Nouriel Roubini's Global EconoMonitor

Asset Price Co-Movements and the Dollar Carry Trade

The ongoing dollar carry trade has recently come to the forefront of the international policy debate (Roubini, 2009). Capital inflows to emerging market countries have put pressures on some currencies, and authorities have responded by slowing the pace of appreciation, in some cases by capital controls. This short article uses a GARCH framework to examine the co-movement of the U.S. dollar with a number of key financial asset prices in recent years.

After the Lehman Brothers collapse in September 2008, volatility spilled over into the foreign currency markets with the carry trades starting to rapidly unwind, whereby this breakdown was reflected by the implied volatilities of major emerging market (EM) currencies. High-yielding and previous investment currencies saw large depreciations against the U.S. Dollar, while funding currencies such as the Japanese yen benefited by a repatriation of funds into Japan. There was a scramble for U.S. dollars, which was reflected in the higher volatility of the Euro-U.S. dollar swap rates. Relatedly, during the crisis there has been increasing divergence from the assumption of covered interest rate parity (CIRP).[1]

With risk appetite rebounding in recent months, the U.S. dollar has depreciated as safe-haven flows have unwound. With low U.S. interest rates investors have increasingly borrowed in U.S. dollars and invested these proceeds in higher-yielding assets especially in EM economies. The capital inflows have put pressures on some currencies, and authorities have responded by slowing the pace of appreciation by accumulating reserves, and in some cases by capital controls. For instance, figure 1 illustrates the strong appreciation of currencies against the U.S. dollar in Asia and especially Latin America after the low point in March 2009.

The current situation bears resemblance to the Japanese experience from 2005 onwards. With declining risk premiums around the world and Japanese interest rates near zero under the quantitative easing policy of the Bank of Japan, Japanese domestic investors were increasingly investing abroad (as evidenced by soaring Japanese holdings of foreign assets) to seek higher returns, and at the same time, foreign investors started to borrow in Japanese Yen to fund higher- yielding currencies (IMF, 2006).

This short article uses a GARCH framework (see also Frank et al, 2008) to examine the co-movement of the U.S. Dollar with a number of key financial asset prices in recent years. In particular, the Dynamic Conditional Correlation (DCC) GARCH model by Engle (2002) is adopted since standard correlations are potentially biased when examining co-movements and spillover between asset prices especially in the presence of systemic risks and high volatilities (Forbes and Rigobon, 2002).[2]

Figure 1: EM- Currency Markets


Source: IMF

The results (figure 2) indicate that an index for the U.S. dollar has seen an increased negative co-movement with major asset price classes in recent months (here the MSCI Emerging Market index, the EMBI+ bond spread, S&P 500 as well as oil prices). For example, the negative co-movement between the U.S. dollar and oil prices is almost at its highest since the beginning of 2006 with -0.5. Jen (2009) recently provided a number of reasons why the correlation between the dollar and crude oil prices has been so negative.[3]

While the increased co-movement of the U.S. dollar with a range of risky assets does not provide any evidence for the dollar carry trade per se, the fact that the correlations have almost reached the highest magnitude since the beginning of the sample period in 2006 for all the asset classes in figure 2 does suggest that a dollar depreciation has gone hand in hand with a sharp appreciation of higher-yielding emerging market asset classes. This is consistent with a story whereby the unwinding of safe-haven flows has significantly led to the rebound of risky asset classes, and the U.S. dollar, bolstered by U.S. quantitative easing and low interest rates, could have increasingly served as a funding currency. In practice, it is very difficult to document the extent and strength of the dollar carry trade given data limitations so more research is surely needed in order to obtain a better understanding of these recent developments.

Figure 2: Implied DCC GARCH Correlations


Source: IMF Estimates

Note: The views expressed herein are those of the author and should not be attributed to the IMF, its Executive Board, or its management.


Engle, R. 2002, “Dynamic Conditional Correlation: A Simple Class of Multivariate Generalized Autoregressive Conditional Heteroskedasticity Models,” Journal of Business & Economic Statistics, Vol. 20, pp. 339–50.

Forbes, K., and R. Rigobon, 2002, “No Contagion, Only Interdependence: Measuring Stock Market Co-movements,” Journal of Finance, Vol. 57, No. 5, pp. 2223–61.

Frank, Nathaniel, Brenda González-Hermosillo, and Heiko Hesse, 2008, “Transmission of Liquidity Shocks: Evidence from the 2007 Subprime Crisis,” IMF Working Paper 08/200 (Washington: International Monetary Fund).

International Monetary Fund, 2006, Global Financial Stability Report. World Economic and Financial Surveys (Washington, September).

Jen, Stephen L., 2009, “On the Link between the Dollar and Crude Oil,” BlueGold Capital Management LLP (November 20, 2009).

Roubini, Nouriel, 2009, “Mother of all carry trades faces an inevitable bust,” Comment in Financial Times, November 2, 2009.

[1] This relationship postulates that the currency forward premium equals the interest rate differentials of the home and foreign interest rate, such that a violation would imply possible arbitrage opportunities. The daily deviations from the CIRP jumped at the time of the Bear Stearns rescue, and then completely broke down for various EM currencies after Lehman’s bankruptcy. 
[2] The DCC model allows for heteroskedasticity of the data and a time-varying correlation in the conditional variance.
[3] On oil prices driving the dollar, Jen (2009) argues that petrodollar recycling could have become less dollar friendly, there are different central bank responses to oil price shocks and high oil prices hurt the U.S. current account deficit. In contrast for possible reasons for the dollar driving oil prices, a weak dollar could be increasing demand for energy products especially in Asia, and institutional investors could be using commodities as a separate asset class (as anti-dollars). The increased negative correlation could also be caused by a common factor.         

Opinions and comments on RGE EconoMonitors do not necessarily reflect the views of Roubini Global Economics, LLC, which encourages a free-ranging debate among its own analysts and our EconoMonitor community. RGE takes no responsibility for verifying the accuracy of any opinions expressed by outside contributors. We encourage cross-linking but must insist that no forwarding, reprinting, republication or any other redistribution of RGE content is permissible without expressed consent of RGE.    

407 Responses to “Asset Price Co-Movements and the Dollar Carry Trade”

Regan LinDecember 3rd, 2009 at 10:29 pm

Since most emerging crisis stem from capital inflows, should these emerging countries receiving these capital be wary once dollar interest rate increases. This is exactly what happen to Mexico in 1994.

Octavio RichettaDecember 4th, 2009 at 3:34 pm

More on the BLS report:Something I picked up this morning within 5 minutes of the release: and stock bulls cheered this morning’s better-than-expected November employment report. But was the data as good as it seemed? Consider the following:Temporary jobsCould the nine-month rally in share prices and the positive spin pouring out of Wall Street and Washington have encouraged some owners and managers, who are seeing little direct evidence of rebound in the economy, to acquire what might be described as a labor call option — that is, temporary staff (a key factor in the overall increase)?Otherwise, temporary employees accounted for 52,400 of the hefty 86,000 jump in the professional and business services category. Might this reflect the fact that firms are temporarily taking on accountants, lawyers, and others who can help them further reduce costs (e.g., labor), restructure operations, and maybe even prepare for bankruptcy?…

Octavio RichettaDecember 4th, 2009 at 3:36 pm

More!CHART OF THE DAY: Depressed Americans Quit The Labor Force don’t be mistaken, I am not trying to do away with the fact that the employment situation though negative, is slowly crawling back from the bottom….

11b40December 4th, 2009 at 5:53 pm

Instead of BLS numbers they just be called BS numbers. When the question is, who do you trust – Trim Tabs or the BLS?, from where I sit, it’s Trim Tabs every time. The aggregate income/wealth destruction is staggering, hence the problems the state and municipal govts face with tax revenue shortfalls. One thing rarely mentioned and that is not measured is the huge number of small bussiness owners who have either stopped paying themselves, or taken drastic reductions in income, so they may keep others working and save their businesses. Everyday, more of them lose.Independent Contractor

MM CADecember 4th, 2009 at 7:11 pm

Totally agree Independent contractor…todays Jobs/unemployment numbers are cooked. No way job loss has slowed. Warn data says otherwise and so do Forclosures. Wait until end of January and look at job loss that will occur from all the Holiday 6 week temp jobs that go away. IMO they will continue to cook the numbers for the forseeable future… We’ve been lied to about so mnay things the past few years, this is no different. Create the illusuion things are better and pray and hope they get better is thier motto, all the while making sure Wall street and the PTB get thier hands on as much of middle class wealth as possible.The Good Jobs Data Was All Temporary Workers And The Public SectorMichael Panzner|Dec. 4, 2009, 4:12 PM(This post originally appeared on the author’s blog.)Economists and stock bulls cheered this morning’s better-than-expected November employment report. But was the data as good as it seemed? Consider the following:Temporary jobsCould the nine-month rally in share prices and the positive spin pouring out of Wall Street and Washington have encouraged some owners and managers, who are seeing little direct evidence of rebound in the economy, to acquire what might be described as a labor call option — that is, temporary staff (a key factor in the overall increase)?Otherwise, temporary employees accounted for 52,400 of the hefty 86,000 jump in the professional and business services category. Might this reflect the fact that firms are temporarily taking on accountants, lawyers, and others who can help them further reduce costs (e.g., labor), restructure operations, and maybe even prepare for bankruptcy?Long-term unemployedToday’s employment report revealed that the labor force participation rate dropped to 65%, it’s lowest level in more than two decades; the number of Americans who are unemployed over 26 weeks fell to a record 3.8% of the civilian workforce; and, the “underemployment” ratio improved only marginally, to 17.2%.Could this set of statistics be interpreted as a sign that employers don’t see enough good opportunities to justify taking risks as far as hiring is concerned? In other words, are they are sticking with the safe option — the job market’s “known quantities” (e.g., those who are currently employed or who haven’t been out of work too long)?Category trendsWhile much of the focus was on the overall number, the breakdown by category was less reassuring. Those areas of the economy that would naturally be associated with a sustainable rebound in activity, including manufacturing, trade, transportation and utilities, and construction, are still hemorrhaging jobs.Moreover, recent developments suggest that two categories which did see respectable gains, education and health care, face major headwinds in the period ahead. With municipal budgets under growing strain, school budgets — and education-related hiring — have nowhere to go but down. And with all eyes now focused on the rising cost of health care, the pressure to reign in spending will only increase.

SoftwarengineerDecember 5th, 2009 at 12:30 pm

What is the Federal Income Tax Taken in for 2009?2008 showed a 44% drop from 2007, I can only imagine how big 2009’s drop from 2008 will be, with this “snow-balling” unemployment/underemployment paying in hardly no federal income tax.I also hear the handful of unemployed finding work are taking 44% cuts in pay on the avg.Heal Care Reform= $40K Doctors, $20K RNs and $10K LPNs….especially if our broke healthcare system takes on masses of untaxed poor [with Medicare/Medicaid butcher-axing], requiring more lower paid healthcare workers?Anyone have an idea how we’ll pay for it without slashing salaries?

ArmchairDecember 6th, 2009 at 2:56 pm

Your equation: HCR = low salaries for health care workers could apply whether there is health care or not.Was it Aentna that stated it will drop 650,000 insureds in the coming year? Why is that? Probably because they have lost a lot of business with all of the layoffs. The health care industry is doing a fine job of destroying its financial viability, and it is doing so without reform.

GuestDecember 6th, 2009 at 4:06 pm

I think that this is a perfect demonstration of economies of scale in reverse. There’s a downward spiral, and nothing to change this course: it’s contraction… where is stops is hard to say, other than someday most of everything we know about will have disappeared/shriveled away (due to it being energy negative).

The AlarmistDecember 7th, 2009 at 5:08 am

Not quite … but it would mean $140k Doctors, $60k RNs and $50k LPN’s. It would also mean that wages for everyone else would stagnate as the new taxes … er, I mean premiums, would depress wages for years to come.

SoftwarengineerDecember 7th, 2009 at 10:17 am

Hi AlarmistI was just referring to gross pay our net pay reduces from with witholding taxes, etc, without the 40-50% add-ons for direct worker agency contributions, for things like social security and medicare; that we’ll be lucky to get or live long enough to partially cash in, anyway.Albeit, you could add in the approx $6000/yr if there’s paid family option medical though.

CaponeDecember 4th, 2009 at 8:12 pm

Gold down 4%, dollar index up 1.5% and S&P down how much? Up .5% of course… PPT did a fine job today of supporting the S&P 500. Remove all fundamental and technical analysis from the equation. Know what the PPT marching orders are and you will know the future. In the short term to long term, it is always their tape to paint. I will always be amazed that soo many people hang their professional hats on being financial professionals analyzing equities when the working group calls the shots each and every day… They put on a theatrical performance of a market while we pull our hair out (me literally today) trying to match technicals or fundamentals to our bets I mean investments. Soo many others spend their entire careers in the financial media covering a completely scripted controlled market place. It is a financial fairy tale. Speaking of those, anyone heard or seen from Goldilocks?

Octavio RichettaDecember 5th, 2009 at 6:12 am

IMHO, money managers will try hard to make december another positive month. The only way December will turn negative is if we get a S^^%t load of really bad news. Still, I will remain hunkered down for the rest of the year.

FEDupDecember 5th, 2009 at 9:43 am

yes, Friday was another academy award winning performance by Mr. schizo market defying all fundamental and technical measures. Talk about worse odds than Vegas, the market casino keeps on paying off big bets for those “in the know”. A racquet that somehow becomes even more manipulated over time-crisis or no crisis, more regulation, less regulation. Yet Washington always seems too busy to enact real measures addressing fairplay, equality and transparency-sad, oh so sad.

PeteCADecember 5th, 2009 at 10:25 am

We’ve seen all of this play out before. Endless risk taking and market pumping. The central banks allow it – because they think it’s good for the image of a “recovering economy”. But the truth is that they have little influence on consumer finances. The Wall St banks carry out the orders of their masters … quite happy in the knowledge that they will profit both from the market going up, and from any subsequent burst in the asset bubble. The entire set of behaviors is inexcusable – as are the actions of Congress for allowing these people to destroy the US economy.The real issue is not the stock market. The real issue is the credit markets – just as it has always been. We have spiraling debts in a number of countries, and the possibility of a genuine debt crisis in 2010.PeteCA

Octavio RichettaDecember 5th, 2009 at 1:09 pm

“The real issue is the credit markets – just as it has always been. We have spiraling debts in a number of countries, and the possibility of a genuine debt crisis in 2010.”Good observation and, possibly the reason that, just as before, equity markets hold up until the very very late. Remember the debt crisis started the summer of 07 and the stock market held up pretty well until October of 08.

Pecos BankerDecember 6th, 2009 at 3:21 am

The real issue is Congress. That is the only thing we have even the remotest possibility of doing something about. Everything else is out of our hands. I still think we should throw out the good and the bad, otherwise we are just equivocating. One person’s good is another persons bad.There should be a million person march on Washington to protest lobbying and campaign finance. It is up to the people to reign in this beast. Enough already with self-regulation.

GuestDecember 6th, 2009 at 5:24 am

While I’d like to toss out all the bums too, this isn’t going to cause people, people who are massively in debt, to be able to spend the economy “back to health,” nor to wipe out the debt (which really only happens in lockstep with a whole lot of violence). NOTE: closing and locking the doors once the bums have been thrown out would be even better.

blury eye less one...December 4th, 2009 at 8:36 pm

speaking of war, war ming and piplines…check out this interview. or not as it probablymakes no difference with regards broad outcomes. etc.anyway, should you be curious…..Health Styles Friday December 4, 2009 1:00pmPublic Affairs. says ” u.s., get out!” let the peopleof afganistan deal with their own internal stuff.this from someone who was born there, grew there,lives there, loves there, governed there,malaya joya, “a women among warlords”.9/11 has nothing to do with this, tapi pipelinedoes, imperialism does, collapsing ponzi financialsystem does.. PipelineFrom Wikipedia,The Trans-Afghanistan Pipeline (TAP or TAPI) is a proposed natural gas pipeline being developed by the Asian Development Bank. The pipeline will transport Caspian Sea natural gas from Turkmenistan through Afghanistan into Pakistan and then to India. The abbreviation comes from the first letters of those countries. Proponents of the project see it as a modern continuation of the Silk Road. The Afghan government is expected to receive 8% of the project’s revenue.* 1 History* 2 Route* 3 Technical features* 4 See also* 5 References[edit] HistoryThe original project started in March 1995 when an inaugural memorandum of understanding between the governments of Turkmenistan and Pakistan for a pipeline project was signed. In August 1996, the Central Asia Gas Pipeline, Ltd. (CentGas) consortium for construction of a pipeline, led by U.S. oil company, Unocal was formed. On 27 October 1997, CentGas was incorporated in formal signing ceremonies in Ashgabat, Turkmenistan by several international oil companies along with the Government of Turkmenistan. In January 1998, the Taliban, selecting CentGas over Argentinian competitor Bridas Corporation, signed an agreement that allowed the proposed project to proceed. In June 1998, Russian Gazprom relinquished its 10% stake in the project. Unocal withdrew from the consortium on 8 December 1998.The new deal on the pipeline was signed on 27 December 2002 by the leaders of Turkmenistan, Afghanistan and Pakistan.[1] In 2005, the Asian Development Bank submitted the final version of a feasibility study designed by British company Penspen. Due to increasing instability, the project has essentially stalled; construction of the Turkmen part was supposed to start in 2006, but the overall feasibility is questionable since the southern part of the Afghan section runs through territory which continues to be under de facto Taliban control.On 24 April 2008, Pakistan, India and Afghanistan signed a framework agreement to buy natural gas from Turkmenistan.[2][edit] RouteThe 1,680 kilometres (1,040 mi) pipeline will run from the Dauletabad gas field to Afghanistan. From there TAPI will be constructed alongside the highway running from Herat to Kandahar, and then via Quetta and Multan in Pakistan. The final destination of the pipeline will be the Indian town of Fazilka, near the border between Pakistan and India.[3][edit] Technical featuresThe pipeline will be 1,420 millimetres (56 in) in diameter with a working pressure of 100 atm.[3] The initial capacity will be 27 billion cubic meter (bcm) of natural gas annually of which 2 bcm will be provided to Afghanistan and 12.5 bcm to each Pakistan and India. Later the capacity will increase to 33 bcm.[4] Six compressor stations are to be constructed along the pipeline.[3] The pipeline is expected to be operational by 2014.[5]The cost of the pipeline is estimated cost at US$7.6 billion.[2] The project is to be financed by the Asian Development Bank.[6][edit] See also* Zalmay Khalilzad* CentGas* Transport in Afghanistan* Trans-Caspian Gas Pipeline* Baku-Tbilisi-Ceyhan pipeline (BTC)* South Caucasus Pipeline* Afghanistan Oil Pipeline* Enron’s Dabhol Power Company…

MandarinDecember 7th, 2009 at 7:40 pm

This pipeline has been in the works since the late 80’s. While I’m sure certain parties would like it built, don’t neglect the other factors in the Great Game: Afghanistan under US control adds leverage to play off India and Pakistan; adds to the encirclement of Iran from the East as Iraq does in the West; blocks Russian access to India and the Indian Ocena; provides a seaport (being developed by the Chinese) for offloading Persian Gulf oil and last but not least, offers control of the world opium trade.

GuestDecember 5th, 2009 at 4:03 pm

G,zzzZZZZZZZZZZZZZZZ……….UUUUUUUuuuuuuuuHHHHhhhhHhH.zzzzzzzZZZZZZZZZZZZZ……uuuuuuuhhhhhhhHHHHHHHHHH.was that you on the answering machine?

CaponeDecember 5th, 2009 at 12:32 pm

President Working Group on Equity Markets Outlook for 2010December 5, 2009Equity prices will remain tied completely to what is in our interest. Rallies, corrections and periods of range bound trading will continue to be decided at our discretion. Price will fluctuate as dictated by our presence in the S&P 500 futures market. When we buy the futures at key technical levels or choose not to, the masses of institutions and hedge funds will follow the lead of the S&P 500 future taking the market where we command. Market participants have no other choice. Many financial institutions trade the basket of stocks in the S & P 500 versus the future so there is a built in real-time mechanism in place for the futures to be followed immediately. This is highly effective and we are very good at managing the market in this way.Valuations, growth prospects and technical chart analysis shall remain a complete and total after thought to what we have done. It has been this way since 1987 and the stimulus bill assured it shall be this way for years to come. We appreciate the entire world’s financial media for lending their personal integrity via the various media networks to what we offer the masses of investors as a real market. We appreciate the universities’ efforts to educate and create actors for our production. All are well versed in subject matter required to describe our actions as something believable and real to all of the people who both actively and passively participate in our market.We would like to address at this time concerns some have raised related to the fairness of allowing Goldman Sachs, our chief operator, the privilege of knowing where the market will move on a regular basis. Even though Goldman Sachs actively trades equities with substantial leverage, maintains their status as a for-profit non-government entity and is about to pay out their employees several billion in bonuses, we would like to re-emphasize that the work they do is in the interest of humanity. In fact, it is the work of god. In closing, we would like to remind all The President’s Working Group on Financial Markets is the financial god. Goldman Sachs is the chosen one, the financial christ. They are one in the same. Here to rule benevolently over all investors.Cheers PPT and Goldman Sachs! Well done! Merry Christmas and Happy Hanukah! Please consider taking your parties of 12 or 13 or less in front of the computer to make substantial contributions to all of the food banks in the United States. Americans are starving this holiday season yah? While you are at it, set aside a couple of commodity / food contracts for physical delivery to the same food banks over each of the next 5 years. Make sense? If not for your own personal satisfaction as human beings, then as a nice PR idea for your organization!Here are a few links to get you started. Food Depository1285 Avenue of the Americas, New York, NY(212) 554-4422‎Please feel free to pass this along folks.

PeterJBDecember 5th, 2009 at 4:54 pm

Preparing ones-self for the future by practising sentientism;]> bear investor and Gloom, Boom and Doom Report editor Marc Faber says Dubai World’s debt problems are just the tip of the iceberg, and suggests investors will be better off not buying U.S. government bonds.“In the context of all the default that will happen in the world, it (Dubai) is not a big thing,” Faber told Bloomberg. “But it’s a reminder that governments can default.”The 3.3 percent investors currently earn on U.S. bonds will likely be lost to dollar depreciation over time, Faber notes. Moreover, if deflation occurs, “much more money will be printed” and stimulus packages will cause government debt to rise.“Eventually, I suppose a lot of governments will be bust, including the U.S.,” Faber says. “Nothing has been resolved, it’s just being postponed…The ultimate crisis will not just bankrupt the banking system and financial as happened in 2008, it will bankrupt governments.”“I think the upside potential for U.S. bonds is extremely limited.”Ho hum

GuestDecember 5th, 2009 at 7:26 pm

Obama and Orszag continue to say they understand the deficit is problematic.So will they allow deflation to rule?From the article link below.“My credibility is on the line in the document that we put out,” Orszag told business leaders in November, referring to the 2011 budget.In public, Orszag offers assurances — but no specifics — that Obama will honor a Feb. 23 pledge to halve the fiscal 2009 deficit by 2012.“The adverse consequences of sustained large budget deficits may well be far larger and occur more suddenly than conventional analysis suggests,” Orszag said in Senate testimony in 2006.Once Obama settles on a budget, Orszag will become a chief salesman before Congress. He may fall back on a reservoir of goodwill built up while at the CBO.“He has unusual respect on the Hill among those who do fiscal policy,” says Senator Judd Gregg of New Hampshire, the Budget Committee’s top-ranking Republican.Orszag proved his numbers were credible at the CBO, says Representative Paul Ryan, the ranking Republican on the House Budget Committee. Orszag also showed his independence there, Ryan says, citing Orszag’s decision to treat carbon-emission caps as a tax on business rather than revenue-neutral regulation.“There was pressure from his party to do otherwise,” Ryan says.Taming the nation’s looming budget deficits is proving a consummate test for Orszag and the problem-solving skills instilled by his mathematician father.“I am not underestimating how difficult it will be,” Orszag says. “But it’s crucial.”

GuestDecember 6th, 2009 at 3:10 am

“In the context of all the default that will happen in the world, it (Dubai) is not a big thing,” Faber told Bloomberg. “But it’s a reminder that governments can default.”Hm… I’d heard that it wasn’t Dubai itself, but Dubai World, which is not (supposedly) part of the Dubai government. Of course the government has a stake here, but it isn’t clear that it’s the outright owner of this project/debt. So, is Dubai World a GSE or not? If not, then Faber is (almost misleadingly) wrong.

PeterJBDecember 5th, 2009 at 5:08 pm

Humour, laughter, spin and downright stupidity where nothing is more stupid than stupid er, “leadership”: (“… One Hell of a Job… “)The really serious question we face is, CAN WE AMERICANS STOP BARACK AND THE AMERICAN SECRET POLICE AND MILITARY FROM DESTROYING US IN THE NAME OF SAVING US, VERY MUCH AS FEMA DROWNED MUCH OF NEW ORLEANS IN THE NAME OF SAVING THEM? YES, WE CAN – IF AMERICANS WILL LEARN THE MOST SIMPLE FACTS ABOUT THESE ANCIENT NATIONS AND REMEMBER THAT THEY WERE OUR FRIENDS BEFORE OUR GOVERNMENT TRANSFORMED THEM INTO OUR ENEMIES.”People in the West are dreaming. If you ask anyone in Afghanistan what the US can do for the country, they will start laughing at you.” hum

GuestDecember 6th, 2009 at 5:30 am

It’s the climax of capitalism. The wealthiest country has sucked the rest of the world so hard (capitalism is all about consolidating capital) for so long that it’s not going to stop doing so until either the rest of the world is dry or it (US) collapses due to its own diseases.The world’s most powerful military empire will stop when the fuel runs out. Shouldn’t be too much longer now.

PeteCADecember 6th, 2009 at 11:06 am

Actually, ZeroHedge is probably well on track. I’m not sure the driver is the FDIC money. The big driver is the Christmas bonus money at the Wall St banks. One way or another – they will make sure that their investment returns look good in order to lock in those bonuses. Very likey that will be a driving factor in the market behavior over the next couple of weeks.PeteCA

GuestDecember 5th, 2009 at 7:53 pm

How low can they go? this link I posted before., how many bullets does the fed have. wethepeople posted the following link describing measures taken during the great depression (I am unable at the time to pull it up as my computer is have issues), are there limits to the fed ultimately loaning directly to the homeowners? If they can in the future, it will enable the can to be kicked down the road, while homeowners find new equity to start spending.

MorbidDecember 5th, 2009 at 7:58 pm

Bill Moyer Transcript Interview With Oliver Stone

Oliver Stone: Smedley Butler, the great Marine general said that “war is a racket” for corporate America. And he said, “I fought–” he got two medals of honor.He was in China. He was in the Philippines. He was in Haiti, Nicaragua. He said, “It was all for nothin’.” It was all for Bank of America. It was all for the corporations. It was for United Fruit. It’s all for corporate interests. War is a racket. “It’s a bigger racket than Al Capone ever invented,” he said. “Al Capone had two counties in Chicago. I was in ten countries.”

GuestDecember 6th, 2009 at 3:20 am

Snippet from War is a Racket (from

War is just a racket. A racket is best described, I believe, as something that is not what it seems to the majority of people. Only a small inside group knows what it is about. It is conducted for the benefit of the very few at the expense of the masses.I believe in adequate defense at the coastline and nothing else. If a nation comes over here to fight, then we’ll fight. The trouble with America is that when the dollar only earns six percent over here, then it gets restless and goes overseas to get 100 percent. Then the flag follows the dollar and the soldiers follow the flag.I wouldn’t go to war again as I have done to protect some lousy investment of the bankers. There are only two things we should fight for. One is the defense of our homes, and the other is the Bill of Rights. War for any other reason is simply a racket.There isn’t a trick in the racketeering bag that the military gang is blind to. It has its “finger men” to point out enemies, its “muscle men” to destroy enemies, its “brain men” to plan war preparations, and a “Big Boss” Super-Nationalistic-Capitalism.It may seem off for me, a military man, to adopt such a comparison. Truthfulness compels me to. I spent thirty-three years and four months in active military service as a member of this country’s most agile military force, the Marine Corps. I served in all commissioned ranks from Second Lieutenant to Major-General. And during that period, I spent most of my time being a high-class muscle-man for Big Business, for Wall Street, and for the Bankers. In short, I was a racketeer, a gangster for capitalism.I suspected I was just part of a racket at the time. Now I am sure of it. Like all the members of the military profession, I never had a thought of my own until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of higher-ups. This is typical with everyone in the military service.(Speech originally-delivered in 1933)

War is a Racket is available online from here.

FEDupDecember 6th, 2009 at 8:44 am

The sad joke is and has always been on the patriotic yet naive American people who trust what their corrupt and soul less leaders tell them without thinking for themselves and risk their lives under false pretenses and for the wrong reasons while certain corporations make vast fortunes over unnecessary misery and death. That’s why they call it W.A.R. (War’s A Racket)!

11b40December 6th, 2009 at 12:47 pm

..and it is why our polititicians got rid of the draft. Informed young people simply refuse to go fight and die without valid reasons. Uninfomred young people are simply gullible and easy prey for false “patriots” who lie us into war for their own gain. Had the draft not been eliminated, we would have never gone to Iraq. When the burden is spread randomly, and more or less equally, a spotlight is shined on the cause of the burden and remedial action is quickly taken. When the burden is pushed onto lower classes and relegated to the back pages of the newspapers, when the wealthy and powerful face no real hardship…no remedies seem to be on the horizon.Independent Contractor

blindmanDecember 5th, 2009 at 10:34 pm of disengaging from Afghanistan, Obama escalates warBy Jerry MazzaOnline Journal Associate EditorDec 4, 2009, 00:24…”In conclusion, dear heart, you got one thing right: “We are passing through a time of great trial.” And our republic won’t be brought down by double-talkers or their henchmen. Our freedom won’t be stolen if we have differing opinions.”..

GuestDecember 6th, 2009 at 5:12 am

A perfect war is the war on terrorism which has vague shifting targets and never ends…everlasting revenue for the Pentagon funded folks. That is the only sense one can derive from US policy.

GuestDecember 6th, 2009 at 6:11 am

Actually, if you read War is a Racket (see above) it all makes a lot more sense. A more recent addition (which I have not read) is John Perkin’s Confessions of an Economic Hit Man: some have doubted Perkin’s background and prowess, but I suspect that it all makes perfect sense once one reads Butler’s piece.It all boils down to greed and power.

GuestDecember 6th, 2009 at 3:26 am

Paul Graig Roberts goes off

Obama is loading up the poor with enormous debts that imply hyperinflation in order to make Gold Sacks too heavy to lift and in order to reward the munitions industry for its service to world peace and American hegemony.

Full article here: The Twin Frauds of Obama

MorbidDecember 6th, 2009 at 5:55 am

We Are Witnessing Another National DisgraceAnd where is the criminal media? Why is there no marching on Washington D.C. in protest? We are truly headed for disaster when no doves are among us to counter-balance.Look Out Below

GuestDecember 6th, 2009 at 6:07 am

The criminal media is busy duplicating Big Brother’s message!Grover Norquist was/is wright in wanting to shrink the US government such that it could be drowned in a bathtub, but not for the reasons that he and his other right-wing control-freaks thought. Nevertheless, that will be the outcome, and at the rate of destruction it can’t come soon enough.

11b40December 6th, 2009 at 12:54 pm

Sadly, doves don’t show up in significant numbers unless the dove population is threatened. Protests are largely driven by self-interests.Enact a draft, and the college campuses will explode. Enact a HEFTY war tax on the wealthy, and there will be an explosion of a different type.Independent Contractor

ArmchairDecember 6th, 2009 at 3:05 pm

It is true that the media functionally ignored massive protests against the rush to war in Iraq that occurred in 2002 and 2003. Nevertheless, it is true that the rallies were enormous. My provincial U.S. city mustered two very large protests that were probably larger than the teabag event in Washington D.C.The fact that doves never win should be no great comfort to soldiers going off to fight in endless wars in godforesaken lands.

GuestDecember 6th, 2009 at 4:16 pm

Only when soldier lay down their weapons… The Vietnam war ended largely as a result of US soldiers refusing to fight (and fragging officers); yes, everything else helped push it over the edge, but this was the main impetus.As a Vet, I’ve argued that honoring Vets only helps perpetuate the myth that soldiers are doing the people’s work (when they are really only hired hit men for the wealthy corporations). Such mentality/programming creates hero worship, elevating some above others, which ultimately instills the sense that others are worth less, worth exploiting (and, most likely, killing).When military force is dominate it rules. Doesn’t matter whether it’s in some third-world,dictator-run country, or the US.

11b40December 7th, 2009 at 5:16 pm

@ Armchair – it is true there were a few sizeable anti-war protests, but they were largely one-offs with no sustainablility…and far too peaceful to have any real meaning. If you want change, you gotta get in their face and in their pocketbooks. The ONLY way to prevent endless fodder for the war machine is to educate the soldier, and the only way to do that is to draft from the college ranks.@ Guest below – we are simply at different points on the same continuem. The REAL draft came about in Nov ’69 when the first lottery was held. Up until then, it was relatively easy to get those deferments or slide into a Guard or Reserve unit if you were in school and had a few connections. Things really changed starting in ’70 in RVN, when a new breed of draftees arrived in larger numbers, and went downhill every year after.Yes, the unwilling soldier had a lot to do with our withdrawal, but it was beefing up the draft that brought in enough unwilling soldiers from the colleges. Kids who knew the real score about that tragic and misguided adventure. I have said it before and say it again, if we had a draft (preferrably Universal Service), we would never have gone to Iraq on the evidence presented…and if we had, Bush would have been impeached before the 2004 elections.And before anyone starts beating me up about being a pacifist, well, that ain’t me. I marched for Civil Rights, I marched against the war, then I did a tour of duty..11b40 has a meaning & you can google it.Independent Contractor

blindmanDecember 6th, 2009 at 9:33 am World’s Least Powerful ManThe Obama Puppet.By PAUL CRAIG ROBERTS…Russia’s Putin has already compared the US to Nazi Germany, and the Chinese premier has likened the US to an irresponsible, profligate debtor.Increasingly the rest of the world sees the US as the sole source of all of its problems. Germany has lost the chief of its armed forces and its defense minister, because the US convinced or pressured, by hook or crook, the German government to violate its Constitution and to send troops to fight for Unocal’s interest in Afghanistan. The Germans had pretended that their troops were not really fighting, but were were engaged in a “peace-keeping operation.” This more or less worked until the Germans called in an air strike that murdered 100 women and children lined up for a fuel allotment….Meanwhile, the US investment banks, which have wrecked the financial stability of many governments, including that of the US, continue to control, as they have done since the Clinton administration, US economic and financial policy. The world has suffered terribly from the Wall Street gangsters, and now looks upon America with acritical eye..comment: when the international community and thedomestic population agree that the financial/political incest child has lost its mindand cannot be trusted or followed then change will come. we are at that point of recognition. those inpositions of influence should start to place theirintegrity at a position of importance in the schemeof things before it is too late, now. honesty andhumanity first, a long shot but perhaps the only one left. the universe knows what it is doing is just “we” the people who play catch think m.l.k. was correct in quoting…” let us realize the arc of the universe is long but it bends toward justice. “in humility, let us realize the implications.if nothing else for the sake of the survival of ourchildren and their children. the universe willhave its justice, no doubt. only a sick mindedincest child would think this can be averted.

blindmanDecember 6th, 2009 at 9:51 am lie-based realityBy Peter ChamberlinOnline Journal Contributing WriterDec 2, 2009, 00:17…With this renewed confidence in the people continuing to act like sheep being led to the slaughter, Obama announced the new exit strategy/escalation before an obedient, if not downright adoring audience yesterday at West Point. The only thing that will prevent the unfolding of this premeditated act of mass-murder is a sudden revelation for our secret leaders that the old official lies aren’t going to cut it anymore, that We the Sheeple won’t play along with the usual bullshit anymore. The only thing that will save our rotten souls is if we all get really mad at ourselves for allowing this travesty of international justice to continue, and convince our overlords that our minds have been changed. First, we must get mad, then, we must convince them just how angry we really are.We the People are mad as hell and we are not going to take it anymore!Scream it from every street corner and every other venue..comment: this is The Issue. The Heart. Ouronly Hope.imo.

GuestDecember 6th, 2009 at 10:10 am would expect that the Kuwait Investment Authority would have the best inside information on the Taxpayer Assisted Citibank. KIA has been very astute in the past and I suspect that CITI is becoming SHITY. Maybe Alaweed is going to bail, or there issome other great CITI investment like the Dubai investment. Maybe the Dubai Holdings news has something to do with this. Anybody have any info?

GuestDecember 6th, 2009 at 10:10 am address was made to the Tenth Anniversary Convention of the S.C.L.C. in Atlanta on August 16, 1967. Dr. King projected in it the issues which led to Poor People’s March on Washington.(From: Foner, Philip S.; THE VOICE OF BLACK AMERICA; New York, 1972)”Where we are now”Now, in order to answer the question, “Where do we go from here?” which is our theme, we must first honestly recognize where we are now. When the Constitution was written, a strange formula to determine taxes and representation declared that the Negro was 60 percent of a person. Today another curious formula seems to declare he is 50 percent of a person. Of the good things in life, the Negro has approximately one half those of whites. Of the bad things of life, he has twice those of whites. Thus half of all Negroes live in substandard housing. And Negroes have half the income of whites. When we view the negative experiences of life, the Negro has a double share. There are twice as many unemployed. The rate of infant mortality among Negroes is double that of whites and there are twice as many Negroes dying in Vietnam as whites in proportion to their size in the population.In other spheres, the figures are equally alarming. In elementary schools, Negroes lag one to three years behind whites, and their segregated schools receive substantially less money per student than the white schools. One twentieth as many Negroes as whites attend college. Of employed Negroes, 75 percent hold menial jobs….

blindmanDecember 6th, 2009 at 10:47 am

speaking of 100 year old spirits being unearthedor un iced, or dug up….'s whisky to be dug upHut used by ShackletonThe crates of whisky were found under a hut built and used by ShackletonTwo crates of Scotch whisky which belonged to the polar explorer Ernest Shackleton are to be recovered after a century buried in the Antarctic ice..comment ( question ): shouldn’t someone sample these spirits andreport their findings immediately? is this obvious only to me?

PeteCADecember 6th, 2009 at 11:10 am

It will sell for a lot of $$ on E-bay. You could practically name your price … if you were selling something like that.PeteCA

blindmanDecember 6th, 2009 at 11:38 am

p,better than selling it i would like to hear the musingsof a philosopher poet under the influence. the worlddeserves at least that, and not just any philosopher but a qualified poet.i know just the Man! this is a matter of historic and universalimportance for humanity and eclipses the fiat market forces.a matter of international significance and universal imperative reguiringall our attention/s. someone needs to confiscate this contraband fromthese fools who have no idea what to do with it and lets get on with it!

blindmanDecember 6th, 2009 at 4:14 pm

g,i’m glad at least some one besides myself can see thehistoric importance of this opportunity and on a multitudeof levels. this is incredible. i fear it will go unnoticedand squandered as the potential and power of reality, themetaphoric beauty and poetic symmetry unnoticed, anotherpotential perfect moment for humanity utterly wasted.not to belabor the point but these spirits have have beenon ice at the magnetic south pole for 100 years! and just nowbeing recognized. and, they say, no one will TASTE them?what have we become? i cannot abide by this, even incrementally,NO! this cannot stand! i draw a line in the sand! RIGHT HERE!

GuestDecember 6th, 2009 at 4:19 pm

Any chance that tasting could result in a less-than-favorable review? Could such revelation have a huge impact on the industry? Is this another case where we just accept the collective “wisdom” (not look behind the curtain)?

blindmanDecember 6th, 2009 at 4:35 pm

@G “Any chance that tasting could….”no. no chance. besides it is not about the is about the “chemistry” of these spirits with ourchosen representative, potentate, oracle, poet, (what havewe) whatnot…etc..but yes, the results could get nasty or complicated isuppose…. perhaps we should have a number of peopletasting the stuff and reflecting / speaking / reviewing,just to have some quality controls in place. double blindperhaps, as in “double blind study”.

blindmanDecember 6th, 2009 at 4:51 pm

and…at least a few properly selected individualsshould be encouraged to get thoroughly lithere just to see if there are any unanticipatedlatent powers / influences associated with thisextraordinary storage mechanism. as withcommon spirits extreme caution should be consideredand then transition from tasting to actual drinking,then the world can have its question answered regardingthese spirits!

GuestDecember 6th, 2009 at 5:27 pm

at least a few properly selected individualsshould be encouraged to get thoroughly lithere just to see if there are any unanticipatedlatent powers / influences associated with thisextraordinary storage mechanism.ROFLMAO!

Jason BDecember 6th, 2009 at 7:32 pm

I agree, they have no idea the proper use for the material they have on their hands.In the right hands, this could be used to solve all the problems of mankind. At least until the morning.

GuestDecember 6th, 2009 at 8:00 pm

Hey! I know… this should be reserved for ALL the world’s leaders. We have them all assemble and get lit up- mandatory! While lit we force them to look at various world issues and comment on them. The resultant dialog (videos anyone?) would be made available to ALL of the world’s human inhabitants. I think that this would go a long way in helping us see through the fog…

blindmanDecember 6th, 2009 at 9:34 pm

hold on!this stuff should never go anywhere near a world leaderuntil it has been tested and deemed safe.i like the world leader idea a lot though, but let me suggestthis modification to your notion.they should be assembled at the louvre in paris and force fedpeyote and then locked in their for 48 hours or so.six months later repeat the experiment in the mountains of afpak.and then egypt and then in cleavland and jakarta ..etc…perhaps an on going leadership peyote induction? with minimumattendance of one retreat per / 4 year period. this would probablyimprove things, seriously.

Octavio RichettaDecember 6th, 2009 at 3:06 pm

Above, I highlighted the increase in temps hiring as a possible negative in the employment report. And knew I was onto something:-) The best take on the BLS employment report I have seen comes via CR:…A surge in temporary employment was one of the encouraging aspects of a Labor Department report issued Friday. The U.S. unemployment rate dropped to 10 percent in November. Overall job losses fell to just 11,000 while temporary jobs grew by 52,000 in the fourth consecutive monthly increase in this bellwether category.…The surge in temp employment and the lower jobless rate show the labor market taking a turn for the better, but it’s not clear how quickly significant permanent job growth will begin.One note of caution emerges from a research paper published by the Federal Reserve Bank of Kansas City – “A Closer Look at Jobless Recoveries” – that links temporary employment with the slow hiring rebounds that followed the 1990-91 and 2001 recessions.“The very availability of just-in-time employment practices can contribute indirectly to the joblessness of a recovery,” Fed researchers wrote in 2003. “Just-in-time employment lets firms wait to see that a recovery is robust before hiring, yet still expand production on short notice by hiring temps and using overtime.”In the current recession, he said, companies began shedding temps 12 months before they started cutting permanent payrolls.A similar pattern prevailed in the two prior recoveries, Mann said. Temp jobs came back at the same time as overall employment after the 1991 recovery. Temporary employment rebounded five months before the general job market turned positive following the 2001 dip.If that pattern holds, it could be next summer before general payrolls start to grow.Mann refused to speculate about the timing, but said temps are playing an increasing role in the job cycle.”Employers are getting more savvy about using just-in-time labor on the way down and on the way up,” he said.Some optimismRichard Wahlquist, president of the American Staffing Association, whose members place workers in temporary jobs, has a more optimistic timetable.Based on his analysis of 36 years of data, temp employment has come back about three to six months before overall hiring, which would mean overall job gains by February.Even if that timeline holds, Wahlquist thinks temporary labor will become a larger factor after this recession as companies build a ring of disposable workers around their core staff.”After the last two recessions, a lot of businesses don’t want to get caught again,” he said.Wahlquist said the job market will be “brutally competitive” next year and urged people to take temporary work to earn income and get on the inside track when permanent hiring resumes….

GuestDecember 6th, 2009 at 4:25 pm

Many years ago I forecasted the “new migrant worker” as being corporate-controlled and sponsored. I’d worked for an international corporation and had people from other countries working along side myself. Nearby, though not necessarily tied to my company, were new dense housing units in what was an industrial area/park. At the time (10 years ago?) see that units such as these would become the “barracks/camps” of the workers.Yup, Just-In-Time workers!

GuestDecember 6th, 2009 at 4:28 pm

Backlash is brewing. From Japan May Ban Manufacturers From Hiring Temporary Employees:

Japan may ban manufacturers from hiring temporary workers, Health and Labor Minister Akira Nagatsuma said, as Prime Minister Yukio Hatoyama seeks to fulfill a campaign pledge to shift more employment to full time.The government is preparing legislation “that will stop manufacturing firms from employing temps and encourage them to hire full-timers,” Nagatsuma said yesterday on a business program broadcast by public network NHK.

Octavio RichettaDecember 6th, 2009 at 4:43 pm

“Japan may ban manufacturers from hiring temporary workers, …”we can do it here too:-) After all, we have entered the age of regulation:-)

GuestDecember 6th, 2009 at 5:25 pm

Not that I approve, as doing so only legitimizes the centralization of power (both in the state and in corporations), but it is clear that going the route of everyone being the migrant-labor pawn of corporations isn’t going to turn out too well.People accuse me of being overly critical. Well, there’s nothing to NOT be critical of; it is clear that, to paraphrase Albert Einstein, the minds that created this tangled web will not, can not, resolve our current issues. And, this article pretty much demonstrates the futility in/of it all.

Octavio RichettaDecember 6th, 2009 at 8:58 pm

You are 100% right. Corporation and money have destroyed the value scale something needs to be done.

GuestDecember 6th, 2009 at 5:44 pm

More to chew on… From Libertarian Municipalism:

As for the workplace, public democracy would be substituted for the traditional images of productive management and operation, “economic democracy” and “economic collectivization.” Significantly, “economic democracy” in the workplace is no longer incompatible with a corporatized or nationalized economy. Quite to the contrary: the effective use of “workers’ participation” in production, even the outright handing over of industrial operations to the workers who perform them, has become another form of time-studied, assembly-line rationalization, another systematic abuse of labor, by bringing labor itself into complicity with its own exploitation. (emphasis added)Many workers, in fact, would like to get away from their workplaces and find more creative types of work, not simply participate in planning their own misery. What “economic democracy” meant in its profoundest sense was free, democratic access to the means of life, the guarantee of freedom from material want–not simply the involvement of workers in onerous productive activities that could better be turned over to machines. It is a blatant bourgeois trick, in which many radicals unknowingly participate, that “economic democracy” has been reinterpreted to mean “employee ownership” or that “workplace democracy” has come to mean workers’ “participation” in industrial management rather than freedom from the tyranny of the factory, rationalized labor, and planned production.

GuestDecember 6th, 2009 at 5:54 pm

Well of course there’s going to be exploitation and corruption of data! What the hell else is new?But this is all no more than the means to which the current entrenched (government backed) corporations keep up their existing games of exploiting people and the environment. Anyone who wants to deny THIS fact needs to be banned from public discourse: Amazing Pictures, Pollution in ChinaFurther, it all works rather nicely to shield ourselves, nay, lie to ourselves, that we aren’t facing massive resource shortages.Are all these people (and when we talk about the UN keep in mind that the US is the biggest manipulator [just go back to Colin Powell’s Iraq WMD presentation to the UN security council]; and also the massive spying done by the US]).We’re being distracted by the battle of the big boys fighting over the scraps. Though One may “win,” in the end they will lose- Mother Nature has already determined this. (I thank blindman for sharing the MLK quote about the long arc of the universe).

bDecember 6th, 2009 at 6:24 pm

Let us realize that William Cullen Bryant is right: “Truth crushed to earth will rise again.” m.l.k.why try to crush it when we can grow with it?

GuestDecember 6th, 2009 at 7:57 pm

Well, we can’t actually “crush” the earth, only ourselves.If by “growth” you mean intellectually, then yes. But if by physically, no.

bDecember 6th, 2009 at 9:17 pm

g,truth. truth crushed. the earth here metaphorically beingthe nurturing origin, or the heart, where from truth will onceagain grow. it is about the intellect and adaptation, growthin truth rather than in some other landscape where truth has beencrushed to earth…that’s all. no exponential math here.

GuestDecember 6th, 2009 at 7:58 pm

Yeah yeah the economist blowhards all know more than the climatologists, and it’s obvious that the few dissenters MUST be correct because otherwise all the over-entitled wankers with investments will have to come live with the other 90% of the global population.

GuestDecember 6th, 2009 at 10:56 pm

…and he would be right:Marc Morano (the asshole in that video) runs the climate denial website for the Committee for a Constructive Tomorrow, a conservative anti-environmentalism think tank. Until spring of 2009, Morano served as communications director for the Republicans on the U.S. Senate Committee on Environment and Public Works. Morano commenced work with the committee under Senator James Inhofe, who was majority chairman of the committee until January 2007 and is now minority ranking member. In December 2006 Morano launched a blog on the committee’s website that largely promotes the views of climate change skeptics.Morano is a former journalist with Cybercast News Service (CNS), which is owned by the conservative Media Research Center. CNS and Morano were the first source in May 2004 of the Swift Boat Veterans for Truth claims against John Kerry in the 2004 presidential election and in January 2006 of similar smears against Vietnam war veteran John Murtha.Many believe that is it Morano who has been behind Inhofe’s latest attacks on the science of climate change.Writing in the New York Times, Leslie Kaufman noted that Morano, while working for Inhofe, had authored a report titled More than 700 International Scientists Dissent Over Man-Made Global Warming Claims. One of those cited in the report was Steve Rayner, from Oxford University. However, Rayner — who doesn’t dispute global warming though has been critical of the Kyoto Protocol — described his inclusion as “quite outrageous” and had asked for his name to be removed from the report. Despite being told by an Inhofe staffer that it would be removed, it hasn’t. Morano is unrepentant , claiming instead that Rayner must be “not to be remembering this clearly.”

GuestDecember 7th, 2009 at 9:01 am

Glaciers have come, it’s geologically proven (no guessing here on reading ice cores). Glaciers are earth’s way of remineralizing the planet (you know, like tilling, so stuff can grow again). If people quit all the political BS and look at it in this way it’s pretty clear.Folks on the Right are just mean b*stards. The folks on the Left don’t get it that the planet is going to cycle no matter what we do (though, however, there is a chance that we can delay the next cycle a bit).

The AlarmistDecember 7th, 2009 at 9:31 am

Seriously, if the globe were warming, New Zealand wouldn’t be surrounded by icebergs … they would have melted long before reaching there. The fact that there are more icebergs should have you scratching your head as to what could be a possible source since, if ice has been melting or breaking away over the past two decades, how much more can possibly be there (A: The snow pack in the Antarctic is growing).The only fact about Global Warming is that it is mostly hot air from groups with a hidden agenda.The

GuestDecember 7th, 2009 at 12:15 pm

From Stolen emails, climate change, and the practice of science (which I highly recommend if someone wishes to see the whole story behind what the right-wing, corporate-protectionist, climate-change deniers are distorting):

Among those who need to spend less time idealizing science is CBS News’s Declan McCullagh, who writes: “The irony of this situation is that most of us expect science to be conducted in the open, without unpublished secret data, hidden agendas, and computer programs of dubious reliability.” First, that’s not really irony, and second, anyone who has worked in academia knows that the software often sucks (as does commercial software, but scientific software is often highly customized), there are copious personal agendas, and lots of unpublished data waiting to be analyzed. Publishing data isn’t easy, and casting databases open to the world runs the risk of letting your research get scooped. Lots of journalists, including science journalists, don’t seem to get this, which is worrisome. Few deniers get this either, which is not surprising at all, though it continues to disappoint.In all honesty, there isn’t that much more to be said about the substance of the emails. On their face and in their proper context, they demonstrate that there’s no active conspiracy to promote global warming as a plot by Jews liberals to control the world economy. They demonstrate that these scientists are not a monolithic group, but have internal disagreements which they resolve using data. The evidence that the planet is getting hotter is unchanged, and the evidence that the change is mostly due to human activity is equally unchanged. So what’s the big deal?Part of the fuss arises from a single line in one email which refers to using a “trick” to “hide the decline.” Deniers try to claim that the “decline” in question is a decline in global average temperature since 1998, despite the fact that statisticians can find no such decline. In fact, the “decline” discussed in the email is an artifact of certain temperature proxies, which have shown a decline in their estimate of regional temperature compared to instrumental measurements (which is to say, thermometers). Since those data are known to be erroneous, the scientists have determined standard ways to represent the real data and to set aside the bogus data. This is what the scientist is referring to as his “trick….I’ll have more on the nexus of creationism and climate change denial anon. For now, I’ll simply note that the Discovery Institute’s creationism-specific blog has devoted itself entirely to commentary on these stolen emails (without any acknowledgement that they are stolen, natch), and the blog of Disco. director Bruce Chapman has been equally singleminded (note that Disco. has a project dedicated to promoting mass transit in the Northwest, a project funded in part by groups interested in averting climate change). (emphasis added) Chapman now calls climate change “religion,” a “science conspiracy,” asserts evidence of “authoritarianism,” while the creationism blog describes the incident as “the worst scientific scandal of our generation,” describes climate change as “fraud,” accuses experienced journalist trying to explain the scientific context of “turn[ing] a climate ‘trick,” accuses scientists of “criminal fraud on a massive scale,” compares science to “money-laundering,” and so forth….Careful observers will recall that Disco. was beating the drum for greater civility mere days before the release of these stolen emails, seeking to “tone down the rhetoric” to get at real issues. Now the group is dedicating itself to inflammatory and maliciously false statements about scientists for no other reason than to tar a field of science that they find politically unpalatable.Nor is there any sense of self-awareness from Disco. in cheering on internet crime. Barely a month ago, they were claiming that “Darwinists” had launched a “cyber attack” against the website of a creationist conference. No evidence was offered that a denial of service attack was under way, nor that “Darwinists” were responsible. Now, maybe there’s some actual evidence to back up the Disco. spin, but maybe it’s like that time Joe Lieberman insisted hackers had taken down his website, only to have the FBI later determine the site failed because Lieberman can’t do anything right. Or the time the RNC website was taken down by the same “hacker”: incompetence. And yet, they were happy to moralize about the evils of such cyber attacks, convicting an entire class of people of this alleged crime.Now, when it’s clear that an actual hacker actually gained illegal access to files and emails and illegally made them publicly available, we hear no condemnation of the crime, just joy at the fruits of this criminal act. “By their fruits you shall know them,” indeed.

So, once again the right-wing hacks have managed to obscure and debase science as a means to further their agendas of control and profit.

GuestDecember 6th, 2009 at 7:55 pm

Great article, but this smacks of the modern-day “libertarian” taint/angle/falsehood:Perhaps the next system will be more respectful of individual rights and freedoms, which are ultimately based in property rights, for that defines limits on what an authority may usurp.More respectful of individual rights? Yes, absolutely necessary. But by no means are these only obtained though “property rights,” that’s where the author kind of blows it (tips his hand).Migratory animals are more free than humans, yet They don’t have “property rights,” not in the sense that the author is trying to suggest (which is based on ownership, which leads to accumulation, which leads to depriving others of property [sooner or later there will not be enough land to support everyone], which then nullifies the freedom and individual rights as only being through property ownership notion). NOTE: yes, I know that “property” is more than just land, but, given that land is more valuable than anything else it’s pretty safe to use it as the target.This is really not a judgment for or against property rights. I’m just pointing out the poor logic (abuse of?) used by the author.

bDecember 6th, 2009 at 11:09 pm

g,i tripped at exactly the same spot on the sidewalkbut the view was so good i sorta kept on moving.all in all the thing is worth reading. yourpoints are on the money, so to speak. imo.

Octavio RichettaDecember 6th, 2009 at 9:18 pm

…”It’s like a dream,” Kashkari says, his work boots crunching pine cones. “Sometimes I think: Was it real?”It all began as it ended, abruptly. Kashkari was a 35-year-old business school graduate from a suburb of Akron, Ohio, who had gone to Washington in 2006 to learn how government worked. Then came the recession, and through a freakish set of circumstances, mixing pluck, cataclysm and luck, he was appointed by Treasury Secretary Hank Paulson as the federal bailout chief.Suddenly, he was in charge of $700 billion.Congress savaged him. Wall Street Journal editorials doubted him. His home-town buddies urged him to use the money to buy the Cleveland Browns and fire the coaches. His wife spoke to him so rarely, she described them as “dead to each other.” He lost sleep, gained weight and saw a close adviser, Don Hammond, suffer a heart attack at his Treasury desk. On May 1, after serving seven months under Presidents Bush and Obama, he resigned.Within a week, Kashkari and his wife put their belongings into “indefinite storage.” They moved to a cabin near the Truckee River in Northern California. “Off the map,” he told his friends. He threw away his business cards, and made a list of the things he wanted to do:1. build shed…

MorbidDecember 7th, 2009 at 5:55 am

Key question?What does this 700 Billion Dollar Man know that we don’t if his first act of detox is to build a shed in the wilderness. Survival or renewal?Head for the hills brothers and sisters. There’s a natural born killer coming.

bDecember 6th, 2009 at 10:25 pm

julian jaynes, p390, Hypnosis. toocitbdotbm…”Hence the important concept of trance logic which has been brought forwardto denote this difference. This is simply the bland response to absurdlogical contradictions, but it is not any kind of logic really, nor simply a trance phenomenon. It is rather what i would prefer to dress up as paralogical complianceto verbally mediated reality. It is paralogical because the rules of logic( which we remember are an external standard of truth, not the way the mind works )are put aside to comply with assertions about reality that are not concretely true.It is a type of behavior found everywhere in the human condition from contemporaryreligious litanies to various superstitions of tribal societies. But it is particularly pronounced in and centrally characteristic of the mental state of hypnosis..It is paralogic compliance that a subject walks around a chair he has been told is not there, rather than crashing into it ( logical compliance ), and finds nothing illogical in his actions. It is paralogical compliance when a subject says in English that heknows no English and finds nothing amiss in saying so. If our German subject had beensimulating hypnosis, he would have shown logical compliance by talking only in whatGerman he could remember or being mute…..Like a bicameral man, the hypnotized subject does not recognize any peculiaritiesand inconsistencies in his behavior. He cannot “see” contradictions because hecannot introspect in a completely conscious way..The sense of time in a trance is also diminished, as we have seen it was in thebicameral mind. This is particularly evident in post-hypnotic amnesia. We, in ournormal states, use the spatialized succession of conscious time as a substratefor successions of memories. Asked what we have done since breakfast, we commonlynarratize a row of happenings that are what we call “time-tagged”. ” …..keyword: paralogic compliance. ( avoiding the obvious and seeing no contradictionin that intentional avoidance while denying the existence of the obstacle. )trance? hypnosis? media? government? etc….second keyword: identity. consciousness.

GuestDecember 7th, 2009 at 6:39 am

Fed Vice Chairman Donald Kohn conceded that the government’s actions “will reduce [companies’] incentive to be careful in the future.” In other words, he’s admitting that the government’s actions will encourage financial companies to make even riskier gambles in the future.Kansas City Fed President and veteran Fed official Thomas Hoenig said:Too big has failed….The sequence of [the government’s] actions, unfortunately, has added to market uncertainty. Investors are understandably watching to see which institutions will receive public money and survive as wards of the state…Any financial crisis leaves a stream of losses among the various participants, and these losses must ultimately be borne by someone. To start the resolution process, management responsible for the problems must be replaced and the losses identified and taken. Until these actions are taken, there is little chance to restore market confidence and get credit markets flowing. It is not a question of avoiding these losses, but one of how soon we will take them and get on to the process of recovery….Many of the [government’s current policy revolves around the idea of] “too big to fail” …. History, however, may show us a different experience. When examining previous financial crises, both in other countries as well as the United States, large institutions have been allowed to fail. Banking authorities have been successful in placing new and more responsible managers and directions in charge and then reprivatizing them. There is also evidence suggesting that countries that have tried to avoid taking such steps have been much slower to recover, and the ultimate cost to taxpayers has been larger…The current head of the Philadelphia fed bank, Charles Plosser, disagrees with Bernanke’s strategy of the endless printing-press and ever-increasing fed balance sheet:Plosser urged the Fed to “proceed with caution” with the new policy. Others outside the Fed are much more strident and want plans in place immediately to reverse it. They believe an inflation storm is already in train.***Bernanke argued that focusing on the size of the balance sheet misses the point, arguing the Fed’s various asset purchase programs are not easily summarized in a single number.But Plosser said that the growth of the Fed’s balance sheet was a key metric.”It is not appropriate to ignore quantitative metrics in this new policy environment,” Plosser said…Plosser is bringing the spotlight right back to the Fed’s balance sheet.”The size of the balance sheet does offer a possible nominal anchor for monitoring the volume of our liquidity provisions,” Plosser said.The former head of the Fed’s Open Market Operations says the bailout might make things worse. Specifically, the former head of the Fed’s open market operation – the key Fed agency which has been loaning hundreds of billions of dollars to Wall Street companies and banks – was quoted in Bloomberg as saying:”Every time you tinker with this delicate system even small changes can create big ripples,” said Dino Kos, former head of the New York Fed’s open-market operations . . . “This is the impossible situation they are in. The risks are that the government’s $700 billion purchase of assets disturbs markets even more.”And William Poole, who recently left his post as president of the St. Louis Fed, is essentially calling Bernanke a communist:Poole said he was very concerned that the Fed could simply lend money to anyone, without constraint.In the Soviet Union and Eastern Europe during the Cold War era, economies were inefficient because they had a soft-budget constraint. If a firm got into trouble, the banking system would give them more money, Poole said.The current situation at the Fed seems eerily similar, he said.”What is discipline – where are the hard choices – when does Fed say our resources are exhausted?” Poole asked.But the strongest criticism may be from the former Vice President of Dallas Federal Reserve, who said that the failure of the government to provide more information about the bailout could signal corruption. As ABC writes:Gerald O’Driscoll, a former vice president at the Federal Reserve Bank of Dallas and a senior fellow at the Cato Institute, a libertarian think tank, said he worried that the failure of the government to provide more information about its rescue spending could signal corruption.”Nontransparency in government programs is always associated with corruption in other countries, so I don’t see why it wouldn’t be here,” he said.Of course, former Fed chairman Paul Volcker has also strongly criticized current Fed policies.Given such harsh criticism from within the Fed, how can Bernanke justify his actions to date?Global Agencies Slam BernankeThe Bank of International Settlements (BIS) – called “the central banks’ central bank” – has slammed the Fed for blowing bubbles and then “using gimmicks and palliatives” which “will only make things worse”.As the Telegraph wrote in June 2007:The Bank for International Settlements, the world’s most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood…The BIS, the ultimate bank of central bankers, pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system…The bank said it was far from clear whether the US would be able to shrug off the consequences of its latest imbalances …”Sooner or later the credit cycle will turn and default rates will begin to rise,” said the bank.A year later, in June 2008, the Telegraph wrote:A year ago, the Bank for International Settlements startled the financial world by warning that we might soon face challenges last seen during the onset of the Great Depression. This has proved frighteningly accurate…[BIS economist] Dr White says the US sub-prime crisis was the “trigger”, not the cause of the disaster.Indeed, BIS slammed the Fed and other central banks for blowing the bubble, failing to regulate the shadow banking system, and then using gimmicks which will only make things worse. As the 2008 Telegraph article notes:In a pointed attack on the US Federal Reserve, it said central banks would not find it easy to “clean up” once property bubbles have burst…Nor does it exonerate the watchdogs. “How could such a huge shadow banking system emerge without provoking clear statements of official concern?””The fundamental cause of today’s emerging problems was excessive and imprudent credit growth over a long period. Policy interest rates in the advanced industrial countries have been unusually low,” he said.The Fed and fellow central banks instinctively cut rates lower with each cycle to avoid facing the pain. The effect has been to put off the day of reckoning…”Should governments feel it necessary to take direct actions to alleviate debt burdens, it is crucial that they understand one thing beforehand. If asset prices are unrealistically high, they must fall. If savings rates are unrealistically low, they must rise. If debts cannot be serviced, they must be written off.”To deny this through the use of gimmicks and palliatives will only make things worse in the end,” he said.In other words, BIS slammed the easy credit policy of the Fed and other central banks, and the failure to regulate the shadow banking system

GuestDecember 7th, 2009 at 9:25 am

“What is discipline – where are the hard choices – when does Fed say our resources are exhausted?” Poole asked.While probably not meant as resources as commodities, this is a pretty telling statement as to our economic future. The Fed is really the pinnacle of capitalism, and capitalism is the measure of our ability to amass resources.

11b40December 7th, 2009 at 5:31 pm

The quote below from Kansas City Fed President and veteran Fed official Thomas Hoenig really sums it up for me. The FED is spreading the losses out into the masses (that would be us) while protecting the charlatans who caused the problems.”Any financial crisis leaves a stream of losses among the various participants, and these losses must ultimately be borne by someone. To start the resolution process, management responsible for the problems must be replaced and the losses identified and taken. Until these actions are taken, there is little chance to restore market confidence and get credit markets flowing. It is not a question of avoiding these losses, but one of how soon we will take them and get on to the process of recovery….”Independent Contractor

MM CADecember 7th, 2009 at 7:58 am

NO JOBS! and lot of real reasons not to believe the numbers that Obama and the BLS are putting out. they have changed the way they count 3 times in the past year.Bah, humbug and labor statisticsBy SpenglerThe unemployment rate in the United States fell to 10% from 10.2% in November, the Bureau of Labor Statistics (BLS) reported on Friday, which means that the real unemployment rate (including those who have stopped looking for work, or can’t find full-time work) fell to 17.2% from 17.5%. In addition, employers polled by the BLS reduced payrolls by 11,000 workers, rather than the 150,000 or so that economists expected.Supposedly, this reflects economic recovery. I don’t believe a word of it.First, the labor force participation rate continues to plunge, as prospective workers leave the workforce.For the full series going back to 1948, click here.Between October and November, nearly 300,000 Americans disappeared from the labor force:Here is a Top 10 of reasons to scrooge the BLS report:10. As noted, nearly 300,000 people disappeared from the labor force, yet the BLS reports no increase in “discouraged workers” or workers forced to take part-time jobs for economic reasons.9. Private sector service jobs supposedly increased by 51,000, yet the National Institute of Purchasing Managers’ (NIPM) survey shows that services employment fell during November. The unexpected drop in the NIPM report, which is a reasonably good advanced indicator of economic activity, doesn’t square with the BLS report.8. The reported improvement in services was driven by an 86,000 increase in temporary employees in “administrative and support services”. There almost certainly is an element of truth in this report, but it is not necessarily good news. The biggest hiring boom stems from the huge backlog of home foreclosures. With one out of eight American homeowners behind on mortgage payments, the Wall Street Journal on November 19 reported, “Mortgage restructuring for strapped homeowners has emerged as a rare growth area in the economy as companies in the field keep hiring. Four of the largest mortgages servicers – Bank of America Corp, Citigroup Inc, JP Morgan Chase & Co and Wells Fargo & Co – have collectively hired almost 17,000 people this year, mostly to work with financially ailing homeowners. With the number of defaults rising, many are planning to keep adding staff.”7. Goods-producing industries lost 69,000 jobs by the BLS count, about equally divided between manufacturing and construction – yet the “recovery” supposedly is led by manufacturing.6. ADP, America’s largest processor of payroll information, publishes an independent survey of employment based on its own data. This is somewhat less comprehensive than the BLS data, but far more reliable. ADP reported a loss of 169,000 jobs, compared to only 11,000 for the BLS survey.5.The correlation between changes in the BLS employment measure since 2000 is about 95%, and the discrepancy between the BLS number of 11,000 jobs lost in November versus the ADP number of 169,000 jobs lost lies at the extreme range of error for the two series.4. The job losses reported by ADP are equally split between goods-producing and services. It simply doesn’t make sense for ADP to show nearly identical job losses for goods-producing and services, while BLS shows a big jump in services employment combined with a big drop in goods-producing employment.3. One of the brightest spots in the BLS report was a 12,600 increase in health services employment. Yet a forward-looking indicator of demand for health-service employees, the online advertising index for health-care jobs, fell in November to an all-time low of 83 (from an October level of 96 and a year-earlier level of 111).2. According to the Conference Board’s monthly survey of consumer confidence, “Consumers’ assessment of the labor market deteriorated moderately. Those claiming jobs are ‘hard to get’ increased to 49.8% from 49.4%, while those claiming jobs are ‘plentiful’ decreased to 3.2% from 3.5%.”And the top reason not to believe the BLS report is:1. The level of un- and underemployment is so huge by historical standards as to make the usual sort of measurement questionable. With nearly 20% of the population unable to find proper work, there is a different sort of workforce. The vast majority of job creation in the US during the past two generations came from small businesses, which display only vaguely on the radar of government agencies as well as the bigger private surveys. The financial crisis killed small entrepreneurs as surely as Joseph Stalin killed the kulaks, and the roots of the economy are dead and dry.Spengler is channeled by David P Goldman, senior editor at First Things (

GuestDecember 7th, 2009 at 9:30 am

Now we know what it was like in the Soviet Union!I recall a saying that went like this: They pretend to pay us, so we pretend to work. It got to the point that work was done on paper only and everyone pretended that it had been done in the physical: a lot like our modern-day-finance-as-productive-work scheme (which was a huge lie, and which clearly failed).

MM CADecember 7th, 2009 at 8:06 am

As I have been saying there are at least 7-10 million more foreclosres coming…The ramifications of this is a nightmare for Average Joe American and the US Economy. We will wish we were only in a recession, that now the PTB and wall street say we are out of it? lol…Overview – Millions More Homeowners are At -Risk than Most ThinkMost look to loan type and equity position as two of the most important factors when forecasting loan default. In fact, I believe that epidemic negative-equity is the overarching reason that the default, foreclosure and housing crisis remains in the early innings. But…negative-equity with a caveat.While negative equity is a threat in and of itself, being in an over-leveraged household debt position is the true default catalyst for most in a negative-equity position. And being over-leveraged is also the primary default catalyst for those is a positive equity position. Being in a negative-equity position with lots of top line and disposable income each month is generally more of a mental burden than a reason to fly the coop.How many homeowners are over-levered and at imminent risk of default? This answer is…a lot more than most think, especially those who got a loan from 2003-2007 due to a radical, yet subtle shift in loan guidelines across the mortgage spectrum that kicked-off the bubble-years.Yes, even Prime full-doc borrowers in 30-year fixed mortgages with 20% equity who got their purchase or refi from 03-07 are at much greater risk than most think. Being over-levered was condoned – all the lenders, investors and loan programs operated in the same manner.In my research, I often assume that everybody knows the subtle idiosyncrasies of how loans are really structured. I understand this is not the case. So, in an attempt to highlight why the total residential mortgage risk exposure is so much greater than anybody’s expectations, this report drills down on Prime, Alt-A and Subprime allowable debt-to-income (DTI) ratios that were made ridiculously lax relative to pre and post 2003 – 2007. This, in my opinion, is the real tempest in the mortgage teapot that buckets millions more loans that are still in existence today across all loan types, as risky.- Time-Tested DTI Standards Thrown out the WindowA long time ago in a mortgage market far, far away (circa-2000 and before!) there was responsibility in lending. Age-old underwriting standards only allowed fully-documented debt-to-income ratios of 28% for housing and 36% for total debt (referred to as front and back DTI). On Jumbo loans, the ratios were 33/38 because Jumbo borrowers typically have more disposable income. On occasion, banks would make exceptions to this rule if the borrower had a large equity position or liquid reserves. At 28/36, homeowners can pay debt, shop, take their annual vacation, and even save money. At 28/36 DTI a house is a place to live first and an investment, second.Bubble year’s loan guidelines not only pushed the boundaries of risk by exotic loan structure but also income leverage. Circa-2002, time-tested DTI standards went out the window. Allowable DTI ratios on Prime loans rose to 50% and much higher when considering that so many loans were made with limited or no income documentation. Alt-A and Subprime full-doc loans would routinely go to 55% DTI…and full-doc are supposed to be the safe loans. Given that full-doc only represented 50% of Subprime and 25% of Alt-A loans it is understandable why these two loan types are experiencing the worst trouble, even though across the Alt-A universe the average FICO was above 700 at the time of origination.Around this same time, the investment bank’s participation and non-Agency lending and securitization began to really heat up. Guidelines expended further…hey, if the loan was going to be off the books in a few months, who cares how over-leveraged the borrower is.- Going Exotic in Plain SightBefore too long — circa-2003 — lending guidelines were fundamentally changing with many lenders allowing leverage through increased DTI ratios never seen before. Obviously, this expanded affordability sharply. When all of a sudden you can spend 50% of your gross income on debt vs 36% before, you can afford to buy much more house or take a much larger cash-out refi.Subtly changing loan guidelines by raising the allowable DTI on traditional loans, such as a 30-year fixed, was a more sneaky way of easing credit and going exotic than blatantly advertising for ‘no doc’. In fact, 30-year fixed loans and the borrowers that chose them were deemed to be so safe, the underwriting was much more lax than on an exotic structured loan, such as a Pay Option ARM.By 2004, as property values pushed house prices to levels that were unaffordable and stated income was not the norm yet, the new-normal in mortgage lending was allowing up to 50% of gross income to go to total debt. The mortgage obviously was the largest chunk.And remember, the 50% is only mortgage PITI and other debt listed on the credit report. It does not include income taxes, auto insurance, food or all the other things that individuals spend money on over the period of a month.And it didn’t stop there. As the mortgage credit strengthened the borrower’s credit profile, other credit was made available, including second mortgages, that could take total DTI far above 50%. Nevertheless, at 50% DTI, the house becomes the largest investment of a person’s life because there is no way for most to put out half of their gross income to debt each month and invest elsewhere.- Borrower’s Always Borrowed the MaxWhen buying or refinancing, most got a purchase or refi loan for as much as their banker or Realtor said they could, which was what 50% of their gross income paid for in most cases. Most borrowers don’t say “we know we qualify for $500k but just to make sure we have some wiggle room in our budget, let’s stick to a $400k loan”. Bottom Line – everybody borrowed too much because all of the lenders and loans — from the safest full-doc Prime loans to Subprime trash — allowed it. And after the fact, most expanded their credit portfolio because all credit was so easily attained until a couple of years ago.- GSE Loans – A Culture of FraudDuring the bubble years the GSE’s looked at DTI secondarily to credit score, LTV, and cash reserves as measured by liquid cash and 70% of retirement. Both Fannie and Freddie have automated underwriting systems called DU and LP respectively. During the bubble years, if the LTV was low enough and/or score and cash reserves high enough, the system would approve virtually anything.Many lenders, especially the big banks, had in-house DU and LP underwriting ‘trainers’ that would go around to the various mortgage branches and teach underwriters how to ‘trip’ the systems in order to achieve automated loan approvals when a declination was certain, or simply get fewer approval conditions on a loan that was borderline. Getting a loan approval out of DU/LP on a borrower with a 100% DTI — with limited documentation required on the automated findings — was not uncommon.In fact, many that needed to pump up a borrower’s strength who was light on income — instead of lying about the income — would pump up another aspect of the loan. The most common was to increase the borrower’s cash reserves, particularly retirement. This way, the retail sales worker buying a house well beyond their means would not need an obviously fraudulent income level, rather a believable household retirement total of maybe $100k. Doing it this way simply raised fewer red flags for the underwriter and investor.Few Loans Were Ever Denied at First PassDuring the bubble years, very few loans were ever denied. Denying loans was not ‘production oriented’. The culture across all lenders was to ‘approve everything subject to’. If you did not do it this way, your competitors would get all of the business.The approval process was for the underwriter to run the loan through DU/LP and if the system did not issue an approval (or an approval the borrower and the loan officer were happy with) to go back into the input file and edit the income, assets, retirement (or all three) until the system approved it. Some loans were edited 30 or 40 times until the GSE system issued an approval.Then, the approval was sent out to the borrower and loan officer even if it required them to verify $100k more in retirement reserves than the borrower had per the original loan application. Within a few days, a new back-dated loan application and a retirement account statement reflecting adequate reserves would arrive, the underwriter would sign it off and the loan would be on its way to the doc department. There was no way to verify if the document was a fake, unless it physically looked altered. In many cases the borrower never even knew this was happening.Note – this process was not GSE exclusive…this is just how it was done across all lenders.- Affordability out of ControlThen circa late-2004, as affordability declined sharply even with 50% DTI the norm, stated income came into play in a big way. This super-charged affordability and house prices in ways we will never see again in our lifetime.Stated income was around for years prior but limited to verified self-employed borrowers. The new-era Stated income loan allowed anyone with a two year job history to get a loan. All of a sudden, everybody earned $150k a year. From then on, the housing market had no shortage of purchases, cash-out refinances or HELOCs and house prices never looked back…well, until the exotic loan programs went away in late 2007.Circa early-2006 when it became obvious that Stated income was being abused because everybody (hair dressers, public sector workers, and anyone that said they were self-employed for two-years and could provide a fraudulent CPA letter that the lender never verified) suddenly was earning $12k a month, lenders became more cautious.What was the answer? Begin to push Pay Option ARMs with low teaser rates and payments. This way the borrowers could earn less so their fake income looked more believable. In addition, this is about the time that No Doc and No Ratio doc type options began to show up on every lender’s rate sheet, which provided the ultimate in plausible deniability.Bottom line – 80% of all Alt-A (including Pay Options), 50% of Subprime, 50% of Jumbo Prime and 30% of Prime loans from 2003-2007 were limited documentation loans for a reason – because the borrowers didn’t even have the 50% DTI needed for full doc.- How Big is the Total At-Risk Mortgage Universe?Of the loans in existence today at least 75% were refinanced or attained through a purchase from 2003-2007 – the bubble years. On several occasions the past couple of years, Jim Cramer has quantified the at-risk loan universe as being around 14 million, which represents everyone who purchased a home between 2005-2007. But then he says ‘”here is no way everybody who bought a house from 2005-2007 will ever default”. So, he pairs it back to 20% or 25% of 14 million – whatever. He is incorrect on a number of levels.First off, the bubble years were really 2003-2007. But aside from that, the number of people who purchased a home is only a small piece of the entire pie. The bubble years was not about purchases, rather refi’s. During the bubble years, cash-out refi’s and HELOCs were at least 5:1 over purchases. A purchase is no more risky than an existing homeowner with a great payment history who pulled out 90% or 100% of their equity at a 50% DTI. In fact, the latter are more risky…purchases in general are always considered the safest loans.This means the true potential at-risk loan universe is any Prime, Alt-A, or Subprime borrower that did a purchase or refi from 2003-2007. Obviously, not every single borrower is at-risk but we have no way of really knowing how many of the 43 million + loans from that period still in existence today are destined for trouble. This is especially true when even borrowers with 800 scores and 70% LTV’s are at risk of default because their DTI started out at 50% and after the fact, they expanded their credit portfolio because all credit was so easily attained until a couple of years ago.- 13 to 15 Million Loans at Imminent Risk of Default- Potentially, 20 Million Homeowners over the Next Few YearsThe chart below breaks out all of the loans in existence by loan type. Of the loans originated during the trouble years, the far right columns show the conservative number of loans in which the borrowers either borrowed at 50% DTI or went Limited Doc (stated income, light doc, no doc, no ratio). The two columns are not mutually exclusive.The last Mortgage Bankers Association report estimates that the total number of loans in some sort of delinquency, default, or foreclosure status to be about 8.2 million, or 14.41% of all loans. If the true number of Imminently at-risk loans is somewhere between 13 and 15 million, the default and foreclosure crisis is about 60% over.The problem with the final 40% is that it crushes everyone other than Subprime households and likely happens over a longer period of time than the two-year Subprime Implosion.In addition to the imminent defaulters, a large percentage will default for various unforeseen reasons tied to the macro. Throw in top strategic defaulters and we could easily see a situation over the next few years in which 20 MILLION homeowners are either delinquent, defaulted, or in the foreclosure pipeline.- What a 50% DTI Really Means- Time-tested 36% DTI Means 60% MORE Disposable Income Each Month1) What a 50% DTI Really Means?Borrower Earnings: $100k per year50% Total DTI: $50,000 per year to housing PITI & all other debt on credit report25% Fed & State Taxes: $25,000 per yearDisposable income: $25,000 per year, or $2,083 per monthHow does this well-above average household SAVE MONEY AND pay for utilities (power, water, cable, garbage, insurance (car, life, health), gas, food, car payment, fuel, clothes, household maintenance and more on $2,083 per month? How do they save an emergency fund or take even a drive-away trip for the weekend?How do they shop this holiday season when over a trillion dollar in consumer credit was taken away in the past year?A 50% housing DTI turns the house into the largest investment of your life and ruins most household’s balance sheet at the same time unless the gross income — and disposable income — is much larger.For most in a serious negative equity position, it is better to walk away. Earning your way out of a $200k hole is impossible with disposable income of $2,083 per month less expenses. Why not walk – the borrower’s credit will be trashed for a few years but as long as they maintain their credit rating on all other credit, their overall rating will not be damaged for as long as their house remains underwater.2) Now, let’s look at this with 28/36 time-tested debt-to-income ratios.Bottom Line – 60% MORE disposable income each month.Borrower Earnings: $100k per year36% Total DTI: $36,000 per year per to housing PITI & all other debt on credit report25% Fed and State Taxes: $25,000 per yearDisposable income: $39,000 per year or $3,250 per monthWith $3,250 per month, a $100k household can likely save $20k per year. Still, this is not enough to make a real dent in a $200k neg-equity position. But, with this much disposable income the homeowner is not missing out on much and they are saving money, meaning their house is a place to live.What do households spend money in every year? The U.S. Census bureau provides the answers:• $200 billion on furniture, appliances ($1,900 per household annually)• $400 billion on vehicle purchases ($3,800 per household annually)• $425 billion at restaurants ($4,000 per household annually)• $9 billion at Starbucks ($85 per household annually)• $250 billion on clothing ($2,400 per household annually)• $100 billion on electronics ($950 per household annually)• $60 billion on lottery tickets ($600 per household annually)• $100 billion at gambling casinos ($950 per household annually)• $60 billion on alcohol ($600 per household annually)• $40 billion on smoking ($400 per household annually)• $32 billion on spectator sports ($300 per household annually)• $150 billion on entertainment ($1,400 per household annually)• $100 billion on education ($950 per household annually)• $300 billion to charity ($2,900 per household annually)The average homeowner household spends $22,785 per year, or $1900 per month on the above. When making an allowance for some of the items that are typically financed, the outgo is still roughly $1500 per month.At 50% DTI, the $100k earner with a disposable income of $2083 per month will have extra monthly income of $583 based upon typical spending. That does not leave a lot for savings, or items not listed such as auto insurance, vacations, gas etc. That definitely is not enough to ‘earn their way out’ of their negative equity hole.However, the 36% DTI borrower will have an extra $1750 month, which allows for living life and saving money, significantly reducing the chance of loan default due to negative-equity..Bottom Line – This shows vividly why 50% DTI — even with borrowers making $100k a year and with 20% equity in their property — is in fact over-leveraged and a recipe for loan default for any number of reasons.- HAMP — More Exotic than Bubble-Years LoansNow you know why I have been calling HAMP “the most exotic loan ever created” since its inception.But from the HAMP headlines you could not tell. All that is ever focused upon is the 31% DTI. But that is the front DTI…the housing-only DTI. If you read the guidelines, the back DTI (total debt) allows borrowers to go to 55%!In fact, if the borrower’s DTI is over 55%, the borrowers are required to go to credit counseling. A little news for ya – a borrower paying out 55% of their gross income to debt does not have time for credit counseling because they have a second job.Bottom Line: HAMP was designed to lower ‘payments’ for underwater borrowers, but also designed to suck every bit of disposable income every month to the bank. Being underwater in a high-DTI situation is the recipe for default, so it is no wonder the program is not performing as thought.Borrower’s realize this and are simply using the HAMP multi-month processing and approval process as a way of staying in their home rent-free for a longer period of time. At the end of the day, those that do make it to a permanent mod — but have a high back DTI — will ultimately fail.For small percentage of those that fit the HAMP sweet-spot, it is great and absolutely the right medicine. However, at what cost? For many that can technically afford the house and would have gone on paying for 30-years — but can’t qualify for a new-vintage refi — a pre-meditated loan default and subsequent HAMP mod is an easy route to a government subsidized no cost refi.For all of these reasons and more, I believe HAMP will be fundamentally changed in 2010, perhaps to finally include principal balance reductions. Principal reductions are the only way modifications will stick. I hate the idea of any gov’t interference, but if they are going to be spending hundreds of billions anyway, they may as well target it.I also believe that HAMP will be ultimately responsible for a sizable wave of foreclosures beginning in the near-term from those who do not make it through their trail period, which as of recent data, is most. With foreclosures averaging 80k a month for the past six months and 700k foreclosures held up in the pipeline due to HAMP, even a trial mod failure rate of 40k a month would increase foreclosures by 50%.However, this is housing market bullish. The biggest threat to the housing market in 2010 is a lack of distress inventory, which is some states still makes up 70% of all sales. Foreclosures are what is in demand and the biggest unintended consequence of HAMP is to keep those who can’t afford their houses in them and others than can afford them away.- Fannie Mae to Tighten DTI GuidelinesLastly, the following story talks about a recent move by Fannie to raise minimum credit scores and to lower the max allowable DTI to 45%. Operating in a pro-cyclical manner like this only sucks more liquidity out of the mortgage and housing market, but does make for safer loans in the future. It is also validation that DTI and household leverage — something rarely focused upon any any analysis I have ever read — is beginning to get the attention it deserves.Fannie Mae to Tighten Lending Standards: ReportPublished: Thursday, 26 Nov 2009 | 6:40 AM ETBy: ReutersFannie Mae plans to raise minimum credit score requirements next month and limit the amount of overall debt that borrowers can carry relative to their incomes, The Washington Post reported on Thursday.Starting Dec. 12, the automated system that the government-controlled mortgage finance company uses to approve loans will reject borrowers who have at least a 20 percent down payment but whose credit scores fall below 620 out of 850, the newspaper reported. Previously, the cut-off was 580.Also, for borrowers with a 20 percent down payment, no more than 45 percent of their gross monthly income can go toward paying debts, the newspaper said.A Fannie Mae spokesman told the newspaper that the limits reflect the company’s recent experience.Loans to people with credit scores below 620 fell seriously behind at a rate approximately nine times higher than other loans purchased in the same period, Fannie Mae spokesman Brian Faith said.Loans taken out by borrowers with lots of debt also suffer higher levels of serious delinquency, he said “It’s not enough to help borrowers buy a home — we must also ensure that they can stay in the home over the long term,” Faith said in a statement to The Washington Post.Copyright 2009 Reuters. a great Holiday Season.Best Regards,Mark HansonFiled on: December, 6 2009 by Mark Hanson

11b40December 7th, 2009 at 5:48 pm

Credit reports and ratings will soon become irrelevant. There is very little demand for small business loans from CREDITWORTHY customers. Plenty of struggling small businesses would LIKE to have a loan, but when you look at their numbers, they are poor risks.Independent Contractor

Average JaneDecember 7th, 2009 at 2:21 pm

MM CA, many thanks for posting this. Chock full of information and he is absolutely correct about the DTI problem. I’ve been screaming about that for five years. People just don’t think. They never could afford these loans and refis and HELOCs and still have a prudent “cushion” for those emergencies that always come up, never mind sock a little bit away in savings.And now the health insurance companies want to take 20% of our income for their g**damned premiums? That’ll decimate the entire middle class in no time. Hope they’ve got lots of debtors’ prisons ready for the 100 million-plus members of the middle class who quite simply will have no money at all.

MorbidDecember 7th, 2009 at 3:25 pm

Yeah, but guess what – in prison you receive free health care; including transplants.Commit a crime – go to jail. It’s free.

GuestDecember 7th, 2009 at 4:06 pm

Obviously sarcasm… But, the more people go to prison the worse things become, until at some point prison just ain’t happening anymore (California has already started down this path). So, it appears that today’s profiteers aren’t seeing the outcomes of their actions (that’s what profit is mostly about, externalizing costs). The US has over-grown its industrial-prison complex too much anyway…

The AlarmistDecember 9th, 2009 at 2:58 am

Yeah, but some A**hole Republican like me will tell you you would simply be coddling the debtors by giving them free room and board.Or maybe not … the US is a world leader in prison labor forces. On those rare occasions you get an un-accented native english speaker when you ring into a call center, you have a high likelihood of speaking to someone working out of a prison, you should cringe if you have to give them your credit card number.

Octavio RichettaDecember 7th, 2009 at 10:23 am

Just established small position in the following ultra shorts: DZZ (gold), EEV(emerging markets), EUO (euro). I don’t wanna rock the boat so close to year’s end but my intention is to increase these positions as I study further…

MM CADecember 7th, 2009 at 11:07 am

Rosenberg: There’s Just A 1-In-35 Chance Friday’s Employment Number Was RightJoe Weisenthal|Dec. 7, 2009, 10:33 AM | 922 |4It’s getting hard to keep track of all the different ways people are attacking Friday’s employment number.You’ve got TrimTabs which keeps banging the drum about the birth-death model.You’ve got folks talking about how it was all in temp work, or the public.Then there are those who point out all of the people who have left the workforce.David Rosenberg chimes in with another: that it just can’t be right, because it doesn’t jibe with the contraction in the services sector——A 1-IN-35 EVENTIt’s remarkable nobody talks about this. The big surprise in the payroll data wasthe service sector component; it rose 58k. But we know from the ADP reportthat service sector employment fell 81k, which was fractionally worse than the79k decline in October. Such a discrepancy has occurred less than 3% of thetime in the past, and each time, the following month after the big gap, there wasa convergence … with headline nonfarm payrolls swinging 100k lower onaverage, which would imply a 111k decline when December’s figure comes out.Also take note that the +58k print in the service sector payroll was completely atodds with the 41.6 reading in the ISM non-manufacturing employment index inNovember — a figure that in the past was consistent with a -192k tally in servicesector payrolls and never before aligned with a positive number. Go back to the2001 recession, and the worst ISM non-manufacturing jobs subindex was 43.9(right after 9/11) and here we published a figure that was more than two pointsshy of that!So as we wonder how the headline number could only be -11k on Friday, therewere some very lumpy increases in some very non-cyclical segments of theeconomy:• Administration/waste management +87k• Health/education +40k• Government +7kThe rest of the economy shed 145 jobs and the declines were spread acrossnearly 60% of the industrial base from retail, to transports, to manufacturing, toconstruction. For some reason, we didn’t see this dichotomy mentionedanywhere in the weekend press.

GuestDecember 7th, 2009 at 5:40 pm

How do we measure the success in Behavioral Economics?Am I cynical for thinking Christmas is the perfect time to create an atmosphere that will loosen the purse string of the consumer?”Today, behavioral economics is a young, robust, burgeoning sector in mainstream economics, and can claim a Nobel Prize, a critical mass of empirical research, and a history of upending the neoclassical theories that dominated the discipline for so long.Although behavioral economists teach at Stanford, Berkeley, Chicago, Princeton, MIT, and elsewhere, the subfield’s greatest concentration of scholars is at Harvard. “Harvard’s approach to economics has traditionally been somewhat more worldly and empirical than that of other universities,” says President Lawrence H. Summers, who earned his own economics doctorate at Harvard and identifies himself as a behavioral economist. “And if you are worldly and empirical, you are drawn to behavioral approaches.”

11b40December 7th, 2009 at 6:00 pm

The word is ‘manipulation’. At it’s base we find lies.“Harvard’s approach to economics has traditionally been somewhat more worldly and empirical than that of other universities,” says President Lawrence H. Summers, who earned his own economics doctorate at Harvard and identifies himself as a behavioral economist. “And if you are worldly and empirical, you are drawn to behavioral approaches.”And this is waht passes for leadership in the world’s greatest democracy.The very first thing I thought of when I heard those BS numbers from the BLS last week was Christmas Retail Sales, and that the numbers were manipulated to create the most positive public sentiment possible.The problem will come next month when the big revision hits. I see Octavio is figuring it out, too. Add SRS, SCC, SKF, TWM & FXP to his list ;~()Independent Contractor

GuestDecember 7th, 2009 at 11:31 am

In my mind Pesek has been one of the more insightful economic commentators around (esp on Bloomberg). I was warning of a China bubble a long time ago. Unfortunately this article only discusses the ramifications to China, not the rest of the world; there is, however, mention that the US consumerism is unable to fuel China’s growth, which kind of paints the whole picture.Gross, Roubini Weigh Dueling Chinese Bubbles: William Pesek

JLarkinDecember 7th, 2009 at 2:45 pm

I agree with this. China is still dependent on the US consumer. Lots of factories closed and workers idled over the past year and not much media coverage. Government stimulus will inevitably be misallocated to building infrastructure and industry that is not optimal, “bridges to nowhere” if you like (and apartments, airports and industrial parks).But keep in mind that the government support for certain industries, like semiconductors and LCD’s will bring about technology transfers from Taiwan, Japan, US and Korea to fuel Chinese consumerism for domestically manufactured flat screens and mobile phones. US demand is a headwind, certainly, but how overwhelming will it be? When will China run out of runway? In the meantime, key industries will continue transferring to emerging markets like China at a fairly rapid pace. This is probably not going to end well for anyone.(

GuestDecember 7th, 2009 at 4:01 pm

And if things really explode in China after a lot of manufacturing has shifted there? Ooh, what a mess!I don’t know whether it’s a plan or not, but if one were to consider that the US lifestyle wasn’t going to continue at its high levels then it would make perfect sense to relocate manufacturing, as has been done. But I think that China has been sold a bill of goods in that they didn’t really foresee this collapse in the US “consumer” and will now be forced to shift to domestic consumption. Domestic consumption, however, is going to be very difficult to grow since their export $$s will be dwindling: two negative forces acting on revenues- increasing internal consumption and decreasing exports, both “growing” the gap. And, as you note, in order to support that domestic consumption they have to ratchet up their infrastructure, which is very expensive (can you say externalized costs? that’s what business does well while pretending not to do so).Like I’ve been saying, economies of scale also work in reverse…2010 might be the year that China realizes that it’s screwed.

GuestDecember 7th, 2009 at 12:26 pm

Just who are the “forecasters?” Are they economists (or peddlers)?Options Signal Stock Peril as Analysts See Profits :

Forecasts for the fastest U.S. earnings growth in 15 years are failing to convince options traders that the Standard & Poor’s 500 Index will extend its biggest rally since the 1930s.S&P 500 options to protect against declines in stocks over the next year cost 22 percent more than one-month contracts, the highest since 1999, data compiled by London-based Barclays Plc and Bloomberg show. The gap shows concern that analyst estimates for record earnings by 2011 may prove exaggerated, endangering an advance that pushed the S&P 500 up 63 percent since March.“It’s telling you that there’s severe anxiety about the future,” said Paul Britton, chief executive officer of New York-based Capstone Holdings Group LLC, which oversees about $1 billion. “People want to protect next year, and there’s a sense of urgency.”The last time the average gap between one-year insurance and 30-day contracts was higher was five months before the S&P 500 began a 49 percent plunge in March 2000 during the collapse of the Internet bubble. More than $5 trillion has been restored to U.S. shares this year after the government lent, spent or guaranteed $11.6 trillion to end the worst recession in seven decades. (emphasis added)

11b40December 7th, 2009 at 6:13 pm

“Forecasts for the fastest U.S. earnings growth in 15 years are failing to convince options traders that the Standard & Poor’s 500 Index will extend its biggest rally since the 1930s.”Really, now what does that sentence mean? Fastest US earnings growth in 15 years? Well, after a collapse in earnings growth, YOY comps are easy to beat. Instead, have a look at total earnings and run a multi-year graph. If options traders know anything, it’s math. They know the numbers are a joke and the future looks bad, but like so many others in the game, they just take it one deal at a time.You really have to pause and think about all the BS that people write and say, especially when numbers are involved.Independent Contractor

PeterJBDecember 7th, 2009 at 4:32 pm

speaking of observations and considerations:Keywords: Global Warming and /or Climate Change | bin Laden | Obama | Benanke & Co | War killing and profit | Gold | lies and manipulation | “leadership” | stupidity | civilization | honour & courage | pain | chaos | lesson | learn | stupid |song |future… Without death how could there be any courage or indeed honour?… Without suffering how could we even learn er, anything?… Without corruption, why would we be still here?… Without song, how could our heart ever sing?Casting ones’ eye and mind across today’s wide spectrum of current events (read: applied insanity) it must be undeniable that irrationality, stupidity, and a clash of agendii has created an aura of seemingly madness oft’ referred to, by the coherent ones, as chaos. Carbon Credits, where I pay and pollute (continue to) while you get (or you think that you are going to get) my money… hah!Lost little man and his horse ;+)> still lostNobel Peace Prize “Leader” (read: “fluff”) escalates War (nothing new here) and now declared by those rabbinical neocons as yet, another, Yes, (yawn) – “War President”For those that are indeed coherent, like Julian Jaynes and the blindman, et al, don’t be too concerned, as “we” (read: “they”) are not in control of anything, despite that which they would have you believe. Yes, Life will go on but it will be without their paradigm and hopefully, without most of them, being in our faces everyday with their applied stupidity, but only if we try to learn our lessons…So the lesson of the day is: ^^^Stupid is Stupid^^^ *Please learn this vital lesson, otherwise you will condemn us all to another round of pain, similar to this one*This message is for you and you alone, so don’t concern yourself with them – Learn your Lesson and the rest (read: future with a new variety of sanity (in))follows:Ho hum

GuestDecember 7th, 2009 at 5:15 pm

No honor without death? No one can commit an honorable act unless it ends in death? This would mean that we’re all dishonorable because we’re still alive?You seem to be on this not-so-subtle campaign of discrediting the science of climate change. I would suggest taking a lot stronger, read “critical,” look at the deniers. It is the deniers (lead by profit-driven corporations, couch-scientists and Creationists) whose credibility should be looked at. (read the article I presented above- if it’s too hard to find let me know and I’ll drag it down here).Sure, the carbon tax stuff is crap, but this is what our current economic climate is going to produce; I call it capitalism, others may call it something else. I personally hate this idea, but because I hate it it doesn’t mean that I think that the science that they’re riding on top of is crap. But how else do you think things are going to turn out with a system whose main purveyors and prognosticators deny limitations to (physical) growth?Making all the opportunists go away isn’t going to change the fact that climate change is happening.If anyone thinks that shitting in one’s nest is problematic, then I suggest visiting a CAFO sometime. (but then again, one needn’t actually go there in order to feel the affects- e-coli etc.).

PeterJBDecember 7th, 2009 at 5:59 pm

With apologies for not making my message clear:Death & honour: If we did not live with death, that is to say, without death being the end of our temporal signature, our consciousness would not have developed the idea of honour; or indeed courage: that’s a given.There is no honour in death per se, the honour is in the way one lives.”Science of Climate Change”: HAaHaHaHa hahashahahahaha SOL I think you mean the pseudo science of climate change er, global warning er, applied ignorance?I believe it was Summers who dreamt up the idea of exporting pollution and he appears to be again in charge so…(?)(brings meaning to “Living in Sh%t” -store high in transit)Pollution: Not good and not necessary but don’t expect “leadership” to grasp that ideation too easily as to them it is a highly complex issue…like far as the “ists” are concerned, we are all people known as human beings and it appears that it would be immensely profitable for us to find harmonious relationships sans WAR and frenzied profiteering through influential impositions and the story of the life of the homo sapien sapien yet to be_come, so hence still an emergent phenomenon, there are merely two contexts of import and they are to comprehend human behaviours and to to discover the physics (nature) of all things.time: did I forget time you ask? No, there is no time except phenomenal time and this is confined, a priori, to the individual entity itself, without exception.Your article: You (Guest)have posted so much and already have myriads of postings on this Blog, just how am I to search all these for that particular post to which you refer?”one’s nest” I assume that you refer to Plato’s Cave (the analogy).Ho hum

PeterJBDecember 7th, 2009 at 6:07 pm

Your article on climate change and whatever:Thank you for the clarification: All and I repeat all, of these arguments are merely entertainment and deserve no comment or consideration apart from cheap amusement to lighten one’s day!Or, founded in fantasy and self-agenda(read: political).Ho hum

GuestDecember 7th, 2009 at 11:29 pm

So, you’re casting YOUR decision in with Creationists? LOL. Yeah, how bright ARE you?Just because some opportunists create a bandwagon based on the facts doesn’t mean that the fundamentals are wrong, it just means that their “solution” (or exploitation) is wrong.Go ahead, refute the items in the article? Who is to benefit? The scientists? Ha ha! No, politicians, sleazy religious cults and the like.

GuestDecember 7th, 2009 at 11:36 pm

Your article: You (Guest)have posted so much and already have myriads of postings on this Blog, just how am I to search all these for that particular post to which you refer?I figured you wouldn’t spend the extra minute to search (something that was posted to one of your many many threads attacking climate science), so I re-posted it for you.Nothing to do with Plato’s analogy: no need to try to show off intellectually. It’s pretty simple- would you toss all your garbage in your backyard and believe it to never be a problem?

GuestDecember 7th, 2009 at 11:54 pm

My apology, I got you mixed up with another libertarian… But same basic Rush Limbaugh-style attacks.And once again, yes, climate change is being used by politicians. I will NOT dispute this fact (they use everything). And I’d also say that in a way I understand why they are doing this (to stay in power; if they fall from power then the entire system is going to go with them- it’ll be economic collapse; though this will happen no matter). This doesn’t, however, mean that I condone what they are doing: I’m against centralized rule, so I’m an enemy of all statists, libertarians, democrats, republicans, you name them! Oh, and I don’t care for the US educational system either- I’m anti-hierarchical! To put it another way- I have ZERO interest in protecting ANY group; my only interest is in facts and truths (as supported by facts).This issue really didn’t come up until the much talked about “e-mails.” The article pretty much dismisses this for what it was- an internal heated discussion about coming to a decision on how best to represent data: the data is there, it didn’t change; the agreed upon change still points at the same target (climate change). Scientists do what scientist should do, and that’s constantly challenge their observations/findings: the article clearly discusses why there scientists don’t just hand samples or data to just anyone who asks/demands.As asked before, if the devil told you that God was good would you disbelieve him because he is the devil? (taking the opposite side- God is bad?) Yes, the devil is going to do bad things, but that doesn’t mean that the (well, as all the religious types tell me anyway) facts of God being good are false.

GuestDecember 7th, 2009 at 9:47 pm

RetailOne of my favorite (animated) Retail characters.Howard Davidowitz: “We Are On A Death March!” “We Are Japan!”w/video

Octavio RichettaDecember 7th, 2009 at 9:05 pm

PIMCO came out with the Kashkari hiring announcement today. The WP piece came out yesterday. There it is mentioned that Kash would start a new job in the financial services industries. Why couldn’t they say it was at PIMCO?Now I understand why the guy was in California. I didn’t understand how an Ohio guy ended up in California. As I read the article I kept waiting for an explanation on how he got to California, how he got the land. It would appear he landed the job at PIMCO and then moved to Califirnia; with the detox routine been part of the deal with the detox routine, perhaps, even suggested by zen type Gross:-)

Octavio RichettaDecember 8th, 2009 at 5:25 am

Ups! Information overload. I do recall now that the article mentions he was a tech banker for GS in California(?). If that is the case, that is where the California connection comes from.

The AlarmistDecember 9th, 2009 at 3:05 am

I didn’t realise California had immigration quotas for people coming from Ohio … or anywhere else for that matter.

AnonymousDecember 8th, 2009 at 4:17 am

”The UN’s future scenarios for climate are pure fantasy”Kjell AleklettProfessor of Physics, Global Energy Systems at Uppsala UniversityOur conclusion is that the assumptions of coal use that the IPCC recommended that climate researchers refer to in calculating their future horror scenarios are completely unrealistic.The question is why at all these gigantic volumes of carbon dioxide emission are to be found among the possible scenarios. The IPCC bears a great responsibility for the fact that thousands of climate researchers around the world have dedicated years of research to calculating temperature increases for scenarios that are completely unrealistic.The consequence is that very large research resources have been wasted to little benefit for us all.That fossil fuel reserves are insufficient to support the IPCC’s horror scenarios may alleviate somewhat our concerns about future climate. On the other hand, we must be even more concerned about future resource shortages.The shortage of oil can, for example, place even greater pressure on the rainforests through increased production of biodiesel from palm oil.The fact that the fossil fuel energy required until 2100 for the “Business as Usual” scenarios does not exist means that the world’s growing population needs a global crisis package to create new energy solutions.We must now – and with immediate effect – change the global energy system.Read more:

AnonymousDecember 8th, 2009 at 4:35 am

The Peak of the Oil Age- analyzing the world oil production Reference Scenario in World Energy Outlook 2008Kjell AleklettProfessor of Physics, Global Energy Systems at Uppsala UniversityThe connection between economic growth and energy use is fundamental in the IEA‟s present modelling approach.Since our forecast sees little chance of a significant increase in global oil production, our findings suggest that the “policy makers, investors and end users” to whom WEO 2008 is addressed should rethink their future plans for economic growth.The fact that global oil production has very probably passed its maximum implies that we have reached the Peak of the Oil Age.Read more:

The AlarmistDecember 9th, 2009 at 3:08 am

Maybe, maybe not. Peak production does not necessarily mean peak supply, as new reserves continue to be found. And it is only peak production due to constraints imposed largely for environmental reasons. But so what if it is peak-oil?The way things are going, the only way we will find viable alternatives is when we finally used up all the oil. So be glad we are running out, if we are.

Octavio RichettaDecember 8th, 2009 at 7:05 am

It loooks like bulish MMWW (money managers worldwide) will have a hard time holding the market up in December:Stocks, Gold, Oil Retreat While Treasuries, Yen, Dollar Advance

PeteCADecember 8th, 2009 at 1:50 pm

Who would have thought that golfing could be so hazardous to one’s health !??There must be at least 20 million more blonde bombshells who have not climbed on this bandwagon, yet. I give them a good two or three weeks. It’s so hard to reach your lawyer and publicist … right before Christmas time. :-)PeteCA

MorbidDecember 8th, 2009 at 9:15 am

An End Run By The World Bank?Copenhagen Climate Summit In Disarray After ‘Danish text’ Leak

The agreement, leaked to the Guardian, is a departure from the Kyoto protocol’s principle that rich nations, which have emitted the bulk of the CO2, should take on firm and binding commitments to reduce greenhouse gases, while poorer nations were not compelled to act. The draft hands effective control of climate change finance to the World Bank; would abandon the Kyoto protocol – the only legally binding treaty that the world has on emissions reductions; and would make any money to help poor countries adapt to climate change dependent on them taking a range of actions.

Everything is bankrupt!

The AlarmistDecember 9th, 2009 at 3:12 am

We need to keep in mind that none of our esteemed leaders and concerned scientists are taking the best interests of plants into account. Instead of fearing carbon emissions, we should embrace them for the sake of the disempowered plants of the world.

MM CADecember 8th, 2009 at 9:21 am

anyone seeing the same thing I am? All the holiday spending/buying chatter and news has fallen off a cliff. Stores look extremely empty and no one is talking much about the effect of average joe American Holiday spending. Seems it all died the day after black monday.i suspect retial numbers will be horrendous when they start reporting in january. There good be some pretty big Retail names goign under the 1st qtr. too.

SoftwarengineerDecember 8th, 2009 at 11:18 am

You Got ItI was thinking about this days ago and I’d say the zombie banks with 23% minimum credit card interest jack ups, “just in time for the holidays”, has shifted a lion’s share of consumers to debit cards. Have you noticed the VISA debit card advertisements are rampant lately?How much is in Americans’ checking accounts for Christmas debit card shopping, versus using credit cards?I’d say only a small fraction.

11b40December 8th, 2009 at 2:04 pm

I just returned from a meeting with a major department store. Black Friday sales were good in the division I was working with and they made plan. The “Branded” goods are holding up well at retail, delivering much needed volume and margin. All is not well in paradise, however, as their opening price points and non-branded goods are struggling. The assumption is, the non-branded customer is headed to the discount stores. Business is slack during the week, but weekend sales (ad driven/margin killing) have held up pretty well so far. In addition, certain departments are doing exceptionally well (small appliances, for one) and would be doing better if they had more inventory. Coffeemakers, for instance, are essentially sold out and the vendors have no goods for re-orders.So, what does it mean? Over lunch, our conclusions are that the consumer with discretionary income is persuing a kind of flight to quality with their personal purchases. When they spend the money, they want assurance of quality that brand names deliver. More marginal consumers are shopping elsewhere with greater frequency. The Department Store customer is the upper income consumer, and they do have the dollars to spend if the choose.Many questions remain – especially regarding 2010. There is a lot of fear after the disaster experienced in first half of 2009, and nagging feeling that after Santa goes back to the North Pole, the consumer may go into hibernation.Just another day in the life of retail.Independent contractor

Pecos BankerDecember 9th, 2009 at 4:17 am

It’s funny, you mention debit cards. The French don’t use credit cards, only debit cards. Their economy is doing great. The stores and malls are briming over with shoppers.

Average JaneDecember 8th, 2009 at 2:05 pm

I’ve noticed that too, MM CA. At this time last year news coverage was wall-to-wall of the Great American Consumer feverishly shopping for holiday gifts with live interview updates every five minutes on how much money they were spending. This year, not so much. It does make one wonder.

GuestDecember 8th, 2009 at 11:21 am

Bloomberg notes that the carbon trading scheme will be centered around derivatives:The banks are preparing to do with carbon what they’ve done before: design and market derivatives contracts that will help client companies hedge their price risk over the long term. They’re also ready to sell carbon-related financial products to outside investors.[Blythe] Masters says banks must be allowed to lead the way if a mandatory carbon-trading system is going to help save the planet at the lowest possible cost. And derivatives related to carbon must be part of the mix, she says. Derivatives are securities whose value is derived from the value of an underlying commodity — in this case, CO2 and other greenhouse gases…Who is Blythe Masters?She is the JP Morgan employee who invented credit default swaps, and is now heading JPM’s carbon trading efforts. As Bloomberg notes (this and all remaining quotes are from the above-linked Bloomberg article):Masters, 40, oversees the New York bank’s environmental businesses as the firm’s global head of commodities…As a young London banker in the early 1990s, Masters was part of JPMorgan’s team developing ideas for transferring risk to third parties. She went on to manage credit risk for JPMorgan’s investment bank.Among the credit derivatives that grew from the bank’s early efforts was the credit-default swap.Some in congress are fighting against carbon derivatives:“People are going to be cutting up carbon futures, and we’ll be in trouble,” says Maria Cantwell, a Democratic senator from Washington state. “You can’t stay ahead of the next tool they’re going to create.”Cantwell, 51, proposed in November that U.S. state governments be given the right to ban unregulated financial products. “The derivatives market has done so much damage to our economy and is nothing more than a very-high-stakes casino — except that casinos have to abide by regulations,” she wrote in a press release…However, Congress may cave in to industry pressure to let carbon derivatives trade over-the-counter:The House cap-and-trade bill bans OTC derivatives, requiring that all carbon trading be done on exchanges…The bankers say such a ban would be a mistake…The banks and companies may get their way on carbon derivatives in separate legislation now being worked out in Congress…Financial experts are also opposed to cap and trade:Even George Soros, the billionaire hedge fund operator, says money managers would find ways to manipulate cap-and-trade markets. “The system can be gamed,” Soros, 79, remarked at a London School of Economics seminar in July. “That’s why financial types like me like it — because there are financial opportunities”…Hedge fund manager Michael Masters, founder of Masters Capital Management LLC, based in St. Croix, U.S. Virgin Islands [and unrelated to Blythe Masters] says speculators will end up controlling U.S. carbon prices, and their participation could trigger the same type of boom-and-bust cycles that have buffeted other commodities…The hedge fund manager says that banks will attempt to inflate the carbon market by recruiting investors from hedge funds and pension funds.“Wall Street is going to sell it as an investment product to people that have nothing to do with carbon,” he says. “Then suddenly investment managers are dominating the asset class, and nothing is related to actual supply and demand. We have seen this movie before.”Indeed, as I have previously pointed out, many environmentalists are opposed to cap and trade as well. For example:Michelle Chan, a senior policy analyst in San Francisco for Friends of the Earth, isn’t convinced.“Should we really create a new $2 trillion market when we haven’t yet finished the job of revamping and testing new financial regulation?” she asks. Chan says that, given their recent history, the banks’ ability to turn climate change into a new commodities market should be curbed…“What we have just been woken up to in the credit crisis — to a jarring and shocking degree — is what happens in the real world,” she says…Friends of the Earth’s Chan is working hard to prevent the banks from adding carbon to their repertoire. She titled a March FOE report “Subprime Carbon?” In testimony on Capitol Hill, she warned, “Wall Street won’t just be brokering in plain carbon derivatives — they’ll get creative.”Yes, they’ll get “creative”, and we have seen this movie before …an inadequately-regulated carbon derivatives boom will destabilize the economy and lead to another crash.

CaponeDecember 8th, 2009 at 11:50 am

Professor, you are a transparency advocate right? Would you address this next time they scurry you before the camera on CNBC?OTC derivatives? Really! You have got to be freaking kidding me.

GuestDecember 8th, 2009 at 1:26 pm

Yes and no – it a greenhouse gas, but enough of it creates clouds which reflects sun and reduces the warming effect…

The AlarmistDecember 9th, 2009 at 3:15 am

And the cloud comment is largely rubbish … clouds are a key component in the so-called greenhouse effect, far more so than carbon.

The AlarmistDecember 9th, 2009 at 3:14 am

It’s not being regulated because it cannot be as easily taxed as the other mainstream greenhouse gases.

bDecember 8th, 2009 at 5:04 pm

m,this was added as if you would like to purchase ( and this isnot an advertisement ) the 30 minute short film “la ricotta”,it comes as a special feature on the “criterion collection” editionof “mamma roma” also by Pier Paolo Pasolini. you can google at wikithe review of the plot and then it will make sense.a statement involving the theme of fascist? dreams and state religionthrough the lens of a story about a prostitute and her orphaned son.something like that.. the son….” Ettore dies in an Italian prison even though he doesn’t die from extreme physical torture. Pasolini shows that the corruption of society is not because of outside forces like Roma under Nazi occupation. The problems are actually created within the society or the people in it.There is a shot of the landscape of Rome in the end of Mamma Roma. The dome of a church sticks out from the rest of the top of buildings. The scene shares the similarity with the aforementioned Rossellini’s film again. In Rossellini’s film, the dome of St. Peter’s appears as the background when boys are walking on the street dragging their sadness. They seem like they are walking toward St. Peter’s or “the house of God.” On the other hand, in Pasolini’s film, when Mamma Roma finds out Ettore’s death, goes back to her apartment and tries to jump off the window, she sees the dome of a church. She stares at the dome. The image of her and the dome switches back and forth. Her stare gets more intense. The film ends.”.( spoiler.) sorry.

JLarkinDecember 8th, 2009 at 1:07 pm

With all the confusing articles and opinions out there right now, I’ll list a few things about which I am confident.• Good jobs are hard to find and unemployment (U3) will continue to be 10% for a couple of years.• Unemployment puts pressure on wages, benefits, and bonuses. All three will continue getting cut by various organizations at various times.• Lower wages means that consumer demand will remain slack, except for fortunate investors, people with job security, and people in key industries.• Prices will not be able to rise much in this economy.• Company earnings will be under pressure and the stock market may correct.• A flight to safety will strengthen the dollar and commodities may correct.• Consumer, corporate and municipal defaults will continue, maybe accelerate.For the next year or two:• Credit will remain tight.• Consumers and corporations will reduce debt and postpone capital expenditures or durable goods orders.• Imports, durable good orders, and shipping will not improve much.• The government will increase stimulus and continue bail-outs (of banks, the states, etc.) and make record deficits.• The banks will be made to appear healthy by hook or by crook, and will lend conservatively. Except Wall St. banks will continue to gamble by using leverage to get higher returns. If they fail again, they will be bailed out.• Those with cash will scoop up bargains.I believe this describes what Nouriel means by an L or U shaped recovery, and what Bernanke means by a slow recovery.

GuestDecember 8th, 2009 at 2:11 pm

One in eight Americans are on food stamps. Imagine there was no food stamp program. Where would you see these 30 million folks? ON BREAD LINES!! Forget this alphabet game-It’s a depression differing only from the Great Depression by a more advanced societal safety net.

SoftwarengineerDecember 8th, 2009 at 3:27 pm

You Got ItAdd in the historical fact we had a Dust Bowl then and we lacked food production skills we have today; the comparison of hunger/homelessness in America is far worse today than the Great Depression.

BobDecember 8th, 2009 at 3:50 pm

Food stamps recipients are at ~38 million and growing at about 750K per month. Then you throw in unemployment insurance payments, in states like California, that now pay ~92 weeks (close to 2 years now)!How NR gets to an L or U shaped recovery is beyond me! We haven’t reached bottom yet and it will take years for that to occur. A large ‘Black Swan’ event is the only hope of making it bottom quicker.

bDecember 8th, 2009 at 2:15 pm

what is the meaning and main function of a derivative?who do they serve? who or what entity is not servedby them? why do they need to be associated, predicatedon anything at all? and, at his phase, why an element or compound?hmmmm?ps.death offers relief if nothing else. relief from the companyof the cowardly insane overlord imaginatists who dream up thingslike a “carbon derivative” to commit selective genocide and capturevalue at a distance. it is nothing more that institutionalizedslavery by fascism. global planning by mouskateers. and cheesy.and ridiculous, moronic, and a clear sign of deep desperation..not for the environment but for authority to steal value at adistance. theft by law. same old story. since everythingthey touch turns to shit we should have a shit derivative anda toilet paper derivative to trade otc. some ideas are justso bad and dangerous that the originator should be immediately imprisonedbefore the thing catches on. it is getting dangerous out there!and how will the carbon derivative bubble collapse? with the incentiveto create a conflagration to increase the basis, carbon emissions, to justifyall the speculation that has no foundation. great, a financial instrument thatturns the burning of the entire globe into a massively profitablecredit event and the market will literally be on fire. ….there may be no honor in death, per se, but there must be relief..pps. story is over. the financial engineers have been caught red handedcounterfeiting the currency but have stolen enough to pay off theirassigned regulators. they have unchecked the checks and outweighed the balancesand are moving to go fully global. truth, law, ethics, morality, spirituality,science have nothing to do with this power grab. but they always need you andyour voluntary compliance, especially in the early phases.your unknowing in the face of their pure bullshit is the first move. it is alwayscheap at first, then you feed the beast. later realizing “this makes no sense”i am working poor / they do not and are rich. so it goes…..we will see.

GuestDecember 8th, 2009 at 2:42 pm

Meredith Whitney: Consumers in Troubleby CalculatedRisk on 12/08/2009 09:48:00 AMFrom CNBC: Government ‘Out of Bullets,’ Consumers in Trouble: WhitneyPrimary among her concerns is the lack of credit access for consumers who she said are “getting kicked out of the financial system.” She said that will be the prevailing trend in 2010….”You’re going to get a situation where you revert from a consumer standpoint,” she added, “where those that had bank accounts for the first time, credit cards for the first time, homes for the first time get kicked out of the system and then fall prey to real predatory lenders.”…”I have 100 percent conviction that the consumer is not getting any better and there’s not more liquidity,” Whitney said. … “For a 2010 prediction, which is so disturbing on so many levels to have so many Americans be kicked out of the financial system and the consequences both political and economic of that, it’s a real issue. You can’t get around it. This has never happened before in this country.”

PeterJBDecember 8th, 2009 at 3:35 pm

“… there may be no honor in death, per se, but there must be relief.”@ By b on 2009-12-08 14:15:40You are obviously an optimist – see, now I have categorized you 😉 (it’s the rage, and fashionable you know)… but we don’t know, do we?Well knowing doesn’t stop us from pretending that we know, like “economists”, weather theorists, greenists, UN type expert-ists, politianists, bureaucrats (ists),unemployed (-able) diplomat-ists, self-styled academic-ists, scientists and pseudo-scientists (summer holiday and professional grant manipulators / hoppers)and all such like, all which pretend that they know. But what is it that “they” know?So, as a student of the ancients crafts of alchemy (of Islamic origin, Oh Dear!)lore, and of the Brahman traditions “I know” that there is a probability of reincarnation and therefore I can state (pretend) quite categorically, that death may/could /perhaps /would /maybe / under certain conditions and subject to continued funding of my thesis for at least another 4 years that is to say and in other words, until such time that I receive my tenured position at the University of Post Tense as the Chair of Socialized and Consequential Pretence (after which I will expect far larger donations to my research programs)er, not bring relief but actually send you back for another round of hell on Earth, as a tax-payer (Inshallah, and, er, “God forbid and may He have mercy on my er, your soul).)Expectations… “forgive him, for he knew not what he did”. Expectations, like imagination are always coloured and painted by the emotions that just make your eyes roll over and over… hallelujah, brothers and sisters… its economics and weather theory for all.Ho hum ;-[>

blindmanDecember 8th, 2009 at 6:12 pm

pjb,i think you may be correct concerning most everything, includingyour optimistic cynicism. ( reincarnation ). we seem to be at thepoint where the cynics and the optimists, the hero the terrorist andrich and poor have all become …. indistinguishable? the rug has beenpulled from beneath the foot, so to speak. we stand or walk on ….water? or is it fire? opacity has become revealing and we haveseen the “lack of light”!. and … operating system is also a continuous shadow systemfull accessible by micro(nsa)soft. i think they have, infinite wisdow, wrongly determined that privacy = loneliness,and no one should be so have figured me out! i am an optimist in the faceof collapse and doom and until death. for now.

Octavio RichettaDecember 8th, 2009 at 4:11 pm

THIS IS NOT INVESTMENT ADVICE!In the last two days I have established the following short positions. All of them ultrashorts:SDS, TWM, DUG, DZZ, EEV, EUO, FXP, QID, SOC, SKF. (I may add SRS tomorrow and increase the short and gold euro positions)SKF, QID, SDS, TWM are between 1.5% and 2% of total assets. The others are all close to 1%. The ultra short nature of the holdings of course doubles the short weight. As a result, my net equity exposure went down from around 28% to less than 10%.I also sold in-the-money Dec-19 covered calls* on my high-yield consumer goods stocks (except nestle for which there are no calls). The calls were all out of the money by the close today.The stocks I am long are: LLY, JNJ, MRK, PFE, VZ, T, PG, PM, MO, NSRGY. This are all between 2% and 3% of assets, except for PG which is 7%.*In retirement accounts as I don’t want to run the risk that a stock with a significant capital gain is called from me in a taxable account as this would be a taxable event.

Octavio RichettaDecember 8th, 2009 at 4:17 pm

So I guess I will receive the new year alwomst fully hedged. I don’t anticipate going net short; but you never know. The bear noise meter is as high as it has been since march. And I think the bulls are now ready to start listening…

Octavio RichettaDecember 8th, 2009 at 4:29 pm

if you are gonna get into any short etf positions, make sure you read the fine-print well. Diz things don’t behave well as long term holdings and/or when variability conditions deviate significantly from historical norms. read the prospectuses. IMO, holding for a few months should be OK. I also control possible ‘surprises’ via making the positions small. Diz way, you don’t make much but you don’t loose much either:-)

11b40December 8th, 2009 at 5:45 pm

…and you might mention that the capital gains can be a huge surprise in a taxable account come December if your ETF’s have a good year. The Ultra’s are like playing with fire, I cleaned up with them in 2008 and 1st qtr 2009, but then got whacked pretty good April forward for not adjusting my bearish stance. Your direction for 2010 seems right to me. Did your advisory service switch trend direction?Independent Contractor

Octavio RichettaDecember 9th, 2009 at 5:31 am

IMO, we are at cross roads again. I’ve had the golden touch for the last two years but I NEVER fool myself into believing that I have any kind of special skill and always expect the markets to bruise me badly. I love risk taking so I have to make a tremendous effort to control risks and make capital preservation my numero uno objective. If you just don’t care about risks it is easy to do well in up years. Datz the reason why the performance of the guys managing OPM looks so good this year; but they also get whacked pretty good in years like 08 in which most of them got double digit losses.Now lets try and answer your question: I am just trying to get to the 2009 finish line. My hunch is that December [for a variety of reasons I try to convey in my posts; e.g., weak consumer spending, increase credit risks, Dubai, Greece, etc.] will be softer than most MMs expect but the clock hasn’t run out yet. Things can turn around in a dime and all the ultra short stuff could turn around suddenly and whack 2-3 percentage point out of my 2009 performance. Remember, diz guys are trying to look for any excuse that gives them the comfort to pump up all asset classes in the year’s last 16 days of trading.I think the odds are in my favor, I give it a 60:40, not a 99:1!I see 2010 up to a slow start but last year, when the FED lowered rates to zero in December, I saw things too soon. I believed the year was gonna start strong and position myself accordingly (read my posts); but ran into a freight train in March. As you may recall from my posts, my YTD got as low as almost -15% sometime in March.BTW, everyone and the cat is jumping now into utilities and high dividend stocks. In a flat market you do get your 4% dividend return. But if we get anywhere close to a 10% correction, the dividend guys are gonna jump ship just as the rest. Those low beta stocks will go down less than the overall market but they will go down enough to wipe “the easy” dividend return.

Octavio RichettaDecember 8th, 2009 at 4:14 pm

Marketers Pull All Tiger Woods Ads From Prime-Time Television was about time! I guess diz is what happens when you don’t growup like a regular kid. U break down later in life!

Octavio RichettaDecember 8th, 2009 at 4:31 pm

Watch Meredith Whitney Explain How She’s Bearish But That She’s Been “Trading Bullish” to watch Da’ blond lady! She’s been may be the key word. I will watch now…

Octavio RichettaDecember 8th, 2009 at 4:37 pm

She said consumer spending is her strongest area of research. Good to keep in mind! See post about this at CR (above)

PeterJBDecember 8th, 2009 at 4:34 pm

And, about those that want to know: Paranoiac RetreatsDo you remember those sign-up for an account declarations that ‘we will never release your private details – please read our Privacy Policy’ that were always at the bottom of email account applications?Well, the First Rule of the Internet always was and remains so today:”If you are connected (to a telephone), you have NO Privacy”.And just to remind you that mobile phones all (most, if not all models since 2008) have GPS and listening functionalities where the only way to turn this off is to remove the main battery as well as the tiny secondary batteries (which you don’t know about yet), in higher level models.We are all “terrorists” now!!And and from the King of the Pollution Export Policy Industries: Larry SummersAll Rise! but great things as more of the reincarnated are created to bring tribute to those that know: see(r);-}]> above.Ho humHo hum

GuestDecember 8th, 2009 at 7:51 pm

Hyperinflation? Some history to consider.”Although the US economy is still struggling with 10%+ unemployment, deeply indebted consumers, and millions of homeowners under water on their mortgages, many investors are worried about the return of that old bugaboo from the 1970s, inflation.But some well-known investment gurus go further still: They say the US is on the brink of hyperinflation, out-of-control price increases of astonishing magnitude.But hyperinflation? Weimar Germany? Slobodan Milosevic’s Yugoslavia? Robert Mugabe’s Zimbabwe? Come on, people, please—get a grip.”

AnonymousDecember 8th, 2009 at 7:58 pm

ive seen this behaviour before,sounds similar to:-hmm, here no waynaaaah not mei dont believe itoh boy… weimar here we come

GuestDecember 8th, 2009 at 9:14 pm

The comments in the article are thought provoking.”We are in a **** sandwich. And you want civil unrest you got Beck, Limbaugh and Hannity ranting every night how much better we’d be without our President to a bunch of gun toting idiot hillbilly tea baggers that I assume is all thats left of the RNC. Our how about 90 IQ Sahara Palin gets elected. Our country and its fiat currency is deep trouble.”hlowe

blindmanDecember 8th, 2009 at 8:27 pm

ps.@ “..but we don’t know, do we?”.i remember this from an old lady i used to sharean apartment with. she used to say, all the time…” with what i don’t know about ……( fill in the blank),you could fill a big book.”at night she used to speak really loudly from her bed, sayingthings to me and my wife that she would never say to our facesin the morning. she wanted us out of the apartment, but she alsodid not want us to leave. many people thought she was crazy butactually i think she was just human. she was 89 and had a thingfor this 25 year old chinese exchange student , a prior occupant.second thought, we were crazy and she was right to want to be rid of us..anyway, if we don’t know then no one ever will. knowingbeing of primarily two types. one, as you said above, a state or conditionpredicated upon and necessitated by our temporal / organic signature andtwo , the verbally (symbolic) mediated harmonic associated with could be that it is all too simple for us to elevate it to the “status”of “knowing” as we commonly use that term. ie. i don’t know!.ps.did i post this part already? i don’t know?a derivative creates the “idea” of value, in one particular imaginary moment,providing there is adherence, agreement and consensus concerning the narrativecreated to imbue “it” with “value” thereby making it convertibleor exchangeable for something with recognized value, and “recognized”by an entirely different and perhaps conflicting amounts to printing money so long as you have the treasury andgovernment officials fat and happy, in the hot tub with strangersand on video. (or under some threat). pressing the acceptance ofparalogical compliance. ( crazy making for the rational people )..i see nothing but problems here. we are not capable of keepingour stories straight when we agree on a single narrative, not thatthat is possible either..carbon derivative, ha. trade in faith as your mind is useless and tribute to the gods, that is all it can amount to. thegods of fascism..but are we for it or against it? institutionally sanctionedimplements / financial tools of fascism.sheesh….was it “financial tools of mass destruction”? was he first againstthen for?.double dejavu …

blindmanDecember 8th, 2009 at 10:35 pm

ps. and ..this seems to be related to the linear reductionist trap…or void that requires a fleshy narrative to provide contextas the real basis is abandoned and becomes a tangentialtriviality, secondary to the tangential derivative whichhas been imagined in “time” or “out of “time”” into a conceptualspace that requires decoration, or virtual flesh. the goalperhaps being foresight but in a narrative that has no true relationregarding the reality that was “modeled”. ideas about ideas,striving for the prophetic. when they are confronted with realitythe trance of denial and paralogical compliance function toprotect the structure of ideation, social norms which function to facilitateadherence to social order or historic continuity. control. could be goodor bad, depending on reality.?i sleep

Pecos BankerDecember 9th, 2009 at 4:34 am

Here’s a good read for you, blindman. Perhaps you’ve already seen it.Stuffed and Starved by Raj Patel. ISBN9781846270116The subtitle is “From farm to fork, the hidden battle for the world food system”.Everyone should read this. The food we eat is crap and getting worse.

blindmanDecember 9th, 2009 at 7:14 am

p,i’ll check that out. i read “fast food nation”years ago. history of reverse engineered food( fast) food in america. disgusting. this is whywe are so looks, smell, tastes, has texture of “food”but is it nutritious like “food”? the “experience” of the foodis constructed in a marketing “think” tank andchemistry lab. more top secrets.

PeterJBDecember 8th, 2009 at 11:08 pm

If my Grandfather hadn’t told me the truth about Banks (and “leadership”) 60 years ago, then this statement would be quite novel:”Echoing FSA chairman Lord Turner’s comments that banks are “socially useless”, Mr Volcker told delegates who had been discussing how to rebuild the financial system to “wake up”. “ it is clear why Larry Summers has influenced the ‘White House Team O” to keep Volker back in the shower room away from the action. The Banks are *utilities* and should be organized as such as opposed to the Holy Order of Highnesses and Priesties.Ho hum

The AlarmistDecember 9th, 2009 at 3:25 am

You know, the Utility analogy isn’t so far off the mark … you have an industry practically legislated to certain profitability and people at the top pretending to add so much value that must surely warrant big money.

PeterJBDecember 9th, 2009 at 2:40 am

Volker and the staement that ‘banks are socially useless”: secondary thoughts…I remember FedRes Chairman Benanke puppying along behind Hank Paulson to the offices of Madam Pelosi and then onto the White House. Then discussions with the elite king makers of Congress and the Senate – all on the basis that what are now the prime banks, they are/were so vital to the US and global economy that nothing could be spared unless others would be responsible for the World to collapse.And we also have these bankers doing the work of the Lord; God’s work indeed, so vital are these banks they are far above the fettle on mere men and the unwashed, so much so, we are asked to become on bended knee and Kow Tow while singing rock of ages.And, in every country in the World of Western influence, it has all been about the importance of the “banks” as they are so vital to all economic matters of civilization. First in line here in Australia without a blush even after caught in the acts (not the plural) secret provisioning, all has been justified on the premise (promise?) that the banks are vital to the economic good health of all society.And now we have Lord Turner AND Paul Volker, the latter who is a man of proven ability, a man of some great contextual experience, a man well qualified to know just what is what; a man of Team O, but a man of all this resource that has been kept out in the cold on matters economic in terms of global, banks (both the old and the transformed (“born again”)IOW. One side has it that banks are “socially useless” while the other has it that they are up there with God (Hallelujah)?I’m with Volker on this: Dump the FedRes and transform it into a Bordello.Ho Hum

Pecos BankerDecember 9th, 2009 at 4:50 am

I thought this was Dr Doom’s blog. Why, we’re nothing in the Doom department compared to the comments over at Zerohedge. Check out the comments section of their lead article on the Collapse of Witholding…The regulars seem to be lining up behind the economic collapse scenario, and there are some who are regular readers of is the Surviving in Argentina site. You’ll enjoy the bullet proof vest ad. Somebody suggested that perhaps Argentina economic collapse was engineered to give the PTB a sort of “how to” manual for the US. Fuel for the paranoid. Get your daily dose!Sometimes, with all the corruption and lying going on in America, I can’t help thinking it’s really turning in to Mordor. But that could just be from reading too many internet blogs! A dark cloud is settling over America from California to Maine. Makes Revelation seem like a contemporary chronology.Perhaps such blogs should come with the warning: Warning, reading pessimistic internet blogs could be hazardous to your mental health.

11b40December 9th, 2009 at 8:14 am

So can wolking down Main St and looking at the empty storefronts, reading the paper and noting the ‘going out of business sales’, going home for the hoidays to learn about the reltives who have lost jobs, etc.Independent Contractor

GuestDecember 9th, 2009 at 7:54 am

Unemployment numbers don’t tell the real jobs crisis storyWEB EXCLUSIVEBy Edward E. GordonDecember 8, 2009While the drop in unemployment rate in November from 10.2% to 10% was welcome news, the fact remains that economy is still in crisis mode. The United States is coping with 15.7 million unemployed and 7.3 million jobs lost between December 2007 and October 2009. And, despite November’s jobless claims dip, we’re not likely to see real improvement anytime soon.In a recent New York Times column, Thomas Friedman suggested that a critical reason for the Great Recession is “an education breakdown on Main Street” that has undermined the ability of the average American worker to compete in the global arena. While financial disasters and job losses have grabbed the headlines, there is credible evidence supporting Friedman’s contention.AdvertisementManpower’s 2009 Talent Shortage Survey (June 2009) of 39,000 employers in 33 nations reported that 30% of employers were still experiencing difficulties in filling jobs. In the European Union, this represented 2.3 million jobs and in the United States, about two million vacant positions, i.e., jobs unfilled for six months or longer. This was confirmed by two additional reports. A National Federation of Independent Businesses 2009 survey indicated that 23% of small businesses had few or no qualified applicants for job openings, and 8% had vacant positions.The September 2009 Employment Dynamics and Growth Expectations Report from the staffing firms Robert Half International and Career Builder also reported that human resource managers judged 47% of their applicants unqualified. Many of these vacant positions were STEM jobs or those that are in science, technology, engineering, or mathematically-related areas. For the United States to retain its competitive edge, it must build up its technological and scientific talent in such high-tech areas.The 2009 EDGE Report pronounced technology as the number one area of future job growth once the economy recovers. Economists at Goldman Sachs, HIS Global Insight, and the Northern Trust concur in the importance of this sector in producing new jobs. The United States must keep spawning new technologies in such areas as aerospace, nanotech, biotech, and advanced manufacturing that produce innovative high-value products and services generating high-wage employment gains.But it will take time to retrain current workers and better prepare students for this transition to a “Cyber-Mental Age” of all-embracing technology. The canary has been singing in the mine for several decades warning of our growing lack of talent as we enter a transitional labor-market era.For the year 2010, a chief economic concern is the future of the U.S. job market. As a historical economist trying to connect the dots for a more holistic picture, I think that this 2010 jobs crossroad can best be described in three paradoxes: a technology paradox, a people paradox, and a globalization paradox.The technology paradoxIn 2009, the World Future Society predicted that over the next decade the amount of new technology introduced into the U.S. economy may equal that of the last 50 years. Already an acceleration of the talent shift from low-skill jobs to more complex knowledge jobs across major world economies is increasingly evident. Many of these jobs are in STEM-related occupations. At the top of this STEM jobs pyramid are scientists and engineers with advanced degrees who are inventing new technologies.However, installing, applying, and maintaining these technologies across the entire spectrum of the U.S. economy will require an even broader base of middle jobs for knowledge technologists. The U.S. Bureau of Labor Statistics and the Educational Testing Service predict that over the next decade, 60% of these positions will not require a four-year college degree at the entry level, but rather appropriate occupational certificates, two-year degrees or post-secondary apprenticeships.Gone forever are the days of semi-skilled, well-paying blue-collar factory jobs that can provide a 19-year-old dropout or high school graduate with a living wage. Today counting on a low-skill manufacturing or service job to keep you in the middle class is as sensible as buying a BETA tape for a Blue Ray DVD player.The people paradoxMany national economies are just beginning to experience the disruption unleashed by a rising tide of a baby boomer retirements, and due to decades of declining birth rates, a dearth of replacement Generation X and Y workers. Between 2010 and 2050, the United Nations predicts some dramatic annual national population losses: Germany, 100,000; Italy, 100,000; Russia, 700,000; Japan, 50,000, and Korea, 50,000. The shrinking working-age populations of such countries will have to support higher and higher numbers of retirees.In the United States, 79 million baby boomers will retire, but the fertility rate has remained at a replacement level. Thus, when immigration is included, the U.S. workforce will not shrink over the next decade, but it is likely to grow very slowly. Shifts in generational values are also magnifying the impact of demographic change.On top of this, the work-life ethos is changing. To varying degrees, both Generations X and Y are more interested in obtaining a good work-life balance. Most businesses are having problems adjusting to their demands for more flexibility. Added to this is a widening skills gap between these generations.Since the publication of A Nation at Risk in 1982, a steady drumbeat of reports continues to be issued about the serious deficiencies of American education. In this age when some form of postsecondary education is a requirement for all but low-wage, low-skill jobs, the overall U.S. high-school dropout rate has now reached 30%. Even more alarming, the average high school graduation rate in the 50 largest U.S. cities was 52.8%. In a 2005 survey, 60% of American manufacturers reported that even those high-school students who did graduate were poorly prepared for entry-level jobs.As one inner-city Algebra I student told Bill Gates, “Some people seem to think it’s cool to be stupid. But it’s not.” If you do not think that the United States is paying a price for such thinking, just look around.The rate of personal educational progress has significantly slowed. The United States is falling behind a number of other nations in the percentage of youth finishing high school and obtaining specific career preparation at the postsecondary level. The Organisation for Economic Co-Operation and Development reported that between 1998 and 2006 there was no increase in the number of younger people in America who successfully obtained skilled jobs.For the first time in American history, the next generation of workers will not be better educated than the generation now retiring. Too many younger American workers are not equipped for today’s rapid pace of change in which jobs come and go, and skills can rapidly become obsolete. This is the people paradox.The globalization paradoxOver the past several decades, the United States has muddled through these skilled people shortages using two major talent safety valves:1) America has imported large numbers of high-skill workers using H1-B visas.2) U.S. businesses have used outsourcing, not just of low-wage jobs, but also millions of high-skill, high-wage jobs which they have placed in countries with wages either equivalent or higher than the United States, including: Germany, Japan, Singapore, Korea and Canada.But these business talent safety valves are about to fail.As we have seen, many nations are beginning to experience severe yearly population declines. This population shrinkage includes a significant decline in the size of their workforces. And the go-to sources of talent that countries could once easily rely on, such as India and China, are having challenges of their own.Both India and China graduate about 400,000 engineers each year. Yet according to several McKinsey & Company studies and other sources, only about 25% of Indian graduates are considered qualified for employment in international businesses. Worse yet, only 10% of Chinese graduates meet world-class multinational expectations. As India’s and China’s economies have become more sophisticated, they are moving from low-skill to high-skill products and services.To meet these demands, both countries have begun to call home millions of expatriates—engineers, scientists, medical personnel, and others—to fill the large talent gaps growing across their economies. One indication of this change is the change in H-1B visa applications. For the fiscal year 2010 after 211 days there were still thousands of H-1B visa slots available. For 2009 it took one day to fill all the slots and in 2008 two days. Would be immigrants from India and China are finding good career opportunities at home.This is the globalization paradox. In the immediate future, U.S. businesses will fail to import nearly enough high-skill talent. Nor will they be able to export enough high-skill jobs overseas. How will America keep pace with both new job growth and finding the massive amount of talent needed to replace departing boomer workers? The bottom-line answer: the U.S. labor market must begin equipping more Americans with the education and skills to fill these jobs.A global talent enigmaThe present talent enigma threatens the future U.S. and global economy. The housing-banking bubble collapse has changed nothing. The current recession will only quicken the pace in eliminating low-skill jobs as the United States moves firmly into a knowledge-based technology economy. Current economic upheavals may for a time mask these talent shortage issues, but over the next decade they will not be able to reverse the major socioeconomic forces behind this global talent showdown.The United States needs an immediate major overhaul of its talent creation and distribution systems. If not addressed, Manpower, Inc. predicts that over the next decade, 10% to 20% of U.S. businesses that cannot fill key positions will be forced to close. Businesses will face the dire possibility of 12 to 24 million vacant positions.RemediesThere are, however, businesses and communities that have begun working to change this talent black hole into a decade of opportunity. They are beginning to forge partnerships that I call “Gateways-to-the Future.” Across America, numerous community-based organizations (CBOs) and non-governmental organizations (NGOs) have been at work for more than a decade expanding business-education partnerships. They have mobilized the broad participation of chambers of commerce, unions, parent organizations, workforce boards, economic-development organizations, and other community groups.In Santa Ana, Calif., Fargo, N.D., Danville, Ill., Mansfield, Ohio, and in many other communities, these local CBOs and NGOs are now making significant local investments to reinvent their local and regional education-to-employment systems. They have helped businesses stay competitive through worker retraining and elementary/secondary/postsecondary career-education programs, including career academies. These CBOs and NGOs are rebuilding talent pipelines and helping to attract new businesses offering higher-wage, higher-skilled jobs for their communities.CBOs/NGOs are often regional entities that can encompass many communities. They act as neutral civic spaces that begin the conversation of what needs to be done and then building a broad network of partners that engage in the “strategic doing” needed to reinvigorate local labor markets.Such action is urgently needed as our research shows that students must be informed that there are fewer and fewer occupations that will not require some formal professional, scientific, mathematical and/or humanistic-based career education beyond high school. Also, for the majority of those currently employed, lifelong learning updates are essential. But even more is needed.At the national level, the U.S. Congress can encourage these community investments by allowing businesses to capitalize investments in training and education, just as they now capitalize investments in plants and equipment. This will help reduce unemployment by encouraging companies to once again offer entry-level job trainee positions to fill vacant positions.Businesses will also have an incentive to invest in career information and education programs in community elementary, secondary, and postsecondary institutions to rebuild the shattered education-to-employment pipeline. In 2009, U.S. businesses invested $53 billion annually in training and education. This could grow to over $100 billion by 2020 if such tax legislation was enacted by the U.S. Congress. (Read more about capitalization of training and education in Gordon’s article in the January issue of EBN.)The futureFor the economy to grow between 2010 and 2020, the U.S. education-to-employment system needs to be rebuilt. If left unchanged, we may see increasing numbers of people, even degreed individuals, with poor job prospects. While the overall unemployment rate in October 2009 was 10.2%, analysis reveals that there was great variation by age and educational attainment. For those with less than a high school diploma the rate was 15.5%; for high school graduates, 11.2%; those with some college, 9.0%; and for holders of Bachelor’s degrees or higher, 4.7%.What is the likely scenario for unemployment in the next decade? At the end of the last major U.S. recession in April 1982 the unemployment rate reached a high of 10.8%. It seems likely that the unemployment rate will peak between 10.5 and 11% by June 2010, and it is likely to remain stubbornly high – perhaps about 8% by the end of 2011. What will occur by mid-decade, beyond the massive retirement of the baby boomers, will largely depend on the future revamping of the U.S. education-to-employment system.According to U.S. Department of Labor data, 62% of all U.S. jobs in 2010 will require higher skill levels. While 97 million people will be needed, only 43 million Americans will have the educational qualifications for these jobs. Businesses will try to make up the difference by using the failing talent safety valves discussed earlier. On the other hand, 38% of all U.S. jobs in 2010 will still be low-pay/low-skill requiring 61 million workers, but 115 million Americans will be competing for these jobs.Without a massive overhaul in our education-to-employment system we predict that by 2020 the U.S. labor market will be significantly out of balance. High pay/high/skill jobs will rise to 74% of the U.S. labor market; 123 million people will be needed, but only 43 million are likely to be qualified. On the other hand, low-pay/low-skills jobs will shrink to 26% of the total; 44 million people will be needed, but over 142 million will be available.The impact of this talent meltdown will probably be greatest on small and mid-sized companies, with larger corporations merging or leaving the United States. Large companies will poach the talent they need from smaller businesses. Wages in key STEM occupations will begin to rise rapidly. Over the next decade, more dollars will chase scarce talent worldwide. Businesses in the United States, China, and India are already feeling the effects of wage inflation in retaining or attracting workers in many STEM occupational areas.The United States has faced difficult economic odds before and beaten them throughout our history by encouraging flexibility, renewal, and growth. America’s competitiveness can be revived by moving away from a dependence on consumer consumption and expanding technological innovations that boost exports and the manufacturing and service sectors.Will 2010 be a year in which the meltdown of our labor force continues or the beginning of economic growth based on regenerating U.S. talent? We all can play a part in making that decision by investing in new talent strategies at the local community level and supporting changes at the federal level that foster business liquidity and training.

MM CADecember 9th, 2009 at 8:05 am

As I ahve been saying for months: State, Local and Federal Revenues are tanking… it does ntot ake a rocket scientist to see the correlation to NO JOBS continuing to get worse…Its a year later and it’s Christmas and we are far worse off then we were last Christmas… Obama has no clue and is guided by idiots… His total lack of experiance is like a bright shining star this holiday season…By my estimates we are now at 32 million plus U6 unemployment… Someone has to to keep counting all the folks they wont count…Collapse In Tax Withholdings Refutes Improvements In Either Unemployment Or Corporate ProfitabilitySubmitted by Tyler Durden on 12/08/2009 12:40 -0500Even as the BLS and the administration are trying to cover up the real state of unemployment affairs using assorted semantic gimmicks of just what it means to be unemployed, and as companies provide adjusted EPS numbers, while actual earnings continue to collapse, the true barometer of spending, provided by the Financial Management Service, tax withholdings (net of refunds), continues to paint the truest picture of just what is really happening with both America’s consumer and the corporate world. And it ain’t pretty. On a rolling 12 month basis, individual tax withheld has dropped by nearly 8% YoY, from $1.42 trillion to $1.31 trillion, while company witholdings are down a whalloping 64%, from $274 billion to just under $100 billion! This is money that will never be used to pay down the skyrocketing US deficit, because both the US consumer and average US company are simply not collecting the required cash to line the Treasury’s pockets with the one traditional way to pad the deficit: taxes. Expect much, much, much more debt issuance in America’s short, medium and long-term future.Reader Michael provides some perspective on the above data:A perspective on the level of US unemployment is not whether someone is employed or partly employed (and varying obtuse definitions) but the level of wages being generated by the consumers. Only wages pay the bills (and generate economic activity), not employment definitions. An insight into National wages is the daily (cash) tax collections published by the Financial Management Service. The rolling 12 months figures show a consistent decline, with Nov 2009 showing a 7.6% decline from Nov 2008. Drilling down into actual monthly figures does not indicate any trend change. The rolling 12 Month Company tax payments shows a 63.95% decline to Nov 2009. Monthly net collections again show no change in trend, with the month to 4th December showing a further refund of $14 Billion.And even though we missed the President in his daily address to the nation earlier, we hope this a topic he will bring up tomorrow or later this afternoon, whichever comes earliest in his next scheduled TV appearance

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think about this and what it implies… The British Govt knows thier Average Joe Limes are pissed..that and they are an insolvent gov’t… this will soon be coming to to the US.Britain To Tax Banker Bonuses At 50%, Will US Bankers Now Drop Market Preemptively To Show Who Is In Charge?Submitted by Tyler Durden on 12/09/2009 09:04 -0500Excess Profits TaxIn his pre-budget report, British Chancellor Alistair Darling said that he will now levy a 50% tax on banker bonuses. The new tax will be effective from today until April 5.The tax will hit virtually all financial companies, including subsidiaries of foreign banks . Thus a Goldman banker working in London will suddenly be faced with a much higher marginal tax rate that his associate in New York. This will either generate much transatlantic resentment, or expect a comparable move to the replicated by the IRS with the President’s blessing, who has already lost control of the unemployment picture, so the last thing he can do to regain some popularity is to take Main Street’s outcry direct to the southern tip of Manhattan.Yet even as the likelihood of a copycat tax in the U.S. is increasing, the question is do the domestic trading desks now drop the market and show the administration who is really in charge? Because even the President’s working group can not survive a concerted attack from every single financial entity in the world. And bankers are nothing if not efficient at marking their territory in the protection of take home pay. If that requires a 200 point drop in the S&P, so be it.

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just more proof, most mainstream pundits, news orgs, govt mouths, govt economists have NO CLUE! how in the world can you be off 3.5%- its alomst comical….its all about now and delivery…. Tell everyone something good now and deal with the facts that disprove it in later months…The PTB truly are becoming more and more arrogant and have no issue telling 300 Million Average Joe Americans “you are going to take it and like it”!Dec. 9 (Bloomberg) — Japan’s economy expanded less than a third of the pace initially reported in the three months to September as companies slashed spending.Gross domestic product rose an annualized 1.3 percent, slower than the 4.8 percent reported last month, the Cabinet Office said today in Tokyo. The revision, which was deeper than the predictions of all but one of the 17 economists surveyed by Bloomberg News, also showed that price declines accelerated.

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