The Georgian Government, following its disasterous assault on South Ossetia and war with Russia, has dismissed its defense and foreign ministers.
You know, I think that the problem is a few levels higher…..You know that guy with the degrees from Columbia and George Washington University.
We now have rumors of more Republican retirements, Chuck Grassley of Iowa and George Voinovich of Ohio, though a spokesman for the latter denied this.
So, Bush is wondering if the Big 3 (Big 2½) are a prudent taxpayer investment:
President Bush on Friday said he is worried about giving taxpayer money to car companies that “may not survive.”
After giving, what, 5 times that amount to an just one insurance insurance company, and engineering something on the order of 200 times that amount for wall street in exchange for stock that has already lost a third of its value.
Big finance is a political ally, so they must be saved.
The UAW is the enemy, and so must be crushed, even if it means that there will be a 6 month period where no cars at all are assembled in the US, by either surviving members of the Big 3 (Big 2½) or by the transplants like Toyota, Honda, etc. because of suppliers going into bankruptcy like dominoes.
Additionally, you would start seeing shortages on spare parts for the cars, adversely effecting the auto repair business.
Seriously, when you see this level of disregard of the basic well being of the country because of political expediency, there is only one thing to day, “The Hague, bitches.”
Pretty much the hed of Huge Job Losses Could Be Signal That Worst Is Over.
There’s a HMS Titanic metaphor here, but I’m too pissed off to think of it.
I’ve never been entirely sure why, but Fridays tend to be OMFG kinds of days, and this one is a doozy.
We have the jobs report out, and it is unbelievably grim, with 533,000 job losses, and the unemployment rate going from 6.5% to 6.7%.
By way of perspective, the so-called experts has predicted job losses of “only” 335,000.
It’s the worst monthly job losses since 1974.
The numbers are actually worse, since this does not count the 422,000 people who just stopped looking for work.
BTW, the unemployment number quoted, the U3 is considered, by me at least, to be over restrictive and understate unemployment. The broader U6, it hits 12.5%:
The U-6 rate only has comparable history back to 1994, but November’s rate is by far the highest since then and the swift rise to that elevated level also far surpasses similar moves during the recessions in 2001 and 1990-91. Previously, the Labor Dept. kept a similar gauge with history back to 1970, showing a high of 14% unemployment during the deep recession in 1982.
The U-6 rate rose sharply in November, from 11.8% in October, and is markedly higher now than the 8.4% recorded in November 2007.
It sucks north of the border too, where Canada Lost 70,600 jobs, which is more on a per capita basis…but Steven Harper wants to try Hoovernomics for a few months to see if it will fix things, which is why the hereditary enemies Liberal, NDP, and BQ parties are trying to desperately form a coalition government to kick his ass to the curb.
Given these numbers, it’s no surprise that a record number of Americans are on food stamps.
Meanwhile, in real estate, delinquencies and foreclosures hit record highs, loans in foreclosure are now at 2.97%, and delinquencies rose to 6.99%.
Meanwhile, it’s clear that the central banks are pushing on a string, and the Bank of England is looking at finding new ways to give away money, because rate cuts are not working:
The Bank of England is working on radical plans to inject cash directly into the British economy as a last resort to reverse a slide into recession, a newspaper reported on Friday.
…
The Daily Telegraph said the Bank was “working on radical plans to inject cash directly into the economy — the nuclear option to be used only when interest rates approach zero.” The report said the Bank was considering engaging in “quantitative easing” — printing more money to reflate the economy.
“Measures under consideration include direct purchases of assets, such as government debt or commercial investments, by the Bank or the Treasury, as well as expanding the Bank’s balance sheet, a means of pumping extra cash into the banking sector,” the newspaper said.
This is end of days economics…..They are literally considering throwing money out the window.
Meanwhile, the markets behaved in ways that make no sense to me, once again indicating that anything beyond simple index funds is not a good investment option for me:
because….Honestly, I have no clue as to why.
In the meantime, oil fell to $40.81/bbl, the lowest since December 10, 2004, and Gasoline?: $1.773/gallon retail.
Please, just throw all of them, particularly Bob Rubin, in Jail, because enough is enough:
An investor lawsuit contends that Citigroup Inc insiders, including senior counselor and former U.S. Treasury Secretary Robert Rubin, sold more than $150 million of their own shares at inflated prices while concealing the bank’s true financial health.
Rubin has to be front and center in all this, because he’s….well, he’s front and center in all this.
Every time you see a problem, his name crops up, either as a financial actor or a political one, and yes, criminalizing this sort of revolving door would be a very good thing.
In order to show real accountability, those who knew, or should have known, and with the stock dumping it is clearly the former, and were in a position to do something about this, need to be punished.
It does a number of good things, the first is that he would clearly be a placeholder, and so we can allow the voters select a replacement in a special election in 2010.
The second is that Elliot Spitzer really understands the current financial mess, and how the current prescription, which involves even more bank consolidation, is just plain wrong.
His point is that if financial institutions are too big to fail, they are too big not to be broken up:
Two responses are possible: One is to accept the need for gigantic financial institutions and the impossibility of failure—and hence the reality of explicit government guarantees, such as Fannie and Freddie now have—but then to regulate the entities so heavily that they essentially become extensions of the government. To do so could risk the nimbleness we want from economic actors.
The better policy is to return to an era of vibrant competition among multiple, smaller entities—none so essential to the entire structure that it is indispensable.
I have, on a number of occasions mentioned that the Fed has a habit eliminating statistics that might show them in a less than stellar light, so we have them dropping M3 from their reports, for example.
Well, we have another case of this now, with the Cleveland Federal Reserve ceasing the publication of their TIPS spread derived inflation expectations.
OK, so what is a, “TIPS spread derived inflation expectations?”
Well, the TIPS are, “Treasury Inflation Protected Securities”, basically bonds, with a twist, and the twist is that the principal is indexed to the consumer price index, so over the life of the instrument, you have interest and principal, your original investment returned to you.
They are set up so that the bond stars with an index of 1, and can never go below 1.
The spread derives inflation expectations are a measure of the difference in price between new 5 year TIPS and 5 year old 10 year tips.
Assuming that they pay the same interest, you would assume that they would be identical. In both cases you pay your money, and you get all your money back, plus interest, after 5 years, right?
Wrong.
This is wrong, because after 5 years, those 10 year bonds are at an index of 1.2 or so, while the new bonds are at an index of 1.0, which means that if you have deflation, the 10 year bonds can drop back to some number between 1.2 and 1.0, while the 5 year bond will, under those circumstances, stay at 1.0.
In the event of flat prices, or inflation, they are identical.
So, the 10 year bond with 5 years left is somewhat riskier, because you can lose up to 20% through deflation.
So the question is, what do people who buy these bonds think of this risk?
If they think the risk is small, then the price difference (spread) between the two bonds in the open market will be small, and if they think that the risk is large, the spread will be larger.
So, the market has increasingly been saying that they have high deflationary expectations, which translates to “Depression” for the rest of us, and the Federal Reserve Bank of Cleveland finds this inconvenient, so they will stop publishing the data.
I don’t know who found pictures of Lichtenstein’s royal family engaged in unnatural acts with a sheep, because, they have announced that they have, “agreed a landmark deal with the U.S. to drop bank secrecy in cases of tax evasion and could make similar concessions in the European Union.”
They now have to show evidence of likely tax evasion, as opposed to proving that there is deliberate tax fraud, which, you know, you generally cant without having access to the accounts in the first place.
You are going to see a whole bunch of people paying back taxes soon.
My daughter, Natalie is on the “Principal’s Honor Roll” at Franklin Middle school, which means that she is maintaining an above “B” average.
Considering the challenges Natalie has had, she had problems learning to read and she is still on an IEP,* this is a very pleasant development.
We took her out to an Italian restaurant that she rather likes by way of reward.
*Individualized education plan, a personalized plan to address the specific needs of a special education student.
Senator David Vitter (R-LA) is running for reelection.
This is the man who contracted with the DC Madame to have himself put in diapers, and he’s running for reelection.
So, why the hell is Elliot Spitzer not governor of New York again?
Well, let’s be clear here, the problem is not just that people are not buying cars from the Big 3 (Big 2½), it’s that they are not buying cars from anyone.
Year over year, we have domestic sales filling by: GM ↓41%, Ford ↓30%, Chyrsler ↓47%, Toyota ↓34%, Honda ↓32%, Nissan ↓42%, and Hyundai ↓40%.
That is simply not sustainable, and with its lack of a foreign presence, Chrysler is clearly in the worst shape of the lot.
So, we now have the CEOS of the Big 3 (Big 2½) going before Congress and abasing themselves for operating cash, along with the obligatory promise to pay themselves $1/year.
The investment bankers did not do this, and they are still getting multimillion dollar bonuses.
Chrysler and GM are still saying that they need the money to function, though Ford is still saying that they just need a loan guarantee to in case one of the others goes belly up, and it sets up a cascade of bankruptcies among the parts suppliers.
Also, the amount of money has increased, from $25 billion to 34 billion…Which is still a lot less than the $7 trillion promised in one form or another to the Wall Street set.
Well, in Minnesota, the Coleman campaign withdrew 650 ballot challenges in response to the withdrawal of challenges yesterday by the Franken campaign.
It will come down to the challenges and the excluded absentee ballots, but I think that Franken has a slight advantage.
Also, on a sad note, Tom McClintock (R) beat Charlie Brown (D) in Doolittle’s old district in California.
A heart breaker there…Less than 1800 votes out of about 360,000 cast.
Short version buy the big 3 (big 2½) with the money that they are asking for, screw the shareholders, and tell them what to do, just like the US government did in WWII.
Go read it.
Well, it appears that Nora R. Dannehy, the US Attorney assigned to investigate the politically motivated firings of US Attorneys, has been aggressively pursuing the case, “meeting with defense lawyers, dispatching subpoenas and seeking information about the events.”
What’s more, one of her investigators has formally contacted Alberto “Abu” Gonzalez, which means that any lies or omissions to that investigator are handled under obstruction of justice, which is much easier to prove than perjury.
But I do wish that we had their banking regulators:
Banks will face huge fines if they do not treat their customers fairly, under a crackdown to be announced by the Government today.
Ministers have decided to turn the voluntary code of practice operated by the banks into a legally-binding one, amid mounting concern that they are flouting their own rules during the credit crunch. The move follows claims that small businesses and individual customers have had the terms and conditions of their loans and overdrafts changed overnight by their banks.
No, it wasn’t a Republican being rude. She thought that Obama, and later Emanuel were pranking DJs trying to punk her.
I really don’t blame Ros-Lehtinen, but it is way too funny not to mention.
It’s to prevent a no confidence vote of his minority government, which went completely nuts following the last election, and attempted to defund the opposition parties, pass strike bans, and fight the downturn with Hoovernomics.
The mask slipped, and it was enough to make the various members of the Liberals, NDP, and BQ decide to form a coalition government, and throw him out.
While I do think that the Conservatives might be able to do something in the next 7 weeks to hold onto power, it would involve dumping Steven Harper and finding someone who is not a serious right wing nutjob as party leader.
As it stands right now, the Conservatives are running around screaming, “Coup”, and saying that it would be a disaster for the BQ to be a part of the government, because they want to secede from Canada (OK, they are right on that one, but the Tories are a worse disaster).
There has not been a government change in Canada without an election since 1924, but it is a legal move, and it’s intended for moments like this.
It should be interesting to see whether the Conservatives can peel off some Libs or BQ, or whether some Tories will move away from Harper.
Any Canadians want to handicap this?
First, Calculated Risk’s Credit Crisis Indicators are either flat or down, and the 3 month treasure note is still at 0.005%, which means that people basically put their cash in a mattress, so that is how freaked investors are, and how much they look for a safe haven.
Of course, what with the Bank of England cutting its rate by 100 basis points to 2%, it’s not like there is a whole bunch out there that is going to generate decent return anyway.
The weekly jobless claims posted a surprise drop, but continuing claims rose to a 26 year high.
Additionally, we have factory orders falling by the most in 8 years, which is completely unsurprising, as factories do not order much if consumers are not buying, and we are seeing double digit drops in buying this holiday season.
Considering that demand for commodities is falling with the economy, it’s not a surprise that oil has fallen to less than $44/bbl, and retail gasoline price has falls below $1.80/gallon.
Remember how I said that it was the scariest word in finance?
Well, now that Harvard is trying to get its endowment out of some private-equity stakes, we are seeing illiquidity in these markets:
A push by the richest U.S. universities to unload their stakes in private-equity funds is flooding the market, driving down prices for the world’s best- known buyout firms.
Investors led by Harvard University, which manages the largest U.S. endowment at $36.9 billion, may increase so-called secondary sales of private-equity funds to more than $100 billion during the next year, overwhelming available pools of capital. Interests in funds managed by KKR & Co., Madison Dearborn LLC and Terra Firma Capital Partners Ltd. all are being offered at discounts of at least 50 percent, according to people familiar with the sales
(emphasis mine)
Illiquid: You have assets, but no buyers, so those assets are worthless, or near worthless. This is what Greenspan’s “financial innovation” have gotten us.