions of academic lettered degrees:

BS = bullsh!t
MS = more of the same
PhD = pile it higher and deeper

* The Wall Street Journal
* ASIA MARKETS
* DECEMBER 8, 2009, 11:24 P.M. ET

Asia Lower After Wall Street Dips
By COLIN NG

SINGAPORE — Asian shares were lower Wednesday as renewed risk aversion gripped markets after Wall Street’s sharp decline, while weaker-than-expected economic growth data in Japan hurt stocks there.

There was plenty for investors to worry about, after Tuesday’s ratings downgrade for Greece and a raft of Dubai government-controlled companies.

“Despite the recovery in the global economy, sovereigns are still under pressure to be downgraded in the coming months. Like the Dubai World default, recent sovereign ratings actions underscore the need for investors to be discerning amongst countries,” Brown Brothers Harriman analysts said.

The news flow overnight “has once again reminded investors of the fragilities still present within the global economy, said ANZ bank economist Philip Borkin in Wellington. “However, positioning is also clearly playing a role as risk is taken off the table with the year-end approaching.”

The Nikkei 225 was down 1.5%, Australia’s S&P/ASX 200 was down 0.9%, South Korea’s Kospi Composite was off 0.3%. The Shanghai Composite index was 1.6% lower and Hong Kong’s Hang Seng Index was down 0.7%, while shares in Taiwan bucked the region and were up 0.1%. Dow Jones industrial average futures were 22 points higher in screen trade.

Shares in China were being led lower by banks on concerns of capital raising leading to massive stock supply.

Industrial Bank Co. said its shareholders had approved its plan to raise 18 billion yuan ($2.6 billion) in a rights issue to boost the lender’s capital adequacy ratio and support rapid lending growth in the next few years.

“Concerns over massive refinancing plans are overhanging bank stocks and make it difficult for the general market” to stop falls in the short term, said Shenyin Wanguo Securities analyst Li Xiaoxuan. Industrial Bank was down 3.2%, ICBC was off 1.3% and Bank of China was 1.2% lower.
…

Uncle Buck loves bad economic news anymore…

* The Wall Street Journal
* FOREIGN EXCHANGE
* DECEMBER 9, 2009

Dollar Makes the Most of the Shaky Markets

More in Markets Main »
BY FABIO ALVES

NEW YORK—The dollar rose against most of its rivals Tuesday as worries about deteriorating global credit quality hurt demand for stocks, gold, oil and higher-yielding currencies.

The euro and the pound tumbled to one-month lows against the greenback. A number of other higher-yielding or commodity-related currencies declined sharply, including the Swedish krona, the Canadian dollar, the Mexican peso and the Australian dollar.
…

Can renters who caulk their landord’s investment properties collect the $12K in free money?

Cash for Caulkers could seal $12,000 a home
Under President’s proposal, homeowners would be reimbursed for energy-efficient appliances and insulation.

Last Updated: December 8, 2009: 6:24 PM ET

NEW YORK (CNNMoney.com) — President Obama proposed a new program Tuesday that would reimburse homeowners for energy-efficient appliances and insulation, part of a broader plan to stimulate the economy.
…

Top News December 8, 2009, 6:42PM EST text size: TT
Americans Grow Gloomy About Future

Almost half the people now feel less financially secure than when President Barack Obama took office in January, a Bloomberg National Poll shows

By Mike Dorning and Rebecca Christie

(Bloomberg)—Americans have grown gloomier about both the economy and the nation’s direction over the past three months even as the U.S. shows signs of moving from recession to recovery.

Almost half the people now feel less financially secure than when President Barack Obama took office in January, a Bloomberg National Poll shows.

Those concerns have put consumers in a miserly mood as they head to the mall for holiday shopping, with half the country planning to spend less on gifts than last year and few buyers willing to run up credit-card debt for Christmas.

“The recession may be over, but the administration seems to be losing the battle when it comes to winning the hearts and minds of Americans,” says Chris Rupkey, chief financial economist for Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “This is important because the spending of consumers is the main factor that will turn the economic recovery into a self- sustaining one.”
…

A budget constrained J6P seems to be increasingly choosing beer over fast food.

P.S. My McDonald’s dining habits are unchanged by the Great Recession. Never ate there before; never eat there now.

Eating at McDonald’s is now a luxury?
Posted: December 08, 2009, 4:50 PM by Andrea Ball
McDonalds, economic recession, Market Call

Watch those Big Macs. No, no, it’s not because of your waistline—it’s because of what those meaty treats have to say about the economy. McDonald’s Corp., the world’s largest fast-food chain, said Tuesday that its sales are looking distinctly unappetizing. No matter what you think about fast food, this is not a good trend.

McDonald’s reports that comparable sales at its U.S. stores fell for a second month in a row in November, while global sales at restaurants open at least 13 months inched ahead by only 0.7%. The disappointing results appear to signal an end to the theory that McDonald’s could thrive in the middle of an economic downturn by offering low-cost Dollar Menus and other bargains.

The latest results also suggest that the U.S. consumer is now so strapped for cash that dining out, even at McDonald’s, is becoming a luxury. Other fast-food retailers, such as Yum! Brands Inc., owner of Taco Bell, KFC and Pizza Hut, are also hurting. Yum said last week that it expected an 8% fall in its comparable U.S. sales.
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The Dollar Bubble

Thomas Sowell Blames Housing Bust on Frank, Bush, Greenspan

Sowell is one of the heroes of the housing bust. His incredulity about insane housing policies on both sides of the aisle are a great gift to the American public in defense of economic rationality.

Interviewer: “Of George W Bush, Alan Greenspan and Barney Frank, who was the worst?”

Thomas Sowell: “Barney Frank, easily…”

Dubai Real Estate Crash. Lindsey Williams was Right

Is there any doubt at this point that Dubai is ground zero and source of the initial impulse for the commercial real estate collapse?

Bye Bye Dubai , total collapse

Dubai’s Dirty Little Secret