Friday, November 27, 2009

SAR #9332

What exactly is a "consumer" and why are there still so many of them?

Terminology:  Try telling your credit card company that you are entering a “six-month standstill” in repaying your debts.   Dubai thought it might work on its $80 billion ...

Match'em Quiz:  Match the markets with their results: (a) CAC-40 (b) DJ 600 Stoxx (c) DAX (d) FTSE 100 (e) Hang Seng. with (1)-3.3%, (2) -3.2%, (3) -3.4% (4) -3.3% (5) –2.75%

Counting: If there were 416 “problem banks” in the second quarter and 552 at the end of the third quarter and 50 banks had failed in the meantime, how safe is your money in an FDIC bank?

Another Record Year! Atmospheric carbon dioxide continues to climb at rates that match scientists' worse-case scenarios, reaching levels not experienced in the last million years. We're living in a mad scientist's laboratory.

Hip-Bone connected to the.... Commercial Real Estate is “going sub-prime” and mortgage holders are likely to suffer big losses. Banks may write off $430 billion. Big life insurance companies have about $150 billion in “exposure” and some may have difficulty surviving an extended downturn, but so far their accountants “have not recognized material impairments or losses”. Wouldn't know a loss if it sat down beside them.

Good News Bad News: The good news is that scientists have succeeded in producing the polymers used for everyday plastics through bioengineering. The bad news is that scientists have succeeded....

Smoke: There's a reason everyone thinks there was collusion between the Treasury and AIG to conceal payments to Goldman Sachs.

Location, Location, Location: Over 5 million US houses are worth at least 20% less than the mortgage and 10.7 million are underwater to some degree. Nine percent of Americans are either in foreclosure or more than 90 days behind in their mortgage payments – a point from which foreclosure is all but a sure thing.

Official Talent: The Census Bureau employee found dead, hands and feet tied with duct tape, mouth sealed with same, rope around neck and “FED” written (bottom up... ) on his chest has been determined to have committed suicide.

And Then the Rains Came: By the end of 2010 the US has to roll over $3 trillion in existing debt plus finance another $2 trillion in new debt. Sucking that much money out of the market will dampen things, if they can actually do it.

Just Sign Here:  Another set of studies has shown that Americans are financially illiterate, a foregone conclusion in the land of the otherwise illiterate and innumerate. Go figure.

Garden Party: China says it will not sacrifice its growth just to reduce CO2 emissions. “Can't please everyone, gotta please yourself.”

Oil and Economics: At $90 a barrel, 4.5% of the global economy goes to pay for oil. Any higher price will destroy the economy and thus destroy demand. “So we do have a ceiling on how much expensive alternative fuel we can put into the market.” said Saudi Aramco's former VP of production, who apparently isn't deeply invested in Iowa corn.

Asked & Answered: Is global warming unstoppable? No, if we're lucky a major collapse of the world's economy might save us. But a 6ºC rise by 2100 seems possible and a 4ºC rise probable.

Plot Sketch: A group of well paid and highly trained American assassins, working out of a safe house in Karachi, covertly kidnap, torture and kill terrorists, saving the world from forces that would kidnap, torture and kill Americans in revenge.

The Sequel: Citi fears that investors haven't learned anything in the last two years and the rampant speculation in basic commodities will turn out badly. Badly, as in “Sub-Prime II, the Sequel”.

Strange Idea: Let Afghans solve Afghan problems. It'll never fly, there's no profit in that approach.

Socialism:   The next time someone bitches that the government spends 43% of its money on Social Security, Medicare, and Medicaid, remind them that 34% of the government's money comes from dedicated Social Security and Medicaid taxes and only 9% of general tax revenue monies go to these programs.

Porn O'Graph:   Money vs pretense.

10 comments:

Anonymous said...

Just Sign Here: Another set of studies has shown that Americans are financially illiterate, a foregone conclusion in the land of the otherwise illiterate and innumerate. Go figure.

Yes, but this is compensated for by the FACT that their Sports Literacy is off the Chart. Speaking of which, why has no Internet Wag noted that the Yankees of New York, home of Goldman Suchs and all the other Banksters just purchased the World Series. Does no real sports fan in the Hinterland resent this obvious statement of how Sports, like Society itself is really run and who runs it?

Anonymous said...

Of course most Americans are financially illiterate: it's a reflection of our broken K-12 public educational system, which seems to exist for the benefit of the teacher's union rather than the students.

And you must have been living under a rock to just notice that baseball is more or less dominated by large market teams. But the players' union likes that setup.

As for our society, in general, we are being governed by financial illiterates who have no clue as to the limitations of money or how an economy actually functions. Look no further than this graph for proof.

http://blog.american.com/?p=7572

Perhaps that's why our pinhead leaders in Washington marveled at the pronouncement last month that the ecomony was on the way back, but didn't grasp the concept that the economy does not grow because government does.

Look, I'd love to see some banksters in striped pajamas, but the co-conspirators in DC haven't the stomach for it. Instead, the politicians and career civil servants have taken the helm, and it's only a matter of when, not if, they will steer our already fragile economy into an iceberg.

I fear that Dubai is a preview of coming attractions. Karl Denninger wrote this on his blog this morning about Dubai:

This may instead be the last warning we get. The potential for contagion does exist in this situation, and with the markets floating not on fundamental values but rather on Fed-created games and distortions. This in turn has encouraged people to lever up, which means that we are once again exposed to a potential margin call tsunami that circles the globe and takes down all asset classes at once in an uncontrolled unwind.

Is anyone in the "global regulatory community", including most especially The Fed and Congress, listening?

Probably not.


But that's just crazy talk because Obama, Reid, Pelosi and helicopter Ben know better: just keep printing money until Washington can save us from the root of all evil -- the insurance companies. Then we can all live happily ever after.

TomOfTheNorth said...

re:Terminology, perhaps Dubai saw the 10 tips to get out of debt as suggested by CNBC and dissected on Outside The Cardboard) Box:
http://outsidethe-cardboard-box.tumblr.com/post/256400826/giving-thanks-for-cnbc

In Tip #2 on slide 3 of 13, CNBC suggests "Reducing your interest cost is one way to fast track your way out of debt." So simple, yet brilliant!

As a side note, I read that Dubai has approx $500 billion available so,the writer argued, Dubai will ultimately make good on the (as much as $100 billion) debt.

That's a big percentage hit for an investment likely to decline precipitously. US homeowners are handingover the keys to their homes for losses with much tighter spreads than that....

The way I see it, the Dubai deferrence 'strategy' is a poker hand that Dubai is likely to play to the last card and a strategy more sovereigns are also likely to pursue....

re: Anonymous' discussion of financial illiteracy, while I generally agree that our k-12 system is broken, I don't necessarily think that primary education need convey much more than the basics of earning, saving, budgetting and the uses & pitfalls of credit. Consider that our President, arguably a well educated man, back in Feb spoke of the Profit / Earnings Ratio - what even novice investors know to be the Price/ Earnings ratio. So clearly financial illiteracy, on its own, is not a serious handicap. You only need to know what the p/e is if you invest in stocks based on valuation.

One other point on the same subject is one of personal responsibility - savings, investment, debt - people need to take responsibility for their own lives - financially & otherwise. The post-Great Depression era was marked by frugality. The post -Whatever We're In Nowera will likely be the same...

Cheers!
- TomOfTheNorth

Anonymous said...

CKM, this is said with all due respect.

Please learn the difference between "it's" and "its".

When you don't use it correctly, It makes your intelligent blog a bit less so.

TomOfTheNorth said...

Re: it's & its- a typo is not the same as ignorance. But 'ANAL' is forever.....

and re:Dubai, I mistakenly assigned a $500 bil sovereign wealth balance to Dubai, when in fact 'its' belongs to Abu Dhabi

Cheers!

- TomOfTheNorth

Charles Kingsley Michaelson, III said...

Anony 814 & Tom - Its not ignorance, its a lifelong curse - one of not taking the time to let my mind over-rule my rushing fingers. I blame it all on my mother insisting I learn to spell and touch-type during the same summer. I learned the one and not the other. But I also learned to hope that my readers were bright enough to accept a misspelling or grammatical error and not spill soup down their shirts.
ckm

Anonymous said...

Bright enough, yes.
Fed up with shoddy grammar everywhere, yes.
Eats,
Shoots,
and Leaves.

Anonymous said...

Tom, our president has a very high IQ, but I believe that he has little or no basic financial knowledge. In fact, his personal financial history is the perfect example of why our economy ultimately collapsed in a sea of debt.

Although he had every right to take such personal risk (many successful people have), he is incredibly negligent to repeat it with OUR money. He clearly doesn't understand the perils of too much debt, nor the power of compound interest.

Following is an excerpt from a May 2009 op-ed by "an elected official in California" -- apparently not Nancy Pelosi -- writing under the pseudonym Richard Henry Lee."

A close examination of their finances shows that the Obamas were living off lines of credit along with other income for several years until 2005, when Obama's book royalties came through and Michelle received her 260% pay raise at the University of Chicago. This was also the year Obama started serving in the U.S. Senate...

In April 1999, they purchased a Chicago condo and obtained a mortgage for $159,250. In May 1999, they took out a line of credit for $20,750. Then, in 2002, they refinanced the condo with a $210,000 mortgage, which means they took out about $50,000 in equity. Finally, in 2004, they took out another line of credit for $100,000 on top of the mortgage.

Tax returns for 2004 reveal $14,395 in mortgage deductions. If we assume an effective interest rate of 6%, then they owed about $240,000 on a home they purchased for about $159,250.

This means they spent perhaps $80,000 beyond their income from 1999 to 2004.


http://tinyurl.com/o6aauw

TomOfTheNorth said...

Great comment on the Obama's finances, anon. I would just say that a basic understanding of money & credit, which I believe the President has, would tend to steer one away from personal financial leverage. The couple's successful use of leverage suggests they may in fact be more sophisticated (mistatement of P/E notwithstanding). At the national policy level however, there is always more involved than just facts and hard calculations. The President likely did the deal he felt had to be done, regardless of his personal opinion. That said, I imagine you & I agree that they've really screwed the pooch this time.....

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