Posted By thestatedtruth.com on September 8, 2010
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Posted By thestatedtruth.com on September 8, 2010
Sounds like a hybred communist capitalist system is coming to Cuba soon. Maybe they will look to the Chinnese model for guidence!
HAVANAÂ Â Â Fidel Castro told a visiting American journalist that Cuba’s communist economic model doesn’t work, in a rare comment on domestic affairs.
Jeffrey Goldberg, a national correspondent for The Atlantic magazine, asked if Cuba’s economic system was still worth exporting to other countries, and Castro replied: “The Cuban model doesn’t even work for us anymore” Goldberg wrote Wednesday in a post on his Atlantic blog.
He said Castro made the comment casually over lunch following a long talk about the Middle East, and did not elaborate.
Posted By thestatedtruth.com on September 8, 2010
The Federal Reserve said the U.S. economy maintained its expansion while showing “widespread signs of a deceleration†in mid-July through the end of August, according to a survey by 12 regional Fed banks.
The New York Fed reported “signs of decelerating†in the district, including “further deceleration†in manufacturing. The Philadelphia region said business conditions were “mixed,†while the Richmond Fed said “signs of slowing or contracting economic activity became more prevalent.†The Atlanta region’s economy “continued to slow†and Chicago’s “moderated†in July and August, the Beige Book said.
Reports received by regional Fed banks “suggested continued growth in national economic activity during the reporting period of mid-July through the end of August, but with widespread signs of a deceleration compared with preceding periods,†today’s report said.
The report showed that manufacturing maintained its expansion while showing signs of slowing. Consumer spending “appeared to increase on balance,†though shoppers were limiting purchases of non-essential items. Home sales were “very low†or “declining†in most Fed districts following the expiration of a government tax credit.
“Demand for commercial, industrial, and retail space generally remained depressed,†the Fed said, though commercial real estate “showed signs of stabilization in some areas.â€
Low interest rates have failed to spur renewed borrowing. “Most Districts reported little or no change from existing low levels of commercial and industrial lending, as businesses remained quite cautious about expansion plans,†the Fed said, also noting that “consumer lending remained sluggish in general.â€
Posted By thestatedtruth.com on September 7, 2010
Here is another government controlled project. These are unbelievable statistics. Simply beyond belief! Credit card debt peaked at $975 billion back in September of 2008 and is now down to $826 billion. Past and current students now carry a stunning $829 billion in student loan debt.   Fact:  You are not allowed to discharge student loan debt through bankruptcy.Â
Source:Â New York Times
One of the more ominous statistics coming from this recession is that student loan debt has now surpassed total credit card debt in the United States. The reason for this is based on the deep impact of the recession. Credit card debt peak at $975 billion back in September of 2008 and is now down to $826 billion. This is good news right? Well the main reason for the decline has been through the rise of bankruptcies. As this number decreased student loan debt has continued to soar and is now larger than total credit card debt. Part of it has to do with the fact that you are not allowed to discharge student loan debt through bankruptcy. The government is the biggest player in the student loan market but the banks are the folks dishing out the loans. Similar to the housing bubble, when banks and government combine you usually end up with inflated prices and very wealthy bankers. The working and middle class end up paying for the bad bets in the end with inflated prices and giant amounts of debt.
Here is the unfortunate tipping of the scales:
Source:Â Mint
Past and current students carry a stunning $829 billion in student loan debt. The cost of a college education has far outpaced the rate of inflation.Â
Interesting that in 2005 when costs started skyrocketing this happened:
Posted By thestatedtruth.com on September 7, 2010
The problem with trying to put hupty dumty back together is much like a house of cards,  they both tend to fall apart in a heap.  While abundant liquidity in May and June served as an artificial prop to return European and PIIGS spreads to previous levels, it looks more like a mean reversion as algorythems took hold. The second time around we may not be so lucky. CDR’s Tim Backshall was on Strategy Session today discussing the key trends in sovereign products over the past few months. He noted the declining liquidity in both sovereign cash and derivative exposure. But his most interesting observation is the declining half life of risk-on past episodes, which much like the SNB’s (now declining) interventions are having less of an impact on the market, even as worsening fundamentals are swept under the carpet long before they start stinking up the place. Tim points out in the interview, even the IMF now realizes that the second domino may fall soon, and it’s better to be prepared (via the previously discussed infinitely expanded credit line), than to have to scramble at the last minute as was necessary back in May. So, again we have storm clouds gathering. Buyer beware in risk assets. The bottom line Backshall says:  “do they default now or default later.”
For more: Â www.zerohedge.com
Posted By thestatedtruth.com on September 7, 2010
So…….What’s going to happen here in the good old USA when, not if our congress gets around to this. Hint….. judging from the french reaction,  it won’t be pretty! Â
If you would like to know more about the demographic problem, just go to Categories on the left and click on Pensions and Retirement. There is plenty to read about on the subject.
PARIS — French unions called a one-day national strike on Tuesday, setting up a transportation nightmare just as parliament began a debate on a measure that would raise the minimum retirement age from 60 to 62.
President Nicolas Sarkozy has called the pension legislation the last major legislation of his first term and vowed that the government will not bend on the essentials of the bill, which is intended to avoid large and growing deficits in the pension system as people live longer and baby boomers start to reach retirement age.
Posted By thestatedtruth.com on September 6, 2010
Have you ever wondered about which countries have the biggest gold reserves or are the largest producers of gold?
Gold
Atomic Number: 79
Symbol: Au
Atomic Weight: 196.9665
Discovery: Known since prehistoric time
Word Origin: Sanskrit Jval; Anglo-Saxon gold; meaning gold – also Latin aurum, shining dawn
The word ‘carat’ (the measurement for gold purity) comes from ‘carob’; carob seeds were originally used to balance scales in Oriental bazaars. Pure gold is designated 24 carat, which compares with the ‘fineness’ by which bar gold is defined.
Click the infographic to view it full-size (1200px by 2600px)
![Who's Got All The Gold and Who's Mining It [Infographic]](http://www.moneychoices.com.au/media/uploads/offers/gold-infographic-1200px.jpg "Click to view the full size gold infographic")
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More at: http://www.moneychoices.com.au/blog/whos-got-all-the-gold-and-whos-mining-it-infographic.php
Posted By thestatedtruth.com on September 6, 2010
Posted By thestatedtruth.com on September 5, 2010
So even though we have nearly 8,000 banks, the bulk of the assets sit with a small number of banks and the Deposit Insurance Fund (DIF), the fund that backs the assets of the banks is actually in the red for $15 billion:
Posted By thestatedtruth.com on September 4, 2010
There are two, and only two, ways that you can grow your economy. You can either increase your (working-age) population or increase your productivity. That’s it. There is no magic fairy dust you can sprinkle on an economy to make it grow. To increase GDP you actually have to produce something. That’s why it’s called gross domestic product.
The Greek letter delta (∆) is the symbol for change. So if you want to change your GDP you write that as:
∆GDP = ∆Population + ∆Productivity
That is, the change in GDP is equal to the change in population plus the change in productivity. Therefore, and I’m oversimplifying a bit here, a recession is basically a decrease in production (as normally, populations don’t decrease).
Two clear implications: The first is that if you want your economy to grow, you must have an economic environment that is friendly to increasing productivity.
While government can invest in industries in ways that are productive, empirical evidence and the preponderance of academic studies suggest that private companies are better at increasing productivity and producing long-term job growth.
Going to the U.S. for a second, studies show that it is business startups that have produced nearly all the net new jobs over the last 20 years. Let’s look at this analysis by Vivek Wadhwa.1
“The Kauffman Foundation has done extensive research on job creation. Kauffman Senior Fellow Tim Kane analyzed a new data set from the U.S. government, called Business Dynamics Statistics, which provides details about the age and employment of businesses started in the U.S. since 1977. What this showed was that startups aren’t just an important contributor to job growth: they’re the only thing. Without startups, there would be no net job growth in the U.S. economy. From 1977 to 2005, existing companies were net job destroyers, losing 1 million net jobs per year. In contrast, new businesses in their first year added an average of 3 million jobs annually.
“When analyzed by company age, the data are even more startling. Gross job creation at startups averaged more than 3 million jobs per year during 1992-2005, four times as high as any other yearly age group. Existing firms in all year groups have gross job losses that are larger than gross job gains.
“Half of the startups go out of business within five years; but overall they are still the ones that lead the charge in employment creation. Kauffman Foundation analyzed the average employment of all firms as they age from year zero (birth) to year five. When a given cohort of startups reaches age five, its employment level is 80 percent of what it was when it began. In 2000, for example, startups created 3,099,639 jobs. By 2005, the surviving firms had a total employment of 2,412,410, or about 78 percent of the number of jobs that existed when these firms were born.
“So we can’t count on the Intels or Microsofts to create employment: we need the entrepreneurs.”
Run through the data from around the world. Where has the vast majority of long-term net new jobs come from, even in China? The private sector. And what is the mother’s milk of the private sector? Money. Investments. Angel investors. Private banking. Private offerings. Public offerings. Loans. Personal savings. Money from friends and family. Borrowing against houses. Credit cards. And anything else that provides capital to business.
(We are reminded of the improbable story of Fred Smith, the founder of FedEx, who early in the history of the company could not make payroll. So he flew to Las Vegas and wagered what little cash they had, and incredibly made enough [$27,000] to keep the company alive. Not exactly orthodox investment banking procedure, but it is illustrative of the crazy, gung-ho nature of some entrepreneurs. Eighty percent of all business startups do not exist after five years (at least in the US). We guess Fred figured he could get better odds in Vegas.)
Want to increase productivity and jobs? The best way it seems, is to encourage private business, and especially startups.
You have permission to publish this article electronically or in print as long as the following is included:
John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore
Posted By thestatedtruth.com on September 4, 2010
Even after looking at the market’s rebound from the lows of 2009, nest eggs remain severely impaired. As of the first quarter of 2010, net household assets—homes, 401(k) plans, pension assets and other investments minus debts—stood at $54.6 trillion, down an average of 18% from the end of 2007.  We actually think the losses are higher but we’ll use these numbers and give them the benefit of the doubt!
Since this isn’t a job for crisp logic, we’re going to apply some fuzzy logic calculations to the figures of the chart below. These figures could have some flex in them, and of course different areas of the country will effect these figures with a different weighting. But this will give everyone a general lay of the land sort of speak.
The iTulip chart below is from 2007, ……so to get current we will multiply the numbers below by 82% (we have to take into account the 18% net asset loss on average since 2007 and that leaves us with 82% left,  multiply times the value of 2007). So, the 90 percentile will be $475,000 total net worth for 2007 (taken from the chart below)  x  82% = $389,500.   $389,500 total net worth and greater now puts that person in the 90th percentile as of the first quarter 2010 based on the chart below.
Like wise, for the 95th percentile we do a similar calculation and come up with the formula $785,000 total net worth x 82% = $643,700 total net worth. So $643,700 and greater will put an individual in the 95th percentile as of quarter 1, 2010 based on the chart below.
The current mean, (average) net worth is $227,483 x .82% = $186,536.  This shows  $186,536 as the mean or average total net worth as of quarter 1, 2010 based on the chart below.
Posted By thestatedtruth.com on September 4, 2010
Posted By thestatedtruth.com on September 3, 2010
Very interesting,  but also a worst nightmare for tax payers……….Under Pennsylvania law, Ambac Assurance (which insures some of Harrisburg’s debt) can take Harrisburg to court to seek an order to raise property taxes to pay debt. This is the nature of “full faith and credit†of general-obligation bonds. So the tax payers are stuck for the dumb ass business decisions made by a few local  government (dopes) people! Say it isn’t so………….
The Harrisburg Mess – The First Inning
September 3, 2010
John Mousseau is a portfolio manager and heads the tax-free Muni section of Cumberland. He is a member of the Management Committee of Cumberland Advisors.Â
Harrisburg, Pennsylvania announced this week that it would skip $3.3 million in municipal bond payments due this month on the city’s debt.
The Harrisburg problem has been known for some time in the municipal bond market. It was caused by the city saddling itself with over $280 million of debt for a large trash incinerator that it did not need.
The city has said that it is trying to construct a plan to make payments “in the near future.â€
Ambac Assurance, a bond insurer whose own ratings have been downgraded in the past two years due to woes related to its insuring of mortgage-backed bonds, insures some of Harrisburg’s debt. AMBAC has said it will make coupon interest payments when due.
We will write more on this as things sort themselves out after the Labor Day holiday, but this is what we know now:
– Harrisburg’s problems have been mounting for some time. They have already missed payments on bonds related specifically to the incinerator.  This incinerator was ill-conceived and not needed. Part of that incinerator debt is also guaranteed by Dauphin County, where Harrisburg is located.
– Under Pennsylvania law, Ambac Assurance can take Harrisburg to court to seek an order to raise property taxes to pay debt. This is the nature of “full faith and credit†of general-obligation bonds.
– Seeking Chapter 9 bankruptcy is extremely complicated, legally, and it is costly. It points to woes that go beyond the problems with just the incinerator, and it certainly limits solutions to the incinerator debt problems.
– The Commonwealth of Pennsylvania, whose capital is Harrisburg, has been extremely slow in trying to foster a solution.
As we have said before, Harrisburg and its incinerator are a very small part of the municipal bond market. It is unrelated to the Kentucky Turnpike Authority, the State of Oregon, the Minnesota Housing Authority, or any of the other state and local governmental issuers of municipal bonds, almost all of which are functioning normally. However, the slowness with which the city, county, and state have addressed the Harrisburg incinerator problem is certainly troublesome on the Pennsylvania level.
We will keep readers apprised of developments.
John Musseau, CFA, Managing Director and Portfolio Manager
Please feel free to forward this Commentary (with proper attribution) to others who may be interested.
Copyright 2010, Cumberland Advisors. All rights reserved.
Posted By thestatedtruth.com on September 3, 2010
Reviewed below are mutual fund flows for the  year…..bonds over stocks by a huge margin. In fact, the monthly trends are so negative for stock mutual fund flows that we would be surprised if the small yearly stock inflows for 2010 don’t turn into outflows. The stock monthly flow data was posted here on September 2, which was yesterday.
17x forward P/Es and expecting a 20% rise in corprate earnings in 2011 with a flat GDP indicates a serious question mark.
Citi’s Robert Buckland is out with this must read report, parts of which are reviewed below.
 “A reduction in equity holdings back to pre-1959 levels (around 20% of total assets) would indicate considerable selling pressure to come. For US private sector pension funds alone, that would imply a further $1900bn reduction in equity weightings. The evidence suggests that there could still be considerable institutional selling to come.”
So let’s recap what the medium- and long-term trends for the market are:
The annual returns data by decade sums things up!
More at: www.zerohedge.com
Posted By thestatedtruth.com on September 3, 2010
This from Art Cashin on the floor of The New York Stock Exchange
On this day in 1666, a massive fire broke out in the city of London, England.
It began in a bakery on Pudding Lane, which was on the East End (between London Bridge and the Tower). The fire raged into the shop (or shoppe) next door which sold ship’s goods, especially tar and turpentine. That building not only caught fire, it exploded raining flaming tar down on the wooden buildings in the neighborhood.
At first the authorities dismissed it as a local blaze. The wind had other ideas, however. It whipped up in strong gusts and soon the flames were spreading across the city. By mid-morning the next day much of the city was on fire and much of the populace had taken to boats and barges on the Thames.
The king called for a team of Navy gun experts to blow up blocks of buildings to form a firebreak. Luckily, the strategy worked and after raging three days, the fire burned itself out. The devastation, however, was huge. Nearly 500 acres of the city was nothing more than ashes. An estimated 15,000 homes and nearly 100 churches were fully destroyed leaving 100,000 homeless. Amazingly, the human death toll was set at 10.
Under the rubric of “It’s an ill wind that blows no good” the disaster was, in fact, a blessing in disguise. The year before, nearly 100,000 Londoners had died of the Plague. A new outbreak had been feared but the fire destroyed the rat hovels where the plague-bearing fleas had prospered. After the Great Fire, the Plague virtually disappeared. No one realized it at the time but the fire saved the city.
Posted By thestatedtruth.com on September 2, 2010
Consumers are eschewing fixed-line alternatives for their cell phones, opting to keep connected to a single number whether they’re at home or in the car.
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Posted By thestatedtruth.com on September 2, 2010
Key message here is….. for liquidity ratios, equity fund portfolio managers are at an all-time record low of 3.4%, down from 3.8% in June. Tack on the fact that there are less shorts to be covered – being that the market peaked in April, and short interest is now 4.3% of the S&P 500 market cap (in August 2008 it was 6%), well…..there’s not a whole lot of underlying fund-flow support for the stock market here.  Add to that negative seasonality and you have the picture.
New ICI reports just out: We have just recorded the 17th consecutive weekly outflow from domestic equity mutual funds, and what’s worse for mutual funds’ depleted liquidity ratios, it is now accelerating, hitting a total of $4.3 billion, a more than 50% increase from last week’s $2.7 billion. YTD outflows have now hit $54 billion, as ever more capital is going into far safer fixed income instruments. As a reminder, here is what Rosenberg said on the issue yesterday: “As for liquidity ratios, equity funds portfolio manages have theirs at an all-time low of 3.4%, down from 3.8% in June. Tack on the fact that there are really not very many shorts to be covered – since the market peaked in April, short interest is 4.3% of the S&P 500 market cap (in August 2008 it was 6%) and there’s not a whole lot of underlying fund-flow support for the stock market here.” As for this being a contrarian signal, hopefully all those who see this as a buying opportunity can also find a way to make the now retiring baby boomers about 10 years younger and force them away from fixed income capital reallocation.Â
In the meantime, no matter what the market does (and somehow it has been flat during the entire period of record redemptions: good to know someone is putting capital into stocks), on a short-term basis, nobody wants to touch it with a ten foot pole.
Posted By thestatedtruth.com on September 2, 2010
Key words here are…..”public debt had served for decades as the ultimate shock absorber — rising in bad times but not declining much in good times.â€Â Now things have to change as  the wealthiest nations face years of belt-tightening.Â
International Monetary Fund Warns G7 on Debt
Thursday, 2 Sep 2010Â
By: Sewell Chan
The world’s most developed economies, which have been racking up spending since the mid-1960s, face record levels of debt as a result of the 2008-9 financial crisis and have little room for maneuver, the International Monetary Fund warned on Wednesday.
Despite the stark warning and the prospect that the wealthiest nations face years of belt-tightening, the fund also said that the risk of default by heavily indebted European countries like Greece, Ireland and Portugal had been significantly overestimated.
In three new research papers, the fund’s economists offered stern admonitions while cautioning against an overreaction.
That mix of messages was reflected in one paper on the long-term trends in the public finances of the Group of 7 economies.
The authors, Carlo Cottarelli, director of fiscal affairs, and Andrea Schaechter, a senior economist, concluded that public debt had served for decades as “the ultimate shock absorber — rising in bad times but not declining much in good times.â€
More at:Â http://www.cnbc.com/id/38967851
Posted By thestatedtruth.com on September 2, 2010
Crisis mode? Hmm…..their words not ours!
ECB Keeps Key Interest Rate at 1%, May Maintain Crisis Mode
By Christian VitsÂ
 Sep 2, 2010Â
The European Central Bank kept interest rates at a record low today and President Jean-Claude Trichet may signal the bank will stay in crisis mode into next year.
The ECB’s Governing Council set the benchmark lending rate at 1 percent for a 17th month, as predicted by all 57 economists in a Bloomberg News survey. Policy makers are also likely to extend emergency lending measures for banks into 2011 as the risk of a renewed U.S. recession threatens the euro region’s economic rebound, economists said. Trichet holds a press conference at 2:30 p.m. in Frankfurt.
“The ECB would like to end its extraordinary measures relatively soon but the situation is still too fragile to return to the exit path before year-end,†said Juergen Michels, chief euro-area economist at Citigroup Inc. in London.
More at:Â http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a_kD.vHMhD6A
Posted By thestatedtruth.com on September 1, 2010
A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned – this is the sum of good government. – Thomas Jefferson, Writings, 1743-1826
Â
I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of the people. – Thomas Jefferson, Letter to Thomas Cooper, 1802
Posted By thestatedtruth.com on September 1, 2010
Posted By thestatedtruth.com on September 1, 2010
This looks like the worst sales performance since the early 1980’s………If autos looked this bad then one would asume that housing should fare no better as consumers still have too much debt…..Here is a quote from Toyota, “We are bracing ourselves for the coming crisis.”.  Â
Toyota Motor Corp., General Motors Co. and Ford Motor Co., the world’s three largest automakers, reported sales declines that exceeded analysts’ projections as the U.S. auto industry headed for its worst August in 28 years.
GM said deliveries fell 25 % and Toyota, the world’s largest automaker, reported a 34 % drop and Ford sales fell 11 %. Chrysler sales rose 7 %. Honda Motor Co. sales were down 33% and Nissan Motor Co.’s sales were down 27%.
Fleets may have accounted for 20 percent of the industry’s August deliveries.
Posted By thestatedtruth.com on September 1, 2010
Front Running the Fed
September 1, 2010
“… the public is no longer investing in stocks, but rather in bonds. So far this year through July, bond mutual funds have attracted $224.4bn in net inflows including reinvested dividends.  Equity funds have attracted only $17.2bn ytd, with $32.2bn going into International funds while $15.0bn flowed out of Domestic funds.†— Ed Yardeni, September 1, 2010.
Understanding the movement of markets (prices) requires the examination of flows of funds. Â Stocks in America have experienced malaise, while bonds have been on an upward trend in prices (falling yields). Â The mutual-fund flows cited above demonstrate why this is so.
Add to this the actions of the Federal Reserve this year, and a fuller explanation of the bond markets becomes apparent.  The Fed terminated the purchases of $1.25 trillion in GSE mortgages and mortgage-related paper in March.  It was fully transparent in its strategy, as it should be. Simultaneously, the housing-purchases credit subsidy ceased. Housing went into relapse, as most economists expected.  Simply put, subsidize something and you get more of it; remove the subsidy and you find that you have borrowed economic activity from the future, and now you get less of it.  That is the condition of the housing market.
The federal government has made a decade-long mess of housing finance. Â Fannie and Freddie are fully discredited. Â They are costing the US taxpayer mountains of billions due to the losses. Â The US Treasury effectively guarantees their debt.
The Fed now faces the issue of watching its mortgage holdings prepay at speeds that are difficult to forecast.  We wrote about this on Monday. See “The Emperor, the Gladiator & the Lion†on our website, www.cumber.com.  In that commentary we noted how the world is trying to front-run the Fed.  We offered that the “rest of the world is watching, trading, investing, swapping, hedging, and attempting to front-run the Fed’s tsunami every single minute.â€
Many readers commented on this issue of front-running the Fed. Â We thank them for their email. Â Some asked for solid evidence. Â We can draw inferences form market movements. Â We can ask investors and institutional traders and acquire anecdotes. Â We can observe our own trading behavior. Â We can survey sentiment and receive interpretations of the survey data. Â However, we cannot definitively prove that the there is front-running. Â Such a proof is impossible.
Logic suggests to us that some of this behavior exists. Â It is a human instinct to try to get in front of the crowd. Â Therefore, our conclusion is that part of the upward movement in Treasury-bill, note, and bond prices (falling yields) is due to investors positioning themselves ahead of the Fed as the Fed rebalances its asset holdings from mortgage paper to Treasuries.
We expect this behavior in the markets to continue, since the Fed is going to pursue this transition for the next year, and since the amount involved is nearly half a trillion dollars in purchases of treasury securities as the mortgage paper runs off.  When the world’s largest buyer of US treasury paper is transparent about its intent, it is better to be in front of this 800-pound gorilla than behind it.  Note that markets have a forward-looking expectations component.  Market agents will anticipate the ending of the Fed’s purchases before it actually occurs.
We thank our readers for their supportive comments. Â We particularly thank Art Cashin, who offered an alternate punch line to the gladiator joke.
We are scheduled to talk about markets on CNBC at 10 AM today
Then to Maine and the Labor Day weekend at Leen’s Lodge.  Hurricane Earl: you are not invited.
David R. Kotok, Chairman and Chief Investment Officer
Copyright 2010, Cumberland Advisors. All rights reserved.
For a list of all equity sales/purchases for the past year, please contact It is not our intention to state or imply in any manner that past results and profitability are an indication of future performance. This does not constitute an offer to sell or the solicitation or recommendation of an offer to buy or sell any securities directly or indirectly herein.
Cumberland Advisors supervises about $1.4 billion in separate account assets for individuals, institutions, retirement plans, government entities, and cash-management portfolios. Cumberland manages portfolios for clients in 43 states, the District of Columbia and in countries outside the U.S. Cumberland Advisors is an SEC registered investment adviser. For further information about Cumberland Advisors, please visit our website at www.cumber.com.
Please feel free to forward this Commentary (with proper attribution) to others who may be interested.
Archived Commentaries: http://www.cumber.com/comments/archiveindex.htm
Posted By thestatedtruth.com on August 31, 2010
More then one in six Americans are currently on government anti-poverty programs and the number continues to rise. The chart is below.
WASHINGTON — Government anti-poverty programs that have grown to meet the needs of recession victims now serve a record one in six Americans and are continuing to expand.
More than 50 million Americans are on Medicaid, which is the federal-state program aimed principally at the poor. This according to a survey of state data by USA TODAY.   That’s up at about 17% since the recession began in December 2007.
 
More at: http://www.usatoday.com/news/washington/2010-08-30-1Asafetynet30_ST_N.htm
Posted By thestatedtruth.com on August 31, 2010
What a travesty………..how do seemingly smart minds create such stupid problems?  “If we do nothing, in four years, the University will be spending more on retirement programs each year than we do on classroom instruction,”
The University of California retirement system faces a shortfall of more than $20 billion, according to a new report.Â
The panel, which released its report publicly Monday, proposed such changes as increasing contributions made by the university and employees, raising the minimum retirement age for new hires and reducing some benefits.
Part of the problem with the retirement fund stems from a decision 20 years ago when UC and its employees stopped paying into the retirement system because it was believed to be overfunded, officials said. The university and employees resumed payments this year, but now drastic changes will be needed.
The recommendations include raising the amount, over the next two years, that employees and UC must contribute to pensions, from the current 2% and 4% of paychecks, respectively, to 5% and 10%. In other suggestions, new employees would not be allowed to retire and receive a pension until they reach the age of 55, up from the current 50, and they also could receive smaller pensions based on their years of service than current employees.
Be  warned, there will be terrible consequences if the problem is not tackled quickly. “If we do nothing, in four years, the University will be spending more on retirement programs each year than we do on classroom instruction,” this from a recent letter to UC employees.
Here is the catch….Rollbacks in pension benefits also would require agreement from labor unions, as has been the case with similar benefit reductions that Gov. Arnold Schwarzenegger has proposed for the State of California.
Posted By thestatedtruth.com on August 31, 2010
Record low temperatures for the day were set Monday in Long Beach and Santa Barbara amid cooler weather that has settled over Southern California, forecasters said. Long Beach recorded 58 degrees, breaking by one degree a record set in 1989, the National Weather Service said. Santa Barbara bottomed out at 48 degrees, one degree below a record set in 1975.
Oceanside in San Diego County tied a record low of 66 degrees set this date in 1916, the weather service said.
Posted By thestatedtruth.com on August 31, 2010
By George Friedman
Public discussion of potential attacks on Iran’s nuclear development sites is surging again. This has happened before. On several occasions, leaks about potential airstrikes have created an atmosphere of impending war. These leaks normally coincided with diplomatic initiatives and were designed to intimidate the Iranians and facilitate a settlement favorable to the United States and Israel. These initiatives have failed in the past. It is therefore reasonable to associate the current avalanche of reports with the imposition of sanctions and view it as an attempt to increase the pressure on Iran and either force a policy shift or take advantage of divisions within the regime.
My first instinct is to dismiss the war talk as simply another round of psychological warfare against Iran, this time originating with Israel. Most of the reports indicate that Israel is on the verge of attacking Iran. From a psychological-warfare standpoint, this sets up the good-cop/bad-cop routine. The Israelis play the mad dog barely restrained by the more sober Americans, who urge the Iranians through intermediaries to make concessions and head off a war. As I said, we have been here before several times, and this hasn’t worked.
The worst sin of intelligence is complacency, the belief that simply because something has happened (or has not happened) several times before it is not going to happen this time. But each episode must be considered carefully in its own light and preconceptions from previous episodes must be banished. Indeed, the previous episodes might well have been intended to lull the Iranians into complacency themselves. Paradoxically, the very existence of another round of war talk could be intended to convince the Iranians that war is distant while covert war preparations take place. An attack may be in the offing, but the public displays neither confirm nor deny that possibility.
STRATFOR has gone through three phases in its evaluation of the possibility of war. The first, which was in place until July 2009, held that while Iran was working toward a nuclear weapon, its progress could not be judged by its accumulation of enriched uranium. While that would give you an underground explosion, the creation of a weapon required sophisticated technologies for ruggedizing and miniaturizing the device, along with a very reliable delivery system. In our view, Iran might be nearing a testable device but it was far from a deliverable weapon. Therefore, we dismissed war talk and argued that there was no meaningful pressure for an attack on Iran.
We modified this view somewhat in July 2009, after the Iranian elections and the demonstrations. While we dismissed the significance of the demonstrations, we noted close collaboration developing between Russia and Iran. That meant there could be no effective sanctions against Iran, so stalling for time in order for sanctions to work had no value. Therefore, the possibility of a strike increased.
But then Russian support stalled as well, and we turned back to our analysis, adding to it an evaluation of potential Iranian responses to any air attack. We noted three potential counters: activating Shiite militant groups (most notably Hezbollah), creating chaos in Iraq and
There has been debate over whether Iran would choose to do the latter or whether the U.S. Navy could rapidly clear mines. It is hard to imagine how an Iranian government could survive air attacks without countering them in some way. It is also a painful lesson of history that the confidence of any military force cannot be a guide to its performance. At the very least, there is a possibility that the Iranians could block the Strait of Hormuz, and that means the possibility of devastating global economic consequences. That is a massive risk for the United States to take, against an unknown probability of successful Iranian action. In our mind, it was not a risk that the United States could take, especially when added to the other Iranian counters. Therefore, we did not think the United States would strike.
Certainly, we did not believe that the Israelis would strike Iran alone. First, the Israelis are much less likely to succeed than the Americans would be, given the size of their force and their distance from Iran (not to mention the fact that they would have to traverse either Turkish, Iraqi or Saudi airspace). More important, Israel lacks the ability to mitigate any consequences. Any Israeli attack would have to be coordinated with the United States so that the United States could alert and deploy its counter-mine, anti-submarine and missile-suppression assets. For Israel to act without giving the United States time to mitigate the Hormuz option would put Israel in the position of triggering a global economic crisis. The political consequences of that would not be manageable by Israel. Therefore, we found an Israeli strike against Iran without U.S. involvement difficult to imagine.
Our current view is that the accumulation of enough enriched uranium to build a weapon does not mean that the Iranians are anywhere close to having a weapon. Moreover, the risks inherent in an airstrike on its nuclear facilities outstrip the benefits (and even that assumes that the entire nuclear industry is destroyed in one fell swoop — an unsure outcome at best). It also assumes the absence of other necessary technologies. Assumptions of U.S. prowess against mines might be faulty, and so, too, could my assumption about weapon development. The calculus becomes murky, and one would expect all governments involved to be waffling.
There is, of course, a massive additional issue. Apart from the direct actions that Iran might make, there is the fact that the destruction of its nuclear capability would not solve the underlying strategic challenge that Iran poses. It has the largest military force in the Persian Gulf, absent the United States. The United States is in the process of withdrawing from Iraq, which would further diminish the ability of the United States to contain Iran. Therefore, a surgical strike on Iran’s nuclear capability combined with the continuing withdrawal of U.S. forces from Iraq would create a profound strategic crisis in the Persian Gulf.
The country most concerned about Iran is not Israel, but Saudi Arabia. The Saudis recall the result of the last strategic imbalance in the region, when Iraq, following its armistice with Iran, proceeded to invade Kuwait, opening the possibility that its next intention was to seize the northeastern oil fields of Saudi Arabia. In that case, the United States intervened. Given that the United States is now withdrawing from Iraq, intervention following withdrawal would be politically difficult unless the threat to the United States was clear. More important, the Iranians might not give the Saudis the present Saddam Hussein gave them by seizing Kuwait and then halting. They might continue. They certainly have the military capacity to try.
In a real sense, the Iranians would not have to execute such a military operation in order to gain the benefits. The simple imbalance of forces would compel the Saudis and others in the Persian Gulf to seek a political accommodation with the Iranians. Strategic domination of the Persian Gulf does not necessarily require military occupation — as the Americans have abundantly demonstrated over the past 40 years. It merely requires the ability to carry out those operations.
The Saudis, therefore, have been far quieter — and far more urgent — than the Israelis in asking the United States to do something about the Iranians. The Saudis certainly do not want the United States to leave Iraq. They want the Americans there as a blocking force protecting Saudi Arabia but not positioned on Saudi soil. They obviously are not happy about Iran’s nuclear efforts, but the Saudis see the conventional and nuclear threat as a single entity. The collapse of the Iran-Iraq balance of power has left the Arabian Peninsula in a precarious position.
King Abdullah of Saudi Arabia did an interesting thing a few weeks ago. He visited Lebanon personally and in the company of the president of Syria. The Syrian and Saudi regimes are not normally friendly, given different ideologies, Syria’s close relationship with Iran and their divergent interests in Lebanon. But there they were together, meeting with the Lebanese government and giving not very subtle warnings to Hezbollah. Saudi influence and money and the threat of Iran jeopardizing the Saudi regime by excessive adventurism seems to have created an anti-Hezbollah dynamic in Lebanon. Hezbollah is suddenly finding many of its supposed allies cooperating with some of its certain enemies. The threat of a Hezbollah response to an airstrike on Iran seems to be mitigated somewhat.
I said that there were three counters. One was Hezbollah, which is the least potent of the three from the American perspective. The other two are Iraq and Hormuz. If the Iraqis were able to form a government that boxed in pro-Iranian factions in a manner similar to how Hezbollah is being tentatively contained, then the second Iranian counter would be weakened. That would “just†leave the major issue — Hormuz.
The problem with Hormuz is that the United States cannot tolerate any risk there. The only way to control that risk is to destroy Iranian naval capability before airstrikes on nuclear targets take place. Since many of the Iranian mine layers would be small boats, this would mean an extensive air campaign and special operations forces raids against Iranian ports designed to destroy anything that could lay mines, along with any and all potential mine-storage facilities, anti-ship missile emplacements, submarines and aircraft. Put simply, any piece of infrastructure within a few miles of any port would need to be eliminated. The risk to Hormuz cannot be eliminated after the attack on nuclear sites. It must be eliminated before an attack on the nuclear sites. And the damage must be overwhelming.
There are two benefits to this strategy. First, the nuclear facilities aren’t going anywhere. It is the facilities that are producing the enriched uranium and other parts of the weapon that must be destroyed more than any uranium that has already been enriched. And the vast bulk of those facilities will remain where they are even if there is an attack on Iran’s maritime capabilities. Key personnel would undoubtedly escape, but considering that within minutes of the first American strike anywhere in Iran a mass evacuation of key scientists would be under way anyway, there is little appreciable difference between a first strike against nuclear sites and a first strike against maritime targets. (U.S. air assets are good, but even the United States cannot strike 100-plus targets simultaneously.)
Second, the counter-nuclear strategy wouldn’t deal with the more fundamental problem of Iran’s conventional military power. This opening gambit would necessarily attack Iran’s command-and-control, air-defense and offensive air capabilities as well as maritime capabilities. This would sequence with an attack on the nuclear capabilities and could be extended into a prolonged air campaign targeting Iran’s ground forces.
The United States is very good at gaining command of the air and attacking conventional military capabilities (see Yugoslavia in 1999). Its strategic air capability is massive and, unlike most of the U.S. military, underutilized. The United States also has substantial air forces deployed around Iran, along with special operations forces teams trained in penetration, evasion and targeting, and satellite surveillance. Far from the less-than-rewarding task of counterinsurgency in Afghanistan, going after Iran would be the kind of war the United States excels at fighting. No conventional land invasion, no boots-on-the-ground occupation, just a very thorough bombing campaign. If regime change happens as a consequence, great, but that is not the primary goal. Defanging the Iranian state is.
It is also the only type of operation that could destroy the nuclear capabilities (and then some) while preventing an Iranian response. It would devastate Iran’s conventional military forces, eliminating the near-term threat to the Arabian Peninsula. Such an attack, properly executed, would be the worst-case scenario for Iran and, in my view, the only way an extended air campaign against nuclear facilities could be safely executed.
Just as Iran’s domination of the Persian Gulf rests on its ability to conduct military operations, not on its actually conducting the operations, the reverse is also true. It is the capacity and apparent will to conduct broadened military operations against Iran that can shape Iranian calculations and decision-making. So long as the only threat is to Iran’s nuclear facilities, its conventional forces remain intact and its counter options remain viable, Iran will not shift its strategy. Once its counter options are shut down and its conventional forces are put at risk, Iran must draw up another calculus.
In this scenario, Israel is a marginal player. The United States is the only significant actor, and it might not strike Iran simply over the nuclear issue. That’s not a major U.S. problem. But the continuing withdrawal from Iraq and Iran’s conventional forces are very much an American problem. Destroying Iran’s nuclear capability is merely an added benefit.
Given the Saudi intervention in Lebanese politics, this scenario now requires a radical change in Iraq, one in which a government would be quickly formed and Iranian influence quickly curtailed. Interestingly, we have heard recent comments by administration officials asserting that Iranian influence has, in fact, been dramatically reduced. At present, such a reduction is not obvious to us, but the first step of shifting perceptions tends to be propaganda. If such a reduction became real, then the two lesser Iranian counter moves would be blocked and the U.S. offensive option would become more viable.
At this point, we would expect to see the Iranians recalculating their position, with some of the clerical leadership using the shifting sands of Lebanon against Iranian President Mahmoud Ahmadinejad. Indeed, there have been many indications of internal stress, not between the mythical democratic masses and the elite, but within the elite itself. This past weekend the Iranian speaker of the house attacked Ahmadinejad’s handling of special emissaries. For what purpose we don’t yet know, but the internal tension is growing.
The Iranians are not concerned about the sanctions. The destruction of their nuclear capacity would, from their point of view, be a pity. But the destruction of large amounts of their conventional forces would threaten not only their goals in the wider Islamic world but also their stability at home. That would be unacceptable and would require a shift in their general strategy.
From the Iranian point of view — and from ours — Washington’s intentions are opaque. But when we consider the Obama administration’s stated need to withdraw from Iraq, Saudi pressure on the United States not to withdraw while Iran remains a threat, Saudi moves against Hezbollah to split Syria from Iran and Israeli pressure on the United States to deal with nuclear weapons, the pieces for a new American strategy are emerging from the mist. Certainly the Iranians appear to be nervous. And the threat of a new strategy might just be enough to move the Iranians off dead center. If they don’t, logic would dictate the consideration of a broader treatment of the military problem posed by Iran.
“Rethinking American Options on Iran is republished with permission of STRATFOR.
Posted By thestatedtruth.com on August 30, 2010
According to the Investment Company Institute (ICI), bond mutual funds have attracted more money than equity mutual funds for 30 consecutive months through June, the longest stretch in more than 23 years.
Posted By thestatedtruth.com on August 30, 2010
News For Thought From Dr. Joe Duarte’s Market I.Q.
Public Hospitals May Be A Thing Of The Past.
According to The Wall Street Journal: “Faced with mounting debt and looming costs from the new federal health-care law, many local governments are leaving the hospital business, shedding public facilities that can be the caregiver of last resort.” The report added: “More than a fifth of the nation’s 5,000 hospitals are owned by governments and many are drowning in debt caused by rising health-care costs, a spike in uninsured patients, cuts in Medicare and Medicaid and payments on construction bonds sold in fatter times. Because most public hospitals tend to be solo operations, they don’t enjoy the economies of scale, or more generous insurance contracts, which bolster revenue at many larger nonprofit and for-profit systems.” Finally, the article added: “Local officials also predict an expensive future as new requirements—for technology, quality accounting and care coordination—start under the overhaul, which became law in March. Moody’s Investors Service said in April that many standalone hospitals won’t have the resources to invest in information technology or manage bundled payments well. Many nonprofits have bad credit ratings and in a tight credit market cannot borrow money, either. Meantime, the federal government is expected to cut aid to hospitals.”
Posted By thestatedtruth.com on August 30, 2010
Another fraudulent entity, this time it’s a state……The state of New Jersey’s most recent report said that as of June 2009, its pension funds should have assets of $112 billion to meet their future obligations, but have only $66 billion now — This is one of the largest shortfalls of its kind, and is known as an unfunded liability!  The state said even if benefits are cut and taxes raised, there is no obvious fix in sight. Ouch!
Behind Fraud Charges, New Jersey’s Deep Crisis
By RICHARD PÉREZ-PEÑA
New Jersey got in trouble with federal regulators this week for misrepresenting the health of its pension funds. But the bigger problem may be what the state was trying to hide: a long-brewing crisis in its ability to pay retirees.
Experts say that governors and legislators, Republicans and Democrats, have all contributed to the problem by refusing to put state money into the funds as they should have. And even if benefits are cut and taxes raised, they said, there is no obvious fix in sight.
“The whole political culture evolved where the purpose in Trenton was to spend and defer the problems until later,†said James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.
The state’s most recent report said that as of June 2009, the pension funds should have had assets of $112 billion to meet their future obligations, but had only $66 billion — one of the largest shortfalls, known as unfunded liability, in the country. The situation is probably worse today: The state is supposed to contribute about $3 billion a year to the funds, but amid huge budget deficits and spending cuts, it is in the second consecutive year of contributing nothing.
More…     www.jsmineset.com
Posted By thestatedtruth.com on August 30, 2010
“People are sitting on a fence, said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $550 billion. When I go and talk to our equity analysts, they look at the companies and say, ‘Boy these companies look pretty good, earnings are OK, they have plenty of cash. What if there’s a double dip?’
More than 54 percent of ratings for companies in the U.S., U.K., Japan and Brazil are holds, the highest level since Bloomberg began tracking the data in 1997. While the proportion of sell ratings in the U.S. has fallen to 5.1 percent, half the level of 2003, the total combined with holds reached a record 71 percent last month, the data show.
“A ‘neutral’ usually means historically a ‘sell,’ said Kevin Rendino, a money manager at New York-based BlackRock Inc., which oversees about $3.2 trillion. Ratings chase stock prices. When everyone becomes risk averse, they don’t want to stick their necks out.
Posted By thestatedtruth.com on August 30, 2010
| The Daily Reckoning Presents | |
| Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â AAA Ratings: A Grim Fairy Tale | |
| Â | |
| How the ratings agencies have managed to emerge from the credit crisis unscathed and unregulated is a mystery…and a sham.”Nothing is ever clear or certain in public,” we wrote in The New Empire of Debt. “Every error is someone else’s fault. That is why so many men prefer it. The public world is so surrounded in fog that he thinks he sees half-naked nymphs behind every tree and $100 bills under every cushion.”If Wall Street is a foggy valley of shadows where wise bankers pick the pockets of the wandering masses, then rating agencies act as the surrounding hilltops. No – not the pillars of transparency and relief from the villains below. Rather, they’re the unscaleable, daunting cliffs that trap and thicken the fog. (This is the case almost literally, in fact. Moody’s, Standard and Poor’s and Fitch Ratings’ major offices surround the lowest tip of Manhattan eerily… Moody’s to the west, S&P at east and Fitch at the southernmost point of the island.)
While it is the duty of ratings agencies to assess investment risk and provide a clear playing field for investors of every kind, we all know that they have done just the opposite. From mortgage-backed securities to municipal bonds, sovereign debt to CDOs, ratings agencies have notoriously mispriced risk over the last decade, and nearly all of us have paid the consequence. Yet they not only remain, but prosper. They’re still used by every major firm in America (if not the world). And they’re left largely untouched by regulators and investigators. Why? Last month, a long-running Senate study determined that over 91% of the AAA mortgage-backed securities issued from 2006-2007 have since been downgraded to “junk” – BB or lower. Surely, a screw-up this gigantic can only be attributed to some extremely smart people. A man off the street would have better odds just flipping a coin. Only geniuses can be so, so wrong. In fact, that’s the best explanation for what happened to the “big three” ratings agencies. They were run by brilliant quantitative economists, with models derived from statistics dating back decades. Whether the housing statistics from the Great Depression were lost, or if the raters willfully left them out of their models, we don’t know. But there was no model in use that took into account a generational crisis – one where home prices might drop 20% in one year. So investment bankers were able to stuff securities full of bad loans and still get their precious AAA ratings. “Their quantitative models appeared to have a Mensa-like IQ of at least 160,” bond legend Bill Gross sums up nicely, “but their common-sense rating was closer to 60, resembling an idiot savant with a full command of the mathematics, but no idea of how to apply them.” “It’s easier to be smart than good,” we also wrote in Empire of Debt. “Smart men get elected to high office. They run major corporations… “But it is virtue, not brainpower, that pays off.” Of course, all the raters and bankers were more than just too smart for their own good. Their lack of virtue exposed a conflict of interest obvious to any functional adult;
You can pick your metaphor. It’s like a student who pays his teacher to grade his papers. Or a plaintiff paying the judge’s salary. Cultural differences only exacerbated the problem. Investment bankers might pay the ratings agencies, but it’s the bankers – by selling those securities the agencies rate – who make the big bucks. It’s quite common for a junior man at a ratings agency to one day work for Goldman Sachs or JP Morgan (though not the other way around). Thus, there is further incentive, though widely unspoken, for raters to play ball. After all, what’s the Wall Street life expectancy of an S&P analyst with a ball-busting, no-games reputation? (This same relationship, by the way, is also a real issue with the SEC.) And so the game was played. Together, the rater and banker would decide what combination of loans garnered what rating. Of course, the banker wanted AAA notes to sell to the Icelandic government or a Fidelity retirement fund, and the rater wanted the banker’s business…if not to become a banker himself one day. The models played along, too, having never known a crisis like the one that was around the corner. Even when things got really crazy – when there were just way too many bad loans to make a AAA security – bankers and raters found a solution. They split the security into different partitions of risk, each with separate yields, but all under the same rating. They called these “tranches,” as if it weren’t complicated enough – a French word for a “slice” or “portion.” Shareholders and taxpayers, of course, paid the biggest price for the subprime fallout. Bankers have taken a few jabs, too…sort of. But ratings agencies managed to emerge largely unscathed. The big three, Moody’s, Fitch and S&P, are not only still in business, but they remain highly relevant. Even as we write, traders are waiting to hear from them with bated breath…the fates of debt-strapped euro-nations, Greece in particular, is in their hands. S&P likes to boast that they insist on sending not one, but two ratings analysts to every country to help determine its credit sovereignty. “It’s been our practice, and it’s worked well,” said S&P’s John Chambers. S&P rated Iceland “A+” in March 2008, about six months before its currency collapsed. Late last month, Chambers helped knock Spain down to AA, a “bold” move, defying Moody’s and Fitch’s AAA rating on Spanish debt. “Here’s a country,” Bill Gross continues, “with 20% unemployment, a recent current account deficit of 10%, that has defaulted 13 times in the past two centuries, whose bonds are already trading at Baa levels and whose fate is increasingly dependent on the kindness of the EU and IMF to bail them out. Some AAA!” That’s the biggest bond investor in the world calling agencies out with a crystal-clear example of their inability to function. Yet global credit still lives and dies by their ratings. Despite all the obvious, common-sense issues – incompetence, conflict of interest, past performance – Congress is turning a blind eye to this tawdry corner of the financial services industry. Even the free market seems to have failed in this instance. There are more than just three ratings agencies in this world, after all. Some of them even managed to do their jobs. “Second tier” agency Egan Jones comes to mind. Its analysts are paid by the buyers of the securities it rates, not the issuers. What a novel idea! Yet Egan Jones is not the No. 1 agency in the world, for reasons we can’t explain. Even if American investors are content to continue this charade, the Chinese are not. An upstart Chinese ratings agency, Dagong Global, has begun to offer a competing perspective. (Check out the rating on lucky nation #13 in the chart below!)
There’s one easy takeaway: You still can’t trust Wall Street. The same players and the same rules that created this mess – largely for their own benefit – are still a part of the game. The other pill is a little harder to swallow. In the current market environment, the individual, independent investor has the best chances of long-term capital appreciation when he invests outside of “The Wall Street Fandango.” When it comes to the truly important investments in life, leave the indexes, blue chip stocks, sovereign bonds and super funds to lower Manhattan. Ratings agencies and their banker clients do not bother with small companies, commodities, smaller funds and other securities that have little potential to make them large amounts of money. What’s more, they have no stake whatsoever in the status of your small- to medium-sized business, your family, your education or your local under-the-radar investments. It’s in these arenas, where Wall Street has no dice to roll and no purses to snatch, where your failure or success is determined by little more than willpower, wit and some luck. That’s the best a good investor could ask for. Addison Wiggin, |
More at: www.dailyreckoning.com
Posted By thestatedtruth.com on August 30, 2010
Posted By thestatedtruth.com on August 29, 2010
Only three states had declining revenue,  Illinois revenue declined 7%, while Michigan’s collections fell 3.8%.  So, not sure just how this could happen, but….California, tax revenue declined 0.9%, despite 12% increase in income-tax collections, this according to the Rockefeller Institute.  Hmm    Best to remember it’s just one quarter and most state budgets are still busted.    Question: Inquiring minds want to know, was this increase mostly because of the government stimulus package!
In a surprising new report, state tax revenue rose in the second quarter after 5 losing quarters in a row.. Overall tax revenue increased 2.2% in 47 states that have reported their receipts covering the three months ended June 30. But in three states starting with California, tax revenue declined 0.9%, despite 12% increase in income-tax collections, according to the Rockefeller Institute.  Illinois revenue declined 7%, while Michigan’s collections fell 3.8%.
Posted By thestatedtruth.com on August 29, 2010
Interesting to say the least….rare earth elemnts are used in almost everything that is high tech…….
Bloomberg reports that China is cutting back 72% of its exports of Rare Earth metals. Â China has said that environmental issues are the reason for the cutbacks.
72% drop in availability of any commodity is important. RE’s are important. Japan and the U.S. are already protesting the ban. The rest of the world’s manufacturing base will soon follow. This could become an interesting problem.
And all those folks were saying that China would be the world’s economic growth engine.
Â
| Z | Symbol | Name | Etymology | Selected Usages |
|---|---|---|---|---|
| 57 | La | Lanthanum | from the Greek “lanthanon,” meaning I am hidden. | High refractive index glass, flint, hydrogen storage, battery-electrode, camera lens |
| 58 | Ce | Cerium | for the Roman deity of fertility Ceres. | chemical oxidising agent, polishing powder, yellow colors in glass and ceramics, catalyst for Self-cleaning oven etc. |
| 59 | Pr | Praseodymium | from the Greek “praso,” meaning leek-green, and “didymos,” meaning twin. | Rare-earth magnets, laser, green colors in glass and ceramics, flint |
| 60 | Nd | Neodymium | from the Greek “neo,” meaning new-one, and “didymos,” meaning twin. | Rare-earth magnets, laser, violet colors in glass and ceramics, ceramic capacitor |
| 61 | Pm | Promethium | for the Titan Prometheus, who brought fire to mortals. | Nuclear battery |
| 62 | Sm | Samarium | for Vasili Samarsky-Bykhovets, who discovered the rare earth ore samarskite. | Rare-earth magnets, Laser, neutron capture, maser |
| 63 | Eu | Europium | for the continent of Europe. | Red and blue phosphors, laser, mercury-vapor lamp |
| 64 | Gd | Gadolinium | for Johan Gadolin (1760–1852), to honor his investigation of rare earths. | Rare-earth magnets, high refractive index glass or garnets, laser, x-ray tube, computer memory, neutron capture |
| 65 | Tb | Terbium | for the village of Ytterby, Sweden, where the first rare earth ore was discovered. | Green phosphors, laser, fluorescent lamp |
| 66 | Dy | Dysprosium | from the Greek “dysprositos,” meaning hard to get. | Rare-earth magnets, laser, |
| 67 | Ho | Holmium | for Stockholm (in Latin, “Holmia”), native city of one of its discoverers. | Laser |
| 68 | Er | Erbium | for the village of Ytterby, Sweden. | Laser, vanadium steel |
| 69 | Tm | Thulium | for the mythological land of Thule. | Portable X-ray machine |
| 70 | Yb | Ytterbium | for the village of Ytterby, Sweden. | Infrared Laser, chemical reducing agent, High-temperature superconductors (YBCO) |
| 71 | Lu | Lutetium | for Lutetia, the city which later became Paris. |
Posted By thestatedtruth.com on August 29, 2010
Some food for thought from George Friedman, CEO of STRATFOR, who believes China “will have a collapse†in the coming decade due to internal striff, an export based economy, and low internal rates of return,  It will set America up as the primary beneficiary in a new Golden Era.
Mr. Friedman’s views are controversial but well worth listening to.
More at:Â www.cnbc.com
Posted By thestatedtruth.com on August 29, 2010
Last week, the Liscio Report posted an interesting comment on their blog, Where we are?:
Here’s an updated guide to “where we areâ€â€”how the U.S. economy is faring relative to the average of previous financial crises around the world. Though individual details vary, we’re following the script pretty well.
In the graphs of four major indicators (click on chart above), the lines marked “average†are the averages of fifteen financial crises in thirteen rich countries since the early 1970s, as identified by the IMF. GDP isn’t shown because the experiences were so varied that the averages were meaningless. But for the indicators shown, the averages do illustrate some tendencies worth taking seriously.
Employment
Though the U.S. peaked later and bottomed earlier than the average, and also rose higher and fell harder, the trajectories of the two lines are still remarkably similar. Note that after hitting bottom, employment in the average experience grew very slowly. If we’re in for anything like that average, then we’re likely to see employment growth of only about 35,000 a month over the next year—less than a third what’s necessary just to accommodate population growth. That suggests that we could see an unemployment north of 10% in about a year.CPI
Given the gyrations in energy prices over the last couple of years, reading the headline CPI has been very difficult. But the gyration does seem to be around the average line. And core CPI—for which we don’t have international data—is tracking the average pretty tightly. If inflation follows the script, it should continue to decline into next year. With core inflation at around 1%, it’s reasonable to expect that we could go into mild deflation sometime over the next few quarters.Interest Rates
Rates on 10-year Treasury bonds have fallen harder in the U.S. than in other crisis-afflicted countries, but the trend is typically down for almost four years after the onset of crisis. Further declines in U.S. rates seem like a stretch, but the likelihood of an upward spike looks remote.Stocks
Stocks fell much harder in the U.S. than they did in the wake of the average financial crisis, though they did enjoy five quarters of nice recovery. As with interest rates, further declines seem unlikely; in fact, the average increase from here would be around 7% over the next year.So, all in all, we’re getting pretty much what we might expect out of our major economic and financial variables: a weak, choppy recovery with a deflationary undertow.
Coming Soon
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