luni, 27 decembrie 2010

Simple Gifts: Holidays at the White House

The White House Your Daily Snapshot for
Monday, Dec. 27,  2010
 

Simple Gifts: Holidays at the White House

Check out the behind-the-scenes video of the holiday decorations and festivities at the White House this year.

Watch the video.

Photo of the Day 

Photo of the Day

President Barack Obama and First Lady Michelle Obama, along with daughters Sasha and Malia, sing during services at St. Michael's Chapel at Marine Corps Base Hawaii in Kailua, Hawaii, Dec. 26, 2010. (Official White House Photo by Pete Souza)

In Case You Missed It

Weekly Address: Merry Christmas from the President & First Lady
President Obama and the First Lady wish families across the country a “Merry Christmas” and encourage everyone to support the troops and their families this holiday season.

Tracking Santa -- An Interview with the Head Researcher
Every year since 1998, the Department of Energy's Los Alamos lab has been using state of the art technology to track Santa Claus as he circles the globe the night before Christmas.

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Seth's Blog : Bigger or smaller?

[You're getting this note because you subscribed to Seth Godin's blog.]

Bigger or smaller?

Every decision we make, every encounter we have... we get a choice.

Are we opening doors or closing them?

It's so tempting to shut people down, to limit the upside, to ostracize, select and demonize. It makes things a lot simpler. Not seeing means you don't have to take action. Not opening means it's easier to announce that you're done. And not raising the bar means you're less likely to fail.

Just about all the things we treasure in our world were built by people who were intent on making things bigger, enabling things to be better, opening doors for us to achieve. The line between a realist and a optimist is hard to draw. And both might be self-fulfilling.

[Please don't confuse this with the issue of focus. Focus involves eliminating options until you have so few moving parts that work actually gets done. You can be focused but still think bigger.]

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duminică, 26 decembrie 2010

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


98 TARP Recipients Close To Failure; Citigroup's Chairman Gives Reasons Citigroup Should Be Broken Up

Posted: 26 Dec 2010 06:42 PM PST

The Wall Street Journal reports 98 shaky TARP recipients are on the verge of failure as bad loans pile up. Please consider Bailed-Out Banks Slip Toward Failure
Nearly 100 U.S. banks that got bailout funds from the federal government show signs they are in jeopardy of failing.

The troubled banks identified by the Journal all have either a Tier 1 capital ratio under the "well-capitalized" 6% level; both a total risk-based capital ratio of under the "well-capitalized" 10% threshold and nonperforming loans of over 10% of their portfolio; or a regulatory order requiring the bank to monitor or boost its capital.

A Federal Deposit Insurance Corp. spokesman declined to comment on the Journal's analysis, which also calculated that 814 of the nation's 7,760 banks and savings institutions are troubled according to these standards, up from 729 at the end of the second quarter. The FDIC's official list of problem banks, which uses different criteria from the Journal's analysis, includes 860 financial institutions. The banks aren't publicly identified.

One example of a TARP recipient in deep trouble: closely held Legacy Bank of Milwaukee. José Mantilla, Legacy's president and chief executive, said the bank lends to an underserved, lower-income customer base.
As Legacy Bank careens towards failure, it appears its customer base was not "underserved" but rather "overserved".

Most of these failures will be relatively small ones. The median TARP infusion for the 98 banks was $10 million. The grand total of the 98 banks was about $4.2 billion. In contrast the first 8 large recipients received a total of $125 billion, now repaid.

Commercial real estate loans gone sour are at the heart of many small bank failures. One consequence of these failures is the too big to fail banks keep getting bigger.

Citigroup Too Interwoven to Fail, Chairman Says

As proof that Citigroup is one gigantic tangled mess, Citi Chairman Richard Parsons boasts Citigroup Too Interwoven to Fail
Citigroup remains too "interwoven" to fail even after the government has plowed billions into rescuing the banking titan and Congress has passed laws taking aim at financial behemoths, Citi Chairman Richard Parsons told CNBC.

"It's not a question of too big to fail," Parsons said in a live interview. "It's a question of too interwoven in the fabric of the global financial life to fail."

Parsons said allowing Citi to fail previously or in the future would be akin to having "the heart, the pump of the economic system fail because then everybody else dies."

"It's probably the most important private financial institution for maintaining our economic strength and presence around the world. You can't let an institution like that go down," he said.
Do these clowns even realize what they are saying? Parsons just gave a superb reason Citigroup needs to be broken up.

I suggest Citigroup should be forced to sell itself off piece by piece by piece, until it is not "too interwoven to fail". The same applies to Goldman Sachs and Bank of America.

Anything too big or too interwoven to fail, is simply too big.

In a free market with adequate fraud-prevention controls between various operations, these banks would likely not have gotten so big in the first place. They certainly would not have survived this global financial crisis if they did.

These gargantuan banks only exist intact because of Fed and taxpayer sponsored bailouts. Adding insult to injury, these banks pose the same systemic risk as before. Topping it off, Citigroup has the gall to brag about it.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Militarization of the Economy; Retired Generals "Advise" the Pentagon as Paid Consultants of Defense Contractors

Posted: 26 Dec 2010 12:35 PM PST

It's widely known that retired military officers frequently move into private industry at the end of their military careers. However, few realize these "generals-for-rent" are often hired back as a pentagon consultants. The potential for fraud is massive. Direct industry representatives get inside information about military programs and budgets. Then in a massive conflict of interest scheme, former generals get paid by both the Pentagon and the defense contractor.

Please consider the Pentagon to the private sector by Bryan Bender at Boston.Com.
An hour after the official ceremony marking the end of his 35-year career in the Air Force, General Gregory "Speedy'' Martin returned to his quarters to swap his dress uniform for golf attire. He was ready for his first tee time as a retired four-star general.

But almost as soon as he closed the door that day in 2005 his phone rang. It was an executive at Northrop Grumman, asking if he was interested in working for the manufacturer of the B-2 stealth bomber as a paid consultant. A few weeks later, Martin received another call. This time it was the Pentagon, asking him to join a top-secret Air Force panel studying the future of stealth aircraft technology.

He said yes to both offers.

a Globe review has found, such apparent conflicts are a routine fact of life at the lucrative nexus between the defense procurement system, which spends hundreds of billions of dollars a year, and the industry that feasts on those riches. And almost nothing is ever done about it.

The Globe analyzed the career paths of 750 of the highest ranking generals and admirals who retired during the last two decades and found that, for most, moving into what many in Washington call the "rent-a-general'' business is all but irresistible.

In some years, the move from general staff to industry is a virtual clean sweep. Thirty-four out of 39 three- and four-star generals and admirals who retired in 2007 are now working in defense roles — nearly 90 percent.

Among the Globe findings:

Dozens of retired generals employed by defense firms maintain Pentagon advisory roles, giving them unparalleled levels of influence and access to inside information on Department of Defense procurement plans.

The generals are, in many cases, recruited for private sector roles well before they retire, raising questions about their independence and judgment while still in uniform. The Pentagon is aware and even supports this practice.

When a general-turned-businessman arrives at the Pentagon, he is often treated with extraordinary deference — as if still in uniform — which can greatly increase his effectiveness as a rainmaker for industry. The military even has name for it — the "bobblehead effect."

The generals who navigate these ethical minefields said they are capable of managing potential conflicts without oversight, because of their own integrity.

"You have to have a firewall in your head," said industry consultant and former Vice Admiral Justin D. McCarthy.

But a number of retired generals contacted by the Globe said they are uncomfortable with the laxity of the system and refuse to use their Pentagon contacts to win private clients.

Navy Admiral William J. Fallon said he turned down consulting offers after learning that defense industry clients were seeking "tactical" information from inside the Pentagon. Said Fallon: "I didn't want to be a walking Rolodex."

Retired Army General Wesley K. Clark, who now works as a lobbyist and investment banker for companies seeking alternative energy contracts, believes the growing hunger among private equity firms and Wall Street investors to enlist retired generals is a consequence of a broader phenomenon: the increasing importance of the military to America's industrial base.

"It is the militarization of the economy," Clark said in a recent interview.
Here is a video from the article.



Bender's article is an excellent eight-page read. Please give it a closer look.

President Obama could easily put a stop to this fraud if he wanted to. So could have President Bush before him. So could Congress.

Yet nothing happens and we keep wasting more on more money on programs we do not need. For more details, please see Why the United States of America is Broke

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Sunday Funnies 2010-12-26 Bernanke and Kucinich Discuss the Need for Paper

Posted: 26 Dec 2010 11:00 AM PST



In other news Bridgewater, New Jersey spends $17K to defend $5 fee it charged resident
A Somerset County town spent more than $17,000 defending a $5 fee it charged a resident for a compact disc of a council meeting.

Tom Coulter filed a complaint with the New Jersey Government Record Council in October 2008, saying he should pay the actual cost of the CD to get the recording.

The state council this year sided with Coulter and found he should have paid about 96 cents.

Bridgewater paid more than $14,000 in legal fees defending the case. It had to pay $3,500 to Coulter for his legal fees and give him a $4.04 refund.

Township Attorney Alan Grant tells The Courier News of Bridgewater the legal fees would have been substantially lower had Coulter settled, as the township had offered.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Pensions Eat 70% of Decatur, Illinois' Budget; New York City's $76 Billion Shortfall; Houston Mayor Wants Pension Benefit Cuts

Posted: 25 Dec 2010 11:43 PM PST

Public pension woes continue to escalate. Here are three more stories highlighting problems at various cities in Illinois, New York, and Texas.

Pensions Eat 70% Decatur, Illinois Budget

Please consider Pensions eat up growing portion of city of Decatur's property tax revenue
As the Decatur City Council prepares to convene Monday to discuss setting its portion of the local property tax levy, the largest burden on those revenues - funding the pensions of police, firefighters and city employees - remains a persistent and growing challenge.

City Manager Ryan McCrady and Finance Director Ron Neufeld highlighted some telling statistics in the city's attempts to maintain its pension funds over the last decade.

"We've been putting in what we're required to put in, but the unfunded liability keeps growing," McCrady said.

In 2001, about 30 percent of the city's property tax levy went into paying down the pensions of its retired police and firefighters. In 2011, 70 percent of it will go toward pensions, even as recent years have seen cuts to other services that draw their funds from the same source, including the Decatur Public Library.

The state legislature sets all of the rules for pension contributions, and over the years it has mandated that municipalities make ever increasing payments. The result, McCrady said, has been a higher and higher cost for the city.

Recent pension reforms that passed the General Assembly and await the Gov. Pat Quinn's signature could provide long-term relief, McCrady said, but in the short term, city staff and the council have to figure out how to meet their obligations in a fiscal climate that leaves little breathing room.

"It's to the point now where taxpayers can't sustain a property tax levy to the point where we can fund these out of the property taxes," McCrady said. "We're starting to draw from other operations to pay for these obligations."
Long-term fixes won't do Decatur much good now if it runs out of money a few years from now. Property tax hikes certainly are not the answer either. I suggest bankruptcy, followed by outsourcing the police and fire departments to the lowest qualified bidder.

New York's Exploding Pension Costs

The Empire Center for New York State Policy discusses New York's Exploding Pension Costs
Public pension costs in New York are mushrooming—just when taxpayers can least afford it. Over the next five years, tax-funded annual contributions to the New York State Teachers' Retirement System (NYSTRS) will more than quadruple, while contributions to the New York State and Local Retirement System (NYSLRS) will more than double, according to estimates presented in this report. New York City's budgeted pension costs, which already have increased tenfold in the past decade, will rise by at least 20 percent more in the next three years, according to the city's financial plan projections.

NYSTRS and NYSLRS are "fully funded" by government actuarial standards, but we estimate they have combined funding shortfalls of $120 billion when their liabilities are measured using private-sector accounting rules. Based on a similar alternative standard, New York City's pension funds had unfunded liabilities of $76 billion as of mid-2008—before their net asset values plunged in the wake of the financial crisis.

In November 2003, the Manhattan Institute for Policy Research issued a report de-scribing New York State's public pension system as "a ticking fiscal time bomb."

The bomb is now exploding—and New Yorkers will be coping with the fallout for years to come.

New York's state and local taxpayers support three public pension funds encom-passing eight different retirement systems—five covering different groups of New York City employees, and three covering employees of the state, local governments, school districts and public authorities outside the city. Between 2007 and 2009, these funds lost a collective total of more than $109 billion, or 29 percent of their combined assets. Two of the three funds ended their 2010 fiscal years with asset values below fiscal 2000 levels; the third has barely grown in the past decade.

Meanwhile, the number of pension fund retirees and other beneficiaries has risen 20 percent and total pension benefit payments have doubled in the past 10 years. Tax-payers will now have to make up for the resulting pension fund shortfalls.

Assuming the pension systems all hit their rate-of-return targets:

  • Taxpayer contributions to NYSTRS could more than quadruple, rising from about $900 million as of 2010-11 to about $4.5 billion by 2015-16. The projected increase is equivalent to 18 percent of current school property tax levies.
  • State and local employer contributions to NYSLRS will more than double over the next five years, adding nearly $4 billion to annual taxpayer costs even if most opt to convert a portion of their higher pension bills into IOUs that won't be paid off until the 2020s.
  • New York City's budgeted pension contributions, which already have in-creased by more than 500 percent ($5.8 billion) in the last decade, are projected to increase at least 20 percent more, or $1.4 billion, in the next three years.

Pension costs would be even higher if New York's state and local retirement funds were not calculating pension contributions based on permissive government ac-counting standards, which allow them to understate their true liabilities.

While New York's two state pension systems officially are deemed "fully funded," we estimate that NYSLRS is $71 billion short of what it will need to fund its pension obligations, and that NYSTRS has a funding shortfall of $49 billion, based on valua-tion standards applied to corporate pension funds.

New York City's pension systems are not as flush as NYSLRS and NYSTRS, which is the main reason why the city spends more for pension contributions than all of the state's other public employers combined. The official "funded ratios" for the five city retirement systems ranged from 56 percent to 80 percent as of June 30, 2008. This would indicate they were $42 billion below fully funded status before the financial market meltdown wiped out more than 20 percent of their net assets. However, the city actuary also has computed alternative measures of funded status based on the kind of more conservative assumptions used in the private sector. These measures show the city's pension system was underfunded by $76 billion in 2008.

The shortfalls in the city systems undoubtedly have grown much larger in the last two years, but the full dimensions of the problem won't be known until the pension plans issue their financial reports for fiscal 2010.
Note that those shortfalls assume New York meets its expected rates of return of 7.5-8.0% based on plan. The odds of that happening are slim. Please see the article for more facts, figures, and charts.

Houston Mayor Wants Pension Benefit Cuts

The Houston Chronicle reports Houston mayor wants benefits cut, takes fight to Legislature
Instability in its three pension systems is the greatest threat to Houston's financial solvency, city officials and financial analysts say.

Within three years, according to an actuarial study commissioned by the city, the pension for firefighters will require the city to contribute 45 percent of its payroll costs for that retirement plan, a burden Mayor Annise Parker says is unsustainable.

The other two plans are in even worse shape. The police and municipal employee pensions are underfunded by $2.1 billion, roughly the equivalent of what the city spends annually for public safety and general operations.

"The bottom line is the whole system is completely unsustainable with current benefit levels and the city's financial position," said John Diamond, a Rice University public finance fellow and governmental tax consultant.

The opening salvo in what may be a long fight over city pensions is expected to take place in the upcoming state legislative session. The city is taking direct aim at the firefighters' pension, seeking help from state lawmakers to force pension officials to negotiate in hopes they can reduce benefits and lower annual contributions.

"Voters elected me to make tough choices, and voters elected me to get the city's budget in order," Parker said. "We are hemorrhaging right now … in some of our pension costs. … There's a difference between a fair pension and a gold-plated pension, and the citizens of Houston have to know that we can find a fair balance in there."

Christopher Gonzales, executive director of the firefighter pension, said the fund does not want to join the city in a "meet and confer" agreement, a sort of watered-down collective bargaining. Those negotiations with the two other employee pensions in recent years have only resulted in reduced benefits for the workers and annual contributions to the system that were not enough to ensure its financial security, he said.
The firefighters don't want "watered-down collective bargaining". Well, I don't want collective bargaining at all. Collective bargaining is one of the problems.

The mayor ought to grant Gonzales his watered-down wish and outsource police and fire to the lowest bidder. Then again, the City of Houston is Bankrupt (So are California, Oregon, and Pension Plans in General) so arguably the best thing for Houston to do is admit it and file for bankruptcy. The police and fire departments can then see what benefits they get in bankruptcy court.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Seth's Blog : Measuring busy-ness...

[You're getting this note because you subscribed to Seth Godin's blog.]

Measuring busy-ness...

is far easier than measuring business.

Busy-ness might feel good (like checking your email on Christmas weekend) but business means producing things of actual value. Often, the two are completely unrelated.

What if you spent a day totally unbusy, and instead confronted the fear-filled tasks you've been putting off that will actually produce value once shipped?

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sâmbătă, 25 decembrie 2010

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Margin Debt Soars to Highest Levels Since September 2008

Posted: 25 Dec 2010 09:09 AM PST

Margin debt is one measure of the amount of optimism or pessimism in the stock market. Rising margin debt generally correlates to a rising stock market. Margin use has soared to the highest level since September 2008.

Margin Debt vs. S&P 500



click on chart for sharper image

Margin Debt Data is from NYSE Factbook Securities Credit

ZeroHedge discussed margin debt in NYSE October Margin Debt Jumps To Highest Since Lehman Failure As Investor Net Worth Is At Lowest Since April Highs
It is not just the stock market that is at the highest levels since Lehman. Probably just as importantly, NYSE margin debt has surged to $269 billion, an increase of $13 billion from the prior month, and the highest since September 2008 when it was at $299 billion.

We are confident that NYSE cash in November will be at the lowest level of the year, not to mention December, as hedge funds leveraged everything they could, in some cases hitting as much as 3-4x gross leverage, in pursuit of beta, now that unleveraged alpha strategies have ceased to work. Which means that with retail stubbornly missing from the picture, the only beneficiaries of the HFT and Fed facilitated melt up are the 1000 or so hedge funds, where average net worth is in the 6 digits, that will be profitable this year.
Moreover, mutual fund cash levels have been near record lows since September, and topping it off, a respected friend tells me NYSE cash levels are negative $35 billion.

Collectively, this sounds like "all in" to me, and then some. However, just as in 2007, no one knows for sure when excessive optimism gets punished, historically it always is.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Merry Christmas from the President and First Lady

The White House Your Daily Snapshot for
Saturday, Dec. 25,  2010
 

Merry Christmas from the President and First Lady 

President Obama and the First Lady wish families across the country a “Merry Christmas” and encourage everyone to support the troops and their families this holiday season.  Visit www.serve.gov to find ideas for what you can do to help our servicemen and women and their families.

Watch the video.

Weekly Address

Weekly Wrap-Up

Holidays at the White House: The White House celebrates Simple Gifts this holiday season. You're invited to tour the Christmas decorations, watch behind-the-scenes videos, share a Season's Greetings message with the troops and more.

Tracking Santa: The Department of Energy's Los Alamos lab uses state of the art technology to track Santa Claus as he circles the globe.

West Wing Week Video: “AKA Santa Claus” -- walk step by step with the President as he signs the repeal of “Don’t Ask Don’t Tell,” reads to kids for the Holidays, and receives the Census report.

5 Achievements: As the President said, it’s been the most productive post-election period we’ve seen in decades. Here are five post-election achievements you should know about.

White House Staff: It Gets Better Video: Inspired by President Obama’s It Gets Better video, several LGBT White House staffers decided to add their voices to the project.

“'Out of Many, We Are One”: The President signs the repeal of “Don’t Ask Don’t Tell” -- the right thing to do for our military, and the right thing to do for our country.

The President’s Press Conference: As this session of Congress draws to a close, the President reflects on the flurry of productivity for the American people during the final stretch.

Behind-the-Scenes Video: A day of service with President Obama and the Los Angeles Lakers.

White House White Board Video: HHS Secretary Sebelius explains how a new rule helps states review and crack down on unjustified premium hikes and protect consumers.

My American Story: Americans step up to be a part of the solution – watch the video, then visit Serve.gov to find a volunteer opportunity that’s right for you.

CAPTA: President Obama signs the reauthorization of the Child Abuse Prevention and Treatment Act (CAPTA) – critical legislation to prevent child abuse and domestic violence.

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Seth's Blog : Family day

[You're getting this note because you subscribed to Seth Godin's blog.]

Family day

If you got a Kindle today, here are some tips to get you started. A million or so people are starting with an empty one.

I hope you enjoy your family and doing whatever truly matters to you today.

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