How bad will it be?

[theLIBERTARIAN]

Hey, get paid under the table while collecting unemployment. What a deal...

[Nictoe]

The worst is yet to come: Unemployed Americans should hunker down for more job losses

BY Nouriel Roubini

Sunday, November 15th 2009

Think the worst is over? Wrong. Conditions in the U.S. labor markets are awful and worsening. While the official unemployment rate is already 10.2% and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.

While losing 200,000 jobs per month is better than the 700,000 jobs lost in January, current job losses still average more than the per month rate of 150,000 during the last recession.

Also, remember: The last recession ended in November 2001, but job losses continued for more than a year and half until June of 2003; ditto for the 1990-91 recession.

So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.

There's really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation.

The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.

This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.

Other measures tell the same ugly story: The average length of unemployment is at an all time high; the ratio of job applicants to vacancies is 6 to 1; initial claims are down but continued claims are very high and now millions of unemployed are resorting to the exceptional extended unemployment benefits programs and are staying in them longer.

Based on my best judgment, it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.

The weakness in labor markets and the sharp fall in labor income ensure a weak recovery of private consumption and an anemic recovery of the economy, and increases the risk of a double dip recession.

As a result of these terribly weak labor markets, we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial institutions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures.

The damage will be extensive and severe unless bold policy action is undertaken now.

Roubini is professor of Economics at the Stern School of Business at New York University and Chairman of Roubini Global Economics.
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[Nictoe]

We Are Not Yet Buying Into The Idea Of Recovery

The International Forecaster

December 2 2009

Summary: Dubai faces bankruptcy, profits coming from cost cutting, growth not what it is claimed, profits for offshore profits remain in tax-free havens, Fed in Congress crosshairs, stimulus package not reaching small business.

This past week was one of utmost turmoil in world markets. In the midst of an American holiday, Dubai faced bankruptcy for some $100 billion. Another unsuspected untoward event. The exposure of the Dubai event coming as it did could have been discovered at any given time, thus, we question the timing. We can understand why the London market was off some 300 Dow points, but exposure to Dubai was very limited in Europe, the US and in Asia. Could it have been an excuse to take down the US and European markets and gold and silver? We do not know, but we have come to question everything that happens.

We are predicting a very damaging year in 2010 for both stocks and bonds. One of the big questions is the implementation of Basil II and III and the FASB. If their stricter accounting practices are enforced the corporate world is in for a heap of trouble. Financial firms are in particular danger. In this past 3rd quarter non-financial corporate profits fell 12%. The result was that $97 billion of $123 billion in profits came from the financial sector. This is not a balanced performance. It is very disturbing because most of corporate profits come from cost cutting – that is firing employees. That method of fattening the bottom line cannot continue indefinitely. Lending is not supplying those profits, because loan origination is off 16.2% yoy. Loan defaults were up 10% and a record 5% of loans were not current. Lending fell $2.8 billion, the most since records began in 1984. Ninety percent of loans go to consumers and business, which means consumers consumption of GDP, has had to fall. It’s currently 69.3%, down from 72%. Loans to businesses have fallen 6.5% and small and medium-sized businessmen create 70% to 80% of all jobs. That means improving the employment situation is going to be very difficult. The exceptions are transnational conglomerates, which continue to offshore our production and outsource service jobs. Their profits are up 29%, but they have caused unemployment of 7 million good paying jobs over the past nine years. If you remove the financials, profits are up 7% off their lows. The financial stocks have appreciated 135% off their March lows, which we believe leaves them very vulnerable. Industrials are up 80%. While this was going on business profits fell 0.4% in the 3rd quarter with no relief in sight. Growth rates are falling at the highest rate in decades. We are hard pressed to believe that 3rd quarter growth was 2.8%. What growth there was came from the federal government. Not only is employment falling, but wages have been at a standstill and have been for two years. The government says inflation is 1.2%. We say it is 7-1/8%. Without higher wages buying power is falling 5% or so – hardly inducive for consumer consumption.

In addition to market vulnerability and a very questionable economic recovery we now have to watch world banking deal with the Dubai problems, which is going to bring on a currency warfare, which will bring trade warfare. Soon the accusations will fly and it will be every currency, or country for itself, and that will bring tariffs. We have already seen that with US increasing tariffs on steel and tires with China. The US may have many faults, but other countries are not blameless. All have been devaluing their currencies for years. The ultimate consequences for the world will create difficulties that could eventually lead to wars, domestic and social unrest, and additional unemployment in all countries. Whether you realize it or not this process has already begun. The only avenue left open to nations has been the unbridled creation of money and credit and monetization. That has been accompanied by the concept of too big to fail. This is why the Illuminist lending institutions are being saved and that is being paid for by the public. In 1990 it was decided that in order to keep the system from collapsing, derivatives would be created, as an adjunct to what we now call quantitative easing, a creation of the Federal Reserve. This is another reason why the Fed and its fellow elitists do not want HR 1207 and S604 passed. It will expose the giant Ponzi scheme they have created in partnership with Fed shareholders JP Morgan Chase, Goldman Sachs, Citigroup and others. The edifice is a house of cards. Professionals do not understand how important it is for the Fed to be terminated. It is the core of central control of not only the US economy, but also those of many other nations. Its demise will give America the opportunity to begin a new system not controlled by moneychangers.

The implementation 50 years ago of free trade, globalization, offshoring and outsourcing upset the balance of trade worldwide. It shifted production and sources to the East from the West. A battle that could not conceivably we won by the West with its much higher standard of living. The wealthy elitists don’t care about the living standard of the West, or anyone for that matter, except themselves. They have made the tax free offshore profits and with those further power to control nations. The Fed controls the dollar – the reserve currency of the world. They could do as they pleased. It created imperial America after WWII. Thus the unbalance caused the steadily depreciating dollar, currency manipulation and free trade have destroyed the world’s financial architecture. The result has been massive trade deficits in the West and surpluses in the East. The East and the transnational conglomerates call for freer trade and that is understandable as they have millions of people who will work for virtually nothing. This way the populace can be fed at the expense of the West. Without fair tariffs the world ends up in financial chaos and that is exactly where we are headed. Unfortunately economists and analysts won’t tell you the truth and give us conclusions, because they are perpetually compromised by the Illuminist system. If they tell the truth they are banned from the system. If they keep expressing the truth they are liquidated. All world leaders are well aware of the situation and go right along with the program to stay in power and enrich themselves. Again, next comes the escalation of currency war and tariffs. If you remember we mentioned recently that Germany’s businessmen were demanding a weaker euro, so they could compete in the middle of a depression. What they do not understand is that the dollar is a failed currency, that has to depreciate whether they like it or not. For the last ten years the eurozone has held a special position with an inexpensive currency. Now it is reality time. It is not the strength of the euro – it is the weakness of the dollar that is now perpetual. They are going to have to live with it. The easy days are over for everyone. You could read it in the tea leaves. For the last six years every country in the world’s currency has fallen versus gold. No one, but a few, wanted to recognize that the very sophisticated were exchanging currencies of declining value for gold. Now more are catching on and in time it will be a thundering herd. The nations of the world have exchanged their wealth for depreciating paper as a cost of entering foreign markets to do business. If they are lucky they will end up with $0.30 to $0.40 on the dollar, once official devaluation takes place a year or so from now. All the actions by imperial America since WWII have led to the current state of affairs. All the wars and the debt created have come home to roost. All empires end the same way. The toughest kid on the block eventually loses by being knocked out. The con of the Communist menace and weapons of mass destruction are not working anymore. Even the deal with China has broken down. Manufacturing would be shipped to China and China would fund US debt. Now the Chinese have found out it wasn’t worth it and are exchanging dollars for things, such as commodities and gold and silver. China has discovered that they have been had.

In the background beyond the things we know about, the Fed and its controllers, the investment banks, is the derivative market and the markets of securitization of assets, some synthetic and some real. As long as confidence in these markets prevail the system works. We do not believe that will continue and when that happens the results will be catechismic. We are talking $1.4 quadrillion or more in assets that in part do not exist created to leverage the system to save it and in turn enrich the key players and extend their powerful grip on America and humanity.

As a result of all this the only way the players can keep the game going is by inflating via quantitative easing and monetization. They know the game will soon end and the dumb sheep will be shorn again. The monetary collapse is on the way. If you read our last issue you know that the elitists expect to devalue the dollar officially by the end of 2010. It could take longer, but it is going to happen. The suspension of the Fed by Congress is on the way as is another war - a war extensive and powerful enough to destroy more than half of humanity. The system as we now know it is in the final state of collapse.

The masters of the universe, as they believe themselves to be, made a major error within the residential and commercial real estate bubbles. They couldn’t create enough virtual money fast enough and it was discovered that the assets were not AAA, but in fact BBB. Once the ruse was discovered confidence and trust was lost and now they are scrambling to keep the system afloat. In addition these geniuses ran out of real assets to play with. They needed a need of new assets to play with. They were to come from a stock market that was to rise from Dow 6600 to 10,500. The problem is the market rise turned out to be just a holding action. CNBC and its long list of Wall Street players would have us believe the market is under priced and ready for recovery. Not in your wildest dreams. The black hole has been entered. Each day fewer and fewer people worldwide refuse to believe that something is too big to fail. All the kings horses and all the kings men, including all the central banks, won’t be able to put this one back together again. Monetization is really virtual money – in creating a hoax. It is the transfer of funds made up out of thin air to its owners - the banks – to keep them from collapsing. This is the ultimate in moral hazard. The elitists get away with it because the public and our leadership do not understand what they do. They may well be catching on though, as 75% of Americans want the Fed audited and investigated. That has send cold shivers up the backs of our resident Illuminists.

The last time Congress wouldn’t heel to these destroyers Mr. Paulson told them that is fine, we will just let the system destruct. Our bought off Congress heeled and succumbed to their masters.

In the final analysis the game is in the process of ending. The game of bookkeeping entries is over. Reality is in the process of taking command. Zero loans from the Fed to their owners in the form of money made up out of thin air, then turned into interest bearing deposits is ludicrous on its face. How can any educated person believe in such chicanery? We give the banks money and then pay them for holding it for them. We call that free money – a gift – that no one else in the nation gets, except for these anointed banks. No jobs are created, less money is loaned and the malefactors are rewarded. What kind of a system is this? Few say anything for these elitist control the media as well and are shamed into silence even newsletter writers.

America’s military force is become less and less as a factor. The world markets are simply reflecting the reality of the monetary and fiscal problems. No military in the world can defeat this reality. You cannot conquer bankruptcy. America can never pay its debt. The powers behind government blinked and their bluff have been called. The problem is there will be no winners. Every person on this planet will be a loser. 2010 will signal the beginning of the end for the world financial system. The US and world economy will begin spiraling out of control. First by official devaluation and default, and by an implosion into violence. There won’t be money to keep the system afloat.

Desperate people do desperate things. Why would the Fed be buying Treasuries, mortgage backed securities – toxic waste, Agencies – Fannie, Freddie, Ginnies and FHA toxic waste, why would they be guaranteeing the Libor market or doing swaps, and lending money so banks can make interest off of the taxpayer if they were not in desperate straights. They are bailing out big banks, brokerage houses and insurance companies at our expense. The whole thing is insanity and we do not hear a peep from Congress.

There is no recovery and there won’t be any recovery no matter how much money is poured into the system. There still isn’t adequate capital and there never will be. The system has to be purged and the Illuminists won’t allow it until their power is taken away from them. This Fed, this lender of last resort, is a criminal enterprise. Do not expect any help or any admission relating to what they have done. Bank loans are off 16.2% yoy, and Citigroup is hoarding $244.2 billion and JP Morgan Chase $453.6 billion. While this goes on our currency continually is debased. It won’t take long for the roof to fall in. Just be patient and own gold and silver related assets.

Last week was quite a week. The Dow slipped 0.1%, the S&P was unchanged, the Russell 2000 fell 1.3% and Nasdaq rose 0.1%. Banks fell 1.5%; broker/dealers 4.4%; cyclicals 0.1% and transports 0.6%. Utilities rose 0.1%; high tech rose 0.1%; semis 0.6% and biotechs gained 2.2%. Internets fell 0.4%.

Two-year T-bill yields hit a new low of .50%; the 10’s fell 17 bps to 3.20%. German bunds fell 9 bps to 3.16%.

The Fed is determined to put residential real estate back into working order, but its attempts will be futile. Freddie Mac 30-year fixed rate mortgage rates fell 5 bps to 4.785. the 15-year rates fell 3 bps to 4.29% and one-year ARMs were unchanged at 4.35%. Jumbo 30-year fixed rates fell 5 bps to 5.90%.

Fed credit fell $1.6 billion to $2.190 trillion. Fed foreign holdings of Treasury and Agency debt fell $2.7 billion to $2.925 trillion. Custody holdings for foreign central banks have risen have risen 18% ytd, and yoy they are up 17.1%.

Total money market fund assets fell $8.9 billion to $3.330 trillion. The ytd decline has been 14.5% or $501 billion, or 10.4% yoy.

Dubai’s debt woes may worsen to become a “major sovereign default” that roils developing nations and cuts off capital flows to emerging markets, Bank of America Corp. said.

“One cannot rule out -- as a tail risk -- a case where this would escalate into a major sovereign default problem, which would then resonate across global emerging markets in the same way that

Argentina did in the early 2000s or Russia in the late 1990s,” Bank of America strategists Benoit Anne and Daniel Tenengauzer wrote in a report.

A default would lead to a “sudden stop of capital flows into emerging markets” and be a “major step back” in the recovery from the global financial crisis, they wrote. Two-thirds of small-business owners surveyed last month by Toluna Research at the behest of Angrisani Turnarounds (which specializes in what its name implies) said that they are concerned or extremely concerned about their firms' surviving for two years. Their fears aren't unfounded, considering that small-business bankruptcies rose 44% in the third quarter of this year, from the same quarter in 2008, according to Equifax, a credit-reporting agency.

"Our survey data over the last three months concludes that we're going to be looking at an acceleration of the failure rate," says Al Angrisani, head of the turnaround firm, who was chief employment advisor to President Ronald Reagan during the last Great Recession, in the early 1980s. Angrisani worries that small businesses not only haven't seen much benefit from the $787 billion stimulus plan, but will be further squeezed by rising state and federal taxes, particularly if health-care reform passes. Another survey, by Employers Holdings, a workers' compensation provider, found that 50% of small business decision makers won't start hiring again for another six months.
_________________

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[theLIBERTARIAN]

[Nictoe]

Jobless professionals vie for holiday sales work


By CHRISTOPHER LEONARD and MAE ANDERSON,
AP Business Writers Christopher Leonard And Mae Anderson, Ap Business Writers Sun Dec 6, 9:42 pm ET

Mara Proctor used to design limestone hearths and columns for luxury homes near Kansas City, drawing on her college education and six years of training.

These days, she's leading customers around a store that sells sculptured snowmen and Santa figurines.

It isn't by choice. Until a few weeks ago, Proctor was among the record 5.9 million Americans who have been jobless for at least six months. Now she belongs to a subset of that group: Out-of-work professionals and managers, engineers and teachers who have turned, in desperation, to holiday-season jobs as sales clerks.

Retailers report a surge in applications this year from professionals who had never applied for such jobs before.

"You'll find Wall Street stock brokers and small business owners trying to find temporary retail jobs during the holidays," said Ellen Davis, vice president of the National Retail Federation.

The pay is low, the jobs temporary. And the work is hardly equal to their experience or expertise. Yet the nation's unemployment crisis left these people jobless so much longer than they'd expected that many count themselves fortunate to have anything.

Laid off eight months ago, Proctor said she figured, "OK, I'll do the unemployment thing for a couple of weeks and get a new job."

"It was very naive," she said. "You start calling all your contacts, and you find out they're all laid off, too, so your contacts list doesn't mean anything."

In a bleak labor market, holiday-season hiring has meant at least a respite for many long-term unemployed. Not that it's easy to land even these jobs. Most retailers have cut back. And overall in the economy, six applicants, on average, are competing for each opening — compared with just 1.7 workers per opening when the recession began in December 2007.

For the stores, though, the availability of clerks with experience managing or working effectively with co-workers is a luxury. They've been able to cull the excellent from the merely qualified.

"It enables us to be somewhat more selective and hire a higher-caliber" clerk, said Glenn Album, vice president of human resources at Toys R Us. Album said the company this year has hired, among others, former teachers and an accountant.

"What's great with the higher-caliber team members is there is much, much better service in the store," he said.

On a cold morning before Thanksgiving, Proctor jangled a set of keys and opened the Sticks boutique for business at the Country Club Plaza shopping district in Kansas City. When she was laid off in March, the notion of a retail job didn't even cross her mind.

At 32, she had spent six years hopping easily from job to job in the home-design business, seeking out higher responsibilities and pay with each move. Last year, she worked for a contractor, using computer drafting programs to draw floor plans.

After her layoff, she thought she'd be marketable. But the market had collapsed. By late summer, Proctor had burned through much of her personal savings.

She leapt at the chance to work temporarily as manager of a Sticks location, selling handmade wooden sculptures. Still, the job lasts only until Jan. 6. After that, she'll be unemployed again.

Retailers pay their sales clerks an average of about $13 an hour, the government estimates. Proctor declined to say how much she's paid, beyond saying it's well below what she earned as a designer. But it's more than the $400 a week she'd been collecting in unemployment benefits.

At Hoffman's Chocolates in Greenacres, Fla., the lavish holiday display of Christmas lights, toy trains and a robotic Santa Claus draws onlookers each year. But finding skilled workers for the holiday rush used to be difficult, said CEO Fred Meltzer.

Until this year. When it posted 45 jobs in its chocolate factory and on the sales floor, Hoffman's received 550 applications. Some came from people laid off by the circulation department of the Palm Beach Post. Others had worked for law firms. Another was Lisa Pagan, a former department store manager.

Once she heard Hoffman's was hiring, Pagan said she put on her best job-interview outfit — just to drop off her resume. She landed a position that pays less than half what she made last year as a department-store manager. But after a year of unemployment, Pagan, a 38-year-old divorced mother of two, isn't complaining.

"It's very scary out there right now," she said. "You get 101 excuses why they can't hire you. You get into panic mode."

At the Showtime Detroit clothing boutique in the Motor City, manager Dan Tatarian has been fielding inquiries from mortgage brokers, among others, desperate for work.

"They just want a job," Tatarian said. "They don't care what they're doing."

The trend illustrates the despair of unemployed people with professional backgrounds who face a pitiless job market, said John Lonski, chief economist of Moody's Capital Markets Research Group. Even though the economy has begun growing again, employers aren't confident enough in the recovery or their own businesses to step up hiring.

"Companies are still capable of meeting customer demands with their now often downsized staffs," Lonski said.

Competition is especially fierce for retail jobs, in part because the industry has cut 1 million jobs since January 2008, said Davis of the National Retail Federation. Many retailers, fearing another weak holiday season, are trying to manage with leaner staffs.

"Not only are there fewer positions, but more people are applying," Davis said.

That helps explain why shoppers who phone customer service at online retailer Moosejaw Mountaineering get Scott Beebe, a trained engineer with two postgraduate degrees and eight years of experience in product development for General Motors.

Beebe, 33, took a buyout from GM in September, feeling the future was bleak at the shrinking automaker. With experience at a development lab where he earned about $75,000, Beebe has since been seeking engineering or management work. No luck.

So in the meantime, he's taken a temporary job at Moosejaw's call center in suburban Detroit. He's making $8 an hour.

"It's a good distraction from searching day in and day out," he said.
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[Nictoe]

The Magnitude Of The Downturn Has Set In

International Forecaster Weekly

Posted: January 9 2010

Bankruptcy filings increased by a third, job market improvements only amount to less of a slowdown, industries coping with economic downturn, Fed still being deceptive, new unemployment filings also up, xmas presents from Geithner for Fannie Mae and Freddie Mac

The number of Americans filing for personal bankruptcy rose by nearly a third in 2009, a surge largely driven by foreclosures and job losses.

And more people are filing for Chapter 7 bankruptcy, which liquidates assets to pay off some debts and absolves the filers of others. That is significant because a 2005 overhaul of federal bankruptcy laws aimed to encourage Chapter 13 filings, which force consumers to sign onto debt-repayment plans in exchange for keeping certain assets.

The changes were designed to make it more difficult for people to shed their debt, particularly in a Chapter 7 filling. A "means" test, for example, was introduced to separate those who could afford to repay their debt from those who couldn't. A Chapter 7 filing is off the table if the means test determines a person is able to pay back at least a portion of the debt after it is restructured.

The worst U.S. recession in a generation is testing the effectiveness of these laws. The economic downturn also has prompted more middle-class Americans to file for bankruptcy protection.

Overall, personal bankruptcy filings hit 1.41 million last year, up 32% from 2008, according to the National Bankruptcy Research Center, which compiles and analyzes bankruptcy data. It is the highest level of consumer-bankruptcy fillings since 2005. Consumers rushed to file in 2005 before the new bankruptcy laws took effect in October of that year.

Chapter 7 filings were up more than 42% as of November 2009, compared with the same period a year earlier, according to the research center. November is the most recent month with analyzed data available. Chapter 13 filings rose by 12% and made up less than a third of 2009 filings as of November.

"That suggests it was largely ineffective," Ronald Mann, a law professor at Columbia University, said of the 2005 overhaul. "I don't think anybody who's knowledgeable about the bankruptcy system thought the statute was well crafted."

During this recession, the housing crisis and high unemployment rate have prompted more people to file for bankruptcy who may never have considered the option before, experts said. Filings from 2008 showed more people with high income and high education levels resorting to bankruptcy petitions, according to an annual survey of consumer-bankruptcy filers' demographics by the Institute for Financial Literacy, a nonprofit that provides bankruptcy-related counseling and education services. Those demographic trends appeared to continue last year.

Mr. Mann said he believes bankruptcies reached their peak sometime last year, but bankruptcy attorneys from across the country said there was no sign that business was slowing. The 113,274 filings in December alone were a third higher than the same month a year earlier.

"I can't see over the top of the files on my desk," said Cathleen Moran, a bankruptcy attorney at Moran Law Group in Mountain View, Calif., likening it to the rush of clients before the revised law went into effect. In a three-month period before those rules changed in 2005, her firm filed five times as many cases as usual.

Ms. Moran's clients in 2008 typically were people who earned between $40,000 and $80,000. That changed last year when a rash of people who earned $100,000 to $300,000 began filing as well, she said.

Non-manufacturing sector expanded in December, but barely, according to data released Wednesday by the Institute for Supply Management. Employment within the broad sector continued to contract.

The ISM's non-manufacturing purchasing managers' index rose to 50.1 last month, from 48.7 in November. The December index was slightly below the 50.5 expected by forecasters surveyed by Dow Jones Newswires. Readings above 50 indicate expanding activity.

The ISM said its December business activity/production index rose to 53.7 last month from 49.6. The new-orders index slipped to 52.1 from 55.1 in November.

Nonfarm private employment declined by 84,000 jobs in the month of December, marking the eight straight month of a decreasing rate of job destruction.

According to the authors of the ADP National Employment Report, “employment losses are now rapidly diminishing and, if recent trends continue, private employment will begin rising within the next few months.”

Despite the improvement over the 145,000 jobs lost in November (revised up from -169,000), December's slowdown was still less than forecast. Analysts had expected a better improvement in the range of 63,000 jobs lost.

Well-known banking analyst Meredith Whitney on Tuesday cut her earnings estimates for Wall Street bank Goldman Sachs for the second time in less than a month.

Shares of Goldman Sachs (NYSE: gs) fell immediately after the news, but then rebounded higher.

Whitney, head of the Meredith Whitney Advisory Group, lowered her fourth quarter estimate for Goldman Sachs to $5.50 from $6.

She also cut her full-year estimate for Goldman for 2010 from $19.65 to $19.20; her 2011 earnings per share estimate from $20.60 to $20.25; and her 2012 estimate from $21.45 to $21.10.

Whitney had previously cut her estimates for Goldman on Dec. 17.

Whitney lowered her estimates for bank Morgan Stanley (NYSE: ms) this past December, reducing her 2010 expectations to $2.60 a share from $2.63 a share. For 2011, her firm lowered its profit estimates to $2.75 a share from $3.28 a share on the bank. It also set an earnings estimate of $2.90 a share for Morgan Stanley for 2012.

Construction spending on hotels, office buildings and retail centers may fall 13 percent this year, the second straight annual decline amid a drop in property prices, the American Institute of Architects said.

The Washington-based group’s forecast is more severe than an estimate it made in July, when it predicted a 12 percent decrease. Spending will turn “marginally” higher in 2011, the group said today.

“The magnitude of the downturn has set in,” Kermit Baker, the group’s chief economist, said in an interview. This year’s expected drop compares with a decline of about 20 percent in 2009. “Another bad year is the bottom line, but there are some prospects of recovery as we get into 2011.”

U.S. commercial real estate values sank to the lowest level in seven years in October as job losses cut demand for apartments, offices and retail space, Moody’s Investors Service Inc. said last month. Office vacancies may approach 20 percent in 2010, according to Jones Lang LaSalle Inc. and Grubb & Ellis Co. Unemployment was 10 percent in November after a 26-year high of 10.2 percent the prior month, the Labor Department said.

Commercial construction spending will probably have a “marginal increase” of 1.8 percent next year, according to the architects group.

That forecast “still implies a weak first half of 2011 and a stronger second half,” Baker said.

Industrial construction spending is likely to slump the most this year, 24 percent, and an additional 7.8 percent in 2011, the institute said.

The group expects hotel building to also fall about 24 percent this year, before rising 5.4 percent in 2011.

Spending on office buildings may drop 19 percent this year and then increase 12 percent in 2011, while retail construction is likely to decline 17 percent this year before climbing 3.2 percent next year, the group said.

The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” President Barack Obama selected Geithner as Treasury secretary, a post he took last year.

Central bankers will hold talks with banking executives in Switzerland this weekend amid concern financial companies are rebuffing a push to increase regulation and temper risk-taking as the recent crisis ebbs.

The gathering to discuss regulation will take place at the Bank for International Settlements in Basel, according to two Group of Seven central bank officials. The BIS invited commercial bankers citing concerns that they are returning to the excessive-risk patterns that helped spark the global crisis in 2007, the Financial Times reported today.

The meeting comes a month after the BIS urged central banks to take greater account of financial stability and published proposals aimed at forcing banks to hold more and better-quality capital and discourage leverage. The MSCI World Index of stocks has surged 73 percent since its low of last March.

“The central bankers are clearly aiming to head off the excesses that will certainly come out of the very easy monetary policy” put in place during the crisis, said Bill Belchere, global chief economist at Mirae Asset Securities in Hong Kong. “They have no choice but to be prudent and vigilant to grapple with the potential problems and stop bubbles before they emerge.”

The BIS meetings occasionally feature sessions with private banks and this month’s gathering will be such an example, the two officials said on condition of anonymity because the agenda isn’t public. Bank executives usually attend the January meet.

The difference between two- and 10- year Treasury yields widened to within 4 basis points of the most in at least 20 years as the Federal Reserve signaled it will hold its target interest rate at a record low.

The so-called yield curve steepened after minutes of the Fed’s last meeting showed officials believe economic growth will be “rather slow relative to past recoveries.” The Treasury will announce plans for next week’s debt sales today.

“Growth and inflation concerns are pushing up longer yields, while market participants are betting that the central bank will keep rates on hold,” said Michael Markovic, a senior fixed-income strategist in Zurich at Credit Suisse.

The 10-year note yield was 3.83 percent as of 7:10 a.m. in New York, according to BGCantor Market data. The 3.375 percent security due in November 2019 was little changed at 96 9/32.

The rate is 2.82 percentage points more than two-year securities. The spread was 2.84 percentage points earlier today, within 4 basis points of the biggest gap since at least 1990. The curve widened to a record 2.88 percentage points on Dec. 22.

The government will sell $10 billion in 10-year Treasury Inflation Protected Securities on Jan. 11, $40 billion of three- year notes on Jan. 12, $21 billion of 10-year securities on Jan. 13 and $13 billion of 30-year debt on Jan. 14, according to Wrightson ICAP LLC, an economic advisory firm in Jersey City, New Jersey.

Treasuries were the worst performing sovereign debt market in 2009 as the U.S. sold $2.1 trillion of notes and bonds to fund extraordinary efforts to bolster the economy and financial markets.

Investors in U.S. debt lost 3.5 percent on average through Dec. 30, according to Bank of America Merrill Lynch indexes, the biggest annual slide since at least 1978. The 10-year Treasury yield reached its highest level in six months yesterday before a Labor Department report next week forecast to show payrolls were unchanged in December after the U.S. economy lost jobs in every month since January 2008.

Defense contractor Lockheed Martin of Bethesda said that it plans to cut 1,200 employees by the spring as it consolidates two of its business units and that it foresees a slowdown in its upcoming work from the Pentagon. [they have already cut 730 jobs.]

The number of Americans filing first- time claims for unemployment benefits rose less than forecast last week from the lowest level in more than a year, indicating jobs cuts are waning as companies become more confident in the economy.

Initial jobless applications increased by 1,000 to 434,000 in the week ended Jan. 2, fewer than the 439,000 claims economists anticipated, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance dropped in the prior week to 4.8 million, and those receiving extended benefits increased.

Improving sales and production gains are prompting companies to slow the pace of firings as the economy recovers from the worst recession since the 1930s. Labor Department data tomorrow may show employment was unchanged in December after almost two years of job cuts.

This is clearly a strong number, said Maxwell Clarke, chief U.S. economist at IDEAglobal in New York, who forecast claims at 435,000. Looking forward, you should see slow and steady improvement and a return to positive payroll numbers.

The four-week moving average of initial claims, a less volatile measure, fell to 450,250 last week, the lowest since the Sept. 13, 2008, from 460,500 the prior one. Claims have fallen 36 percent since reaching a 26-year high of 674,000 in the week ended March 27.

The Federal Reserve's latest weekly money supply report Thursday shows seasonally adjusted M1 rose by $1.7 billion to $1.688 trillion, while M2 rose $16.4 billion to $8.413 trillion.

US job losses resumed in December after revisions showed payrolls rose in November for the first time in nearly two years, the Labor Department estimated Friday. Nonfarm payrolls fell by a seasonally adjusted 85,000 in December following a revised 4,000 gain in November. During 2009, payrolls fell by 4.2 million. Since the recession began two years ago, payrolls have fallen by 7.3 million. The official unemployment rate remained at 10% in December. An alternative gauge of unemployment, which includes discouraged workers and those forced to work part-time, rose to 17.3% from 17.2%. Details of the report were weak, with few signs of further improvement in labor conditions. [John Williams net unemployment figure is 22.7%, our figure is 22.5%.]

We find it comical that the Fed says it is going to wind down the control bank’s purchases of toxic mortgage securities in March and a day later says they may continue them. The excuse is they are concerned that the housing market may collapse without their assistance and 30-year fixed rate mortgage might rise to 6-1/4%. Not to mention staggering real unemployment, which stands at 22.5%.

December Challenger job cuts were at the lowest level in two years. Employers announced 45,094-planned job cuts in December, the fewest since 12/07. That was a 73% decline year-on-year.

Monster Worldwide’s barometer of online employment said its index fell to 115 in December from 119 in November, the lowest in five months.

Incidentally, there are now more government employees than goods-producing workers in the US.

For the week of January 6th, commercial paper fell by $94.2 billion to $1,076 trillion, which is substantial.

We find it of great interest that Timmy, the dwarf, Geithner, removed the bailout limitations on Fannie and Freddie on Christmas Eve, when no one was around to see the news on the major media. This is what you could expect from a habitual tax cheat and a crook.

Worse yet, as head of the NY Fed he pressured AIG to violate SEC laws by instructing them to withhold from the public details of a $200 billion taxpayer bailout of AIG. We paid these bankers 100% on the dollar for worthless paper. The dwarf should be thrown out of his job immediately and be tried for tax fraud.

In case you missed it, Barney Frank found Geithner and the Fed’s actions troubling. This proves again Washington is a criminal enterprise and a den of thieves. Where does it end? We will tell you if we can’t clear out Congress we are doomed.
_________________

Live Green, LIVE FREE

_

[theLIBERTARIAN]

[Nictoe]

Millions of Unemployed Face Years Without Jobs

The New Poor

By PETER S. GOODMAN
February 21, 2010

BUENA PARK, Calif. — Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits.

Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.

Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.

Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.

Here in Southern California, Jean Eisen has been without work since she lost her job selling beauty salon equipment more than two years ago. In the several months she has endured with neither a paycheck nor an unemployment check, she has relied on local food banks for her groceries.

She has learned to live without the prescription medications she is supposed to take for high blood pressure and cholesterol. She has become effusively religious — an unexpected turn for this onetime standup comic with X-rated material — finding in Christianity her only form of health insurance.

“I pray for healing,” says Ms. Eisen, 57. “When you’ve got nothing, you’ve got to go with what you know.”

Warm, outgoing and prone to the positive, Ms. Eisen has worked much of her life. Now, she is one of 6.3 million Americans who have been unemployed for six months or longer, the largest number since the government began keeping track in 1948. That is more than double the toll in the next-worst period, in the early 1980s.

Men have suffered the largest numbers of job losses in this recession. But Ms. Eisen has the unfortunate distinction of being among a group — women from 45 to 64 years of age — whose long-term unemployment rate has grown rapidly.

In 1983, after a deep recession, women in that range made up only 7 percent of those who had been out of work for six months or longer, according to the Labor Department. Last year, they made up 14 percent.

Twice, Ms. Eisen exhausted her unemployment benefits before her check was restored by a federal extension. Last week, her check ran out again. She and her husband now settle their bills with only his $1,595 monthly disability check. The rent on their apartment is $1,380.

“We’re looking at the very real possibility of being homeless,” she said.

Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces — some embedded in the modern-day economy, others unique to this wrenching recession — might make it especially difficult for those out of work to find their way back to their middle-class lives.

Labor experts say the economy needs 100,000 new jobs a month just to absorb entrants to the labor force. With more than 15 million people officially jobless, even a vigorous recovery is likely to leave an enormous number out of work for years.

Some labor experts note that severe economic downturns are generally followed by powerful expansions, suggesting that aggressive hiring will soon resume. But doubts remain about whether such hiring can last long enough to absorb anywhere close to the millions of unemployed.

A New Scarcity of Jobs

Some labor experts say the basic functioning of the American economy has changed in ways that make jobs scarce — particularly for older, less-educated people like Ms. Eisen, who has only a high school diploma.

Large companies are increasingly owned by institutional investors who crave swift profits, a feat often achieved by cutting payroll. The declining influence of unions has made it easier for employers to shift work to part-time and temporary employees. Factory work and even white-collar jobs have moved in recent years to low-cost countries in Asia and Latin America. Automation has helped manufacturing cut 5.6 million jobs since 2000 — the sort of jobs that once provided lower-skilled workers with middle-class paychecks.

“American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”

During periods of American economic expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year, according to an analysis of Labor Department data by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, a research firm. During expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.

“The pace of job growth has been getting weaker in each expansion,” Mr. Achuthan said. “There is no indication that this pattern is about to change.”

Before 1990, it took an average of 21 months for the economy to regain the jobs shed during a recession, according to an analysis of Labor Department data by the National Employment Law Project and the Economic Policy Institute, a labor-oriented research group in Washington.

After the recessions in 1990 and in 2001, 31 and 46 months passed before employment returned to its previous peaks. The economy was growing, but companies remained conservative in their hiring.

Some 34 million people were hired into new and existing private-sector jobs in 2000, at the tail end of an expansion, according to Labor Department data. A year later, in the midst of recession, hiring had fallen off to 31.6 million. And as late as 2003, with the economy again growing, hiring in the private sector continued to slip, to 29.8 million.

It was a jobless recovery: Business was picking up, but it simply did not translate into more work. This time, hiring may be especially subdued, labor economists say.

Traditionally, three sectors have led the way out of recession: automobiles, home building and banking. But auto companies have been shrinking because strapped households have less buying power. Home building is limited by fears about a glut of foreclosed properties. Banking is expanding, but this seems largely a function of government support that is being withdrawn.

At the same time, the continued bite of the financial crisis has crimped the flow of money to small businesses and new ventures, which tend to be major sources of new jobs.

All of which helps explain why Ms. Eisen — who has never before struggled to find work — feels a familiar pain each time she scans job listings on her computer: There are positions in health care, most requiring experience she lacks. Office jobs demand familiarity with software she has never used. Jobs at fast food restaurants are mostly secured by young people and immigrants.

If, as Mr. Sinai expects, the economy again expands without adding many jobs, millions of people like Ms. Eisen will be dependent on an unemployment insurance already being severely tested.

“The system was ill prepared for the reality of long-term unemployment,” said Maurice Emsellem, a policy director for the National Employment Law Project. “Now, you add a severe recession, and you have created a crisis of historic proportions.”

Fewer Protections

Some poverty experts say the broader social safety net is not up to cushioning the impact of the worst downturn since the Great Depression. Social services are less extensive than during the last period of double-digit unemployment, in the early 1980s.

On average, only two-thirds of unemployed people received state-provided unemployment checks last year, according to the Labor Department. The rest either exhausted their benefits, fell short of requirements or did not apply.

“You have very large sets of people who have no social protections,” said Randy Albelda, an economist at the University of Massachusetts in Boston. “They are landing in this netherworld.”

When Ms. Eisen and her husband, Jeff, applied for food stamps, they were turned away for having too much monthly income. The cutoff was $1,570 a month — $25 less than her husband’s disability check.

Reforms in the mid-1990s imposed time limits on cash assistance for poor single mothers, a change predicated on the assumption that women would trade welfare checks for paychecks.

Yet as jobs have become harder to get, so has welfare: as of 2006, 44 states cut off anyone with a household income totaling 75 percent of the poverty level — then limited to $1,383 a month for a family of three — according to an analysis by Ms. Albelda.

“We have a work-based safety net without any work,” said Timothy M. Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin, Madison. “People with more education and skills will probably figure something out once the economy picks up. It’s the ones with less education and skills: that’s the new poor.”

Here in Orange County, the expanse of suburbia stretching south from Los Angeles, long-term unemployment reaches even those who once had six-figure salaries. A center of the national mortgage industry, the area prospered in the real estate boom and suffered with the bust.

Until she was laid off two years ago, Janine Booth, 41, brought home roughly $10,000 a month in commissions from her job selling electronics to retailers. A single mother of three, she has been living lately on $2,000 a month in child support and about $450 a week in unemployment insurance — a stream of checks that ran out last week.

For Ms. Booth, work has been a constant since her teenage years, when she cleaned houses under pressure from her mother to earn pocket money. Today, Ms. Booth pays her $1,500 monthly mortgage with help from her mother, who is herself living off savings after being laid off.

“I don’t want to take money from her,” Ms. Booth said. “I just want to find a job.”

Ms. Booth, with a résumé full of well-paid sales jobs, seems the sort of person who would have little difficulty getting work. Yet two years of looking have yielded little but anxiety.

She sends out dozens of résumés a week and rarely hears back. She responds to online ads, only to learn they are seeking operators for telephone sex lines or people willing to send mysterious packages from their homes.

She spends weekdays in a classroom in Anaheim, in a state-financed training program that is supposed to land her a job in medical administration. Even if she does find a job, she will be lucky if it pays $15 an hour.

“What is going to happen?” she asked plaintively. “I worry about my kids. I just don’t want them to think I’m a failure.”

On a recent weekend, she was running errands with her 18-year-old son when they stopped at an A.T.M. and he saw her checking account balance: $50.

“He says, ‘Is that all you have?’ ” she recalled. “ ‘Are we going to be O.K.?’ ”

Yes, she replied — and not only for his benefit.

“I have to keep telling myself it’s going to be O.K.,” she said. “Otherwise, I’d go into a deep depression.”

Last week, she made up fliers advertising her eagerness to clean houses — the same activity that provided her with spending money in high school, and now the only way she sees fit to provide for her kids. She plans to place the fliers on porches in some other neighborhood.

“I don’t want to clean my neighbors’ houses,” she said. “I know I’m going to come out of this. There’s no way I’m going to be homeless and poverty-stricken. But I am scared. I have a lot of sleepless nights.”

For the Eisens, poverty is already here. In the two years Ms. Eisen has been without work, they have exhausted their savings of about $24,000. Their credit card balances have grown to $15,000.

“I don’t know how we’re still indoors,” she said.

Her 1994 Dodge Caravan broke down in January, leaving her to ask for rides to an employment center.

She does not have the money to move to a cheaper apartment.

“You have to have money for first and last month’s rent, and to open utility accounts,” she said.

What she has is personality and presence — two traits that used to seem enough. She narrates her life in a stream of self-deprecating wisecracks, her punch lines tinged with desperation.

“See that,” she said, spotting a man dressed as the Statue of Liberty. Standing on a sidewalk, he waved at passing cars with a sign advertising a tax preparation business. “That will be me next week. Do you think this guy ever thought he’d be doing this?”

And yet, she would gladly do this. She would do nearly anything.

“There are no bad jobs now,” she says. “Any job is a good job.”

She has applied everywhere she can think of — at offices, at gas stations. Nothing.

“I’m being seen as a person who is no longer viable,” she said. “I’m chalking it up to my age and my weight. Blame it on your most prominent insecurity.”

Two Incomes, Then None

Ms. Eisen grew up poor, in Flatbush in Brooklyn. Her father was in maintenance. Her mother worked part time at a company that made window blinds.

She married Jeff when she was 19, and they soon moved to California, where he had grown up. He worked in sales for a chemical company. They rented an apartment in Buena Park, a growing spread of houses filling out former orange groves. She stayed home and took care of their daughter.

“I never asked him how much he earned,” Ms. Eisen said. “I was of the mentality that the husband took care of everything. But we never wanted.”

By the early 1980s, gas and rent strained their finances. So she took a job as a quality assurance clerk at a factory that made aircraft parts. It paid $13.50 an hour and had health insurance.

When the company moved to Mexico in the early 1990s, Ms. Eisen quickly found a job at a travel agency. When online booking killed that business, she got the job at the beauty salon equipment company. It paid $13.25 an hour, with an annual bonus — enough for presents under the Christmas tree.

But six years ago, her husband took a fall at work and then succumbed to various ailments — diabetes, liver disease, high blood pressure — leaving him confined to the couch. Not until 2008 did he secure his disability check.

And now they find themselves in this desert of joblessness, her paycheck replaced by a $702 unemployment check every other week. She received 14 weeks of benefits after she lost her job, and then a seven-week extension.

For most of October through December 2008, she received nothing, as she waited for another extension. The checks came again, then ran out in September 2009. They were restored by an extension right before Christmas.

Their daughter has back problems and is living on disability checks, making the church their ultimate safety net.

“I never thought I’d be in the position where I had to go to a food bank,” Ms. Eisen said. But there she is, standing in the parking lot of the Calvary Chapel church, chatting with a half-dozen women, all waiting to enter the Bread of Life Food Pantry.

When her name is called, she steps into a windowless alcove, where a smiling woman hands her three bags of groceries: carrots, potatoes, bread, cheese and a hunk of frozen meat.

“Haven’t we got a lot to be thankful for?” Ms. Eisen asks.

For one thing, no pinto beans.

“I’ve got 10 bags of pinto beans,” she says. “And I have no clue how to cook a pinto bean.”

Local job listings are just as mysterious. On a bulletin board at the county-financed ProPath Business and Career Services Center, many are written in jargon hinting of accounting or computers.

“Nothing I’m qualified for,” Ms. Eisen says. “When you can’t define what it is, that’s a pretty good indication.”

Her counselor has a couple of possibilities — a cashier at a supermarket and a night desk job at a motel.

“I’ll e-mail them,” Ms. Eisen promises. “I’ll tell them what a shining example of humanity I am.”

http://www.clms.neu.edu/publication/documents/Labor_Underutilization_Problems_of_U.pdf

_

[Nictoe]

[Nictoe]

Thats a good one.....America will run out of trees if they keep printing money like that.

[theLIBERTARIAN]

I think the government can keep shooting - just spend more money and cut taxes. What else is there they can do? It would be great if they Federal Reserve sent everyone a check. That is better than having the government do it. At least that way we don't have to pay interest on the money.

[Biscuit]

The Fed Reserve has the govt. under its thumb.

[theLIBERTARIAN]

I think so too. There were people who predicted this long ago too.

[Biscuit]

Thats true, and Im sure that those people were mocked and made fun of because of their views. Now fast forward to today, and look at what we have.....the very conditions that we were warned about....going all the way back to Thomas Jefferson!!

[Nictoe]

A Debt Level Great Enough To Threaten The Dollar Rating

International Forecaster Weekly
April 7 2010

Summary: Your purchasing power is less and less with every passing day, changes coming to currencies, no end to corruption in government, Wall Street, and banking, US states on the verge of bankruptcy, economic and financial zombies on the old continent, globalization has brought us to the brink of collapse, Interest rate volatility to come soon, US debt far over GDP, property abandoned.

Almost every day in almost any currency your purchasing power in terms of gold is less and less. Thus, these currencies in which you save the fruits of your labor are cheating you out of your savings.

The US dollar is particularly vulnerable because of its staggering debt even though it is the world reserve currency. In fact the debt is so onerous that we believe the quality rating of the dollar could be lowered by the end of the year. Many other currencies face the same dilemma and in the final analysis only gold will be worth what it is today or in the future.

Unless the US government expropriates Americans’ retirement plans they won’t be able to fund their sovereign debt. This situation is exacerbated by continued fiscal deficits of some $1.8 trillion. The administration and the Democratic Party are bound and determined to destroy America financially. Between government, Wall Street and banking America is being destroyed. This did not just happen that way; it was planned that way. When people discover what has been done to them there will probably be a revolution.

Government spends excessively, as free trade and globalization keeps America under a staggering load of unemployment in what has become a corporatist fascist nation controlled by Wall Street and banking and run by Marxists, who for years have operated in the shadows as bureaucrats.

Many American states are on the edge of bankruptcy. Their only hope is massive layoffs and reduced services adding to the already massive unemployment that plagues our nation. The situation is close presently to resembling the 1930s and that is after trillions of dollars created out of thin air permeated the economy. Worse yet, nothing has been done deliberately to solve the problems. One might think the antics of government; banking and Wall Street were deliberate-unfortunately they are. It won’t be long before everything will be nationalized and corporatist fascism will be in full flower.

Corruption in government, Wall Street and banking knows no end. This in addition to the looting of funds for Social Security and Medicare, that the Treasury now must fund, when they cannot even fund current debt without having the Fed buy it with money created out of thin air. Talk about inflation – it is surely on the way. If we use GAAP accounting, not the US government’s cash figures, the deficit is really in the vicinity of $4.5 to $5 trillion, not $1.8 trillion. This, of course, is nothing new and the same lying and secrecy is in force worldwide. All that people have saved worldwide has been stolen from them - they just do not know it yet.

The situation in Europe is so bad that all of Europe is attacking Germany because they save and do not spend enough and their balance of payments surplus is obscene to other spenders not only in the euro zone, but in the entire EU as well. Their thought is Germany should be losers like we are. Then there are the PIIGS who care about little or nothing. We know we lived for years in all of these countries and fully understand where they are coming from. They all wanted socialism and it has doomed them, as has the euro zone and the European Union. They are about to discover socialism and debt are about to destroy them. You have made yourselves into economic and financial zombies. There is no one left to bail you out. Subsidizing everything doesn’t work as they are soon to find out. When Europe and America fail unfortunately they are going to in part take the entire world down with them – no one is going to be spared.

We have an economy in a state of collapse and part of the reason for that is free trade, globalization, offshoring and outsourcing, which since 2000 has cost America some 8 million good quality jobs. Where are you Smoot-Hawley now that we need you? There are many reasons why the American economy is collapsing and free trade, British mercantilism, is one of them.

As we have said for months there is a multilateral change coming in currencies. A massive devaluation of all currencies and a debt settlement between countries. When that happens consumers worldwide will lose 2/3’s of their purchasing power on the final leg down into deflationary depression, which is probably 1-1/2 to 2 years away. Your only protection against such events is holding gold and silver related assets.

Those who have opted for general stock investments since 1998 have come out even if they were lucky and that includes massive market manipulation by our government. Not just failed policies. The creation in August 1988 of the President’s Working Group on Financial Markets” has been a disaster for free markets and a gift to dictators and would be tyrants. The markets are a giant scam and their underpinnings are about to collapse. There has been little or no growth over those years. Real estate bubbles in residential and commercial markets have collapsed and the stock market will soon follow. Hitting you right in the forehead is almost a 4% yield on 10-year T-notes that could well become 5% by yearend, which we predicted late last year. That will put the 30-year fixed rate mortgage at 6-1/4% to 6-1/2%. What do you think that will do to real estate, markets and profits? This is mainly because of sovereign debt that grows exponentially every minute of every day. These pyromaniacs in the White House and Congress add to the conflagration all day every day. The result has been a 25% loss in the S&P since March of 2000, and a loss versus gold of 75%. Gold has risen from $252 to $1,224 and silver from $3.50 to $20.00 with massive government and Fed suppression. Where do you think your money should have been and where your money should be? In gold and silver bullion, coins and shares. Yes, as usual we were crazy and we were right and we are going to continue to be right, because we understand what the Illuminists are up too.

You live in a bankrupt country, along with 18 other major bankrupts, and you will soon learn how you are going to lose everything you have worked a lifetime for. A rise in interest rates of 5% adds $620 billion annually to the US debt in interest alone and that is rising exponentially. The US, nor any government, can survive such debt service.

We are calling inflation, real inflation, not the official variety of 3%, but at 8%. John Williams says on the things you buy every day it is 10%. We should easily see 14-5/8% inflation by the end of the year just as we did 2-1/2 years ago.

The Fed has ended its $1.25 trillion program of buying toxic debt from lenders. We do not know if that is the correct figure, we do not know from whom they were purchased and we do not know what was paid for the MBS, because it is a secret. This purchase has put downward pressure on interest rates for the past 15 months. This is an abnormal procedure and it can be expected that interest rates would move higher. It also means that the fed will now be a seller in the market as the FDIC is attempting to be. If sold these securities will put downward pressure on these bonds and force higher rates in a market that is already subject to crowding out by the treasury. In addition, quantitative easing is being phased out, putting further upward pressure on rates. The Fed if it continues these policies may stem hyperinflation but they run the distinct risk of having deflation run out of control, which could easily drive the economy into deflationary depression. This is a super human feat we do not see being accomplished without major damage, at the least.

Rate volatility is going to increase dramatically, as the Fed works to hold the 10-year T-bill rate below 4%. This is what they did previously at great cost to savers and taxpayers.

As rates climb the dollar carry trade becomes much less attractive and as it is unwound borrowed money is pulled from other investments, such as bonds putting more upward pressure on rates and at the same time downward pressure on stocks, which have been purchased with borrowed money. If the Fed tightens, as they might on Wednesday, yields will move even higher. If that happens those in the carry trade and bonds and shares will see gains evaporate and sales of both bonds and stock will ensue, as the carry trade is unwound. This is what markets are now facing.

This takes us to municipal bonds and particularly California, which has $85 billion in debt, that has to be paid by its citizens, of which about 40% do not pay any taxes. In addition it officially has 12.4% unemployment, which is really about 25% and getting worse daily. This is a state with $1 trillion to $3.5 trillion in unfunded pensions and the world’s 8th largest economy. This is a state that, via federal subsidy, sold “Build America Bonds”, bonds yielding 6.3%, or 2.4%, higher rates than Treasuries. California is on the edge of bankruptcy and their municipal bonds should be sold, as many from other states should be sold as well. States won’t work out of their problems for years.

Last week the Dow rose 0.7%; S&P 1%, the Russell 2000 0.7% and the Nasdaq was unchanged. Banks rose 0.3%; broker/dealers 0.8%; cyclicals 0.8%; transports 1.2%; consumers 1.2%, as utilities fell 1.8%. High tech fell 0.3% as semis gained 1.1% and Internets fell 0.2%. Biotechs fell 0.2%; gold gained $12.00; the HUI rose 6.2% and the USDX fell 0.6% to 81.17.

Two-year Treasury bills rose 6 bps to 1.02%; the 10-year T-notes rose 10 bps to 3.95% and the 10-year German bund fell 7 bps to 3.08%.

The Freddie Mac 30-year fixed rate mortgage rose 9 bps to 5.08%; the 15’s rose 5 bps to 4.39%; one-year ARMs fell 15 bps to 4.05% and jumbos rose 1 bps to 5.83%.

Fed credit declined $7.4 billion. Fed foreign holdings of Treasury, Agency debt rose $7.2 billion to a record of $3.020 trillion. Custody holdings for foreign central banks increased $64.5 billion just year-to-date, and year-on-year 15.7%.

M2 narrow money supply fell $10 billion.

Total money market fund assets fell $30 billion to $2.983 trillion, the first time below $3 trillion since 10/07. Year-to-date it is off $311 billion and year-on-year it is off 22.2%.

Commercial paper fell $5.2 billion, or 20.8% ytd and 24.9% yoy.

America’s debt is now $31 trillion, or 2-1/2 times US GDP. Americans on average only own 11% of their home the remainder is debt. Home prices are headed lower until 2013, so 20% lower prices are a certainty. In some areas homes have already fallen 60% to 75%. This situation will feed on itself for years and bankruptcies and inventory for sale will flourish for years. About 45% of homes have mortgages. We wrote five years ago that the government wants to own and nationalize those homes, so they can control the public.

As we wrote earlier we expect another large stimulus plan soon and the Fed to reverse gears and flood the world with money sometime soon. This should be the last rescue and the result will be hyperinflation followed by collapse and a deflationary depression. This is the last chance to buy gold and silver inexpensively.

If you do not think there was inflation in 2007 and 2008 homeowners insurance rose 24%, in 2008 it rose 31% and again in 2009-10 it rose 31%.

Treasury debt is on the ropes and is about to cause the Illuminists real trouble, along with higher interest rates. Later this year or early next year debt as a percentage will reach 95%. From there on its collapse. How can anyone conceive deficits of more than $10 trillion over the next ten years?

The ISM Non-Manufacturing Index release by the Institute for Supply Management rose in March to 55.4 from 53.0. The index reached the highest level since November of 2007.

The increase to 55.4 was above market expectations of an increase to 53.3. The data shows that the economic activity in the US continues to improve.

More Americans unexpectedly signed contracts in February to buy previously owned homes, signaling government efforts to support the market will start pay off.

The index of purchase agreements, or pending home sales, rose 8.2 percent, the second-biggest gain on record and the largest since October 2001, after a revised 7.8 percent drop in January, the National Association of Realtors announced today in Washington.

Hedge funds that aim to profit from macroeconomic upheavals have had a lacklustre start to 2010, in spite of some of the biggest international monetary crises in more than a decade.

http://www.ft.com/cms/s/0/b8e7ab2e-400f-11df-8d23-00144feabdc0.html?ftcamp=rss - The Greek debt crisis and steep falls in value for both the euro and sterling have failed to translate into noticeable gains for most macro managers, many of whom predicted a stellar year on the back of huge global economic rebalancing.

So-called global macro hedge funds, which specialise in bets on interest rates, sovereign bonds and currencies, have on average lost 1.25 per cent on investments so far this year, according to industry data compiled by Hedge Fund Research, a Chicago-based index compiler.

Many of the hedge fund industry’s biggest names have so far failed to turn market crises to their advantage often in spite of fervent political criticism linking them to damaging market “speculation”.

The 5-foot alligator lurking in the algae-green waters of the community swimming pool was not the worst thing code-enforcement officers have found in recent years at AAA Apartments in Cocoa.

Bathrooms infested with mold. Walls with gaping holes where air conditioners had been ripped out. Garbage and trash strewn about the 52-unit complex. The city began issuing code-violation fines in 2007, back at the beginning of the housing slump, and the apartments' co-owners soon owed the city $1.8 million more than three times the current list price of the property, and enough money to motivate the now-former co-owners to try bribing a code-enforcement officer.

AAA Apartments, now bank-owned, may be an example of things to come. As home foreclosures continue to mount throughout Central Florida, code-enforcement officers say apartments, condominiums and other commercial buildings are being abandoned by their owners and repossessed by banks in growing numbers.


A surprise Fed announcement eclipsed the disappointing March Employment Report on Friday. Yes, it is a disappointment despite the media and permabull spin, because the Street expected March NFP to exceed 200k. One forecast had the job gain at 400k. But only 48k temporary Census workers were recorded. So only 162k NFP were reported.

Birth Death Model jobs are 81k, even though ADP, who actually does a count, showed small business lost 112k jobs. Professional services gained 11,000 jobs, but 40,000 were part-time jobs.

Review and determination by the Board of Governors of the advance and discount rates to be charged by Federal Reserve Banks.

Traders quickly surmised that if the Fed is going to allow public access to an emergency meeting to discuss a possible discount rate hike, the probability is very high that a discount rate will occur soon.

The probable reason for the public airing is to disabuse the notion that the Fed’s secrecy keeps the public in the dark about its operations while it tips coming policy to insiders who profit on the inside info.

Most of the financial media ignored the Fed notice and reported the dollar surged because the jobs report indicated the economy had turned the corner. How is this possible when the number of jobs were below the consensus forecast?

Other financial media types spun the disappointing NFP as good news because it means the Fed cannot hike rates. But the dollar rally contradicts this notion…If anything, SPMs jumped on asset allocation, which will be a temporary boost for stocks. Perhaps the past months’ upward revisions were a factor.

The change in total nonfarm payroll employment for January was revised from -26,000 to +14,000, and the change for February was revised from -36,000 to -14,000.

Once again we see chicanery in the March Employment because the Household Survey shows a gain of 264k jobs but ‘Men 20 years & over’ accounted for a 290k job gain. ‘Women 20 years & over’ LOST 42k jobs. This is absurd.

You might recall that we noted that the January Employment Report recorded a 541k jobs increase in the Household Survey due to an increase of 529k of jobs for ‘Women 20 years & over’, while ‘Men 20 years & over’ LOST 1k jobs. This is impossible!

Now we see the opposite scheme ‘Men 20 years & over’ gained 290k jobs; women lost 42k jobs.

The Household Survey shows an increase of 308,000 jobs, but the BLS did not report this in the preamble to the report. Most of the gain is due to 233,000 gain in ‘Men 20 years and older’. ‘Men 16 year and older’ account for 297,000 of the 308,000 jobs gain in the Household Survey! For February, ‘Women 20 years of age and older’ increased only 11,000.

Wages fell 0.1% (+0.2% expected), a record for the data series; but it only goes back to 2006. Wages should increase before employment increases due to the high cost of benefits.

U6, comprehensive unemployment, increase 0.1 to 16.9% in March. ‘Unemployed for 27 weeks or more’ hit a record 44.1%. Per Alan Abelson, the odds of finding a job sank to 18.7% from Feb’s 20.1%. The Exhaust Rate (people that have exhausted unemployment benefits) hit 54.01% for February.

Gallup Daily tracking finds that 20.3% of the U.S. workforce was underemployed in March. [The 149,268 consumer bankruptcies filed in March represented the highest monthly consumer filing total since Congress overhauled the Bankruptcy Code in 2005.]

For the week ended Wednesday, the Fed’s balance contracted $5.992B due to the sale of $5.103B of MBS. The Fed monetized $1.5B of agencies.

US banks earned $2.5bn last year from an accounting rule that enables them to book gains – known as “Christmas capital” by buying assets at a discount, a new study shows. More than half of all acquisitions of failed banks last year resulted in such gains, according to SNL Financial, which compiled the data.
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