STOCK MARKET WATCH, Wednesday December 2

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday December 2, 2009

Bush Administration Officials Convicted = 1
Name(s): David Safavian

Bush Administration Officials Charged = 1
Name(s): Richard Lopez Razo

Financial Sector Officials Convicted since 1/20/09 = 11

AT THE CLOSING BELL ON December 1, 2009

Dow... 10,471.58 +126.74 (+1.23%)
Nasdaq... 2,175.81 +31.21 (+1.46%)
S&P 500... 1,108.86 +13.23 (+1.21%)
Gold future... 1,200 +17.90 (+1.51%)
10-Yr Bond... 3.29 +0.09 (+2.88%)
30-Year Bond 4.28 +0.08 (+1.98%)

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U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES..............................................S&P FUTURES

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie, Silver and US$

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This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du

[ozymandius]

1. Market Observation

This Week's Charts
BY RON GRIESS

We take a graphical look at several items: money supply growth, retail money market fund growth, the monetary base, cash held by commercial banks, commercial and industrial loans made by commercial banks and the loan to deposit ratio of commercial banks. The six charts that follow provide the details.

-lotsa charts-

http://www.financialsense.com/Market/wrapup.htm

[ozymandius]

2. Today's Reports

07:30 Challenger Job Cuts Nov
Briefing.com NA
Consensus NA
Prior -50.7%

08:15 ADP Employment Report Nov
Briefing.com -175K
Consensus -150K
Prior -203K

10:30 Crude Inventories 11/27
Briefing.com NA
Consensus NA
Prior 1.02M

14:00 Fed Beige Book Nov

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

[UpInArms]

23. US Nov job cuts shrink for 4th month to 2-year low

http://www.reuters.com/article/bondsNews/idUSNYS00758220091202

NEW YORK, Dec 2 (Reuters) - The number of planned layoffs at U.S. firms shrank in November to the lowest level in nearly two years, suggesting corporate labor force cuts are tapering off even if actual hiring appears a distant prospect.

Employers announced 50,349 planned job cuts in November, which is the fewest number of monthly job cuts since 44,416 in December 2007, according to the report on Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

"Most industries are seeing job cuts subside. Barring any unexpected shocks to the economy, we appear to be coming out of the woods when it comes to downsizing," said John Challenger, chief executive officer of Challenger, Gray & Christmas.

"Unfortunately, the second half of the job-market equation -- hiring -- has shown no signs of an imminent rebound. At the moment, payrolls continue to experience net losses every month, a trend that is likely to repeat through the end of the year."

The November job cut total was 9.6 percent less than the 55,679 job cuts announced in October and marked the fourth consecutive decline in monthly layoffs.

November job cuts were down 72 percent from last November's 181,671 job cuts, the highest monthly total of 2008.

...more...

[bread_and_roses]

33. So they've cut everyone they can while still keeping the doors open...

...they can't cut anymore, but they are not hiring. And we're supposed to think this is somehow "recovering?"

And a question keeps haunting me...in what "industry" or "sector" will all the jobs we need be created, or regained? The very fate of the earth depends on us shifting away from a consumer-driven economy, which is where we've been lo these many years since the Corp-o-Crats started dismantling our productive capacity in search of cheap labor.

Not that there is not plenty of real work that needs to be done - infrastructure, green jobs, health care, teaching, child-care, greening our cities, restoring our local agricultural capacity, re-forestation, recreating local industry, etc., etc. But there is no money to create those jobs, since the Banksters have gobbled up all the wealth of our nation, and what we borrow is going to finance our obscene killing machine around the globe.

Gee, maybe we can all take turns being the guards and prisoners in our prison-industrial complex?

[rfranklin]

35. Our manufacturing is down to about 10% of the economy...

But banking is making a recovery!

[Demeter]

36. See? Less IS More!

[Tansy_Gold]

44. Cutting jobless will take time: Summers

thanks to AllentownJake for posting this in GD

http://news.yahoo.com/s/nm/20091201/ts_nm/us_usa_economy_summers

WASHINGTON (Reuters) – President Barack Obama's top economic adviser said on Monday that tackling high U.S. unemployment was vital but the problem would take time to fix.

"I think recessions like the one we're suffering now have very substantial costs," said Lawrence Summers, director of Obama's National Economic Council.

"Addressing 10.2 percent unemployment is a matter of very great urgency. It is not something that is going to be fixed in a week, or a month, or a year," Summers said in after-dinner remarks for a conference on innovation and the economy sponsored by Intel Corp and the Aspen Institute.

He also firmly rejected any notion there was any silver lining to the country's worst slump in 70 years.

"One of the most damaging ideas in economics is ... the doctrine of the cathartic recession. ... Somehow it's for the best if everyone suffers for a long time ... (it) teaches everybody a very valuable lesson," Summers said.

Labor market softness has persisted despite a return to growth in the third quarter, which ended the longest U.S. economic contraction since World War Two.

At 10.2 percent, it is the highest U.S. jobless level in 26 years and it may get worse before it starts to improve.

The White House has pointed out repeatedly that job creation traditionally lags an economic recovery, as firms squeeze more productivity out of existing workers before adding to their payrolls. As a result, it is eager to encourage firms to boost hiring and is hosting a jobs forum on Thursday to explore ways the process can be speeded up.

Summers said policies to foster science in schools, as well as research and development in the private sector, would be crucial to aiding long-term U.S. productivity growth.

The White House jobs forum will also focus on how to boost U.S. exports, and Summers reiterated the United States would no longer be the engine on which the rest of the world economy could fly.

"There is no way that our import-led growth is going to be the driving force for the entire rest of the world to have export-led growth going forward," he said.

The United States would boost domestic savings and the rest of the world would have to pick up the slack, in particular China, whose domestic demand is just 35 percent of its gross domestic product, or half that of the United States.

"Thirty-five (percent) is a peacetime world record low and that is why their commitment to move toward more consumption, move toward more domestic demand-led growth, are, I think important for them and important as well for the global economy," Summers said.

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

I already posted a rant on AJ's thread, but that was before I read the whole article.

Shoving a sock in it, larry, is far too nice for you........



Tansy Gold

[Demeter]

48. I Hope Larry Summers Suffers a Long, Long Time

I hope that come Jan 1, he's unemployable for the rest of his unnatural life.

[ozymandius]

68. Seeing him eating from a dumpster would be A-Okay in my book.

On my way home from work today, I saw a dog ripping a garbage bag open with its teeth. I imagined the dog as Larry Summers. I suddenly felt happy.

[Demeter]

69. Mike Hudson Has Choice Words About Larry, and Timmy

Video downthread

[ozymandius]

73. Which post?

I've looked and cannot find it. :shrug:

[Demeter]

74. Post #59

William K. Black, sorry.

[ozymandius]

67. Less Bad Is The New Good!

It's like celebrating a slightly unsuccessful self-immolation scene.

[UpInArms]

32. U.S. Nov. private-sector jobs down 169,000: ADP

U.S. Nov. private-sector jobs down 169,000: ADP
8:15 a.m. Today

[ozymandius]

3. Oil settles above $78 on sliding dollar

Oil prices climbed Tuesday as the dollar weakened and new figures showed energy demand for crude may be growing in China.
.....

The dollar grew weaker against the euro, which fetched more than $1.50 Tuesday after the European Union said unemployment held steady at 9.8 percent in October. Unemployment in the U.S. is already above 10 percent.
.....

Expectations of higher U.S. demand have rarely met reality recently. Demand for gasoline for the week ended Friday was flat with the depressed levels of a year ago and is up just 0.6 percent for the year, according to the weekly MasterCard SpendingPulse report.
.....

In other Nymex trading in January contracts, heating oil rose 3.01 cents to settle at $2.0780 and gasoline gained 3.08 cents to settle at $2.0423. Natural gas lost 8.6 cents to settle at $4.762 per 1,000 cubic feet.

http://news.yahoo.com/s/ap/oil_prices

[mrdmk]

64. Changes in the oil market, down to $76.84 per barrel

graph: http://ichart.finance.yahoo.com/t?s=CLF10.NYM

link: http://news.yahoo.com/s/ap/oil_prices

<snip>
NEW YORK – Oil prices dipped Wednesday with more evidence that the country is using less energy while oil and gasoline supplies continue to grow.

Demand for gasoline slumped during the Thanksgiving week, when millions of people take to the road and gas sales usually jump.

"Once the holiday was over, people got right back to their cocooning habits, stayed home and didn't do a lot of driving," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

Benchmark crude for January delivery dropped $1.83, or more than 2 percent, to $76.54 on the New York Mercantile Exchange. In London, Brent crude for January delivery fell $1.76 to $77.61 on the ICE Futures exchange.
<end>

About a month and a half ago, Goldman Sachs predicted that oil would be $85 per barrel. This was at the same time they were getting a lot of bad press from Rolling Stone Magazine. I wonder what really happened to that $85 per barrel prediction?

[ozymandius]

4. New $100 billion safety net for jobless in works

.....
The jaw-dropping numbers combine the approximately $85 billion cost of continuing emergency benefits through 2010 for the long-term unemployed — jobless more than six months — plus an estimated $15 billion to continue subsidies to help pay health insurance premiums.

Even before the last new round of extended benefits in November, the cost of unemployment compensation was estimated by the White House to exceed $140 billion for fiscal 2010, which began in October. Just two years ago — when the unemployment rate was 4.8 percent in contrast to the current 10.2 percent — the cost of unemployment benefits was only $43 billion.

Extending unemployment benefits again is an obvious solution to Democrats preaching compassion for the long-term jobless, as well as to economists who say cutting off the flow of money could harm the economy.

http://news.yahoo.com/s/ap/20091201/ap_on_bi_ge/us_cost_of_compassion

[snot]

13. still nuthin' for those virtuous of us who worked, saved, invested wisely,

saw our retirement funds melted, + no help re- our healthcare in sight (i'm among those likely to see premiums rise steeply under the current leg.) . . .

[tclambert]

28. According to Republican theology, if you were virtuous, you'd be rich.

Obviously, the God of Republicans finds you morally lacking. Personally, I find it amusing to watch my own moral standing fluctuate as my investments go up and down. I don't feel any more or less virtuous, but the numbers are very clear.

[Demeter]

38. My Gold Investment Is Up 20% Last Month

and 200% in 22 years. Wish I'd bought more back then....I coulda been a Republican!

Edited because I can't do math without a computer. Price today is 3X what it was.

[tclambert]

63. Isn't it nice to know you are 3 times more virtuous now?

See, they've made virtue scientific because now you can measure it. Just compare net worth and you can tell who is more virtuous. Bill Gates should be Pope. Poor people should be locked up, and Bernie Madoff set free.

[Tansy_Gold]

70. I don't think it has anything to do with virtue.

It's that their God just chooses, on a whim I guess or by eenie meenie, who gets the loot and who doesn't. You can't really earn it by good works; you just sorta get it.

Anyway, that's how I understood it, but since I didn't get any of the loot, I'm just not favored by their god.

I didn't like him anyway. He had bad table manners.




TG

[snot]

77. I've actually been asking brokers about investing in gold for some years; but

there's a lot of uncertainty about investing in gold -- missing reserves, certificates that turn out to be worth nothing, manipulation of prices.

I don't have the expertise to figure all that out; and my brokers knew even less than me.

[ozymandius]

5. Treasury will auction off Capital One warrants

WASHINGTON – The Treasury Department said Tuesday it will begin auctioning warrants of Capital One Financial Corp., marking the latest government effort to rein in emergency rescue programs set up during the height of the financial crisis last year.

Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price.

Treasury said it would auction nearly 12.7 million warrants to buy Capital One stock. The auction, which is being conducted by Deutsche Bank Securities Inc., will be conducted from 8 a.m. to 6:30 p.m. EST on Thursday.
.....

Treasury got the warrants as a deal-sweetener when it injected capital into the banks. They allow taxpayers to benefit from the upside of a financial recovery supported by billions of their dollars.

http://news.yahoo.com/s/ap/20091201/ap_on_bi_ge/us_treasury_capital_one_warrants

[Tansy_Gold]

15. Empty, empty promises. A true vacuum

"They allow taxpayers to benefit from the upside of a financial recovery supported by billions of their dollars."


There will be no "upside" for the taxpayers, only for the uber-wealthy who are pocketing the money and buying up our homes, to be rented back to us at exorbitant rates that will prevent us from ever accumulating any wealth of our own. There will be no "financial recovery" for us, not while they're in power.



TG

[ret5hd]

37. So even the Treasury admits the bailout isn't going to work.

[Demeter]

39. Since They Designed It That Way They Never Needed to "Admit" Anything

It was a scam. They aren't going to admit to that.

[Festivito]

6. Debt: 11/30/2009 12,113,047,538,115.42 (UP 104,397,155,498.94) (Mon)

(Debt seems to jump up then drop slowly down for days--repeat. Today we see the jump up. Occurred on Monday. Good day all.)

= Held by the Public + Intragovernmental(FICA)
= 7,712,387,187,111.25 + 4,400,660,351,004.17
UP 96,793,151,824.92 + UP 7,604,003,674.02

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 308-Million person America.
If every American, man, woman and child puts in $3.25 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.74, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 10 seconds we net gain another American, so at the end of the workday of the report, there should be 308,081,118 people in America.
http://www.census.gov/population/www/popclockus.html ON 11/07/2009 08:19 -> 307,879,272
Currently, each of these Americans owe $39,317.72.
A family of three owes $117,953.16. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 20 reports in the last 30 to 31 days.
The average for the last 20 reports is 10,997,825,487.72.
The average for the last 30 days would be 7,331,883,658.48.
The average for the last 31 days would be 7,095,371,282.40.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 41 reports in 61 days of FY2010 averaging 4.96B$ per report, 3.33B$/day.
Above line should be okay

PROJECTION:
There are 1,147 days remaining in this Obama 1st term.
By that time the debt could be between 13.7 and 20.3T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
11/30/2009 12,113,047,538,115.42 BHO (UP 1,486,170,489,202.34 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +0,203,218,534,603.70 ------------* * * * * BHO
Endof10 +1,215,979,756,235.26 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
11/06/2009 -000,072,128,565.19 ----
11/09/2009 +000,009,587,108.80 ------------****** Mon
11/10/2009 +000,298,454,946.90 ------------********
11/12/2009 +005,635,979,422.58 ------------*********
11/13/2009 -000,263,776,071.91 ---
11/16/2009 +038,287,630,031.50 ------------********** Mon
11/17/2009 +000,263,245,360.02 ------------********
11/18/2009 -000,023,369,864.09 ----
11/19/2009 -021,100,228,230.36 -
11/20/2009 -000,090,793,748.95 ----
11/23/2009 -000,049,087,609.27 ---- Mon
11/24/2009 +000,322,336,139.24 ------------********
11/25/2009 +000,525,986,426.45 ------------********
11/27/2009 +003,712,180,392.83 ------------*********
11/30/2009 +096,793,151,824.92 ------------********** Mon

124,249,167,563.47 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock
http://www.usdebtclock.org/

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4166493&mesg_id=4166534

[Festivito]

76. Debt: 12/01/2009 12,089,226,465,642.57 (DOWN 23,821,072,472.85) (Tue)

(Debt seems to jump up then drop slowly down for days--repeat. Yesterday's report up big, today's back down. Good day all.)

= Held by the Public + Intragovernmental(FICA)
= 7,707,251,353,639.54 + 4,381,975,112,003.03
DOWN 5,135,833,471.71 + DOWN 18,685,239,001.14

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 308-Million person America.
If every American, man, woman and child puts in $3.25 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.74, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 10 seconds we net gain another American, so at the end of the workday of the report, there should be 308,089,758 people in America.
http://www.census.gov/population/www/popclockus.html ON 11/07/2009 08:19 -> 307,879,272
Currently, each of these Americans owe $39,239.3.
A family of three owes $117,717.9. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 32 days.
The average for the last 21 reports is 9,339,782,727.69.
The average for the last 30 days would be 6,537,847,909.38.
The average for the last 32 days would be 6,129,232,415.05.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 42 reports in 62 days of FY2010 averaging 4.27B$ per report, 2.89B$/day.
Above line should be okay

PROJECTION:
There are 1,146 days remaining in this Obama 1st term.
By that time the debt could be between 13.7 and 19.1T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
12/01/2009 12,089,226,465,642.57 BHO (UP 1,462,349,416,729.49 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +0,179,397,462,130.80 ------------* * * * BHO
Endof10 +1,056,130,220,608.75 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
11/09/2009 +000,009,587,108.80 ------------****** Mon
11/10/2009 +000,298,454,946.90 ------------********
11/12/2009 +005,635,979,422.58 ------------*********
11/13/2009 -000,263,776,071.91 ---
11/16/2009 +038,287,630,031.50 ------------********** Mon
11/17/2009 +000,263,245,360.02 ------------********
11/18/2009 -000,023,369,864.09 ----
11/19/2009 -021,100,228,230.36 -
11/20/2009 -000,090,793,748.95 ----
11/23/2009 -000,049,087,609.27 ---- Mon
11/24/2009 +000,322,336,139.24 ------------********
11/25/2009 +000,525,986,426.45 ------------********
11/27/2009 +003,712,180,392.83 ------------*********
11/30/2009 +096,793,151,824.92 ------------********** Mon
12/01/2009 -005,135,833,471.71 --

119,185,462,656.95 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock
http://www.usdebtclock.org/

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4167783&mesg_id=4167793

[ozymandius]

7. Huffington hits out at Murdoch speech (re: limiting web aggregator access to news)

Huffington Post founder Arianna Huffington has accused Rupert Murdoch of confusing aggregation with misappropriation following his Federal Trade Commission speech claiming "There's no such thing as a free news story".

Huffington began in a humorous vein: "First of all, I would like to quote my great grandmother who likes to say: 'Never bet on a company that takes itself out of Google.'"
.....

And she offered a solution to the News Corp chief: "Any site can shut down the indexing of its content by Google any time it wants with a simple 'disallow' in its robots.txt file. But be careful what you wish for because as soon as you do that, and start denying your content to other sites that aggregate and link back to the original source, you stand to lose a large part of your traffic overnight. But as they say in Australia: 'Good on ya.' Of course as someone who cares deeply about the future of this country, I'd say that having Glenn Beck not searchable by Google is an entirely good thing. But a good business move? Not so much."
.....

She added: "The contributions of citizen journalists, bloggers, and others who aren't paid to cover the news are constantly mocked and derided by the critics of new media who clearly don't understand that technology has enabled millions of consumers to shift their focus from passive observation to active participation – from couch potato to self-expression. Writing blogs, sending tweets, updating your Facebook page, editing photos, uploading videos, and making music are just a few of the active entertainment options now available. But when the data began to show a significant shift in consumer habits, traditional media responded by belittling web journalism.

http://www.guardian.co.uk/media/2009/dec/01/arianna-huffington-murdoch-ftc

---

That was a fun read.

[ozymandius]

8. World Stocks Drift Higher, Focus on Data

LONDON (Reuters) - World stocks ticked higher on Wednesday with anxiety over Dubai's debt problems taking a backseat and focus shifting to this week's economic numbers and the European Central Bank's rate meeting.

Euro zone government bond futures edged lower as traders braced for a U.S. private sector report later in the session for hints on the key payrolls numbers due on Friday. Investors were unwilling to take on big bets ahead of the European Central Bank policy meeting on Thursday.

Gold hit a record high above $1,215 an ounce and key base metals rose further, but oil prices came under some pressure on data showing U.S. crude stocks rose much more than expected. The yen broadly weakened as investors moved to stocks and some commodities.
.....

Investors' attention has turned to the ECB's policy meeting on Thursday. It is widely expected to keep its refi rate on hold at one percent, but also to give guidance on the timing and extent of how it intends to withdraw generous liquidity stimulus from the system.
.....

The dollar has been widely considered the funding currency of choice in recent months, as investors have sold the low-yielding unit for other currencies and assets. Asian central banks were said to buying dollars on Tuesday.

http://www.nytimes.com/reuters/2009/12/02/business/business-us-markets-global.html

[ozymandius]

9. European Banks Growing Bigger ‘Sowing the Seeds’ of Next Crisis

.....
BNP Paribas SA, Barclays Plc and Banco Santander SA are among at least 353 European lenders that have increased in size since the beginning of 2007, according to data compiled by Bloomberg. Fifteen European banks now have assets larger than their home economies, compared with 10 lenders three years ago.

While the European Union has grabbed headlines for breaking up bailed-out banks, regulators haven’t reined in firms that shunned state aid and are too big to fail. European bank assets have grown 25 percent since the start of 2007, compared with a 20 percent increase at U.S. lenders, Bloomberg data show.
.....

Banks expanded their balance sheets during the credit bubble, borrowing cheap money in the wholesale market to fund loans and investments. Royal Bank of Scotland Group Plc’s assets ballooned 2,914 percent in the 10 years through 2008 as it made acquisitions, boosted trading and increased lending. Edinburgh- based RBS spent $140 billion on takeovers during the period, culminating in the purchase of ABN Amro Holding NV in 2007 that triggered the world’s biggest bank bailout.
.....

The EU doesn’t have authority over banks that weren’t bailed out, many of which continued to expand as European economies contracted. Banks such as BNP Paribas and Santander have taken advantage of their rivals’ woes to make acquisitions. Thirty-eight of Europe’s 100 biggest financial institutions have more assets now than they did at the beginning of the year, according to Bloomberg data.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aRDrzOAWRekc&pos=10

[ozymandius]

10. Fed: We Will Pop Future Bubbles

The best approach here if at all possible is to use supervisory and regulatory methods to restrain undue risk-taking and to make sure the system is resilient in case an asset price bubble bursts in the future.”

-Ben Bernanke, Federal Reserve Chairman

Ben Bernanke, it seems, is changing his spots. He is now trying to prove that he is not Alan Greenspan. The technique? Spotting and popping asset bubbles before they do too much damage.

This is a major change for the Fed Chairman. (Note that the Fed first floated a trial balloon on this in May 2008).

Bernanke made his Fed bones, so to speak, back in 1999, when he presented a paper to Fed officials at their annual Jackson Hole meeting, arguing against the Fed popping bubbles. His argument? The Fed should focus on controlling inflation, not trying to manage the cycle of booms and busts.

That argument resonated with Easy Al.

http://www.ritholtz.com/blog/2009/12/fed-we-will-pop-future-bubbles/

[ozymandius]

14. Martin Mayer: Audit the Fed! Ben Bernanke: Beneath the Banksters

Mayer's comments on auditing the Fed are below, followed by our thoughts on the start of Ben Bernanke's Senate confirmation process. As this issue of The IRA goes to press, several members of the Senate have stated that they do not know if there are sufficient votes to confirm Bernanke for a second term as Fed Chairman.
Audit the Federal Reserve System

By Martin Mayer

Two weeks ago the House Banking Committee voted to authorize periodic audits of the Federal Reserve System by the Government Accountability Office, and outrage spread through the media about the Congress usurping the authority of the Fed.

The fact of the matter is that oversight of the Federal Reserve is part of the job description of the Congress. The Constitution of the United States empowers the Congress "to coin money {and} regulate the value thereof." When he was chairman of the House Bankng Committee in the 1950s, Wright Patman liked to say that the Constitution gave the Congress full power over money, "but we have farmed it out to the Federal Open Market Committee" in the Federal Reserve System.

Not everything said by Representative Ron Paul (R, TX) need be taken seriously, but on this subject he is right on the money. The much touted "independence" of the Fed is an independence from the executive, not the legislative branch.

The Fed can write its own budget without dictation from anyone for the practical reason that printing money is profitable and the central bank always shows a surplus. But under our system of government, the Congress can no more give the Fed full policy independence than the President can resign as commander-in-chief of the Army and Navy. The legally mandated twice-yearly "Humphrey/Hawkins" reports that the chairman of the Fed makes to the Congress are an expression of ultimate Congressional responsibility for monetary policy.
.....

Even those who approve the actions doubt the process. The Fed can no longer interpose its standard claim that secrecy is a necessary part of the mystique of central banking. The American people deserve to know the details of how these decisions were made. The Congress has not just the right but the obligation to audit them.

More here...

---

The column continues with evidence to assert that the "independence" of the central bank is illusory. The Federal Reserve has not been an independent institution for decades. It has been, as the column outlines, captured by the very institutions that the Fed is charged with regulating. The Fed has also been captured by those same institutions that use its power to extract public wealth to backstop private speculative interests.

[AnneD]

43. Ozy...

thanks for posting the Mayers article. It is worth the read.

[tclambert]

29. But if the Fed pops future bubbles, that would be government interfering with business.

When the Republicans take over again, they'll surely put a stop to that. And what about the Chicago School? Milton Friedman? If the free market can do no wrong, then bubbles can't exist. Ah, maybe that's the loophole. The Fed may agree to pop bubbles, but if they refuse to believe there are any bubbles, there's nothing to pop.

[ozymandius]

11. Equities Lost Decade

BusinessWeek with the details:

With the '00s about to flip the odometer to the '10s, there has been a raft of commentary about how lousy a decade this has been. Stock investors can vouch for that: The ten years since Y2K are on track to produce the worst total returns for investors since the 1930s. And, after the roaring '80s and '90s, the disappointment of the last decade is all the more galling.

Indeed, it will be hard for investors to wash the taste of trillions of dollars of losses from their mouths.

In both the 1980s and the 1990s, the broad S&P 500-stock index index provided a total return (which includes dividends) of more than 400%, according to Capital IQ, a Standard & Poor's business. The total return for the S&P 500 since New Years 2000 has been negative 10.8%.

http://econompicdata.blogspot.com/2009/12/equities-lost-decade.html

---

Check out the straightforward chart. Also to note: these valuations only appear to assess S&P losses in Y2K dollars. If accounting for dollar devaluation, the losses grow substantially.

[ozymandius]

12. Worse Than Enron? (Truly, an intriguing probe of "balance sheet renovation")

Enron was the financial scandal that kicked off the decade: a giant energy trading company that appeared to be doing brilliantly—until we finally noticed that it wasn’t. It’s largely been forgotten given the wreckage that followed, and that’s too bad: we may be repeating those mistakes, on a far larger scale.

Specifically, as the largest Wall Street banks return to profitability—in some cases, breaking records—they say everything is rosy. They’re lining up to pay back their TARP money and asking Washington to back off. But why are they doing so well? Remember that Enron got away with their illegalities so long because their financials were so complicated that not even the analysts paid to monitor the Houston-based trading giant could cogently explain how they were making so much money.
.....

I was trying to answer the simple question that you'd think regulators should want to know: how much of each bank’s revenue is derived from trading (taking risk) vs. other businesses? And how can you compare it across the industry—so you can contain all that systemic risk? Only, there's no uniformity across books. And, given the complexity of these mega-merged firms, those questions aren’t easy to answer.

Goldman Sachs and Morgan Stanley, for example, altered their year-end reporting dates, orphaning the month of December, thus making comparison to past quarterly statements more difficult. In the cases of Bank of America, Citigroup and Wells Fargo, the preferred tactic is re-classification and opaqueness. These moves make it virtually impossible to get an accurate, or consistent picture of banks ‘real money’ (from commercial or customer services) vs. their ‘play money’ (used for trading purposes, and most risky to the overall financial system, particularly since much of the required trading capital was federally subsidized).
.....

Bank of America: The firm reclassified its filing categories upon acquiring Merrill Lynch, but it doesn't break down the trading vs. investment banking revenues of Merrill. This either means the firm doesn’t truly know what's going on inside its new problem child, or doesn’t want to tell. (No wonder no one’s jumping for the upcoming CEO vacancy.)....

http://www.thedailybeast.com/blogs-and-stories/2009-12-01/worse-than-enron/full

[ozymandius]

16. “Bank Profits Mirage”

There is a great and troubling little post up at Annaly (hat tip reader Scott) which confirms that all is far from well in bank-land. This story is consistent with the negative readings coming from bank maven Chris Whalen, whose latest proprietary stress ratings based on FDIC call reports found that :

the far worse result for our Stress Index survey vs. Q2 suggests that levels of stress in FDIC insured banks are continuing to build, from multiple factors, even as the subsidies that make the large banks look less risky are being withdrawn.

The issue it focuses on is the profits-goosing strategies employed by banks, namely underreserving. Just as retail stores haircut their revenues to allow for returns, so to do banks provide for a loan loss reserve (an expense item) in anticipation of losses. Loan losses are just as much a part of doing business for banks as returns are for retail stores.

Annaly tells us that the FDIC Quarterly Banking Profile show that loan loss reserves, although higher than the level of 3Q 2008, is lower than the levels of 1Q and 2Q 2009. And that is cause for pause:

If we had improving (or at least steady) credit performance, or a banking system that was already adequately reserved, falling provisions wouldn’t be a red flag. But we don’t. The chart below is an old favorite of ours, one you’ve seen before and one you’re likely to see again (see chart).

More to read and see at Naked Capitalism

---

The same issue is coming into focus in the EU. As the EU central bank withdraws its financial support, the frailty of seemingly healthy banks is revealed.

[Tansy_Gold]

18. here's a question for y'all, somewhat rhetorical but somewhat serious

The banks are showing these huge profits, okay? But banks don't really "make" money. They don't manufacture a product that has physical substance. Therefore, they can only be registering profits off the trading or buying/selling other things.

Their profits have to represent someone else's losses.

Who lost -- or is going to lose -- all that money?




TG

[rfranklin]

19. You and me, of course...

And up until recently, thirty percent of all corporate profits were generated by financial businesses. That's why you would see a new bank, sometimes two, opening on every block for the past decade.

[DemReadingDU]

26. Bsnks charge huge fees, and have raised CC interest rates

we go broker, banks get richer
:(

[Roland99]

34. Checking account fee, NSF fee, non-branch ATM fee

plus interest on loans made based on deposits on-hand, which used to be about an 8:1 or 9:1 ratio but a few years ago major banks were up to 30:1 to 40:1 overleveraged. madness.

[ozymandius]

17. I hope you have an easy day, folks.

:donut: :donut: :donut:
Off to work I go.

:hi:

[Dr.Phool]

20. It's got to get better after the week from hell.

:hi:

[Demeter]

41. What, You Don't Like Turkey?

Or is it Abu Dhabi that is giving you indigestion?

[Dr.Phool]

46. Even though I ruined a turkey, that was the high point of the week.

At least it ended on a humorous note.

[Demeter]

47. I Send Good Thoughts and Best Wishes for a Better Week

and whole better year next month. God knows, we need it.

[Dr.Phool]

52. Thanks.

Between the pup and the vodka, I'll pull through.

[Tansy_Gold]

58. Thank the goddess for dogs

Last week wasn't too bad for me, but this week is proving to be a disaster. Vodka's not my schtick, but as long as I've got those seven brown eyes -- and one blue -- lookin' at me with complete and total and unconditional trust and love, the world can't be all bad.




TG

[UpInArms]

21. dollar watch

http://quotes.ino.com/chart/?acs=NYBOT_DX&v=i

Last trade 74.410 Change +0.045 (+0.06%)

US Dollar Tumbles as Demand for a Safe Haven Fully Dissipates

http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2009-12-02-0127-US_Dollar_Tumbles_as_Demand.html

The dollar’s most recent bid at a meaningful reversal – a surge in risk aversion through the end of last week that played to the currency’s safe haven status – has been fully unwound. The greenback extended its decline this week to put it back on pace with the tentative, bearish break that threatened a renewed bear wave last Wednesday just before liquidity thinned out before the US Thanksgiving holiday. Amongst the majors, the lost opportunity is clear. EURUSD held back the tides of reversal by securing 1.48 and has recently traded within 70 pips of setting a new 15-month high. In the battle of the funding currencies, USDJPY’s promising reversal from 14-year lows has failed to generate critical momentum. And, for those pairs that have a more direct link to underlying risk appetite (like AUDUSD and NZDUSD), the early signs of a dollar-favorable reversal are fading.

While there were a few fundamental contributions to price action through Tuesday’s session, the primary driver was risk appetite itself. Though it may be a vague influence on price action, the impact it has is anything but. Taking stock of investor’s demand for return, the Dow Jones Industrial Average rallied to its highest close in 14-months and spot gold set yet another record high. While it may be difficult to tangibly attribute a specific catalyst to a shift in sentiment, the impact is indisputable. Then again, today’s chief driver was far from vague. When the market caught whiff of the largest potential sovereign default since Argentina’s in 2001, the market responded in dramatic fashion – egged on partially by the low levels of liquidity. Since then, rational heads have surmised that with payments on total liabilities of under $60 billion would not likely threaten a global credit shock. What’s more, today’s news has more than halved the notional threat and confirmed officials were acting to prevent this threat from blowing up. World Dubai, the state-run group, reported that it was in negations to restructure $26 billion in liabilities with creditors while deeming the remainder of its obligations as being on a sound financial footing. So, while there are other cracks in the market’s foundation, it seems this immediate threat has passed.

In more ‘tangible’ fundamental channels, Tuesday’s scheduled event risk offered a mixed since of economic bearing; but more importantly, none of the indicators would spur heavy short-term volatility. Top billing for the session was the November ISM manufacturing report. While this data series was at one point a top market-mover in the past; we have seen its impact degrade along with its influence on overall growth. A sharper-than-expected pullback in the monthly reading would not overwhelm the general trend of recovery that the sector has developed through the year. While factory activity is not a viable, long-term substitute for consumer spending; it can help maintain a recovery until job and wage growth develop. In other news pending home sales for October grew for a ninth-consecutive month (a record for this series going back to 2001), the lagging nature of the report encouraged little response from the dollar. Looking ahead to tomorrow, the Fed’s Beige Book is top scheduled event risk with a look into the data the Fed will use to deliberate monetary policy. But, in the end will this report encourage volatility: not likely.

...more...

Gold Rally Driven by Fed Outlook, Oil Meets Key Resistance

http://www.dailyfx.com/forex/fundamental/forecast/daily/2009-12-02-1021-Gold_Rally_Driven_by_Fed.html

Gold continues to push higher with the rally driven by the market's outlook for Federal Reserve monetary policy in 2010 while the upswing in crude oil has taken prices up to challenge trend-defining technical resistance.

Commodities – Energy
Oil Tests Trend-Defining Resistance, Jobs and Inventory Data on Tap

Crude Oil (WTI)       $78.03       -$0.34       -0.43%

As we suggested yesterday, oil gained to test medium-term falling channel resistance near $79 after breaking above a minor downward-sloping channel earlier in the week. Prices are stalling at this juncture as a meaningful catalyst emerges, with a break higher targeting the significant technical and psychological hurdle at $80. On the fundamental front, November’s US employment change figures from ADP will be interesting to watch ahead of Friday’s more significant Nonfarm Payrolls data, with the health of the American consumer translates directly into expectations for oil demand going forward. Crude inventory figures from the US Department of Energy are also on the docket. Yesterday’s API inventory figures showed a decline in the stock of crude, and the DOE metric is expected to yield a similar outcome.



Commodities – Metals
Gold Sets Another Record High, Fed Outlook Driving Rally

Gold       $1212.43       +$15.82       +1.32%

Gold has continued to defy the skeptics (ourselves included), surging past the $1200 level to new record highs. We are in uncharted territory at this point from a technical perspective, but relative strength studies are firmly in overbought territory and speculative long positions are at the highest in at least 16 years, which point to prices that are highly overstretched at this point. Gold prices are now nearly 87% inversely correlated with the spread between March 2010 and December 2010 fed funds futures, suggesting recent gains are a reflection of the US interest rate outlook for next year and thereby a function of expectations of a weaker US Dollar rather than any supply/demand factors. In the near term, this means tomorrow’s ADP job figures are of most significance, with any meaningful improvement in the market’s perception of US labor market prospects being supportive of a more hawkish Fed and weighing on the yellow metal.

Silver       $19.17       +$0.08       +0.42%

Silver too shows a formidable correlation to the priced-in Fed outlook as reflected in the March – December 2010 fed funds futures spread, but the correlation is meaningfully weaker at 73.3%. Technically, prices are approaching major resistance at $19.47, the July 2008 swing high. Recent gains show sharp negative divergence with relative strength studies, hinting that (at least) a pullback is likely before any attempt to push higher and challenge record highs near $22.



...more...

[UpInArms]

22. Wells Fargo to close 122 California branches: report

http://www.reuters.com/article/businessNews/idUSTRE5B11PE20091202?feedType=RSS&feedName=businessNews

(Reuters) - Wells Fargo & Co said on Tuesday that it would fold up 122 California branches due to its takeover of Wachovia Corp last year, the Los Angeles Times reported.

The closures, scheduled to occur in April, will involve shutting down 101 Wachovia offices and 21 Wells Fargo locations, the bank's spokeswoman Jennifer Langan told the paper.

All affected employees will be allowed to opt for jobs at other Wells Fargo branches, the LA Times said.

The paper said most of the locations that will be closed are Wachovia offices that are smaller and less prominently located than nearby Wells Fargo branches.

...more...

[tclambert]

24. Some news on November car sales.

from: http://www.autoblog.com/2009/12/01/by-the-numbers-november-2009-strengthen-your-core-edition/

by John Neff (RSS feed) on Dec 1st 2009

It's pretty easy to stage a comeback when a prior year's monthly sales are so dismal, but that still doesn't dull the sheen off what happened last month for auto sales in the U.S.

Not surprisingly, Hyundai continues its winning ways with the largest increase in sales by volume at 45.91 percent. Newcomers to the I Know How To Sell Cars In A Down Market list include Nissan, up 19.94 percent, and Mercedes-Benz, up 19.11 percent. Subaru and Kia again perform flawlessly, posting gains of 23.95 and 18.27 percent, respectively.

Perhaps more interesting is the fact that all four core brands of General Motors (Chevrolet, Buick, Cadillac and GMC) posted positive sales numbers last month, and in the case of Buick rose 14.78 percent. Ford also continued to stay positive, but just barely posting 2.02 percent gain for the brand against a 0.04 decrease for the motor company. You can blame that on Lincoln and Mercury, both of which were down.

As the U.S. auto industry continues to claw its way out of this recession, the Chrysler Group is seemingly being left behind. Of the multi-brand companies we follow, the Pentastar performed the worst (-25.45 percent). The next worst performer, BMW Group, was down only 7.54 percent. With sales down only 8.09 percent, the Dodge brand was the company's best performer.
______________________

Of the 7 major car companies Autoblog reported on, Nissan and Toyota actually saw sales increase. Ford, GM, and American Honda were close to even. BMW, not really that high a volume player, saw a 7.5% decrease. Chrysler, down 25%, continues to sink. GM would be in positive territory if not for the "bad" brands Pontiac, Saturn, Saab, and Hummer. Volume-wise, GM had the most sales in North America for November, 151,427. Toyota came in second with 133,700. Ford was third at 123,167. Chrysler was 4th by volume, but at 63,560, they had just a little over half the sales of Ford.

Still a tough market. One of the commenters on the Autoblog article said most automakers are running at 40%-60% of capacity, and poor Chrysler is running at 25% capacity.

[tclambert]

25. More car news: GM CEO Fritz Henderson steps down

http://www.autoblog.com/2009/12/01/breaking-gm-ceo-fritz-henderson-steps-down/

Well, that was quick. Fritz Henderson, the recently appointed CEO of General Motors, is stepping down. Company chairman of the board Ed Whitacre (remember the "Satisfaction Guaranteed" commercials, that's the guy) is set to act as the interim CEO until a permanent replacement is found.

This marks the second CEO that beleaguered automaker General Motors has lost this year, the first being Rick Wagoner, who was asked to resign by the Obama Administration's Task Force for Autos. Over the last few months, deals that GM had made to offload Opel, Saturn and Saab have all fallen through, and some have reported on clashing styles between Whitacre and Henderson.

General Motors has just confirmed the news via a press conference being held as we speak. Stay tuned for more as we learn it.
____________________

They say he resigned. But speculation on the local news is it happened kinda like when the Cylons pointed a gun at President Baltar's head and said, "Sign the order!" OK, the local newscaster didn't phrase it exactly that way, but he would have if he were as much of a Battlestar Galactica fan as I am.

[DemReadingDU]

27. Something I read, or saw on TV, said Henderson was forced out

not exactly resigned

[tclambert]

30. Not sure yet. The press release didn't mention "health" reasons

nor the desire to "spend more time with his family."

[DemReadingDU]

31. GM car sales must be really bad

Henderson needed to go, quickly. And somebody will be brought in to ax the unions.

[tclambert]

62. See post #24. GM sales were actually pretty good in November.

Without Pontiac, Saturn, Saab, and Hummer numbers included, they would have shown increased sales vs. last Novemeber. Chevy, Cadillac, Buick, and GMC show improvement.

As to axing the unions, you may be right. The UAW has been withering for 30 years. Every chance they get, management has tried to hurt them more. Pensions and other benefits may vanish.

[AnneD]

40. Morning Marketeers.....

:donut: and lurkers. Computer problems have hindered me for the last few days. I still am having problems so I will make it short and to the point today.

1. Black Friday Houston style. Our economy here, while anemic, is better than many. Lots of folks were out early for extreme bargains on practical things. Like flies to the outhouse. After the bargains were gone, so were the shoppers. Friday afternoon, one could find a parking space close up. I hope the merchants can live on that kind of income the rest of the year. Lots of folks are cinching their belts.

2. Afghanistan. What can I say. I supported going in there and still do as long as our goal is to get rid of the Taliban terrorists and capture Ben Laden. That is the only reason to be in there. Karzi is nothing but and ex Chevron Bush appointed pipe line protecting stooge that has no support outside Kabul and I don't think it is wise to nation build around that guy. We help the local and protect them until they can protect themselves against the Tali ban then get the hell out. All else is folly at this point. We should have been in Afghanistan all along instead of being drug into Iraq. We have to hold our nose now and try to help as best we can and get out ASAP.

3. The Economy. I pray each night that Paul Volker lives long enough to finally have Obama actually listen and take his advice to heart. I also pray that those evil folks that have caused so much heartache to so many through their actions receive human justice and if possible, and at least Godly Judgment in my lifetime.

Happy hunting and watch out for the bears.

[Demeter]

42. Caracas 'closes compromised banks'

http://english.aljazeera.net/news/americas/2009/12/200912154548180133.html



The Venezuelan government has closed down four banks, saying authorities uncovered major financial problems after they took over the banks due to irregularities in their operations.

Two of the banks, Canarias and ProVivienda, will be permanently closed and their assets auctioned off, Ali Rodriguez, the finance minister, said on Monday.

"The damage caused has been so great that it has severely compromised the solvency of these institutions which therefore requires closed door intervention and their liquidation," Rodriguez said.

Authorities plan to rehabilitate the other two banks, Confederado and Bolivar.

Most deposits in the closed banks are expected to be covered by the state deposit insurance fund.

Government takeover

The four banks, which account for 5.7 per cent of Venezuela's banking sector, were taken over by the government on November 20, citing various violations.

Their owner, Ricardo Fernandez, a wealthy businessman who has close ties to the government, is under arrest.

Rodriguez said the government would pursue an investigation to determine who was responsible for the banks' problems and arrest them.

"Wherever they are, they will be found and brought to justice."

Two people have already been arrested in the affair. Ricardo Fernandez, a key investor, and Jose Camacho, his lawyer, are charged with misappropriating deposits and providing loans to other businesses in which they were investors...

Boris Segura, a senior Latin American analyst for the Royal Bank of Scotland, said
that given problems in some other banks, there could be more "cleaning up" of institutions like the four closed on Monday.

"What we might be seeing is a nationalisation of the system little-by-little," he said.

"That could be his long-term strategy for the banks."

The bank closures come a day after Hugo Chavez, the president, threatened to nationalise banks refusing to lend to the poor or failing to sufficiently aid Venezuela's development.

In his weekly television show "Alo Presidente" on Sunday, Chavez said: "I'm telling the private bankers, 'he who slips up loses', I'll take over the bank, whatever its size."

[Joe Chi Minh]

71. Oh NO! Chavez is not going after bank fraudsters, is he?

[Demeter]

45. The World’s Least Powerful Man The Obama Puppet By Paul Craig Roberts

http://www.informationclearinghouse.info/article24098.htm

.....Essentially, Obama is irrelevant.

President Obama can promise that he is going to bring the troops home, and the military lobby says, “No, you are going to send them to Afghanistan, and in the meantime start a war in Pakistan and maneuver Iran into a position that will provide an excuse for a war there, too. Wars are too profitable for us to let you stop them.” And the mere president has to say, “Yes, Sir!”

Obama can promise health care to 50 million uninsured Americans, but he can’t override the veto of the war lobby and the insurance lobby. The war lobby says its war profits are more important than health care and that the country can’t afford both the “war on terror” and “socialized medicine.”

The insurance lobby says health care has to be provided by private health insurance; otherwise, we can’t afford it.

The war and insurance lobbies rattled their campaign contribution pocketbooks and quickly convinced Congress and the White House that the real purpose of the health care bill is to save money by cutting Medicare and Medicaid benefits, thereby “getting entitlements under control.”

Entitlements is a right-wing word used to cast aspersion on the few things that the government did, in the distant past, for citizens. Social Security and Medicare, for example, are denigrated as “entitlements.” The right-wing goes on endlessly about Social Security and Medicare as if they were welfare give-aways to shiftless people who refuse to look after themselves, whereas in actual fact citizens are vastly overcharged for the meager benefits with a 15% tax on their wages and salaries.

Indeed, for decades now the federal government has been funding its wars and military budgets with the surplus revenues collected by the Social Security tax on labor.

To claim, as the right-wing does, that we can’t afford the only thing in the entire budget that has consistently produced a revenue surplus indicates that the real agenda is to drive the mere citizen into the ground...

MUCH MORE AT LINK

[DemReadingDU]

54. It's about lobbyists, big corporations, money, status quo for wealthy

We the people? Healthcare? Jobs? Not much nowadays.

[Demeter]

49. Australia raises rates for third month

http://www.ft.com/cms/s/0/173f548e-de3a-11de-8c63-00144feabdc0.html

Australia’s central bank lifted interest rates for a third consecutive month on Tuesday amid signs that inflationary pressures were building in an economy expected to return to “trend” growth of 3.25 per cent next year.

The 25 basis point rise to 3.75 per cent matches increases in the past two months and is part of the Reserve Bank of Australia’s strategy of weaning the economy off historically low interest rates. The benchmark rate fell to a 49-year low of 3 per cent earlier this year.

“Growth in 2010 is likely to be close to trend and inflation close to target,” said Glenn Stevens, RBA governor. “With the risk of serious economic contraction in Australia having passed, the board has moved at recent meetings to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker.”

Annette Beacher, senior strategist at TD Securities, said the RBA had provided a bullish growth assessment and she forecast rates would hit 4.5 per cent in June and 5.25 per cent in 12 months. She said trend growth for the period to December 2010 was forecast to be 3.25 per cent.

The Australian economy has been robust during the global downturn. It skirted recession by recording only one quarter of contraction in gross domestic product. Unemployment has also remained lower than feared and came in at 5.8 per cent in October...

AUSTRALIA MAY BE LIVING A DELAYED LIFE---UNLESS IT IS SUFFICIENTLY DECOUPLED FROM THE GLOBAL ECONOMY--EVIDENTLY THE MULTINATIONALS HAVEN'T GUTTED IT. YET.

[Demeter]

50. CBOE on course to demutualise

http://www.ft.com/cms/s/0/acb8bb24-de3d-11de-8c63-00144feabdc0.html

The Chicago Board Options Exchange, the US’s primary options-trading venue and one of the world’s last big member-owned financial exchanges, has struck a deal to remove “within days or weeks” the last hurdle to demutualisation.

The exchange made the announcement on Monday night after reaching a final settlement of a long-running legal battle with members of the Chicago Board of Trade.

The settlement moves the company closer to an initial public offering or a bid from a larger exchange operator.

The CBOE is likely to be an attractive target for a takeover by a company looking to expand in the US equity options sector, which had grown at a furious pace in the years before the financial crisis and whose trading volumes have held up relatively well even in the past year...

[Demeter]

51. UN halts funds to China wind farms

http://www.ft.com/cms/s/0/128a52de-deaf-11de-adff-00144feab49a.html

The United Nations body in charge of managing carbon trading has suspended approvals for dozens of Chinese wind farms amid questions over the country’s use of industrial policy to obtain money under the scheme.

China has been by far the biggest beneficiary of the so-called Clean Development Mechanism, a carbon trading system designed to direct funds from wealthy countries to developing nations to cut greenhouse gases.

China has earned 153m carbon credits, worth more than $1bn and making up almost half of the total issued under the UN-run programme in the past five years, according to a Financial Times analysis. The credits are currently trading at about $10-$15 each.

Industrial countries can meet part of their commitments under the 1997 Kyoto protocol to battle global warming by financing projects that mitigate emissions in developing nations. Projects only qualify for credits if the applicants prove they would not have been built anyway, a condition known as “additionality”.

The controversy over Chinese wind farms and other CDM projects will intensify calls for the system to be overhauled at the UN’s Copenhagen conference, which opens on Monday.

China-based consultants said the CDM’s board in Bonn began refusing approval for Chinese wind power projects in the middle of 2009, over concerns Beijing had deliberately lowered subsidies to make them eligible for funding.

“The board now suddenly says the projects are not additional, whereas in the past they found no fault with additionality,” said Yang Zhiliang, general manager of Accord Global Environment Technology, one of China’s leading CDM consultants. “They are blaming the Chinese government and its decision to lower subsidies.”

Ms Yang said Beijing had other aims, such as limiting overcapacity in the wind turbine sector, in setting subsidies. “The Chinese government wouldn’t adjust subsidies just to bag CDM money,” she said.

Industry officials said the CDM board had refused approval for about 50 wind power projects. Doubts over whether CDM funding will be available in the future has also prompted power companies to stall new wind power investments.

Lex de Jonge, head of the UN board, confirmed that “a handful of projects” had been suspended but declined to give reasons. Michael Wara, of Stanford University, said there were considerable problems in China with the CDM’s rules.

With the emphasis that Beijing is now placing on both smaller hydro-electric projects and wind power, the government would have supported at least some of the projects receiving money under the CDM scheme anyway.

“It is hard to believe that there is additionality in many of the energy projects in China right now,” he said.

Chinese government officials quoted in the local media defended the CDM process as an effective mechanism for helping developed countries cut emissions and the only one that gave poorer nations a role.

Chen Hongbo, of the Chinese Academy of Social Sciences, said although the system needed reform, it should be maintained. “I think that after 2012 , the CDM cannot stop immediately,” he said.

SOUNDS LIKE A REGULAR BOONDOGGLE--OF COURSE, WE IN THESE BENIGHTED UNITED STATES KNOW NOTHING ABOUT THIS--IT'S PART OF THE IGNORANCE CAMPAIGN, OR AS ENGINEERS CALL IT, BEING ON THE MUSHROOM FARM: KEPT IN THE DARK AND FED BULLSHIT.

[Demeter]

53. FROM AUGUST: Pimco: Dollar to Fall as Loses Reserve Currency Status

http://www.nakedcapitalism.com/2009/08/pimco-dollar-to-fall-as-loses-reserve.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Even though this blog and some others have warned of the vulnerabilty of the greenback to erosion of its reserve currency status, many have dismissed that idea as if it were a lunatic fringe view. Yet pound sterling was once the reserve currency and is no more.

Now Pimco has joined the camp of seeing the dollar as waning, and sees emerging economies as the place to be.

From Bloomberg:

Pacific Investment Management Co., which runs the world’s biggest bond fund, said the dollar will weaken as the U.S. pumps “massive” amounts of money into the economy.

The dollar will drop the most against emerging-market counterparts, Curtis A. Mewbourne, a Pimco portfolio manager, wrote in a report on the company’s Web site. The greenback is losing its status as the world’s reserve currency, he said.

“Investors should consider whether it makes sense to take advantage of any periods of U.S. dollar strength to diversify their currency exposure,” Mewbourne wrote in his August Emerging Markets Watch report. “The massive amounts of U.S. dollar liquidity produced in response to the crisis” have helped reduce demand for the currency, he wrote…

“We are positive on the Asian currencies against the dollar and think they will continue to rally,” de Mello said in an interview. “I do think the diversification of reserves is something that’s important and I think we’ll see some from China into other currencies and this will benefit as well Asian currencies and other emerging currencies.”

[Demeter]

55. AUGUST AGAIN: Rogoff Shreds "When in Doubt, Bail It Out" Policy

http://www.nakedcapitalism.com/2009/08/rogoff-shreds-when-in-doubt-bail-it-out.html


Grr. It was so obvious and it never occurred to me…:”When in doubt, bail it out.” I am jealous.

Kenneth Rogoff, who among other things has (with Carmen Reinhart) has created a large dataset on financial crises through history, today takes on the exceedingly permissive posture the US has adopted to the banking industry, simply handing over fistfulls of money with virtually no strings attached, then occasionally making a great show about boxing their ears a bit over private jets. In the meantime, the banks get to run very large risks on the taxpayer nickel and pay themselves handsomely, assured of another rescue if they do screw up. You couldn’t do a better job of writing a prescription for another train wreck.

This piece by Rogoff is actually refreshingly pointed, and shreds the conventional wisdom that supports the policy of enabling banks that had been engaged in reckless policies. From the Financial Times:

“When in doubt, bail it out,” is the policy mantra 11 months after the September 2008 collapse of Lehman Brothers. With the global economy tentatively emerging from recession, and investors salivating over the remaining banks’ apparent return to profitability, some are beginning to ask: “Did we really need to suffer so much?”

Too many policymakers, investors and economists have concluded that US authorities could have engineered a smooth exit from the bubble economy if only Lehman had been bailed out. Too many now believe that any move towards greater financial regulation should be sharply circumscribed since it was the government that dropped the ball. Stifling financial innovation will only slow growth, with little benefit in terms of stemming future crises; it is the job of central banks to prevent bank runs by reacting forcefully in a potential systemic crisis; policymakers should not be obsessed with moral hazard and should forget trying to micromanage the innovative financial sector.

Yves here, OK, I have to stop. Even though this is a straw man, reading that list makes me ill. Back to Rogoff:

This relatively sanguine diagnosis is tempting, but dangerous. There are three basic problems with the view that the costs of greater bank regulation outweigh the benefits, and that the whole problem was the botched Lehman bail-out.

First, the US economy was not exactly cruising along at warp speed in the run-up to September 2008. The National Bureau of Economic Research has the US recession beginning at the end of 2007. Financial markets had begun to exhibit distress from the subprime problem by the summer of 2007. The epic housing bubble had begun to burst six months earlier. Given that the US consumer had been propelling the global economy for a quarter of a century, was it reasonable to think that the inevitable collapse of the US housing market would be a non-event? As Carmen Reinhart and I argue in our forthcoming book This Time is Different: Eight centuries of financial folly, by most quantitative measures, the US economy was heading towards a deep post-war financial crisis for several years before the subprime crisis. Indeed, in related papers, we argued the case long before Lehman hit.

Second, the view that reining in the financial sector jeopardises future growth needs to be nuanced. Certainly enhanced financial development is integral to achieving greater growth and stability. But economists have less empirical evidence than we might care to admit on which financial sector activities are the most helpful. In general, the links between growth and financial development are complex. Mortgage “innovation” in the US was supposed to be helpful by lowering interest rates to homebuyers. Yet, as the crisis revealed, innovation was also a mechanism for levering implicit taxpayer subsidies. More generally, financial innovation was supposed to bring diversification and stability. But in a system-wide breakdown, it also fuelled contagion.

Third, it is dangerous to point to the nascent restoration of profits in the financial sector as clear evidence of a corresponding benefit to the economy. There is an element of arbitrage, as banks borrow at low rates against the implicit guarantee of a government bail-out in the event of a crisis. Do people really believe, as some argue, that moral hazard is a non-issue? Why should large systemically critical financial institutions be allowed to heavily leverage themselves with short-term borrowing? What would be lost if regulators placed stricter capital requirements to discourage arbitrage activities that excessively expose too-big-to-fail banks to systemic risk? Certainly economists have models of why it can be efficient for lenders to keep borrowers on a short leash. Yet these models do not explain why the leash has to be wrapped around borrowers’ necks three dozen times, as in the case of a highly leveraged bank.

The fact is that banks, especially large systemically important ones, are currently able to obtain cash at a near zero interest rate and engage in risky arbitrage activities, knowing that the invisible wallet of the taxpayer stands behind them. In essence, while authorities are saying that they intend to raise capital requirements on banks later, in the short run they are looking the other way while banks gamble under the umbrella of taxpayer guarantees.

If the optimists are wrong, does this mean that the pre-Lehman financial system was one big Sodom and Gomorrah, inevitably condemned to doom? We will never know. Again appealing to my work with Ms Reinhart, theory and history both tell us that any economy that is excessively leveraged with short-term borrowing – be it government, banking, corporate or consumer – is highly vulnerable to crises of confidence. Accidents that are waiting to happen usually do, but when? Neither statistical analysis of history, nor economic theory offer tight limits on the timing of collapses, even to within a year or two.

Certainly the US and global economy were already severely stressed at the time of Lehman’s fall, but better tactical operations by the Federal Reserve and Treasury, especially in backstopping Lehman’s derivatives book, might have stemmed the panic. Indeed, with hindsight it is easy to say the authorities should have acted months earlier to force banks to raise more equity capital. The March 2008 collapse of the fifth-largest investment bank, Bear Stearns, should have been an indication that urgent action was needed. Fed and Treasury officials argue that before Lehman, stronger measures were politically impossible. There had to be blood on the streets to convince Congress. In any event, given the system’s manifest vulnerabilities, and the impending tsunami of the housing price collapse, it is hard to know if deferring the crisis would have made things better or worse, particularly given the obvious paralysis of the political system.

Economists will conduct post-mortems of the crisis for decades. In the meantime, common sense dictates the need for stricter controls on short-term borrowing by systemically important institutions, as well as regularly monitored limits on oversized risk positions, taking into account that markets can be highly correlated in a downturn. Better macroprudential action is needed, particularly in reining in sustained, large current account deficits. While such deficits can sometimes be justified, prolonged imbalances fuel leverage and can give the illusion that high growth and asset prices are sustainable. There should also be more international co-ordination of financial supervision, to prevent countries using soft regulation to bid for business and to insulate regulators from political pressures.

It is good that the economy appears to be stabilising, albeit on the back of a vast array of non-transparent taxpayer subsidies to financial institutions. But this strategy must not be relied on indefinitely because it risks compromising the fiscal credibility of rich-country governments. The view that everything would be fine if Hank Paulson, then US Treasury secretary, had simply underwritten a $50bn bail-out of Lehman is dangerously misguided. The financial system still needs fundamental reform, and not just starting in five years.

[Demeter]

56. Things to come PAUL KRUGMAN

http://krugman.blogs.nytimes.com/2009/11/30/things-to-come/



What’s going to happen, economically and politically, over the next few years? Nobody knows, of course. But I have a vision — what I think is the most likely course of events. It’s fairly grim — but not in the approved way. This vision lies behind a lot of what I’ve been writing, so it might clarify things for regular readers if I laid it out explicitly.

Start with the short-term economics. What we’re in right now is the aftermath of a giant financial crisis, which typically leads to a prolonged period of economic weakness — and this time isn’t different. A bolder economic policy early this year might have led to a turnaround, but what we actually got were half-measures. As a result, unemployment is likely to stay near its current level for a year or more.

And politically it’s hard to do anything about that. Those economic half-measures have landed the Obama administration in a trap: much of the political establishment now sees stimulus as having been discredited by events, so that it’s very hard to come back and scale the policy up to where it should have been in the first place. Also, with the apocalypse on hold, the deficit scolds have come back into their own, decrying any policy that actually involves spending money.

The result, then, will be high unemployment leading into the 2010 elections, and corresponding Democratic losses. These losses will be worse because Obama, by pursuing a uniformly pro-banker policy without even a gesture to popular anger over the bailouts, has ceded populist energy to the right and demoralized the movement that brought him to power.

Despite all this, the midterms probably won’t give Republicans the majority in the House. But the losses will be big enough to deny Obama a working majority for any major initiatives in the rest of his first term. (My guess is that he’ll be reelected thanks to the true awfulness of the Republican nominee). Since Republicans are dead set against any of the things I think could help pull the economy out of its rut, this means more economic stagnation.

Along with this will come a process of defining prosperity down. All the wise heads will tell us that 8 or 9 percent unemployment — maybe even 10 percent — is the “new normal”, and that only irresponsible people want to do anything about the situation.

So what I see is years of terrible job markets, combined with political paralysis.

I hope I’m wrong about all this. But my sense is that to have any hope of breaking out of this trap, Obama and company have to take risks — they have to propose new initiatives that might not pass, and be prepared to run against the do-nothing Republicans if the initiatives fail. That’s not happening now; as best as I can tell, the administration strategy is to insist that only a few minor course corrections are needed, and to wait for the jobs to start coming in.

Maybe they’ll get lucky. But hope is not a plan.

What can the rest of us do? Progressives have to keep the pressure on. The time for trusting the administration to do what’s necessary is past — all indications are that it won’t, not on its own. But maybe, just maybe, the president can be brought to see the danger he’s running by playing it safe.

[Demeter]

57. AIG Slashes US Debt Under Deal With New York Fed

http://www.cnbc.com/id/34219729

Bailed-out insurer AIG said on Tuesday it had closed a pact with the New York Federal Reserve that slashes its debt under a credit facility by more than half, to $17 billion.

The deal is a big step in American International Group's efforts to repay loans from a massive taxpayer bailout, and also moves it closer to spinning off two big life insurance units, which could bolster its financial position further.

AIG said that as of Dec. 1, the outstanding principal balance owed to the New York Fed, from loans received as part of the 2008 bailout, had been reduced to $17 billion. That compares with an outstanding balance of about $45 billion last week, including interest and fees.

AIG shares rose more than 11 percent to above $31, partly reversing a steep fall in the stock on Monday after investors were spooked by concerns over a possible shortfall in reserves for non-life insurance claims. (See Video AT LINK)

The debt reduction is the result of a deal first announced last March to give the New York Fed a preferred stake in two of AIG's biggest life insurance units, American Life Insurance Co (Alico) and American International Assurance (AIA), effectively swapping debt for equity.

"AIG continues to make good on its commitment to pay the American people back," Chief Executive Robert Benmosche said in a statement. However, he warned the company's results could continue to be marked by volatility, and said that even after AIG pays back all its debts, the federal government will continue to be the insurer's majority owner.

AIG will take a charge of about $5.2 billion in the fourth quarter related to the New York Fed transaction, as earlier disclosed. The company reversed a six-quarter losing streak by posting profits in the two latest quarters.

Besides the $17 billion balance on the New York Fed credit facility, AIG also has outstanding borrowings under a separate loan from the U.S. Treasury of about $44 billion...Under Tuesday's agreement, AIG's ability to borrow under the New York Fed credit facility has been reduced to $35 billion from $60 billion.

AIG said it was moving ahead with pursuing initial public offerings or third party sales for AIA and Alico, and in a separate statement said it was moving forward with the separation of Alico.

AIG retains the common interests in the two units, and will benefit should the market valuation of the two units be in excess of $25 billion.

[Demeter]

59. FINAL EXAM TIME: ECONOMICS 601 William Black "This Economic Disaster"

1.5 HOUR VIDEO SUMMARIZES RECENT EVENTS IN CONTEXT, RIPS OUR VILLAINS, AND LOOKS TO THE FUTURE:

Readers may know that William Black, who teaches economics and law at the University of Missouri, Kansas City, has been a vociferous critic of US policy on the financial crisis. In this lecture, he not only revisits one of his favorite topics, fraud, but also examines a wealth transfer from the middle classes to the banksters.

http://www.nakedcapitalism.com/2009/08/william-black-this-economic-disaster.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

[mrdmk]

72. This video needs its own thread

[Demeter]

75. Feel Free!

I'm having time limits.

[Demeter]

60. Obama’s Teflon Melting as Outrage Over Health Care Heats Up

http://www.nakedcapitalism.com/2009/08/guest-post-obamas-teflon-melting-as.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

From Marshall Auerback, an investment management and commentator who writes for New Deal 2.0.

No more free passes. A number of the President’s supporters who expressed concerns about the pro-Wall Street tilt of his early administration decisions were prepared to give him the benefit of the doubt so long as he came through on healthcare. Obama’s statement over the weekend that the public option for insurance coverage was “just a sliver” of the overall proposal, and the suggestion by Health and Human Services Secretary, Kathleen Sebelius, that a direct government role in a system intended to provide virtually universal coverage was “not the essential element“, appear to provide conclusive evidence of this administration’s capitulation to corporatist interests. The “change you can believe in” President now looks more like a Manchurian candidate of the right.

The disturbing thing about Obama taking the Rubinite path is that he now leaves government exposed as the lightning rod for everyone’s problems, rather than the solution. If he had taken a more populist tack, more public anger could have been directed at the right people from the start — as occurred under the FDR administration.

Extending the Bush/Paulson bailout policies (and, indeed, expanding them) and ignoring the needs of the productive economy, have largely discredited government fiscal activism. Obama no longer appears willing to let the fiscal position of the federal budget grow as needed to meet current challenges.

When one adds extreme income imbalances and a comparatively weak social safety net (in contrast to those supposedly horrible “socialists” in Europe), then one has the makings of major social unrest, slowly manifesting itself in town hall meetings across the country this August.

Growing social unrest is something we have warned about for months…but it’s not being taken seriously by Obama’s people. The eruption over the AIG bonuses was the tip of the iceberg. The “experts” said it was “beside the point”, but it wasn’t. It was a basic issue of fairness that could be readily understood by the vast majority of Americans in a way that complex credit default swaps could not be.

And the experts, who derided the eruption over AIG as a sign of irresponsible populism, are now being similarly dismissive of the town hall protests ostensibly being directed against a “government takeover of health care”. True, Obama has responded ineffectively to the absurd distortions of his plan (well, what we’ve seen of his ‘plan’ as he has delegated much of the writing of it to Congress). But when government is no longer perceived as an instrument serving the general good, one can understand the susceptibility to the gross distortion of today’s healthcare proposals, however irrational they might appear to the “experts”. The rage reflects a large, inchoate sense that the government is heading in a horribly wrong direction: At its most basic level, it looks increasingly as if the government is simply rewarding bad behaviour, particularly given how the housing situation and banking bailout has been handled.

In a recent post, we discussed debt repudiation as one manifestation of American citizens’ growing sense of helplessness. Could tax non-compliance be far behind? Certainly, it is a possibility (although one we would certainly NOT advocate), given the underlying perception of unfairness. Both debt repudiation and tax non-compliance come when citizens collectively arrive at the decision that the entire power structure has no legitimacy because it no longer serves the broader population’s needs and interests.

I am quite sympathetic to the “functional finance” view that there is no inherent “value” in money (not even gold), except insofar as one imparts a value to it via a commercial or private-public transaction. Indeed, the ultimate transaction in today’s world is payment of taxes (you don’t pay them, you go to jail). The sanction is so high because the entire legitimacy, indeed functioning of a state depends on its citizens offering their labour in exchange for goods and services. Abba Lerner also suggested:

The modern state can make anything it chooses generally acceptable as money…It is true that a simple declaration that such and such is money will not do, even if backed by the most convincing constitutional evidence of the state’s absolute sovereignty. But if the state is willing to accept the proposed money in payment of taxes and other obligations to itself the trick is done.

But the quid pro quo is that there must be tax compliance.

If debtors’ revolt extends to tax non-compliance, then you’ve got the makings of a severe inflationary problem. Hyperinflations often occur when the government can print ever increasing quantities of money, but find little for sale, even as resources sit idle. The brief history of the Confederacy during the US civil war is an excellent illustration of this phenomenon. This does not require full employment; indeed, most hyperinflations take place with lots of unemployment because once hyperinflation sets in, it is virtually impossible to undertake ‘money now for money later’ operations..

The printing press, then, becomes a symptom of the problem, not the cause because it is the breakdown of the tax system which causes the government’s fiat money to become worthless, not the running of the printing presses per se. Tax gives value to a fiat currency. When one has widespread tax avoidance, it marks the beginnings of true political dysfunction.

To be sure, we haven’t come close to this point yet. But it becomes an increasing risk for an administration that seems determined to recreate the financial conditions that led to the disaster we face now. It risks destroying its legitimacy whilst the rest of its political agenda is hijacked by a small group of wealthy plutocrats at the top. In the words of Yves Smith, “All Team Obama has done on the banking front is write a lot of blank checks, hold some bogus “stress tests” in lieu of doing the real thing, and raise a stink on a few symbolic issues to try to paper over the failure to embark on real and badly needed reforms.”
Similarly, having Big Pharma enlisted in the negotiations to construct a health care plan (as reported in the NY Times last week) is akin to Dick Cheney using Enron executives to construct Bush’s national energy policy.

It is almost as if Obama’s pledge to not deal with lobbyists was never made. His “teflon” is wearing off faster than a hot frying pan.

As Howard Dean notes, without a direct government role in health care, you cannot achieve real reform. And, as Professor James K. Galbraith argues, the intrinsic costs of providing public health insurance are considerably lower than those for private health insurance. In The Predator State, Gailbraith observes,

There are no expensive inputs to purchase, not uncertainties of design or technology with which we have to concern ourselves. The major inputs are personnel and computing capacity. There are few major issues of innovation; unlike the rapid changes characteristic of medical practice, the service of providing insurance to pay for them does not evolve rapidly. A successful private insurance company follows an ancient formula: it stratifies its clientele by risk class and charges minimums adapted to each class. The most successful companies are generally those that manage to exclude the riskiest clients.

Public health insurance entities such as Medicare do not evaluate risk because they are universal. Therefore, they save the major cost associated with private health insurance. They pay their personnel at civil servant salary scales and are under no obligation to provide a return to shareholders via dividends or meet a target rate of return.

Selective provision of private health insurance is invariably inferior to universal public provision. There are ample examples of successful, publicly supported (but privately administered) healthcare programs overseas in Europe and Asia. Yet, we appear to be heading in the opposite direction. Given the inappropriate premises under which the Obama Administration has continued to operate (e.g. credit flows from the top down, rather than the bottom up, banks are suffering from illiquidity, not insolvency, we “can’t afford” a public health insurance option), we may expect that today’s many problems will continue to languish.
All of which will heavily constrain the capacity of the US economy to recover and may well lead to a Japanese-style lost decade of economic stagnation.

[fasttense]

65. Some of those Republicon talking points sure got spun by Auerback

Those all so wonderful, spontaneous, grass root protests of tea baggers. Yeah right, as if those tea baggers who stormed the town halls aren't bussed in, briefed, fed and given signs to carry by the very same corporations and uber wealthy who are making a bundle off the bailouts. The corporatist are playing both sides of the fence and this guy falls for it.

Sure people are angry, sure there is a populist trend but it is being manipulated and posed by corporations for the corporate news. Stir up a few racists, confederate flag lovers, and neo-nazis and you've got the ingredients for fake outrage and a revolt of the idiots.

Now if someone would put in as much effort in stirring up the liberals, progressives and real populist, then I would buy the social unrest is coming trumpet of Dick Armey's army of fools.

[Demeter]

66. And What Happened to the Liberals?

Police brutality, harassment via exclusion, illegal arrests and detentions, assault, even death. Free speech zones. Basic ignoring (and by our own Democratic legislators, even!)

No, I'm afraid the next step to raising the liberals is Rebellion. At 55, I'm ready to give up my life for my country and my descendants. It will be a Boomer thing, because Boomers, having lost it all, will have only upside results. But that's where it's going. I figure by the time I hit 65, if not before.

It will be the Granny Revolution--piss and vinegar, not Velvet; Purple and Red, not Orange. Cursing, not Singing. And it will be very sad, but very necessary.

[burf]

61. I saw this over at Daily Job Cuts

MarketWatch didn't leave the headline up for long. Can't imagine why. My guess it doesn't go with official line on the improving economy.

BOSTON (MarketWatch) -- Fitch Ratings on Wednesday said late payments on credit cards rose again in November and are close to setting record highs as consumers continue to struggle to pay off debt in a weak job market. Payments that are late by at least 60 days rose to 4.41% in November. Late-stage delinquencies are 31% higher than a year ago and just below the record high of 4.45% set in June, the ratings agency said. "Credit-card delinquencies are on the rise again and cardholder defaults will retest recent highs as we head into the new year," said Michael Dean, managing director at Fitch. "Consumer credit quality remains under significant strain as a result of the persistent weakness in the labor markets."

Link: http://www.marketwatch.com/story/credit-card-delinquencies-near-record-high-fitch-2009-12-02