Here's a great article explaining why oil prices are being manipulated. Enjoy...
What the obscure Vopak says about the oil market
Commentary: Vopak, A.P. Moller-Maersk say there's plenty of oil supplies
By MarketWatch
LONDON (MarketWatch) -- The financial world isn't preoccupied with oil at the moment, not with issues like Goldman Sachs bonuses or Federal Reserve exit strategies to consider.
But it wasn't that long ago that oil was the number-one topic in the market, and should black gold resume prominence, the update on Thursday from a relatively obscure Dutch firm called Vopak (AMSTERDAM:NL:VPK) should be eyed.
Vopak is the world's largest independent tank terminal operator, so when it comes to storing oil, liquefied natural gas and the like, they know a few things. And on Thursday, the group raised earnings guidance for the second time this year. The reason? There are a few, but the main one is that demand for storing oil is strong.
A major reason to store, rather than sell, oil is if there aren't buyers for it. (Another would be a bet that prices in the future will grow significantly, but the futures complex at the moment is pricing in a 7% rise in 12 months and a 16% rise over five years -- hardly an irresistible siren song.)
Also take a look at what A.P. Moller-Maersk (SEAQ:UK:0LQM) , the shipping giant, said in its nine-month report on Thursday: "There are no short-term prospects of higher demand for oil and gas transports." About the only good news they reported in the third quarter from that division came as vessels were increasingly used as offshore storage facilities.
And what those European firms are saying tracks with what the admittedly-not-always-truthful OPEC has been maintaining all along -- the market is very well supplied. And similarly, while the International Energy Agency on Thursday hiked its 2009 and 2010 oil demand outlook, it pointed out that demand for gasoil used in railways and trucks is still pretty weak.
And, as the IEA also pointed out, the current price itself could derail recovery.
What it all suggests is that while demand for oil is certainly on the upswing, fundamentals aren't entirely behind the more than doubling in oil from February lows.
Speculators getting ahead of themselves? Nah, it couldn't be. In a market where oil reached as high as $147 a barrel, predicting prices is a fool's game. But know this -- there's plenty of oil sloshing around without a home.
-- Steve Goldstein
Thanks, Steve. Keep the information coming.
Thursday, November 12, 2009
Thursday, July 2, 2009
Should have bought Goldman Sachs in October!!!!
Here is a perfect article explaining the reality of MONEY in America. Thanks Peter...
Why Wall Street pay will hit a record in 2009
by Peter Cohan
Jul 2nd 2009
2009 is turning out to be a great year for Wall Street pay. With unemployment at 9.5 percent and 6.5 million people out of work since 2007 wrapped up, you might be wondering how Wall Street could pull that off. The answer is simple: nobody makes the kind of campaign contributions that Wall Street does -- between 1998 and 2008, Wall Street made $1.725 billion in political contributions and spent another $3.4 billion on lobbyists.
So the taxes from American consumers coupled with trillions of new debt are being funneled into enriching the people who brought the financial world to its knees. How so? Government is rewarding Wall Street -- with $12.9 trillion in taxpayer funds, the Public Private Investment Partnership (PPIP), a $1 trillion no-lose deal for big asset managers and hedge funds to buy financial toxic waste, and new rules that will make it possible for private equity firms to own banks -- the very capital sources on which they depend for their highly leveraged deals.
How big will Wall Street bonuses be this year? Goldman Sachs Group (GS), which paid back its $10 billion in TARP money, is setting aside $20 billion for compensation this year -- $700,000 per employee, which is 6 percent more than it paid in its record 2007 compensation year. Morgan Stanley (MS) will give out between $11 billion and $14 billion in compensation -- close to the $340,000 per employee in record compensation that it paid in 2007.
How can these banks justify these huge compensation increases? Perhaps fear of comp cop, Kenneth Feinberg, is giving Wall Street a huge incentive to pay out as much as possible before he institutes pay limits. Morgan Stanley's pay is a much bigger than average 68 percent of revenues.
The record compensation is not related to superior financial performance. After all, financial results at these firms are way down from where they were in the first quarter of 2007. Goldman made $1.8 billion in the first quarter of 2009, 44 percent less than the $3.2 billion it earned in the first quarter of 2007. And Morgan Stanley lost $177 million in the first quarter of 2009 -- while making $2.7 billion in the first quarter of 2007. Morgan Stanley also repaid $10 billion and is expected to post a 32 cents a share loss in the second quarter.
In addition to all this, the FDIC is loosening rules to permit private equity firms to own their lenders. With 45 banks having failed so far this year, the FDIC needs all the help it can get. Private equity firms like Carlyle Group have plenty of capital and the FDIC would like to use it to help bail out banks -- as it did with BankUnited Financial Corporation in Florida.
But the new rules require private equity firms to hold their investment for as long as two years, increase their capital if they buy banks, and limit their ownership to 24.9 percent unless they want to become bank holding companies. Private equity firms can get around this last restriction by teaming up -- in club deals.
Wall Street rules Washington. And even though the comp cop is scaring Wall Street on pay, he can't stop it from paying itself record bonuses despite far weaker financial performance.
As our children and grandchildren assume the burdens of all the debt America has taken on to bail out Wall Street for its errors, it is worth asking whether we have a true Democracy or merely the best government that Wall Street can buy.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.
Unbelieveable...
Why Wall Street pay will hit a record in 2009
by Peter Cohan
Jul 2nd 2009
2009 is turning out to be a great year for Wall Street pay. With unemployment at 9.5 percent and 6.5 million people out of work since 2007 wrapped up, you might be wondering how Wall Street could pull that off. The answer is simple: nobody makes the kind of campaign contributions that Wall Street does -- between 1998 and 2008, Wall Street made $1.725 billion in political contributions and spent another $3.4 billion on lobbyists.
So the taxes from American consumers coupled with trillions of new debt are being funneled into enriching the people who brought the financial world to its knees. How so? Government is rewarding Wall Street -- with $12.9 trillion in taxpayer funds, the Public Private Investment Partnership (PPIP), a $1 trillion no-lose deal for big asset managers and hedge funds to buy financial toxic waste, and new rules that will make it possible for private equity firms to own banks -- the very capital sources on which they depend for their highly leveraged deals.
How big will Wall Street bonuses be this year? Goldman Sachs Group (GS), which paid back its $10 billion in TARP money, is setting aside $20 billion for compensation this year -- $700,000 per employee, which is 6 percent more than it paid in its record 2007 compensation year. Morgan Stanley (MS) will give out between $11 billion and $14 billion in compensation -- close to the $340,000 per employee in record compensation that it paid in 2007.
How can these banks justify these huge compensation increases? Perhaps fear of comp cop, Kenneth Feinberg, is giving Wall Street a huge incentive to pay out as much as possible before he institutes pay limits. Morgan Stanley's pay is a much bigger than average 68 percent of revenues.
The record compensation is not related to superior financial performance. After all, financial results at these firms are way down from where they were in the first quarter of 2007. Goldman made $1.8 billion in the first quarter of 2009, 44 percent less than the $3.2 billion it earned in the first quarter of 2007. And Morgan Stanley lost $177 million in the first quarter of 2009 -- while making $2.7 billion in the first quarter of 2007. Morgan Stanley also repaid $10 billion and is expected to post a 32 cents a share loss in the second quarter.
In addition to all this, the FDIC is loosening rules to permit private equity firms to own their lenders. With 45 banks having failed so far this year, the FDIC needs all the help it can get. Private equity firms like Carlyle Group have plenty of capital and the FDIC would like to use it to help bail out banks -- as it did with BankUnited Financial Corporation in Florida.
But the new rules require private equity firms to hold their investment for as long as two years, increase their capital if they buy banks, and limit their ownership to 24.9 percent unless they want to become bank holding companies. Private equity firms can get around this last restriction by teaming up -- in club deals.
Wall Street rules Washington. And even though the comp cop is scaring Wall Street on pay, he can't stop it from paying itself record bonuses despite far weaker financial performance.
As our children and grandchildren assume the burdens of all the debt America has taken on to bail out Wall Street for its errors, it is worth asking whether we have a true Democracy or merely the best government that Wall Street can buy.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.
Unbelieveable...
Friday, June 26, 2009
A Dark Day for Music
Michael Jackson is dead. I am speechless and hurt. I feel like a piece of my childhood has been permanently removed. I'll miss you, man. We all loved you and will always remember you...
Sunday, June 21, 2009
WE ARE SUCKERS!!!!
Read this one and enjoy the raping by Goldman Sachs...
http://www.guardian.co.uk/business/2009/jun/21/goldman-sachs-bonus-payments
Goldman to make record bonus payoutSurviving banks accused of undermining stability
Phillip Inman
The Observer, Sunday 21 June 2009
Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.
A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm.
Staff in London were briefed last week on the banking and securities company's prospects and told they could look forward to bumper bonuses if, as predicted, it completed its most profitable year ever. Figures next month detailing the firm's second-quarter earnings are expected to show a further jump in profits. Warren Buffett, who bought $5bn of the company's shares in January, has already made a $1bn gain on his investment.
Goldman is expected to be the biggest winner in the race for revenues that, in 2006, reached £186bn across the entire industry. While this figure is expected to fall to £160bn in 2009, it will be split among a smaller number of firms.
Barclays Capital, Credit Suisse and Deutsche Bank are among the European firms expected to register bumper profits, along with US banks JP Morgan and Morgan Stanley following the near collapse and government rescue of major trading houses including Citigroup, Merrill Lynch, UBS and Royal Bank of Scotland.
In April, Goldman said it would set aside half of its £1.2bn first-quarter profit to reward staff, much of it in bonuses. It is believed to have paid 973 bankers $1m or more last year, while this year's payouts are on track to be the highest for most of the bank's 28,000 staff, including about 5,400 in London.
Critics of the bonus culture in the City said the dominance of a few risk-taking investment banks is undermining the efforts of regulators to stabilise the financial system.
Vince Cable, the Liberal Democrat treasury spokesman, said: "The investment banks more than any other institutions created the culture of excessive leverage, excessive risk and excessive bonuses that led to the downfall of the financial system. Now they are cashing in and the same bonus culture has returned. The result must be that we are being pushed to the edge of another crash."
Goldman Sachs said it reviewed its bonus scheme last year and switched from a system of guaranteed rewards that were paid over three years to variable payments that tied staff to the firm. It told employees last year that profit-related bonuses would be delayed by 12 months.
Until the release of its first quarter profits in April, it seemed inconceivable that a firm owing the US government $10bn would be looking to break all-time records in 2009.
David Williams, an investment banking analyst at Fox Pitt Kelton, said: "This year is shaping up to be the best year ever for investment banks, or at least those that have emerged relatively unscathed from the credit crisis.
"These banks are intermediaries in the bond markets where governments and companies are raising billions of pounds of new money. There is also a lack of competition that means they can charge huge sums for doing business."
Last week, the firm predicted that President Barack Obama's government could issue $3.25tn of debt before September, almost four times last year's sum. Goldman, a prime broker of US government bonds, is expected to make hundreds of millions of dollars in profits from selling and dealing in the bonds.
By the way, I looked for an article in the US press on this subject by could not find one...
http://www.guardian.co.uk/business/2009/jun/21/goldman-sachs-bonus-payments
Goldman to make record bonus payoutSurviving banks accused of undermining stability
Phillip Inman
The Observer, Sunday 21 June 2009
Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.
A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm.
Staff in London were briefed last week on the banking and securities company's prospects and told they could look forward to bumper bonuses if, as predicted, it completed its most profitable year ever. Figures next month detailing the firm's second-quarter earnings are expected to show a further jump in profits. Warren Buffett, who bought $5bn of the company's shares in January, has already made a $1bn gain on his investment.
Goldman is expected to be the biggest winner in the race for revenues that, in 2006, reached £186bn across the entire industry. While this figure is expected to fall to £160bn in 2009, it will be split among a smaller number of firms.
Barclays Capital, Credit Suisse and Deutsche Bank are among the European firms expected to register bumper profits, along with US banks JP Morgan and Morgan Stanley following the near collapse and government rescue of major trading houses including Citigroup, Merrill Lynch, UBS and Royal Bank of Scotland.
In April, Goldman said it would set aside half of its £1.2bn first-quarter profit to reward staff, much of it in bonuses. It is believed to have paid 973 bankers $1m or more last year, while this year's payouts are on track to be the highest for most of the bank's 28,000 staff, including about 5,400 in London.
Critics of the bonus culture in the City said the dominance of a few risk-taking investment banks is undermining the efforts of regulators to stabilise the financial system.
Vince Cable, the Liberal Democrat treasury spokesman, said: "The investment banks more than any other institutions created the culture of excessive leverage, excessive risk and excessive bonuses that led to the downfall of the financial system. Now they are cashing in and the same bonus culture has returned. The result must be that we are being pushed to the edge of another crash."
Goldman Sachs said it reviewed its bonus scheme last year and switched from a system of guaranteed rewards that were paid over three years to variable payments that tied staff to the firm. It told employees last year that profit-related bonuses would be delayed by 12 months.
Until the release of its first quarter profits in April, it seemed inconceivable that a firm owing the US government $10bn would be looking to break all-time records in 2009.
David Williams, an investment banking analyst at Fox Pitt Kelton, said: "This year is shaping up to be the best year ever for investment banks, or at least those that have emerged relatively unscathed from the credit crisis.
"These banks are intermediaries in the bond markets where governments and companies are raising billions of pounds of new money. There is also a lack of competition that means they can charge huge sums for doing business."
Last week, the firm predicted that President Barack Obama's government could issue $3.25tn of debt before September, almost four times last year's sum. Goldman, a prime broker of US government bonds, is expected to make hundreds of millions of dollars in profits from selling and dealing in the bonds.
By the way, I looked for an article in the US press on this subject by could not find one...
Thursday, June 18, 2009
Here's what it's all about...
A story from the NY Post:
BAILOUT BONUS AT BOFA
By MARK DeCAMBRE
June 18, 2009 --
Bailed-out Bank of America has been doling out millions in bonuses in an effort to lure talent and keep investment bankers who management views as vital, sources tell The Post.
Among those who are said to have received payouts are two former Merrill Lynch bankers, Fares Noujaim, who was recently appointed as BofA's vice chairman of investment banking, and Harry McMahon, a well-connected West Coast-based banker. Both were offered guarantees not to leave the firm.
Noujaim, a former Bear Stearns banker who joined Merrill last year, is said to have received roughly $15 million over two years.
Sources say Noujaim -- a well-regarded banker focusing on the Middle East -- was offered a vice-chairman role, and may have been offered at least $5 million more to stay. His earlier employment contract was nullified once Merrill merged with BofA earlier this year, sources said.
The guarantees being shelled out by the embattled bank run by CEO Ken Lewis are raising eyebrows on Wall Street because BofA has taken $45 billion in capital from the Troubled Asset Relief Program and hasn't been allowed to refund that money.
A BofA spokeswoman argued that paying talented employees top dollar to stay is necessary because rival firms are poaching its best execs at an alarming rate.
"Competitive recruiting in investment banking and capital markets continues to be very intense and we're taking the steps necessary to retain key talent in response to competitive pressures," said spokeswoman Jessica Oppenheim.
She added, "Any reference to [a] specific associate's compensation in this story is inaccurate."
The issue of bonus payments by TARP recipients became a flash point earlier this year when Congress discovered that American International Group shelled out $454 million in retention bonuses after receiving a total of $182.5 billion in rescue cash.
Since then, Washington has clamped down on how banks in general, and TARP banks in particular, pay their employees. Last week, the Obama administration named Kenneth Feinberg its pay czar to oversee how TARP recipients pay their top 100 employees.
However, compensation is also a sore spot for banks under the government's thumb, as they try to compete with foreign banks not subject to restraints on pay.
Meanwhile, internally, BofA's guarantees have added to the friction that already exists between former Merrill workers and BofA employees, the latter of whom complain Merrill bankers are more often getting the guarantee bonuses.
mark.decambre@nypost.com
Hey we are in the wrong jobs. We should risk everyone else's money and then get bailed out and take a bonus for our hard work...
BAILOUT BONUS AT BOFA
By MARK DeCAMBRE
June 18, 2009 --
Bailed-out Bank of America has been doling out millions in bonuses in an effort to lure talent and keep investment bankers who management views as vital, sources tell The Post.
Among those who are said to have received payouts are two former Merrill Lynch bankers, Fares Noujaim, who was recently appointed as BofA's vice chairman of investment banking, and Harry McMahon, a well-connected West Coast-based banker. Both were offered guarantees not to leave the firm.
Noujaim, a former Bear Stearns banker who joined Merrill last year, is said to have received roughly $15 million over two years.
Sources say Noujaim -- a well-regarded banker focusing on the Middle East -- was offered a vice-chairman role, and may have been offered at least $5 million more to stay. His earlier employment contract was nullified once Merrill merged with BofA earlier this year, sources said.
The guarantees being shelled out by the embattled bank run by CEO Ken Lewis are raising eyebrows on Wall Street because BofA has taken $45 billion in capital from the Troubled Asset Relief Program and hasn't been allowed to refund that money.
A BofA spokeswoman argued that paying talented employees top dollar to stay is necessary because rival firms are poaching its best execs at an alarming rate.
"Competitive recruiting in investment banking and capital markets continues to be very intense and we're taking the steps necessary to retain key talent in response to competitive pressures," said spokeswoman Jessica Oppenheim.
She added, "Any reference to [a] specific associate's compensation in this story is inaccurate."
The issue of bonus payments by TARP recipients became a flash point earlier this year when Congress discovered that American International Group shelled out $454 million in retention bonuses after receiving a total of $182.5 billion in rescue cash.
Since then, Washington has clamped down on how banks in general, and TARP banks in particular, pay their employees. Last week, the Obama administration named Kenneth Feinberg its pay czar to oversee how TARP recipients pay their top 100 employees.
However, compensation is also a sore spot for banks under the government's thumb, as they try to compete with foreign banks not subject to restraints on pay.
Meanwhile, internally, BofA's guarantees have added to the friction that already exists between former Merrill workers and BofA employees, the latter of whom complain Merrill bankers are more often getting the guarantee bonuses.
mark.decambre@nypost.com
Hey we are in the wrong jobs. We should risk everyone else's money and then get bailed out and take a bonus for our hard work...
Wednesday, June 17, 2009
What the hell is this all about.... - Part 2
Here is a following up commentary found on Bloomberg.
Link: http://www.bloomberg.com/apps/news?pid=20601039&sid=a62_boqkurbI
Suitcase With $134 Billion Puts Dollar on Edge: William Pesek
Commentary by William Pesek
June 17 (Bloomberg) -- It’s a plot better suited for a John Le Carre novel.
Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.
Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?
The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale.
The trillions of dollars of debt the U.S. will issue in the next couple of years needs buyers. Attracting them will require making sure that existing ones aren’t losing faith in the U.S.’s ability to control the dollar.
The dollar is, for better or worse, the core of our world economy and it’s best to keep it stable. News that’s more fitting for international spy novels than the financial pages won’t help that effort. It is incumbent upon the U.S. Treasury to get to the bottom of this tale and keep markets informed.
GDP Carriers
Think about it: These two guys were carrying the gross domestic product of New Zealand or enough for three Beijing Olympics. If economies were for sale, the men could buy Slovakia and Croatia and have plenty left over for Mongolia or Cambodia. Yes, they could have built vacation homes amidst Genghis Khan’s Gobi Desert or the famed Temples of Angkor. Bernard Madoff who?
These men carrying bonds concealed in the bottom of their luggage also would be the fourth-largest U.S. creditors. It makes you wonder if some of the time Treasury Secretary Timothy Geithner spends keeping the Chinese and Japanese invested in dollars should be devoted to well-financed men crossing the Italian-Swiss border.
This tale has gotten little attention in markets, perhaps because of the absurdity of our times. The last year has been a decidedly disorienting one for capitalists who once knew up from down, red from black and risk from reward. It almost fits with the surreal nature of today that a couple of travelers have more U.S. debt than Brazil in a suitcase and, well, that’s life.
Clancy Bestseller
You can almost picture Tom Clancy sitting in his study thinking: “Damn! Why didn’t I think of this yarn and novelize it years ago?” He could have sprinkled in a Chinese angle, a pinch of Russian intrigue, a dose of Pyongyang and a bit of Taiwan-Strait tension into the mix. Presto, a sure bestseller.
Daniel Craig may be thinking this is a great story on which to base the next James Bond flick. Perhaps Don Johnson could buy the rights to this tale. In 2002, the “Miami Vice” star was stopped by German customs officers as he was traveling in a car carrying credit notes and other securities worth as much as $8 billion. Now he could claim it was all, uh, research.
When I first heard of the $134 billion story, I was tempted to glance at my calendar to make sure it didn’t read April 1.
Let’s assume for a moment that these U.S. bonds are real. That would make a mockery of Japanese Finance Minister Kaoru Yosano’s “absolutely unshakable” confidence in the credibility of the U.S. dollar. Yosano would have some explaining to do about Japan’s $686 billion of U.S. debt if more of these suitcase capers come to light.
‘Kennedy Bonds’
Counterfeit $100 bills are one thing; two guys with undeclared bonds including 249 certificates worth $500 million and 10 “Kennedy bonds” of $1 billion each is quite another.
The bust could be a boon for Italy. If the securities are found to be genuine, the smugglers could be fined 40 percent of the total value for attempting to take them out of the country. Not a bad payday for a government grappling with a widening budget deficit and rebuilding the town of L’Aquila, which was destroyed by an earthquake in April.
It would be terrible news for the White House. Other than the U.S., China or Japan, no other nation could theoretically move those amounts. In the absence of clear explanations coming from the Treasury, conspiracy theories are filling the void.
On his blog, the Market Ticker, Karl Denninger wonders if the Treasury “has been surreptitiously issuing bonds to, say, Japan, as a means of financing deficits that someone didn’t want reported over the last, oh, say 10 or 20 years.” Adds Denninger: “Let’s hope we get those answers, and this isn’t one of those ‘funny things’ that just disappears into the night.”
This is still a story with far more questions than answers. It’s odd, though, that it’s not garnering more media attention. Interest is likely to grow. The last thing Geithner and Federal Reserve Chairman Ben Bernanke need right now is tens of billions more of U.S. bonds -- or even high-quality fake ones -- suddenly popping up around the globe.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net
Last Updated: June 16, 2009 15:00 EDT
Link: http://www.bloomberg.com/apps/news?pid=20601039&sid=a62_boqkurbI
Suitcase With $134 Billion Puts Dollar on Edge: William Pesek
Commentary by William Pesek
June 17 (Bloomberg) -- It’s a plot better suited for a John Le Carre novel.
Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.
Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?
The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale.
The trillions of dollars of debt the U.S. will issue in the next couple of years needs buyers. Attracting them will require making sure that existing ones aren’t losing faith in the U.S.’s ability to control the dollar.
The dollar is, for better or worse, the core of our world economy and it’s best to keep it stable. News that’s more fitting for international spy novels than the financial pages won’t help that effort. It is incumbent upon the U.S. Treasury to get to the bottom of this tale and keep markets informed.
GDP Carriers
Think about it: These two guys were carrying the gross domestic product of New Zealand or enough for three Beijing Olympics. If economies were for sale, the men could buy Slovakia and Croatia and have plenty left over for Mongolia or Cambodia. Yes, they could have built vacation homes amidst Genghis Khan’s Gobi Desert or the famed Temples of Angkor. Bernard Madoff who?
These men carrying bonds concealed in the bottom of their luggage also would be the fourth-largest U.S. creditors. It makes you wonder if some of the time Treasury Secretary Timothy Geithner spends keeping the Chinese and Japanese invested in dollars should be devoted to well-financed men crossing the Italian-Swiss border.
This tale has gotten little attention in markets, perhaps because of the absurdity of our times. The last year has been a decidedly disorienting one for capitalists who once knew up from down, red from black and risk from reward. It almost fits with the surreal nature of today that a couple of travelers have more U.S. debt than Brazil in a suitcase and, well, that’s life.
Clancy Bestseller
You can almost picture Tom Clancy sitting in his study thinking: “Damn! Why didn’t I think of this yarn and novelize it years ago?” He could have sprinkled in a Chinese angle, a pinch of Russian intrigue, a dose of Pyongyang and a bit of Taiwan-Strait tension into the mix. Presto, a sure bestseller.
Daniel Craig may be thinking this is a great story on which to base the next James Bond flick. Perhaps Don Johnson could buy the rights to this tale. In 2002, the “Miami Vice” star was stopped by German customs officers as he was traveling in a car carrying credit notes and other securities worth as much as $8 billion. Now he could claim it was all, uh, research.
When I first heard of the $134 billion story, I was tempted to glance at my calendar to make sure it didn’t read April 1.
Let’s assume for a moment that these U.S. bonds are real. That would make a mockery of Japanese Finance Minister Kaoru Yosano’s “absolutely unshakable” confidence in the credibility of the U.S. dollar. Yosano would have some explaining to do about Japan’s $686 billion of U.S. debt if more of these suitcase capers come to light.
‘Kennedy Bonds’
Counterfeit $100 bills are one thing; two guys with undeclared bonds including 249 certificates worth $500 million and 10 “Kennedy bonds” of $1 billion each is quite another.
The bust could be a boon for Italy. If the securities are found to be genuine, the smugglers could be fined 40 percent of the total value for attempting to take them out of the country. Not a bad payday for a government grappling with a widening budget deficit and rebuilding the town of L’Aquila, which was destroyed by an earthquake in April.
It would be terrible news for the White House. Other than the U.S., China or Japan, no other nation could theoretically move those amounts. In the absence of clear explanations coming from the Treasury, conspiracy theories are filling the void.
On his blog, the Market Ticker, Karl Denninger wonders if the Treasury “has been surreptitiously issuing bonds to, say, Japan, as a means of financing deficits that someone didn’t want reported over the last, oh, say 10 or 20 years.” Adds Denninger: “Let’s hope we get those answers, and this isn’t one of those ‘funny things’ that just disappears into the night.”
This is still a story with far more questions than answers. It’s odd, though, that it’s not garnering more media attention. Interest is likely to grow. The last thing Geithner and Federal Reserve Chairman Ben Bernanke need right now is tens of billions more of U.S. bonds -- or even high-quality fake ones -- suddenly popping up around the globe.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net
Last Updated: June 16, 2009 15:00 EDT
What the hell is this all about....
This is a good read and here is the actual link:
http://www.ibtimes.com/articles/20090611/italy-seizes-135b-us-bonds-from-two-japanese-citizens.htm
Italy seizes $135B of US bonds from two Japanese nationals
Two Japanese citizens carrying $134 billion worth of U.S. bonds were detained last week by Italy's financial police at Chiasso (40km from Milan) on the border between Italy and Switzerland, an Italian daily said Wednesday.
According to the report, they include 249 U.S. Treasury bonds each worth $500 million, plus 10 Kennedy bonds and other U.S. government securities worth a billion dollar each.
The two unidentified Japanese citizen were searched on June 3 when they were in Chiasso. They were detained on suspicion of attempting to take a large amount of securities out of Italy without declaring it.
The bonds were found hidden in the bottom of the suitcase, in a closed section separated from the part of the bag containing personal items.
Apart from the securities the Japanese men were carrying a considerable sum of original bank documents.
Investigations are underway to establish the identity and the origin of both the bonds and the bank documents that have also been impounded.
In order to stop money laundering Italian law sets a ceiling of €10,000 per person for importing or exporting money without declaring it. The penalty for violating the law is 40 per cent of the money seized.
If the certificates were real, the fine alone would amount to US$ 38 billion, five times the estimated cost of rebuilding quake-devastated Abruzzi region. It would help Italy’s eliminate its public deficit.
If the certificates are fakes the two Japanese nationals could get a very lengthy jail sentence for fraud.
The US Embassy in Rome was informed.
Great story - any comments!!!
http://www.ibtimes.com/articles/20090611/italy-seizes-135b-us-bonds-from-two-japanese-citizens.htm
Italy seizes $135B of US bonds from two Japanese nationals
Two Japanese citizens carrying $134 billion worth of U.S. bonds were detained last week by Italy's financial police at Chiasso (40km from Milan) on the border between Italy and Switzerland, an Italian daily said Wednesday.
According to the report, they include 249 U.S. Treasury bonds each worth $500 million, plus 10 Kennedy bonds and other U.S. government securities worth a billion dollar each.
The two unidentified Japanese citizen were searched on June 3 when they were in Chiasso. They were detained on suspicion of attempting to take a large amount of securities out of Italy without declaring it.
The bonds were found hidden in the bottom of the suitcase, in a closed section separated from the part of the bag containing personal items.
Apart from the securities the Japanese men were carrying a considerable sum of original bank documents.
Investigations are underway to establish the identity and the origin of both the bonds and the bank documents that have also been impounded.
In order to stop money laundering Italian law sets a ceiling of €10,000 per person for importing or exporting money without declaring it. The penalty for violating the law is 40 per cent of the money seized.
If the certificates were real, the fine alone would amount to US$ 38 billion, five times the estimated cost of rebuilding quake-devastated Abruzzi region. It would help Italy’s eliminate its public deficit.
If the certificates are fakes the two Japanese nationals could get a very lengthy jail sentence for fraud.
The US Embassy in Rome was informed.
Great story - any comments!!!
Saturday, May 16, 2009
What's really going on here...Part 2
I have copied this from another posting. The author wanted the news spread before the information was taken down. I have included all information and give credit to the author. Give it a read...
Thursday, May 14, 2009
Mark Patterson: "It's A Sham. The Banks Are Insolvent"
Posted by Tyler Durden at 8:40 PM
Update 2: Please see the most recent post in this thread, in which I disclose that representatives of Mr. Patterson dispute the original Ambrose Evans-Pritchard article was "fabricated" and have succeeded in getting the Daily Telegraph to remove it.
Update: Daily Telegraph story now "mysteriously" taken down.
The chairman of $7 billion distressed Private Equity firm and TARP beneficiary MatlinPatterson calls a spade a spade and in the process exposes the entire Geithner plan for the complete sham that it is. His comments before the Qatar Global Investment Forum were captured by the Daily Telegraph's Evans-Pritchard earlier, and Zero Hedge republishes the piece in its entirety as it presents every nuance of our predicament with masterful simplicity.
***
US 'sham' bank bail-outs enrich speculators, says buy-out chief Mark Patterson
The US Treasury’s effort to stabilise the banking system through the TARP programme is a hopelessly ill-conceived policy that enriches speculators at public expense, according to the buy-out firm supposed to be pioneering the joint public-private bank rescues.
“The taxpayers ought to know that we are in effect receiving a subsidy. They put in 40pc of the money but get little of the equity upside,” said Mark Patterson, chairman of MatlinPatterson Advisers.
The comments are likely to infuriate Tim Geithner, the US Treasury Secretary, because MatlinPatterson took advantage of the TARP’s matching funds to buy Flagstar Bancorp in Michigan. His confession appears to validate concerns that the bail-out strategy is geared towards Wall Street.
Under the convoluted deal agreed earlier this year, MatlinPatterson has come to own 80pc of the shares while the US government has ended up with under 10pc.
Mr Patterson said the US Treasury is out of its depth and seems to be trying to put off drastic action by pretending that the banking system is still viable.
“It’s a sham. The banks are insolvent. The US government is trying to sedate the public because they are down to the last $100bn (£66bn) of the $700bn TARP funds. They think they’re doing this for the greater good of society,” he said, speaking at the Qatar Global Investment Forum.
Mr Patterson said it would be better for the US to bite the bullet as Britain has done, accepting that crippled lenders must be nationalised. “At least the British are not hiding the bail-out,” he said.
MatlinPatterson said private equity and hedge funds were deluding themselves in hoping to go back to business as usual after the trauma of the last 18 months.
“This is not a normal recession and there will be no V-shaped recovery. The crisis has destroyed leveraged companies. We’re going to see a catastrophic increase in the number of LBO’s (leveraged buyouts) going into default because they’re knee-deep in debt and no solution exists since they can’t refinance,” he said.
“Alfa hedge funds have been making their money by gambling with excessive leverage, so the knife that cuts off leverage is going to cut off their heads as well,” he said.
Like many bears, Mr Patterson expects the great crunch to end in deliberate inflation, deemed a lesser evil than outright depression.
“The US government has thrown 29pc of GDP at this crisis compared to 8pc in the early 1930s. The Fed’s balance sheet has risen from $900bn to $2.7 trillion to bail out the system. America has to do it because the only way out is to debase the currency, but that is going to lead to some very high inflation three years down the road,” he said.
Matlin Patterson, however, has missed the Spring rebound, the most powerful rise in equities in over 70 years. “We shorted the equity rally because we thought it was lunatic. We’ve kept adding positions seven times, and we’re still holding,” he said. Ouch!
Wow!!! Again I credit the author, Tyler Durden. Thanks, man...
Thursday, May 14, 2009
Mark Patterson: "It's A Sham. The Banks Are Insolvent"
Posted by Tyler Durden at 8:40 PM
Update 2: Please see the most recent post in this thread, in which I disclose that representatives of Mr. Patterson dispute the original Ambrose Evans-Pritchard article was "fabricated" and have succeeded in getting the Daily Telegraph to remove it.
Update: Daily Telegraph story now "mysteriously" taken down.
The chairman of $7 billion distressed Private Equity firm and TARP beneficiary MatlinPatterson calls a spade a spade and in the process exposes the entire Geithner plan for the complete sham that it is. His comments before the Qatar Global Investment Forum were captured by the Daily Telegraph's Evans-Pritchard earlier, and Zero Hedge republishes the piece in its entirety as it presents every nuance of our predicament with masterful simplicity.
***
US 'sham' bank bail-outs enrich speculators, says buy-out chief Mark Patterson
The US Treasury’s effort to stabilise the banking system through the TARP programme is a hopelessly ill-conceived policy that enriches speculators at public expense, according to the buy-out firm supposed to be pioneering the joint public-private bank rescues.
“The taxpayers ought to know that we are in effect receiving a subsidy. They put in 40pc of the money but get little of the equity upside,” said Mark Patterson, chairman of MatlinPatterson Advisers.
The comments are likely to infuriate Tim Geithner, the US Treasury Secretary, because MatlinPatterson took advantage of the TARP’s matching funds to buy Flagstar Bancorp in Michigan. His confession appears to validate concerns that the bail-out strategy is geared towards Wall Street.
Under the convoluted deal agreed earlier this year, MatlinPatterson has come to own 80pc of the shares while the US government has ended up with under 10pc.
Mr Patterson said the US Treasury is out of its depth and seems to be trying to put off drastic action by pretending that the banking system is still viable.
“It’s a sham. The banks are insolvent. The US government is trying to sedate the public because they are down to the last $100bn (£66bn) of the $700bn TARP funds. They think they’re doing this for the greater good of society,” he said, speaking at the Qatar Global Investment Forum.
Mr Patterson said it would be better for the US to bite the bullet as Britain has done, accepting that crippled lenders must be nationalised. “At least the British are not hiding the bail-out,” he said.
MatlinPatterson said private equity and hedge funds were deluding themselves in hoping to go back to business as usual after the trauma of the last 18 months.
“This is not a normal recession and there will be no V-shaped recovery. The crisis has destroyed leveraged companies. We’re going to see a catastrophic increase in the number of LBO’s (leveraged buyouts) going into default because they’re knee-deep in debt and no solution exists since they can’t refinance,” he said.
“Alfa hedge funds have been making their money by gambling with excessive leverage, so the knife that cuts off leverage is going to cut off their heads as well,” he said.
Like many bears, Mr Patterson expects the great crunch to end in deliberate inflation, deemed a lesser evil than outright depression.
“The US government has thrown 29pc of GDP at this crisis compared to 8pc in the early 1930s. The Fed’s balance sheet has risen from $900bn to $2.7 trillion to bail out the system. America has to do it because the only way out is to debase the currency, but that is going to lead to some very high inflation three years down the road,” he said.
Matlin Patterson, however, has missed the Spring rebound, the most powerful rise in equities in over 70 years. “We shorted the equity rally because we thought it was lunatic. We’ve kept adding positions seven times, and we’re still holding,” he said. Ouch!
Wow!!! Again I credit the author, Tyler Durden. Thanks, man...
Tuesday, April 21, 2009
What's really going on here...
I am copying a posting from a blogger called, Greed is Good, because I do not want it to disappear before everyone can read it... All credit for this information goes to Greed and thanks...
"The Turner Radio Network has obtained "stress test" results for the top 19 Banks in the USA.
The stress tests were conducted to determine how well, if at all, the top 19 banks in the USA could withstand further or future economic hardship.
When the tests were completed, regulators within the Treasury and inside the Federal Reserve began bickering with each other as to whether or not the test results should be made public. That bickering continues to this very day as evidenced by this "main stream media" report.
The Turner Radio Network has obtained the stress test results. They are very bad. The most salient points from the stress tests appear below.
1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent. (Based upon the “alternative more adverse” scenario which had a 3.3 percent contraction of the U.S. Economy in 2009, accompanied by 8.9 percent unemployment, followed by 0.5 percent growth of the U.S. Economy but a 10.3 percent jobless in 2010.)
2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans. (Without further government injections of cash)
3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.
4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.
5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.
6) Bank of America`s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s, 382 percent; and HSBC America`s, 550 percent. It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital! (HSBC is NOT in the top 19 banks undergoing a stress test, but is mentioned in the report as an aside because of its risk capital exposure to derivatives)
7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!
The debt crisis is much greater than the government has reported. The FDIC`s "Problem List" of troubled banks includes 252 institutions with assets of $159 billion. 1,816 banks and thrifts are at risk of failure, with total assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in total assets in prior quarter."
All you can do is hope that it's not true... If it is true, what have these guys done to you average folk?
Thanks, again to "Greed is Good"
"The Turner Radio Network has obtained "stress test" results for the top 19 Banks in the USA.
The stress tests were conducted to determine how well, if at all, the top 19 banks in the USA could withstand further or future economic hardship.
When the tests were completed, regulators within the Treasury and inside the Federal Reserve began bickering with each other as to whether or not the test results should be made public. That bickering continues to this very day as evidenced by this "main stream media" report.
The Turner Radio Network has obtained the stress test results. They are very bad. The most salient points from the stress tests appear below.
1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent. (Based upon the “alternative more adverse” scenario which had a 3.3 percent contraction of the U.S. Economy in 2009, accompanied by 8.9 percent unemployment, followed by 0.5 percent growth of the U.S. Economy but a 10.3 percent jobless in 2010.)
2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans. (Without further government injections of cash)
3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.
4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.
5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.
6) Bank of America`s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s, 382 percent; and HSBC America`s, 550 percent. It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital! (HSBC is NOT in the top 19 banks undergoing a stress test, but is mentioned in the report as an aside because of its risk capital exposure to derivatives)
7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!
The debt crisis is much greater than the government has reported. The FDIC`s "Problem List" of troubled banks includes 252 institutions with assets of $159 billion. 1,816 banks and thrifts are at risk of failure, with total assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in total assets in prior quarter."
All you can do is hope that it's not true... If it is true, what have these guys done to you average folk?
Thanks, again to "Greed is Good"
Wednesday, March 26, 2008
Whose making money on the war?
The War Industry, maybe... Here is a wonderful article about our wonderful defense contractors... Money... Money... Money...
General Dynamics, Harris, L-3 Lead Gains From 5-Year Iraq War
By Edmond Lococo
March 25 (Bloomberg) -- General Dynamics Corp., Harris Corp. and L-3 Communications Holdings Inc. benefited most among the Pentagon's 25 largest military suppliers from five years of conflict in Iraq, based on a combination of war-related sales and stock gains.
General Dynamics and Harris, the Melbourne, Florida-based maker of combat radios, both tripled in stock price in the five years ended March 20, the anniversary of the war's start. L-3, which provides translators, rose 164 percent. Their gains beat the Standard & Poor's 500 Stock Index, which rose 52 percent, and the S&P Aerospace and Defense Index, which more than doubled.
The U.S. has begun reducing troops in Iraq, a process that may accelerate next year and threaten revenue of companies that gained the most from the war. Heavy combat use of vehicles and equipment still will trigger years of replacement sales. War costs are about $12 billion a month, the Pentagon said Jan. 28.
``The war has been a huge benefit to almost all contractors,'' said William Hartung, director of the arms and security initiative at the New America Foundation in New York. ``Ammunition, armor, vehicles, communications are places where there's a lot of spending now, and they will have to repair or replace much of it when the war ends.''
Congress has approved about $700 billion for conflicts in Iraq and Afghanistan since the 2001 terror attacks, the Congressional Research Service says. That's on top of the regular defense budget, which is $480 billion this year.
The U.S. is pulling five of 20 combat brigades out of Iraq through July. The pace next year may be set by the winner of November's U.S. presidential election, a showdown between presumptive Republican nominee John McCain, an Arizona senator, and either Senate colleague Barack Obama of Illinois or Hillary Clinton of New York for the Democrats.
General Dynamics
General Dynamics benefited from funding to buy and support Abrams tanks and Stryker troop transports, as well as ammunition sales. The company had about $2.35 billion in war revenue last year, the most among U.S. defense companies, based on estimates by Joseph Nadol, an analyst with JP Morgan Securities Inc. in New York. At about 9 percent of sales, it was second to Harris by percentage.
Spokesman Robert Doolittle of Falls Church, Virginia-based General Dynamics declined to confirm the data. ``We don't track orders, revenue or income based on where it's going,'' he said.
General Dynamics rose to fourth on the Pentagon's list of prime contractors in 2006, with $10.5 billion in work, from fifth in 2002 at $6.96 billion. The list excludes money received as a subcontractor. The Defense Department hasn't released 2007 data.
``General Dynamics' business would not be nearly as robust without the war,'' Cai Von Rumohr, a Boston-based analyst with Cowen & Co., said in an interview.
Harris
Harris received an estimated $600 million of war-related sales last year, or about 13 percent of its total, Nadol said. That was the largest proportion among major defense companies.
Harris became the Pentagon's 25th-largest supplier in 2006, with $1.34 billion in prime contracts, from 48th in 2002.
``There has been some benefit from Iraq, but our future is not tied to Iraq or levels of troop deployment, or whether the war is coming to an end,'' Chief Financial Officer Gary McArthur said in an interview. He said he was unable to provide a figure for how much annual revenue Harris has received from the war.
Harris makes Falcon II radios, which can be mounted in vehicles or carried by soldiers. The radios also can carry data and video as part of an upgrade program that may cost as much as $30 billion, McArthur said.
``The whole need to modernize is not dependent on levels of troops in, or not in, Iraq,'' the executive said.
Analyst Nadol has doubts. ``A combat-vehicle maker like General Dynamics is less exposed than an equipment provider such as Harris'' to a drop in revenue, he said.
L-3
New York-based L-3 benefited through its role as the largest supplier of translation services for the Army in Iraq. L-3 lost the translation contract to a DynCorp International Inc. joint venture and became a subcontractor to the new team March 14.
L-3 had $1.1 billion of war revenue last year, or about 8 percent of its total, Nadol calculated. L-3 estimates Iraq- related revenue at about $1 billion last year and this year, spokeswoman Jennifer Barton said.
The Pentagon's five largest suppliers are Bethesda, Maryland-based Lockheed Martin Corp.; Chicago-based Boeing Co.; Northrop Grumman Corp. in Los Angeles; General Dynamics; and Waltham, Massachusetts-based Raytheon Co. Aside from General Dynamics, Nadol estimates they got 1 percent to 4 percent of 2007 sales from the war.
Northrop, the builder of aircraft carriers, won the least: about $300 million, or 1 percent of 2007 revenue, Nadol said.
``Northrop Grumman would be relatively unaffected by a reduction in supplemental funding for Iraq and Afghanistan or a rapid withdrawal from Iraq because our exposure to the supplemental war funding is small,'' Dan McClain, a Northrop spokesman, said in an e-mail.
To contact the reporters on this story: Edmond Lococo in Boston at elococo@bloomberg.net.
It is very true that war can be profitable for some. But it is also true that it is deadly for others. Who will win, nobody knows...
General Dynamics, Harris, L-3 Lead Gains From 5-Year Iraq War
By Edmond Lococo
March 25 (Bloomberg) -- General Dynamics Corp., Harris Corp. and L-3 Communications Holdings Inc. benefited most among the Pentagon's 25 largest military suppliers from five years of conflict in Iraq, based on a combination of war-related sales and stock gains.
General Dynamics and Harris, the Melbourne, Florida-based maker of combat radios, both tripled in stock price in the five years ended March 20, the anniversary of the war's start. L-3, which provides translators, rose 164 percent. Their gains beat the Standard & Poor's 500 Stock Index, which rose 52 percent, and the S&P Aerospace and Defense Index, which more than doubled.
The U.S. has begun reducing troops in Iraq, a process that may accelerate next year and threaten revenue of companies that gained the most from the war. Heavy combat use of vehicles and equipment still will trigger years of replacement sales. War costs are about $12 billion a month, the Pentagon said Jan. 28.
``The war has been a huge benefit to almost all contractors,'' said William Hartung, director of the arms and security initiative at the New America Foundation in New York. ``Ammunition, armor, vehicles, communications are places where there's a lot of spending now, and they will have to repair or replace much of it when the war ends.''
Congress has approved about $700 billion for conflicts in Iraq and Afghanistan since the 2001 terror attacks, the Congressional Research Service says. That's on top of the regular defense budget, which is $480 billion this year.
The U.S. is pulling five of 20 combat brigades out of Iraq through July. The pace next year may be set by the winner of November's U.S. presidential election, a showdown between presumptive Republican nominee John McCain, an Arizona senator, and either Senate colleague Barack Obama of Illinois or Hillary Clinton of New York for the Democrats.
General Dynamics
General Dynamics benefited from funding to buy and support Abrams tanks and Stryker troop transports, as well as ammunition sales. The company had about $2.35 billion in war revenue last year, the most among U.S. defense companies, based on estimates by Joseph Nadol, an analyst with JP Morgan Securities Inc. in New York. At about 9 percent of sales, it was second to Harris by percentage.
Spokesman Robert Doolittle of Falls Church, Virginia-based General Dynamics declined to confirm the data. ``We don't track orders, revenue or income based on where it's going,'' he said.
General Dynamics rose to fourth on the Pentagon's list of prime contractors in 2006, with $10.5 billion in work, from fifth in 2002 at $6.96 billion. The list excludes money received as a subcontractor. The Defense Department hasn't released 2007 data.
``General Dynamics' business would not be nearly as robust without the war,'' Cai Von Rumohr, a Boston-based analyst with Cowen & Co., said in an interview.
Harris
Harris received an estimated $600 million of war-related sales last year, or about 13 percent of its total, Nadol said. That was the largest proportion among major defense companies.
Harris became the Pentagon's 25th-largest supplier in 2006, with $1.34 billion in prime contracts, from 48th in 2002.
``There has been some benefit from Iraq, but our future is not tied to Iraq or levels of troop deployment, or whether the war is coming to an end,'' Chief Financial Officer Gary McArthur said in an interview. He said he was unable to provide a figure for how much annual revenue Harris has received from the war.
Harris makes Falcon II radios, which can be mounted in vehicles or carried by soldiers. The radios also can carry data and video as part of an upgrade program that may cost as much as $30 billion, McArthur said.
``The whole need to modernize is not dependent on levels of troops in, or not in, Iraq,'' the executive said.
Analyst Nadol has doubts. ``A combat-vehicle maker like General Dynamics is less exposed than an equipment provider such as Harris'' to a drop in revenue, he said.
L-3
New York-based L-3 benefited through its role as the largest supplier of translation services for the Army in Iraq. L-3 lost the translation contract to a DynCorp International Inc. joint venture and became a subcontractor to the new team March 14.
L-3 had $1.1 billion of war revenue last year, or about 8 percent of its total, Nadol calculated. L-3 estimates Iraq- related revenue at about $1 billion last year and this year, spokeswoman Jennifer Barton said.
The Pentagon's five largest suppliers are Bethesda, Maryland-based Lockheed Martin Corp.; Chicago-based Boeing Co.; Northrop Grumman Corp. in Los Angeles; General Dynamics; and Waltham, Massachusetts-based Raytheon Co. Aside from General Dynamics, Nadol estimates they got 1 percent to 4 percent of 2007 sales from the war.
Northrop, the builder of aircraft carriers, won the least: about $300 million, or 1 percent of 2007 revenue, Nadol said.
``Northrop Grumman would be relatively unaffected by a reduction in supplemental funding for Iraq and Afghanistan or a rapid withdrawal from Iraq because our exposure to the supplemental war funding is small,'' Dan McClain, a Northrop spokesman, said in an e-mail.
To contact the reporters on this story: Edmond Lococo in Boston at elococo@bloomberg.net.
It is very true that war can be profitable for some. But it is also true that it is deadly for others. Who will win, nobody knows...
Where is the FDIC during this credit crisis?
Little has been said about the Federal Deposit Insurance Corporation (FDIC) during this credit crisis. Bailouts, rescues, propups, thief... But what about the other side of the coin. Well I found this article and thought I would share it with you. If we can believe 10% of what we read, we are in for some deep do-do!!! Enjoy!
F.D.I.C. Prepares for Higher Bank Failures
By THE ASSOCIATED PRESS
WASHINGTON (AP) — Federal bank regulators plan to increase the size of its staff by 60 percent to handle an anticipated surge in troubled financial institutions.
The Federal Deposit Insurance Corporation wants to add 140 workers to bring staff levels to 360 workers in the division that handles bank failures, the agency’s chief operating officer, John Bovenzi, said Tuesday.
“We want to make sure that we’re prepared,” Mr. Bovenzi said, adding that most of the new employees will be temporary and based in Dallas.
There have been five bank failures since February 2007 after an uneventful stretch of more than two years. The last time the agency was hit hard with failures was in the 1990-1991 recession, when 502 banks failed in three years.
Analysts see casualties rising, but do not believe they will reach early-1990s levels.
Gerard Cassidy, managing director of bank equity research at RBC Capital Markets, projects 150 bank failures over the next three years, with the highest concentration in states like California and Florida.
To cushion against losses from bad loans, banks will probably raise additional capital and cut dividends this year, said Tony Davis, a senior bank analyst with Stifel Nicolaus. However, he said, “we’re not looking at a massive number of bank failures.”
The F.D.I.C. provides insurance for deposits up to $100,000. While depositors typically have quick access to their bank accounts on the next business day after a bank goes out of business, winding down a failed bank’s operations can take years to finish. That process can include selling real estate and investments and dealing with lawsuits.
There are 76 banks on the F.D.I.C.’s “problem institutions” list, - which would equate to about 10 expected bank failures this year, though F.D.I.C. officials declined to make projections. Historically, about six banks fail each year on average.
There have been two failures in 2008 — both involving small Missouri-based banks. By far the largest recent failure was last September, when NetBank, a Georgia-based on-line bank with $2.5 billion in assets, NetBank’s insured deposits — held by more than 100,000 customers — were assumed by ING Bank, part of the Dutch financial giant ING Groep.
F.D.I.C. officials said last month they planned to bring back about 25 retirees to the agency, adding that those workers will train new employees.
F.D.I.C. Prepares for Higher Bank Failures
By THE ASSOCIATED PRESS
WASHINGTON (AP) — Federal bank regulators plan to increase the size of its staff by 60 percent to handle an anticipated surge in troubled financial institutions.
The Federal Deposit Insurance Corporation wants to add 140 workers to bring staff levels to 360 workers in the division that handles bank failures, the agency’s chief operating officer, John Bovenzi, said Tuesday.
“We want to make sure that we’re prepared,” Mr. Bovenzi said, adding that most of the new employees will be temporary and based in Dallas.
There have been five bank failures since February 2007 after an uneventful stretch of more than two years. The last time the agency was hit hard with failures was in the 1990-1991 recession, when 502 banks failed in three years.
Analysts see casualties rising, but do not believe they will reach early-1990s levels.
Gerard Cassidy, managing director of bank equity research at RBC Capital Markets, projects 150 bank failures over the next three years, with the highest concentration in states like California and Florida.
To cushion against losses from bad loans, banks will probably raise additional capital and cut dividends this year, said Tony Davis, a senior bank analyst with Stifel Nicolaus. However, he said, “we’re not looking at a massive number of bank failures.”
The F.D.I.C. provides insurance for deposits up to $100,000. While depositors typically have quick access to their bank accounts on the next business day after a bank goes out of business, winding down a failed bank’s operations can take years to finish. That process can include selling real estate and investments and dealing with lawsuits.
There are 76 banks on the F.D.I.C.’s “problem institutions” list, - which would equate to about 10 expected bank failures this year, though F.D.I.C. officials declined to make projections. Historically, about six banks fail each year on average.
There have been two failures in 2008 — both involving small Missouri-based banks. By far the largest recent failure was last September, when NetBank, a Georgia-based on-line bank with $2.5 billion in assets, NetBank’s insured deposits — held by more than 100,000 customers — were assumed by ING Bank, part of the Dutch financial giant ING Groep.
F.D.I.C. officials said last month they planned to bring back about 25 retirees to the agency, adding that those workers will train new employees.
Tuesday, March 11, 2008
Whose money is it anyway?
This just in: the Fed is injecting liquidity into the market to the tune of $400 billion from last week until the end of the month... Whose money are they playing with? They will accept as collateral those securities backed by those worthless home loans - imagine that- securities that no one else will touch!!!
Don't believe me? Here is the article... Enjoy!!!
Fed to Lend $200 Billion, Take on Mortgage Securities (Update3)
By Scott Lanman
March 11 (Bloomberg) -- The Federal Reserve, struggling to contain a crisis of confidence in credit markets, plans to lend up to $200 billion in exchange for mortgage-backed securities.
The Fed coordinated the effort with central banks in Europe and Canada, which plan to inject up to $45 billion into their banking systems. The Fed said in a statement it will hold auctions of Treasuries in exchange for debt including AAA rated mortgage securities sold by Fannie Mae, Freddie Mac and by banks.
Today's steps indicate the Fed is increasingly concerned about the investor exodus from mortgage debt, which threatens to deepen the housing contraction and the economic slowdown. While they fall short of the calls by some analysts for the Fed to make outright purchases of mortgage debt, the central bank left the door open to expanding the effort.
``This is the most significant step the Fed has taken so far,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. ``This relieves some of the pressure'' in the credit markets, he said.
Today's steps are the latest in Chairman Ben S. Bernanke's effort to alleviate increasing strains in financial markets that are curtailing credit to homeowners and companies, even after the Fed lowered its main interest rate by 2.25 percentage points.
Last week, the Fed said it would make up to $200 billion available to banks in a separate initiative to help boost liquidity.
New Tool
The Fed today set up a new tool, the Term Securities Lending Facility, to lend Treasuries to primary dealers for 28- day periods through weekly auctions. The Fed also said it's increasing the amount of dollars available to European central banks through swap lines.
The Federal Open Market Committee authorized increasing currency swap lines with the European Central Bank and Swiss National Bank to $30 billion and $6 billion, respectively, increasing the ECB's line by $10 billion and the Swiss line by $2 billion. The Fed extended the swaps through Sept. 30.
The ECB announced it will lend banks in Europe up to $15 billion for 28 days and the SNB announced a similar auction of up to $6 billion. The Bank of England will offer $20 billion of three-month loans on March 18 and hold another auction on April 15. The Bank of Canada announced plans to purchase $4 billion of securities for 28 days.
Treasuries slid after the announcement, with yields on 10- year notes rising to 3.60 percent at 10:32 a.m. in New York, from 3.46 percent late yesterday.
Rate Expectations
Traders removed bets on the Fed to lower its benchmark rate by a full percentage point, to 2 percent, by the end of the next meeting on March 18, futures showed. The contracts indicate a 60 percent chance of a 0.75 percentage-point reduction.
The Fed's auctions of Treasuries, which will begin March 27, may be secured by collateral including agency and private residential mortgage-backed securities, the Fed said. The central bank ``will consult with primary dealers on technical design features'' of the new tool.
Primary dealers are a group of 20 banks and securities firms that trade Treasuries directly with the Fed Bank of New York.
To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net
Last Updated: March 11, 2008 10:33 EDT
Its crap... Pure crap... Good luck, America!!! Good luck to us all!!!
Don't believe me? Here is the article... Enjoy!!!
Fed to Lend $200 Billion, Take on Mortgage Securities (Update3)
By Scott Lanman
March 11 (Bloomberg) -- The Federal Reserve, struggling to contain a crisis of confidence in credit markets, plans to lend up to $200 billion in exchange for mortgage-backed securities.
The Fed coordinated the effort with central banks in Europe and Canada, which plan to inject up to $45 billion into their banking systems. The Fed said in a statement it will hold auctions of Treasuries in exchange for debt including AAA rated mortgage securities sold by Fannie Mae, Freddie Mac and by banks.
Today's steps indicate the Fed is increasingly concerned about the investor exodus from mortgage debt, which threatens to deepen the housing contraction and the economic slowdown. While they fall short of the calls by some analysts for the Fed to make outright purchases of mortgage debt, the central bank left the door open to expanding the effort.
``This is the most significant step the Fed has taken so far,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. ``This relieves some of the pressure'' in the credit markets, he said.
Today's steps are the latest in Chairman Ben S. Bernanke's effort to alleviate increasing strains in financial markets that are curtailing credit to homeowners and companies, even after the Fed lowered its main interest rate by 2.25 percentage points.
Last week, the Fed said it would make up to $200 billion available to banks in a separate initiative to help boost liquidity.
New Tool
The Fed today set up a new tool, the Term Securities Lending Facility, to lend Treasuries to primary dealers for 28- day periods through weekly auctions. The Fed also said it's increasing the amount of dollars available to European central banks through swap lines.
The Federal Open Market Committee authorized increasing currency swap lines with the European Central Bank and Swiss National Bank to $30 billion and $6 billion, respectively, increasing the ECB's line by $10 billion and the Swiss line by $2 billion. The Fed extended the swaps through Sept. 30.
The ECB announced it will lend banks in Europe up to $15 billion for 28 days and the SNB announced a similar auction of up to $6 billion. The Bank of England will offer $20 billion of three-month loans on March 18 and hold another auction on April 15. The Bank of Canada announced plans to purchase $4 billion of securities for 28 days.
Treasuries slid after the announcement, with yields on 10- year notes rising to 3.60 percent at 10:32 a.m. in New York, from 3.46 percent late yesterday.
Rate Expectations
Traders removed bets on the Fed to lower its benchmark rate by a full percentage point, to 2 percent, by the end of the next meeting on March 18, futures showed. The contracts indicate a 60 percent chance of a 0.75 percentage-point reduction.
The Fed's auctions of Treasuries, which will begin March 27, may be secured by collateral including agency and private residential mortgage-backed securities, the Fed said. The central bank ``will consult with primary dealers on technical design features'' of the new tool.
Primary dealers are a group of 20 banks and securities firms that trade Treasuries directly with the Fed Bank of New York.
To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net
Last Updated: March 11, 2008 10:33 EDT
Its crap... Pure crap... Good luck, America!!! Good luck to us all!!!
Wednesday, February 27, 2008
Whose plan is this one - Clinton or Obama?
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!!
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!!
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...
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