Okay so today was a reading day. I found this article on WSJ.com also. Clinton and Obama have been sparing over who has the best solution for Americans without health insurance. Its the whole, "my plan is better than your plan" bullsh*t. In the meantime, welcome to our reminder that 17% of americans have no health insurance. Give this one a read...
Health Insurers Address Issue Of Nixed Policies To Counter Negative Publicity, Industry Pushes Plans to Let People Appeal Cancellations
By RHONDA L. RUNDLE
February 27, 2008; Page D1
The health-insurance industry is racing to defuse a growing furor over retroactive policy cancellations that have saddled some patients with big medical bills and sparked lawsuits.
America's Health Insurance Plans, an industry group, is pushing a proposal with state regulators that would give consumers the right to appeal such policy cancellations, known as rescissions, to an external panel, whose decisions would be binding. Some insurance companies, eager for even quicker action, are preparing to roll out their own independent review programs.
The efforts, which are getting a largely positive reception from consumer groups, are emerging amid public outrage in several states against insurers that have voided policies after the beneficiaries started racking up large claims for cancer or other serious illnesses.
Last week, an arbitration judge in California awarded $9.4 million, mostly in punitive damages, to a hairdresser whose medical coverage was canceled by Health Net Inc. The insurer, which acted while the woman was undergoing treatment for breast cancer, claimed that she had falsified information about her weight and failed to mention a heart murmur. The judge ruled that Health Net's conduct was "reprehensible" and unlawful.
Such cases have cast an unflattering light on insurers' practices of investigating individuals' medical histories after they get sick. The insurers say they have the right to rescind policies when policyholders don't disclose pre-existing medical conditions that would have disqualified them from coverage, or when they misrepresent information on their policy application. The companies say they are protecting the integrity of the underwriting process and keeping coverage affordable for customers.
But some policy rescissions can seem arbitrary and unfair. Last year, the Connecticut attorney general's office investigated complaints about coverage denials by units of Assurant Inc. In one case, the company refused to pay a 34-year-old woman's bills after she was diagnosed with Hodgkin's lymphoma, according to the attorney general's office. The insurer claimed she had a pre-existing condition because during a postenrollment doctor's visit she recalled experiencing mild shortness of breath while exercising six months earlier, the office said. Under a state order, the company's decision was later reversed and the woman's claims were paid.
"The stories are heart wrenching of people who have paid their money and are relying on the care they paid for, only to have the rug suddenly pulled out from under them," said Betsy Imholz, special projects director at the nonprofit advocacy group Consumers Union.
The controversy about rescissions comes at a time when many Americans are demanding an overhaul of the U.S. health-care system. Indeed, most of the presidential candidates have proposed significant revisions aimed at reducing the ranks of the uninsured. But some critics say that the practice of unfair policy rescissions suggests that private health insurers aren't up to the task of ensuring that sick people maintain coverage.
Companies may void policies after conducting an investigation into patients' medical records, looking for evidence that they were already sick before they bought insurance. Insurance companies say rescissions are unusual, but occur most often when information emerges that a policyholder was pregnant before she bought insurance. Many consumer advocates complain that applications are confusing and that people make honest mistakes in filling them out.
America's Health Insurance Plans, the industry group, hopes its proposal will quell disputes. The group is circulating a draft bill that calls for individual states to use independent panels of health-care professionals and lawyers to review policy rescissions. Details of how the process would function haven't yet been finalized, the group said. Karen Ignagni, the industry group's president and chief executive officer, says the group plans to promote its proposal in a meeting next month with the National Association of Insurance Commissioners, a group of state regulatory officials. "We're operating on a fast track," Ms. Ignagni says.
The proposal for independent review of policy rescissions parallels one that was widely adopted in the late 1990s to resolve fights over health-plan denials for expensive medical treatments. In that appeals process, patients prevail about half of the time.
A spokeswoman for the National Association of Insurance Commissioners said its information about the industry proposal is very preliminary. She said the association first heard of the initiative on Monday when it received an invitation to attend the industry group's presentation.
In California, some big health plans are moving ahead with their own initiatives. In the wake of last week's costly arbitration ruling, Health Net said it won't cancel any more policies until it puts an external review process in place.
Jay Gellert, Health Net's chief executive, said setting up procedures for independent rescission reviews can be done "in a couple or three months." It's not difficult to find lawyers and other people who know how to do this, he said, and "the more objective it is, the better it is for us because it eliminates doubt and provides real clarity." Mr. Gellert said he would support legislation to create a single statewide process, but that could take time and he doesn't want to wait.
Blue Cross of California, a unit of WellPoint Inc., said last week it also is in the process of developing a third-party review process for rescissions. After coming under attack from politicians and others, Blue Cross recently reversed a practice of enlisting doctors to report patients' pre-existing conditions.
A Blue Cross spokeswoman said once a review process is up and running, the company plans to send "every single rescission for review to help us validate the decision."
Consumer groups say independent review could benefit many patients, whose biggest need when a policy is canceled is to get their coverage reinstated, not to file a lawsuit. "We are often viewed as having very different views from the insurance industry, but on this particular matter we think this is a step in the right direction," said Ron Pollack, executive director of Families USA, a Washington nonprofit organization.
A handful of states, including New York and Washington, haven't experienced significant problems with policy rescissions because they have "guaranteed issue" laws that require companies to sell insurance to everyone, regardless of pre-existing conditions. But the industry points to studies that show such states have higher premiums. The industry would ultimately like to see guaranteed issue married to laws that require everyone to purchase insurance, creating a larger financial pot for claims payouts.
Heh, check it out... Help is on the way... The state governments will try to help citizens who deserve more from their federal government. But after all, with a $8 trillion budget deficit and a $1 trillion war in Iraq and Afghanistan, you can't really expect the federal gov. to help out... Wake up, wake up... Stop dreaming!!
Wednesday, February 27, 2008
What's really going on in the Banking Sector?
I came across this article in the Wall Street Journal on-line edition. Thought it was interesting enough to add it to my blog. Is this a sign that things are really bad out there?
FDIC to Add Staff as Bank Failures Loom
By DAMIAN PALETTA
February 26, 2008; Page A2
WASHINGTON – The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation’s housing and credit markets continue to worsen.
The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.
FDIC spokesman Andrew Gray said the agency was looking to bulk up "for preparedness purposes." The division now has 223 employees, mostly based in Dallas.
The agency, which insures accounts at more than 8,000 financial institutions, is also seeking to hire an outside firm that would help manage mortgages and other assets at insolvent banks, according to a newspaper advertisement.
In public, policy makers are debating what role the government should play in trying to stabilize the housing market and minimize foreclosures. Meanwhile, regulators have worked discreetly behind the scenes to closely monitor the growing number of troubled banks and thrifts considered at risk.
"Regulators are bracing for well over 100 bank failures in the next 12 to 24 months, with concentrations in Rust Belt states like Michigan and Ohio, and the states that are suffering severe housing-market problems like California, Florida, and Georgia," said Jaret Seiberg, Washington policy analyst for financial-services firm Stanford Group.
In job postings on its Web site, the FDIC said it is looking for people with "skill in performing duties associated with a financial-institution closing, such as receivership management, resolutions and/or asset disposition; knowledge of the resolutions process as it relates to complex financial institutions." Such positions would require "very frequent overnight travel," the posting said, and would pay up to $180,770.
"The notion of bringing back some people who have been through it before is very smart," said William Isaac, who was FDIC chairman from 1981 until 1985. All told, the FDIC has roughly 4,600 employees, far fewer than the about 15,000 it had as recently as 1992.
On Sunday, the FDIC ran a newspaper ad seeking companies that could service commercial loans, mortgages and student loans in the event of a bank failure. It didn't say how much a company could earn in this area.
The FDIC rated 65 banks and thrifts as "problem" institutions at the end of the third quarter of 2007, up from 47 institutions a year earlier. Both figures are low by historical standards. At the end of 1993, there were 572 "problem" banks and thrifts. The FDIC is expected to update its data on "problem" institutions today.
Before the housing market soured, the banking industry was enjoying one of its most profitable stretches in U.S. history. There wasn't a single bank failure from July 2005 through January 2007, an unprecedented span.
There have only been four bank failures in the past 12 months, a rate the FDIC has easily been able to handle.
In many parts of the country, the housing-market decline has hamstrung banks, and regulators have reported weakening performance of commercial real estate, small business and credit-card loans. Exacerbating the situation is a cash-flow crunch, which makes it harder for banks to obtain funding to originate new loans.
FDIC Chairman Sheila Bair, Comptroller of the Currency John Dugan and Office of Thrift Supervision Director John Reich have warned of a pickup in bank failures. Last week, Mr. Reich reported that the thrift industry lost a record $5.2 billion in the fourth quarter.
The FDIC was created by Congress in the 1930s after a series of bank runs during the Great Depression. At the end of 2007, it had $52.4 billion in its fund that backstops the nation's insured deposits.
So there you have it - housing crisis, foreclosures, bank failures, government bail-outs... Our America!!!
FDIC to Add Staff as Bank Failures Loom
By DAMIAN PALETTA
February 26, 2008; Page A2
WASHINGTON – The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation’s housing and credit markets continue to worsen.
The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.
FDIC spokesman Andrew Gray said the agency was looking to bulk up "for preparedness purposes." The division now has 223 employees, mostly based in Dallas.
The agency, which insures accounts at more than 8,000 financial institutions, is also seeking to hire an outside firm that would help manage mortgages and other assets at insolvent banks, according to a newspaper advertisement.
In public, policy makers are debating what role the government should play in trying to stabilize the housing market and minimize foreclosures. Meanwhile, regulators have worked discreetly behind the scenes to closely monitor the growing number of troubled banks and thrifts considered at risk.
"Regulators are bracing for well over 100 bank failures in the next 12 to 24 months, with concentrations in Rust Belt states like Michigan and Ohio, and the states that are suffering severe housing-market problems like California, Florida, and Georgia," said Jaret Seiberg, Washington policy analyst for financial-services firm Stanford Group.
In job postings on its Web site, the FDIC said it is looking for people with "skill in performing duties associated with a financial-institution closing, such as receivership management, resolutions and/or asset disposition; knowledge of the resolutions process as it relates to complex financial institutions." Such positions would require "very frequent overnight travel," the posting said, and would pay up to $180,770.
"The notion of bringing back some people who have been through it before is very smart," said William Isaac, who was FDIC chairman from 1981 until 1985. All told, the FDIC has roughly 4,600 employees, far fewer than the about 15,000 it had as recently as 1992.
On Sunday, the FDIC ran a newspaper ad seeking companies that could service commercial loans, mortgages and student loans in the event of a bank failure. It didn't say how much a company could earn in this area.
The FDIC rated 65 banks and thrifts as "problem" institutions at the end of the third quarter of 2007, up from 47 institutions a year earlier. Both figures are low by historical standards. At the end of 1993, there were 572 "problem" banks and thrifts. The FDIC is expected to update its data on "problem" institutions today.
Before the housing market soured, the banking industry was enjoying one of its most profitable stretches in U.S. history. There wasn't a single bank failure from July 2005 through January 2007, an unprecedented span.
There have only been four bank failures in the past 12 months, a rate the FDIC has easily been able to handle.
In many parts of the country, the housing-market decline has hamstrung banks, and regulators have reported weakening performance of commercial real estate, small business and credit-card loans. Exacerbating the situation is a cash-flow crunch, which makes it harder for banks to obtain funding to originate new loans.
FDIC Chairman Sheila Bair, Comptroller of the Currency John Dugan and Office of Thrift Supervision Director John Reich have warned of a pickup in bank failures. Last week, Mr. Reich reported that the thrift industry lost a record $5.2 billion in the fourth quarter.
The FDIC was created by Congress in the 1930s after a series of bank runs during the Great Depression. At the end of 2007, it had $52.4 billion in its fund that backstops the nation's insured deposits.
So there you have it - housing crisis, foreclosures, bank failures, government bail-outs... Our America!!!
Who are the experts in the investment trade? (Part 2)
So here we are again discussing the US economy based upon what the "Experts" say and again I struck with awe at the prognosticators! Here is an article that actually contradicts the first article almost word for word...
Dollar Falls to Record Against Euro on Fed Rate-Cut Speculation
By Kim-Mai Cutler and Ye Xie
Feb. 27 (Bloomberg) -- The dollar weakened below $1.50 per euro for the first time on speculation Federal Reserve Chairman Ben S. Bernanke will indicate the U.S. central bank is ready to cut interest rates from a three-year low.
The dollar also dropped after German business confidence unexpectedly strengthened for a second month in February, prompting traders to reduce bets the European Central Bank will cut rates. The currency fell to an all-time low against the Swiss franc and to a 23-year low versus the New Zealand dollar.
``We're in a new regime for the dollar,'' said Bilal Hafeez, London-based global head of currency strategy at Deutsche Bank AG, the world's biggest foreign-exchange trader. ``The proximate cause has been European data, which has indicated that Europe hasn't suffered on the growth side as the U.S. has.''
The dollar touched $1.5088 per euro, the weakest since the European currency's debut in January 1999, before trading at $1.5052 as of 8:34 a.m. in New York, from $1.4974 yesterday. It fell to 106.32 yen from 107.28 yen, coming within 1.2 percent of a 2 1/2-year low reached in January, and dropped as low as 1.0665 francs, from 1.0756. The euro fell to 159.99 yen from 160.67. The dollar may fall to $1.55 per euro by the end of March, Hafeez predicted.
Europe's single currency remained higher against the dollar after ECB policy maker Axel Weber said investors betting on rate cuts in the region are underestimating inflation.
Bernanke will deliver his semi-annual testimony to the House Financial Services Committee at 10 a.m. in Washington. He will appear before the Senate Banking Committee tomorrow.
Rate Differentials
The New Zealand dollar rose to 82.13 U.S. cents from 81.71 cents on speculation the interest-rate differential will widen in favor of assets outside of the U.S. The Australian dollar climbed to 93.92 U.S. cents, from 93.38, reaching the strongest since November's 23-year high. New Zealand's key interest rate is 5.25 percentage points higher than the Fed's 3 percent rate. Australia's is 4 percentage points more.
A Fed trade-weighted index of the dollar against major currencies has fallen about 11 percent in the past year. The U.S. Dollar Index traded on ICE Futures in York, which tracks the currency against six major counterparts, dropped to 74.23 today, the lowest since the gauge started in 1973.
The currency also dropped to an all-time low of $1.5088 against the synthetic euro, a theoretical value that estimates the European currency's price as far back as January 1989, when Bloomberg's data on the series begin.
Contrast With ECB
The dollar extended losses after a government report showed orders for U.S. durable goods fell last month. Orders dropped 5.3 percent, following an increase of 4.4 percent the previous month, the Commerce Department said. The median forecast in a Bloomberg News survey was for a decline of 4 percent.
The U.S. currency has 12 percent versus the euro in the past year. It has weakened against all but one of the 16 most- active currencies as subprime-mortgage losses, the worst housing slump in 25 years and soaring credit costs spurred the Fed to cut rates five times since Sept. 18.
By contrast, the ECB has held its main lending rate at a six-year high of 4 percent since June to counter inflation pressures from surging food and oil prices. Traders increased wagers on rate cuts after ECB President Jean-Claude Trichet on Feb. 7 dropped a threat to raise borrowing costs and said uncertainty about economic growth is ``unusually high.''
Underestimating Inflation
``The consensus expectation for interest rates on the market at the moment clearly underestimates, in my opinion, the inflation risks,'' Weber said today, according to the text of a speech in Bonn. ``In 2009, inflation will not slow as markedly as supposed in the December projections, which were based on lower oil prices.''
The slump in the dollar helped push oil prices to a record above $102 today and increased the cost of buying wheat, sugar, copper, cotton, cocoa and precious metals.
``We're talking about a vicious cycle if you look at price increases in commodities,'' said Stephen Jen, Morgan Stanley's global currency economist in London. ``The dollar weakens first, then food and oil prices rise, which complicates policy-making. At this point, the dollar is hurting itself.''
All of the 10 most-active currencies in Asia outside Japan gained against the U.S. currency today. Thailand's baht advanced to the highest since August 1997 as the central bank kept its benchmark rate unchanged at 3.25 percent for a fifth straight meeting. The currency rose 0.1 percent to 30.09 per dollar.
Indonesia's rupiah rose 0.3 percent against the dollar dollar and the Singapore dollar touched an 11-year high of S$1.3964. The Chinese yuan advanced 0.2 percent to 7.1420.
BOA Forecast
The currency will continue to trade below $1.50 for the next few weeks, Robert Sinche, head of global currency strategy at Bank of America N.A. in New York, wrote in a research note dated today.
``It's crunch time for the dollar,'' said Yuji Saito, head of foreign-exchange sales in Tokyo at Societe Generale SA, a unit of France's second-largest bank by market value. ``Bernanke may know that monetary policy alone cannot support the slowing U.S. economy.''
New home sales dropped 0.7 percent to an annual pace of 600,000 last month, the lowest level in almost 13 years, according to median forecast in a Bloomberg News survey. The Commerce Department's report is due at 10 a.m. in Washington.
The dollar will rebound to $1.48 per euro by the end of March, according to the median forecast in a Bloomberg survey of 41 analysts. Merrill Lynch & Co., the third-biggest U.S. securities firm, is the most bearish, predicting it will fall to $1.57 per euro by the end of March.
March Cut
Futures on the Chicago Board of Trade show traders see a 100 percent chance the U.S. central bank will reduce the 3 percent target rate for overnight lending between banks by at least 50 basis points at their March 18 meeting, and an 8 percent likelihood of a cut to 2.25 percent.
The euro also gained as a government report showed import prices in Germany, an early indicator of inflation pressure in the region's biggest economy, rose the most in 16 months in January.
The single currency got a boost yesterday after the Munich- based Ifo institute said its business climate index rose to 104.1 from 103.4 in January, exceeding the 102.9 median estimate in a Bloomberg News survey and leading traders to pare bets the ECB will lower rates.
``Yesterday U.S. consumer confidence came out at a level that implies further rate easing from the Federal Reserve while German confidence data was considerably higher than market expectations,'' said Manuel Oliveri, a currency strategist at UBS AG in Zurich.
What is interesting about this article is that the source is the same, Bloomberg.com, and it leaves with the impression that the authors never spoke to or read the work of their collegues. It is pretty astonishing... I cannot take it anymore... What do you think?
Dollar Falls to Record Against Euro on Fed Rate-Cut Speculation
By Kim-Mai Cutler and Ye Xie
Feb. 27 (Bloomberg) -- The dollar weakened below $1.50 per euro for the first time on speculation Federal Reserve Chairman Ben S. Bernanke will indicate the U.S. central bank is ready to cut interest rates from a three-year low.
The dollar also dropped after German business confidence unexpectedly strengthened for a second month in February, prompting traders to reduce bets the European Central Bank will cut rates. The currency fell to an all-time low against the Swiss franc and to a 23-year low versus the New Zealand dollar.
``We're in a new regime for the dollar,'' said Bilal Hafeez, London-based global head of currency strategy at Deutsche Bank AG, the world's biggest foreign-exchange trader. ``The proximate cause has been European data, which has indicated that Europe hasn't suffered on the growth side as the U.S. has.''
The dollar touched $1.5088 per euro, the weakest since the European currency's debut in January 1999, before trading at $1.5052 as of 8:34 a.m. in New York, from $1.4974 yesterday. It fell to 106.32 yen from 107.28 yen, coming within 1.2 percent of a 2 1/2-year low reached in January, and dropped as low as 1.0665 francs, from 1.0756. The euro fell to 159.99 yen from 160.67. The dollar may fall to $1.55 per euro by the end of March, Hafeez predicted.
Europe's single currency remained higher against the dollar after ECB policy maker Axel Weber said investors betting on rate cuts in the region are underestimating inflation.
Bernanke will deliver his semi-annual testimony to the House Financial Services Committee at 10 a.m. in Washington. He will appear before the Senate Banking Committee tomorrow.
Rate Differentials
The New Zealand dollar rose to 82.13 U.S. cents from 81.71 cents on speculation the interest-rate differential will widen in favor of assets outside of the U.S. The Australian dollar climbed to 93.92 U.S. cents, from 93.38, reaching the strongest since November's 23-year high. New Zealand's key interest rate is 5.25 percentage points higher than the Fed's 3 percent rate. Australia's is 4 percentage points more.
A Fed trade-weighted index of the dollar against major currencies has fallen about 11 percent in the past year. The U.S. Dollar Index traded on ICE Futures in York, which tracks the currency against six major counterparts, dropped to 74.23 today, the lowest since the gauge started in 1973.
The currency also dropped to an all-time low of $1.5088 against the synthetic euro, a theoretical value that estimates the European currency's price as far back as January 1989, when Bloomberg's data on the series begin.
Contrast With ECB
The dollar extended losses after a government report showed orders for U.S. durable goods fell last month. Orders dropped 5.3 percent, following an increase of 4.4 percent the previous month, the Commerce Department said. The median forecast in a Bloomberg News survey was for a decline of 4 percent.
The U.S. currency has 12 percent versus the euro in the past year. It has weakened against all but one of the 16 most- active currencies as subprime-mortgage losses, the worst housing slump in 25 years and soaring credit costs spurred the Fed to cut rates five times since Sept. 18.
By contrast, the ECB has held its main lending rate at a six-year high of 4 percent since June to counter inflation pressures from surging food and oil prices. Traders increased wagers on rate cuts after ECB President Jean-Claude Trichet on Feb. 7 dropped a threat to raise borrowing costs and said uncertainty about economic growth is ``unusually high.''
Underestimating Inflation
``The consensus expectation for interest rates on the market at the moment clearly underestimates, in my opinion, the inflation risks,'' Weber said today, according to the text of a speech in Bonn. ``In 2009, inflation will not slow as markedly as supposed in the December projections, which were based on lower oil prices.''
The slump in the dollar helped push oil prices to a record above $102 today and increased the cost of buying wheat, sugar, copper, cotton, cocoa and precious metals.
``We're talking about a vicious cycle if you look at price increases in commodities,'' said Stephen Jen, Morgan Stanley's global currency economist in London. ``The dollar weakens first, then food and oil prices rise, which complicates policy-making. At this point, the dollar is hurting itself.''
All of the 10 most-active currencies in Asia outside Japan gained against the U.S. currency today. Thailand's baht advanced to the highest since August 1997 as the central bank kept its benchmark rate unchanged at 3.25 percent for a fifth straight meeting. The currency rose 0.1 percent to 30.09 per dollar.
Indonesia's rupiah rose 0.3 percent against the dollar dollar and the Singapore dollar touched an 11-year high of S$1.3964. The Chinese yuan advanced 0.2 percent to 7.1420.
BOA Forecast
The currency will continue to trade below $1.50 for the next few weeks, Robert Sinche, head of global currency strategy at Bank of America N.A. in New York, wrote in a research note dated today.
``It's crunch time for the dollar,'' said Yuji Saito, head of foreign-exchange sales in Tokyo at Societe Generale SA, a unit of France's second-largest bank by market value. ``Bernanke may know that monetary policy alone cannot support the slowing U.S. economy.''
New home sales dropped 0.7 percent to an annual pace of 600,000 last month, the lowest level in almost 13 years, according to median forecast in a Bloomberg News survey. The Commerce Department's report is due at 10 a.m. in Washington.
The dollar will rebound to $1.48 per euro by the end of March, according to the median forecast in a Bloomberg survey of 41 analysts. Merrill Lynch & Co., the third-biggest U.S. securities firm, is the most bearish, predicting it will fall to $1.57 per euro by the end of March.
March Cut
Futures on the Chicago Board of Trade show traders see a 100 percent chance the U.S. central bank will reduce the 3 percent target rate for overnight lending between banks by at least 50 basis points at their March 18 meeting, and an 8 percent likelihood of a cut to 2.25 percent.
The euro also gained as a government report showed import prices in Germany, an early indicator of inflation pressure in the region's biggest economy, rose the most in 16 months in January.
The single currency got a boost yesterday after the Munich- based Ifo institute said its business climate index rose to 104.1 from 103.4 in January, exceeding the 102.9 median estimate in a Bloomberg News survey and leading traders to pare bets the ECB will lower rates.
``Yesterday U.S. consumer confidence came out at a level that implies further rate easing from the Federal Reserve while German confidence data was considerably higher than market expectations,'' said Manuel Oliveri, a currency strategist at UBS AG in Zurich.
What is interesting about this article is that the source is the same, Bloomberg.com, and it leaves with the impression that the authors never spoke to or read the work of their collegues. It is pretty astonishing... I cannot take it anymore... What do you think?
Saturday, February 16, 2008
I have Press fatigue!
Those who know me know thatI normally try to show the absuredness of the mainstream press. But today I have Press fatigue.
I have been listening to NPR and BBC over the last week and I tell you what, I have just about had it!!!
On both networks, the subprime mess is the fault of those undeserving slackers who bought homes they could not afford and are now falling fast into foreclosure. They should be run out of town on the rail... But...
I have bought three houses in America. Each time, the mortgage provider made me prove that I was not only creditworthy, but a human being living and breathing on the planet. Many credit checks, proof of salary over the previous three month, tax returns over the past three years, proof that I had no liens or judgements against me, proof of ownership of all property, copies of drivers license, social security card, and passport. The rules were very clear: My house payment per month could not be more that 28% and my total debt payments per month could not be more than 32% of my monthly take home salary. The loan application process was unbelieveably thorough...
So, how did these alleged unworthy buyers get these loans they could not afford? Someone accepted those applications, did not verify any information, did not run credit checks on the applicants, included heavy penalties for early payoffs, included teaser interest rates followed by backbreaking increases in those rátes each year, and got super bonuses for their work...!
But no where can you find information on who those loan makers are. There are no lawsuits against them. No investigative reporting about them. Its as though they really don't exist. Instead we hear about the buyers! And news agencies have made it seem as though the real victims are the banks and financial institutions who reaped huge profits for 3-5 years while this project was working well. Now they are in such bad shape that the taxpayers need to bail them all out. But where is the money? Where did the profits go?
No more can I hear BBC or NPR slander these poor homebuyers/losers! Please make it stop... Let me know what you think!!!
I have been listening to NPR and BBC over the last week and I tell you what, I have just about had it!!!
On both networks, the subprime mess is the fault of those undeserving slackers who bought homes they could not afford and are now falling fast into foreclosure. They should be run out of town on the rail... But...
I have bought three houses in America. Each time, the mortgage provider made me prove that I was not only creditworthy, but a human being living and breathing on the planet. Many credit checks, proof of salary over the previous three month, tax returns over the past three years, proof that I had no liens or judgements against me, proof of ownership of all property, copies of drivers license, social security card, and passport. The rules were very clear: My house payment per month could not be more that 28% and my total debt payments per month could not be more than 32% of my monthly take home salary. The loan application process was unbelieveably thorough...
So, how did these alleged unworthy buyers get these loans they could not afford? Someone accepted those applications, did not verify any information, did not run credit checks on the applicants, included heavy penalties for early payoffs, included teaser interest rates followed by backbreaking increases in those rátes each year, and got super bonuses for their work...!
But no where can you find information on who those loan makers are. There are no lawsuits against them. No investigative reporting about them. Its as though they really don't exist. Instead we hear about the buyers! And news agencies have made it seem as though the real victims are the banks and financial institutions who reaped huge profits for 3-5 years while this project was working well. Now they are in such bad shape that the taxpayers need to bail them all out. But where is the money? Where did the profits go?
No more can I hear BBC or NPR slander these poor homebuyers/losers! Please make it stop... Let me know what you think!!!
Wednesday, February 13, 2008
Ever wonder about the value of information?
I do all the time. The problem is that I have a lot of time. I read the two articles below and was surprised that certain information was omitted in one. Give them both a read and I will explain after:
GM Posts Loss on North America; Overseas Profit Rises (Update7)
By Jeff Green and Greg Bensinger Feb. 12 (Bloomberg) --
General Motors Corp., the world's largest automaker, posted a fourth-quarter loss on shrinking sales in North America while revenue overseas rose.
The shares gained as much as 2.6 percent in New York trading as the Detroit-based company recorded a profit after excluding one-time costs. GM's net loss of $722 million followed year- earlier net income of $950 million.
The results indicate Chief Executive Officer Rick Wagoner is delivering on his pledge to rely more on overseas sales while cutting expenses at home. Wagoner said he will offer buyouts to speed the hiring of lower-paid new workers in the U.S., where industrywide sales are projected to fall to a 10-year low this year.
``Wagoner is doing the right things; he's just doing them at a time when the economy might be masking some of the favorable benefits from his actions,'' said Pete Hastings, a fixed-income analyst at Morgan Keegan & Co. in Memphis, Tennessee. Buyouts for 74,000 United Auto Workers members would be ``money well spent,'' he said.
The quarterly per-share loss was $1.28, versus the year- earlier profit of $1.68. Automotive revenue rose 7 percent to $46.7 billion, GM said in a statement today.
Not counting costs and gains the company considers one-time, GM reported an adjusted profit of $64 million, or 8 cents a share. On that basis, analysts estimated a loss of 64 cents. In North America, GM lost $1.1 billion, excluding some costs. By that measure, analysts predicted a loss of $400 million.
Shares Rise
GM rose 46 cents to $27.58 at 11:34 a.m. in New York Stock Exchange composite trading after reaching $27.83 earlier. Through yesterday, the shares had advanced 9 percent this year, the most in the Dow Jones Industrial Average.
The adjusted profit stemmed mostly from a $1.6 billion tax benefit, Chief Financial Officer Fritz Henderson said. The tax gain stems from the sale of the Allison transmission unit and a $7.7 billion reduction in GM's overall pension and retiree health-care liabilities, he said.
``It was a tough quarter in North America,'' Henderson told reporters today in Detroit. ``Volumes were down, and there was tougher pricing because we had a full incentive load for our pickups.''
2007 Loss
The full-year deficit was a record $38.7 billion and included a $39 billion expense in the third quarter related to a tax-accounting change. In 2006, GM lost $1.98 billion, or $3.50 a share.
The third quarter included the $1.6 billion tax benefit and $768 million in one-time expenses.
GM had $27.3 billion in cash, readily available assets and funds from a retirement fund at the end of December, a decline from $30 billion at the end of September. The automaker ended 2007 with a negative adjusted automotive cash flow of $2.4 billion, a $2 billion improvement from 2006.
Outside the U.S., GM had a $424 million profit in the Latin America/Africa/Middle East region and a $72 million Asia-Pacific profit. Europe reported a fourth-quarter deficit of $445 million.
The automaker today also announced details of a buyout plan for its remaining 74,000 UAW employees in the U.S. The offers would provide payments of as much as $62,500 for the most-skilled workers with at least 30 years service.
Enhanced Buyouts
The program enhances a $35,000 payout offered to workers in 2006 and can be taken as a lump sum, annuity, contribution to a 401(k) or individual retirement account, or a combination of cash and retirement contribution.
Workers who are at least 50 years old and have 10 years' experience would also be allowed to take an early retirement, and workers with at least 26 years' service will be allowed to quit and accept pro-rated payments until they are eligible for the regular 30-year pension.
UAW members with 10 or more years service can also opt for a one-time payment of $140,000 to leave the company and forgo future benefits. Workers will less than 10 years can take a $70,000 buyout.
GMAC LLC, the auto and home lending company that's 49 percent owned by GM, posted a $724 million fourth-quarter loss last week as more than one of every 10 homeowners fell behind on their mortgage payments. GM reported a $394 million pretax loss related to GMAC in the fourth quarter and an $872 million deficit for the full year.
GM lost $10.4 billion in 2005 and the $1.98 billion in 2006 as it ceded U.S. market share to Toyota Motor Corp. and health care-costs rose. Wagoner, who cut $9 billion from expenses from 2005 through 2007, last year won a cost-saving contract with the UAW that will trim another $5 billion annually by 2011.
Risk Ahead
Henderson told reporters on Jan. 29 that the automaker sees more ``risk'' than ``upside'' for the next year to 18 months. He declined to discuss fourth-quarter results at the time. GM cut North American production 6 percent in the quarter, and automakers book revenue when a vehicle is built, not when it's sold.
``It's going to be difficult for GM to make a profit in 2008 in spite of all the restructuring they've already done,'' said Bradley Rubin, an analyst at BNP Paribas in New York. ``The silver lining here is that they've already gone to the capital markets and raised all the capital they need.''
Analysts project U.S. auto sales may fall to 15.5 million this year, around 8 percent below the annual average this decade. GM hasn't posted an annual sales increase in the U.S. since 1999, while Toyota has advanced each year.
Toyota Battle
The U.S. automaker fended off a surging Toyota last year and kept its 77-year reign as the world's largest automaker by a margin of about 3,000 cars and trucks. Toyota had passed GM in the first half before GM regained the lead in the third quarter, aided by sales in markets such as Russia and China where GM leads Toyota.
GM's 8.375 percent note due July 2033 was unchanged today at 80.5 cents on the dollar, yielding 10.6 percent, according to Trace, the NASD's bond-price reporting service.
Credit-default swaps on GM debt rose 33 basis points today to 924 basis points, according to CMA Datavision in New York. That's the widest since June 2006. The contracts are designed to protect bondholders against default. A rise in the price indicates a decrease in the perception of a company's credit quality.
To contact the reporters on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net ; Greg Bensinger in New York at gbensinger1@bloomberg.net .
Last Updated: February 12, 2008 11:39 EST
February 12, 2008
G.M. Reports Quarterly Loss of $722 Million
By NICK BUNKLEY, New York Times
DETROIT — General Motors reported a $722 million fourth-quarter loss on Tuesday and offered more buyouts to all 74,000 of its unionized employees in another bid to keep its turnaround from stalling.
The loss translated into $1.28 a share, compared with a profit of $950 million, or $1.68 a share, in the period a year earlier. The swing was attributed to a drastically slowing vehicle market and big losses at its finance arm, the General Motors Acceptance Corporation.
Fourth-quarter revenue was $47.1 billion, down from $50.8 billion in 2006, because the company has since sold 51 percent of G.M.A.C. and now only counts revenue from its remaining stake. Automotive revenue was $46.7 billion in the quarter, up $3 billion from a year ago.
Excluding what G.M. said were one-time items, profit was $46 million, or 8 cents a share, compared with an adjusted profit of $180 million, or 32 cents a share, in the period a year earlier.
“Clearly, G.M. isn’t standing idle,” Peter Nesvold, an analyst with Bear Stearns, wrote to clients Tuesday. “However, we believe something’s happening that continues to erode G.M.’s earnings power faster than the restructurings can offset.”
For all of 2007, G.M. lost $38.7 billion, the biggest loss ever for an automaker. The loss, equal to $68.45 a share, is about the same amount as a noncash charge of $38.3 billion that the company took in the third quarter to write down deferred tax assets, meaning that G.M. almost broke even otherwise after losing $2 billion in 2006. Excluding special items, the company lost $23 million, or 4 cents a share.
Shares of the company were up 37 cents, to $27.49, in morning trading Tuesday on the New York Stock Exchange.
“We’re pleased with the positive improvement trend in our automotive results, especially given the challenging conditions in important markets like the U.S. and Germany, but we have more work to do to achieve acceptable profitability and positive cash flow,” G.M.’s chief executive, Rick Wagoner, said in a statement.
Worldwide, G.M.’s automotive operations lost $1.6 billion in 2007, including $1.3 billion in the fourth quarter, down from $6.1 billion a year earlier. Sales grew 3 percent in 2007, to almost 9.4 million, barely enough to retain its title as the world’s largest automaker over its surging Japanese rival Toyota.
In North America, the company cut its losses by more than half, to $3.3 billion from $7.5 billion in 2006. But the worsening economy in the United States led to higher fourth-quarter losses in the region: $1.1 billion, compared to $30 million in 2006.
“Despite progress and buoyant markets outside the U.S., falling volumes and competitive pressures in the U.S. will continue to pressure G.M. North America and hence overall G.M. operational results,” Brian A. Johnson, an analyst with Lehman Brothers, wrote in a note to clients Tuesday.
Still, G.M. executives maintained that the company’s North American turnaround plan, which calls for reducing annual expenses by another $4 billion to $5 billion by 2010, remains on track. The company has refused to say when it expects to earn a profit in North America.
“In order to get North America sustainably profitable and generating cash,” said G.M.’s chief financial officer, Frederick A. Henderson, “we must get the job done on both sides — revenue as well as cost.”
To cut costs further in the United States, G.M. said employees represented by the United Automobile Workers union can elect to take buyouts of up to $140,000.
Those eligible to retire can do so with full benefits and a payout of $45,000 for production workers or $62,500 for skilled tradespeople. Those amounts are $10,000 and $27,500 higher than what the company offered in 2006, when 30,000 U.A.W. workers agreed to leave their jobs.
Other options include an early retirement program for workers with slightly less than 30 years of seniority or a cash buyout of either $70,000 or $140,000 in exchange for giving up health care and other post-retirement benefits.
Some of the amounts are less than similar offers recently made available to workers at the Ford Motor Company and Chrysler, although G.M. is giving its workers the option to roll their buyout into a retirement account to reduce taxes.
The Detroit automakers are each hoping to persuade more workers to leave so that they can replace some with new hires earning half as much money, as permitted by two-tier wage provisions in the four-year contracts that they signed with the union last fall. None of the three has said how many workers it wants to leave under the new program.
Now it looks so innocent but the devil is in the details. Notice that the New York Times article omits the fact that GM received a $1.6 billion tax rebate! $1.6 billion dollars in one quarter!!!! Why??? Because "Joe SixPack" reads the Times and Joe is worried about his job , his house, his kids education, and everything else. He does not want to hear that GM, the company that is laying off people every damn day also gets $1.6 billion in tax rebates in one three month period.
Meanwhile, in the Bloomberg article this is a celebration of good business procedures. The bankers and businessmen that read Bloomberg want to know that GM is practicing great business strategies, layig off people and ruining lives, etc., and maximizing shareholders' wealth.
This is a pathetic example of wealth re-distribution in America. It is also a great example of media mis-information to insure that the masses are kept dumb and uninformed... Let me know what you think...
GM Posts Loss on North America; Overseas Profit Rises (Update7)
By Jeff Green and Greg Bensinger Feb. 12 (Bloomberg) --
General Motors Corp., the world's largest automaker, posted a fourth-quarter loss on shrinking sales in North America while revenue overseas rose.
The shares gained as much as 2.6 percent in New York trading as the Detroit-based company recorded a profit after excluding one-time costs. GM's net loss of $722 million followed year- earlier net income of $950 million.
The results indicate Chief Executive Officer Rick Wagoner is delivering on his pledge to rely more on overseas sales while cutting expenses at home. Wagoner said he will offer buyouts to speed the hiring of lower-paid new workers in the U.S., where industrywide sales are projected to fall to a 10-year low this year.
``Wagoner is doing the right things; he's just doing them at a time when the economy might be masking some of the favorable benefits from his actions,'' said Pete Hastings, a fixed-income analyst at Morgan Keegan & Co. in Memphis, Tennessee. Buyouts for 74,000 United Auto Workers members would be ``money well spent,'' he said.
The quarterly per-share loss was $1.28, versus the year- earlier profit of $1.68. Automotive revenue rose 7 percent to $46.7 billion, GM said in a statement today.
Not counting costs and gains the company considers one-time, GM reported an adjusted profit of $64 million, or 8 cents a share. On that basis, analysts estimated a loss of 64 cents. In North America, GM lost $1.1 billion, excluding some costs. By that measure, analysts predicted a loss of $400 million.
Shares Rise
GM rose 46 cents to $27.58 at 11:34 a.m. in New York Stock Exchange composite trading after reaching $27.83 earlier. Through yesterday, the shares had advanced 9 percent this year, the most in the Dow Jones Industrial Average.
The adjusted profit stemmed mostly from a $1.6 billion tax benefit, Chief Financial Officer Fritz Henderson said. The tax gain stems from the sale of the Allison transmission unit and a $7.7 billion reduction in GM's overall pension and retiree health-care liabilities, he said.
``It was a tough quarter in North America,'' Henderson told reporters today in Detroit. ``Volumes were down, and there was tougher pricing because we had a full incentive load for our pickups.''
2007 Loss
The full-year deficit was a record $38.7 billion and included a $39 billion expense in the third quarter related to a tax-accounting change. In 2006, GM lost $1.98 billion, or $3.50 a share.
The third quarter included the $1.6 billion tax benefit and $768 million in one-time expenses.
GM had $27.3 billion in cash, readily available assets and funds from a retirement fund at the end of December, a decline from $30 billion at the end of September. The automaker ended 2007 with a negative adjusted automotive cash flow of $2.4 billion, a $2 billion improvement from 2006.
Outside the U.S., GM had a $424 million profit in the Latin America/Africa/Middle East region and a $72 million Asia-Pacific profit. Europe reported a fourth-quarter deficit of $445 million.
The automaker today also announced details of a buyout plan for its remaining 74,000 UAW employees in the U.S. The offers would provide payments of as much as $62,500 for the most-skilled workers with at least 30 years service.
Enhanced Buyouts
The program enhances a $35,000 payout offered to workers in 2006 and can be taken as a lump sum, annuity, contribution to a 401(k) or individual retirement account, or a combination of cash and retirement contribution.
Workers who are at least 50 years old and have 10 years' experience would also be allowed to take an early retirement, and workers with at least 26 years' service will be allowed to quit and accept pro-rated payments until they are eligible for the regular 30-year pension.
UAW members with 10 or more years service can also opt for a one-time payment of $140,000 to leave the company and forgo future benefits. Workers will less than 10 years can take a $70,000 buyout.
GMAC LLC, the auto and home lending company that's 49 percent owned by GM, posted a $724 million fourth-quarter loss last week as more than one of every 10 homeowners fell behind on their mortgage payments. GM reported a $394 million pretax loss related to GMAC in the fourth quarter and an $872 million deficit for the full year.
GM lost $10.4 billion in 2005 and the $1.98 billion in 2006 as it ceded U.S. market share to Toyota Motor Corp. and health care-costs rose. Wagoner, who cut $9 billion from expenses from 2005 through 2007, last year won a cost-saving contract with the UAW that will trim another $5 billion annually by 2011.
Risk Ahead
Henderson told reporters on Jan. 29 that the automaker sees more ``risk'' than ``upside'' for the next year to 18 months. He declined to discuss fourth-quarter results at the time. GM cut North American production 6 percent in the quarter, and automakers book revenue when a vehicle is built, not when it's sold.
``It's going to be difficult for GM to make a profit in 2008 in spite of all the restructuring they've already done,'' said Bradley Rubin, an analyst at BNP Paribas in New York. ``The silver lining here is that they've already gone to the capital markets and raised all the capital they need.''
Analysts project U.S. auto sales may fall to 15.5 million this year, around 8 percent below the annual average this decade. GM hasn't posted an annual sales increase in the U.S. since 1999, while Toyota has advanced each year.
Toyota Battle
The U.S. automaker fended off a surging Toyota last year and kept its 77-year reign as the world's largest automaker by a margin of about 3,000 cars and trucks. Toyota had passed GM in the first half before GM regained the lead in the third quarter, aided by sales in markets such as Russia and China where GM leads Toyota.
GM's 8.375 percent note due July 2033 was unchanged today at 80.5 cents on the dollar, yielding 10.6 percent, according to Trace, the NASD's bond-price reporting service.
Credit-default swaps on GM debt rose 33 basis points today to 924 basis points, according to CMA Datavision in New York. That's the widest since June 2006. The contracts are designed to protect bondholders against default. A rise in the price indicates a decrease in the perception of a company's credit quality.
To contact the reporters on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net ; Greg Bensinger in New York at gbensinger1@bloomberg.net .
Last Updated: February 12, 2008 11:39 EST
February 12, 2008
G.M. Reports Quarterly Loss of $722 Million
By NICK BUNKLEY, New York Times
DETROIT — General Motors reported a $722 million fourth-quarter loss on Tuesday and offered more buyouts to all 74,000 of its unionized employees in another bid to keep its turnaround from stalling.
The loss translated into $1.28 a share, compared with a profit of $950 million, or $1.68 a share, in the period a year earlier. The swing was attributed to a drastically slowing vehicle market and big losses at its finance arm, the General Motors Acceptance Corporation.
Fourth-quarter revenue was $47.1 billion, down from $50.8 billion in 2006, because the company has since sold 51 percent of G.M.A.C. and now only counts revenue from its remaining stake. Automotive revenue was $46.7 billion in the quarter, up $3 billion from a year ago.
Excluding what G.M. said were one-time items, profit was $46 million, or 8 cents a share, compared with an adjusted profit of $180 million, or 32 cents a share, in the period a year earlier.
“Clearly, G.M. isn’t standing idle,” Peter Nesvold, an analyst with Bear Stearns, wrote to clients Tuesday. “However, we believe something’s happening that continues to erode G.M.’s earnings power faster than the restructurings can offset.”
For all of 2007, G.M. lost $38.7 billion, the biggest loss ever for an automaker. The loss, equal to $68.45 a share, is about the same amount as a noncash charge of $38.3 billion that the company took in the third quarter to write down deferred tax assets, meaning that G.M. almost broke even otherwise after losing $2 billion in 2006. Excluding special items, the company lost $23 million, or 4 cents a share.
Shares of the company were up 37 cents, to $27.49, in morning trading Tuesday on the New York Stock Exchange.
“We’re pleased with the positive improvement trend in our automotive results, especially given the challenging conditions in important markets like the U.S. and Germany, but we have more work to do to achieve acceptable profitability and positive cash flow,” G.M.’s chief executive, Rick Wagoner, said in a statement.
Worldwide, G.M.’s automotive operations lost $1.6 billion in 2007, including $1.3 billion in the fourth quarter, down from $6.1 billion a year earlier. Sales grew 3 percent in 2007, to almost 9.4 million, barely enough to retain its title as the world’s largest automaker over its surging Japanese rival Toyota.
In North America, the company cut its losses by more than half, to $3.3 billion from $7.5 billion in 2006. But the worsening economy in the United States led to higher fourth-quarter losses in the region: $1.1 billion, compared to $30 million in 2006.
“Despite progress and buoyant markets outside the U.S., falling volumes and competitive pressures in the U.S. will continue to pressure G.M. North America and hence overall G.M. operational results,” Brian A. Johnson, an analyst with Lehman Brothers, wrote in a note to clients Tuesday.
Still, G.M. executives maintained that the company’s North American turnaround plan, which calls for reducing annual expenses by another $4 billion to $5 billion by 2010, remains on track. The company has refused to say when it expects to earn a profit in North America.
“In order to get North America sustainably profitable and generating cash,” said G.M.’s chief financial officer, Frederick A. Henderson, “we must get the job done on both sides — revenue as well as cost.”
To cut costs further in the United States, G.M. said employees represented by the United Automobile Workers union can elect to take buyouts of up to $140,000.
Those eligible to retire can do so with full benefits and a payout of $45,000 for production workers or $62,500 for skilled tradespeople. Those amounts are $10,000 and $27,500 higher than what the company offered in 2006, when 30,000 U.A.W. workers agreed to leave their jobs.
Other options include an early retirement program for workers with slightly less than 30 years of seniority or a cash buyout of either $70,000 or $140,000 in exchange for giving up health care and other post-retirement benefits.
Some of the amounts are less than similar offers recently made available to workers at the Ford Motor Company and Chrysler, although G.M. is giving its workers the option to roll their buyout into a retirement account to reduce taxes.
The Detroit automakers are each hoping to persuade more workers to leave so that they can replace some with new hires earning half as much money, as permitted by two-tier wage provisions in the four-year contracts that they signed with the union last fall. None of the three has said how many workers it wants to leave under the new program.
Now it looks so innocent but the devil is in the details. Notice that the New York Times article omits the fact that GM received a $1.6 billion tax rebate! $1.6 billion dollars in one quarter!!!! Why??? Because "Joe SixPack" reads the Times and Joe is worried about his job , his house, his kids education, and everything else. He does not want to hear that GM, the company that is laying off people every damn day also gets $1.6 billion in tax rebates in one three month period.
Meanwhile, in the Bloomberg article this is a celebration of good business procedures. The bankers and businessmen that read Bloomberg want to know that GM is practicing great business strategies, layig off people and ruining lives, etc., and maximizing shareholders' wealth.
This is a pathetic example of wealth re-distribution in America. It is also a great example of media mis-information to insure that the masses are kept dumb and uninformed... Let me know what you think...
Wednesday, February 6, 2008
Five year and a trillion dollars later, what have we to show for our efforts in the War on Terror?
Apparently, not much... I heard quotes from yesterdays hearing and found them to be disturbing. Here are some tidbits from the New York Times...:
Intelligence Chief Cites Qaeda Threat to U.S.
By MARK MAZZETTI
WASHINGTON — Al Qaeda is gaining in strength from its refuge in Pakistan and is steadily improving its ability to recruit, train and position operatives capable of carrying out attacks inside the United States, the director of national intelligence told a Senate panel on Tuesday.
The director, Mike McConnell, told lawmakers that Osama bin Laden and his deputy, Ayman al-Zawahri, remained in control of the terrorist group and had promoted a new generation of lieutenants. He said Al Qaeda was also improving what he called “the last key aspect of its ability to attack the U.S.” — producing militants, including new Western recruits, capable of blending into American society and attacking domestic targets.
A senior intelligence official said Tuesday evening that the testimony was based in part on new evidence that Qaeda operatives in Pakistan were training Westerners, most likely including American citizens, to carry out attacks. The official said there was no indication as yet that Al Qaeda had succeeded in getting operatives into the United States.
The testimony, in an annual assessment of the threats facing the United States, was the latest indication that Al Qaeda appears to have significantly rebuilt a network battered by the American invasion of Afghanistan after the Sept. 11 attacks.
“In retrospect, as I mentioned, I would do some things differently,” he said.
Among his litany of worldwide threats, Mr. McConnell also warned the Senate panel about the growing threat of “cyberattacks” by terror groups or homegrown militants. He said President Bush signed a classified directive in January outlining steps to protect American computer networks.
In his testimony on Al Qaeda, Mr. McConnell said Mr. bin Laden and Mr. Zawahri were precluded by “security concerns” from the day-to-day running of the organization. But he said both men “regularly pass inspirational messages and specific operational guidance to their followers through public statements.”
Mr. McConnell said the flow of foreign militants into Iraq slowed somewhat during the final months of 2007. At the same time, however, he warned that Al Qaeda in Mesopotamia, the largely homegrown Sunni insurgent group in Iraq that American officials say is led by foreigners, could shift its focus to carrying out attacks outside Iraq.
Based on captured documents, Mr. McConnell said, fewer than 100 militants from Al Qaeda in Mesopotamia to date have left Iraq to establish cells in other countries.
Senator John D. Rockefeller IV of West Virginia, the Democratic chairman of the Senate Intelligence Committee, blamed the Iraq war for undermining the campaign against Al Qaeda.
“The focus of America’s military forces and intelligence resources were mistakenly shifted,” he said, “from delivering a decisive blow against Al Qaeda, which is the enemy.”
Intelligence Chief Cites Qaeda Threat to U.S.
By MARK MAZZETTI
WASHINGTON — Al Qaeda is gaining in strength from its refuge in Pakistan and is steadily improving its ability to recruit, train and position operatives capable of carrying out attacks inside the United States, the director of national intelligence told a Senate panel on Tuesday.
The director, Mike McConnell, told lawmakers that Osama bin Laden and his deputy, Ayman al-Zawahri, remained in control of the terrorist group and had promoted a new generation of lieutenants. He said Al Qaeda was also improving what he called “the last key aspect of its ability to attack the U.S.” — producing militants, including new Western recruits, capable of blending into American society and attacking domestic targets.
A senior intelligence official said Tuesday evening that the testimony was based in part on new evidence that Qaeda operatives in Pakistan were training Westerners, most likely including American citizens, to carry out attacks. The official said there was no indication as yet that Al Qaeda had succeeded in getting operatives into the United States.
The testimony, in an annual assessment of the threats facing the United States, was the latest indication that Al Qaeda appears to have significantly rebuilt a network battered by the American invasion of Afghanistan after the Sept. 11 attacks.
“In retrospect, as I mentioned, I would do some things differently,” he said.
Among his litany of worldwide threats, Mr. McConnell also warned the Senate panel about the growing threat of “cyberattacks” by terror groups or homegrown militants. He said President Bush signed a classified directive in January outlining steps to protect American computer networks.
In his testimony on Al Qaeda, Mr. McConnell said Mr. bin Laden and Mr. Zawahri were precluded by “security concerns” from the day-to-day running of the organization. But he said both men “regularly pass inspirational messages and specific operational guidance to their followers through public statements.”
Mr. McConnell said the flow of foreign militants into Iraq slowed somewhat during the final months of 2007. At the same time, however, he warned that Al Qaeda in Mesopotamia, the largely homegrown Sunni insurgent group in Iraq that American officials say is led by foreigners, could shift its focus to carrying out attacks outside Iraq.
Based on captured documents, Mr. McConnell said, fewer than 100 militants from Al Qaeda in Mesopotamia to date have left Iraq to establish cells in other countries.
Senator John D. Rockefeller IV of West Virginia, the Democratic chairman of the Senate Intelligence Committee, blamed the Iraq war for undermining the campaign against Al Qaeda.
“The focus of America’s military forces and intelligence resources were mistakenly shifted,” he said, “from delivering a decisive blow against Al Qaeda, which is the enemy.”
Monday, February 4, 2008
How much is too much military spending?
I believe that if we change our approach to foreign policy, ie., less weapon sales to unstable governments, less uninvited interventions, more humanitarian assistance, for example, we would not need to spend so much on Defense in America.
Have a read of this article and try to make sense of it for me...
February 4, 2008
Proposed Military Spending Is Highest Since WWII
By THOM SHANKER
WASHINGTON — As Congress and the public focus on more than $600 billion already approved in supplemental budgets to pay for the wars in Iraq and Afghanistan and for counterterrorism operations, the Bush administration has with little notice approached a landmark in military spending.
The Pentagon on Monday will unveil its proposed 2009 budget of $515.4 billion. If it is approved in full, annual military spending, when adjusted for inflation, will have reached its highest level since World War II.
That new Defense Department budget proposal, which is to pay for the standard operations of the Pentagon and the military but does not include supplemental spending on the war efforts or on nuclear weapons, is an increase in real terms of about 5 percent over this year.
Overall since coming to office, the administration has increased baseline military spending by 30 percent, a figure sure to be noted in coming budget battles as the American economy seems headed downward and government social spending is strained, especially by health-care costs.
Still, the nation’s economy has grown faster than the level of military spending, and even the current colossal Pentagon budgets for regular operations and the war efforts consume a smaller portion of gross domestic product than in previous conflicts.
About 14 percent of the national economy was spent on the military during the Korean War, and about 9 percent during the war in Vietnam. By comparison, when the current base Pentagon budget, nuclear weapons and supplemental war costs are combined, they total just over 4 percent of the current economy, according to budget experts. The base Pentagon spending alone is about 3.4 percent of gross domestic product.
“The Bush administration’s 2009 defense request follows the continuously ascending path of military outlays the president embraced at the beginning of his tenure,” said Loren Thompson, a budget and procurement expert at the Lexington Institute, a policy research center. “However, the 2009 request may be the peak for defense spending.”
Pentagon and military officials acknowledge the considerable commitment of money that will be required for continuing the missions in Iraq and Afghanistan, as well as efforts to increase the size of the Army, Marine Corps and Special Operations forces, to replace weapons worn out in the desert and to assure “quality of life” for those in uniform so they will remain in the military.
Yet those demands for money do not even include the price of refocusing the military’s attention beyond the current wars to prepare for other challenges.
Senior Pentagon civilians and the top generals and admirals do not deny the challenge of sustaining military spending, and they acknowledge that Congress and the American people may turn inward after Iraq.
“I believe that we need to have a broad public discussion about what we should spend on defense,” Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said Friday.
Defense Secretary Robert M. Gates and Admiral Mullen have said military spending should not drop below 4 percent of the national economy. “I really do believe this 4 percent floor is important,” Admiral Mullen said. “It’s really important, given the world we’re living in, given the threats that we see out there, the risks that are, in fact, global, not just in the Middle East.”
Geoff Morrell, the Pentagon press secretary, said Mr. Gates and the senior Pentagon leadership were well aware that the large emergency spending bills for the war, over and above the Pentagon base budget, would at some point come to an end.
“The secretary believes that whenever we transition away from war supplementals, the Congress should dedicate 4 percent of our G.D.P. to funding national security,” Mr. Morrell said. “That is what he believes to be a reasonable price to stay free and protect our interests around the world.”
No weapons programs are canceled in the new Pentagon budget, officials said; in fact, steadily increasing base defense budgets and the large war-fighting supplemental spending packages have made it easier for the Pentagon to avoid some tough calls on where to trim.
“But I think it’s doubtful the nation will sustain this level of defense spending,” said Steven Kosiak, vice president for budget studies at the Center for Strategic and Budgetary Assessments.
The 2009 military spending proposal will be the 11th year of continuous increases in the base military budget, he added.
War-fighting supplement spending measures are outside the base Pentagon budget, an issue that has angered some in Congress. Pentagon officials have proposed a $70 billion special war budget just to carry on operations from Oct. 1, the start of the fiscal year, into the early months of the next presidency.
Another supplemental spending proposal is expected before October, but after Gen. David H. Petraeus, the senior commander in Iraq, reports to Congress on his recommendations for troop levels through the end of 2008.
Any budget proposal is more than just a list of personnel costs and weapons to be purchased, as it lays out the building blocks of military strategy. Democrats vow to scrutinize the budget, the last by this president.
Senator Jack Reed of Rhode Island, who visited Iraq again last month, said that expanding the ground force as proposed in the new budget was an important step to relieve pressure on the Army and Marine Corps — one he would support even though he said it came too late.
Mr. Reed, a Democrat and a senior member of the Armed Services Committee, said demands of the counterinsurgency wars in Iraq and Afghanistan raised questions on whether troops were receiving sufficient training, and were instead surrendering skills across a broader range of combat missions.
“It’s going to require a rebalancing,” he said. “It’s going to require budget decisions that’ll be very difficult.”
After reading this article, I was left with the impression that war is inevitable and ever-present somewhere on the planet and the Americans will make sure that they will be apart of it... Where is the PEACE!
Have a read of this article and try to make sense of it for me...
February 4, 2008
Proposed Military Spending Is Highest Since WWII
By THOM SHANKER
WASHINGTON — As Congress and the public focus on more than $600 billion already approved in supplemental budgets to pay for the wars in Iraq and Afghanistan and for counterterrorism operations, the Bush administration has with little notice approached a landmark in military spending.
The Pentagon on Monday will unveil its proposed 2009 budget of $515.4 billion. If it is approved in full, annual military spending, when adjusted for inflation, will have reached its highest level since World War II.
That new Defense Department budget proposal, which is to pay for the standard operations of the Pentagon and the military but does not include supplemental spending on the war efforts or on nuclear weapons, is an increase in real terms of about 5 percent over this year.
Overall since coming to office, the administration has increased baseline military spending by 30 percent, a figure sure to be noted in coming budget battles as the American economy seems headed downward and government social spending is strained, especially by health-care costs.
Still, the nation’s economy has grown faster than the level of military spending, and even the current colossal Pentagon budgets for regular operations and the war efforts consume a smaller portion of gross domestic product than in previous conflicts.
About 14 percent of the national economy was spent on the military during the Korean War, and about 9 percent during the war in Vietnam. By comparison, when the current base Pentagon budget, nuclear weapons and supplemental war costs are combined, they total just over 4 percent of the current economy, according to budget experts. The base Pentagon spending alone is about 3.4 percent of gross domestic product.
“The Bush administration’s 2009 defense request follows the continuously ascending path of military outlays the president embraced at the beginning of his tenure,” said Loren Thompson, a budget and procurement expert at the Lexington Institute, a policy research center. “However, the 2009 request may be the peak for defense spending.”
Pentagon and military officials acknowledge the considerable commitment of money that will be required for continuing the missions in Iraq and Afghanistan, as well as efforts to increase the size of the Army, Marine Corps and Special Operations forces, to replace weapons worn out in the desert and to assure “quality of life” for those in uniform so they will remain in the military.
Yet those demands for money do not even include the price of refocusing the military’s attention beyond the current wars to prepare for other challenges.
Senior Pentagon civilians and the top generals and admirals do not deny the challenge of sustaining military spending, and they acknowledge that Congress and the American people may turn inward after Iraq.
“I believe that we need to have a broad public discussion about what we should spend on defense,” Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said Friday.
Defense Secretary Robert M. Gates and Admiral Mullen have said military spending should not drop below 4 percent of the national economy. “I really do believe this 4 percent floor is important,” Admiral Mullen said. “It’s really important, given the world we’re living in, given the threats that we see out there, the risks that are, in fact, global, not just in the Middle East.”
Geoff Morrell, the Pentagon press secretary, said Mr. Gates and the senior Pentagon leadership were well aware that the large emergency spending bills for the war, over and above the Pentagon base budget, would at some point come to an end.
“The secretary believes that whenever we transition away from war supplementals, the Congress should dedicate 4 percent of our G.D.P. to funding national security,” Mr. Morrell said. “That is what he believes to be a reasonable price to stay free and protect our interests around the world.”
No weapons programs are canceled in the new Pentagon budget, officials said; in fact, steadily increasing base defense budgets and the large war-fighting supplemental spending packages have made it easier for the Pentagon to avoid some tough calls on where to trim.
“But I think it’s doubtful the nation will sustain this level of defense spending,” said Steven Kosiak, vice president for budget studies at the Center for Strategic and Budgetary Assessments.
The 2009 military spending proposal will be the 11th year of continuous increases in the base military budget, he added.
War-fighting supplement spending measures are outside the base Pentagon budget, an issue that has angered some in Congress. Pentagon officials have proposed a $70 billion special war budget just to carry on operations from Oct. 1, the start of the fiscal year, into the early months of the next presidency.
Another supplemental spending proposal is expected before October, but after Gen. David H. Petraeus, the senior commander in Iraq, reports to Congress on his recommendations for troop levels through the end of 2008.
Any budget proposal is more than just a list of personnel costs and weapons to be purchased, as it lays out the building blocks of military strategy. Democrats vow to scrutinize the budget, the last by this president.
Senator Jack Reed of Rhode Island, who visited Iraq again last month, said that expanding the ground force as proposed in the new budget was an important step to relieve pressure on the Army and Marine Corps — one he would support even though he said it came too late.
Mr. Reed, a Democrat and a senior member of the Armed Services Committee, said demands of the counterinsurgency wars in Iraq and Afghanistan raised questions on whether troops were receiving sufficient training, and were instead surrendering skills across a broader range of combat missions.
“It’s going to require a rebalancing,” he said. “It’s going to require budget decisions that’ll be very difficult.”
After reading this article, I was left with the impression that war is inevitable and ever-present somewhere on the planet and the Americans will make sure that they will be apart of it... Where is the PEACE!
Who are the experts in the investment trade? (Part 1)
This question has plagued me since I started investing for a living. If you read ten different investment sources you will get ten different points of views. My basis conclusion based upon the Fed's actions in January is that the rich banks and financial institutions blackmailed the Fed into cutting rates and rewarding them for fleesing the public with bad investments. They literally orchestrated turmoil in the market in January, forced the rate cut, forced the "stimulus" package, and are now sitting back going great, "How much will my bonus be this year?" meanwhile, on the ground, espeically in the US, people are paying more for food, clothing, gas, heating oil, while trying to figure out if they are going to loose their house. Presidential candidates are not mentioning any of the above but instead are using new buzz words like "a Fresh Start, a New Beginning, Experience Counts, etc".
Today I found this article and decided to post it on my blog. It is a great example of the type of information, misinformation, and distraction continously out there. Give it a read and in one month I wil review this one and compare it to the updated information of March, 2008..
Feb. 4 (Bloomberg) -- Ben S. Bernanke's decision to lower interest rates 1.25 percentage points last month will end the dollar's two-year slide, according to the world's biggest currency traders.
For the first time since 2003, investors are focused on relative growth prospects rather than absolute borrowing costs, according to Geoffrey Yu, a London-based strategist with UBS AG, the No. 2 trader. The steepest cuts by a Federal Reserve chairman in seven years will support economic growth in the U.S. as Europe slows, said BNP Paribas SA, the most accurate currency forecaster Bloomberg tracks. The dollar will gain at least 9 percent against the euro this year, UBS and BNP predict.
``We're not chasing dollar weakness any lower,'' said Robert Robis, a fixed-income manager in New York at OppenheimerFunds Inc., which oversees $260 billion. ``The Fed's actions have avoided a long recession and we may start to see a recovery later this year.''
Robis has reduced the share of euro-denominated assets versus those linked to the dollar in his $9 billion portfolio. It now holds less than the benchmark index because he expects the U.S. currency to outperform. As recently as November, he was ``overweight'' the euro against the dollar.
Futures traders cut the value of contracts benefiting from a drop in the dollar to $13.9 billion as of Jan. 29, according to Charlotte, North Carolina-based Bank of America Corp., the second-largest U.S. bank by assets. That's down from a record $32.3 billion in November.
Yield Advantage
The dollar has gained 1 percent versus the euro to $1.4810 since sinking to an all-time low of $1.4967 on Nov. 23. The currency appreciated even as the yield advantage on a two-year German bund more than doubled to 1.28 percentage points over a comparable Treasury note, making bunds more appealing to international investors. The last time the spread was so large was 2002, when the euro surged 18 percent against the dollar.
Paris-based BNP, the most accurate of 31 firms surveyed about their currency predictions for the second half of 2007, is among the most bullish on the dollar in 2008 with its forecast of $1.36 per euro by yearend. Zurich-based UBS predicts $1.35. The median estimate calls for a 5.4 percent increase to $1.40 by the end of this year and a 6 percent gain to $1.32 in 2009. The dollar weakened 10.6 percent in 2007 and 11.4 percent in 2006 after strengthening 12.6 percent in 2005.
Fed Versus ECB
While two Fed cuts slashed the target rate for overnight loans between banks to 3 percent in nine days, the European Central Bank kept its benchmark rate unchanged at a seven-year high of 4 percent in an attempt to curb inflation. The ECB will keep rates unchanged at its Feb. 7 meeting, according to all 55 economists surveyed by Bloomberg News.
``If aggressive cuts by the Fed can stimulate the economy, then the U.S. will definitely lead the way in terms of economic recovery,'' Yu said. ``The ECB is behind the curve, so it's time to move back'' into the dollar, he said.
Deutsche Bank AG, the world's largest currency trader, predicts an 8 percent gain in the dollar this year as the euro- zone economy expands 1.6 percent, lagging behind the 1.9 percent growth projected for the U.S. For 2009, Frankfurt-based Deutsche Bank puts growth at 2.6 percent in the U.S. and 1.9 percent in Europe.
Maxime Tessier, head of foreign exchange at Caisse de Depot et Placement in Montreal, isn't counting on Bernanke. It may be too late for lower borrowing costs to keep the U.S. out of a recession, he said. The Labor Department said Feb. 1 that payrolls fell by 17,000 in January, the first decline since August 2003.
2001 Reprisal
``From our vantage point it doesn't look very good and every week we re-evaluate the U.S. economy, it has deteriorated,'' said Tessier, whose firm manages $143 billion. ``It's too early to position your portfolio for a dollar rebound because a month from now the currency could be in rally mode, but it could also be a lot lower.''
The U.S. is entering the ``worst consumer recession since 1980,'' and the dollar will fall to $1.57 by the end of March before recovering to its current $1.48 by yearend, according to David Rosenberg, chief economist for North America in New York at Merrill Lynch & Co. The firm is the world's largest brokerage.
The dollar has benefited from Fed rate cuts before. During the first six months of 2001, the currency gained 10 percent against the euro as the central bank slashed its target 2.75 percentage points to below the ECB's benchmark refinance rate following the bursting of the technology bubble.
Foreign Holdings
``We still believe the U.S. promises good returns,'' Sultan bin Sulayem, the chairman of state-owned investment group Dubai World, said Jan. 25 at the World Economic Forum in Davos, Switzerland. Dubai World agreed in August to invest as much as $5.1 billion in Kirk Kerkorian's Las Vegas-based casino group MGM Mirage.
Middle Eastern and Asian investors have poured up to $39 billion into U.S. banks since August, according to Bloomberg calculations. Foreign holdings of U.S. securities rose a net $149.9 billion in November, the most in 22 months, the Treasury Department said last month in Washington. In October, the gain was $92.2 billion.
Investors say there are encouraging signs that business investment will hold up. Last week the House and Senate Finance Committees approved a fiscal stimulus package of as much as $157 billion proposed by President George W. Bush. The same day the Labor Department said the economy was shedding jobs, the Institute for Supply Management said its manufacturing index rose in January.
``A lot of the people are finding this is a good time to get back in the dollar,'' said Scott Ainsbury, a money manager who helps oversee $12 billion in currencies at FX Concepts Inc., a New York-based hedge fund.
To contact the reporters on this story: Bo Nielsen in New York at bnielsen4@bloomberg.net
I should also point out how much of America's financial institutions are up for sell or being bought up by foreign governments and foreign investors. I am not a Protectionist but it does feel funny when you think that our troops are being killed in Irak, stationed in an unhealthly environment in Saudi Arabia, and various parts of the Middle East, while Middle Eastern governments and companies are buying ferociously into our financial institutions. It sort of feels like they are shielding themselves from worry about being next on our invasion list or something. And I will not even get into the human rights issue at this juncture...
We will revisit this one in a month... Send me your thoughts...
Today I found this article and decided to post it on my blog. It is a great example of the type of information, misinformation, and distraction continously out there. Give it a read and in one month I wil review this one and compare it to the updated information of March, 2008..
Feb. 4 (Bloomberg) -- Ben S. Bernanke's decision to lower interest rates 1.25 percentage points last month will end the dollar's two-year slide, according to the world's biggest currency traders.
For the first time since 2003, investors are focused on relative growth prospects rather than absolute borrowing costs, according to Geoffrey Yu, a London-based strategist with UBS AG, the No. 2 trader. The steepest cuts by a Federal Reserve chairman in seven years will support economic growth in the U.S. as Europe slows, said BNP Paribas SA, the most accurate currency forecaster Bloomberg tracks. The dollar will gain at least 9 percent against the euro this year, UBS and BNP predict.
``We're not chasing dollar weakness any lower,'' said Robert Robis, a fixed-income manager in New York at OppenheimerFunds Inc., which oversees $260 billion. ``The Fed's actions have avoided a long recession and we may start to see a recovery later this year.''
Robis has reduced the share of euro-denominated assets versus those linked to the dollar in his $9 billion portfolio. It now holds less than the benchmark index because he expects the U.S. currency to outperform. As recently as November, he was ``overweight'' the euro against the dollar.
Futures traders cut the value of contracts benefiting from a drop in the dollar to $13.9 billion as of Jan. 29, according to Charlotte, North Carolina-based Bank of America Corp., the second-largest U.S. bank by assets. That's down from a record $32.3 billion in November.
Yield Advantage
The dollar has gained 1 percent versus the euro to $1.4810 since sinking to an all-time low of $1.4967 on Nov. 23. The currency appreciated even as the yield advantage on a two-year German bund more than doubled to 1.28 percentage points over a comparable Treasury note, making bunds more appealing to international investors. The last time the spread was so large was 2002, when the euro surged 18 percent against the dollar.
Paris-based BNP, the most accurate of 31 firms surveyed about their currency predictions for the second half of 2007, is among the most bullish on the dollar in 2008 with its forecast of $1.36 per euro by yearend. Zurich-based UBS predicts $1.35. The median estimate calls for a 5.4 percent increase to $1.40 by the end of this year and a 6 percent gain to $1.32 in 2009. The dollar weakened 10.6 percent in 2007 and 11.4 percent in 2006 after strengthening 12.6 percent in 2005.
Fed Versus ECB
While two Fed cuts slashed the target rate for overnight loans between banks to 3 percent in nine days, the European Central Bank kept its benchmark rate unchanged at a seven-year high of 4 percent in an attempt to curb inflation. The ECB will keep rates unchanged at its Feb. 7 meeting, according to all 55 economists surveyed by Bloomberg News.
``If aggressive cuts by the Fed can stimulate the economy, then the U.S. will definitely lead the way in terms of economic recovery,'' Yu said. ``The ECB is behind the curve, so it's time to move back'' into the dollar, he said.
Deutsche Bank AG, the world's largest currency trader, predicts an 8 percent gain in the dollar this year as the euro- zone economy expands 1.6 percent, lagging behind the 1.9 percent growth projected for the U.S. For 2009, Frankfurt-based Deutsche Bank puts growth at 2.6 percent in the U.S. and 1.9 percent in Europe.
Maxime Tessier, head of foreign exchange at Caisse de Depot et Placement in Montreal, isn't counting on Bernanke. It may be too late for lower borrowing costs to keep the U.S. out of a recession, he said. The Labor Department said Feb. 1 that payrolls fell by 17,000 in January, the first decline since August 2003.
2001 Reprisal
``From our vantage point it doesn't look very good and every week we re-evaluate the U.S. economy, it has deteriorated,'' said Tessier, whose firm manages $143 billion. ``It's too early to position your portfolio for a dollar rebound because a month from now the currency could be in rally mode, but it could also be a lot lower.''
The U.S. is entering the ``worst consumer recession since 1980,'' and the dollar will fall to $1.57 by the end of March before recovering to its current $1.48 by yearend, according to David Rosenberg, chief economist for North America in New York at Merrill Lynch & Co. The firm is the world's largest brokerage.
The dollar has benefited from Fed rate cuts before. During the first six months of 2001, the currency gained 10 percent against the euro as the central bank slashed its target 2.75 percentage points to below the ECB's benchmark refinance rate following the bursting of the technology bubble.
Foreign Holdings
``We still believe the U.S. promises good returns,'' Sultan bin Sulayem, the chairman of state-owned investment group Dubai World, said Jan. 25 at the World Economic Forum in Davos, Switzerland. Dubai World agreed in August to invest as much as $5.1 billion in Kirk Kerkorian's Las Vegas-based casino group MGM Mirage.
Middle Eastern and Asian investors have poured up to $39 billion into U.S. banks since August, according to Bloomberg calculations. Foreign holdings of U.S. securities rose a net $149.9 billion in November, the most in 22 months, the Treasury Department said last month in Washington. In October, the gain was $92.2 billion.
Investors say there are encouraging signs that business investment will hold up. Last week the House and Senate Finance Committees approved a fiscal stimulus package of as much as $157 billion proposed by President George W. Bush. The same day the Labor Department said the economy was shedding jobs, the Institute for Supply Management said its manufacturing index rose in January.
``A lot of the people are finding this is a good time to get back in the dollar,'' said Scott Ainsbury, a money manager who helps oversee $12 billion in currencies at FX Concepts Inc., a New York-based hedge fund.
To contact the reporters on this story: Bo Nielsen in New York at bnielsen4@bloomberg.net
I should also point out how much of America's financial institutions are up for sell or being bought up by foreign governments and foreign investors. I am not a Protectionist but it does feel funny when you think that our troops are being killed in Irak, stationed in an unhealthly environment in Saudi Arabia, and various parts of the Middle East, while Middle Eastern governments and companies are buying ferociously into our financial institutions. It sort of feels like they are shielding themselves from worry about being next on our invasion list or something. And I will not even get into the human rights issue at this juncture...
We will revisit this one in a month... Send me your thoughts...
Saturday, February 2, 2008
When is too much profit really too much profit?
If you are an American taxpayer and you read a story like the one below, you should be incensed. Granted that the goal of any corporation is to maximize shareholder wealth, runaway profit should be illegal. Many years ago, congress created a special tax for companies that gained extraordinary profits. That rule is, of course, a thing of the past. Read this article regarding the profits of ExxonMobil and Chevron. Check out the highlighted areas and we will talk later...
Exxon Mobil's Profit in 2007 Tops $40 Billion
By Steven MufsonWashington Post Staff WriterSaturday, February 2, 2008
Buoyed by soaring crude oil prices, Exxon Mobil announced yesterday that it set new records for U.S. quarterly and annual corporate profits in 2007, and Chevron, the nation's second-largest oil company, also reported big gains in earnings.
Exxon broke the record it previously had set for profits by a U.S. corporation, earning $40.6 billion last year. It earned $11.7 billion in the fourth quarter, or $2.13 a share, up 14 percent from the fourth quarter of 2006. Revenue for the quarter rose 30 percent, to $116.64 billion. Exxon's profit for the year came to $4.6 million an hour .
Chevron said its profit rose 29 percent, to $4.9 billion, or $2.32 a share. Chevron's quarterly revenue grew 29 percent, to $61.41 billion. Profits of the five biggest international oil companies have tripled since 2002.
Kenneth P. Cohen, Exxon Mobil's vice president for public affairs, said the earnings reflected the company's "long-term, disciplined approach" and investments made a decade ago when oil prices were low. With mounting exploration costs and increasingly remote oil prospects, Cohen said, the large revenues were needed to meet "the massive scale of the energy challenge before us."
But in Washington, the earnings were seen as outsized. Sen. Charles E. Schumer (D-N.Y.), chairman of the Joint Economic Committee, issued a statement saying, "Congratulations to ExxonMobil and Chevron -- for reminding Americans why they cringe every time they pull into a gas station and for reminding Washington why it needs to act swiftly to break our dependence on foreign oil and roll back unnecessary tax incentives for oil companies."
The announcement of record profits came on the same day the Organization of the Petroleum Exporting Countries was meeting in Vienna. The 13-member group, which produces about 40 percent of the world's petroleum, decided to leave its output unchanged despite crude oil prices that continue to hover around $90 a barrel, about 35 percent higher than they were a year ago.
During his visit to Saudi Arabia last month, President Bush urged OPEC to boost production to ease oil prices, but yesterday the group issued a statement saying that current markets, "coupled with the projected economic slow-down," meant that "current OPEC production is sufficient to meet expected demand for the first quarter of the year."
If anything, the group suggested that it might trim production in the coming weeks. Citing "significant uncertainties associated with the projected downturn in the global economy," it said there was a need for "vigilant attention" and that the organization would "take every measure deemed necessary to keep the market stable."
The prospect of stable oil prices at current levels will translate into more big profits for the major international oil companies. Though they are net buyers of crude oil to supply their refineries and retail gasoline stations, the companies also have large amounts of their own crude oil production pegged to world prices.
In the last three months of 2007, Exxon Mobil produced 2.5 million barrels a day of crude oil and natural gas liquids. The figure was down almost 1 percent from the year before because Exxon's operation in Venezuela was nationalized and because, as prices rise, some exporting countries cut Exxon's share of production.
But the drop in volume was more than offset by higher prices. The price of crude oil was $29 a barrel higher than the year before, said Henry Hubble, Exxon Mobil's vice president of investor relations. Even after paying taxes and expenses, Exxon earned $20.97 a barrel in profits on its production, Hubble said.
Exxon boosted capital spending last year to $20.9 billion, up 5 percent from 2006. About three-quarters of that went for oil and gas exploration, with much of the rest for refinery projects. That was still outstripped by the amount of money the company spent to repurchase its own shares. In 2007, Exxon Mobil bought 386 million shares of its common stock at a cost of $31.8 billion. About a tenth of that went into company pension and benefit plans; the rest went toward reducing the number of shares outstanding.
So there you have it. Profits off the scale, maximizing shareholders wealth, and the American people are footitng the bill for it all.
Question: Which presidential candidate will address this wrong?
Answer: None!
Only in America and maybe Britain...
Exxon Mobil's Profit in 2007 Tops $40 Billion
By Steven MufsonWashington Post Staff WriterSaturday, February 2, 2008
Buoyed by soaring crude oil prices, Exxon Mobil announced yesterday that it set new records for U.S. quarterly and annual corporate profits in 2007, and Chevron, the nation's second-largest oil company, also reported big gains in earnings.
Exxon broke the record it previously had set for profits by a U.S. corporation, earning $40.6 billion last year. It earned $11.7 billion in the fourth quarter, or $2.13 a share, up 14 percent from the fourth quarter of 2006. Revenue for the quarter rose 30 percent, to $116.64 billion. Exxon's profit for the year came to $4.6 million an hour .
Chevron said its profit rose 29 percent, to $4.9 billion, or $2.32 a share. Chevron's quarterly revenue grew 29 percent, to $61.41 billion. Profits of the five biggest international oil companies have tripled since 2002.
Kenneth P. Cohen, Exxon Mobil's vice president for public affairs, said the earnings reflected the company's "long-term, disciplined approach" and investments made a decade ago when oil prices were low. With mounting exploration costs and increasingly remote oil prospects, Cohen said, the large revenues were needed to meet "the massive scale of the energy challenge before us."
But in Washington, the earnings were seen as outsized. Sen. Charles E. Schumer (D-N.Y.), chairman of the Joint Economic Committee, issued a statement saying, "Congratulations to ExxonMobil and Chevron -- for reminding Americans why they cringe every time they pull into a gas station and for reminding Washington why it needs to act swiftly to break our dependence on foreign oil and roll back unnecessary tax incentives for oil companies."
The announcement of record profits came on the same day the Organization of the Petroleum Exporting Countries was meeting in Vienna. The 13-member group, which produces about 40 percent of the world's petroleum, decided to leave its output unchanged despite crude oil prices that continue to hover around $90 a barrel, about 35 percent higher than they were a year ago.
During his visit to Saudi Arabia last month, President Bush urged OPEC to boost production to ease oil prices, but yesterday the group issued a statement saying that current markets, "coupled with the projected economic slow-down," meant that "current OPEC production is sufficient to meet expected demand for the first quarter of the year."
If anything, the group suggested that it might trim production in the coming weeks. Citing "significant uncertainties associated with the projected downturn in the global economy," it said there was a need for "vigilant attention" and that the organization would "take every measure deemed necessary to keep the market stable."
The prospect of stable oil prices at current levels will translate into more big profits for the major international oil companies. Though they are net buyers of crude oil to supply their refineries and retail gasoline stations, the companies also have large amounts of their own crude oil production pegged to world prices.
In the last three months of 2007, Exxon Mobil produced 2.5 million barrels a day of crude oil and natural gas liquids. The figure was down almost 1 percent from the year before because Exxon's operation in Venezuela was nationalized and because, as prices rise, some exporting countries cut Exxon's share of production.
But the drop in volume was more than offset by higher prices. The price of crude oil was $29 a barrel higher than the year before, said Henry Hubble, Exxon Mobil's vice president of investor relations. Even after paying taxes and expenses, Exxon earned $20.97 a barrel in profits on its production, Hubble said.
Exxon boosted capital spending last year to $20.9 billion, up 5 percent from 2006. About three-quarters of that went for oil and gas exploration, with much of the rest for refinery projects. That was still outstripped by the amount of money the company spent to repurchase its own shares. In 2007, Exxon Mobil bought 386 million shares of its common stock at a cost of $31.8 billion. About a tenth of that went into company pension and benefit plans; the rest went toward reducing the number of shares outstanding.
So there you have it. Profits off the scale, maximizing shareholders wealth, and the American people are footitng the bill for it all.
Question: Which presidential candidate will address this wrong?
Answer: None!
Only in America and maybe Britain...
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