Posted By thestatedtruth.com on August 30, 2011
Ugh….this should come as no surprise! The consumer makes up over 70% of the economy.
August consumer confidence fell from 59.2 to 44.2 … below the consensus of 52, and dropping to its lowest level since April 2009. Even uglier is the 6 month outlook which fell from 74.9 to 51.9.
Posted By thestatedtruth.com on August 30, 2011
The U.S. Pentagon has repeatedly warned that September is a time to be watchful about the happenings in the Middle East!
From the AP:
“The Israeli military says it has sent two more warships to the Red Sea border with Egypt following warnings that militants are planning another attack on southern Israel from Egyptian soil. Earlier this week, Israel’s military ordered more troops to the border following intelligence reports of an impending attack. Israel’s home front minister said Tuesday that militants from the Gaza-based Islamic Jihad are in Egypt’s Sinai peninsula waiting to attack. Gunmen who infiltrated Israel through the porous Egyptian Sinai border killed eight Israelis earlier this month. The attack sparked calls to increase security on both sides of the frontier and created new tensions between Israel and Egypt. No changes in security alignments were observed on the Egyptian side of the border.” As a reminder, here is the latest distribution of US naval assets as of August 24, courtesy of Stratfor. We doubt the status quo of just one aircraft carrier patroling the Gulf region will remain for long.
Posted By thestatedtruth.com on August 28, 2011
The forth quarter GDP (Gross Domestic Product) may bounce because of Hurricane Irene damage repairs, but it will likely just be temporary in the bigger picture of things.
Rich Yamarone (Bloomberg’s Chief Economist) points out that when GDP year-over-year drops by more than 2%, we have always had a recession. So with Friday’s second-quarter revision (first revision of many) down to just 1% (technically 0.99%), where are we? At 1.5% year-over-year. The chart is below:
The Michigan Consumer Sentiment number was also just awful. It dropped 8 full points (which is huge for this index) to 55.7. The index has fallen nearly 20 points in three months. In the chart below, note the close previous correlation between sentiment and GDP. Which do you think is more likely to happen: sentiment to rise or GDP to fall?
Posted By thestatedtruth.com on August 26, 2011
MONROE, Ga. (AP) Besse Cooper turned 115 on Friday, August 26, and is now listed as the oldest living person in the world . Besse was born in 1896. To put things in proper perspective, the automobile was just being invented back then, there was no such thing as a TV and most people didn’t have running water or an indoor toilet. All of that in one lifetime…..Geez! Her husband, Luther, died in 1963.
Posted By thestatedtruth.com on August 26, 2011
Here comes the mother of all storms for the East coast! So here’s an interesting question….what happens if you have a giant crane up in the air working a project on the East coast (New York or New Jersey) and it can’t be removed in time because you’ve never before seen a hurricane come this far north like this one? Just wondering? Umm….
From the DailyMail:
The intensity of Hurricane Irene and the extent of the flooding on the East Coast could be made worse by a new moon and high temperature of water in the Atlantic, scientists warn.
During new and full moons, the sun, Earth, and the moon are arranged in a straight line, with the sun and moon intensifying each other’s gravitational pull on Earth.
Meteorologist Jeff Masters, director of the Weather Underground website, said the result is more severe tidal fluctuations.
That means low tides are lower than usual and high tides are higher.
Due to these so-called spring tides, any town that sees the hurricane pass by during one of the two daily high tides is especially in danger of heavy flooding due to storm surges.
Masters cited Atlantic City in New Jersey as an example, if it is hit between 7pm and 8pm local time on Sunday, nationalgeographic.com reports.
Storm surges are caused by a hurricane’s high winds, which create a ‘mound’ of water along the front of the eye as the storm moves forward.
A Category 3 hurricane can push a storm surge of 9 to 12 feet tall ashore at landfall.
So far the United States has been largely spared by the 2011 Atlantic hurricane season, which lasts from June 1 to November 30.
But in May the U.S. National Oceanic and Atmospheric Administration issued a busy forecast.
Eric Blake, a hurricane specialist with the National Hurricane Center, tells TIME that a combination of factors have already contributed to a rise in storms in 2011.
He said: ‘One of the things is, how warm is the Atlantic Ocean? How warm is it compared to an average year? The other factor is the status of El Niño.
The National Hurricane Center reports that sea-surface temperatures in the Main Development Region are reading as the third warmest on record, and models predict a continuation of ‘very warm’ temperatures through the hurricane season.
This is all with the possibility of La Niña redeveloping.
Masters said: ‘I don’t see any roadblocks to intensification over the next few days.’
‘The ocean temperatures are 1 to 1.5 degrees warmer than average this year. Climatologically, conditions are conducive for strong hurricanes tracking far to the north this year.’
Read more: http://www.dailymail.co.uk/news/article-2030278/Hurricane-Irene-2011-Flooding-worse-arrival-new-moon.html#ixzz1WBX3JFpH
Posted By thestatedtruth.com on August 25, 2011
Beware, the ides of October……“I think we are heading for a market shock in September or October that will match anything we have ever seen before,” said a senior credit banker at a major European bank. A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets.
Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during financial crisis caused by the US financial group’s implosion nearly three years ago.
Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender’s bonds against default is now £343,540.
The cost of insuring RBS bonds is now higher than before the taxpayer was forced to step in and rescue the bank in October 2008, and shows the recent dramatic downturn in sentiment among credit investors towards banks.
“The problem is a shortage of liquidity – that is what is causing the problems with the banks. It feels exactly as it felt in 2008,” said one senior London-based bank executive.
“I think we are heading for a market shock in September or October that will match anything we have ever seen before,” said a senior credit banker at a major European bank.
Posted By thestatedtruth.com on August 23, 2011
We have touched on this important subject back on July 17th and again just a few days ago on August 19th here at TheStatedTruth.com in an article that was titled “Things That Could Go Bang And Change The World“. Scroll down to read it.
By George Friedman | August 23, 2011
In September, the U.N. General Assembly will vote on whether to recognize Palestine as an independent and sovereign state with full rights in the United Nations. In many ways, this would appear to be a reasonable and logical step. Whatever the Palestinians once were, they are clearly a nation in the simplest and most important sense — namely, they think of themselves as a nation. Nations are created by historical circumstances, and those circumstances have given rise to a Palestinian nation. Under the principle of the United Nations and the theory of the right to national self-determination, which is the moral foundation of the modern theory of nationalism, a nation has a right to a state, and that state has a place in the family of nations. In this sense, the U.N. vote will be unexceptional.
However, when the United Nations votes on Palestinian statehood, it will intersect with other realities and other historical processes. First, it is one thing to declare a Palestinian state; it is quite another thing to create one. The Palestinians are deeply divided between two views of what the Palestinian nation ought to be, a division not easily overcome. Second, this vote will come at a time when two of Israel’s neighbors are coping with their own internal issues. Syria is in chaos, with an extended and significant resistance against the regime having emerged. Meanwhile, Egypt is struggling with internal tension over the fall of President Hosni Mubarak and the future of the military junta that replaced him. Add to this the U.S. withdrawal from Iraq and the potential rise of Iranian power, and the potential recognition of a Palestinian state — while perfectly logical in an abstract sense — becomes an event that can force a regional crisis in the midst of ongoing regional crises. It thus is a vote that could have significant consequences.
Let’s begin with the issue not of the right of a nation to have a state but of the nature of a Palestinian state under current circumstances. The Palestinians are split into two major factions. The first, Fatah, dominates the West Bank. Fatah derives its ideology from the older, secular Pan-Arab movement. Historically, Fatah saw the Palestinians as a state within the Arab nation. The second, Hamas, dominates Gaza. Unlike Fatah, it sees the Palestinians as forming part of a broader Islamist uprising, one in which Hamas is the dominant Islamist force of the Palestinian people.
The Pan-Arab rising is moribund. Where it once threatened the existence of Muslim states, like the Arab monarchies, it is now itself threatened. Mubarak, Syrian President Bashar al Assad and Libyan leader Moammar Gadhafi all represented the old Pan-Arab vision. A much better way to understand the “Arab Spring” is that it represented the decay of such regimes that were vibrant when they came to power in the late 1960s and early 1970s but have fallen into ideological meaninglessness. Fatah is part of this grouping, and while it still speaks for Palestinian nationalism as a secular movement, beyond that it is isolated from broader trends in the region. It is both at odds with rising religiosity and simultaneously mistrusted by the monarchies it tried to overthrow. Yet it controls the Palestinian proto-state, the Palestinian National Authority, and thus will be claiming a U.N. vote on Palestinian statehood. Hamas, on the other hand, is very much representative of current trends in the Islamic world and holds significant popular support, yet it is not clear that it holds a majority position in the Palestinian nation.
All nations have ideological divisions, but the Palestinians are divided over the fundamental question of the Palestinian nation’s identity. Fatah sees itself as part of a secular Arab world that is on the defensive. Hamas envisions the Palestinian nation as an Islamic state forming in the context of a region-wide Islamist rising. Neither is in a position to speak authoritatively for the Palestinian people, and the things that divide them cut to the heart of the nation. As important, each has a different view of its future relations with Israel. Fatah has accepted, in practice, the idea of Israel’s permanence as a state and the need of the Palestinians to accommodate themselves to the reality. Hamas has rejected it.
The U.N. decision raises the stakes in this debate within the Palestinian nation that could lead to intense conflict. As vicious as the battle between Hamas and Fatah has been, an uneasy truce has existed over recent years. Now, there could emerge an internationally legitimized state, and control of that state will matter more than ever before. Whoever controls the state defines what the Palestinians are, and it becomes increasingly difficult to suspend the argument for a temporary truce. Rather than settling anything, or putting Israel on the defensive, the vote will compel a Palestinian crisis.
Fatah has an advantage in any vote on Palestinian statehood: It enjoys far more international support than Hamas does. Europeans and Americans see it as friendly to their interests and less hostile to Israel. The Saudis and others may distrust Fatah from past conflicts, but in the end they fear radical Islamists and Iran and so require American support at a time when the Americans have tired of playing in what some Americans call the “sandbox.” However reluctantly, while aiding Hamas, the Saudis are more comfortable with Fatah. And of course, the embattled Arabist regimes, whatever tactical shifts there may have been, spring from the same soil as Fatah. While Fatah is the preferred Palestinian partner for many, Hamas can also use that reality to portray Fatah as colluding with Israel against the Palestinian people during a confrontation.
For its part, Hamas has the support of Islamists in the region, including Shiite Iranians, but that is an explosive mix to base a strategy on. Hamas must break its isolation if it is to counter the tired but real power of Fatah. Symbolic flotillas from Turkey are comforting, but Hamas needs an end to Egyptian hostility to Hamas more than anything.
Egypt is the power that geographically isolates Hamas through its treaty with Israel and with its still-functional blockade on Gaza. More than anyone, Hamas needs genuine regime change in Egypt. The new regime it needs is not a liberal democracy but one in which Islamist forces supportive of Hamas, namely the Muslim Brotherhood, come to power.
At the moment, that is not likely. Egypt’s military has retained a remarkable degree of control, its opposition groups are divided between secular and religious elements, and the religious elements are further divided among themselves — as well as penetrated by an Egyptian security apparatus that has made war on them for years. As it stands, Egypt is not likely to evolve in a direction favorable to Hamas. Therefore, Hamas needs to redefine the political situation in Egypt to convert a powerful enemy into a powerful friend.
Though it is not easy for a small movement to redefine a large nation, in this case, it could perhaps happen. There is a broad sense of unhappiness in Egypt over Egypt’s treaty with Israel, an issue that comes to the fore when Israel and the Palestinians are fighting. As in other Arab countries, passions surge in Egypt when the Palestinians are fighting the Israelis.
Under Mubarak, these passions were readily contained in Egypt. Now the Egyptian regime unquestionably is vulnerable, and pro-Palestinian feelings cut across most, if not all, opposition groups. It is a singular, unifying force that might suffice to break the military’s power, or at least to force the military to shift its Israeli policy.
Hamas in conflict with Israel as the United Nations votes for a Palestinian state also places Fatah on the political defensive among the Palestinians. Fatah cooperation with Israel while Gaza is at war would undermine Fatah, possibly pushing Fatah to align with Hamas. Having the U.N. vote take place while Gaza is at war, a vote possibly accompanied by General Assembly condemnation of Israel, could redefine the region.
Last week’s attack on the Eilat road should be understood in this context. Some are hypothesizing that new Islamist groups forming in the Sinai or Palestinian groups in Gaza operating outside Hamas’ control carried out the attack. But while such organizations might formally be separate from Hamas, I find it difficult to believe that Hamas, with an excellent intelligence service inside Gaza and among the Islamist groups in the Sinai, would not at least have known these groups’ broad intentions and would not have been in a position to stop them. Just as Fatah created Black September in the 1970s, a group that appeared separate from Fatah but was in fact covertly part of it, the strategy of creating new organizations to take the blame for conflicts is an old tactic both for the Palestinians and throughout the world.
Hamas’ ideal attack would offer it plausible deniability — allowing it to argue it did not even know an attack was imminent, much less carry it out — and trigger an Israeli attack on Gaza. Such a scenario casts Israel as the aggressor and Hamas as the victim, permitting Hamas to frame the war to maximum effect in Egypt and among the Palestinians, as well as in the wider Islamic world and in Europe.
The matter goes beyond Hamas. The Syrian regime is currently fighting for its life against its majority Sunni population. It has survived thus far, but it needs to redefine the conflict. The Iranians and Hezbollah are among those most concerned with the fall of the Syrian regime. Syria has been Iran’s one significant ally, one strategically positioned to enhance Iranian influence in the Levant. Its fall would be a strategic setback for Iran at a time when Tehran is looking to enhance its position with the U.S. withdrawal from Iraq. Iran, which sees the uprising as engineered by its enemies — the United States, Saudi Arabia and Turkey — understandably wants al Assad to survive.
Meanwhile, the fall of Syria would leave Hezbollah — which is highly dependent on the current Syrian regime and is in large part an extension of Syrian policy in Lebanon — wholly dependent on Iran. And Iran without its Syrian ally is very far away from Hezbollah. Like Tehran, Hezbollah thus also wants al Assad to survive. Hezbollah joining Hamas in a confrontation with Israel would take the focus off the al Assad regime and portray his opponents as undermining resistance to Israel. Joining a war with Israel also would make it easier for Hezbollah to weather the fall of al Assad should his opponents prevail. It would help Hezbollah create a moral foundation for itself independent of Syria. Hezbollah’s ability to force a draw with Israel in 2006 constituted a victory for the radical Islamist group that increased its credibility dramatically.
The 2006 military confrontation was also a victory for Damascus, as it showed the Islamic world that Syria was the only nation-state supporting effective resistance to Israel. It also showed Israel and the United States that Syria alone could control Hezbollah and that forcing Syria out of Lebanon was a strategic error on the part of Israel and the United States.
Faced with this dynamic, it will be difficult for Fatah to maintain its relationship with Israel. Indeed, Fatah could be forced to initiate an intifada, something it would greatly prefer to avoid, as this would undermine what economic development the West Bank has experienced.
Israel therefore conceivably could face conflict in Gaza, a conflict along the Lebanese border and a rising in the West Bank, something it clearly knows. In a rare move, Israel announced plans to call up reserves in September. Though preannouncements of such things are not common, Israel wants to signal resolution.
Israel has two strategies in the face of the potential storm. One is a devastating attack on Gaza followed by rotating forces to the north to deal with Hezbollah and intense suppression of an intifada. Dealing with Gaza fast and hard is the key if the intention is to abort the evolution I laid out. But the problem here is that the three-front scenario I laid out is simply a possibility; there is no certainty here. If Israel initiates conflict in Gaza and fails, it risks making a possibility into a certainty — and Israel has not had many stunning victories for several decades. It could also create a crisis for Egypt’s military rulers, not something the Israelis want.
Israel also simply could absorb the attacks from Hamas to make Israel appear the victim. But seeking sympathy is not likely to work given how Palestinians have managed to shape global opinion. Moreover, we would expect Hamas to repeat its attacks to the point that Israel no longer could decline combat
War thus benefits Hamas (even if Hamas maintains plausible deniability by having others commit the attacks), a war Hezbollah has good reason to enter at such a stage and that Fatah does not want but could be forced into. Such a war could shift the Egyptian dynamic significantly to Hamas’ advantage, while Iran would certainly want al-Assad to be able to say to Syrians that a war with Israel is no time for a civil war in Syria. Israel would thus find itself fighting three battles simultaneously. The only way to do that is to be intensely aggressive, making moderation strategically difficultIsrael responded modestly compared to the past after the Eilat incident, mounting only limited attacks on Gaza against mostly members of the Palestinian Resistance Committees, an umbrella group known to have links with Hamas. Nevertheless, Hamas has made clear that its de facto truce with Israel was no longer assured. The issue now is what Hamas is prepared to do and whether Hamas supporters, Saudi Arabia in particular, can force them to control anti-Israeli activities in the region. The Saudis want al Assad to fall, and they do not want a radical regime in Egypt. Above all, they do not want Iran’s hand strengthened. But it is never clear how much influence the Saudis or Egyptians have over Hamas. For Hamas, this is emerging as the perfect moment, and it is hard to believe that even the Saudis can restrain them. As for the Israelis, what will happen depends on what others decide — which is the fundamental strategic problem that Israel has.
Read more: Israeli-Arab Crisis Approaching | STRATFOR
Posted By thestatedtruth.com on August 22, 2011
Demographics my dear Watson……According to a Federal Reserve Bank report just out stocks could fall an average of 13% over the next ten years solely because of retiring baby boomers. The actual P/E ratio should decline from about 15 in 2010 to about 8.3 in 2025.
The model-generated path for real stock prices implied by demographic trends is quite bearish. Real stock prices should follow a downward trend until 2021.
The same has already started in real estate. But looking ahead, by 2025, things should start getting better and by 2027 we could hopefully be back to breakeven, at least in the stock market part of things. Good to know that by 2027 we can relax as we convalesce watching CNBC at age 80-90 something! Good seats, hey buddy!
Monday, August 22, 2011
A new report by the Federal Reserve Bank of San Francisco predicts stock prices could fall 13% over the next decade solely because of baby boomers dumping stocks to branch into more conservative investments as they retire.
It could take an additional six years, until 2027, for share prices to return to the level they reached last year, according to the analysis by researchers Zheng Liu and Mark M. Spiegel.
The report’s basic premise is that stock prices “have been closely related to demographic trends in the past half century” — in other words, that baby boomers pushed up stock prices in earlier years as they hit their prime earning and saving years.
Aside from being a longer-term depressant, selling by baby boomers -– the post-War contingent born between 1946 and 1964 –- could forestall any current-day recovery in the market from the global financial crisis.
“It is disconcerting that the retirement of the baby-boom generation, which has long been expected to place downward pressure on U.S. equity values, is beginning in earnest just as the stock market is recovering from the recent financial crisis, potentially slowing down the pace of that recovery,” the report says.
The good news is stock values could rise solidly in later years as the boomer generation ages. Stock prices should begin rising strongly starting in 2025, and by 2030 should be about 20% higher than in 2010, according to the report.
Posted By thestatedtruth.com on August 22, 2011
Morgan Stanley, at the brink of collapse in 2008, got $107 B, yes, B as in Billion from the Fed. They’ve got’ta be kidding! Nope, not kidding. Soon after that, record bonuses came flowing faster then you could flick a bic! Every Fed official should be ashamed of this BS… yes the same stuff that gets stepped in. Oh we know the alternative was a depression, but let’s be realistic, we may have one anyway because of an even bigger mess bestowed on us now. The next few years will be tough ones. This is yet another warning. Are you prepared?
From Bloomberg: August 22, 2011
As markets convulsed in September 2008, Morgan Stanley (MS) Treasurer David Wong briefed the Federal Reserve on a “dark” scenario in which the U.S. firm would need at least $10 billion of emergency loans from the central bank.
It got 10 times darker by month’s end. Morgan Stanley borrowed $107.3 billion, the most of any bank, according to data compiled by Bloomberg News using information released in response to Freedom of Information Act requests, related court orders and an act of Congress.
Morgan Stanley’s borrowing was more than twice the amount all banks got from the Fed in the market squeeze that followed the Sept. 11 terrorist attacks.
Morgan Stanley’s Fed loans which were tallied in a Bloomberg News database and assembled from government records of more than 21,000 transactions and 29,346 pages, opens a window on Wall Street’s secretive, lucrative and risky dealings with hedge funds.
At the peak of Morgan Stanley’s Fed borrowings, on Sept. 29, 2008, the firm reported that liquidity was “strong,” without mentioning how dependent its cash stores had become on the government lifeline. Liquidity refers to the daily funds a bank needs to operate, including cash to cover withdrawals.
More at: http://www.bloomberg.com/news/2011-08-22/morgan-stanley-at-brink-of-collapse-got-107b-from-fed.html
Posted By thestatedtruth.com on August 19, 2011
Just a reminder that this was posted on www.thestatedtruth.com back on July 17th………
It doesn’t take a rocket scientist to throw caution to the wind. Gold has been a missile to the upside for a multitude of reasons (no pun intended) and the stock markets around the world have been plunging since we reported this. The third item, oil, has yet to break to the upside. If it does, the set up could be complete for a very nasty outcome.
While things are looking more and more recessionary because of worldwide financial problems, they will be out right depressionary if the below scenario plays out.
Three carriers in proximity to Iran would be extremely troubling, yet fit perfectly with the story of CIA veteran Robert Baer, who as reported by Al Jazeera, appeared on KPFK Los Angeles, warning that Israeli PM Netanyahu is “likely to ignite a war with Iran in the very near future.””Masters asked Baer why the US military is not mobilising to stop this war from happening. Baer responded that the military is opposed, as is former Secretary of Defense Robert Gates, who used his influence to thwart an Israeli attack during the Bush and Obama administrations. But he’s gone now and “there is a warning order inside the Pentagon” to prepare for war.” There is almost “near certainty” that Netanyahu is “planning an attack [on Iran] … and it will probably be in September before the vote on a Palestinian state. And he’s also hoping to draw the United States into the conflict”, Baer explained.”
July….Courtesy of Al Jazeeraa and Haaretz, parts of the full take from Robert Baer:
Earlier this week, Robert Baer appeared on the provocative KPFK Los Angeles show Background Briefing, hosted by Ian Masters. It was there that he predicted that Israeli Prime Minister Binyamin Netanyahu is likely to ignite a war with Iran in the very near future.
Robert Baer has had a storied career, including a stint in Iraq in the 1990s where he organised opposition to Saddam Hussein. (He was recalled after being accused of trying to organise Saddam’s assassination.) Upon his retirement, he received a top decoration for meritorious service.
He obviously won’t name many of his sources in Israel, the United States, and elsewhere, but the few he has named are all Israeli security figures who have publically warned that Netanyahu and Defense Minister Ehud Barak are hell-bent on war.
Baer was especially impressed by the unprecedented warning about Netanyahu’s plans by former Mossad chief Meir Dagan. Dagan left the Israeli intelligence agency in September 2010. Two months ago, he predicted that Israel would attack and said that doing so would be “the stupidest thing” he could imagine.
According to Haaretz:
When asked about what would happen in the aftermath of an Israeli attack Dagan said that: “It will be followed by a war with Iran. It is the kind of thing where we know how it starts, but not how it will end.”
The Iranians have the capability to fire rockets at Israel for a period of months, and Hizbollah could fire tens of thousands of grad rockets and hundreds of long-range missiles, he said.
According to Baer, we ain’t seen nothing yet.
There is almost “near certainty” that Netanyahu is “planning an attack [on Iran] … and it will probably be in September before the vote on a Palestinian state. And he’s also hoping to draw the United States into the conflict”, Baer explained.
The Israeli air force would attack “Natanz and other nuclear facilities to degrade their capabilities. The Iranians will strike back where they can: Basra, Baghdad”, he said, and even Afghanistan. Then the United States would jump into the fight with attacks on Iranian targets. “Our special forces are already looking at Iranian targets in Iraq and across the border [in Iran] which we would strike. What we’re facing here is an escalation, rather than a planned out-and-out war. It’s a nightmare scenario. We don’t have enough troops in the Middle East to fight a war like that.” Baer added, “I think we are looking into the abyss”.
Sources: www.zerohedge.com July 2011
Posted By thestatedtruth.com on August 19, 2011
Interesting tid bit…..according to Rob McEwen, only one gold mining company is included in the S&P 500. Can you guess which one it is?
Answer: Newmont Mining ( NEM) is the only gold mining company listed in the S&P 500
P.S. There is more than $ 1 trillion of index funds invested in the S&P 500! This insinuates that Gold as an asset class is hugely under invested.
Posted By thestatedtruth.com on August 18, 2011
Not exactly what the housing market needs to find a bottom….fiddling with or elimination of the real estate mortgage deduction and real estate tax deduction will be disastrous in the current environment.
Although the compromise legislation itself involved no new taxes, it created an unusual mechanism, an evenly split, 12-member bipartisan super-committee that could call for major cutbacks on real estate write-offs by Thanksgiving.
Among the options open to the super-committee: Lower the maximum mortgage amount eligible for interest deductions to $500,000 from the current $1.1 million; replace the deduction with a tax credit that would be usable by lower and moderate income owners as well as those with higher incomes; eliminate interest deductions on second homes; and phase out the deductibility of homeowner property tax payments.
Posted By thestatedtruth.com on August 18, 2011
Bank of America is cutting 3,500 jobs in the current quarter and working on a broader restructuring that could eliminate as many as ten thousand positions.
Additional reductions are being discussed as part of an overhaul known as “Project New BAC,” after the Charlotte, N.C., bank’s ticker symbol. Sources close to the situation say as many as 10,000 jobs are likely to be eliminated.
Posted By thestatedtruth.com on August 17, 2011
Records are made to be broken. The time for this record to be broken is near. Buyer beware!
The week ending August 10 saw a near-record amount of redemption’s from domestic equity mutual funds, amounting to an unprecedented $23.5 billion. This brings the total for August to $34 billion. Another $13 billion in outflows and this will be the single biggest outflow month in ICI history. As of the end of June mutual funds held an all time record low amount of cash of 3.4%.
In the last three weeks a total of $67 billion has been withdrawan across all asset classes. For U.S. stocks, this is the 16th consecutive week of outflows since April 2011, amounting to $87 billion in total outflows, and $172 billion in domestic equity fund outflows since the beginning of 2010.
Every asset class was effected for the third week in a row….including foreign stocks, bonds and munis.
Posted By thestatedtruth.com on August 16, 2011
The average consumer is tapped out. Be forewarned, a new recession is coming…. whether the government admits it or not!
Walmart, warned on Tuesday that continued weakness in the U.S. economy has put pressure on its low income consumers who are increasingly worried about unemployment and becoming more reliant on government assistance.
Walmart’s has reported its ninth consecutive quarter of falling domestic sales at U.S. stores open for at least one year. Comparable store sales at Walmart in the U.S., excluding fuel sales and purchases at Sam’s Club stores, were down by 0.9 per cent from a year ago.
Posted By thestatedtruth.com on August 16, 2011
And why is this….it’s because most assets are deflating (going down in value) but food has been inflating (going up in cost)… along with most types of energy until just recently.
Rasmussen:
“Americans nationwide continue to lose faith in the Federal Reserve Board to keep inflation under control, with the number who say they are paying more for groceries now at an all-time high.” Specifically, “93% of adults report paying more for groceries now than they did a year ago, the highest finding to date. Only four percent (4%) say they’re not paying more for groceries now compared to a year ago.
Posted By thestatedtruth.com on August 15, 2011
Ding Dong, The Wicked Witch Is Dead….Or, Maybe Not!
Stone McCarthy: Negative Empire Survey Results
“You usually don’t get three straight months of negative results unless you are in a recession (Note: NY Fed historical data only started in July 2001). ” SMRA continues: “If that’s not bad enough for you, the forward-looking new orders index fell to -7.8 in August, after posting -5.5 in July and -3.6 in June. Not only is the latest reading a new low in the recent string of negative results, it’s also the third straight month of contraction.” In other words when the NBER finally sits down to look at the disaster that the US economy has been over the past several years, the start of the next re-recession will likely be given as June 2011, oddly enough in a year when every sell side bank predicted that the economy would grow by at least 3.5% by Q4. As for what to expect next, look for the Philly Fed to be the next major leading indicator disappointment, which based on the NY Fed result, will miss Wall Street expectations of a +2.0% increase yet once gain, and which SMRA believes will drop from 3.2 in July to -3.4 in August.
Posted By thestatedtruth.com on August 15, 2011
Couldn’t have said it better……home owners are already ahead of this curve!
“You just slip out the back, Jack.
Make a new plan, Stan.
You don’t need to be coy, Roy.
Just get yourself free.
Hop on the bus, Gus.
You don’t need to discuss much.
Just drop off the key, Lee.
And get yourself free.” Paul Simon
Posted By thestatedtruth.com on August 11, 2011
It couldn’t happen to a worst run government enterprise. Excuse us, second worst, Fannie Mae probably takes the brass knuckle. Our advice….give the whole pile of crap to United Parcel Service (UPS), they would only need to black out one initial. Not to be too greedy, it might even be smart to pay them to take everything,…even throw in the worthless old fleet of jeeps with the steering wheel on the wrong side. Now there’s a few ideas worth pursuing!
In a notice to employees informing them of its proposals, with the headline “Financial crisis calls for significant actions,” the Postal Service said “we will be insolvent next month due to significant declines in mail volume and retiree health benefit prefunding costs imposed by Congress.”
This major restructuring of the Postal Service’s relationship with its workforce would need congressional approval and would face fierce opposition from postal unions. But if approved, eliminating contract provisions that prevent layoffs and quitting the federal employee health and retirement programs could have ramifications for workers across the government and throughout the national’s labor movement.
The Postal Service plan is described in two draft documents obtained by The Washington Post. A “Workforce Optimization” paper acknowledges “that asking Congress to eliminate the layoff protections in our collective bargaining agreements is an extraordinary request by the Postal Service, and we do not make this request lightly. However, exceptional circumstances require exceptional remedies.
“The Postal Service is facing dire economic challenges that threaten its very existence. . . . If the Postal Service was a private sector business, it would have filed for bankruptcy and utilized the reorganization process to restructure its labor agreements to reflect the new financial reality.”
The USPS says it needs to reduce its workforce by 120,000 career positions by 2015, in addition to the 100,000 it expects through regular attrition. Some of the 120,000 could come through buyouts and other programs, but a significant number likely would be the result of layoffs, if Congress allows the agency to circumvent union contracts.
“Unfortunately, the collective bargaining agreements between the Postal Service and our unionized employees contain layoff restrictions that make it impossible to reduce the size of our workforce by the amount required by 2015,” according to the postal document. “Therefore, a legislative change is needed to eliminate the layoff protections in our collective bargaining agreements.”
How Congress will respond to the postal proposals remains to be seen. Many Republicans, including those who have sponsored legislation that labor considers anti-union, may support the plan. Some Democrats probably would back union opposition. But the Postal Service’s critical financial situation could make Democrats have second thoughts.
The unions wasted no time in crafting a response:
American Postal Workers Union President Cliff Guffey said, “The APWU will vehemently oppose any attempt to destroy the collective bargaining rights of postal employees or tamper with our recently-negotiated contract — whether by postal management or members of Congress.”
National Rural Letter Carriers’ Association President Don Cantriel: “We are absolutely opposed” to the layoff proposal. “We are opposed to pulling out of the Federal Employees Health Benefits Program. Our advisers are not advising us at all to even consider it.”
National Association of Letter Carriers President Fredric V. Rolando: “The issues of lay-off protection and health benefits are specifically covered by our contract. . . . The Congress of the United States does not engage in contract negotiations with unions and we do not believe they are about to do so.”
Posted By thestatedtruth.com on August 11, 2011
If your cell phone is having problems, ours are too…. here may be the reason why.
Solar storms could affect earth technology. According to The International Business Times: “Power grids, GPS systems and satellites could be among the technologies affected by surges of energy released by the sun’s swelling magnetic field, according to the National Oceanic and Atmospheric Administration (NOAA).”
Posted By thestatedtruth.com on August 11, 2011
These are bad seats hey buddy, front row, behind a pole! The chart is a few years old, but you get the picture.
Posted By thestatedtruth.com on August 11, 2011
New federal forecasts show U.S. farmers will harvest dramatically less grain and soybeans than expected this year, failing to ease high prices and rebuild low global supplies.
U.S. corn reserves (as of August 2012) are expected to be at the lowest levels since the mid-1990’s.
Wells Fargo & Co., said it expects retail food prices to climb 3.5% to 4.5% in 2012. The federal government’s consumer-price index for all food was up 3.7% over the 12 months ended in June, while prices in grocery stores were up 4.7%.
And Cotton…….
According to the USDA, a drought across the Southwest U.S. forced farmers to abandon 30% of their cotton acres. In Texas, which just recorded its hottest and second-driest July on record, dairy farmers are being forced to buy high-priced Midwest corn harvested last year because their own fields have shriveled up.
Posted By thestatedtruth.com on August 9, 2011
California was counting on collecting increasing tax revenue, even though almost every tax generating category in the state is slowing. Rest assured that these political morons never passed basic math 101.
California just announced that state tax revenue fell in July, more than 10% below expectations. The LA Times blog says this will, “make it more likely that deeper cuts to public schools built into the state budget in case of a stalled economic recovery will occur.” It adds: “Gov. Jerry Brown and state lawmakers patched up the final $4 billion of California’s budget shortfall this year by hoping for a windfall economic recovery. Those hopes are now fading fast. Tax collections in July were $538.8 million below budget forecasts, according to state Controller John Chiang.”
Income taxes were up slightly, but sales and corporate collections lagged by a combined nearly $210 million. But the biggest drag was from the unidentified $4 billion that budget writers had banked on.
“Every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year,” Chiang said in a statement. Those automatic cuts include a reduction in schools spending that could shrink the academic year by as many as seven days in some districts.
Posted By thestatedtruth.com on August 9, 2011
A Big Mac priced in U.S. Dollars is $17.19 (for one), in Zurich….But Fed Chairman Bernanke says we have no inflation. Question to Mr Burnanke: Just how did a McDonald’s Big Mac get so expensive in Zurich? Um…..
Posted By thestatedtruth.com on August 8, 2011
So what happens when everybody hits the PANIC button at the same time? For starters….How about a global stock market dump equal to $7.8 TRILLION.
Posted By thestatedtruth.com on August 7, 2011
The F-22 Raptor fighter jet is a sleek, diamond-winged fighter conceived during the Cold War in the early 1980’s to combat a new generation of Soviet fighter jets. But with the collapse of the Soviet Union, the Soviet fighters that the U.S. military planners had feared never moved beyond development stage and none were ever built.
So the United States ended up with a fleet of 158 Lockheed F-22 Raptor fighter jet planes, with an expected cost of $139 million each…but nope, they ended up costing $412 million each, and none, that’s right, none have never entered combat. Say what? Yep. They’re the most expensive fighter jets ever built, but the F-22 Raptor’s never have worked even one day of combat. Not one day!
Believe it or not, it gets worse…even the government will have a hard time topping this. The plane takes about 3,000 people to maintain, and the Air Force has calculated that for every hour in the air, the F-22 Raptor spends 45 hours undergoing maintenance.
The F-22s amount to about $65 billion just sitting on the tarmac. “For all that gigantic cost, you have a system you can’t even use,” said Winslow T. Wheeler, a defense budget specialist and frequent Pentagon critic at the Center for Defense Information. “It’s a fundamental explanation on how the country has gotten itself in the financial mess that it’s in today.”
F-22 engines have thrust-vectoring nozzles that can move up and down, making the plane exceptionally agile. It can reach supersonic speeds without using afterburners, enabling the plane to fly faster and farther. It’s also packed with cutting-edge radar and sensors, allowing the pilot to identify, track and shoot an aircraft before the enemy pilot can detect the F-22.
Two decades ago, the U.S. government planned to buy 648 of the fighters for $139 million apiece; the cost has almost tripled since then to $412 million, the Government Accountability Office said.
Purchases finally ended with 188 planes. The $273 million cost over run per plane translates into $51.3 billion in lost buying power for the defense department.
And they wonder why we call them government morons!
Information pertaining to this article are from: http://www.latimes.com/business/la-fi-fighter-jets-grounded-20110807,0,5483241.story
Posted By thestatedtruth.com on August 6, 2011
More specifically it looks like Italy is next up and Spain is in the hole when it comes to new insolvent disasters! Global leaders call for an urgent emergency summit of finance ministers. Is it dominoes we hear falling?
Referencing Spiegel: Concerning the EFSF (European Financial Stability Facility)
Posted By thestatedtruth.com on August 6, 2011
Posted By thestatedtruth.com on August 5, 2011
Bye bye U.S. AAA debt rating. The new normal just changed for the worse. For the most part, everyone thought things were already bad and “had” to get better! Oh well, live and learn. Next week could be a dozy! We have some tough years ahead of us between 2012 and 2014. But before that, a stock market bounce back into late September or early October would not be a surprise. Prepare for the unexpected during the next few years.
“The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.” What to expect on Monday: “it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.”
Posted By thestatedtruth.com on August 5, 2011
Could the unthinkable happen? Here’s Peter Barnes of the Fox Business Network.
Peter Barnes: “Is there a risk that the United States could lose its AAA credit rating? Yes or no?”
Geithner’s response: “No risk of that.”
“No risk?” Barnes asked.
“No risk,” Geithner said.
Posted By thestatedtruth.com on August 5, 2011
The background indicates that this isn’t good news….here’s why. Both Visa and Mastercard have seen credit card use increase, but they have explained that the consumer seems to be tapped out and resorting to credit cards as a source of funds. This would make sense considering how tough the economy is currently.
The most interesting aspect of this report is that non-revolving debt, including educational loans and loans for autos and mobile homes, rose by $10.3 billion, equaling about two thirds of the total monthly increase of $15.5 billion. The May numbers showed an increase of only $5.08 billion and that covered all categories.
Credit increased by $15.5 billion, three times as much as projected and the biggest gain since August 2007, according to the Federal Reserve.
Bloomberg surmised that with unemployment hovering around 9 percent, it may be spurring Americans to stay in school longer or seek more training in the hope of landing a job. At the same time, elevated gasoline and food costs may be straining household budgets, prompting consumers to turn to their credit cards to purchase necessities.
Non-revolving debt, including educational loans and loans for autos and mobile homes, rose by $10.3 billion for the month equaling about two thirds of the total amount.
Revolving debt, which includes credit cards, increased by $5.21 billion in June, the most since March 2008, according to the central bank.
When you look at unemployment being above 9 percent, with housing prices not really coming back to a good space….it really impacts the mood of consumer confidence, according to MasterCard Inc. Chief Financial Officer Martina Hund-Mejean. “It’s impacting things today and it will impact things tomorrow.”
Posted By thestatedtruth.com on August 4, 2011
Stocks plunged sharply Thursday, with the Dow down more than 500 points in its worst one-day drop since December 2008. So, the question is….are we looking at the real meal deal at McDonald’s or just a snack? We think just a snack. Sometime soon the market will probably start a rally, and the rally should last into late September or early October. But that’s assuming Israel doesn’t attack Iran. After that, then straight down we go into the end of the year. Time will tell!
Just thinking out loud of course. This is not a recommendation of any sort!
Posted By thestatedtruth.com on August 4, 2011
Is Texas setting itself up for an electric grid disaster….we’ll soon see!
Power demand for Electric Reliability Council of Texas, Inc, or ERCOT, which runs the power grid for most of the state, hit three consecutive records this week as Texans cranked up air conditioners to escape one of the hottest summers on record. Power usage in ERCOT reached its highest level ever on Wednesday at 68,294 megawatts, almost 4 percent over last year’s peak.
With record-breaking demand came record-breaking prices. Prices for Thursday power topped $400 per megawatt hour, the highest in at least a decade. Friday’s power prices approached $600. Real-time prices also hit the $3,000 market cap over the past few days.
ERCOT has about 73,000 MW of natural gas, coal, oil, nuclear and wind generating facilities, but not all of that capacity is available all the time.
Texas has the most wind power in the country, but the wind does not blow during the summer. Ercot said it got about 2,000 MW from wind during the peak hour on Wednesday. Those wind farms can produce about 9,000 MW when all turbines are spinning. but otherwise the ERCOT power grid is a virtual island with only a few small transmission links to neighboring electric grids, making it tough for Texas to pull energy from neighboring states in times of need.
More at: http://www.reuters.com/article/2011/08/04/us-utilities-ercot-heatwave-idUSTRE7736OT20110804
Posted By thestatedtruth.com on August 3, 2011
The consumer is broke and getting broker. So far, the free loaders have been free spenders. That’s about to change as the banks get closer to kicking millions of the mortgage dead beats out of their homes. As this evolves things will likely get down right nasty for the economy!
From Bloomberg: Disclosure from an internal, and supposedly confidential Wal-Mart memo on store traffic patterns indicate that in U.S. store locations open for at least a year, there has been a 2.6% drop in traffic in the February to June period compared to a year earlier. The Wal-Mart stores in question had “82.8 million fewer visits through the first five months of the company’s fiscal year.” This is an indication of just how exhausted the U.S. consumer is. Bloomberg continues: “Wal-Mart’s plan was to recapture customers by returning thousands of products to U.S. store shelves.” It has failed to reverse a decline in foot traffic at the world’s largest retailer, according to Jeff Stinson, an analyst at Cleveland Research Co. That’s primarily because Wal-Mart’s core low-income customers are shopping less and going to other retailers more often, according to two recent shopper surveys. This should not come as a surprise to anyone, because the CEO of Wal Mart America said a few months back that “shoppers are running out of money and there is no sign of a recovery.”
Posted By thestatedtruth.com on August 3, 2011
The rules have just changed. The little guy gets screwed again. Tiny Central Falls, R.I. filed for bankruptcy on Monday, but a new state law in Rhode Island places bondholders ahead of other creditors. It may turn out to be a bondholder’s dream as the real winners end up being the large municipalities located across the country as they target similar court rulings. The big losers (of course) are the workers themselves. Expect a big fight on this issue to ensue.
PS….It’s hard to believe this little city has 80 million in unfunded pension and health-care liabilities. Yep
This from the WSJ…….
Thanks to a new state law in Rhode Island that places bondholders ahead of other creditors, Central Falls plans to pay investors the entire $635,000 it owes them in October. But retired city workers might make the sacrifice. Instead of $296,000 in pension checks promised before Central Falls became the second U.S. municipality to seek Chapter 9 protection this year, the retirees could get only $196,000 in payments next month, that’s a 34% cut.
Pension payments usually are sacrosanct. But a new Rhode Island law enacted in July upends the traditional pecking order of who gets paid first when a city or county becomes insolvent.
Municipal-bond lawyers believe Rhode Island’s law is the first of its kind in the U.S. As municipalities in other states grapple with overwhelming pension obligations and debts, similar laws could catch on, partly because they will help even shaky cities and counties keep borrowing money, experts say.
“If they can protect access to the bond market, it could open up to more prepackaged bankruptcies like this,” says James Spiotto, a partner at law firm Chapman and Cutler LLP in Chicago who specializes in municipal bankruptcies.
Under the law, city officials who intentionally fail to pay bondholders can be removed from office or held personally liable for the payments.
The July 12 law is likely to be challenged in court by current and retired Central Falls workers.
The $100,000 cut in pension checks being issued in September is part of a proposed benefits restructuring that would reduce payments to some retirees by 50%. The average Central Falls city pension is about $32,000.
The median household income of Central Falls is about equal to the average city worker’s annual pension. The city’s outstanding bonds are a relatively small problem compared with $80 million in unfunded pension and health-care liabilities.
Posted By thestatedtruth.com on August 2, 2011
So….our only question is: What happens if the economy gets really bad (by government standards)? Remember, the government says we’re still in a recovery.
Just released data shows foodstamp usage increased over 1.1 million in the the highest single monthly jump in Foodstamp participation since mid 2009,that was when eligibility requirements were adjusted. We now have what amounts to 45.8 million people (an all time record) living on foodstamps. The breakdown goes like this….. $133.80 per person and $283.65 per household.
Posted By thestatedtruth.com on August 2, 2011
In a puff of smoke….sounds like Putin doesn’t like us (U.S.) anymore? As if he ever did! On the other hand, he makes some startlingly good observations.
Putin says U.S. is “parasite” on global economy
Russian Prime Minister Vladimir Putin accused the United States Monday of living beyond its means “like a parasite” on the global economy and said dollar dominance was a threat to the financial markets.
“They are living beyond their means and shifting a part of the weight of their problems to the world economy,” Putin told the pro-Kremlin youth group Nashi while touring its lakeside summer camp some five hours drive north of Moscow.
Source Reuters
Posted By thestatedtruth.com on August 2, 2011
Let’s get real…..this isn’t unexpected!
Government bonds in Italy and Spain continue on a downward march, creating more concern about the potential spread of the euro zone’s debt crisis. The dominoes are falling one by one. World wide debt problems are bubbling over. A new financial world order is coming shortly.
Posted By thestatedtruth.com on July 31, 2011
We couldn’t be more poetic if we tried…… scratch Pelosi from this chart and substitute Boehner, but it won’t change a thing!
Posted By thestatedtruth.com on July 31, 2011
Slow learners……we’re talking about the government of course! They want banks to loan out more and consumer borrowing to pick up. They still don’t get it!
Household debt levels are at 112% of annual income which is considered too high. To get back to a 1990’s debt-to-income ratio’s of 84%, incomes would need to be nearly $4 trillion higher. This would take about nine years worth of income growth, according to Credit Suisse estimates.
Incomes are shrinking as shown in the chart below.
The U.S. economy has been expanding slowly for two years now, and economists had been expecting it to pick up steam in the second half as robust overseas demand and investment at home by cash-rich companies spured consumers to spend, even as they reduce their debt burdens. But Friday’s GDP report and the impact of Washington’s debt-ceiling stalemate on consumer and business confidence as well as on financial markets are raising doubts about that outlook.
It could be years before Americans feel that they’ve pared enough debt to start spending readily. Household debt levels are at 112% of annual income which is considered high. To get back to a 1990s debt-to-income ratio of 84%, incomes would need to be nearly $4 trillion higher. This would take about nine years worth of income growth, according to Credit Suisse estimates.
Robert Hall, a Stanford University professor, says that three-quarters of households don’t have two months worth of income socked away as cash or other liquid assets. Further more Federal Reserve researcher Karen Pence says that 41% of households can borrow less than $3,000 on their credit cards and 23% have been turned down or discouraged from applying for credit.
Meantime, the government’s ability to serve as a shock absorber is for the most part gone. In 2003, when the economic recovery stumbled, the Bush administration pushed through tax cuts to get cash into the hands of households and the Fed pushed down interest rates to ease borrowing. In 2008 and 2009, the Obama administration and the Fed did it again, boosting federal spending in an $800-billion stimulus and cutting interest rates to near zero.
Now, with deficits sky high, the federal government is moving toward cutting spending. The Fed’s hands are now tied, as they can’t cut short-term rates below zero and are reluctant to pursue another round of buying mortgages and Treasury securities. That’s because the last effort to push down long-term interest rates and stimulate growth had only marginal success.
Coming Soon
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