From Real Time Economics Blog at Wall Street Journal online:
$41 Billion: The total amount of money on gift cards that went, or is likely to go, unspent from 2005 to 2011.
Gift cards are becoming an increasingly popular holiday present, but... what happens to money that goes unspent?
The vast majority of money put on gift cards gets redeemed, but ... since 2005 $41 billion in money on gift cards has been lost or is likely never to be cashed in.
The lion’s share of money lost on gift cards from 2005-2009 came from fees and expiration dates. All that changed with the Credit Card Accountability Responsibility and Disclosure Act. The Act largely forbids fees on cards sold by retailers (cards given away as promotional items can still charge fees), and it prohibits expiration dates less than 5 years after the card is purchased.
But what happens when the purchases go under the face value and then sit in the junk drawer in perpetuity, or when grandma, who can barely check her AOL email, gets an Amazon.com card that she’ll never redeem?
The SEC allows companies to take unused gift-card money as income once they can reasonably say the card won’t be redeemed, but there’s no set time limit....
But some states don’t allow companies to keep unused gift-card cash. They demand that companies give the money to the state after a certain period of time to add to unclaimed-funds accounts.
States claim this is a way to reunite consumers with their unspent money, but practically it’s a way for cash-strapped governments to give themselves more liquid funds. Money the state holds as unclaimed funds can be used for general purposes until someone claims it.
For example, in 2008 ... New York state collected $9.6 million in unredeemed gift cards and returned around $2,150 to the rightful owners.
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Link: http://blogs.wsj.com/economics/2011/12/24/number-of-the-week-billions-in-gift-cards-go-unspent
Tuesday, December 27, 2011
Sunday, December 25, 2011
How to make a fortune after 50
From Reuters online:
At an age when others might ready for pre-retirement, some folks pass age 50 determined to start a new life in the business world - and succeed beyond their rosiest business plan projections...
Reuters spoke with four entrepreneurs who have created successful businesses after 50. And take note: Three of the four leaders featured here are women, having shattered the twin glass ceilings of gender and age...
Carol Gardner, 66
HER STORY: While nursing a broken femur and a broken heart (she'd just divorced her husband of 27 years), Gardner got an English Bulldog named Zelda, who became the mascot of a humorous greeting card land gift line, Zelda Wisdom. A former advertising creative director, Gardner started the business at age 52 around 1997, and almost by accident: Cash-strapped, she entered a Christmas card contest held by a pet store to win free dog food for a year, and won.
TODAY: Gardner started her company with 24 greeting cards in the middle of her living room. Within six months, she sold more than one million cards. Today she produces more than 200 licensed Zelda products, from calendars to children's books. Sales are conservatively estimated at $50 million annually.
TOP TIPS: Listen to your customers...
Franny Martin, 65
HER STORY: A former marketing professional who worked with Domino's Pizza, Martin left the corporate world just shy of turning 56 to pursue her passion - baking cookies.
TODAY: Martin's Cookies on Call, based in Douglas, Michigan, ships 40 cookie varieties all over the world and should surpass $700,000 in sales for 2011. She provides work for more than a dozen part-time and full-time employees. She started the company in 2002.
TOP TIPS: Get a great business team and ask for sage advice. "Make sure that you have the best accountant, the best lawyer and the best web designer," Martin says...
Jill Boehler, 59
HER STORY: A self-described "do gooder," Boehler spent her career as a speech pathologist until she got the inspiration to make "portable shawls" (wrinkle-free wraps that come with a tiny carrying bag) after she shivered through a meal at a restaurant because the air conditioning was too high. Soon she was making cold calls at fashion stores; she was 54 when she started in 2006.
TODAY: The founder of Chilly Jilly sold more than $500,000 in products in 2010 and is constantly unrolling new products, from gloves to the Duelette bracelet and hair tie. Boehler works with 20 private contractors across the country.
TOP TIPS: Toughen up...
STARTING AFTER AGE 50: "It's the perfect time to do it. My kids were gone and I could start working at 3 o'clock and work until 1 in the morning. My husband was into it, and I don't have to wait for kids at the bus stop, change diapers, or take them to activities."
Wally Blume, 73
HIS STORY: The one-time dairy marketer struck out on his own in 1996 to form Denali Flavors, a company that specializes in making ice cream ingredients and flavors for independent dairies. He was 57.
TODAY: With Denali sales at between $80 and $100 million, Blume credits much of his success to Moose Tracks - the flavor he helped develop and popularize as his company took root. "You have a flavor that is almost as strong as vanilla, and the national brands will never be able to get it. As soon as we developed it, it just took off."
TOP TIPS: Know your industry.... He also stresses training and hiring people you can trust to mind the store. "I have such good people working for me that I'm hardly involved with ice cream. They just run it and they do a better job than I can."
-----------
Link: http://www.reuters.com/article/2011/12/23/us-usa-retirement-after-idUSTRE7BM0TO20111223
At an age when others might ready for pre-retirement, some folks pass age 50 determined to start a new life in the business world - and succeed beyond their rosiest business plan projections...
Reuters spoke with four entrepreneurs who have created successful businesses after 50. And take note: Three of the four leaders featured here are women, having shattered the twin glass ceilings of gender and age...
Carol Gardner, 66
HER STORY: While nursing a broken femur and a broken heart (she'd just divorced her husband of 27 years), Gardner got an English Bulldog named Zelda, who became the mascot of a humorous greeting card land gift line, Zelda Wisdom. A former advertising creative director, Gardner started the business at age 52 around 1997, and almost by accident: Cash-strapped, she entered a Christmas card contest held by a pet store to win free dog food for a year, and won.
TODAY: Gardner started her company with 24 greeting cards in the middle of her living room. Within six months, she sold more than one million cards. Today she produces more than 200 licensed Zelda products, from calendars to children's books. Sales are conservatively estimated at $50 million annually.
TOP TIPS: Listen to your customers...
Franny Martin, 65
HER STORY: A former marketing professional who worked with Domino's Pizza, Martin left the corporate world just shy of turning 56 to pursue her passion - baking cookies.
TODAY: Martin's Cookies on Call, based in Douglas, Michigan, ships 40 cookie varieties all over the world and should surpass $700,000 in sales for 2011. She provides work for more than a dozen part-time and full-time employees. She started the company in 2002.
TOP TIPS: Get a great business team and ask for sage advice. "Make sure that you have the best accountant, the best lawyer and the best web designer," Martin says...
Jill Boehler, 59
HER STORY: A self-described "do gooder," Boehler spent her career as a speech pathologist until she got the inspiration to make "portable shawls" (wrinkle-free wraps that come with a tiny carrying bag) after she shivered through a meal at a restaurant because the air conditioning was too high. Soon she was making cold calls at fashion stores; she was 54 when she started in 2006.
TODAY: The founder of Chilly Jilly sold more than $500,000 in products in 2010 and is constantly unrolling new products, from gloves to the Duelette bracelet and hair tie. Boehler works with 20 private contractors across the country.
TOP TIPS: Toughen up...
STARTING AFTER AGE 50: "It's the perfect time to do it. My kids were gone and I could start working at 3 o'clock and work until 1 in the morning. My husband was into it, and I don't have to wait for kids at the bus stop, change diapers, or take them to activities."
Wally Blume, 73
HIS STORY: The one-time dairy marketer struck out on his own in 1996 to form Denali Flavors, a company that specializes in making ice cream ingredients and flavors for independent dairies. He was 57.
TODAY: With Denali sales at between $80 and $100 million, Blume credits much of his success to Moose Tracks - the flavor he helped develop and popularize as his company took root. "You have a flavor that is almost as strong as vanilla, and the national brands will never be able to get it. As soon as we developed it, it just took off."
TOP TIPS: Know your industry.... He also stresses training and hiring people you can trust to mind the store. "I have such good people working for me that I'm hardly involved with ice cream. They just run it and they do a better job than I can."
-----------
Link: http://www.reuters.com/article/2011/12/23/us-usa-retirement-after-idUSTRE7BM0TO20111223
Friday, December 23, 2011
No Child Left Behind Meltdown
From Walter Russell Mead's blog at The American Interest online:
President Bush’s No Child Left Behind act was widely hailed as a bipartisan cure for the problems of American education. That no longer rings true; the law has been in force for some time and plenty of children are being left behind every day at schools from all over the land.
The law’s goals include tracking student performance, increasing teacher accountability and improving standards for education — all generally commendable goals, but the law has mostly failed to achieve them....
But if gaming the system was the primary way many schools dealt with the law, others went straight to cheating. Superintendents, principals and teachers routinely committed deliberate and willful fraud to get scores that would bring money to their schools in violation of the clear provisions of the law....
The fact that NCLB triggered a national fraud epidemic leads to two conclusions:
The first is that the law was pointing to some real problems. Schools are failing all over the country; teachers and principals are receiving salaries but aren’t succeeding at their jobs.
The second is that the problem is bigger than the schools, much bigger. Bad schools aren’t simply a bad teacher or a bad principal problem. Children from homes where books and reading are important often come to the first grade or even kindergarten with reading skills. From other homes they come knowing very little they haven’t learned from TV.
The school is the place where society’s expectations meet reality: a large chunk of the American population doesn’t have what it takes to function successfully in the contemporary world, and no school system, however lavishly funded and minutely supervised can fix a problem whose roots lie outside the school....
NCLB at best is a diagnostic tool; its standards help us identify who is failing, but its provisions cannot make them succeed.
The Via Meadia guess is that there is no such thing as a national solution for the problems of our schools. Money is not the problem. With the right kids and parents, a school straight out of Little House on the Prairie would get better results than the most expensive and elaborate program that all the educational foundations, peer-reviewed experts and congressional bill writers in this country can devise.
With the wrong kids from the wrong homes, not all the consultants at the Ford Foundation or all the billions in the Gates Foundation can make schools work.
We need to be a little bit more honest with ourselves. Schools didn’t cause America’s biggest social problems, and schools can’t cure them. A public school doesn’t take in sow’s ears and put out silk purses; a school inevitably reflects the strong and weak points of the society and culture around it.
A neighborhood of weak families will rarely have strong schools. School reform is important and we have a long way to go, but until America finds ways to address its broken homes, we will not be able to fix our broken schools....
------------------------------
Link: http://blogs.the-american-interest.com/wrm/2011/12/22/no-child-left-behind-meltdown/
"A neighborhood of weak families will rarely have strong schools. School reform is important and we have a long way to go, but until America finds ways to address its broken homes, we will not be able to fix our broken schools."
President Bush’s No Child Left Behind act was widely hailed as a bipartisan cure for the problems of American education. That no longer rings true; the law has been in force for some time and plenty of children are being left behind every day at schools from all over the land.
The law’s goals include tracking student performance, increasing teacher accountability and improving standards for education — all generally commendable goals, but the law has mostly failed to achieve them....
But if gaming the system was the primary way many schools dealt with the law, others went straight to cheating. Superintendents, principals and teachers routinely committed deliberate and willful fraud to get scores that would bring money to their schools in violation of the clear provisions of the law....
The fact that NCLB triggered a national fraud epidemic leads to two conclusions:
The first is that the law was pointing to some real problems. Schools are failing all over the country; teachers and principals are receiving salaries but aren’t succeeding at their jobs.
The second is that the problem is bigger than the schools, much bigger. Bad schools aren’t simply a bad teacher or a bad principal problem. Children from homes where books and reading are important often come to the first grade or even kindergarten with reading skills. From other homes they come knowing very little they haven’t learned from TV.
The school is the place where society’s expectations meet reality: a large chunk of the American population doesn’t have what it takes to function successfully in the contemporary world, and no school system, however lavishly funded and minutely supervised can fix a problem whose roots lie outside the school....
NCLB at best is a diagnostic tool; its standards help us identify who is failing, but its provisions cannot make them succeed.
The Via Meadia guess is that there is no such thing as a national solution for the problems of our schools. Money is not the problem. With the right kids and parents, a school straight out of Little House on the Prairie would get better results than the most expensive and elaborate program that all the educational foundations, peer-reviewed experts and congressional bill writers in this country can devise.
With the wrong kids from the wrong homes, not all the consultants at the Ford Foundation or all the billions in the Gates Foundation can make schools work.
We need to be a little bit more honest with ourselves. Schools didn’t cause America’s biggest social problems, and schools can’t cure them. A public school doesn’t take in sow’s ears and put out silk purses; a school inevitably reflects the strong and weak points of the society and culture around it.
A neighborhood of weak families will rarely have strong schools. School reform is important and we have a long way to go, but until America finds ways to address its broken homes, we will not be able to fix our broken schools....
------------------------------
Link: http://blogs.the-american-interest.com/wrm/2011/12/22/no-child-left-behind-meltdown/
Thursday, December 22, 2011
Foreclosures Rise, Delinquencies Stable
From the Wall Street Journal online:
Newly initiated foreclosures jumped in the third quarter of the year and are expected to remain at a high level for the “foreseeable future,” a U.S. bank regulator said Wednesday.
The number of new foreclosures increased by 21.1% during the third quarter, the Office of the Comptroller of the Currency said in a report.
The rise follows an end to voluntary freezes on foreclosures started in late 2010 by mortgage servicers, the OCC said. There were 347,726 newly initiated foreclosures during the July to September period. Nearly 1.33 million foreclosures were in process at the end of the quarter; 172,785 homes were seized....
About 88% of borrowers measured in the bank regulator’s report were making their payments on time, down only slightly from the second quarter. About 9% had either missed at least two mortgage payments or were in foreclosure, and another 3% had missed just one mortgage payment....
--------------------
Link: http://blogs.wsj.com/developments/2011/12/21/foreclosures-rise-delinquencies-stable/
Newly initiated foreclosures jumped in the third quarter of the year and are expected to remain at a high level for the “foreseeable future,” a U.S. bank regulator said Wednesday.
The number of new foreclosures increased by 21.1% during the third quarter, the Office of the Comptroller of the Currency said in a report.
The rise follows an end to voluntary freezes on foreclosures started in late 2010 by mortgage servicers, the OCC said. There were 347,726 newly initiated foreclosures during the July to September period. Nearly 1.33 million foreclosures were in process at the end of the quarter; 172,785 homes were seized....
About 88% of borrowers measured in the bank regulator’s report were making their payments on time, down only slightly from the second quarter. About 9% had either missed at least two mortgage payments or were in foreclosure, and another 3% had missed just one mortgage payment....
--------------------
Link: http://blogs.wsj.com/developments/2011/12/21/foreclosures-rise-delinquencies-stable/
Economic Growth Revised Lower for 3rd Quarter
From the Wall Street Journal online:
The U.S. economy expanded less than thought during the third quarter as consumer spending fell short of an earlier estimate, though signs point to stronger growth in the final months of the year.
Separately, new claims for unemployment benefits unexpectedly fell last week, reaching the lowest level since April 2008 and providing another sign of improvement for the weak labor market.
Gross domestic product, the broadest measure of all the goods and services produced in an economy, grew at an inflation-adjusted annual rate of 1.8% in the July to September period.... lower than the previous reading of 2.0%....
For the economy as a whole, the final three months of the year look stronger. Consumer spending has looked solid during the key holiday shopping season and exports have been surprisingly resilient. Many economists have been forecasting fourth-quarter growth greater than 3.0%.
However, the unemployment rate remains historically high at 8.6% and there are many clouds on the economic horizon, including the chance of higher taxes at home and the fallout from Europe's ongoing debt crisis....
The Federal Reserve is considering additional steps to help the economy, though some officials at the central bank worry that further monetary stimulus could spur inflation....
-----------------------
Link: http://online.wsj.com/public/page/news-economy.html
The U.S. economy expanded less than thought during the third quarter as consumer spending fell short of an earlier estimate, though signs point to stronger growth in the final months of the year.
Separately, new claims for unemployment benefits unexpectedly fell last week, reaching the lowest level since April 2008 and providing another sign of improvement for the weak labor market.
Gross domestic product, the broadest measure of all the goods and services produced in an economy, grew at an inflation-adjusted annual rate of 1.8% in the July to September period.... lower than the previous reading of 2.0%....
For the economy as a whole, the final three months of the year look stronger. Consumer spending has looked solid during the key holiday shopping season and exports have been surprisingly resilient. Many economists have been forecasting fourth-quarter growth greater than 3.0%.
However, the unemployment rate remains historically high at 8.6% and there are many clouds on the economic horizon, including the chance of higher taxes at home and the fallout from Europe's ongoing debt crisis....
The Federal Reserve is considering additional steps to help the economy, though some officials at the central bank worry that further monetary stimulus could spur inflation....
-----------------------
Link: http://online.wsj.com/public/page/news-economy.html
"Signs Point to Economy’s Rise, but Experts See a False Dawn"
From the NY Times online:
As the fourth quarter draws to a close, a spate of unexpectedly good economic data suggests that it will have some of the fastest and strongest economic growth since the recovery started in 2009, causing a surge in the stock market and cheering economists, investors and policy makers.
...But the good news also comes with a significant caveat. Many forecasters say the recent uptick probably does not represent the long-awaited start to a strong, sustainable recovery. Much of the current strength is caused by temporary factors. And economists expect growth to slow in the first half of 2012 to an annual pace of about 1.5 to 2 percent.
...There are two reasons for the renewed pessimism. First, economists say that temporary trends increased growth in the fourth quarter and may not continue into next year. Second, the economy faces significant headwinds in 2012: some from Europe’s long-lingering sovereign debt crisis, and some from domestic cutbacks beyond the control of President Obama, whose campaign would like to point to a brightening economic picture, not a darkening one.
Even the Federal Reserve is predicting that the unemployment rate will remain around 8.6 percent by the time voters go to the polls in November....
-----------------------
Link: http://www.nytimes.com/2011/12/22/business/signs-point-to-economys-rise-but-experts-see-a-false-dawn.html
As the fourth quarter draws to a close, a spate of unexpectedly good economic data suggests that it will have some of the fastest and strongest economic growth since the recovery started in 2009, causing a surge in the stock market and cheering economists, investors and policy makers.
...But the good news also comes with a significant caveat. Many forecasters say the recent uptick probably does not represent the long-awaited start to a strong, sustainable recovery. Much of the current strength is caused by temporary factors. And economists expect growth to slow in the first half of 2012 to an annual pace of about 1.5 to 2 percent.
...There are two reasons for the renewed pessimism. First, economists say that temporary trends increased growth in the fourth quarter and may not continue into next year. Second, the economy faces significant headwinds in 2012: some from Europe’s long-lingering sovereign debt crisis, and some from domestic cutbacks beyond the control of President Obama, whose campaign would like to point to a brightening economic picture, not a darkening one.
Even the Federal Reserve is predicting that the unemployment rate will remain around 8.6 percent by the time voters go to the polls in November....
-----------------------
Link: http://www.nytimes.com/2011/12/22/business/signs-point-to-economys-rise-but-experts-see-a-false-dawn.html
Monday, December 19, 2011
Most stock funds post losses this year
From USA Today online:
The average diversified U.S. stock mutual fund has fallen 5.9% this year, vs. a 1.4% loss for the Standard & Poor's 500-stock index, says Lipper, which tracks the funds... 92% are showing a loss ....
One reason the average fund has lagged so badly: expenses. The average fund charges about 1.3% a year to pay for salaries, offices and other costs, according to Morningstar. Stock indexes have no expenses....
Investors have yanked out $133 billion more than they have put in to stock funds this year, according to the Investment Company Institute, the funds' trade group....
Few investors put all their money in stock funds, however, so the year hasn't been a total wash. The average bond fund that invests in U.S. Treasury securities has soared 14.7% this year, as investors flocked to government securities for safety.
Funds that invest in Treasury Inflation Protected Securities, or TIPS, have surged 11% even though the consumer price index, the government's main gauge of inflation, has risen only 3.4% the 12 months ended November.
-----------------
Link: http://www.usatoday.com/money/perfi/funds/story/2011-12-16/mutual-fund-performance/52056356/1
The average diversified U.S. stock mutual fund has fallen 5.9% this year, vs. a 1.4% loss for the Standard & Poor's 500-stock index, says Lipper, which tracks the funds... 92% are showing a loss ....
One reason the average fund has lagged so badly: expenses. The average fund charges about 1.3% a year to pay for salaries, offices and other costs, according to Morningstar. Stock indexes have no expenses....
Investors have yanked out $133 billion more than they have put in to stock funds this year, according to the Investment Company Institute, the funds' trade group....
Few investors put all their money in stock funds, however, so the year hasn't been a total wash. The average bond fund that invests in U.S. Treasury securities has soared 14.7% this year, as investors flocked to government securities for safety.
Funds that invest in Treasury Inflation Protected Securities, or TIPS, have surged 11% even though the consumer price index, the government's main gauge of inflation, has risen only 3.4% the 12 months ended November.
-----------------
Link: http://www.usatoday.com/money/perfi/funds/story/2011-12-16/mutual-fund-performance/52056356/1
Thursday, December 15, 2011
Initial jobless claims fall to lowest level since 2008
From CNN:
Fewer Americans filed for their first week of unemployment benefits last week. So few in fact, that initial jobless claims were at their lowest level since May 2008.
About 366,000 people filed initial jobless claims in the week ended Dec. 10, the Labor Department said Thursday. That was a decrease of 19,000 from the prior week, and far better than the bigger influx of claims that economists were expecting....
That said, the United States job market is still far from robust. About 8.8. million jobs were lost in the financial crisis, and as of November, still less than a third of those have been added back. Plus, the population has also grown during that time.
Still, 3.6 million people filled for their second week of unemployment benefits or more, in the week ended Dec. 3, the most recent data available.
---------
Link: http://money.cnn.com/2011/12/15/news/economy/unemployment_benefits/index.htm
Fewer Americans filed for their first week of unemployment benefits last week. So few in fact, that initial jobless claims were at their lowest level since May 2008.
About 366,000 people filed initial jobless claims in the week ended Dec. 10, the Labor Department said Thursday. That was a decrease of 19,000 from the prior week, and far better than the bigger influx of claims that economists were expecting....
That said, the United States job market is still far from robust. About 8.8. million jobs were lost in the financial crisis, and as of November, still less than a third of those have been added back. Plus, the population has also grown during that time.
Still, 3.6 million people filled for their second week of unemployment benefits or more, in the week ended Dec. 3, the most recent data available.
---------
Link: http://money.cnn.com/2011/12/15/news/economy/unemployment_benefits/index.htm
New Foreclosure Wave is Coming
From CNBC:
Despite a seasonal slowdown in overall foreclosure activity, and a process still bogged down and backed up by the "robo-signing" processing scandal, the U.S real estate market is about to be hit by another surge of bank repossessions, according to a new report from the online foreclosure sale site RealtyTrac.
As banks resubmit millions of documents and courts begin hearing cases again, the backlog of over four million delinquent loans will start surging through the pipeline again....
While overall inventories of homes for sale have been dropping somewhat steadily over the past year, these new distressed properties will put increasing downward pressure on home prices nationally.... Both government and the private sector know that until the backlog of distressed properties is cleared, the housing market will have little chance of regaining a solid footing.
--------------
Link: http://www.cnbc.com/id/45682960
Despite a seasonal slowdown in overall foreclosure activity, and a process still bogged down and backed up by the "robo-signing" processing scandal, the U.S real estate market is about to be hit by another surge of bank repossessions, according to a new report from the online foreclosure sale site RealtyTrac.
As banks resubmit millions of documents and courts begin hearing cases again, the backlog of over four million delinquent loans will start surging through the pipeline again....
While overall inventories of homes for sale have been dropping somewhat steadily over the past year, these new distressed properties will put increasing downward pressure on home prices nationally.... Both government and the private sector know that until the backlog of distressed properties is cleared, the housing market will have little chance of regaining a solid footing.
--------------
Link: http://www.cnbc.com/id/45682960
Roubini: Fragile and Unbalanced in 2012
Commentary from Nouriel Roubini:
The outlook for the global economy in 2012 is clear, but it isn’t pretty: recession in Europe, anemic growth at best in the United States, and a sharp slowdown in China and in most emerging-market economies...
At this point, a eurozone recession is certain. While its depth and length cannot be predicted, a continued credit crunch, sovereign-debt problems, lack of competitiveness, and fiscal austerity imply a serious downturn....
Restoring robust growth is difficult enough without the ever-present specter of deleveraging and a severe shortage of policy ammunition. But that is the challenge that a fragile and unbalanced global economy faces in 2012. To paraphrase Bette Davis in All About Eve, “Fasten your seat belts, it’s going to be a bumpy year!”
--------
Link: http://www.project-syndicate.org/commentary/roubini45/English
The outlook for the global economy in 2012 is clear, but it isn’t pretty: recession in Europe, anemic growth at best in the United States, and a sharp slowdown in China and in most emerging-market economies...
At this point, a eurozone recession is certain. While its depth and length cannot be predicted, a continued credit crunch, sovereign-debt problems, lack of competitiveness, and fiscal austerity imply a serious downturn....
Restoring robust growth is difficult enough without the ever-present specter of deleveraging and a severe shortage of policy ammunition. But that is the challenge that a fragile and unbalanced global economy faces in 2012. To paraphrase Bette Davis in All About Eve, “Fasten your seat belts, it’s going to be a bumpy year!”
--------
Link: http://www.project-syndicate.org/commentary/roubini45/English
Tuesday, December 13, 2011
Now they tell us: Realtors say they Overcounted Home Sales for Five Years
From CNBC online:
Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought.
The National Association of Realtors said a benchmarking exercise had revealed that some properties were listed more than once, and in some instances, new home sales were also captured.
"All the sales and inventory data that have been reported since January 2007 are being downwardly revised. Sales were weaker than people thought," NAR spokesman Walter Malony told Reuters.
"We're capturing some new home data that should have been filtered out and we also discovered that some properties were being listed in more than one list."
....The depressed housing market is one of the key obstacles to strong economic growth and an oversupply of unsold homes on the market continues to stifle the sector.
-------------------
Link: http://www.cnbc.com/id/45659547
Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought.
The National Association of Realtors said a benchmarking exercise had revealed that some properties were listed more than once, and in some instances, new home sales were also captured.
"All the sales and inventory data that have been reported since January 2007 are being downwardly revised. Sales were weaker than people thought," NAR spokesman Walter Malony told Reuters.
"We're capturing some new home data that should have been filtered out and we also discovered that some properties were being listed in more than one list."
....The depressed housing market is one of the key obstacles to strong economic growth and an oversupply of unsold homes on the market continues to stifle the sector.
-------------------
Link: http://www.cnbc.com/id/45659547
More: Corzine knew of $175M loan
From the Washington Post online:
A financial-exchange executive said that Jon Corzine [former co-Chairman of Goldman Sachs, U.S. Senator, New Jersey Governor] might have known that MF Global customers’ money was transferred earlier than Corzine has admitted.
CME Group Inc. Executive Chairman Terrence Duffy told a Senate panel that Corzine knew before Oct. 30 about a transfer of $175 million in the form of a loan to a European affiliate of MF Global.
Corzine, a former senator, has testified that he didn’t know any customer money was missing until Oct. 30, the day before MF Global became the eighth-largest bankruptcy in U.S. history....
Under a 2002 anti-corporate-fraud law that Corzine co-wrote as a U.S. senator, the CEO and chief financial officer of public companies must personally certify the accuracy of their company’s financial statements. It can be a violation of the law for executives to sign a false statement.
The three executives say that they didn’t become aware of the shortfall until hours before the firm filed for bankruptcy protection on Oct. 31....
The Senate panel is one of three committees to have issued subpoenas to compel Corzine’s testimony on the issue. It marked the first time a former senator has been subpoenaed by his former peers in more than 100 years, according to the Senate historian’s office....
---------------
Link: http://www.washingtonpost.com/business/corzine-and-2-other-top-mf-global-executives-deny-role-in-missing-12b-of-clients-money/2011/12/13/.html
A financial-exchange executive said that Jon Corzine [former co-Chairman of Goldman Sachs, U.S. Senator, New Jersey Governor] might have known that MF Global customers’ money was transferred earlier than Corzine has admitted.
CME Group Inc. Executive Chairman Terrence Duffy told a Senate panel that Corzine knew before Oct. 30 about a transfer of $175 million in the form of a loan to a European affiliate of MF Global.
Corzine, a former senator, has testified that he didn’t know any customer money was missing until Oct. 30, the day before MF Global became the eighth-largest bankruptcy in U.S. history....
Under a 2002 anti-corporate-fraud law that Corzine co-wrote as a U.S. senator, the CEO and chief financial officer of public companies must personally certify the accuracy of their company’s financial statements. It can be a violation of the law for executives to sign a false statement.
The three executives say that they didn’t become aware of the shortfall until hours before the firm filed for bankruptcy protection on Oct. 31....
The Senate panel is one of three committees to have issued subpoenas to compel Corzine’s testimony on the issue. It marked the first time a former senator has been subpoenaed by his former peers in more than 100 years, according to the Senate historian’s office....
---------------
Link: http://www.washingtonpost.com/business/corzine-and-2-other-top-mf-global-executives-deny-role-in-missing-12b-of-clients-money/2011/12/13/.html
Sunday, December 11, 2011
The Fattest or the Fittest?
From Gretchen Morgenson on the New York Times website:
Institutions most likely to receive assistance from the federal government if they become troubled — behemoths like Citigroup, Bank of America or Wells Fargo — have grown only larger in recent years.
... the army arguing for change is far outgunned by the battalions of bankers and lobbyists working to maintain the status quo. But some combatants seeking reform believe they are making headway.
Richard W. Fisher, the president of the Federal Reserve Bank of Dallas ... described, quite colorfully, the problems of these unwieldy institutions and the regulatory ethic “that coddles survival of the fattest rather than promoting survival of the fittest.”
...Sheila Bair, former chairwoman of the Federal Deposit Insurance Corporation ... “I know that many members of this subcommittee heard the same arguments that I heard during the crisis — that bailouts were necessary or the ‘entire system’ would come down,” she said. “But we never really had good, detailed information about the derivatives counterparties, bond holders and others who were ultimately benefiting from the bailouts and why they needed protecting.”
Such details are still kept under wraps. Ms. Bair urged the Fed and the F.D.I.C. to write rules requiring banks to report on their interrelationships. That way, distress at one institution can be recognized before it causes crippling losses at another.
In her testimony, Ms. Bair also urged regulators to write rules requiring executives and boards to be “personally accountable for monitoring and compliance” of the institutions they oversee.
...“What in the world are they being paid for?”
At the moment, they are being paid for taking risks that generate lush bonuses when things go well but that require taxpayer bailouts when the tide turns. Main Street understands that this is wrong and that allowing it to continue is dangerous. It’s past time that Washington did something about it.
--------------------
Link: http://www.nytimes.com/2011/12/11/business/a-fed-banker-wants-to-break-up-some-banks.html
Institutions most likely to receive assistance from the federal government if they become troubled — behemoths like Citigroup, Bank of America or Wells Fargo — have grown only larger in recent years.
... the army arguing for change is far outgunned by the battalions of bankers and lobbyists working to maintain the status quo. But some combatants seeking reform believe they are making headway.
Richard W. Fisher, the president of the Federal Reserve Bank of Dallas ... described, quite colorfully, the problems of these unwieldy institutions and the regulatory ethic “that coddles survival of the fattest rather than promoting survival of the fittest.”
...Sheila Bair, former chairwoman of the Federal Deposit Insurance Corporation ... “I know that many members of this subcommittee heard the same arguments that I heard during the crisis — that bailouts were necessary or the ‘entire system’ would come down,” she said. “But we never really had good, detailed information about the derivatives counterparties, bond holders and others who were ultimately benefiting from the bailouts and why they needed protecting.”
Such details are still kept under wraps. Ms. Bair urged the Fed and the F.D.I.C. to write rules requiring banks to report on their interrelationships. That way, distress at one institution can be recognized before it causes crippling losses at another.
In her testimony, Ms. Bair also urged regulators to write rules requiring executives and boards to be “personally accountable for monitoring and compliance” of the institutions they oversee.
...“What in the world are they being paid for?”
At the moment, they are being paid for taking risks that generate lush bonuses when things go well but that require taxpayer bailouts when the tide turns. Main Street understands that this is wrong and that allowing it to continue is dangerous. It’s past time that Washington did something about it.
--------------------
Link: http://www.nytimes.com/2011/12/11/business/a-fed-banker-wants-to-break-up-some-banks.html
Saturday, December 10, 2011
Corzine offers Testimony of the Week
From the Washington Post website:
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” Corzine said, according to the testimony....
Jon S. Corzine, the former U.S. senator and governor who presided over the collapse of the commodities brokerage MF Global, told lawmakers Thursday that he never intended to authorize a transfer of customer funds to the firm’s accounts and that if he did “it was a misunderstanding.”
...Corzine served as chairman and chief executive of Goldman Sachs but, according to published accounts, was forced out.
He used the personal fortune he built at Goldman to fuel his ascent to the U.S. Senate, where he served on the Banking Committee. He later won the New Jersey governorship. In 2007, he was badly injured in a car crash.
He ran for reelection as governor of New Jersey in 2009 but was defeated by Republican Chris Christie...
At MF Global, Corzine was returning to his Wall Street roots. The job could have served as a step toward a political comeback. As recently as last spring, he hosted a fundraiser for President Obama.
Now, Corzine’s disastrous tenure at MF Global has left him in a harsh spotlight. The House Agriculture Committee isn’t the only congressional panel eager to question Corzine.
The Senate Agriculture Committee on Tuesday voted unanimously to subpoena him for a Dec. 13 hearing, and the House Financial Services Subcommittee on Oversight and Investigations voted 15-0 Wednesday to subpoena him for a Dec. 15 hearing.
------------------------
Link: http://www.washingtonpost.com/business/economy/jon-corzine-to-tell-house-panel-he-doesnt-know-where-customers-money-went/2011/12/07/
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” Corzine said, according to the testimony....
Jon S. Corzine, the former U.S. senator and governor who presided over the collapse of the commodities brokerage MF Global, told lawmakers Thursday that he never intended to authorize a transfer of customer funds to the firm’s accounts and that if he did “it was a misunderstanding.”
...Corzine served as chairman and chief executive of Goldman Sachs but, according to published accounts, was forced out.
He used the personal fortune he built at Goldman to fuel his ascent to the U.S. Senate, where he served on the Banking Committee. He later won the New Jersey governorship. In 2007, he was badly injured in a car crash.
He ran for reelection as governor of New Jersey in 2009 but was defeated by Republican Chris Christie...
At MF Global, Corzine was returning to his Wall Street roots. The job could have served as a step toward a political comeback. As recently as last spring, he hosted a fundraiser for President Obama.
Now, Corzine’s disastrous tenure at MF Global has left him in a harsh spotlight. The House Agriculture Committee isn’t the only congressional panel eager to question Corzine.
The Senate Agriculture Committee on Tuesday voted unanimously to subpoena him for a Dec. 13 hearing, and the House Financial Services Subcommittee on Oversight and Investigations voted 15-0 Wednesday to subpoena him for a Dec. 15 hearing.
------------------------
Link: http://www.washingtonpost.com/business/economy/jon-corzine-to-tell-house-panel-he-doesnt-know-where-customers-money-went/2011/12/07/
Sunday, December 4, 2011
More Cronyism: Secret Fed Loans; Hundreds of Billions in Hidden Bailout Money; Big Banks Benefit with Profits of $13 Billion from Special Deals
From Bloomberg.com:
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.
Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse...
----------------
Link: http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.
Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse...
----------------
Link: http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html
"Economy Creates 120,000 Jobs, Unemployment Rate Drops to 8.6%"... yet something is not right
From CNBC.com:
Job creation remained weak in the U.S. during November, with just 120,000 new positions created, though the unemployment rate slid to 8.6 percent, a government report showed Friday.
The rate fell from the previous month's 9.0 percent, a move which in part reflected a drop in those looking for jobs. The participation rate dropped to 64 percent, from 64.2 percent in October, representing 315,000 fewer job-seekers....
The drop in participation rate is significant in that had the labor force remained steady, the jobless rate would have dropped to 8.8 percent, according to Citigroup calculations. If the labor force had followed trend growth, unemployment would be at 8.9 percent.
"Overall, the continued modest employment gains reflect an economy that plods along at an uninspiring pace," Kathy Bostjancic, director of macroeconomic analysis at The Conference Board, said in a statement. "These modest job gains are still not enough to propel economic growth to a sustainable 2 percent-plus growth path."
The measure some refer to as the "real" unemployment rate, which counts discouraged workers, also took a fall to 15.6 percent from 16.2 percent, its lowest level since March 2009.
-------------
Link: http://www.cnbc.com/id/45521793
Job creation remained weak in the U.S. during November, with just 120,000 new positions created, though the unemployment rate slid to 8.6 percent, a government report showed Friday.
The rate fell from the previous month's 9.0 percent, a move which in part reflected a drop in those looking for jobs. The participation rate dropped to 64 percent, from 64.2 percent in October, representing 315,000 fewer job-seekers....
The drop in participation rate is significant in that had the labor force remained steady, the jobless rate would have dropped to 8.8 percent, according to Citigroup calculations. If the labor force had followed trend growth, unemployment would be at 8.9 percent.
"Overall, the continued modest employment gains reflect an economy that plods along at an uninspiring pace," Kathy Bostjancic, director of macroeconomic analysis at The Conference Board, said in a statement. "These modest job gains are still not enough to propel economic growth to a sustainable 2 percent-plus growth path."
The measure some refer to as the "real" unemployment rate, which counts discouraged workers, also took a fall to 15.6 percent from 16.2 percent, its lowest level since March 2009.
-------------
Link: http://www.cnbc.com/id/45521793
Our Deeply Daunting Jobs Hole
From the New Republic online:
As the Bureau of Labor Statistics announced a fall in the unemployment rate from 9.0 to 8.6 percent, it noted that a contraction of the labor force accounted for more than half the reduction in the number of unemployed....
Three points are worthy of note.
First: Despite the growth of the working-age population over the past four years, the labor force (roughly, the sum of those employed plus job-seekers) has not expanded. For various reasons, more and more Americans have been dropping out of the labor force. If Americans of working age were participating in the labor force at the same rate as they were at the onset of the recession, the labor force would be nearly 5 million people larger, and unemployment would be significantly worse in both absolute and percentage terms.
Second: Despite the modest economic recovery since the recession ended in mid-2009, total employment remains more than 5.5 million below the level of 2007 and about 1.6 million below where it was when President Obama took office.
Third: To regain full employment (5 percent, which happens to be the same as the level when the recession began) with the pre-recessionary labor force participation rate, we would need 150.7 million jobs—10.1 million more than we have today. That’s a reasonable measure of the hole we’re still in, two and a half years since the official end of the recession.
The American people are unlikely to cheer up about the economy until we get appreciably closer to the top of the hole.
Bill Galston is a senior fellow at the Brookings Institution and a contributing editor for The New Republic.
-------------
Link: http://www.tnr.com/article/the-vital-center/98073/unemployment-contraction-labor-force-recovery
As the Bureau of Labor Statistics announced a fall in the unemployment rate from 9.0 to 8.6 percent, it noted that a contraction of the labor force accounted for more than half the reduction in the number of unemployed....
Three points are worthy of note.
First: Despite the growth of the working-age population over the past four years, the labor force (roughly, the sum of those employed plus job-seekers) has not expanded. For various reasons, more and more Americans have been dropping out of the labor force. If Americans of working age were participating in the labor force at the same rate as they were at the onset of the recession, the labor force would be nearly 5 million people larger, and unemployment would be significantly worse in both absolute and percentage terms.
Second: Despite the modest economic recovery since the recession ended in mid-2009, total employment remains more than 5.5 million below the level of 2007 and about 1.6 million below where it was when President Obama took office.
Third: To regain full employment (5 percent, which happens to be the same as the level when the recession began) with the pre-recessionary labor force participation rate, we would need 150.7 million jobs—10.1 million more than we have today. That’s a reasonable measure of the hole we’re still in, two and a half years since the official end of the recession.
The American people are unlikely to cheer up about the economy until we get appreciably closer to the top of the hole.
Bill Galston is a senior fellow at the Brookings Institution and a contributing editor for The New Republic.
-------------
Link: http://www.tnr.com/article/the-vital-center/98073/unemployment-contraction-labor-force-recovery
For Jobless, Little Hope of Restoring Better Days
From the New York Times online:
People across the working spectrum suffered job losses in recent years: bricklayers and bookkeepers as well as workers in manufacturing and marketing.
But only a select few workers have fully regained their footing during the slow recovery....
According to (a) study... by the John J. Heldrich Center for Workforce Development at Rutgers, just 7 percent of those who lost jobs after the financial crisis have returned to or exceeded their previous financial position and maintained their lifestyles.
The vast majority say they have diminished lifestyles, and about 15 percent say the reduction in their incomes has been drastic and will probably be permanent. ...
More than two years after the recovery officially began, American employers have reinstated less than a quarter of the jobs lost during the downturn, according to Labor Department figures. Of the 13.1 million people still searching for work, more than 42 percent have been unemployed for six months or longer. About 8.9 million more are working part time because they cannot find full-time work.
While health care and some energy-related jobs have boomed throughout in recent years, the other winners have mostly been in skilled professions like computer systems design, management consulting and accounting, where employers have added back as many or more jobs than were cut during the downturn....
Some are trying for slots even if they do not meet basic qualifications. PricewaterhouseCoopers received more than 250,000 applications through its Web site over the last year, but it has hired only 1 percent from that pool, said Holly Paul, its United States recruiting leader. She said a house painter with no qualifications beyond high school had applied for 10 different openings that required college degrees and accounting certification.
“It’s definitely an eye-opener for me because it gives you an idea of what unfortunately is happening in the economy,” said Ms. Paul.
-----------
Link: http://www.nytimes.com/2011/12/02/business/for-jobless-little-hope-of-full-recovery-study-says.html
People across the working spectrum suffered job losses in recent years: bricklayers and bookkeepers as well as workers in manufacturing and marketing.
But only a select few workers have fully regained their footing during the slow recovery....
According to (a) study... by the John J. Heldrich Center for Workforce Development at Rutgers, just 7 percent of those who lost jobs after the financial crisis have returned to or exceeded their previous financial position and maintained their lifestyles.
The vast majority say they have diminished lifestyles, and about 15 percent say the reduction in their incomes has been drastic and will probably be permanent. ...
More than two years after the recovery officially began, American employers have reinstated less than a quarter of the jobs lost during the downturn, according to Labor Department figures. Of the 13.1 million people still searching for work, more than 42 percent have been unemployed for six months or longer. About 8.9 million more are working part time because they cannot find full-time work.
While health care and some energy-related jobs have boomed throughout in recent years, the other winners have mostly been in skilled professions like computer systems design, management consulting and accounting, where employers have added back as many or more jobs than were cut during the downturn....
Some are trying for slots even if they do not meet basic qualifications. PricewaterhouseCoopers received more than 250,000 applications through its Web site over the last year, but it has hired only 1 percent from that pool, said Holly Paul, its United States recruiting leader. She said a house painter with no qualifications beyond high school had applied for 10 different openings that required college degrees and accounting certification.
“It’s definitely an eye-opener for me because it gives you an idea of what unfortunately is happening in the economy,” said Ms. Paul.
-----------
Link: http://www.nytimes.com/2011/12/02/business/for-jobless-little-hope-of-full-recovery-study-says.html
A Trusted Market Predictor Falters
From the New York Times online:
ONE of the most reliable guides to investing in the American stock market — to buy during the third year of a presidential term — is in danger of failing for the first time since the Great Depression.
...The last negative return during the third year of a presidential term was in 1939, when the loss was a barely noticeable 0.1 percent. That loss came as storm clouds gathered in Europe with the beginning of World War II. It is hard to think of any year since the war when Europe’s problems have loomed as large to investors as they have this year.
As can be seen from the accompanying charts, an investor who put money into American stocks at the beginning of each third year, and then got out of the market for the next three years, would have done far better than one who chose any other year of the presidential cycle to invest in.
...A $100 investment in 1947, allowed to grow only in third years, would be worth more than $2,000 now. Similar investments in the first, second or fourth years would have grown to less than $400.
It has long been suspected that the fact that third years were the best was far from a coincidence, as presidents sought to stimulate the economy and corporate profits heading into a year when they would seek re-election or, if they were completing a second term, try to keep the White House in the hands of the same party.
This year, the economic outlook has been anything but clear, with encouraging signs of growth early in the year replaced by fears of a double-dip recession in the summer as the European credit crisis intensified. Since August, the market has gyrated wildly as European prospects have seemed to change almost daily....
------------
Link: http://www.nytimes.com/2011/12/03/business/as-a-market-predictor-a-trusty-guide-falters.html
ONE of the most reliable guides to investing in the American stock market — to buy during the third year of a presidential term — is in danger of failing for the first time since the Great Depression.
...The last negative return during the third year of a presidential term was in 1939, when the loss was a barely noticeable 0.1 percent. That loss came as storm clouds gathered in Europe with the beginning of World War II. It is hard to think of any year since the war when Europe’s problems have loomed as large to investors as they have this year.
As can be seen from the accompanying charts, an investor who put money into American stocks at the beginning of each third year, and then got out of the market for the next three years, would have done far better than one who chose any other year of the presidential cycle to invest in.
...A $100 investment in 1947, allowed to grow only in third years, would be worth more than $2,000 now. Similar investments in the first, second or fourth years would have grown to less than $400.
It has long been suspected that the fact that third years were the best was far from a coincidence, as presidents sought to stimulate the economy and corporate profits heading into a year when they would seek re-election or, if they were completing a second term, try to keep the White House in the hands of the same party.
This year, the economic outlook has been anything but clear, with encouraging signs of growth early in the year replaced by fears of a double-dip recession in the summer as the European credit crisis intensified. Since August, the market has gyrated wildly as European prospects have seemed to change almost daily....
------------
Link: http://www.nytimes.com/2011/12/03/business/as-a-market-predictor-a-trusty-guide-falters.html
Tuesday, November 29, 2011
More Cronyism!
From Bloomberg.com:
"How Paulson Gave Hedge Funds Advance Word"
(Bush Administration) Treasury Secretary Henry Paulson stepped off the elevator into the Third Avenue offices of hedge fund Eton Park Capital Management LP in Manhattan. It was July 21, 2008, and market fears were mounting. Four months earlier, Bear Stearns had sold itself for just $10 a share to JPMorgan.
Now, amid tumbling home prices and near-record foreclosures, attention was focused on a new source of contagion: Fannie Mae and Freddie Mac, which together had more than $5 trillion in mortgage-backed securities and other debt outstanding, Bloomberg Markets reports in its January issue....
Paulson had spoken to New York Times reporters and editors, according to his Treasury Department schedule. A Times article the next day said the Federal Reserve and the Office of the Comptroller of the Currency were inspecting Fannie and Freddie’s books and cited Paulson as saying he expected their examination would give a signal of confidence to the markets.
At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.
Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives -- at least five of them alumni of Goldman Sachs Group Inc., of which Paulson was chief executive officer and chairman from 1999 to 2006....
After a perfunctory discussion of the market turmoil, the fund manager says, the discussion turned to Fannie Mae and Freddie Mac. Paulson said he had erred by not punishing Bear Stearns shareholders more severely. The secretary, then 62, went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” -- a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.
Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.
The fund manager says he was shocked that Paulson would furnish such specific information -- to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information....
---------
Link: http://www.bloomberg.com/news/2011-11-29/how-henry-paulson-gave-hedge-funds-advance-word-of-2008-fannie-mae-rescue.html
"How Paulson Gave Hedge Funds Advance Word"
(Bush Administration) Treasury Secretary Henry Paulson stepped off the elevator into the Third Avenue offices of hedge fund Eton Park Capital Management LP in Manhattan. It was July 21, 2008, and market fears were mounting. Four months earlier, Bear Stearns had sold itself for just $10 a share to JPMorgan.
Now, amid tumbling home prices and near-record foreclosures, attention was focused on a new source of contagion: Fannie Mae and Freddie Mac, which together had more than $5 trillion in mortgage-backed securities and other debt outstanding, Bloomberg Markets reports in its January issue....
Paulson had spoken to New York Times reporters and editors, according to his Treasury Department schedule. A Times article the next day said the Federal Reserve and the Office of the Comptroller of the Currency were inspecting Fannie and Freddie’s books and cited Paulson as saying he expected their examination would give a signal of confidence to the markets.
At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.
Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives -- at least five of them alumni of Goldman Sachs Group Inc., of which Paulson was chief executive officer and chairman from 1999 to 2006....
After a perfunctory discussion of the market turmoil, the fund manager says, the discussion turned to Fannie Mae and Freddie Mac. Paulson said he had erred by not punishing Bear Stearns shareholders more severely. The secretary, then 62, went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” -- a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.
Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.
The fund manager says he was shocked that Paulson would furnish such specific information -- to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information....
---------
Link: http://www.bloomberg.com/news/2011-11-29/how-henry-paulson-gave-hedge-funds-advance-word-of-2008-fannie-mae-rescue.html
Sunday, November 27, 2011
Where Greeks Hide Their Savings
From the Globalpost.com:
-------------------------------
Athens, Greece: Hardware-store owner Dimitris Andreadakis is brutally honest with customers who inquire about buying safes where they can stash euros.
“I tell them, ‘Don’t do it. It’s dangerous,’” he said, noting that burglaries are rising. “People can come with a gun to your head.”
The risk is worth it to many Greeks. “Most of the people still do it,” he said. Sales have risen 40 percent at his store in the past year.
They’re motivated by what they regard as a more ominous scenario: watching the value of their savings evaporate, in the unlikely but still anxiety-inducing prospect that debt-ridden Greece abandons the euro and returns to the drachma. If that happens, a greatly devalued drachma could put imported goods like food, fuel and electronics out of reach.
To protect their savings, Greeks are pulling their euros out of the bank at an alarming rate. Over the past 21 months, they’ve been sending money to Swiss bank accounts, stuffing safe-deposit boxes, and installing home safes to horde euros.....
From the start of 2010 through this September, $75 billion in deposits was withdrawn, according to Bank of Greece statistics. That represents a 23 percent drop in assets — increasing the pressure on already beleaguered banks....
The financial exodus represents households and corporations, although households account for about 80 percent of the withdrawals....
...not every euro withdrawn from Greek banks is going...under the mattress.
Greeks have been tapping their savings for survival purposes. Unemployment has reached 18.4 percent, according to the latest monthly figures. And a new property tax is due soon. It’s being collected through electric bills, with the threat of power shutoffs for delinquents.
“It seems like every month there’s a new tax,” said Savvas Dimitriou, who helps operate his parents’ kiosk after being laid off nine months ago.
Dimitriou noted that customers of all ages are increasingly paying for items with small coins. Inside his kiosk near a north Athens metro station, he collects the 1 cent, 2 cent, and 5 cent coins in small plastic drinking cups. They add up to about $20 per week.
“I haven’t seen that in years,” he said of the reliance on small coins. “Now, we see it every day.”
--------------
Link: http://www.globalpost.com/dispatch/news/regions/europe/111122/where-greeks-hide-their-savings
-------------------------------
Athens, Greece: Hardware-store owner Dimitris Andreadakis is brutally honest with customers who inquire about buying safes where they can stash euros.
“I tell them, ‘Don’t do it. It’s dangerous,’” he said, noting that burglaries are rising. “People can come with a gun to your head.”
The risk is worth it to many Greeks. “Most of the people still do it,” he said. Sales have risen 40 percent at his store in the past year.
They’re motivated by what they regard as a more ominous scenario: watching the value of their savings evaporate, in the unlikely but still anxiety-inducing prospect that debt-ridden Greece abandons the euro and returns to the drachma. If that happens, a greatly devalued drachma could put imported goods like food, fuel and electronics out of reach.
To protect their savings, Greeks are pulling their euros out of the bank at an alarming rate. Over the past 21 months, they’ve been sending money to Swiss bank accounts, stuffing safe-deposit boxes, and installing home safes to horde euros.....
From the start of 2010 through this September, $75 billion in deposits was withdrawn, according to Bank of Greece statistics. That represents a 23 percent drop in assets — increasing the pressure on already beleaguered banks....
The financial exodus represents households and corporations, although households account for about 80 percent of the withdrawals....
...not every euro withdrawn from Greek banks is going...under the mattress.
Greeks have been tapping their savings for survival purposes. Unemployment has reached 18.4 percent, according to the latest monthly figures. And a new property tax is due soon. It’s being collected through electric bills, with the threat of power shutoffs for delinquents.
“It seems like every month there’s a new tax,” said Savvas Dimitriou, who helps operate his parents’ kiosk after being laid off nine months ago.
Dimitriou noted that customers of all ages are increasingly paying for items with small coins. Inside his kiosk near a north Athens metro station, he collects the 1 cent, 2 cent, and 5 cent coins in small plastic drinking cups. They add up to about $20 per week.
“I haven’t seen that in years,” he said of the reliance on small coins. “Now, we see it every day.”
--------------
Link: http://www.globalpost.com/dispatch/news/regions/europe/111122/where-greeks-hide-their-savings
Wednesday, November 23, 2011
$$$ Wall Street & Washington & Insider Whispers: Big Money Love Affair keeps on going and giving
From today's Wall Street Journal online:
"Hours after an Aug. 15 meeting with Federal Reserve Chairman Ben Bernanke in his office, Nancy Lazar made a hasty call to investor clients: The Fed was dusting off an obscure 1960s-era strategy known as Operation Twist.
The news pointed to a boom in long-term bonds. It was a good call. Over the next five weeks, prices on 10-year Treasury bonds soared, offering double-digit returns in an otherwise dismal year.
By the time the Fed announced its $400 billion Operation Twist on Sept. 21, the window for quick profits had all but slammed shut. Ms. Lazar is among a group of well-connected investors and analysts with access to top Federal Reserve officials....
The access is part of a push by hedge funds and other traders to get more information about the inner workings of government. Developments in Washington have become more important after the financial crisis in 2008...
New York Federal Reserve Bank President William Dudley also meets regularly with investors, both in his office with individuals and in committee groups. The New York Fed [...] has the strongest ties to investors because it conducts the Fed's bond-market transactions...
Over the past two-and-a-half years, Mr. Dudley has had dozens of private meetings, according to his calendar, which lists SAC Capital Advisors, Citadel Investment Group, Duquesne Capital Management, and Tudor Investments [All Hedge Funds], among others. Lloyd Blankfein, chief of Goldman Sachs, and Mr. Fink, of BlackRock, also had private meetings, according to Mr. Dudley's calendar...
Worries about Fed access surfaced a year ago. On Aug. 18, 2010, former Fed governor Laurence Meyer, who runs a research service predicting and analyzing Fed actions, told clients in a note the central bank's "bazooka is loaded" to buy bonds to stimulate the economy.
The note described how the Fed's "doves," members inclined to ease monetary policy, had said the Fed couldn't "sit on its hands,"... An Aug. 20 note included some specific information about the Fed's balance sheet.
A week later, Mr. Bernanke said during a speech in Jackson Hole, Wyo., that "policy options are available to provide additional stimulus" to the economy. Stocks rose on the news, which by then had given Mr. Meyer's clients plenty of time to profit."
----------------
Link: http://online.wsj.com/article/SB10001424052970204554204577025922155198762.html
"Hours after an Aug. 15 meeting with Federal Reserve Chairman Ben Bernanke in his office, Nancy Lazar made a hasty call to investor clients: The Fed was dusting off an obscure 1960s-era strategy known as Operation Twist.
The news pointed to a boom in long-term bonds. It was a good call. Over the next five weeks, prices on 10-year Treasury bonds soared, offering double-digit returns in an otherwise dismal year.
By the time the Fed announced its $400 billion Operation Twist on Sept. 21, the window for quick profits had all but slammed shut. Ms. Lazar is among a group of well-connected investors and analysts with access to top Federal Reserve officials....
The access is part of a push by hedge funds and other traders to get more information about the inner workings of government. Developments in Washington have become more important after the financial crisis in 2008...
New York Federal Reserve Bank President William Dudley also meets regularly with investors, both in his office with individuals and in committee groups. The New York Fed [...] has the strongest ties to investors because it conducts the Fed's bond-market transactions...
Over the past two-and-a-half years, Mr. Dudley has had dozens of private meetings, according to his calendar, which lists SAC Capital Advisors, Citadel Investment Group, Duquesne Capital Management, and Tudor Investments [All Hedge Funds], among others. Lloyd Blankfein, chief of Goldman Sachs, and Mr. Fink, of BlackRock, also had private meetings, according to Mr. Dudley's calendar...
Worries about Fed access surfaced a year ago. On Aug. 18, 2010, former Fed governor Laurence Meyer, who runs a research service predicting and analyzing Fed actions, told clients in a note the central bank's "bazooka is loaded" to buy bonds to stimulate the economy.
The note described how the Fed's "doves," members inclined to ease monetary policy, had said the Fed couldn't "sit on its hands,"... An Aug. 20 note included some specific information about the Fed's balance sheet.
A week later, Mr. Bernanke said during a speech in Jackson Hole, Wyo., that "policy options are available to provide additional stimulus" to the economy. Stocks rose on the news, which by then had given Mr. Meyer's clients plenty of time to profit."
----------------
Link: http://online.wsj.com/article/SB10001424052970204554204577025922155198762.html
How Government Props Up Big Finance
From RealClearMarkets.com:
While there is no objective size the financial industry should be, it is fair to say it would never have become this large without the crony capitalist system that has masqueraded as a free market.
In the process, the financial industry has absorbed resources that could better be used elsewhere while imposing large, systemic risks on the economy...
Big finance has achieved its present girth on the back of numerous policy decisions - some going back centuries. Many of these policies had the intention of protecting the general public, but often had the unintended consequence of enriching bankers beyond the product of their labor.
... protections and hidden subsidies have enabled the financial industry to achieve enormous size and profitability, while placing the overall economy at great risk.
Usually, these protections were accompanied by regulations such as capital requirements or size restrictions. These regulations usually failed to achieve their intended results - especially over the long term - because financial institutions are able to wear down the restrictions by lobbying and by hiring away key regulators.
------------------
Link: http://www.realclearmarkets.com/articles/2011/11/22/how_government_props_up_big_finance_99381.html
While there is no objective size the financial industry should be, it is fair to say it would never have become this large without the crony capitalist system that has masqueraded as a free market.
In the process, the financial industry has absorbed resources that could better be used elsewhere while imposing large, systemic risks on the economy...
Big finance has achieved its present girth on the back of numerous policy decisions - some going back centuries. Many of these policies had the intention of protecting the general public, but often had the unintended consequence of enriching bankers beyond the product of their labor.
... protections and hidden subsidies have enabled the financial industry to achieve enormous size and profitability, while placing the overall economy at great risk.
Usually, these protections were accompanied by regulations such as capital requirements or size restrictions. These regulations usually failed to achieve their intended results - especially over the long term - because financial institutions are able to wear down the restrictions by lobbying and by hiring away key regulators.
------------------
Link: http://www.realclearmarkets.com/articles/2011/11/22/how_government_props_up_big_finance_99381.html
Friday, November 18, 2011
The economy has a job creation problem
From James Sherk, senior policy analyst in labor economics at the Heritage Foundation:
----------------
-----------
The Bureau of Labor Statistics (BLS) announced ... that job losses in the first quarter of 2011 hit a record low. In the first quarter, employers eliminated the fewest jobs since the BLS began keeping track two decades ago. Job losses are now one-sixth below their pre-recession levels. Workers with jobs are less likely to lose them now than before the recession began.
This sounds absurd. At the start of the recession, the news was filled with stories of companies going bankrupt. The unemployment rate stands at 9 percent. Record-low job losses seem impossible.
They are not. Unemployment remains high because of another record announced today: Hiring at new businesses also hit a new low. Only 660,000 workers were hired at new business establishments — 27 percent fewer than when the recession began. Overall job creation, both at existing firms and at startups, has similarly fallen one-sixth since the recession began.
The economy has a job-creation problem.
Entrepreneurs and investors are starting or expanding fewer businesses. Consequently, they need fewer new workers, making it very difficult for the unemployed to find work. If job creation had returned to normal at the recession’s end, unemployment would have returned to normal levels by now.
America needs more risk-taking and entrepreneurship. We need a climate that favors investment and business growth. Unfortunately, with Congress talking tax increases and the administration increasing regulation, this does not seem terribly likely.
-------------------------
Link: http://www.nationalreview.com/corner/283461/job-losses-and-business-startups-hit-record-lows-james-sherk
Also see: http://www.heritage.org/research/reports/2010/03/the-cause-of-high-unemployment-still-due-to-dwindling-job-creation
----------------
-----------
The Bureau of Labor Statistics (BLS) announced ... that job losses in the first quarter of 2011 hit a record low. In the first quarter, employers eliminated the fewest jobs since the BLS began keeping track two decades ago. Job losses are now one-sixth below their pre-recession levels. Workers with jobs are less likely to lose them now than before the recession began.
This sounds absurd. At the start of the recession, the news was filled with stories of companies going bankrupt. The unemployment rate stands at 9 percent. Record-low job losses seem impossible.
They are not. Unemployment remains high because of another record announced today: Hiring at new businesses also hit a new low. Only 660,000 workers were hired at new business establishments — 27 percent fewer than when the recession began. Overall job creation, both at existing firms and at startups, has similarly fallen one-sixth since the recession began.
The economy has a job-creation problem.
Entrepreneurs and investors are starting or expanding fewer businesses. Consequently, they need fewer new workers, making it very difficult for the unemployed to find work. If job creation had returned to normal at the recession’s end, unemployment would have returned to normal levels by now.
America needs more risk-taking and entrepreneurship. We need a climate that favors investment and business growth. Unfortunately, with Congress talking tax increases and the administration increasing regulation, this does not seem terribly likely.
-------------------------
Link: http://www.nationalreview.com/corner/283461/job-losses-and-business-startups-hit-record-lows-james-sherk
Also see: http://www.heritage.org/research/reports/2010/03/the-cause-of-high-unemployment-still-due-to-dwindling-job-creation
Tuesday, November 15, 2011
Why take the of risk of owning individual stocks?
Consider this excerpt from a story in the Detroit News about General Motors' stock: GM. Then look at the graphic that shows how the stock has performed over the past year compared to the index: the Dow Jones Industrial Average (DJIA)
The DJIA Index has a history dating back more than 100 years. You can own the DJIA Index instead as an ETF. The ticker symbol is DIA. It is purchased like a stock, but this type of mutual fund has very low expenses and diversifies your holdings across 30 stocks.
No one can fool you or take advantage of you if you buy and keep it for life.
You will always know what you own. It is the most widely reported market index. And your cost savings make a gigantic difference over time.
Why buy individual stocks with all the risks that are involved?
Patrick Broderick
_____________________________________________
From the Detroit News online:
"1 year after going public, GM has lost 1/3 of its value"
"One year after its much-heralded IPO, which raised a record $23.1 billion, General Motors Co.'s stock has swooned 30 percent from its initial offering price.
... post-bankruptcy GM made its triumphant comeback to Wall Street as a new, slimmer company with fewer workers, less debt and a lower cost structure.
The IPO — the world's largest ever — raised $23.1 billion. GM shares quickly jumped above the $33 initial offering price and soon rocketed to near $40...
But the ascent was short-lived. GM's share price plummeted to a low of $19.05 in early October. Despite seven consecutive quarters in the black and profits of $7.4 billion so far this year, investors have largely withdrawn to the sidelines. Morgan Stanley last week dropped GM from its list of recommended stocks."
_________________________________________________
More from Patrick Broderick:
The lower graph on the chart shows the performance of the DJIA, or Dow Jones Industrial Average. You can easily purchase a low expense Exchange Traded Fund (ETF) that will closely mirror the returns of the DJIA Index. The ticker symbol DIA can be owned in any account and bought anywhere you buy stocks.
It's gross annual expense ratio is 0.18%, which is 80% to 90% less expensive than the annual costs of most stock mutual funds.
You can easily substitute lowest cost ETFs for most of the investments you already own. We've guided hundreds of investors how to cut costs and save a fortune. Let us know if we can do the same for you. There is a great deal of money you can keep in your pockets for the rest of your investing life. Send us an email at BroderickETF@gmail.com
Here is a list of the current 30 Holdings in the DIA:
International Business Machines
Chevron Corp
Caterpillar Inc
Mcdonalds Corp
3M Co
United Technologies Corp
Exxon Mobil Corp
Coca Cola Co
Boeing Co
Johnson & Johnson
Procter & Gamble Co
Wal Mart Stores Inc
Travelers Companies Inc
American Express Co
Du Pont E I De Nemours & Co
Home Depot Inc
Verizon Communications Inc
Disney Walt Co
Merck & Co Inc New
Kraft Foods Inc
JP Morgan Chase & Co
At&T Inc
Hewlett Packard Co
Microsoft Corp
Intel Corp
Pfizer Inc
Cisco Sys Inc
General Electric Co
Alcoa Inc
Bank Of America Corp
Find more information on the SPDR Dow Jones Industrial Average ETF (DIA) click on SPDRS under the LINKS shown on the upper left column of this page.
The DJIA Index has a history dating back more than 100 years. You can own the DJIA Index instead as an ETF. The ticker symbol is DIA. It is purchased like a stock, but this type of mutual fund has very low expenses and diversifies your holdings across 30 stocks.
No one can fool you or take advantage of you if you buy and keep it for life.
You will always know what you own. It is the most widely reported market index. And your cost savings make a gigantic difference over time.
Why buy individual stocks with all the risks that are involved?
Patrick Broderick
_____________________________________________
From the Detroit News online:
"1 year after going public, GM has lost 1/3 of its value"
"One year after its much-heralded IPO, which raised a record $23.1 billion, General Motors Co.'s stock has swooned 30 percent from its initial offering price.
... post-bankruptcy GM made its triumphant comeback to Wall Street as a new, slimmer company with fewer workers, less debt and a lower cost structure.
The IPO — the world's largest ever — raised $23.1 billion. GM shares quickly jumped above the $33 initial offering price and soon rocketed to near $40...
But the ascent was short-lived. GM's share price plummeted to a low of $19.05 in early October. Despite seven consecutive quarters in the black and profits of $7.4 billion so far this year, investors have largely withdrawn to the sidelines. Morgan Stanley last week dropped GM from its list of recommended stocks."
_________________________________________________
Link: http://www.detnews.com/article/20111115/AUTO01/111150369/1148/A-year-after-going-public--GM%E2%80%99s-stock-has-lost-third-of-its-value
____________________________________________________________
More from Patrick Broderick:
The lower graph on the chart shows the performance of the DJIA, or Dow Jones Industrial Average. You can easily purchase a low expense Exchange Traded Fund (ETF) that will closely mirror the returns of the DJIA Index. The ticker symbol DIA can be owned in any account and bought anywhere you buy stocks.
It's gross annual expense ratio is 0.18%, which is 80% to 90% less expensive than the annual costs of most stock mutual funds.
You can easily substitute lowest cost ETFs for most of the investments you already own. We've guided hundreds of investors how to cut costs and save a fortune. Let us know if we can do the same for you. There is a great deal of money you can keep in your pockets for the rest of your investing life. Send us an email at BroderickETF@gmail.com
Here is a list of the current 30 Holdings in the DIA:
International Business Machines
Chevron Corp
Caterpillar Inc
Mcdonalds Corp
3M Co
United Technologies Corp
Exxon Mobil Corp
Coca Cola Co
Boeing Co
Johnson & Johnson
Procter & Gamble Co
Wal Mart Stores Inc
Travelers Companies Inc
American Express Co
Du Pont E I De Nemours & Co
Home Depot Inc
Verizon Communications Inc
Disney Walt Co
Merck & Co Inc New
Kraft Foods Inc
JP Morgan Chase & Co
At&T Inc
Hewlett Packard Co
Microsoft Corp
Intel Corp
Pfizer Inc
Cisco Sys Inc
General Electric Co
Alcoa Inc
Bank Of America Corp
Find more information on the SPDR Dow Jones Industrial Average ETF (DIA) click on SPDRS under the LINKS shown on the upper left column of this page.
Monday, November 14, 2011
Book: "Throw Them All Out!"
________________________
From author Peter Schweizer on his website:
"Why did I write this book?
First let me tell you why I didn’t. This is not a book about corrupt political leaders.
It is instead about a compromised political system....
...were anyone else in America to engage in these sort of trading patterns, they would likely receive scrutiny from the Securities and Exchange Commission (SEC). Indeed, private citizens might very likely go to jail were they to do this as it relates to their own jobs.
The real scandal is that in our current system of government, these trades are perfectly legal. We wouldn’t tolerate professional athletes betting on their games. So why do we let our leaders do it on something far more important?"
-----------------------------
http://throwthemalloutbook.com
From author Peter Schweizer on his website:
"Why did I write this book?
First let me tell you why I didn’t. This is not a book about corrupt political leaders.
It is instead about a compromised political system....
...were anyone else in America to engage in these sort of trading patterns, they would likely receive scrutiny from the Securities and Exchange Commission (SEC). Indeed, private citizens might very likely go to jail were they to do this as it relates to their own jobs.
The real scandal is that in our current system of government, these trades are perfectly legal. We wouldn’t tolerate professional athletes betting on their games. So why do we let our leaders do it on something far more important?"
-----------------------------
http://throwthemalloutbook.com
Tuesday, November 8, 2011
Investors Can Save Tens of Billions of Dollars Every Year in Cost Savings
___________________________________________
Refinance Your Investments® with the lowest cost ETFs.
___________________________________________
Our Life Keepers™ approach is the most cost effective way to invest.
* Buy the best ETFs, pay the lowest costs, keep them for life.
* Never pay more than 0.2% in total annual costs.
* Own them anywhere you buy stocks and bonds.
We teach. You invest. And, you keep all the cost savings. That's our method. (Click on the blue shaded links above about 2 inches from the top like "Real Examples" to get more information on what we do.)
We have demonstrated to investors how to save from hundreds of dollars up to tens of thousands of dollars in the first year alone. When those savings stay locked in and repeated every year, the total amounts saved can add extra hundreds of thousands of dollars to your individual accounts.
No matter how the markets perform - up, down, sideways - your cost savings will remain with you. In effect, you can stop others from skimming your wealth with fees that are no longer necessary to pay. From brokerage accounts to mutual funds, what you own can be replaced with the lowest cost ETFs from the best, largest asset managers like Vanguard.
Our experience over twenty five years tells us most investors don't know how much money they waste on costs. That is why most products, like mutual funds, bury their costs inside the products. You never see what you pay in actual dollar amounts.
We expose your costs. We put a dollar figure on the total. And show you what happens to the growth of your money when you keep the savings in your accounts.
Advice? Trust? We don't question your advisers; we explain how much they really cost you. The industry basically sells the value of the "relationships" that are promoted. We focus on the relationship between costs and the effect it has on your money. Learn our simple, effective alternative.
You can save large, meaningful amounts of money. That should be motivation enough. Together with a million or so other investors - average folks with whatever they have managed to save and invest - the total savings nationwide can reach tens of billions of dollars every year.
Stop focusing on what the industry, the marketers, and the media want you to follow. Instead, go inside what you own, put a dollar figure on the actual loss to costs that happens with your money, and consider a simpler way to invest that keeps large savings in your accounts.
Investments like the lowest cost ETFs from Vanguard are so good you can buy them and keep them for life. We know how more expensive products and services are justified and sold to you. But you don't need them. There is a better way that can be measured in real dollars.
Ask us to present our Life Keepers approach to your group of friends, fellow employees, or fellow retirees.
Patrick Broderick
Contact me at BroderickETF@gmail.com
Refinance Your Investments® with the lowest cost ETFs.
___________________________________________
Our Life Keepers™ approach is the most cost effective way to invest.
* Buy the best ETFs, pay the lowest costs, keep them for life.
* Never pay more than 0.2% in total annual costs.
* Own them anywhere you buy stocks and bonds.
We teach. You invest. And, you keep all the cost savings. That's our method. (Click on the blue shaded links above about 2 inches from the top like "Real Examples" to get more information on what we do.)
We have demonstrated to investors how to save from hundreds of dollars up to tens of thousands of dollars in the first year alone. When those savings stay locked in and repeated every year, the total amounts saved can add extra hundreds of thousands of dollars to your individual accounts.
No matter how the markets perform - up, down, sideways - your cost savings will remain with you. In effect, you can stop others from skimming your wealth with fees that are no longer necessary to pay. From brokerage accounts to mutual funds, what you own can be replaced with the lowest cost ETFs from the best, largest asset managers like Vanguard.
Our experience over twenty five years tells us most investors don't know how much money they waste on costs. That is why most products, like mutual funds, bury their costs inside the products. You never see what you pay in actual dollar amounts.
We expose your costs. We put a dollar figure on the total. And show you what happens to the growth of your money when you keep the savings in your accounts.
Advice? Trust? We don't question your advisers; we explain how much they really cost you. The industry basically sells the value of the "relationships" that are promoted. We focus on the relationship between costs and the effect it has on your money. Learn our simple, effective alternative.
You can save large, meaningful amounts of money. That should be motivation enough. Together with a million or so other investors - average folks with whatever they have managed to save and invest - the total savings nationwide can reach tens of billions of dollars every year.
Stop focusing on what the industry, the marketers, and the media want you to follow. Instead, go inside what you own, put a dollar figure on the actual loss to costs that happens with your money, and consider a simpler way to invest that keeps large savings in your accounts.
Investments like the lowest cost ETFs from Vanguard are so good you can buy them and keep them for life. We know how more expensive products and services are justified and sold to you. But you don't need them. There is a better way that can be measured in real dollars.
Ask us to present our Life Keepers approach to your group of friends, fellow employees, or fellow retirees.
Patrick Broderick
Contact me at BroderickETF@gmail.com
Monday, November 7, 2011
Do No Evil! says Google. But does Google really pay its Fair Share of taxes?
_____________________
From Businessweek.com:
"The Tax Haven That's Saving Google Billions"
Google uses a complicated structure to send most of its overseas profits to tax havens, keeping its corporate rate at a super-low 2.4 percent.
The heart of Google's international operations is an office building in central Dublin... credited with 88 percent of the search juggernaut's $12.5 billion in sales outside the U.S. Most of the profits, however, went to the tax haven of Bermuda.
To reduce its overseas tax bill, Google uses a complicated legal structure that has saved it $3.1 billion since 2007 and boosted last year's overall earnings by 26 percent. While many multinationals use similar structures, Google has managed to lower its overseas tax rate more than its peers in the technology sector....
In Bermuda there's no corporate income tax at all. Google's profits travel to the island's white sands via a convoluted route known to tax lawyers as the "Double Irish" and the "Dutch Sandwich." In Google's case, it generally works like this: When a company in Europe, the Middle East, or Africa purchases a search ad through Google, it sends the money to Google Ireland. The Irish government taxes corporate profits at 12.5 percent, but Google mostly escapes that tax because its earnings don't stay in the Dublin office, which reported a pretax profit of less than 1 percent of revenues in 2008.
Irish law makes it difficult for Google to send the money directly to Bermuda without incurring a large tax hit, so the payment makes a brief detour through the Netherlands, since Ireland doesn't tax certain payments to companies in other European Union states. Once the money is in the Netherlands, Google can take advantage of generous Dutch tax laws. Its subsidiary there, Google Netherlands Holdings, is just a shell (it has no employees) and passes on about 99.8 percent of what it collects to Bermuda. (The subsidiary managed in Bermuda is technically an Irish company, hence the "Double Irish" nickname....
The setup lowers Google's overseas tax bill, but it also affects U.S. tax revenues as the government struggles to close a projected $1.4 trillion budget gap. Google Ireland licenses its search and advertising technology from Google headquarters in Mountain View, Calif. The licensing agreement allows Google to attribute its overseas profits to its Irish operations instead of the U.S., where most of the technology was developed.
Even if the tax avoidance structures are legal, not everyone considers them ethical. Google is "flying a banner of doing no evil, and then they're perpetrating evil under our noses," says Abraham J. Briloff, a professor emeritus of accounting at Baruch College who has examined Google's tax disclosures. "Who is it that paid for the underlying concept on which they built these billions of dollars of revenues? It was paid for by the United States citizenry," Briloff says, referring to the fact that Google's initial technology was based in part on research done at Stanford University and funded by the National Science Foundation.
Profit-shifting arrangements such as Google's cost the U.S. government as much as $60 billion in annual revenue, according to Kimberly A. Clausing, an economics professor at Reed College in Portland, Ore.
__________________
Link: http://www.businessweek.com/magazine/content/10_44/b4201043146825.htm
____________________________
Patrick Broderick
From Businessweek.com:
"The Tax Haven That's Saving Google Billions"
Google uses a complicated structure to send most of its overseas profits to tax havens, keeping its corporate rate at a super-low 2.4 percent.
The heart of Google's international operations is an office building in central Dublin... credited with 88 percent of the search juggernaut's $12.5 billion in sales outside the U.S. Most of the profits, however, went to the tax haven of Bermuda.
To reduce its overseas tax bill, Google uses a complicated legal structure that has saved it $3.1 billion since 2007 and boosted last year's overall earnings by 26 percent. While many multinationals use similar structures, Google has managed to lower its overseas tax rate more than its peers in the technology sector....
In Bermuda there's no corporate income tax at all. Google's profits travel to the island's white sands via a convoluted route known to tax lawyers as the "Double Irish" and the "Dutch Sandwich." In Google's case, it generally works like this: When a company in Europe, the Middle East, or Africa purchases a search ad through Google, it sends the money to Google Ireland. The Irish government taxes corporate profits at 12.5 percent, but Google mostly escapes that tax because its earnings don't stay in the Dublin office, which reported a pretax profit of less than 1 percent of revenues in 2008.
Irish law makes it difficult for Google to send the money directly to Bermuda without incurring a large tax hit, so the payment makes a brief detour through the Netherlands, since Ireland doesn't tax certain payments to companies in other European Union states. Once the money is in the Netherlands, Google can take advantage of generous Dutch tax laws. Its subsidiary there, Google Netherlands Holdings, is just a shell (it has no employees) and passes on about 99.8 percent of what it collects to Bermuda. (The subsidiary managed in Bermuda is technically an Irish company, hence the "Double Irish" nickname....
The setup lowers Google's overseas tax bill, but it also affects U.S. tax revenues as the government struggles to close a projected $1.4 trillion budget gap. Google Ireland licenses its search and advertising technology from Google headquarters in Mountain View, Calif. The licensing agreement allows Google to attribute its overseas profits to its Irish operations instead of the U.S., where most of the technology was developed.
Even if the tax avoidance structures are legal, not everyone considers them ethical. Google is "flying a banner of doing no evil, and then they're perpetrating evil under our noses," says Abraham J. Briloff, a professor emeritus of accounting at Baruch College who has examined Google's tax disclosures. "Who is it that paid for the underlying concept on which they built these billions of dollars of revenues? It was paid for by the United States citizenry," Briloff says, referring to the fact that Google's initial technology was based in part on research done at Stanford University and funded by the National Science Foundation.
Profit-shifting arrangements such as Google's cost the U.S. government as much as $60 billion in annual revenue, according to Kimberly A. Clausing, an economics professor at Reed College in Portland, Ore.
__________________
Link: http://www.businessweek.com/magazine/content/10_44/b4201043146825.htm
____________________________
You likely can't google your taxes away like the search engine giant does. But guess what? You can permanently cut your investment costs and save serious amounts of money over the rest of your life.
We teach investors how and why they should cut their costs and keep that money in their own accounts. It is easy, effective, and long lasting! Contact us. We will be happy to teach you and your friends.
Sunday, November 6, 2011
Good CEOs plan ahead
----------------------------------------------
From KeithHennessy.com:
"Here is the President speaking ... in Cincinnati:
Now, that should not be too much to ask. And by the way, it wouldn’t kick in until 2013. So when you hear folks say, oh, we shouldn’t be raising taxes right now — nobody is talking about raising taxes right now. We’re talking about cutting taxes right now. But it does mean that there’s a long-term plan, and part of it involves everybody doing their fair share.
The problem with the President’s argument is that good CEOs plan ahead. When they think about whether to hire a new worker, buy a new piece of equipment, or build a new factory, they plan over a horizon that’s longer than just the next 15 months.
A tax increase enacted into law now, to take effect in 2013, is only slightly less discouraging to economic growth than a tax increase that takes effect immediately. A CEO who knows her firm’s taxes will increase in 2013 will be discouraged from hiring, investing, and building now.
The President is right when he says that “there’s a long-term plan.” Unfortunately, that long-term plan involves higher taxes, and firm managers know that.
Their horizon is not limited to the next election.
______________
Link: http://keithhennessey.com/2011/09/22/good-ceos-plan-ahead/
From KeithHennessy.com:
THE PRESIDENT: We already cut a trillion dollars in spending. [My plan] makes an additional hundreds of billions of dollars in cuts in spending, but it also asks the wealthiest Americans and the biggest corporations to pay their fair share of taxes.
Now, that should not be too much to ask. And by the way, it wouldn’t kick in until 2013. So when you hear folks say, oh, we shouldn’t be raising taxes right now — nobody is talking about raising taxes right now. We’re talking about cutting taxes right now. But it does mean that there’s a long-term plan, and part of it involves everybody doing their fair share.
The problem with the President’s argument is that good CEOs plan ahead. When they think about whether to hire a new worker, buy a new piece of equipment, or build a new factory, they plan over a horizon that’s longer than just the next 15 months.
A tax increase enacted into law now, to take effect in 2013, is only slightly less discouraging to economic growth than a tax increase that takes effect immediately. A CEO who knows her firm’s taxes will increase in 2013 will be discouraged from hiring, investing, and building now.
The President is right when he says that “there’s a long-term plan.” Unfortunately, that long-term plan involves higher taxes, and firm managers know that.
Their horizon is not limited to the next election.
______________
Link: http://keithhennessey.com/2011/09/22/good-ceos-plan-ahead/
Saturday, November 5, 2011
Yes, unemployment is still a crisis
__________
From the Washington Post online:
Another month, another dreary jobs report from the Labor Department. The U.S. economy added just 80,000 jobs in October, which isn’t enough to keep up with population growth, let alone get us back to full employment.
Indeed, this marks the seventh straight month that the jobless rate hasn’t nudged below 9 percent (it was at 9.1 percent last month). While there are a few bright spots in the report — the numbers for August and September were revised upward by 200,000 jobs — that still leaves vast battalions of unemployed workers sitting out there.
And for a reminder of why this is so alarming, the Hamilton Project has released a study looking, once more, at the heavy long-term toll that unemployment is taking on American workers.
The numbers are grim: Two years after losing his or her job, the average worker will earn 48 percent less than previously. Even workers who do find new jobs end up making about 17 percent less, and based on history, those lower wages will likely persist for years to come...
________________
Link: http://www.washingtonpost.com/blogs/ezra-klein/post/unemployment-takes-a-long-term-toll-on-workers/2011/11/04/gIQAE97olM_blog.html
From the Washington Post online:
Another month, another dreary jobs report from the Labor Department. The U.S. economy added just 80,000 jobs in October, which isn’t enough to keep up with population growth, let alone get us back to full employment.
Indeed, this marks the seventh straight month that the jobless rate hasn’t nudged below 9 percent (it was at 9.1 percent last month). While there are a few bright spots in the report — the numbers for August and September were revised upward by 200,000 jobs — that still leaves vast battalions of unemployed workers sitting out there.
And for a reminder of why this is so alarming, the Hamilton Project has released a study looking, once more, at the heavy long-term toll that unemployment is taking on American workers.
The numbers are grim: Two years after losing his or her job, the average worker will earn 48 percent less than previously. Even workers who do find new jobs end up making about 17 percent less, and based on history, those lower wages will likely persist for years to come...
________________
Link: http://www.washingtonpost.com/blogs/ezra-klein/post/unemployment-takes-a-long-term-toll-on-workers/2011/11/04/gIQAE97olM_blog.html
At this rate, full employment is 12 years away
________________
From MarketWatch:
WASHINGTON (MarketWatch) — The U.S. economy is creating jobs, but it’s doing it so slowly that, at the current pace of hiring, the unemployment rate would stay stuck at 9% for five more years...
Where are the jobs?
The pace of hiring is so weak, in fact, that the economy wouldn’t get back to full employment (around 6%) until 2023, or mid-way through Kim Kardashian’s second term in the White House...
--------------
Link: http://www.marketwatch.com/story/at-this-rate-full-employment-is-12-years-away-2011-11-03?link=home_carousel
From MarketWatch:
WASHINGTON (MarketWatch) — The U.S. economy is creating jobs, but it’s doing it so slowly that, at the current pace of hiring, the unemployment rate would stay stuck at 9% for five more years...
Where are the jobs?
The pace of hiring is so weak, in fact, that the economy wouldn’t get back to full employment (around 6%) until 2023, or mid-way through Kim Kardashian’s second term in the White House...
Link: http://www.marketwatch.com/story/at-this-rate-full-employment-is-12-years-away-2011-11-03?link=home_carousel
Friday, November 4, 2011
October: Jobs and 9% Unemployment
______________
New York Times:
Report Shows a Mere 80,000 Jobs Added in U.S. in October
The United States had another month of mediocre job growth in October, the Labor Department reported Friday.
___________
CNN/Money
October jobs report: Unemployment rate dips
October's hiring was also weaker than expected, as economists surveyed by CNNMoney had predicted a gain of 98,000 jobs in the month. Typically, it takes at least 150,000 jobs per month just to keep up with population growth.
The unemployment rate improved slightly, falling to 9.0%...
________________
Wall Street Journal
Private Sector Adds Jobs, but Unemployment Stubborn
U.S. companies kept adding workers to their payrolls in October, and data for the previous two months were revised higher, but the gains made only a small dent in the high unemployment rate.
_______________
Links:
CNN: http://money.cnn.com/2011/11/04/news/economy/jobs_report_unemployment/index.htm
WSJ: http://online.wsj.com/article/SB10001424052970203804204577017573707549462.html
NYT: http://www.nytimes.com/2011/11/05/business/economy/us-added-80000-jobs-in-october.html
New York Times:
Report Shows a Mere 80,000 Jobs Added in U.S. in October
The United States had another month of mediocre job growth in October, the Labor Department reported Friday.
___________
CNN/Money
October jobs report: Unemployment rate dips
October's hiring was also weaker than expected, as economists surveyed by CNNMoney had predicted a gain of 98,000 jobs in the month. Typically, it takes at least 150,000 jobs per month just to keep up with population growth.
The unemployment rate improved slightly, falling to 9.0%...
________________
Wall Street Journal
Private Sector Adds Jobs, but Unemployment Stubborn
U.S. companies kept adding workers to their payrolls in October, and data for the previous two months were revised higher, but the gains made only a small dent in the high unemployment rate.
_______________
Links:
CNN: http://money.cnn.com/2011/11/04/news/economy/jobs_report_unemployment/index.htm
WSJ: http://online.wsj.com/article/SB10001424052970203804204577017573707549462.html
NYT: http://www.nytimes.com/2011/11/05/business/economy/us-added-80000-jobs-in-october.html
Wednesday, November 2, 2011
The economics of polarization
By David P. Goldman at the Asia Times online:
America is engaged in class war, but not of the sort one reads about in the mainstream press. The truly indigent - young African-American men, for example, most of whom are now unemployed - have little to do in this war. Large corporations for the most part are bystanders as well; they will make their peace with the victor. This is a war of survival between the productive middle class on one hand, and the dependents of the state on the other.
The Tea Party's aversion to government spending is as pure an expression of rational self-interest as we have seen in American history. Like any new movement, it attracts more than its fair share of oddballs. The fact that a movement led by amateurs continues to wield so much power proves that it has good reason to be there.
The Tea Party is a middle-class movement, older, better educated and wealthier than average, but it is not a party of the very wealthy, who are conspicuously absent among its activists.
They know from personal or family experience that taxation is destroying the American middle class. They are approaching retirement, and most of their wealth is in the family home, as it is for the great majority of Americans:
The average homebuyer today, the chart shows, will pay almost as much in property taxes as in mortgage interest. (Mortgage interest is calculated on the basis of the current mortgage rate, reflecting the costs to prospective homebuyers rather than existing homeowners).
That is an astonishing outcome; in the past, mortgage interest typically was two or three times the property tax bill. Put another way, the combined cost of mortgage interest and property taxes is close to a trillion dollars a year today, about the same as at the peak of the housing bubble. Rising property taxes have just about wiped out the impact of lower interest rates and lower home prices on households. The property tax data include commercial as well as residential taxes, to be sure, but more than two-thirds of total property tax collections are from households....
State and local governments, though, have exhausted their tax base, and the continuous rise in property taxes through the crash in property prices has kept the real estate market more depressed than economic conditions otherwise might indicate. A further increase in tax rates would yield less revenue. In effect, the government would have to proceed from taxing private capital to expropriating it, de facto or de jure - for example, nationalizing banks and directing them to make loans to politically-favored projects, after the fashion of Latin American banana republics.
The alternative is to renegotiate pension and health benefits already promised to public sector unions....
----------------
Link: http://www.atimes.com/atimes/Global_Economy/MK01Dj04.html
America is engaged in class war, but not of the sort one reads about in the mainstream press. The truly indigent - young African-American men, for example, most of whom are now unemployed - have little to do in this war. Large corporations for the most part are bystanders as well; they will make their peace with the victor. This is a war of survival between the productive middle class on one hand, and the dependents of the state on the other.
The Tea Party's aversion to government spending is as pure an expression of rational self-interest as we have seen in American history. Like any new movement, it attracts more than its fair share of oddballs. The fact that a movement led by amateurs continues to wield so much power proves that it has good reason to be there.
The Tea Party is a middle-class movement, older, better educated and wealthier than average, but it is not a party of the very wealthy, who are conspicuously absent among its activists.
They know from personal or family experience that taxation is destroying the American middle class. They are approaching retirement, and most of their wealth is in the family home, as it is for the great majority of Americans:
The average homebuyer today, the chart shows, will pay almost as much in property taxes as in mortgage interest. (Mortgage interest is calculated on the basis of the current mortgage rate, reflecting the costs to prospective homebuyers rather than existing homeowners).
That is an astonishing outcome; in the past, mortgage interest typically was two or three times the property tax bill. Put another way, the combined cost of mortgage interest and property taxes is close to a trillion dollars a year today, about the same as at the peak of the housing bubble. Rising property taxes have just about wiped out the impact of lower interest rates and lower home prices on households. The property tax data include commercial as well as residential taxes, to be sure, but more than two-thirds of total property tax collections are from households....
State and local governments, though, have exhausted their tax base, and the continuous rise in property taxes through the crash in property prices has kept the real estate market more depressed than economic conditions otherwise might indicate. A further increase in tax rates would yield less revenue. In effect, the government would have to proceed from taxing private capital to expropriating it, de facto or de jure - for example, nationalizing banks and directing them to make loans to politically-favored projects, after the fashion of Latin American banana republics.
The alternative is to renegotiate pension and health benefits already promised to public sector unions....
----------------
Link: http://www.atimes.com/atimes/Global_Economy/MK01Dj04.html
Tuesday, November 1, 2011
Perspective from PIMCO's Bill Gross:
_______________
"Growth is the elixir that seems to make every ache, pain or serious ailment go away. Sovereign debt too high? Just grow your way out of it. Unemployment rates hitting historical peaks? Growth produces jobs. Stock markets depressed? Nothing a lot of growth wouldn’t cure.
But growth is the commodity that the world is short of at the moment... No country has enough of it – not even China – and many of the developed countries (specifically in Euroland) seem to be shrinking into recession....
The situation, of course, is compounded now by high debt levels and government spending that always used to restart capitalism’s private engine. However, as economists Rogoff & Reinhart have shown in their historic text, This Time Is Different, sovereign debt at 80-90% of GDP acts as a barrier to growth. Because debt service and interest rate spreads start to rise at these debt levels, a greater and greater percentage of a nation’s output must necessarily be diverted to creditors who in turn become leery of reinvesting in a slowing economy.
The virtuous circle becomes vicious in its reflexive counter reaction, spiraling into a debt/liquidity trap á la Japan’s lost decades if not stopped in time.
Halting the downward maelstrom is what current monetary policy is attempting to accomplish...
Link: http://www.pimco.com/EN/Insights/Pages/Pennies-from-Heaven.aspx
"Growth is the elixir that seems to make every ache, pain or serious ailment go away. Sovereign debt too high? Just grow your way out of it. Unemployment rates hitting historical peaks? Growth produces jobs. Stock markets depressed? Nothing a lot of growth wouldn’t cure.
But growth is the commodity that the world is short of at the moment... No country has enough of it – not even China – and many of the developed countries (specifically in Euroland) seem to be shrinking into recession....
The situation, of course, is compounded now by high debt levels and government spending that always used to restart capitalism’s private engine. However, as economists Rogoff & Reinhart have shown in their historic text, This Time Is Different, sovereign debt at 80-90% of GDP acts as a barrier to growth. Because debt service and interest rate spreads start to rise at these debt levels, a greater and greater percentage of a nation’s output must necessarily be diverted to creditors who in turn become leery of reinvesting in a slowing economy.
The virtuous circle becomes vicious in its reflexive counter reaction, spiraling into a debt/liquidity trap á la Japan’s lost decades if not stopped in time.
Halting the downward maelstrom is what current monetary policy is attempting to accomplish...
- If (1) globalization is precluding the hiring of domestic labor due to cheaper alternatives in developing countries, then rock-bottom yields can do little to change the minds of corporate decision makers.
- If (2) technological innovation is destroying retail book and record stores, as well as theaters and retail shopping centers nationwide due to online retailers, then what do low cap rates matter to Macy’s or Walmart in terms of future store expansion?
- If (3) U.S. and Euroland boomers are beginning to retire or at least plan more seriously for retirement, why will lower interest rates cause them to spend more? As a matter of fact, savers will have to save more just to replicate their expected retirement income from bank CDs or Treasuries that used to yield 5% and now offer something close to nothing.
Link: http://www.pimco.com/EN/Insights/Pages/Pennies-from-Heaven.aspx
Perspective from Comstock Partners:
________________
More Important than Historical Statistics--Private Debt Decline
We believe the private debt decline that has already started will continue, and be led by the consumers who are reigning in their spending habits, saving more, and paying off (or defaulting on) their enormous debt. Although it might seem that deleveraging would be beneficial for our economy, almost certainly any decline from present debt levels will not be "orderly" and consumer demand will contract sharply...
Now that the credit binge has ended, we expect consumer demand to continue declining. As the consumer continues to retrench, we expect the household debt to decline below $10 tn. from $13.3 tn. now. With the deprivation of this consumption power which has been the backbone of the U.S. economy for the past 75 years, the economy can be expected to enter a double dip recession.
Link: http://www.comstockfunds.com/default.aspx/act/newsletter.aspx/category/MarketCommentary/MenuGroup/Home/NewsLetterID/1613/startrow/3.htm
--------------------------
Another Bear Market Trap
The sharp rally off the October 4th intraday low of the S&P 500 is a result of the assumed prospect of a real plan to save the Euro Zone and the European banks that have large holdings of sovereign debt, and slightly improved U.S. economic numbers indicating that the U.S. may not be in a recession right now...
As we have pointed out numerous times in previous comments and special reports, the economy has a good reason to be weak. Household debt relative to GDP has exploded over the last couple of decades and consumers are now in the lengthy process of paying it down. That's why consumers are not spending and that's why businesses are not hiring. The demand for goods and services is just not there.
---------------
Link: http://www.comstockfunds.com/default.aspx?act=Newsletter.aspx&category=MarketCommentary&newsletterid=1615&menugroup=Home&AspxAutoDetectCookieSupport=1
More Important than Historical Statistics--Private Debt Decline
We believe the private debt decline that has already started will continue, and be led by the consumers who are reigning in their spending habits, saving more, and paying off (or defaulting on) their enormous debt. Although it might seem that deleveraging would be beneficial for our economy, almost certainly any decline from present debt levels will not be "orderly" and consumer demand will contract sharply...
Now that the credit binge has ended, we expect consumer demand to continue declining. As the consumer continues to retrench, we expect the household debt to decline below $10 tn. from $13.3 tn. now. With the deprivation of this consumption power which has been the backbone of the U.S. economy for the past 75 years, the economy can be expected to enter a double dip recession.
Link: http://www.comstockfunds.com/default.aspx/act/newsletter.aspx/category/MarketCommentary/MenuGroup/Home/NewsLetterID/1613/startrow/3.htm
--------------------------
Another Bear Market Trap
The sharp rally off the October 4th intraday low of the S&P 500 is a result of the assumed prospect of a real plan to save the Euro Zone and the European banks that have large holdings of sovereign debt, and slightly improved U.S. economic numbers indicating that the U.S. may not be in a recession right now...
As we have pointed out numerous times in previous comments and special reports, the economy has a good reason to be weak. Household debt relative to GDP has exploded over the last couple of decades and consumers are now in the lengthy process of paying it down. That's why consumers are not spending and that's why businesses are not hiring. The demand for goods and services is just not there.
---------------
Link: http://www.comstockfunds.com/default.aspx?act=Newsletter.aspx&category=MarketCommentary&newsletterid=1615&menugroup=Home&AspxAutoDetectCookieSupport=1
Friday, October 28, 2011
Bernie Madoff, 21st Century Philosopher
Plato records Socrates:
Convicted in 2009, the Ponzi scheme swindler Bernie Madoff serves a 150 year sentence in federal prison. Madoff recently philosophized to Barbara Walters in an exclusive interview and touched upon deep, important subjects:
"Sanity, humor, horror, luck, suicide, courage."
_________________
From ABC News:
Bernard Madoff Mulled Suicide, Is 'Lucky to Still Be Sane'
"Madoff said all he has left in prison is his sense of humor, and sometimes he is horrified to find himself smiling.
He is "lucky to still be sane," he added.
During four months he spent in a New York jail, Madoff said, he was on suicide watch. He considered killing himself, but he "didn't have enough courage to do it" at the time."
---------
Link: http://abcnews.go.com/US/bernie-madoff-live-fraud-victims-anger-familys-tells/story?id=14823108&page=2
Convicted in 2009, the Ponzi scheme swindler Bernie Madoff serves a 150 year sentence in federal prison. Madoff recently philosophized to Barbara Walters in an exclusive interview and touched upon deep, important subjects:
"Sanity, humor, horror, luck, suicide, courage."
_________________
From ABC News:
Bernard Madoff Mulled Suicide, Is 'Lucky to Still Be Sane'
"Madoff said all he has left in prison is his sense of humor, and sometimes he is horrified to find himself smiling.
He is "lucky to still be sane," he added.
During four months he spent in a New York jail, Madoff said, he was on suicide watch. He considered killing himself, but he "didn't have enough courage to do it" at the time."
---------
Link: http://abcnews.go.com/US/bernie-madoff-live-fraud-victims-anger-familys-tells/story?id=14823108&page=2
Monday, October 24, 2011
Federal Reserve Bank: Transparency Needed
Below are four excerpts from news items and analysis found online regarding the Audit by the GAO (General Accountability Office) of the Federal Reserve.
Transparency at the Federal Reserve and in our government is badly needed. Conflicts of interest reign in the absence of transparency.
We highlight the Federal Reserve transparency issue because there is a parallel problem that affects you personally: there is little to no transparency when it comes to your investment costs. Billions of dollars of private wealth (your money!) are siphoned out of investor accounts through widely owned products like mutual funds while better alternatives and practices exist.
Investors can save tens of billions annually by changing the way they invest. This can be done simply, confidently, and effectively. Read below how conflicts of interest thrived during the financial crisis. Then consider whether you want to explore transparency regarding the costs you pay for investment products and advice.
We want to lead millions of investors to change the way they invest and save billions and billions of dollars every year. It starts with each household of investors. Discover how cutting costs, and keeping the money that belongs to you, can add thousands, tens of thousands, and up to hundreds of thousands of extra wealth over the rest of your life. Believe, no one in the industry wants you to do this. But we can effectively teach you how to keep those savings. It is your money.
Patrick Broderick
Transparency at the Federal Reserve and in our government is badly needed. Conflicts of interest reign in the absence of transparency.
We highlight the Federal Reserve transparency issue because there is a parallel problem that affects you personally: there is little to no transparency when it comes to your investment costs. Billions of dollars of private wealth (your money!) are siphoned out of investor accounts through widely owned products like mutual funds while better alternatives and practices exist.
Investors can save tens of billions annually by changing the way they invest. This can be done simply, confidently, and effectively. Read below how conflicts of interest thrived during the financial crisis. Then consider whether you want to explore transparency regarding the costs you pay for investment products and advice.
We want to lead millions of investors to change the way they invest and save billions and billions of dollars every year. It starts with each household of investors. Discover how cutting costs, and keeping the money that belongs to you, can add thousands, tens of thousands, and up to hundreds of thousands of extra wealth over the rest of your life. Believe, no one in the industry wants you to do this. But we can effectively teach you how to keep those savings. It is your money.
Patrick Broderick
Both Libertarian and Socialist Agree!
From the Washington Examiner:
_____________________
Apparent conflicts show why more transparency needed at the Fed
"Love him or hate him, Ron Paul, a Republican congressman from Texas and a candidate for the GOP nomination, deserves commendation for his determination to put the Federal Reserve Board under the national political microscope. Largely as a result of Paul's persistence in the House and an amendment offered by Sen. Bernie Sanders, I-Vt., the General Accounting Office was directed in the Dodd-Frank financial reform bill to examine the extent to which conflicts of interest were involved in Fed decisions during the financial crisis of 2008. The results of the GAO examination were made public last week, and they make clear that there is indeed a great need for more transparency in the operations of the U.S. central bank.
The most troublesome revelation in the GAO audit is the extent to which insiders benefited from their positions and access during the crisis. The GAO found 18 instances in which current and former members of the Fed affiliated with banks and other companies received emergency loans from the board, including General Electric, Goldman Sachs, Lehman Brothers, and JP Morgan Chase. In the case of General Electric, its CEO Jeffrey Immelt served on the New York Fed, which loaned his corporation $16 billion in emergency funding during the crisis. Those loans were made after the New York Fed consulted with General Electric officials concerning creation of a Commercial Paper Funding Facility, according to Sanders.
One of Goldman Sachs' directors, Stephen Friedman, was chairman of the board of the New York Fed. Friedman also owned substantial stock in Goldman Sachs during the same period in 2008 when the New York Fed voted to allow Goldman to operate as a commercial bank as well as an investment bank. That approval meant Goldman got access to loans from the Fed at highly favorable rates. Fed ethics guidelines prohibit a Fed governor from owning stock in a firm being considered for commercial status, but Friedman received a waiver and continued buying Goldman stock.
As for JP Morgan Chase, its chief executive officer, Jamie Dimon, was on the New York Fed board when the company got $29 billion in emergency loans. In addition, Dimon was able to secure approval from the New York Fed for an 18-month exemption for his firm from risk-based leverage and capital requirements, as well as removal of certain high-risk investments on Bear Stearns' balance sheet before JP Morgan Chase's acquisition of the troubled investment bank.
It is not necessary to agree with Paul's demand that the Fed be abolished entirely to recognize the necessity for maximum transparency in its operations that is highlighted by these conflicts of interest exposed by GAO. As presently structured, the Fed operates with virtually no oversight by Congress or the president. Even if, as its defender claim, the Fed needs to be independent to accomplish its purpose of stabilizing the U.S. economy, greater transparency will help reassure Americans that the board is operating to benefit the entire country and not just a few insiders."
---------------
Link: http://washingtonexaminer.com/opinion/editorials/2011/10/apparent-conflicts-show-why-more-transparency-needed-fed
_____________________
Apparent conflicts show why more transparency needed at the Fed
"Love him or hate him, Ron Paul, a Republican congressman from Texas and a candidate for the GOP nomination, deserves commendation for his determination to put the Federal Reserve Board under the national political microscope. Largely as a result of Paul's persistence in the House and an amendment offered by Sen. Bernie Sanders, I-Vt., the General Accounting Office was directed in the Dodd-Frank financial reform bill to examine the extent to which conflicts of interest were involved in Fed decisions during the financial crisis of 2008. The results of the GAO examination were made public last week, and they make clear that there is indeed a great need for more transparency in the operations of the U.S. central bank.
The most troublesome revelation in the GAO audit is the extent to which insiders benefited from their positions and access during the crisis. The GAO found 18 instances in which current and former members of the Fed affiliated with banks and other companies received emergency loans from the board, including General Electric, Goldman Sachs, Lehman Brothers, and JP Morgan Chase. In the case of General Electric, its CEO Jeffrey Immelt served on the New York Fed, which loaned his corporation $16 billion in emergency funding during the crisis. Those loans were made after the New York Fed consulted with General Electric officials concerning creation of a Commercial Paper Funding Facility, according to Sanders.
One of Goldman Sachs' directors, Stephen Friedman, was chairman of the board of the New York Fed. Friedman also owned substantial stock in Goldman Sachs during the same period in 2008 when the New York Fed voted to allow Goldman to operate as a commercial bank as well as an investment bank. That approval meant Goldman got access to loans from the Fed at highly favorable rates. Fed ethics guidelines prohibit a Fed governor from owning stock in a firm being considered for commercial status, but Friedman received a waiver and continued buying Goldman stock.
As for JP Morgan Chase, its chief executive officer, Jamie Dimon, was on the New York Fed board when the company got $29 billion in emergency loans. In addition, Dimon was able to secure approval from the New York Fed for an 18-month exemption for his firm from risk-based leverage and capital requirements, as well as removal of certain high-risk investments on Bear Stearns' balance sheet before JP Morgan Chase's acquisition of the troubled investment bank.
It is not necessary to agree with Paul's demand that the Fed be abolished entirely to recognize the necessity for maximum transparency in its operations that is highlighted by these conflicts of interest exposed by GAO. As presently structured, the Fed operates with virtually no oversight by Congress or the president. Even if, as its defender claim, the Fed needs to be independent to accomplish its purpose of stabilizing the U.S. economy, greater transparency will help reassure Americans that the board is operating to benefit the entire country and not just a few insiders."
---------------
Link: http://washingtonexaminer.com/opinion/editorials/2011/10/apparent-conflicts-show-why-more-transparency-needed-fed
Transparency Needed
From Barrons Online:
______________________
No Way to Run a Central Bank
Two reports show that during the 2008 financial meltdown, regulators were taking advice from the regulated, who themselves were recipients of bailout largesse.
"When banking and investment wizards inadvertently blew up the financial system in 2008, the Federal Reserve Bank of New York required outside expertise on its triage team. And so it hired banking and investment wizards, including some who allegedly helped precipitate the devastating financial explosion, paying out $659.4 million across 103 contracts from 2008 through 2010. Among the hires were Goldman Sachs, Morgan Stanley, State Street and JPMorgan Chase -- all of which were recipients of the government's TARP, or Troubled Assets Relief Program funds. The 10 largest contracts awarded by the New York Fed represented 74% of the total amount. Eight of the largest contracts were awarded without competitive bidding.
Recipients of the 10 largest contracts were BlackRock (no bid); Morgan Stanley (no bid); Ernst & Young (no bid); Allianz's Pimco (no bid); law firm Davis Polk & Wardell (no bid); Wellington Management (no bid); State Street; JPMorgan (no bid); Goldman Sachs; and Morgan Stanley's EMC (no bid). Much of the contracted work was with American International Group, Bear Stearns, Citigroup and Bank of America; the no-bids were awarded to companies that were familiar with the innards of these troubled institutions. The New York Fed was lending the troubled institutions money and needed help to evaluate the value of the assets that they proffered as collateral....
By reading both audits head to footnote, I noticed things that apparently the GAO did not. Goldman Sachs and JPMorgan both got big contracts in 2008, when company officers were New York Fed directors. Without going into individual cases, the GAO makes a blanket statement that no directors had a say on any vendor contracts. Bully for that.
But from the outside looking in, the Fed looks sloppier than expected, no doubt owing to its insulation from oversight. A Dodd-Frank tweak, authorizing even broader GAO audits of the Federal Reserve System, might be the perfect pill."
--------------
Link: http://online.barrons.com/article/SB50001424052748703927304576637292951198616.html?mod=BOL_twm_col
______________________
No Way to Run a Central Bank
Two reports show that during the 2008 financial meltdown, regulators were taking advice from the regulated, who themselves were recipients of bailout largesse.
"When banking and investment wizards inadvertently blew up the financial system in 2008, the Federal Reserve Bank of New York required outside expertise on its triage team. And so it hired banking and investment wizards, including some who allegedly helped precipitate the devastating financial explosion, paying out $659.4 million across 103 contracts from 2008 through 2010. Among the hires were Goldman Sachs, Morgan Stanley, State Street and JPMorgan Chase -- all of which were recipients of the government's TARP, or Troubled Assets Relief Program funds. The 10 largest contracts awarded by the New York Fed represented 74% of the total amount. Eight of the largest contracts were awarded without competitive bidding.
Recipients of the 10 largest contracts were BlackRock (no bid); Morgan Stanley (no bid); Ernst & Young (no bid); Allianz's Pimco (no bid); law firm Davis Polk & Wardell (no bid); Wellington Management (no bid); State Street; JPMorgan (no bid); Goldman Sachs; and Morgan Stanley's EMC (no bid). Much of the contracted work was with American International Group, Bear Stearns, Citigroup and Bank of America; the no-bids were awarded to companies that were familiar with the innards of these troubled institutions. The New York Fed was lending the troubled institutions money and needed help to evaluate the value of the assets that they proffered as collateral....
By reading both audits head to footnote, I noticed things that apparently the GAO did not. Goldman Sachs and JPMorgan both got big contracts in 2008, when company officers were New York Fed directors. Without going into individual cases, the GAO makes a blanket statement that no directors had a say on any vendor contracts. Bully for that.
But from the outside looking in, the Fed looks sloppier than expected, no doubt owing to its insulation from oversight. A Dodd-Frank tweak, authorizing even broader GAO audits of the Federal Reserve System, might be the perfect pill."
--------------
Link: http://online.barrons.com/article/SB50001424052748703927304576637292951198616.html?mod=BOL_twm_col
Transparency Needed
From CNN:
__________________
GAO audit finds Federal Reserve bank boards lack transparency
"The Federal Reserve banks need to better prevent conflicts of interest, according to a new government report that highlights transparency issues with financial executives serving on the banks' boards.
All 12 reserve banks should more "clearly document the roles and responsibilities of the (board) directors," according to a Government Accountability Office (GAO) audit released Wednesday.
The report focuses on scenarios in which executives pose apparent conflicts of interest by serving on boards that regulate financial houses where they also have business relationships.
An example, it notes, occurred when then-chairman of the New York Fed's board of directors Stephen Friedman owned shares in the investment firm Goldman Sachs, but in September 2008 provided it and other banks billions of dollars in federal funding in response to the unfolding financial crisis.
Friedman was granted a waiver by the Federal Reserve Board in January 2009, the report said. But the board was unaware that he had purchased additional shares in Goldman Sachs through an automatic stock purchase program.
The former chairman, who resigned in May 2009, could not be immediately reached for comment.
The GAO, meanwhile, said that "without more public disclosure of governance arrangements, such as board of director bylaws and director eligibility and ethics policies, there may be continued concerns about Reserve Bank governance and the integrity of the Federal Reserve System.""
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Link: http://www.cnn.com/2011/10/20/us/gao-report-fed/index.html
Transparency Needed
From The Economic Populist, economicpopulist.org:
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GAO Audit of Federal Reserve Reveals Strong Conflicts of Interest
"The Government Accountability Office has completed their audit of the Federal Reserve. Guess what the GAO found? Conflicts of Interest. It seems the Banksters are sitting on the Federal Reserve board, supervising their own institutions. The fox is guarding the hen house in other words. One of the most damning GAO discoveries is the timeline of Goldman Sachs turning into a holding bank and a Goldman Sachs board of directors, Stephen Friedman, also serving as the New York Federal Reserve chair....
In other words, you have a NY Fed Chair, helping make sure his company, Goldman Sachs, has access to cheap money, which will guarantee a strong profit for Goldman Sachs and buying more stock in Goldman Sachs. Why this is watered down as a conflict of interest, instead of a criminal offense is beyond comprehension. And there are more.
You know G.E. CEO Jeffrey Immelt, sitting at the White House, as a jobs czar, all the while promoting offshore outsourcing, more foreign guest workers to displace U.S. citizen workers? How G.E. CEO Immelt loves China as an offshore outsourcing manufacturing destination? Seems while Immelt was sitting as a New York Federal Reserve director, G.E. magically got a new cheap money program (p. 39)...."
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Link: http://www.economicpopulist.org/content/gao-audit-federal-reserve-reveals-strong-conflicts-interest
_________________
GAO Audit of Federal Reserve Reveals Strong Conflicts of Interest
"The Government Accountability Office has completed their audit of the Federal Reserve. Guess what the GAO found? Conflicts of Interest. It seems the Banksters are sitting on the Federal Reserve board, supervising their own institutions. The fox is guarding the hen house in other words. One of the most damning GAO discoveries is the timeline of Goldman Sachs turning into a holding bank and a Goldman Sachs board of directors, Stephen Friedman, also serving as the New York Federal Reserve chair....
In other words, you have a NY Fed Chair, helping make sure his company, Goldman Sachs, has access to cheap money, which will guarantee a strong profit for Goldman Sachs and buying more stock in Goldman Sachs. Why this is watered down as a conflict of interest, instead of a criminal offense is beyond comprehension. And there are more.
You know G.E. CEO Jeffrey Immelt, sitting at the White House, as a jobs czar, all the while promoting offshore outsourcing, more foreign guest workers to displace U.S. citizen workers? How G.E. CEO Immelt loves China as an offshore outsourcing manufacturing destination? Seems while Immelt was sitting as a New York Federal Reserve director, G.E. magically got a new cheap money program (p. 39)...."
---------------
Link: http://www.economicpopulist.org/content/gao-audit-federal-reserve-reveals-strong-conflicts-interest
Monday, October 17, 2011
"Financial Geniuses" who OCCUPY THE MEDIA!
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The Austerity Myth: Federal Spending Up 5% This Year
from INVESTOR'S BUSINESS DAILY
When Republicans took control of the House in January, they pledged to make deep cuts in federal spending, and in April they succeeded in getting a bill advertised as cutting $38 billion from fiscal 2011's budget. Then in August, they pushed for a deal to cut another $2.4 trillion over the next decade.
Some analysts have blamed these spending cuts for this year's economic slowdown.
But data released by the Treasury Department on Friday show that, so far, there hasn't been any spending cuts at all.
In fact, in the first nine months of this year, federal spending was $120 billion higher than in the same period in 2010, the data show. That's an increase of almost 5%. And deficits during this time were $23.5 billion higher.
These spending hikes haven't stopped many analysts from claiming that the country is in an age of budget austerity, one that's hurting economic growth....
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Link: http://www.investors.com/NewsAndAnalysis/Article/588254/201110170805/The-Austerity-Myth-Federal-Spending-Up-5-This-Year.htm
- What do you do when so many are so wrong?
- "Austerity" is a problem....really?
- Who occupies the media?
- What should we say about those multitudes in the media who are mere mouthpieces repeating the cliches and partisan slants of pre-ordained experts?
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The Austerity Myth: Federal Spending Up 5% This Year
from INVESTOR'S BUSINESS DAILY
- Economist and New York Times columnist Paul Krugman argued in September that "the turn toward austerity (is) a major factor in our growth slowdown."
- Jared Bernstein, former chief economic adviser to Vice President Biden, wrote over the summer that "government spending cutbacks have been a large drag on growth in recent quarters and have led to sharp losses in state and local employment."
- A July article in USA Today ... claimed that "Already in 2011, softer government spending has sapped growth."
When Republicans took control of the House in January, they pledged to make deep cuts in federal spending, and in April they succeeded in getting a bill advertised as cutting $38 billion from fiscal 2011's budget. Then in August, they pushed for a deal to cut another $2.4 trillion over the next decade.
Some analysts have blamed these spending cuts for this year's economic slowdown.
But data released by the Treasury Department on Friday show that, so far, there hasn't been any spending cuts at all.
In fact, in the first nine months of this year, federal spending was $120 billion higher than in the same period in 2010, the data show. That's an increase of almost 5%. And deficits during this time were $23.5 billion higher.
These spending hikes haven't stopped many analysts from claiming that the country is in an age of budget austerity, one that's hurting economic growth....
_______________________________
Link: http://www.investors.com/NewsAndAnalysis/Article/588254/201110170805/The-Austerity-Myth-Federal-Spending-Up-5-This-Year.htm
Monday, October 10, 2011
Recession Nightmare: From Unemployed to Unemployable
From the FiscalTimes.com:
...The key question for policymakers is how this labor market is different.
... many economists are starting to fear that the U.S. may never return to the days of 5 percent or less unemployment. That’s because the long-term jobless are losing their skills and their employment connections, and are drifting further away from the labor force. The most effective policy in that case would be retraining for the unemployed and education geared toward growth industries, especially at a time when ever-greater global competition is reshaping the U.S. industry.
People are less likely to move from unemployment to employment the longer they are out of work. Of people who have been jobless for more than 12 months, only about 1 in 10 have returned to work, while about 90 percent have either remained unemployed or dropped out of the labor force, according to a Labor Dept. study.
Since the recession began, the labor force participation rate, defined as the percentage of the population aged 16 and over who are employed or seeking work, has fallen by the most in post-war history to levels not seen since the early 1980s.
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Link: http://www.thefiscaltimes.com/Columns/2011/10/10/Recession-Nightmare-From-Unemployed-to-Unemployable.aspx?p=1
...The key question for policymakers is how this labor market is different.
... many economists are starting to fear that the U.S. may never return to the days of 5 percent or less unemployment. That’s because the long-term jobless are losing their skills and their employment connections, and are drifting further away from the labor force. The most effective policy in that case would be retraining for the unemployed and education geared toward growth industries, especially at a time when ever-greater global competition is reshaping the U.S. industry.
People are less likely to move from unemployment to employment the longer they are out of work. Of people who have been jobless for more than 12 months, only about 1 in 10 have returned to work, while about 90 percent have either remained unemployed or dropped out of the labor force, according to a Labor Dept. study.
Since the recession began, the labor force participation rate, defined as the percentage of the population aged 16 and over who are employed or seeking work, has fallen by the most in post-war history to levels not seen since the early 1980s.
_____________________________
Link: http://www.thefiscaltimes.com/Columns/2011/10/10/Recession-Nightmare-From-Unemployed-to-Unemployable.aspx?p=1
U.S. Economy Tipping into Recession: Bad News
From the Economic Cycle Research Institute:
"Early last week, ECRI notified clients that the U.S. economy is indeed tipping into a new recession. And there’s nothing that policy makers can do to head it off.
ECRI’s recession call isn’t based on just one or two leading indexes, but on dozens of specialized leading indexes, including the U.S. Long Leading Index, which was the first to turn down – before the Arab Spring and Japanese earthquake – to be followed by downturns in the Weekly Leading Index and other shorter-leading indexes. In fact, the most reliable forward-looking indicators are now collectively behaving as they did on the cusp of full-blown recessions, not “soft landings.”
....A new recession isn’t simply a statistical event. It’s a vicious cycle that, once started, must run its course. Under certain circumstances, a drop in sales, for instance, lowers production, which results in declining employment and income, which in turn weakens sales further, all the while spreading like wildfire from industry to industry, region to region, and indicator to indicator. That’s what a recession is all about.
...So it comes as no surprise to us that, with the latest expansion only a couple of years old, we’re already facing a new recession. Actually, such short expansions are hardly unheard of. From 1799 to 1929, nearly 90% of U.S. expansions lasted three years or less, as did two of the three expansions between 1970 and 1981. In other words, such short expansions are unusual only with respect to recent decades.
It’s important to understand that recession doesn’t mean a bad economy – we’ve had that for years now. It means an economy that keeps worsening, because it’s locked into a vicious cycle. It means that the jobless rate, already above 9%, will go much higher, and the federal budget deficit, already above a trillion dollars, will soar.
Here’s what ECRI’s recession call really says: if you think this is a bad economy, you haven’t seen anything yet. And that has profound implications for both Main Street and Wall Street."
_____________________________________
Link: http://www.businesscycle.com/reports_indexes/reportsummarydetails/1091
"Early last week, ECRI notified clients that the U.S. economy is indeed tipping into a new recession. And there’s nothing that policy makers can do to head it off.
ECRI’s recession call isn’t based on just one or two leading indexes, but on dozens of specialized leading indexes, including the U.S. Long Leading Index, which was the first to turn down – before the Arab Spring and Japanese earthquake – to be followed by downturns in the Weekly Leading Index and other shorter-leading indexes. In fact, the most reliable forward-looking indicators are now collectively behaving as they did on the cusp of full-blown recessions, not “soft landings.”
....A new recession isn’t simply a statistical event. It’s a vicious cycle that, once started, must run its course. Under certain circumstances, a drop in sales, for instance, lowers production, which results in declining employment and income, which in turn weakens sales further, all the while spreading like wildfire from industry to industry, region to region, and indicator to indicator. That’s what a recession is all about.
...So it comes as no surprise to us that, with the latest expansion only a couple of years old, we’re already facing a new recession. Actually, such short expansions are hardly unheard of. From 1799 to 1929, nearly 90% of U.S. expansions lasted three years or less, as did two of the three expansions between 1970 and 1981. In other words, such short expansions are unusual only with respect to recent decades.
It’s important to understand that recession doesn’t mean a bad economy – we’ve had that for years now. It means an economy that keeps worsening, because it’s locked into a vicious cycle. It means that the jobless rate, already above 9%, will go much higher, and the federal budget deficit, already above a trillion dollars, will soar.
Here’s what ECRI’s recession call really says: if you think this is a bad economy, you haven’t seen anything yet. And that has profound implications for both Main Street and Wall Street."
_____________________________________
Link: http://www.businesscycle.com/reports_indexes/reportsummarydetails/1091
New York Times headline: "Recession Officially Over, U.S. Incomes Kept Falling"
From the New York Times:
In a grim sign of the enduring nature of the economic slump, household income declined more in the two years after the recession ended than it did during the recession itself, new research has found.
Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent...
During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.
[PB: This means median household income has fallen twice as much as during the "recession." This is frightening.]
The finding helps explain why Americans’ attitudes toward the economy, the country’s direction and its political leaders have continued to sour even as the economy has been growing....
One reason pay has stagnated is that many people who lost their jobs in the recession — and remained out of work for months — have taken pay cuts in order to be hired again. In a separate study, Henry S. Farber, an economics professor at Princeton, found that people who lost jobs in the recession and later found work again made an average of 17.5 percent less than they had in their old jobs.
“As a labor economist, I do not think the recession has ended,” Mr. Farber said. “Job losers are having more trouble than ever before finding full-time jobs.”
Mr. Farber added that this downturn was “fundamentally different” from most previous ones. Historically, other economists say, financial crises and debt-caused bubbles have led to deeper, more protracted downturns.
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Link: http://www.nytimes.com/2011/10/10/us/recession-officially-over-us-incomes-kept-falling.html
In a grim sign of the enduring nature of the economic slump, household income declined more in the two years after the recession ended than it did during the recession itself, new research has found.
Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent...
During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.
[PB: This means median household income has fallen twice as much as during the "recession." This is frightening.]
The finding helps explain why Americans’ attitudes toward the economy, the country’s direction and its political leaders have continued to sour even as the economy has been growing....
One reason pay has stagnated is that many people who lost their jobs in the recession — and remained out of work for months — have taken pay cuts in order to be hired again. In a separate study, Henry S. Farber, an economics professor at Princeton, found that people who lost jobs in the recession and later found work again made an average of 17.5 percent less than they had in their old jobs.
“As a labor economist, I do not think the recession has ended,” Mr. Farber said. “Job losers are having more trouble than ever before finding full-time jobs.”
Mr. Farber added that this downturn was “fundamentally different” from most previous ones. Historically, other economists say, financial crises and debt-caused bubbles have led to deeper, more protracted downturns.
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Link: http://www.nytimes.com/2011/10/10/us/recession-officially-over-us-incomes-kept-falling.html
Saturday, October 8, 2011
Baseball: 3 Top Payrolls Gone!
Of the remaining 4 teams in Major League Baseball, ESPN blogger Howard Bryant tweets on Twitter about Payroll and Playoffs:
"DET top payroll team left, 10th @ $105.7m.
STL 11th @ $105.4.
TEX 13th @ $92.2m.
MIL 17th @$85.4m. 1-2-3:
NYY $201.6, PHI $172.9, BOS $161.4"
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What does this mean? High costs guarantee nothing. Big names, marketing muscle and media attention can mean nothing. This also applies to investment costs. Like Payrolls during this season's MLB Playoffs, costs paid to advisers and mutual funds do nothing but take your money.
There are high quality, low cost ETFs that can reduce your total investment costs by up to 90% for the rest of your life. There are a select number of these ETFs that are so good you can keep them for life.
Learn what this means in real dollars. You can save thousands, hundreds of thousands, and possibly millions of dollars over the rest of life by keeping the costs you no longer have to pay! Uncover how much of your money is lost over time to costs, especially costs hidden in products like mutual funds.
Once you measure the savings in actual dollars, do you think you might want to keep more of your money instead of wasting it?
Patrick Broderick
"DET top payroll team left, 10th @ $105.7m.
STL 11th @ $105.4.
TEX 13th @ $92.2m.
MIL 17th @$85.4m. 1-2-3:
NYY $201.6, PHI $172.9, BOS $161.4"
_____________________________
What does this mean? High costs guarantee nothing. Big names, marketing muscle and media attention can mean nothing. This also applies to investment costs. Like Payrolls during this season's MLB Playoffs, costs paid to advisers and mutual funds do nothing but take your money.
There are high quality, low cost ETFs that can reduce your total investment costs by up to 90% for the rest of your life. There are a select number of these ETFs that are so good you can keep them for life.
Learn what this means in real dollars. You can save thousands, hundreds of thousands, and possibly millions of dollars over the rest of life by keeping the costs you no longer have to pay! Uncover how much of your money is lost over time to costs, especially costs hidden in products like mutual funds.
Once you measure the savings in actual dollars, do you think you might want to keep more of your money instead of wasting it?
Patrick Broderick
Tuesday, October 4, 2011
WSJ: Hedge Funds Pay Top Dollar for Washington Insider Information
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Good work - if you can get it. Washington is so huge, and the money that flows through it so enormous, insiders become "experts" and profit from it. What some promote as "public service" is little more than a lifetime of profit from public connections and insider status.
The most revealing quotes from the article:
"I have information from doing my day job as a lobbyist," explains one lobbyist. "That information has value on Wall Street. So I sell it."
Securities laws don't, however, bar most political insiders from sharing nonpublic information about government affairs.
"The ultimate [investing edge] is insider information, so you want to get as close to the line as possible without crossing the line" ... "That's why Washington is so interesting—because there is no line."
Because there is no line.
-----------------------------------------
From today's Wall Street Journal:
WASHINGTON—At a breakfast fund-raiser last year at the Liaison Capitol Hill hotel, former lobbyist Paul Equale pulled up a chair next to Sen. Richard Durbin. As they chatted, the Illinois Democrat told him about a recent breakthrough in his efforts to push through a bill to cap debit-card fees.
In Washington, such shop talk between political insiders is so routine that it hardly warrants mention. For Mr. Equale, however, it yields intelligence that fetches good money on Wall Street.
Mr. Equale works as a consultant ... which connects Wall Street investors hungry for information with Washington insiders ... [the Hedge] funds subsequently traded in the stocks of Visa Inc. and MasterCard Inc., according to regulatory filings. It is unclear what role Mr. Equale's report played in their investment decisions.
Information about what's happening in Washington is at a premium on Wall Street these days. Government regulatory changes and economic initiatives following the 2008 financial crisis have affected numerous industries, and even minor shifts in policy can be of interest to hedge-fund managers. When the health-care bill was snaking its way through Congress in 2009, for example, hedge funds wanted to know about every twist and turn. They followed the debt-ceiling showdown over the summer just as closely.
Keen for information about what's happening behind the scenes, hedge funds have been drilling ever deeper into the government. Thousands of political insiders are being paid by hedge funds, private-equity firms and other big investors.
Former Federal Reserve Chairman Alan Greenspan, for example, is an adviser to Paulson & Co., and former Treasury Secretary John Snow works for Cerberus Capital Management. SAC Capital Advisors and Eton Park Capital Management have hired former congressional staffers....
----------
Link: http://online.wsj.com/article/SB10001424053111904070604576514791591319306
Good work - if you can get it. Washington is so huge, and the money that flows through it so enormous, insiders become "experts" and profit from it. What some promote as "public service" is little more than a lifetime of profit from public connections and insider status.
The most revealing quotes from the article:
"I have information from doing my day job as a lobbyist," explains one lobbyist. "That information has value on Wall Street. So I sell it."
Securities laws don't, however, bar most political insiders from sharing nonpublic information about government affairs.
"The ultimate [investing edge] is insider information, so you want to get as close to the line as possible without crossing the line" ... "That's why Washington is so interesting—because there is no line."
Because there is no line.
-----------------------------------------
From today's Wall Street Journal:
WASHINGTON—At a breakfast fund-raiser last year at the Liaison Capitol Hill hotel, former lobbyist Paul Equale pulled up a chair next to Sen. Richard Durbin. As they chatted, the Illinois Democrat told him about a recent breakthrough in his efforts to push through a bill to cap debit-card fees.
In Washington, such shop talk between political insiders is so routine that it hardly warrants mention. For Mr. Equale, however, it yields intelligence that fetches good money on Wall Street.
Mr. Equale works as a consultant ... which connects Wall Street investors hungry for information with Washington insiders ... [the Hedge] funds subsequently traded in the stocks of Visa Inc. and MasterCard Inc., according to regulatory filings. It is unclear what role Mr. Equale's report played in their investment decisions.
Information about what's happening in Washington is at a premium on Wall Street these days. Government regulatory changes and economic initiatives following the 2008 financial crisis have affected numerous industries, and even minor shifts in policy can be of interest to hedge-fund managers. When the health-care bill was snaking its way through Congress in 2009, for example, hedge funds wanted to know about every twist and turn. They followed the debt-ceiling showdown over the summer just as closely.
Keen for information about what's happening behind the scenes, hedge funds have been drilling ever deeper into the government. Thousands of political insiders are being paid by hedge funds, private-equity firms and other big investors.
Former Federal Reserve Chairman Alan Greenspan, for example, is an adviser to Paulson & Co., and former Treasury Secretary John Snow works for Cerberus Capital Management. SAC Capital Advisors and Eton Park Capital Management have hired former congressional staffers....
----------
Link: http://online.wsj.com/article/SB10001424053111904070604576514791591319306
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