Thursday, December 31, 2009

Forecast 2010

By James Howard Kunstler

The Center does Not Hold...
But Neither Does the Floor

There are always disagreements in a society, differences of opinion, and contested ideas, but I don't remember any period in my own longish life, even the Vietnam uproar, when the collective sense of purpose, intent, and self-confidence was so muddled in this country, so detached from reality. Obviously, in saying this I'm assuming that I have some reliable notion of what's real. I admit the possibility that I'm as mistaken as anyone else. But for the purpose of this exercise I'll ask you to regard me as a reliable narrator. Forecasting is a nasty job, usually thankless, often disappointing - but somebody's got to do it. There are so many variables in motion, and so much of that motion is driven by randomness, and the best one can do in forecasting amounts to offering up some guesses for whatever they are worth.

I begin by restating my central theme of recent months: that we're doing a poor job of constructing a coherent consensus about what is happening to us and what we are going to do about it.

There is a great clamor for "solutions" out there. I've noticed that what's being clamored for is a set of rescue remedies - miracles even - that will allow us to keep living exactly the way we're accustomed to in the USA, with all the trappings of comfort and convenience now taken as entitlements. I don't believe that this will be remotely possible, so I avoid the term "solutions" entirely and suggest that we speak instead of "intelligent responses" to our changing circumstances. This implies that our well-being depends on our own behavior and the choices that we make, not on the lucky arrival of just-in-time miracles. It is an active stance, not a passive one. What will we do?

The great muddlement out there, this inability to form a coherent consensus about what's happening, is especially frightening when, as is the case today, even the intelligent elites appear clueless or patently dishonest, in any case unreliable, in their relations with reality. President Obama, for instance - a charming, articulate man, with a winning smile, pectorals like Kansas City strip steaks, and a mandate for "change" - who speaks incessantly and implausibly of "the recovery" when all the economic vital signs tell a different story except for some obviously manipulated stock market indexes. You hear this enough times and you can't help but regard it as lying, and even if it is lying ostensibly for the good of the nation, it is still lying about what is actually going on and does much harm to the project of building a coherent consensus. I submit that we would benefit more if we acknowledged what is really happening to us because only that will allow us to respond intelligently. What prior state does Mr. Obama suppose we're recovering to? A Potemkin housing boom and an endless credit card spending orgy? The lying spreads downward from the White House and broadly across the fruited plain and the corporate office landscape and through the campuses and the editorial floors and the suites of absolutely everyone in charge of everything until all leadership in every field of endeavor has been given permission to speak untruth and to reinforce each others lies and illusions.

How dysfunctional is our nation? These days, we lie to ourselves perhaps as badly the Soviets did, and in a worse way, because where information is concerned we really are a freer people than they were, so our failure is far less excusable, far more disgraceful. That you are reading this blog is proof that we still enjoy free speech in this country, whatever state of captivity or foolishness the so-called "mainstream media" may be in. By submitting to lies and illusions, therefore, we are discrediting the idea that freedom of speech and action has any value. How dangerous is that?

Where We Are Now

continue reading...

Tuesday, December 29, 2009

RealityZone; A New Era ?: South Korea, China, Japan, [ASEAN] Sign Currency Swap?

RealityZone; A New Era ?: South Korea, China, Japan, [ASEAN] Sign Currency Swap?

Eyes Wide Open And Pedal To The Metal

Ilargi: On Christmas Eve, in No Morals, No Hazard, I talked about Eric Sprott’s report "Is it all just a Ponzi scheme?", which suggests that $704 billion in purchases of US Treasuries cannot be accounted for, since they are on file as purchases by what the Federal Reserve Flow of Funds Report labels the "Household Sector", which, it turns out, doesn't exist. It's merely a name under which all unknown purchasers are grouped, while remaining unknown. The purchaser may be the Fed itself, unwilling to admit to more purchases than are already on file.
Alternatively, as someone suggested, the Treasuries may never have been issued in the first place, and the entire thing may be an empty charade aimed solely at keeping up the appearance of a functioning US sovereign debt market.
This possibility, which Sprott failed to mention, opens up whole new vistas, and would certainly lend a lot more credence to the idea that US finance policy, as designed and engineered by the Treasury Department and the Federal Reserve, is indeed nothing but the giant Ponzi scheme Sprott suspects it may be.
The Tyler Durden collective at ZeroHedge takes Sprott’s suspicions a step or two further, one might say, in a little directive called "Brace For Impact: In 2010, Demand For US Fixed Income Has To Increase Elevenfold... Or Else".
Durden looks at what the net issuance of US fixed income has been in 2009, after you subtract the part purchased by the Fed (which is after all not a real purchase, but just money going from one's left pocket to the right one, I’ve used the metaphor numerous times in relation to US financial policies).
What Tyler Durden then finds is that net US$ denominated fixed income issuance was only $200 billion this year. For 2010, though, since the Fed is set to leave the scene stage left along with Quantitative Easing sometime early spring, over $2.06 trillion will have to be sold to parties other than the Fed.
continue reading Eyes Wide Open And Pedal To The Metal

Sunday, December 27, 2009

Dead Men Walking

Why 2009's truly top thinkers are yesterday's news.


There is nothing like a really big economic crisis to separate the Cassandras from the Panglosses, the horsemen of the apocalypse from the Kool-Aid-swigging optimists. No, the last year has shown that all is not for the best in the best of all possible worlds. On the contrary, we might be doomed.

At such times, we do well to remember that most of today’s public intellectuals are mere dwarves, standing on the shoulders of giants. So, if they had e-mail in the hereafter, which of the great thinkers of the past would be entitled to send us a message with the subject line: "I told you so"? And which would prefer to remain offline?

It has, for example, been a bad year for Adam Smith (1723-1790) and his "invisible hand," which was supposed to steer the global economy onward and upward to new heights of opulence through the action of individual choice in unfettered markets. By contrast, it has been a good year for Karl Marx (1818-1883), who always maintained that the internal contradictions of capitalism, and particularly its tendency to increase the inequality of the distribution of wealth, would lead to crisis and finally collapse. A special mention is also due to early 20th-century Marxist theorist Rudolf Hilferding (1877-1941), whose Das Finanzkapital foresaw the rise of giant "too big to fail" financial institutions.

Joining Smith in embarrassed silence, you might think, is Friedrich von Hayek (1899-1992), who warned back in 1944 that the welfare state would lead the West down the "road to serfdom." With a government-mandated expansion of health insurance likely to be enacted in the United States, Hayek's libertarian fears appear to have receded, at least in the Democratic Party. It has been a bumper year, on the other hand, for Hayek's old enemy, John Maynard Keynes (1883-1946), whose 1936 work The General Theory of Employment, Interest and Money has become the new bible for finance ministers seeking to reduce unemployment by means of fiscal stimuli. His biographer, Robert Skidelsky, has hailed the "return of the master." Keynes's self-appointed representative on Earth, New York Times columnist Paul Krugman, insists that the application of Keynesian theory, in the form of giant government deficits, has saved the world from a second Great Depression.

Read more

Saturday, December 26, 2009

week ending Dec 26th

the review of the week ending Dec 26th has been completed & posted on the globalglassonion covers articles from MSM and the blogosphere on the topics listed below and whatever else, including a couple dozen op-eds on and analysis of the health care bill passed this week in the senate...

anyone who wants my weekly emailing of selected and leftover links from this post, contact me....

Thursday, December 24, 2009

Bernanke's & Geithner’s Troubles at Home

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Home Crisis Investigation
Daily Show
Full Episodes
Political HumorHealth Care Crisis

You Can't Make This Stuff Up
from the Time Magazine Person of the Year extended interview with Ben Bernanke:
I: What's your interest rate?
B: That I'm earning?
I: No, on your house. Do you have a mortgage?
B: Oh, yes, we refinanced.
I: Oh, perfect. When?
B: About 5%. A couple of months ago.
I: Good time.
B: Yes. We had to do it because we had an adjustable rate mortgage and it exploded, so we had to."

inspires confidence, doesnt it?

Monday, December 21, 2009

Saturday, December 19, 2009

week ending Dec 19th

the review of the week ending Dec 19th has been completed & posted on the globalglassonion covers articles from MSM and the blogosphere on the topics listed below and whatever else, and not necessarily in that alphabetical order...

anyone who wants my weekly emailing of selected and leftover links from this post, contact me....

Friday, December 18, 2009

The Colbert Report: The Word - The Green Mile

The Colbert ReportMon - Thurs 11:30pm / 10:30c
The Word - The Green Mile
Colbert Report Full EpisodesPolitical HumorU.S. Speedskating

I've heard it said that laughter is an interupted defense mechanism. Perhaps this wouldn't be so funny but for the fact that's it's also so true.

Related article..........

Thursday, December 17, 2009

How Banks Fleece the Unemployed

Just when you thought the big banks had maxed out their chutzpah account, think again.

While posting breathtaking profits in the last two quarters – Wells Fargo’s $3.2 billion, Citigroup’s $3 billion and Chase’s $2.7 billion – U.S. banks have figured out a way to squeeze some extra dollars from those who can least afford it, the unemployed.

Here’s how it works. In the past two years, states have been overwhelmed with unemployment claims. Always eager to serve, America’s banks offered a deal the states couldn’t refuse.

Sign a contract — which won’t cost you a dime — and send us your weekly unemployment funds, the banks said. In return, we’ll issue our VISA or MasterCard debit cards to your laid-off workers, on which we’ll post their benefits electronically.

Thirty states signed on with the usual suspects — Citi, Wells Fargo, JPMorgan Chase, Bank of America — and some smaller ones, too. More states are lining up.

In a stroke, states dropped all their costs for printing and mailing checks. Andrew James, with North Carolina’s Employment Security Commission, told me that in the past year, his state saved a whopping $10 million. During the same time, Nevada saved $800,000, Maryland $400,000 and West Virginia $340,000.

But if the system is good for the states, it's great for the banks. A February 2009 Associated Press article noted that Missouri’s Central Bank, which won that state’s contract, could reap $6.3 million this year alone.

The banks profit from interest earned on the funds the states deposit with them until the money is posted onto the debit cards. Then there’s the money the banks get from retailers where the unemployed shop with their cards — from 2 percent to 3 percent per transaction.

But such sums are not large enough, it seems. So the banks have figured how to extract more money from the millions of unemployed now using the debit cards. The devil’s in the fees.

it gets worse: continue reading about How Banks Fleece the Unemployed...

Wednesday, December 16, 2009

Handing Over Goods for Promises

...Time for a new blurring of distinctions. The two parties in this case are the US Government and the Federal Reserve. Let’s pretend they are one entity. Why is this reasonable to pretend this?

  •  Profits from the Federal Reserve go to the US Treasury.
  •  The US Government appoints most of the critical members of the Fed’s governing board.
  •  During the crisis, the Fed and Treasury worked hand in glove to achieve their ends.
  •  The Fed takes actions that an ordinary Central Bank would not. Why bail out Bear Stearns and AIG? Why aid Fannie and Freddie? Why buy mortgage-backed securities? There is no reason for a central bank to own anything but the highest quality securities.

 Much as Bernanke and others have protested about central bank independence, they have acted like an arm of the Treasury in most of 2008-2009. So let’s stop the act, or let’s bring back men in the nature of Volcker, Martin and Eccles. Tell Congress and the Executive that we are going to preserve sound money, and if they don’t like it, don’t reappoint us.

But suppose we continue on in the limp-wristed way that we have been going. Maybe the US doesn’t have a Central Bank. Maybe it has an additional financing arm. Think of the Dollars you hold as o% 0-day commercial paper. Think of the Fed encouraging banks to lend to them for the rate of less than 0.25%/year annualized on an overnight basis. Consider their purchases of longer dated securities as similar to that of a hedge fund, admittedly a clumsy one, pasted onto our government.

So long as there is slack labor, slack capital, and slack resources, the cheap lending rates to the US government can persist. But in the ’70s resources were not slack, and inflation occurred while there were recessionary conditions. If the global economy is markedly stronger than the US economy, that could be our situation again — stagflation.

Central banks by their nature abhor two risks, credit risk, and lending long. In the present environment, the Fed is doing both. Bagehot said to lend against impeccable capital at a penalty rate. In the current crisis, the Fed, far from being independent, is absorbing credit risk, and lending long risk, and is doing so without abnormal compensation, indeed the compensation is sometimes subpar.

My sense is that when the Fed stops its purchases of mortgage bonds in the next few months, the longer-dated debt markets will cease to be so friendly, and rates will rise. That is what should be happening. It is risky to lend for long periods in US Dollar terms, and those that do so should be amply rewarded.

There are many who are arguing that the US should borrow more and spend with abandon. They are fools; fools believe that the government can create prosperity through legislative or regulatory actions. As it is, the creditworthiness of our government declines as we use its credit to bail out private interests.

We might not be as bad off as Greece, but what assurance do creditors of the US have that they will be repaid in purchasing power similar to that which they lent? I don’t see the assurance. Better to invest in the debt of non-PIIGS euro-debt. [PIIGS -- Portugal, Ireland, Italy, Greece and Spain]

There is a lot of stress in the global economy as it attempts to reconcile economies that must export, no matter what, with those that must run deficits, no matter what. The exporters take in debt from the nations that borrow in order to make books balance. I don’t know when that system will break, but it will break, delivering losses to the exporters, much as that happened in the era of mercantilism.

That said, when the exporters lose, so will the countries that relied on the cheap financing, including the US. Interest rates will be higher, and the US economy will be that much weaker, aside from exporters benefiting from a weaker dollar. This may not take place for years, but it will eventually happen.
In other words, the cheap finance that the US has will eventually fail. I don’t know when that will be, but eventually the world will tire of handing over goods for promises.

...from the Aleph Blog

Monday, December 14, 2009

Ron Paul's Texas Straight Talk - 12/14/2009

Texas Straight Talk
A weekly column

The Fed's Money Monopoly

Last week, in the name of protecting the little guy from Wall Street, the House passed HR 4173 to increase the little guy’s false sense of security in the financial system. This mammoth piece of legislation would massively increase government regulation and oversight in the banking industry under the misguided reasoning that more government could have stopped faulty lending practices, when in actuality it caused them. This bill would also greatly increase the powers of the Federal Reserve, which too many in Congress still see as savior rather than perpetrator in this mess.

Continue reading.........

Posted by Ron Paul (12-14-2009, 12:14 PM) filed under Monetary Policy

Sunday, December 13, 2009

who owns us

be patient with this one, it takes a minute to load...

Who Owns America's Debt - A Dynamic Perspective on Major Foreign Holders of Treasury Securities (2002-Present) from Michael J Bommarito II on Vimeo.

Three Things to Notice

(1) China Passes Japan — This dynamic visual demonstrates how in the fall of 2008 China surpassed Japan as the top foreign holder of U.S. Debt.

(2) The Rise of Russia – Notice how Russia becomes a significant holder of U.S. Debt between late-2006 and mid-2007.

(3) The Increasing Amount of U.S. Debt Held Abroad — The pie chart is sized by the total debt held by the current top ten debt holders. As a function of U.S. expenditures over the relevant time period, this pie grows in nearly every time period. In the bottom right corner, we track the total debts held by the current top debt holders. Of course, this alone does not represent the complete picture as there is additional U.S. debt held by a variety of other other countries. Therefore, we also track the grand total of all debts held abroad in the bottom right corner of the visual.

Dynamic Perspective on the Increasing Amount of American Debt Held Abroad

Focusing upon the ”Major Foreign Holders of Treasury Securities,” we were interested in considering how today’s major debt holders acquired their top position. The data used the generate the visual above is drawn from United States Department of Treasury. For those interested in replicating our results, the current data is located here and the historical data is located here.

related post: A Decade of Debt — The American Dream and the Road to Riches?

The Illusion of Recovery

Talk about a devastated landscape... Any which way you look, the housing numbers are relentlessly bad. For example, 23% of U.S. homeowners owe more on their mortgages than their properties are worth, according to the Wall Street Journal. They possess, in the vivid lingo of the housing industry, “underwater mortgages.” Among them, 5.3 million households have mortgages that are at least 20% higher than their home’s value, 520,000 of whom have already received default notices. In the meantime, home-loan delinquencies and home repossessions are now at record highs. According to the Los Angeles Times, by the end of September, “one in seven U.S. home loans was past due or in foreclosure,” and the chief economist for the Mortgage Bankers Association expects the number of foreclosures to keep rising deep into 2010.

Worse yet, foreclosures on large rental-unit buildings are also on the rise. This means, reports Robin Shulman of the Washington Post, that not just homeowners but renters are now being swept up in the housing crisis as landlords of apartment buildings in trouble let upkeep go while maintenance problems soar. Nor are the latest figures on home prices offering much cheer. Two key price indexes released last week, write David Streitfeld and Javier Hernandez of the New York Times, “indicated that the momentum the housing market showed over the late spring and summer is faltering.”

There was, however, a rare ray of good news amid this dismal scene: Wall Street has, according to Louise Story of the Times, figured out how to make money from the mortgage mess by “buying billions of dollars’ worth of home loans, discounted from the loans’ original value” and pocketing profits while shifting “nearly all the risk for the loans to the federal government -- and ultimately taxpayers.”

With this grim picture in mind and with California one of four Sunbelt states that account for 43% of all foreclosures started in recent months, we sent TomDispatch regular Andy Kroll to the Ground Zero of the mortgage crisis to see what an economic “recovery” looks like firsthand in post-meltdown America.

continue reading The Illusion of Recovery...

Saturday, December 12, 2009

week ending Dec 12th

the review of the week ending Dec 12th has been completed & posted on the globalglassonion covers articles from MSM and the blogosphere on the topics listed below and whatever else, and not necessarily in that alphabetical order...

anyone who wants my weekly emailing of selected and leftover links from this post, contact me....


The 12 days of bailout...Loadup the Jack Daniels cause your Eggnog is gonna need it...CHEERS

Friday, December 11, 2009

The Human Ecology of Collapse

Part One: Failure is the Only Option

The old legend of the Holy Grail has a plot twist that’s oddly relevant to the predicament of industrial civilization. A knight who went searching for the Grail, so the story has it, if he was brave and pure, would sooner or later reach an isolated castle in the midst of the desolate Waste Land. There the Grail could be found and the Waste Land made green again, but only if the knight asked the right question. Failing that, he would wake the next morning in a deserted castle, which would vanish behind him as soon as he left, and it might take years of searching to find the castle again.

As we approach the twilight of the age of cheap energy, we’re arguably in a similar situation. It seems to me that a great deal of the confusion that grips the peak oil scene, and even more of the blind commitment to catastrophically misguided policies that reigns outside peak-aware circles, comes from a failure to ask the right questions. A great many people aware of the limits to fossil fuels, for example, have assumed that the question that needs answering is how to sustain a modern industrial society on alternative energy.

Ask that, though, and you’re back in the Waste Land, because any answer you give to that question is wrong. The question that has to be asked is whether a modern industrial society can exist at all without vast and rising inputs of essentially free energy, of the sort only available on this planet from fossil fuels, and the answer is no. Once that’s grasped, other useful questions come to mind – for example, how much of the useful legacy of the last three centuries can be saved, and how – but until you get past the wrong question, you’re stuck chasing the mirage of a replacement for oil that didn’t take a hundred million years or so to come into being.

continue reading The Human Ecology of Collapse...

Thursday, December 10, 2009

How To Kill OTC Derivatives Reform in Two Sentences

the headline on the Reuters article reads “U.S. House to debate financial regulation overhaul” and it goes on to tells us how “Obama and congressional Democrats see the reforms they are backing as crucial to preventing a repeat of last year's financial crisis”. you have to scroll halfway down the article to get at the punchlines:
An army of lobbyists from banks and Wall Street have worked for months to block, water down and delay the bill, which would threaten the profits of many financial services firms. Reformers have reduced their goals since earlier this year, abandoning a wholesale reorganization of existing regulatory agencies as too politically difficult, for instance.
Mike Konczal, author of the Rortybomb blog, has found one thing those lobbyists have been up to:
“Have lobbyists snuck another major loophole into the OTC Derivatives bill? This week the final touches are being put on Barney Frank’s financial regulation bill – H.R. 4173 – “Wall Street Reform and Consumer Protection Act of 2009.” One of the centerpieces of this reform is Title III: Over-the-Counter Derivatives Markets Act. And one of the goals of this reform would be to get as many derivatives as possible to trade on exchanges.
An initial hurdle for Barney Frank was what to do with an “end-user exemption.” This would exempt certain types of derivative buyers who use derivatives, say corporations hedging interest rate risk without speculating, from the extra scrutiny and regulation that comes with the exchange/clearing system. One of the narratives of financial reform so far has been that this initial end-user exemption was too large a loophole at first, and instead of just handling 10-20% of the market, it would let a large majority of the market sneak through, but ultimately Barney Frank was convinced by consumer groups and people pushing for stronger financial regulation and fixed this issue. See Noah Scheiber here in “Could Wall Street Actually Lose in Congress?” for this story, and it shows up as well in a recent profile of Barney Frank in Newsweek.
I thought it was a little too early to declare victory, and sure enough instead of attacking and weakening how people will have to use the exchanges, lobbyists have re-focused their attack on the idea of the exchange itself. For a while, reformers have been worried about an “alternative swap execution facility.” This would be a way of essentially allowing the current way things are done to be allowed to count as an exchange. Fighting off this loophole was a battle from a month ago, and it had appeared to be won. Now many are worried that this language appears to have snuck back into the final bill now.
Colin Peterson (D-MN), Chairman of the House Committee on Agriculture, along with Barney Frank, has added an amendment to the OTC Bill (opens large pdf). There are two relevant sentences for reformers from the long document. The first is on page 32:
(49) SWAP EXECUTION FACILITY.—The term ‘swap execution facility’ means a person or entity that facilitates the execution or trading of swaps between two persons through any means of interstate commerce, but which is not a designated contract market, including any electronic trade execution or voice brokerage facility.
This replaces other language in the original bill (opens even larger pdf), on page 546:
(A) No person may operate a swap execution facility unless the facility is registered under this section.

(B) The term ‘swap execution facility’ means an entity that facilitates the execution of swaps between two persons through any means of interstate commerce but which is not a designated contract market.
So notice any differences? First the definition of a swap execution facility has been expanded to include “a person” (different from the “or entity”). It’s also expanded to an “or trading” definition, and includes voice brokerage firms. So now we are moving from the definition of something that is a platform for swaps to be traded on to instead something that simply helps swaps get traded. This could, quite simply, be a telephone over which two people trade a derivative (with one person declaring himself to be the exchange?). Instead of changing the way business is done for reform it looks like it redefines reform as the way things are currently done, and just calls it a victory.
Now on page 89 of the amendment:
(2) RULES FOR TRADING THROUGH THE FACILITY.—Not later than 1 year after the date of the enactment of the Derivative Markets transparency and Accountability Act of 2009, the Commission shall adopt rules to allow a swap to be traded through the facilities of a designated contract market or a swap execution facility. Such rules shall permit an intermediary, acting as principal or agent, to enter into or execute a swap, notwithstanding section 2(k), if the swap is executed, reported, recorded, or confirmed in accordance with the rules of the designated contract market or swap execution facility.
The second sentence here allows an intermediary to execute a swap, ignoring the section 2(k) which is the meat of the reform, as long as the swap is recorded somewhere. Now we already have, from above, that a swap execution facility can be something other than the exchange. This is a rule that guts the regulation right out the door, and for no apparent benefit to reform. Many of these alternative swap facilities will be owned by the banks, so it won’t necessarily force the price transparency that has been promised. To trust regulators to simply do the right thing is naive at best when the ability to follow fixed rules is available.
From what I’m hearing, it is possible Frank doesn’t even know that this language, once in the bill as an amendment but removed, has snuck back into his reform legislation. Things are moving very quickly on the hill right now, and this is scheduled to be wrapped up by tomorrow. However this new language runs counter to the reforms Frank has promised to deliver to the American people. Either this language needs to be clarified before the bill is complete, or removed entirely.”
(the above from a guest post on The Baseline Scenario)

Tuesday, December 8, 2009

unemployment crisis continues

Jobs Crisis Fact Sheet - Economic Policy Institute

View in printer-friendly PDF format

(Note that all numbers are current as of December 4, 2009. States numbers are current as of November 20, 2009.)

The jobs crisis

Hardships and the safety net

American Recovery and Reinvestment Act

  • Average weekly unemployment benefit in October (including additional $25 per week from the American Recovery and Reinvestment Act): $334
  • Number of additional people each week receiving unemployment compensation because of ARRA in October:  3.9 million
  • Average monthly cost of COBRA with American Recovery and Reinvestment Act subsidy: $370; Without American Recovery and Reinvestment Act subsidy: $1,057
  • Jobs lost since February 2008: 2.7 million ; Jobs likely lost since February 2008 without passage of ARRA: 4.0 to 4.5 million

Sunday, December 6, 2009

Sovereign Wealth Funds Selling Off ?

Dec. 6 (Bloomberg) -- Kuwait Investment Authority, the nation’s sovereign-wealth fund, sold its stake in Citigroup Inc. for $4.1 billion after helping the U.S. bank boost capital amid the worst financial crisis since the Great Depression.

The fund converted preferred securities of Citigroup that it purchased for $3 billion last year into common shares and sold them, making a profit of $1.1 billion, KIA said in an e- mailed statement today.

The transaction “will be a confidence-booster,” said M.R. Raghu, head of research at Kuwait Financial Center, a Kuwait- based investment bank, in a telephone interview. “It looks to be good news, making a profit in these times.”

Sovereign wealth funds are selling investments in financial stocks as they seek to reduce risk and address domestic criticism over investment priorities. The funds, fueled in part by oil revenue, had become sources of capital around the world for companies including Citigroup and Morgan Stanley, helping them to withstand the credit market seizure that followed the collapse of U.S. subprime mortgages.

Singapore’s Temasek Holdings Pte, KIA and China Investment Corp. are among the sovereign funds that helped U.S. investment banks replenish more than $200 billion of capital. KIA and Temasek owned shares in Merrill Lynch & Co., which was bought by Bank of America in 2008 after the shares slumped 35 percent.

Alwaleed Stake

Saudi Arabia’s Prince Alwaleed bin Talal remains a shareholder in New York-based Citigroup, even after an 88 percent drop in its stock price during the past two years. Alwaleed has been among the company’s top shareholders since the early 1990s, when he helped rescue it from near-collapse. He said Dec. 1 that he expects 2010 to be a year of “stabilization” for the bank.

Barclays Plc, Britain’s second-biggest bank, avoided a government bailout in part by selling 5.3 billion pounds ($8.7 billion) of stock and convertible notes to the Qatar and Abu Dhabi sovereign wealth funds. The bank’s Abu Dhabi investors made a profit of 1.46 billion pounds when they sold shares in the lender in June.

Sovereign funds, together valued at about $3.2 trillion, operate as government-owned, special purpose investment vehicles.

Saturday, December 5, 2009

week ending Dec 5th

the review of the week ending Dec 5th has been completed & posted on the globalglassonion covers articles from MSM and the blogosphere on the topics listed below, and whatever else, with extra emphasis on the bernanke hearings and job creation ideas associated with this weeks jobs summit...

Eliot Spitzer: Geithner, Bernanke “Complicit” in Financial Crisis and Should Go

Six More Banks Fail ?

After a brief holiday respite, bank failure Friday came back with a vengeance yesterday. The FDIC and its fellow regulators closed six institutions, bringing the total to 130 for the year. (See our complete list of failed banks [1] this year.)

By far, the largest institution to go down was Cleveland-based savings and loan AmTrust [2]. It’s the fourth largest bank or thrift to fail this year. As of late October, AmTrust had total deposits of approximately $8 billion. Its demise is expected to cost the FDIC’s deposit fund about $2 billion.

In a geographic departure, New York Community Bank of Westbury, New York entered into an agreement with the FDIC to assume all of AmTrust’s deposits and its 66 branches. Until now, New York Community only had branches in New York and New Jersey.

The Wall Street Journal has a detailed account of AmTrust’s slow demise [3], including how politicians in Cleveland and Washington interceded with regulators to give the thrift more time, thereby likely increasing the ultimate cost to the FDIC.

Also failing on Friday were three banks in Georgia. The Peach State now leads the country in bank failures, with 24 this year. Among the failures was Buckhead Community Bank [4], located in a tony suburb of Atlanta. The Atlanta Journal-Constitution describes the bank [5] as “founded by Atlanta business royalty to cater to a wealthy clientele.” It had total deposits of approximately $838 million. The failure will cost the FDIC’s deposit fund an estimated $241 million.

Read More

I have said from the beginning that this is not "the greatest transfer of wealth in history". Rather it is the greatest "CONSOLIDATION OF WEALTH" .And we still have the same Banksters leading this charade that got us into this charade.

Friday, December 4, 2009

Drug-Makers Paying Off Competitors To Keep Cheap Generics Off Market

(from TPMMuckraker)

Over the last few years, drug-makers have embraced a startlingly simple tactic for fending off competition from generic brands: paying them off. In a nutshell, the company that holds the patent on a profitable drug strikes a deal with the maker of the cheaper generic brand: you hold off on marketing your generic for several years, and in return, we'll give you a share of our profits on the drug.

The vehicle for these deals is patent litigation. When a generic drug is approved to come to market, the maker of the more expensive name-brand drug sues the generic for patent infringement. But instead of a conventional settlement, in which the generic pays the patent-holder to settle the claim that it infringed the patent, the payment goes the other way: the patent-holder pays the maker of the generic, in exchange for a pledge to delay bringing the generic to market. That suggests the patent-holder fears its patent wouldn't hold up in court, as many don't. And it runs counter to the intent of the Hatch-Waxman Act of 1984, which sought to speed the path of generics to market, and to provide a legal framework for these cases.

So common have these deals become lately that they've been given a name: pay-for-delay. The approach -- a textbook anti-competitive tactic -- is worth billions to drug-makers, because it essentially allows them to buy more protection than their patent confers.


Bunning on Bernanke

although Fed chairman Bernanke's confirmation seems to be a given if one believes the vote counters, the hearings are giving the senators a chance to open up on him with both barrels; the rant by Jim Bunning of Kentucky has been posted on several blogs, with commentary, but ill just post the opening paragraphs from his website, and you can go there to read the rest:

Four years ago when you came before the Senate for confirmation to be Chairman of the Federal Reserve, I was the only Senator to vote against you. In fact, I was the only Senator to even raise serious concerns about you. I opposed you because I knew you would continue the legacy of Alan Greenspan, and I was right. But I did not know how right I would be and could not begin to imagine how wrong you would be in the following four years.

The Greenspan legacy on monetary policy was breaking from the Taylor Rule to provide easy money, and thus inflate bubbles. Not only did you continue that policy when you took control of the Fed, but you supported every Greenspan rate decision when you were on the Fed earlier this decade. Sometimes you even wanted to go further and provide even more easy money than Chairman Greenspan. As recently as a letter you sent me two weeks ago, you still refuse to admit Fed actions played any role in inflating the housing bubble despite overwhelming evidence and the consensus of economists to the contrary. And in your efforts to keep filling the punch bowl, you cranked up the printing press to buy mortgage securities, Treasury securities, commercial paper, and other assets from Wall Street. Those purchases, by the way, led to some nice profits for the Wall Street banks and dealers who sold them to you, and the G.S.E. purchases seem to be illegal since the Federal Reserve Act only allows the purchase of securities backed by the government.

for the rest, go to the Bunning Statement On The Re-Nomination Of Ben Bernanke To Be Chairman Of The Federal Reserve...

Thursday, December 3, 2009

Goldman Arming Itself? :-> - The Market Ticker

Goldman Arming Itself? :->


[Posted by Karl Denninger in Editorial at 09:25]

This is a riot (well, ok, I might be a week - or a month early on that):

Dec. 1 (Bloomberg) -- “I just wrote my first reference for a gun permit,” said a friend, who
told me of swearing to the good character of a Goldman Sachs Group Inc. banker who applied
to the local police for a permit to buy a pistol. The banker had told this friend of mine that
senior Goldman people have loaded up on firearms and are now equipped to defend
themselves if there is a populist uprising against the bank.

Let me give those fine bankers from Goldman Sachs (and the other big banking and trading houses) a few pieces of advice. And yeah, it's unsolicited and free, so you figure out whether it has value.

1. A handgun is a close-quarters defensive weapon. The FBI says that of shootings involving a handgun, most happen at something like 7 feet (yes, feet) of range or less. Oh, and you'd be surprised at how many people miss at that same seven feet. No, guns in real life don't work like in the movies where each bullet has a GPS in it and directs itself to its target, and when shot people don't go flying backward through windows. Guns simply make holes in things, wherever they are pointed when they go "bang" is where the bullet will travel, and all the energy that goes into the target also goes into your body (Newton's laws of motion and all.)

2. There are, by some estimates, more firearms in America than there are people. Americans bought something like 20 billion rounds of ammunition this year alone. Indeed, there are shortages of many sorts of ammunition and have been all year. While some of that lead undoubtedly was expended at the practice range, an awful lot of it is being stockpiled. Everyone who is stockpiling it in various amounts is doing so for different reasons, and most would self-declare it as protection against "zombies." Definitions of "zombie" differ.

3. There are a lot of hunting rifles in America. Most hunters can easily hit a deer-sized target at well beyond 100 yards with said rifle. I'm willing to bet that Mr. Investment Banker can't hit the broadside of a barn at 100yds with his brand new pistol that he's probably never fired, and probably never will.

4. Don't bother with soft body armor. It's useless against rifles. It is effective against pistols, which is why cops wear it (see that FBI stat about most handgun battles happening within seven feet.) But again, a hunter can easily hit a deer-sized target at well beyond 100 yards, common hunting rifles are legal almost literally everywhere, even in places like NYC, and a person armed with a handgun doesn't have a prayer in hell defending against a person with a rifle 100 or more yards away that has drawn a bead on them.

5. Unless you're prepared to practice with that weapon on a regular basis, and unless you have personally been in a life-threatening situation (a real one, not some mock-up or fake "game" run at some "weekend commando" class you were undoubtedly sold to make you feel macho with that shiny new handgun) there is at least a 50% chance that if you really do wind up confronted by some crazed nutball at close range you will either miss or worse, freeze - and the "bad guy" will simply take your gun from you and then kill you with your own weapon. Go ask the military about this - studies have shown that despite putting new soldiers through a grueling "basic training" course a very significant number of them will, when first confronted with an enemy shooting at them, intentionally fire high - that is, they miss on purpose in their first firefight. It turns out that most people have a hard-wired aversion to killing other humans. That's probably a good thing but psychopaths seem to be missing that inhibition. If someone really does come after you they're pretty much by definition one of those psychopaths.

Finally, if you're a "big banker" and concerned about your safety you might want to consider that in the 1800s there were lots of guns too, and yet they were both unnecessary and inadequate. Bankers during the panic of 1873 were simply hauled out of their offices bodily and hung from the lamp posts. We don't have lamp posts any more in Manhattan, so you have an advantage there, and I've not noted a run on boiled rope.


continued here....

Matt Taibbi on Obama’s Economy

[This entry was posted [on RollingStone] on Tuesday, December 1st, 2009 at 6:03 pm and is filed under Uncategorized. Includes video.]

In “Obama’s Big Sellout”, Matt Taibbi argues that President Obama has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway. Rather than keeping his progressive campaign advisers on board, Taibbi says Obama gave key economic positions in the White House to the very people who caused the economic crisis in the first place. Taibbi also points to the ties Obama’s appointees have to one main in particular: Bob Rubin, the former Goldman Sachs co-chairman who served as Treasury secretary under Bill Clinton.

Click above for Taibbi’s video breakdown of his argument in which he identifies the major players on Obama’s economic team, untangles the web that ties them to Rubin and points to how these relationships play into the financial “reforms” the Democrats are currently pushing through Congress. — Rolling Stone

Tuesday, December 1, 2009

Ron Paul's Texas Straight Talk - 11/30/2009

Healthcare Freedom or Healthcare Bureaucracy?

The U.S. Preventive Task Force caused quite a stir recently when they revised their recommendations on the frequency and age for women to get mammograms. Many have speculated on the timing for this government-funded report, with the Senate vote on health care looming, and cost estimates being watched closely. Just the hint that the government would risk women’s health to cut costs is causing outrage on both sides of the aisle.

Even the administration is alarmed at its own panel’s recommendation. One official, the Secretary of Health and Human Services, Kathleen Sebelius told women to ignore the new guidelines, keep doing what they are doing and make the best decisions for themselves after consulting with their doctors.

Continue reading article....