Central Perk

vineri, 19 noiembrie 2010

Mish's Global Economic Trend Analysis

China Builds 15 Story Hotel in 6 Days
Michigan Forbids City of Hamtramck to Seek Bankruptcy; My Advice to Hamtramck: "Default"
Run on Allied Irish Banks, Customers Pull 17% of Deposits; Ghost Estates and Broken Lives: the Human Cost of the Irish Crash

Posted: 19 Nov 2010 05:00 PM PST

Inquiring minds should be interested in the deflationary aspects of the following video.

In terms of jobs, is that entertaining or frightening?

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

Michigan Forbids City of Hamtramck to Seek Bankruptcy; My Advice to Hamtramck: "Default"

Posted: 19 Nov 2010 12:02 PM PST

A few days ago I noted Hamtramck, Michigan Seeks Bankruptcy.

That Hamtramck is clearly bankrupt, unable to bay bills, saddled with unions salaries, pension promises that cannot be met, as well as other problems it desperately needs to get rid of without burdening taxpayers even more, is of no concern to the current governor of the state.

Please consider this updated report Michigan Forbids City To Seek Municipal Bankruptcy.

A spokesman for the Michigan state treasury said Thursday that municipal bankruptcy isn't an option for Hamtramck, the small city near Detroit that earlier this month asked the state for permission to file for the process.

No Michigan local government has ever filed for municipal bankruptcy, Stanton said, a rarely used tool that allows cities and other local governments to deal with creditors and extract concessions from its unions.

Instead, Michigan has offered Hamtramck, a city of 23,000 residents, three options.

One is a low-interest loan from the state for a maximum of $3 million, to be paid back over 20 years.

The second is a tax-anticipation note, or TAN, which would allow Hamtramck to borrow up to half of whatever it collects in property-tax assessments in a given year; it would have to be repaid in 12 months.

The third is a fiscal stabilization bond, which would let the city borrow up to 3% of its assessed value.

Bill Cooper, the city's manager, said that Hamtramck is currently evaluating the options the state gave it, but he is "not very optimistic these options will work for us" because "we don't need to take on any more debt."

"We have a survival deadline here," Cooper said, noting that, if things continue on the current course, Hamtramck could run out of money by Jan. 31 and be unable to make payroll or pay bills.

Cooper said the state's options essentially require Hamtramck to borrow more money, and much hinges on the city's ability to win its lawsuit against Detroit.

"It pushes the problem down the road," he said.

Meanwhile, getting the city's unions to negotiate has been a problem, as Hamtramck officials have already tried to work with them three times. Municipal bankruptcy could be a way to force concessions, Cooper said.

"It should allow us in essence to restructure," said Cooper, who added the city wouldn't want to be in bankruptcy a long time. "If major corporations can do it, why can't we give it a shot?"

Uncommonly Good Sense

I commend city manager, Bill Cooper, for a masterful display of common sense. Moreover, I point out the well-deserved election shellacking of Democrats as noted by the Lansing State Journal.

The national mood of voter unrest that swept through many states Tuesday played a large part in the shellacking Democratic candidates took in Michigan, when Republicans swept the governor, secretary of state, attorney general and state education board seats while winning control of the state House and a majority on the Michigan Supreme Court.

Advice for Hamtramck City Manager, Bill Cooper

My advice consists of one word "default". Who can stop you? The answer is no one. Let the incoming governor know that is how you intend to proceed.

Send the public unions a message that you will not be intimidated by the state. Explain to the taxpayers you are doing this for them. Let the city residents know if you take the Treasurer's options you would have to hike taxes and burden them with debt for decades to come.

That is all it will take to win their overwhelming support.

I am confident the new governor will be more sympathetic to your cause than the current clowns running the state. The good news is you only have a couple months to wait.

Finally, tell the current treasurer "No Deal", bargaining is over and you will deal with the new administration.

That's all it takes. Stand to your guns Bill Cooper. You have the upper hand as well as the high moral ground.

For the record, I have no financial interest related to my advice. My wife is from Livonia and I know first hand the problems of the state and of Detroit. I send the Citizens of Hamtramck best wishes.

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

Run on Allied Irish Banks, Customers Pull 17% of Deposits; Ghost Estates and Broken Lives: the Human Cost of the Irish Crash

Posted: 19 Nov 2010 09:51 AM PST

A slow steady bleed has turned into a mad dash for cash at Allied Irish Banks. Allied Irish Banks has had to rely on Central Bank funding as customers withdraw $18 billion, a stunning 17 percent of its deposit base. Without Central Bank funding, there would indeed be outright panic.

Forbes reports Allied Irish says it's lost 17 percent of deposits

Allied Irish Banks announced Friday it has lost a staggering euro13 billion ($18 billion), or 17 percent, of its total deposit base since June in the latest evidence of cash flight from Ireland's debt-crippled banking sector.

Earlier this month two other banks, Bank of Ireland and Irish Life & Permament, reported suffering losses of more than 10 percent of deposits in recent months.

The cash flight from Irish banks has accelerated since September, when the government raised its estimated bill for bailing out five banks to at least euro45 billion ($62 billion), a figure that many analysts said was still too low.

Officials at Allied Irish said the bank had euro74 billion in customer deposits at the end of June but just euro61 billion today.

Allied Irish was once Ireland's largest business, but it has suffered a spectacular fall since 2008 in line with the collapse of a construction-dependent economy.

Property Boon Gone Bust Sinks Ireland

Read that last paragraph above once again. Note that unlike Greece which was destroyed by public unions, it was a property bubble and irresponsible bank lending that sunk Irish banks.

Ghost Estates and Broken Lives

Inquiring minds are reading Ghost estates and broken lives: the human cost of the Irish crash

They stand empty across Ireland: 300,000 unoccupied homes, a silent reproach to those who built them believing that the country's economic boom would never end. As Europe's finance ministers laboured in vain to reach an agreement on how to ease Ireland's economic misery last night, the so-called ghost estates were an awful reminder that the "survival crisis" the politicians were warning was under way had already hit ordinary people.

Dave O'Hara was one of those who bought into the "Celtic Tiger" at the beginning of the decade, eschewing a seven-generation family tradition of carving headstones in favour of a piece of the country's building boom. He founded a firm that constructed bespoke windows and doors for the thousands of upscale homes being built. The firm grew into a multimillion-euro enterprise, until the recession – and the collapse of the building industry – hit in September 2008.

Now his company is in liquidation, and Mr O'Hara, 41, who has one child, is on the dole. He owes the Bank of Scotland more than 1m Euros (£850,000).

Not far from Mr O'Hara's home, the "ghost estates" are well-known eyesores along the rugged landscape. And the crisis that created them has hit not just the people who built them, but those who might once have expected to move in, as well. Hundreds of thousands of homeowners have already found themselves saddled with negative equity as a result of the crash, economists estimate, with as many as one in seven families affected.

Personal indebtedness is also an issue, as are redundancy and the end of easy loans, meaning around 100,000 households are struggling to make regular repayments on the money they owe. And yet, house prices continue to fall precipitously. Together with slumping disposable incomes due to frozen wages and stubbornly high unemployment, still running at more than one in every eight adults of working age, many fear a social disaster is unfolding.

Operating Profits Down

For a bank that is clearly bankrupt and exists only because of life support from the central bank, it is interesting to see the headline Allied Irish Banks says operating profits down

Allied Irish Banks (AIB) said today that challenging economic and market conditions are reducing operating profits overall, and in each of the divisions, relative to the same period in 2009. There has been an outflow of €13bn worth of of deposits in 2010.

Excluding Poland, the loan to deposit ratio at 30th September was 159% compared to 151% at 30th June.

The bank said customer accounts have been affected by current adverse international sentiment towards the Irish sovereign and banking sector and are down by c.€13bn from the beginning of 2010 to the close of business on 16 November. This reduction was primarily due to lower institutional and corporate balances.

Operating income has declined year on year to 30th September 2010, mainly due to lower business volumes, an increase in Government guarantee costs of c.€190m and a lower net interest margin. The bank said factors reducing its net interest margin this year include lower capital income, lower treasury income, lower income on loans pending transfer to NAMA and higher wholesale funding costs. AIB said it is continuing to improve margins across non-NAMA loan portfolios and deposit margins, particularly in the Irish market, have stabilised in recent months.

Irish Taxpayers "Namatized"

For more on the situation in Ireland please see Hooray,ECB Saves Eurozone 2nd Time;Allied Irish Bonds Bid at 45% of Face Value, Anglo Irish SubDebt has 99.99% Default Odds;Irish Citizens "Namatized"

Allied Irish Banks Weekly Chart

That's quite the trip from $45 to 72 cents to $10.42 then back down to 76 cents. Shares have rallied in recent days on rumors of a bailout of Irish banks by the ECB and IMF. See the previous link for details too numerous to repeat.

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

Damn Cool Pics

The Biggest Football Miss in History - Uzbekistan vs Qatar
Steve Jobs Households
Only In Japan - Part 2
Invisible Airbag Bicycle Helmet
Hilarious Robert Pattinson Meme
Harry Potter Pets

The Biggest Football Miss in History - Uzbekistan vs Qatar

Posted: 19 Nov 2010 09:16 AM PST

In the game vs. Uzbekistan, the Qatar's 18 year old striker made probably one of the most incredible miss of goal ever.

Steve Jobs Households

Posted: 19 Nov 2010 08:25 AM PST

Here's house in Palo Alto where he lives with his wife and their three children.

He bought it right after his marriage in the 90's and since resides there. Judging by the photos, there's not any special luxury there like other celebs or rich people may have. The house is in the British country style that doesn't really resemble a house of a high-tech/media mogul.

On the screen you can see the picture of his son Reed.

Steve Jobs also has a mansion in Woodside where he lived in the latter part of the 1980s.

He always planned on raze it down and build a new house, a more contemporary styled one, but the local communities, dedicated to saving the historic residence, were opposed to it all this time. But in March of 2010 Jobs finally was granted the right by a California court to demolish the mansion.

The mansion is called the Jackling House which is a historic mansion in Woodside, California, designed and built for copper mining magnate Daniel Cowan Jackling and his family by the noted California architect George Washington Smith in 1925.

After Jobs moved to his new house in Palo Alto, he leased the mansion out for several years until 2000 when he stopped maintaining the house, with the elements degrading it.

Sources: allaboutstevejobs, appleinsider

Only In Japan - Part 2

Posted: 19 Nov 2010 08:09 AM PST

Another selection of funny and weird things that happen in Japan.

Previous part:
Only In Japan.

Invisible Airbag Bicycle Helmet

Posted: 19 Nov 2010 07:56 AM PST

All these people are wearing a helmet but you would never notice it if I didn't tell you about it. The airbag is shaped like a hood that surrounds your head. The gas inflater that inflates the airbag is placed in a holder in the collar on the bicyclist's back. The airbag is deployed by sensors – accelerometers and gyros – that pick up a bicyclist's abnormal movements in the event of an accident.

Source: hovding

Hilarious Robert Pattinson Meme

Posted: 19 Nov 2010 12:50 AM PST

Robert Pattinson has become a meme. A photo of a shirtless Twilight vampire jumping around in his swim trunks is manipulated into all kinds of situations. Have some laugh with this hilarious collection of Jumping Rob memes.

Other Internet Memes:
Disaster Girl Grown Up
Strutting Leo Meme
Bubble Girl Gets Photoshopped
Sad Keanu Reeves Meme
Arjen Robben Is a Ball, Your Argument Is Invalid
Everything You Need to Know about Memes

Harry Potter Pets

Posted: 19 Nov 2010 12:46 AM PST

Some people loved Harry Potter movies so much; they started to dress their pets as wizards and Gryffindor students. These are 20 photographs of Harry Potter themed cats and dogs.