Saturday, January 31, 2009
Hyperinflation is a possibility, say Morgan Stanley
As the year progresses we will be reading more articles like this one.-Lou
Hyperinflation is a possibility, say Morgan Stanley
That’s not in Zimbabwe by the way.
Morgan Stanley’s Jocahcim Fels and Spyros Andreopoulos look at the possibility of hyperinflation hitting the western shores of the UK, Europe and the US in their latest note. Their conclusion is a little scary.
One stark lesson from the ongoing financial and economic crisis is that so-called black swans — large-impact, hard-to-predict and seemingly rare events — can occur more frequently than generally believed.
With policymakers around the world throwing massive conventional and unconventional monetary and fiscal stimuli at their economies, we think that it is worth exploring the black swan event of very high inflation or even hyperinflation.
While such an outcome is clearly not our main case, the risk of hyperinflation cannot be dismissed very easily any longer, in our view. We discuss the historical evidence, the conditions that can lead to very high or hyperinflation, and whether and how it might happen again.
So hyperinflation is a black-swan event that, given all the other black-swan events of late, should not be dismissed.
Read Article Here:
http://ftalphaville.ft.com/blog/2009/01/30/51876/hyperinflation-is-a-possibility-say-morgan-stanley/
Hyperinflation is a possibility, say Morgan Stanley
That’s not in Zimbabwe by the way.
Morgan Stanley’s Jocahcim Fels and Spyros Andreopoulos look at the possibility of hyperinflation hitting the western shores of the UK, Europe and the US in their latest note. Their conclusion is a little scary.
One stark lesson from the ongoing financial and economic crisis is that so-called black swans — large-impact, hard-to-predict and seemingly rare events — can occur more frequently than generally believed.
With policymakers around the world throwing massive conventional and unconventional monetary and fiscal stimuli at their economies, we think that it is worth exploring the black swan event of very high inflation or even hyperinflation.
While such an outcome is clearly not our main case, the risk of hyperinflation cannot be dismissed very easily any longer, in our view. We discuss the historical evidence, the conditions that can lead to very high or hyperinflation, and whether and how it might happen again.
So hyperinflation is a black-swan event that, given all the other black-swan events of late, should not be dismissed.
Read Article Here:
http://ftalphaville.ft.com/blog/2009/01/30/51876/hyperinflation-is-a-possibility-say-morgan-stanley/
Financial Market Review
Stocks Have Worst January Drop in History
By Lou Scatigna
Stocks posted the worst performance ever for a January. Many investors looked to the new year with hope that with 2008's horrible year in the history books, 2009 would offer better times. There is an old adage on Wall Street: "As goes January so goes the year". If that is the case do not expect 2009 to be much different than 2008.
The SP500 index declined 8.6% in January, the worst performance ever recorded for a January. The Dow Jones Industrials drop even more, declining 8.8% also the worst performance for any January.
According to the Stock Traders Almanac's January Barometer, the month of January tends to predict the direction of the market with a 91.4% accuracy ratio, with only five major errors recorded since 1950. That means that the odds are 91.4% that the market will end down for the year, not very optimistic.
Continued problems in the financial sector was the main culprit in January's historically bad performance. Banks across the globe reported multi-billion dollar losses. Defacto nationalization also took it's toll on share prices as shareholders braced for massive dilution as governments took equity positions in the worlds biggest banks.
Corporate earnings reports for the 4th quarter 2008 were largely worse than expected. Many companies downgraded forward looking projections indicating that the economy is still contracting at an accelarating rate.
January retail sales as well as the all important payroll report should indicate that the worst is yet to come for the economy. The payroll report comes out next Friday and will be a main driver of the market. Some economists predict job losses of between 700,000 and 1 million.
The one bright spot in financial markets was the precious metals sector. Gold was up nicely in January closing at a six month high around $925/oz. Gold mining stocks performed relatively well in January. Concerns about the expansion of the money supply worldwide have driven investors to gold and silver as a hedge against currency debasement and future inflation.
Energy prices showed continued weakness with Crude Oil down 10% for the month. Gasoline on the other hand has risen smartly at the pump, rising from a low of about 1.35/gallon to 1.70.
By Lou Scatigna
Stocks posted the worst performance ever for a January. Many investors looked to the new year with hope that with 2008's horrible year in the history books, 2009 would offer better times. There is an old adage on Wall Street: "As goes January so goes the year". If that is the case do not expect 2009 to be much different than 2008.
The SP500 index declined 8.6% in January, the worst performance ever recorded for a January. The Dow Jones Industrials drop even more, declining 8.8% also the worst performance for any January.
According to the Stock Traders Almanac's January Barometer, the month of January tends to predict the direction of the market with a 91.4% accuracy ratio, with only five major errors recorded since 1950. That means that the odds are 91.4% that the market will end down for the year, not very optimistic.
Continued problems in the financial sector was the main culprit in January's historically bad performance. Banks across the globe reported multi-billion dollar losses. Defacto nationalization also took it's toll on share prices as shareholders braced for massive dilution as governments took equity positions in the worlds biggest banks.
Corporate earnings reports for the 4th quarter 2008 were largely worse than expected. Many companies downgraded forward looking projections indicating that the economy is still contracting at an accelarating rate.
January retail sales as well as the all important payroll report should indicate that the worst is yet to come for the economy. The payroll report comes out next Friday and will be a main driver of the market. Some economists predict job losses of between 700,000 and 1 million.
The one bright spot in financial markets was the precious metals sector. Gold was up nicely in January closing at a six month high around $925/oz. Gold mining stocks performed relatively well in January. Concerns about the expansion of the money supply worldwide have driven investors to gold and silver as a hedge against currency debasement and future inflation.
Energy prices showed continued weakness with Crude Oil down 10% for the month. Gasoline on the other hand has risen smartly at the pump, rising from a low of about 1.35/gallon to 1.70.
Gold at Six Month High
click on chart to enlargeThe chart for gold looks very bullish. Interesting to see gold rise in the face of a strong dollar market. Investors are no longer fleeing to U.S. Treasuries as a safe haven but to gold instead. This is an important change in investor psychology and bodes well for a rise to record prices in the coming months (or weeks or days)-Lou
Gold ends at six-month high on safe-haven buying
Holdings in the largest gold ETF have leaped 8% in one month to record high
NEW YORK (MarketWatch) -- Gold futures rose Friday, ending the week at their highest level in six months as investors sought the safety of the metal following government data that showed the U.S. economy contracted the most in 27 years during the fourth quarter.
Holdings in the largest gold ETF have leaped 8% in one month to record high
NEW YORK (MarketWatch) -- Gold futures rose Friday, ending the week at their highest level in six months as investors sought the safety of the metal following government data that showed the U.S. economy contracted the most in 27 years during the fourth quarter.
Rising demand for the metal has pushed holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by gold, to a new record level.
Gold for February delivery closed up $22.20, or 2.4%, at $927.30 an ounce on the Comex division of the New York Mercantile Exchange, the loftiest closing level for a front-month contract since July.
The benchmark contract has risen 3.5% this week and 4.9% this month.
"Demand remains very high internationally for ETFs, gold certificates and bullion coins and bars," said Mark O'Byrne, executive director at Gold and Silver Investments. We've seen "continuing safe haven demand for gold" due to "sharp deterioration in the global economy."
"Demand remains very high internationally for ETFs, gold certificates and bullion coins and bars," said Mark O'Byrne, executive director at Gold and Silver Investments. We've seen "continuing safe haven demand for gold" due to "sharp deterioration in the global economy."
Read Article Here:
Today's Tax Tip
Many taxpayers like to file thier taxes as soon as they can.
But some taxpayers may not be able to file as early-bird as they like: The so-called bailout bill passed by Congress last year included a provision that gives brokerage firms and mutual-fund companies additional time to send tax forms to investors, specifically Form 1099-B used to report proceeds from brokers' transactions. Instead of the Jan. 31 deadline, brokers now have until Feb. 15. (Since Feb. 15 is a Sunday and Feb. 16 is a federal holiday, they actually have until Feb. 17 this year.)
Also, the IRS said, that for 2008, the Feb. 17 deadline "also applies to other tax information that brokers report to their customers, including such items as interest and dividends, on a combined year-end statement."
So be patient and remember to wait to at least February 17 before scheduling your apppointment with your accountant.
See IRS Statement Here:
FDIC Closes Three More Banks
We will now begin to see multiple bank closings on Friday nights. I expect the pace to increase greatly over the coming months. Please make sure you are within FDIC insurance limits, generally $250,000 per person, $500,000 joint.-Lou
Utah's MagnetBank closed without an acquirer
FDIC shuts down three banks in one day amid ongoing credit crisis
(MarketWatch) -- Federal regulators closed three banks in a single day Friday, as the ongoing credit crisis showed no signs of abating.
Utah's MagnetBank became the fourth bank failure of the year, and the Federal Deposit Insurance Corp. was forced to directly refund depositors after being unable to find another institution willing to take over its operations.
That marked the first time the FDIC has been unable to find an acquirer for a failed bank in nearly five years, according to FDIC spokesman David Barr. "This bank did not have an attractive franchise value, and not many retail deposits or core deposits," Barr said. The FDIC had conducted an extensive marketing process for the bank's assets, he said.
The FDIC later said it has also closed Maryland-based Suburban Federal Savings Bank, and Florida's Ocala National Bank.
Read Article Here:
Friday, January 30, 2009
American Companies Announced 148,000 Job Cuts This Week
American companies announced some 148,000 job cuts this week alone. The job losses effect many industries and are pretty deep. Here are some of the more notable ones.-Lou
Q4 GDP down 3.8 percent, biggest drop since 1982
This is actually better than the -5.5% that economists expected (some where even expecting -7%). This only the advanced number, it will be adjusted twice over the next few months. I expect it to be adjusted lower. Expect 1st quarter 2009 to be even worse.-Lou
Q4 GDP down 3.8 percent, biggest drop since 1982
WASHINGTON (Reuters) - The economy shrank at its fastest pace in nearly 27 years in the fourth quarter, government data showed, sinking deeper into recession as consumers and business cut spending.
The Commerce Department on Friday said gross domestic product, which measures total goods and services output within U.S. borders, plummeted at a 3.8 percent annual rate, the lowest pace since the first quarter of 1982, when output contracted 6.4 percent. GDP fell 0.5 percent in the third quarter. These were the first consecutive declines in GDP since the fourth quarter of 1990 and the first three months of 1991.
Analysts polled by Reuters had forecast GDP contracting 5.4 percent in the fourth quarter. The U.S. economy slipped into recession in December 2007, driven by the collapse of the housing market and resulting global credit crisis.
For 2008, GDP rose 1.3 percent, the slowest pace of growth since 2001, when the economy expanded 0.8 percent.
Read Article Here:
http://finance.yahoo.com/news/Q4-GDP-down-38-percent-rb-14206284.html/print
Q4 GDP down 3.8 percent, biggest drop since 1982
WASHINGTON (Reuters) - The economy shrank at its fastest pace in nearly 27 years in the fourth quarter, government data showed, sinking deeper into recession as consumers and business cut spending.
The Commerce Department on Friday said gross domestic product, which measures total goods and services output within U.S. borders, plummeted at a 3.8 percent annual rate, the lowest pace since the first quarter of 1982, when output contracted 6.4 percent. GDP fell 0.5 percent in the third quarter. These were the first consecutive declines in GDP since the fourth quarter of 1990 and the first three months of 1991.
Analysts polled by Reuters had forecast GDP contracting 5.4 percent in the fourth quarter. The U.S. economy slipped into recession in December 2007, driven by the collapse of the housing market and resulting global credit crisis.
For 2008, GDP rose 1.3 percent, the slowest pace of growth since 2001, when the economy expanded 0.8 percent.
Read Article Here:
http://finance.yahoo.com/news/Q4-GDP-down-38-percent-rb-14206284.html/print
Bank Borrowing From Federal Reserve Beyond Belief
This video illustrates the scope of the current banking crisis compared to others in US history. It is truly scary. Do you think we can avoid a depression?-Lou
Watch Video Here:
http://www.youtube.com/watch?v=pZsY1rFr_yw&eurl=http://thecomingdepression.blogspot.com/2009/01/dont-believe-we-are-going-into.html
Watch Video Here:
http://www.youtube.com/watch?v=pZsY1rFr_yw&eurl=http://thecomingdepression.blogspot.com/2009/01/dont-believe-we-are-going-into.html
Hundreds of thousands protest in France
Most of us have no idea how quickly civilization can break down. What would it take?, perhaps 3 weeks without electricity?, shortages of food at the supermarket?, no money to buy food? Before the end of the year I expect that as the economy continues to crater, we will see protests of this size here in America as well as other countries worldwide.-Lou
Hundreds of thousands protest in France
PARIS: A nationwide protest against Nicolas Sarkozy's economic policies drew more than one million demonstrators into the streets of France on Thursday, in the biggest popular challenge to the president since he took office in 2007.
Organizers hailed the demonstrations - meant to highlight unemployment and declining spending power in a time of crisis - as a great success.
Organizers hailed the demonstrations - meant to highlight unemployment and declining spending power in a time of crisis - as a great success.
François Chérèque, secretary general of the CFDT union, called the protest "the biggest nationwide demonstrations in 20 years." He said in Paris that private sector workers had turned out in surprisingly large numbers, showing that workers from across the spectrum were "expressing their fears about the future."
Gold Rally Fills Vaults With Bullion as Bank Stimulus Increases
Gold is up over $50 from yesterday's low and is now trading around $920/oz. House passage of the pork and entitlement laden "stimulus package" may be the catalyst for the current run to gold. Keep an eye on the 10yr and 30yr US Treasury bonds. It will be quite concerning if yields continue to rise and prices continue to fall.-Lou
Gold Rally Fills Vaults With Bullion as Bank Stimulus Increases
Jan. 30 (Bloomberg) -- The same unprecedented steps that central bankers are taking to rescue the banking system are driving investors to gold, the commodity investors buy when they lose confidence in financial assets.
David Einhorn, manager of the $5.1 billion Greenlight Capital Inc. hedge fund, bought gold for the first time. Steven Lehman, the Federated Investors Inc. fund manager who beat 99 percent of his peers last year, is betting on bullion with Toronto-based Yamana Gold Inc. and Goldcorp Inc.
The combination of central banks spending trillions of dollars to prop up the banking system in the worst financial crisis since the Great Depression will cause gold to appreciate at least 17 percent this year from $882.05 an ounce on Dec. 31, surpassing the record of $1,032.70 in London, according to 16 of 24 analysts surveyed by the London Bullion Market Association. The metal traded at $909.10 yesterday.
Read Article Here:http://www.bloomberg.com/apps/news?pid=20601170&refer=special_report&sid=a0pWErBctHdM#
Report: Obama Might Triple Bank Bailout
A trillion here, a trillion there, what difference does it make? Got Gold??-Lou
Report: Obama Might Triple Bank Bailout
US government officials seeking to revamp the financial bailout have discussed spending another $1 trillion to $2 trillion to help restore banks to health, the Wall Street Journal said, citing people familiar with the matter.
The paper said the Barack Obama administration could announce its plans within days but has not yet determined the final shape of its new proposal, and the exact details could change.
The administration is also seeking more effective ways to pump money into banks, and is considering buying common shares in the banks, according to the paper
Read Article Here:
http://moneynews.com/streettalk/obama_bailout_triple/2009/01/29/176320.html?s=al&promo_code=7902-1
Report: Obama Might Triple Bank Bailout
US government officials seeking to revamp the financial bailout have discussed spending another $1 trillion to $2 trillion to help restore banks to health, the Wall Street Journal said, citing people familiar with the matter.
The paper said the Barack Obama administration could announce its plans within days but has not yet determined the final shape of its new proposal, and the exact details could change.
The administration is also seeking more effective ways to pump money into banks, and is considering buying common shares in the banks, according to the paper
Read Article Here:
http://moneynews.com/streettalk/obama_bailout_triple/2009/01/29/176320.html?s=al&promo_code=7902-1
Thursday, January 29, 2009
Look At Gold Today
The green line is todays action
Big reversal day in gold. After starting the day down 10 bucks gold reversed hard and closed up $20. Investors are begining to see gold as the only real safe haven.-Lou
U.S. durable goods orders fall 5 straight months
U.S. durable goods orders fall 5 straight months
WASHINGTON, Jan 29 (Reuters) - New U.S. orders for long-lasting manufactured goods dropped 2.6 percent in December, falling for a fifth straight month, according to a report on Thursday that underscored the deepening economic malaise.
Durable goods orders for November were revised to show a decline of 3.7 percent, the Commerce Department said, which was previously reported as a 1.5 percent fall. For 2008, overall orders tumbled 5.7 percent, the second biggest decline since 2001, after rising 1.3 percent in 2007.
New orders excluding transportation dropped 3.6 percent in December, but transportation equipment rose 0.6 percent, while motor vehicles and parts plunged 5.2 percent.
WASHINGTON, Jan 29 (Reuters) - New U.S. orders for long-lasting manufactured goods dropped 2.6 percent in December, falling for a fifth straight month, according to a report on Thursday that underscored the deepening economic malaise.
Durable goods orders for November were revised to show a decline of 3.7 percent, the Commerce Department said, which was previously reported as a 1.5 percent fall. For 2008, overall orders tumbled 5.7 percent, the second biggest decline since 2001, after rising 1.3 percent in 2007.
New orders excluding transportation dropped 3.6 percent in December, but transportation equipment rose 0.6 percent, while motor vehicles and parts plunged 5.2 percent.
Americans receiving jobless benefits hits record
As long as the number of unemployed continue to rise, the economy will continue to contract. Retail sales will fall and corporate profits as well.-Lou
Americans receiving jobless benefits hits record
WASHINGTON: The number of people receiving unemployment benefits has reached an all-time record, the government said Thursday, and more layoffs are spreading throughout the economy.
The Labor Department reported that the number of Americans continuing to claim unemployment insurance for the week ending Jan. 17 was a seasonally adjusted 4.78 million, the highest on records dating back to 1967. That's an increase of 159,000 from the previous week and worse than economists' expectations of 4.65 million.
Read Article Here:
http://www.iht.com/articles/ap/2009/01/29/america/NA-US-Economy.php
Americans receiving jobless benefits hits record
WASHINGTON: The number of people receiving unemployment benefits has reached an all-time record, the government said Thursday, and more layoffs are spreading throughout the economy.
The Labor Department reported that the number of Americans continuing to claim unemployment insurance for the week ending Jan. 17 was a seasonally adjusted 4.78 million, the highest on records dating back to 1967. That's an increase of 159,000 from the previous week and worse than economists' expectations of 4.65 million.
Read Article Here:
http://www.iht.com/articles/ap/2009/01/29/america/NA-US-Economy.php
Mail May Be Cut To 5 Days
Great, one less walk down the driveway to the mailbox each week. Do people still use regular mail for anything?-Lou
Postmaster General: 'Six-Day Delivery May Simply Prove to Be Unaffordable' Battered by the global economic meltdown, the postmaster general has asked Congress to cut U.S. mail delivery to five days a week.
WASHINGTON -- Massive deficits could force the post office to cut out one day of mail delivery, the postmaster general told Congress on Wednesday, in asking lawmakers to lift the requirement that the agency deliver mail six days a week.
If the change happens, that doesn't necessarily mean an end to Saturday mail delivery. Previous post office studies have looked at the possibility of skipping some other day when mail flow is light, such as Tuesday.
If the change happens, that doesn't necessarily mean an end to Saturday mail delivery. Previous post office studies have looked at the possibility of skipping some other day when mail flow is light, such as Tuesday.
Faced with dwindling mail volume and rising costs, the post office was $2.8 billion in the red last year. "If current trends continue, we could experience a net loss of $6 billion or more this fiscal year," Postmaster General John E. Potter said in testimony for a Senate Homeland Security and Governmental Affairs subcommittee.
Read Article Here:
Today's Tax Tip
I will be continually posting tax tips during the income tax season.-Lou
Recovery Rebate Credit
Feel like you got shortchanged last year when the government doled out its Economic Stimulus Act rebate checks? Well, if you didn't qualify for the rebate before or didn't receive the full amount ($600 per taxpayer and $1,200 if married and filing jointly) because your income was too high (or too low), you may now be able to collect.
The rebate checks that were sent out last year were based on information on your 1040 for 2007. This second chance to collect will be based on your 2008 1040. So if your income took a hit last year, it may be worth a shot. You can also qualify for this credit if you had a child in 2008, among other reasons.
Read More About Tax Credits To Pursue:
Wednesday, January 28, 2009
Divided US House to hand Obama stimulus win
Click on link and look at what a $900 billion, 647 page stimulus bill looks like. Who can find the most outrageous waste of taxpayer money?
How does spending $335,000,000 on Sexual Transmited Diseases prevention stimulate the economy?-Lou
Here is the entire stimulus bill:
http://www.rules.house.gov/111/LegText/111_hr1_text.pdf
Fed: Rates to remain low 'for some time'
The Fed will try to create asset inflation through a zero interest rate policy and explosion of the money supply.-Lou
Fed: Rates to remain low 'for some time'
The following statement was posted on the Federal Reserve Web site on January 28, 2009:
The Federal Open Market Committee decided today to keep its target range for the federal funds rate at 0 to 1/4 percent. The Committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.
Information received since the Committee met in December suggests that the economy has weakened further. Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending. Furthermore, global demand appears to be slowing significantly.
Conditions in some financial markets have improved, in part reflecting government efforts to provide liquidity and strengthen financial institutions; nevertheless, credit conditions for households and firms remain extremely tight. The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant.
Read Full Fed Statement:
http://finance.yahoo.com/news/Fed-Rates-to-remain-low-for-cnnm-14184365.html
Fed: Rates to remain low 'for some time'
The following statement was posted on the Federal Reserve Web site on January 28, 2009:
The Federal Open Market Committee decided today to keep its target range for the federal funds rate at 0 to 1/4 percent. The Committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.
Information received since the Committee met in December suggests that the economy has weakened further. Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending. Furthermore, global demand appears to be slowing significantly.
Conditions in some financial markets have improved, in part reflecting government efforts to provide liquidity and strengthen financial institutions; nevertheless, credit conditions for households and firms remain extremely tight. The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant.
Read Full Fed Statement:
http://finance.yahoo.com/news/Fed-Rates-to-remain-low-for-cnnm-14184365.html
Merrill Lynch: "We Are Already In a Depression"
This report is a must read. I like David Rosenberg, when other big Wall St firms were saying we were in a "Goldilocks" economy he was warning of coming recession.-Lou
Merrill Lynch's chief economist for North America, David Rosenberg, writes in an economic commentary entitled "Some Inconvenient Truths" that we are probably already in a depression:
We are likely enduring a depression today. As for depressions, there is no official definition, except to say that they have existed in the past. There were no fewer than four in the nineteenth century, one in the twentieth century, and we are very likely enduring another one today.
As I have previously written, just like it took many months for the officials and talking heads to admit that we were in a recession - and in fact had been for a long time - it will take a while before the government admits that we are already in a depression.
Read Entire Report Here:
http://base.googlehosted.com/base_media?q=hand-2050195680450736211&size=8
Merrill Lynch's chief economist for North America, David Rosenberg, writes in an economic commentary entitled "Some Inconvenient Truths" that we are probably already in a depression:
We are likely enduring a depression today. As for depressions, there is no official definition, except to say that they have existed in the past. There were no fewer than four in the nineteenth century, one in the twentieth century, and we are very likely enduring another one today.
As I have previously written, just like it took many months for the officials and talking heads to admit that we were in a recession - and in fact had been for a long time - it will take a while before the government admits that we are already in a depression.
Read Entire Report Here:
http://base.googlehosted.com/base_media?q=hand-2050195680450736211&size=8
Quote Of The Day
“A national debt if it is not excessive, will be to us a national blessing.”
Alexander Hamilton
Alexander Hamilton
Nation's economic mood darkens as more jobs vanish
It is the consumer and only the consumer who can turn this economy around. This number indicates that it is not happening any time soon.-Lou
Consumer confidence hits record low as Americans worry about withering job and housing markets
NEW YORK (AP) -- This is one recession Americans aren't going to spend their way out of. Americans are in no mood to spend their way out of this recession.
The Conference Board said Tuesday its Consumer Confidence Index edged down to 37.7 this month, a record low, from a revised 38.6 in December. It stood at about 87 just a year ago.
Americans are battered by headlines about massive job cuts, including thousands at Home Depot, Corning, General Motors and Caterpillar in just the past two days, and are still watching the values of their homes and retirement funds dwindle.
"Virtually, there is no confidence out there," said Bernard Baumohl, chief global economist at The Economic Outlook Group LLC. "Household anxiety has reached a point that we can count them out to get us out of the recession."
Economists believe Americans will remain in a financial funk until they start seeing fundamental improvements in the economy, including a turnaround in the housing and job markets. And two other reports Tuesday suggested that's unlikely to come soon.
Read Article Here:
http://biz.yahoo.com/ap/090127/consumer_confidence.html?printer=1
Consumer confidence hits record low as Americans worry about withering job and housing markets
NEW YORK (AP) -- This is one recession Americans aren't going to spend their way out of. Americans are in no mood to spend their way out of this recession.
The Conference Board said Tuesday its Consumer Confidence Index edged down to 37.7 this month, a record low, from a revised 38.6 in December. It stood at about 87 just a year ago.
Americans are battered by headlines about massive job cuts, including thousands at Home Depot, Corning, General Motors and Caterpillar in just the past two days, and are still watching the values of their homes and retirement funds dwindle.
"Virtually, there is no confidence out there," said Bernard Baumohl, chief global economist at The Economic Outlook Group LLC. "Household anxiety has reached a point that we can count them out to get us out of the recession."
Economists believe Americans will remain in a financial funk until they start seeing fundamental improvements in the economy, including a turnaround in the housing and job markets. And two other reports Tuesday suggested that's unlikely to come soon.
Read Article Here:
http://biz.yahoo.com/ap/090127/consumer_confidence.html?printer=1
Tuesday, January 27, 2009
WWII Veteran Freezes To Death In Own Home
What a sad story. I was wondering how long it would take before we hear of people dying because they could not pay thier utility bills. During this depression, many more will sadly face the same fate. Meanwhile the guys that got us in this mess live in nice warm mansions, we all should be outraged.-Lou
WWII Veteran Freezes To Death In Own Home
By The Associated Press
BAY CITY, Mich. - A 93-year-old man froze to death inside his home just days after the municipal power company restricted his use of electricity because of unpaid bills, officials said.
Marvin Schur died "a slow, painful death," said Kanu Virani, Oakland County's deputy chief medical examiner, who performed the autopsy.
Neighbours discovered Schur's body on Jan. 17. They said the indoor temperature was below zero Celsius at the time, the Bay City Times reported Monday.
"Hypothermia shuts the whole system down, slowly," Virani said. "It's not easy to die from hypothermia without first realizing your fingers and toes feel like they're burning."
Schur owed Bay City Electric Light & Power more than $1,000 in unpaid electric bills, Bay City manager Robert Belleman told The Associated Press on Monday.
A city utility worker had installed a "limiter" device to restrict the use of electricity at Schur's home on Jan. 13, Belleman said. The device limits power reaching a home and blows out like a fuse if consumption rises past a set level. Power is not restored until the device is reset.
Read Article Here:
http://ca.news.yahoo.com/s/capress/090126/world/frozen_indoors
WWII Veteran Freezes To Death In Own Home
By The Associated Press
BAY CITY, Mich. - A 93-year-old man froze to death inside his home just days after the municipal power company restricted his use of electricity because of unpaid bills, officials said.
Marvin Schur died "a slow, painful death," said Kanu Virani, Oakland County's deputy chief medical examiner, who performed the autopsy.
Neighbours discovered Schur's body on Jan. 17. They said the indoor temperature was below zero Celsius at the time, the Bay City Times reported Monday.
"Hypothermia shuts the whole system down, slowly," Virani said. "It's not easy to die from hypothermia without first realizing your fingers and toes feel like they're burning."
Schur owed Bay City Electric Light & Power more than $1,000 in unpaid electric bills, Bay City manager Robert Belleman told The Associated Press on Monday.
A city utility worker had installed a "limiter" device to restrict the use of electricity at Schur's home on Jan. 13, Belleman said. The device limits power reaching a home and blows out like a fuse if consumption rises past a set level. Power is not restored until the device is reset.
Read Article Here:
http://ca.news.yahoo.com/s/capress/090126/world/frozen_indoors
California prepares to stop paying bills
This is just the first of many states that will become insolvent in 2009. I don't think the good citizens of the great state of California will be happy getting IOUs instead of income tax refunds. At least they will get some interest-Lou
California prepares to stop paying billsCome Feb. 1, tax refunds, welfare checks replaced with IOUs
By Drew Zahn© 2009 WorldNetDaily
The state of California has run out of money.
Facing a $42 billion budget deficit, State Controller John Chiang told the Sacramento Bee he has already borrowed $21.5 billion to try to cover the state's checks, but by Feb. 1, there will be no more options left but to simply stop paying some of the bills – including tax refunds, welfare checks, student grants and other payments owned to California citizens.
"It pains me to pull this trigger," Chiang said at a news conference held in his office. "But it is an action that is critically necessary."
Federal law requires that many school and healthcare programs – a total of about $6.6 billion in California – must be paid, the Los Angeles Times reports, so Chiang has announced an expected payment freeze on $3.7 billion worth of the state's bills, most of it refunds owed to taxpayers.
But even with the freeze beginning next week, the Times reports, California will still fall $346 million short for the month of February, forcing Chiang to consider something only done once since the Great Depression: issuing IOUs. Formally called "registered warrants," the state's IOUs consist of little more than a piece of paper that says the state owes a payee money, plus interest, to be paid at some point in the future.
Read Article Here:
http://www.worldnetdaily.com/?pageId=87175
California prepares to stop paying billsCome Feb. 1, tax refunds, welfare checks replaced with IOUs
By Drew Zahn© 2009 WorldNetDaily
The state of California has run out of money.
Facing a $42 billion budget deficit, State Controller John Chiang told the Sacramento Bee he has already borrowed $21.5 billion to try to cover the state's checks, but by Feb. 1, there will be no more options left but to simply stop paying some of the bills – including tax refunds, welfare checks, student grants and other payments owned to California citizens.
"It pains me to pull this trigger," Chiang said at a news conference held in his office. "But it is an action that is critically necessary."
Federal law requires that many school and healthcare programs – a total of about $6.6 billion in California – must be paid, the Los Angeles Times reports, so Chiang has announced an expected payment freeze on $3.7 billion worth of the state's bills, most of it refunds owed to taxpayers.
But even with the freeze beginning next week, the Times reports, California will still fall $346 million short for the month of February, forcing Chiang to consider something only done once since the Great Depression: issuing IOUs. Formally called "registered warrants," the state's IOUs consist of little more than a piece of paper that says the state owes a payee money, plus interest, to be paid at some point in the future.
Read Article Here:
http://www.worldnetdaily.com/?pageId=87175
Obama MADness
click on picture to enlargeWhen I was a boy I loved reading Mad Magazine. Even today Mad is still an enjoyable publication. I just love the cover of the current issue. I saw John McCain this week on the Suinday news shows, is it just me or does he look like the most relaxed and happy guy in Washington?-Lou
This Week's Radio Show Now Available
This week's "The Financial Physician" radio show is now available. This week I interview good friend and internationally known financial commentator Peter Grandich.-Lou
Listen Here:
U.S. existing home sales rose 6.5 pct in December
Some good news for a change. Before the economy can begin to stabilize, the housing market needs to first. Although much of the increase in existing home sales can be attributed to foreclosure sales, any increase in sales is welcome. I am especially impressed with the decline in inventories. If mortgage rates can remain below 5 1/2% we may see the housing market begin to turn around in late 2009 or early 2010. When inflation begins to take hold, and believe me it will, housing will turn around hard as all tangible assets will be in demand.-Lou
U.S. existing home sales rose 6.5 pct in December
WASHINGTON, Jan 26 (Reuters) - The pace of sales of existing homes in the U.S. rose 6.5 percent in December, but the median home price dropped by a record 15.3 percent compared to the same period the year earlier, a National Association of Realtors report showed on Monday. Existing home sales increased to a 4.74 million unit annual rate from a downwardly revised 4.45 million units in November.
For the whole of 2008, existing home sales fell 13.1 percent to 4.91 million units, the lowest since 1997. The median national home price fell 15.3 percent from the year earlier to $175,400, the largest decline since the NAR started keeping records and probably the largest since the Great Depression, Lawrence Yun, NAR chief economist told reporters. Analysts polled by Reuters had expected existing home sales to set a 4.40 million unit pace in December.
The inventory of existing homes for sale fell 11.7 percent to 3.68 million units from 4.16 million in November, translating into 9.3 months of supply.
U.S. existing home sales rose 6.5 pct in December
WASHINGTON, Jan 26 (Reuters) - The pace of sales of existing homes in the U.S. rose 6.5 percent in December, but the median home price dropped by a record 15.3 percent compared to the same period the year earlier, a National Association of Realtors report showed on Monday. Existing home sales increased to a 4.74 million unit annual rate from a downwardly revised 4.45 million units in November.
For the whole of 2008, existing home sales fell 13.1 percent to 4.91 million units, the lowest since 1997. The median national home price fell 15.3 percent from the year earlier to $175,400, the largest decline since the NAR started keeping records and probably the largest since the Great Depression, Lawrence Yun, NAR chief economist told reporters. Analysts polled by Reuters had expected existing home sales to set a 4.40 million unit pace in December.
The inventory of existing homes for sale fell 11.7 percent to 3.68 million units from 4.16 million in November, translating into 9.3 months of supply.
Revealed: Day the banks were just three hours from collapse
What else don't we know about? Keep the people in the dark is best way to make sure they behave. The truth will be hard to find in the coming days.-Lou
Revealed: Day the banks were just three hours from collapse
Narrow escape: The Bank of England was forced to contact RBS's creditors abroad to persuade them not to withdraw their funds.
Britain was just three hours away from going bust last year after a secret run on the banks, one of Gordon Brown's Ministers has revealed.
City Minister Paul Myners disclosed that on Friday, October 10, the country was 'very close' to a complete banking collapse after 'major depositors' attempted to withdraw their money en masse.
The Mail on Sunday has been told that the Treasury was preparing for the banks to shut their doors to all customers, terminate electronic transfers and even block hole-in-the-wall cash withdrawals.
Only frantic behind-the-scenes efforts averted financial meltdown.
Read Article Here:
http://www.dailymail.co.uk/news/article-1127278/Revealed-Day-banks-just-hours-collapse.html#
Revealed: Day the banks were just three hours from collapse
Narrow escape: The Bank of England was forced to contact RBS's creditors abroad to persuade them not to withdraw their funds.
Britain was just three hours away from going bust last year after a secret run on the banks, one of Gordon Brown's Ministers has revealed.
City Minister Paul Myners disclosed that on Friday, October 10, the country was 'very close' to a complete banking collapse after 'major depositors' attempted to withdraw their money en masse.
The Mail on Sunday has been told that the Treasury was preparing for the banks to shut their doors to all customers, terminate electronic transfers and even block hole-in-the-wall cash withdrawals.
Only frantic behind-the-scenes efforts averted financial meltdown.
Read Article Here:
http://www.dailymail.co.uk/news/article-1127278/Revealed-Day-banks-just-hours-collapse.html#
Monday, January 26, 2009
Iceland’s government topples amid financial mess
That's the Icelandic Parlament in the Background I expect the world financial crisis will result in civil unrest in many countries this year. Rising prices due to falling currencies and unrestrained money supply growth results in depravation and unhappy citizens. If you think it can't happen in the U.S., you are wrong.-Lou
Iceland’s government topples amid financial mess
The Associated Press
Mon, Jan 26, 2009
Iceland's coalition government collapsed Monday, leaving the island nation in political turmoil amid a financial crisis that has pummeled its economy and required an international bailout.
Iceland has been mired in crisis since the collapse of the country's banks under the weight of debts amassed during years of rapid expansion. Inflation and unemployment have soared, and the krona currency has plummeted.
Haarde's government has nationalized banks and negotiated about $10 billion in loans from the IMF and individual countries. In addition, Iceland faces a bill likely to run to billions of dollars to repay thousands of Europeans who held accounts with subsidiaries of collapsed Icelandic banks.
Read Article Here:
http://www.lasvegassun.com/news/2009/jan/26/icelands-government-topples-amid-financial-mess/
Iceland’s government topples amid financial mess
The Associated Press
Mon, Jan 26, 2009
Iceland's coalition government collapsed Monday, leaving the island nation in political turmoil amid a financial crisis that has pummeled its economy and required an international bailout.
Iceland has been mired in crisis since the collapse of the country's banks under the weight of debts amassed during years of rapid expansion. Inflation and unemployment have soared, and the krona currency has plummeted.
Haarde's government has nationalized banks and negotiated about $10 billion in loans from the IMF and individual countries. In addition, Iceland faces a bill likely to run to billions of dollars to repay thousands of Europeans who held accounts with subsidiaries of collapsed Icelandic banks.
Read Article Here:
http://www.lasvegassun.com/news/2009/jan/26/icelands-government-topples-amid-financial-mess/
Who Is Responsible For The Financial Crisis?
This video shows that the Bush Administration tried to warn Congress in 2001, 2002, 2003, etc that this economic crisis was coming, if something was not done. But Congress refused to listen especially Barney Frank and Chuck Schumer. This video says it all.
Watch Here:
Chinese Ministry Denies Geithner's Currency Claims
I does not seem smart to upset the largest buyer (and holder) of U.S. debt securities. This is especially true in a year where the U.S. needs to borrow over $1 trillion to finance our deficit. I have said for some time that the U.S. trade deficit with China was not only an economic issue but one of national security. If China decides to boycott our treasury auctions, or worse, dump existing U.S. holdings (currently close to $1 trillion), the dollar would crash and interest rates and inflation would soar. My advise to the Obama administration is to play nice with our asian friends.-Lou
BEIJING -- A Chinese ministry Saturday strongly denied Obama administration claims that China "manipulates" its currency, as the first contact between the new administration and China takes a markedly sour tone.
BEIJING -- A Chinese ministry Saturday strongly denied Obama administration claims that China "manipulates" its currency, as the first contact between the new administration and China takes a markedly sour tone.
Since China is the largest holder (and buyer) of US debt, it does not seem very smart to upset them. This is especially true since the U.S. will need to borrow over $1 trillion this year. I have said for years that the U.S. trade deficit with China was not just an economic issue but one of national security. If China wanted to they could boycott U.S. treasury auctions or worse, dump existing holdingsof U.S. securities causing a plunge in the dollar and skyrocketing interest rates.-Lou
On Thursday, President Obama's nominee for Treasury secretary, Timothy Geithner, told U.S. lawmakers that President Barack Obama, "backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency." No Chinese official of Mr. Geithner's standing has fired back -- a move analysts say shows that China doesn't want to overreact to the statement -- but Saturday morning an official from China's Ministry of Commerce said "we never have used currency manipulation or exchange-rate manipulation as a mains to gain an advantage in international trade.".....
"In recent days persons in a Western country have said 'China is manipulating the yuan exchange rate,' " said People's Bank of China Vice Governor Su Ning, according to a report Saturday by the state-controlled Xinhua news agency. "These remarks are not only inconsistent with the facts, but they are misleading about the reasons for the financial crisis."
Gold Takes Off
Gold has taken out $900/oz this morning after gaining $41 on Friday. Since mid-November's low of $700/oz gold has rallied $200 or 28.5%. Gold has been higher eight years in a row and remains one of the few assets that seems to be thriving in this deflationary environment.
It should not come as a surprise since western governments have been monetizing failing banks, brokers and the auto industry. I expect gold to exceed $1,200/oz this year and quite possibly $1,600-2,000 in the event of a financial panic.
The fact that gold has been rising in the face of a rising dollar is impressive. When the dollar resumes it's fall, as I'm sure will happen, gold should take off in a buying panic.-Lou
Friday, January 23, 2009
Gold soars above $900
Gold is soaring because world currencies are falling like a rock. Massive bailouts and resulting currency creation make gold the alternative to paper money. Keep a close eye on gold it is the worlds financial barometer.-Lou
Tuesday, January 20, 2009
Bank Sector Has Worst Day Ever
Sorry for the delay in posting, internet service on the cruise ship is spotty at best.
Us bank stocks got hammered today on concerns about the health of banks worldwide .
JP Morgan down 20%
Wells fargo down 23.8%
Bank of America down 16.4%
State Street Bank down 59% Yikes!
Looks like newly Inaugaurated President Obama has inherited a major financial calamity.
The bank stocks better stabilize soon or the entire market is headed much lower and a depression will become a certainty.-Lou
Us bank stocks got hammered today on concerns about the health of banks worldwide .
JP Morgan down 20%
Wells fargo down 23.8%
Bank of America down 16.4%
State Street Bank down 59% Yikes!
Looks like newly Inaugaurated President Obama has inherited a major financial calamity.
The bank stocks better stabilize soon or the entire market is headed much lower and a depression will become a certainty.-Lou
Monday, January 19, 2009
Royal Bank of Scotland may report $41 Billion Loss
$41 Billion loss!! This is starting to get surreal. The world banking system may be collapsing.-Lou
Saturday, January 17, 2009
Video of US Air Crash and Rescue
During these times of horrible news it was uplifting to see all passengers survive the ditching of the US Air flight. The pilots, crew and rescuers are true American heros. I'm flying tomorrow, I wish Sully was my pilot. Here is an incredible video of the landing and the immediate aftermath. It starts exactly 2 minutes into the video.-Lou
Watch Here:
Weekly Market Review
The Bear is Back
by Lou Scatigna
Many were looking forward to the new year with the hope that the financial disaster of 2008 will be left behind to history and stabilization and then economic healing will arrive in 2009. So far January is turning out to be just as bad as the worst months of 2008.
This past week the stock market succumed to continued dreadful economic news. Retail sales, industrial production, corporate earnings and bank problems were all worse than expected. Some of the economic reports are boardering on depressionary.
The stock market took it on the chin this week, with large losses Monday through Wednesday while Thursday and Friday brought some stabilization. High volatility is returning and is troublesome to many market participants.
The Dow was down 3.7% for the week, SP500 down 4.5% and the tech heavy Nasdaq was down 2.7%.
Financial stocks were hit especially hard as Merrill Lynch, Bank of America and Citigroup all announced huge fourth quarter losses. For the month the Dow is down 5.48%, the SP is down 5.79% and the Nasdaq is 4.13% lower.
The January barometer is a forecasting gauge that is quite accurate. It states that as goes January so goes the entire year. Unless the market turns around over the next two weeks, 2009 can be a reprise of 2008, or maybe worse.
by Lou Scatigna
Many were looking forward to the new year with the hope that the financial disaster of 2008 will be left behind to history and stabilization and then economic healing will arrive in 2009. So far January is turning out to be just as bad as the worst months of 2008.
This past week the stock market succumed to continued dreadful economic news. Retail sales, industrial production, corporate earnings and bank problems were all worse than expected. Some of the economic reports are boardering on depressionary.
The stock market took it on the chin this week, with large losses Monday through Wednesday while Thursday and Friday brought some stabilization. High volatility is returning and is troublesome to many market participants.
The Dow was down 3.7% for the week, SP500 down 4.5% and the tech heavy Nasdaq was down 2.7%.
Financial stocks were hit especially hard as Merrill Lynch, Bank of America and Citigroup all announced huge fourth quarter losses. For the month the Dow is down 5.48%, the SP is down 5.79% and the Nasdaq is 4.13% lower.
The January barometer is a forecasting gauge that is quite accurate. It states that as goes January so goes the entire year. Unless the market turns around over the next two weeks, 2009 can be a reprise of 2008, or maybe worse.
Florida money manager, millions, missing: police
As the financial tide goes out, all the little creatures reveal themselves. There are many more mini-Madoffs out there.-Lou
Florida money manager, millions, missing: police
MIAMI (Reuters) – A Florida money manager is missing and police have opened an investigation into the possible disappearance of "hundreds of millions" of dollars, authorities said on Friday.
Police are searching for Arthur Nadel, 75, a prominent Sarasota philanthropist and fund manager who was reported missing by his family on Wednesday.
Sarasota police are investigating complaints from at least five investors in Nadel's funds, run from a management office in Sarasota, that their money has disappeared. The Sarasota Herald-Tribune reported investors could be out as much as $350 million.
"It was brought to our attention that there has been a very significant number of victims with a very significant amount of money that has disappeared," Sarasota Police Capt. Bill Spitler said. "Allegedly it's hundreds of millions of dollars."
Read Article Here:
http://news.yahoo.com/s/nm/20090117/us_nm/us_nadel_3
Florida money manager, millions, missing: police
MIAMI (Reuters) – A Florida money manager is missing and police have opened an investigation into the possible disappearance of "hundreds of millions" of dollars, authorities said on Friday.
Police are searching for Arthur Nadel, 75, a prominent Sarasota philanthropist and fund manager who was reported missing by his family on Wednesday.
Sarasota police are investigating complaints from at least five investors in Nadel's funds, run from a management office in Sarasota, that their money has disappeared. The Sarasota Herald-Tribune reported investors could be out as much as $350 million.
"It was brought to our attention that there has been a very significant number of victims with a very significant amount of money that has disappeared," Sarasota Police Capt. Bill Spitler said. "Allegedly it's hundreds of millions of dollars."
Read Article Here:
http://news.yahoo.com/s/nm/20090117/us_nm/us_nadel_3
FDIC, regulators shut down two banks
Bank failure Friday's will become a weekly event this year. I expect as many as 300 banks to fail in 2009. The FDIC will shut mostly small to mid size banks since the big ones like Bank of America and Citigroup are considered too big to fail. The small banks do not have good old boy friends in Washington to come to their rescue like the big boys. The FDIC may run out of money by June and need a huge cash infusion from the feds.-Lou
FDIC, regulators shut down two banks
By John Letzing, MarketWatch
SAN FRANCISCO (MarketWatch) - The Federal Deposit Insurance Corporation and state regulators on Friday shut down banks in Illinois and Washington - the first bank failures of the year and the 26th and 27th since the start of the current credit crisis.
SAN FRANCISCO (MarketWatch) - The Federal Deposit Insurance Corporation and state regulators on Friday shut down banks in Illinois and Washington - the first bank failures of the year and the 26th and 27th since the start of the current credit crisis.
Berkeley, Ill.-based National Bank of Commerce was shut down and he FDIC said Republic Bank of Chicago will assume all of National Bank of Commerce's deposits. The two locations of National Bank of Commerce will reopen Saturday as branches of Republic Bank, the FDIC said.
Read Article Here:
Friday, January 16, 2009
Circuit City to liquidate, shutter stores
The company is not going belly up because of me, I spend more money in that store each year than any other-"hello Best Buy!"
I hope you did not buy that protection plan they try to sell you when you buy a TV or other electronic gadget. Gift cards will not be valid and are worthless. There will be many retail bankruptcies this year, be careful buying gift cards at any retailer.-Lou
Circuit City to liquidate, shutter stores
ATLANTA/RICHMOND, Virginia (Reuters) - Bankrupt electronics retailer Circuit City Stores said on Friday it will liquidate its assets and shutter hundreds of U.S. stores after failing to reach a deal to sell the company.
Circuit City is one of the largest retail bankruptcies seen in the current U.S. recession and its demise paves the way for larger rival Best Buy Inc to boost sales and gain clout with suppliers as the leading specialty electronics retailer.
Regrettably for the more than 30,000 employees of Circuit City and our loyal customers, we were unable to reach an agreement with our creditors and lenders to structure a going-concern transaction .
Read Article Here:
Need A Gold Iphone?
Lovely, I think I will go to my local Apple store and buy one. On second thought, I destroyed my last IPhone when I took took for a swim with me in the pool.-LouNew Gold iPhone Retails for $2.5 Million
Despite the global recession, Austrian jeweler Peter Aloisson has designed and is currently marketing the world's most expensive gold iPhone.
The new gold iPhone, named Kings Button, is constructed of 18 carat yellow gold, white gold, and rose gold. The gold iPhone is also encrusted with a total of 138 brilliant cut diamonds of the best quality with an approximate weight of 5.5 carats.
The most striking feature of Aloisson's new gold iPhone, however, is the main home button. The home button on Aloisson's gold iPhone, is a blinding 6.6 carat mega-diamond. This, of course, is where the gold iPhone gets its name Kings Button.The price tag for the extravagant Kings Button gold iPhone... a whopping €1.8 million ($2.4 million).
Read Article Here:http://www.goldworld.com/articles/gold-iphone-gold+iphone/358
Government giving $20 billion to Bank of America
Bank of America indeed. The extent of bank losses mostly due to toxic derivatives is staggering. We will continue to see injections of capital into many large banks for months to come. Eventually there will be only one bank left-The Last National Bank. This is insane.-Lou
Government giving $20 billion to Bank of America
LONDON (MarketWatch) -- The U.S. government on Friday announced it was injecting $20 billion into Bank of America and guaranteeing losses on billions more as the Charlotte giant struggles to digest the acquisition of Merrill Lynch.
In a statement released early Friday, the Treasury Department and the Federal Deposit Insurance Corporation said they will invest $20 billion in Bank of America from the Troubled Assets Relief Program in exchange for preferred stock paying an 8% dividend.
The government also will provide protection against the possibility of unusually large losses on an asset pool of approximately $118 billion of loans, securities backed by residential and commercial real estate loans and other such assets, which have been marked to current value.
The government also will provide protection against the possibility of unusually large losses on an asset pool of approximately $118 billion of loans, securities backed by residential and commercial real estate loans and other such assets, which have been marked to current value.
Read Article Here:
Thursday, January 15, 2009
House Dems offer $825B stimulus bill
$140 Billion for education and modernazation of schools is just a waste of money. Do you think this just might be a payback to the NEA union?-Lou
House Dems offer $825B stimulus bill
Package includes $550 billion in spending and state aid plus $275 billion in tax cuts. Pelosi: 'We wanted to get the biggest bang for the buck
NEW YORK (CNNMoney.com) -- After weeks of talks with President-elect Barack Obama's top aides, House Democrats on Thursday released an expansive economic recovery plan that calls for $550 billion in spending and aid to states and $275 billion in tax cuts.
House Speaker Nancy Pelosi, D-Calif., again expressed confidence that Congress would reach the mid-February deadline for getting a bill to Obama's desk.
But, she noted at a press conference, "this [package] is just the first step."
Pelosi said lawmakers tried to assemble a package of measures that would be most effective in stimulating the U.S. economy, which is now in its 14th month of recession. "We wanted to get the biggest bang for the buck."
The bill includes roughly $90 billion to modernize roads, bridges, mass transit and waterways, and over $140 billion, mostly to states and localities, to defray their costs for education and to modernize schools.
Read Article Here:
http://money.cnn.com/2009/01/15/news/economy/house_stimulus_bill/index.htm?postversion=2009011513
House Dems offer $825B stimulus bill
Package includes $550 billion in spending and state aid plus $275 billion in tax cuts. Pelosi: 'We wanted to get the biggest bang for the buck
NEW YORK (CNNMoney.com) -- After weeks of talks with President-elect Barack Obama's top aides, House Democrats on Thursday released an expansive economic recovery plan that calls for $550 billion in spending and aid to states and $275 billion in tax cuts.
House Speaker Nancy Pelosi, D-Calif., again expressed confidence that Congress would reach the mid-February deadline for getting a bill to Obama's desk.
But, she noted at a press conference, "this [package] is just the first step."
Pelosi said lawmakers tried to assemble a package of measures that would be most effective in stimulating the U.S. economy, which is now in its 14th month of recession. "We wanted to get the biggest bang for the buck."
The bill includes roughly $90 billion to modernize roads, bridges, mass transit and waterways, and over $140 billion, mostly to states and localities, to defray their costs for education and to modernize schools.
Read Article Here:
http://money.cnn.com/2009/01/15/news/economy/house_stimulus_bill/index.htm?postversion=2009011513
IRS says it will help financially distressed taxpayers
A kinder, gentler and more flexible IRS?-Lou
The Internal Revenue Service rang in the tax filing season Tuesday by calling attention to the new tax credits and emphasizing the agency's willingness to work with financially distressed taxpayers.
"What we're doing today is saying we recognize the economic realities out there and we're available to work with people," said IRS Commissioner Douglas Shulman.For starters, IRS employees have been given greater authority to suspend collection actions.
They have more flexibility in allowing taxpayers facing difficult economic situations to miss or reduce a monthly installment payment on taxes previously owed without automatically ending the installment agreement, Shulman said.
Read Article Here:
We're Borrowing Like Mad. Can the U.S. Pay It Back?
Of course we will never pay it back. The risk of the US defaulting grows by the day.-Lou
We're Borrowing Like Mad. Can the U.S. Pay It Back?
In its battle against the financial crisis, the U.S. government has extended its full faith and credit to an ever-growing swath of the private sector: first homeowners, then banks, now car companies. Soon, President-elect Barack Obama will put the government credit card to work with a massive fiscal boost for the economy. Necessary as these steps are, they raise a worry of their own: Can the United States pay the money back?
The notion seems absurd: Banana republics default, not the world's biggest, richest economy, right? The United States has unparalleled wealth, a stable legal tradition, responsible macroeconomic policies and a top-notch, triple-A credit rating. U.S. Treasury bonds are routinely called "risk-free," and the United States has the unique privilege of borrowing in the currency that other countries like to hold as foreign-exchange reserves.
Read Article Here:
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/09/AR2009010902325_pf.html
We're Borrowing Like Mad. Can the U.S. Pay It Back?
In its battle against the financial crisis, the U.S. government has extended its full faith and credit to an ever-growing swath of the private sector: first homeowners, then banks, now car companies. Soon, President-elect Barack Obama will put the government credit card to work with a massive fiscal boost for the economy. Necessary as these steps are, they raise a worry of their own: Can the United States pay the money back?
The notion seems absurd: Banana republics default, not the world's biggest, richest economy, right? The United States has unparalleled wealth, a stable legal tradition, responsible macroeconomic policies and a top-notch, triple-A credit rating. U.S. Treasury bonds are routinely called "risk-free," and the United States has the unique privilege of borrowing in the currency that other countries like to hold as foreign-exchange reserves.
Read Article Here:
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/09/AR2009010902325_pf.html
Wednesday, January 14, 2009
What's Wrong With Citigroup?
The slogan "The Citi Never Sleeps" should be changed to "The Citi Shareholder Never Sleeps". Something is seriously wrong behind the scenes at Citigroup.-Lou
Citi set to pare back further after brokerage deal
Bank seen shedding more units following Morgan Stanley joint venture
By MarketWatch
BOSTON (MarketWatch) -- Following a blockbuster brokerage deal with Morgan Stanley, Citigroup Inc. is set to unveil a sweeping plan to unload several businesses and reduce its size by one-third -- moves that essentially sound a death knell for its financial-services supermarket model, according to a published report.
Citigroup announced a brokerage joint venture with Morgan Stanley late Tuesday, in what could be the first part of a major reorganization of the struggling company
.Read Article Here:
Retail sales plunge 2.7% in December
The consumer continues to retrench. Since consumer spending represents 70% of the economy, these numbers indicate the economy will contract much more.-Lou
Retail sales plunge 2.7% in December
By Rex Nutting
WASHINGTON (MarketWatch) - Stung by weak demand and falling prices, U.S. seasonally adjusted retail sales plunged 2.7% in December, the Commerce Department estimated Wednesday.
Excluding the 0.7% decline in auto sales, retail sales recorded their biggest drop since record-keeping began in the early 1990s, falling 3.1%. Excluding gasoline and autos, sales fell 1.5%, the largest drop since September 2001. Retail sales have fallen for six months in a row, the longest decline on record.
Sales in October and November were revised lower. Chain stores have reported further weakening in early January as the recession began its second year. December's sales were down a record 9.8% compared with the previous December.
Retail sales plunge 2.7% in December
By Rex Nutting
WASHINGTON (MarketWatch) - Stung by weak demand and falling prices, U.S. seasonally adjusted retail sales plunged 2.7% in December, the Commerce Department estimated Wednesday.
Excluding the 0.7% decline in auto sales, retail sales recorded their biggest drop since record-keeping began in the early 1990s, falling 3.1%. Excluding gasoline and autos, sales fell 1.5%, the largest drop since September 2001. Retail sales have fallen for six months in a row, the longest decline on record.
Sales in October and November were revised lower. Chain stores have reported further weakening in early January as the recession began its second year. December's sales were down a record 9.8% compared with the previous December.
Double dipping rises despite outrage
Even if you don't live in Florida you have to be outraged by this. No wonder taxes and tuition is so high-Lou
Double dipping: Ire, but higher
By Lucy Morgan,
TALLAHASSEE — This year some of Florida's public officials are giving a whole new meaning to the phrase "home for the holidays.'' It's a new crop of double dippers, taking advantage of a loophole in state law that allows them to "retire'' by taking 30 days off and return to work in their old jobs with a salary and a pension.
Many also collect a lump-sum "retirement'' payment that can reach hundreds of thousands of dollars. At least 25 of those spending December at home were re-elected in November — sheriffs, property appraisers, court clerks and tax collectors, six circuit judges and one state attorney.
None announced their "retirement'' plans before voters cast their ballots, and most have not made any public announcement of the resignation letters they have written to Gov. Charlie Crist.
Earlier this year when the St. Petersburg Times began looking at double- and even triple-dippers, the state retirement system had about 8,000 members collecting paychecks and pensions at the same time. By June that number had risen to 9,397, and it's still growing.
Read Article Here:
http://www.tampabay.com/news/politics/article950391.ece
Double dipping: Ire, but higher
By Lucy Morgan,
TALLAHASSEE — This year some of Florida's public officials are giving a whole new meaning to the phrase "home for the holidays.'' It's a new crop of double dippers, taking advantage of a loophole in state law that allows them to "retire'' by taking 30 days off and return to work in their old jobs with a salary and a pension.
Many also collect a lump-sum "retirement'' payment that can reach hundreds of thousands of dollars. At least 25 of those spending December at home were re-elected in November — sheriffs, property appraisers, court clerks and tax collectors, six circuit judges and one state attorney.
None announced their "retirement'' plans before voters cast their ballots, and most have not made any public announcement of the resignation letters they have written to Gov. Charlie Crist.
Earlier this year when the St. Petersburg Times began looking at double- and even triple-dippers, the state retirement system had about 8,000 members collecting paychecks and pensions at the same time. By June that number had risen to 9,397, and it's still growing.
Read Article Here:
http://www.tampabay.com/news/politics/article950391.ece
State Pensions’ $865 Billion Loss Affects New Workers
A combination of stock market losses, a surge in baby boomer retirements and retirees increased longevity are about to blow up pension plans. Many retirees are going to receive letters alerting them that their retirement checks will be cut as much as 50% over the next two years. One of more distressing situations arising from the financial crisis. Couple that with the coming inflation problem and we may see a vast number of older folks impoverished, truly sad indeed.=Lou
State Pensions’ $865 Billion Loss Affects New Workers
By Adam L. Cataldo
Jan. 13 (Bloomberg) -- State governments from Rhode Island to California have run up estimated pension-fund losses of $865.1 billion, forcing some to cut benefits for new hires.
Assets for 109 state funds declined 37 percent to $1.46 trillion over the 14 months ended Dec. 16, according to the Center for Retirement Research at Boston College. The Standard & Poor’s 500 Index of stocks fell 41 percent in the period.
Read Article Here:
http://www.bloomberg.com/apps/news?pid=20601109&sid=aV0VZMxdImVQ&refer=home
State Pensions’ $865 Billion Loss Affects New Workers
By Adam L. Cataldo
Jan. 13 (Bloomberg) -- State governments from Rhode Island to California have run up estimated pension-fund losses of $865.1 billion, forcing some to cut benefits for new hires.
Assets for 109 state funds declined 37 percent to $1.46 trillion over the 14 months ended Dec. 16, according to the Center for Retirement Research at Boston College. The Standard & Poor’s 500 Index of stocks fell 41 percent in the period.
Read Article Here:
http://www.bloomberg.com/apps/news?pid=20601109&sid=aV0VZMxdImVQ&refer=home
Tuesday, January 13, 2009
Pakistani Nuclear Security Worries U.S. Officials
The biggest threat to world security is Pakistan.-LouPakistani Nuclear Security Worries U.S. Officials
Preventing Pakistan's nuclear arsenal from falling into extremist hands is a more important security priority for the United States than stabilizing Afghanistan and Iraq, according to a Bush administration report delivered to the team preparing for Barack Obama's presidency, the New York Times reported yesterday.
"Only one of those countries has a hundred nuclear weapons," the report's lead author said. Concerns persist over Islamabad's ability to protect the arsenal, according to the Times.
U.S. intelligence officials have briefed Obama on the possibility that some Pakistani scientists with radical Islamic sympathies have sought to join the ranks of the nation's nuclear elite.
Read Article Here:
Citi reportedly to unveil major re-organization
I'm sure the U.S. government is making Citigroup do this, after all we put up $300 billion to keep them from blowing up. Perhaps the name of the combined Citigroup and Morgan Stanley brokerage unit should be "Citi Morg"!-Lou
Citi reportedly to unveil major re-organization
Financial-supermarket strategy may be replaced by focus on banking
By Alistair Barr, MarketWatch
SAN FRANCISCO (MarketWatch) -- Citigroup Inc. will reportedly unveil a major re-organization that will end its efforts to build a global financial-services supermarket, according to media reports.
Citigroup said earlier Tuesday that it's talking with Morgan Stanley about a combination of the two companies' brokerage businesses. The deal could be set up as a joint venture. Morgan Stanley may pay $2.5 billion to Citi for a majority stake and have the option to buy the rest of the unit later, reports say.
Read Article Here:
http://www.marketwatch.com/news/story/Citi-give-up-financial-supermarket/story.aspx?guid=%7b47DFDEBB-1325-4B92-904C-F38B4588F5C0%7d&print=true&dist=printMidSection
Citi reportedly to unveil major re-organization
Financial-supermarket strategy may be replaced by focus on banking
By Alistair Barr, MarketWatch
SAN FRANCISCO (MarketWatch) -- Citigroup Inc. will reportedly unveil a major re-organization that will end its efforts to build a global financial-services supermarket, according to media reports.
Citigroup said earlier Tuesday that it's talking with Morgan Stanley about a combination of the two companies' brokerage businesses. The deal could be set up as a joint venture. Morgan Stanley may pay $2.5 billion to Citi for a majority stake and have the option to buy the rest of the unit later, reports say.
Read Article Here:
http://www.marketwatch.com/news/story/Citi-give-up-financial-supermarket/story.aspx?guid=%7b47DFDEBB-1325-4B92-904C-F38B4588F5C0%7d&print=true&dist=printMidSection
Treasury: deficit hits new record in just 3 months
Trillion dollar deficits will be with us for years to come, how could that be good for the dollar?.-Lou
Treasury: deficit hits new record in just 3 months
WASHINGTON (AP) - The Treasury Department says the federal government already has run up a record deficit of $485.2 billion in just the first three months of the current budget year.
The deficit is on track to surpass $1 trillion for all of fiscal 2009 and some economists believe it could go much higher.
The Treasury says the deficit for December totaled $83.6 billion, a sharp deterioration from a year ago when the government managed a surplus of $48.3 billion.
All the red ink is occurring because of the massive spending on the $700 billion financial rescue program and a prolonged recession which has depressed tax revenues.
Treasury: deficit hits new record in just 3 months
WASHINGTON (AP) - The Treasury Department says the federal government already has run up a record deficit of $485.2 billion in just the first three months of the current budget year.
The deficit is on track to surpass $1 trillion for all of fiscal 2009 and some economists believe it could go much higher.
The Treasury says the deficit for December totaled $83.6 billion, a sharp deterioration from a year ago when the government managed a surplus of $48.3 billion.
All the red ink is occurring because of the massive spending on the $700 billion financial rescue program and a prolonged recession which has depressed tax revenues.
Bank Index Hits November Lows
click on chart to enlargeAlthough the stock market in general is well of the November lows, bank stocks have broken down and are now testing lows again. Citigroup and JP Morgan's shares look especially weak. Despite all the bailouts, the banking system still is very shaky.-Lou
Zimbabwe introduces $50 billion note
This is what happens when you create massive amounts of money to battle economic weakness.-Lou
Zimbabwe introduces $50 billion note
Story Highlights:
Zimbabwe grappling with hyperinflation estimated at 231 million percent
As of Friday, one U.S. dollar was trading at around ZW$25 billion
The country slashed 10 zeros from the amount of its worthless currency in August
RBZ has allowed most goods and services to be charged in foreign currency
HARARE, Zimbabwe (CNN) -- Zimbabwe's central bank will introduce a $50 billion note -- enough to buy just two loaves of bread -- as a way of fighting cash shortages amid spiraling inflation.
The country's acting finance minister, Patrick Chinamasa, made the announcement in a government gazette released Saturday.
Although Chinamasa did not give the date on which the $50 billion and new $20 billion notes would come into circulation, an official at the Reserve Bank of Zimbabwe said the notes would be distributed to all banks by the end of Monday.
Zimbabwe is grappling with hyperinflation now officially estimated at 231 million percent, and its currency is fast losing its value. As of Friday, one U.S. dollar was trading at around ZW$25 billion.
When the government issued a $10 billion note just three weeks ago, it bought 20 loaves of bread. That note now can purchase less than half of one loaf.
Read Article Here:
http://cnn.site.printthis.clickability.com/pt/cpt?action=cpt&title=Zimbabwe+introduces+%2450+billion+note+-+CNN.com&expire=-1&urlID=33563311&fb=Y&url=http%3A%2F%2Fwww.cnn.com%2F2009%2FWORLD%2Fafrica%2F01%2F10%2Fzimbawe.currency%2Findex.html&partnerID=211911
Quote Of The Day
The problem with socialism is that you eventually run out of other people’s money. –Margaret Thatcher
Vintage pro-inflation propaganda
Interesting video during made during the depression explaining why inflation is good. Perhaps Steven Spielberg is working on a contemporary version.-Lou
http://au.youtube.com/watch?v=99Dzdc1H0wM
http://au.youtube.com/watch?v=99Dzdc1H0wM
Monday, January 12, 2009
Financier Madoff stays in penthouse
It amazes and infuriates me that this guy stays out of jail while waiting trial. Obviously, the judge did not have any money invested with Madoff-Lou
Financier Madoff stays in penthouse, avoids jail
Judge say money manager Madoff can remain free on bail in penthouse with more restrictions
Monday January 12, 2009
NEW YORK (AP) -- A judge allowed disgraced money manager Bernard Madoff to remain free on bail Monday, rejecting an attempt by prosecutors to send him to jail for mailing more than $1 million in jewelry to family and friends over the holidays.
The decision is sure to outrage investors who have been clamoring for Madoff to be sent to jail for allegedly carrying out the largest financial fraud in history - a scheme authorities say he has described as a Ponzi scheme.
If bail had been revoked, Madoff would have been forced from the comfort of his $7 million penthouse where he has been under house arrest and await trial living in a jail cell with nothing but bunkbeds, a sink and toilet.
Read Article Here:
http://finance.yahoo.com/news/Financier-Madoff-stays-in-apf-14033202.html/print
Financier Madoff stays in penthouse, avoids jail
Judge say money manager Madoff can remain free on bail in penthouse with more restrictions
Monday January 12, 2009
NEW YORK (AP) -- A judge allowed disgraced money manager Bernard Madoff to remain free on bail Monday, rejecting an attempt by prosecutors to send him to jail for mailing more than $1 million in jewelry to family and friends over the holidays.
The decision is sure to outrage investors who have been clamoring for Madoff to be sent to jail for allegedly carrying out the largest financial fraud in history - a scheme authorities say he has described as a Ponzi scheme.
If bail had been revoked, Madoff would have been forced from the comfort of his $7 million penthouse where he has been under house arrest and await trial living in a jail cell with nothing but bunkbeds, a sink and toilet.
Read Article Here:
http://finance.yahoo.com/news/Financier-Madoff-stays-in-apf-14033202.html/print
This week's "The Financial Physician" radio show now available.Listen Here:
http://wobmam.com/personalities_lou_scatigna.html
FDIC Faces up to $10B Whack on IndyMac Loans
FDIC will go to congress for a massive bailout as many more banks fail in 2009-Lou
FDIC Faces up to $10B Whack on IndyMac Loans
New York Post
THE Federal Deposit In surance Corp. may not have fully washed its hands of IndyMac Bank.
Despite the agreement to sell of the once-troubled bank last week to a group of private-equity investors for $1.6 billion, the FDIC may be facing up to $10 billion in previously-unknown liabilities linked to mortgages IndyMac has sold to Fannie Mae, The Post has learned.
Such a haircut to the FDIC's $34.6 billion insurance fund would leave Sheila Bair's agency less able to deal with the number of bank failures expected this year.
Read Article Here:
http://www.nypost.com/seven/01112009/business/fdic_faces_up_to_10b_whack_on_indymac_lo_149620.htm
FDIC Faces up to $10B Whack on IndyMac Loans
New York Post
THE Federal Deposit In surance Corp. may not have fully washed its hands of IndyMac Bank.
Despite the agreement to sell of the once-troubled bank last week to a group of private-equity investors for $1.6 billion, the FDIC may be facing up to $10 billion in previously-unknown liabilities linked to mortgages IndyMac has sold to Fannie Mae, The Post has learned.
Such a haircut to the FDIC's $34.6 billion insurance fund would leave Sheila Bair's agency less able to deal with the number of bank failures expected this year.
Read Article Here:
http://www.nypost.com/seven/01112009/business/fdic_faces_up_to_10b_whack_on_indymac_lo_149620.htm
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