Friday, November 6, 2009

SAR #9311

In the USA work and poverty are no longer incompatible.

Finance 101: The best way to make money* is to borrow it from John Q.'s right hand at 0.92% and to lend the same money back to John Q.'s left hand at 3% or more. (*If you are Goldman Sachs, which lost money on only one day in the last quarter.)

On the Beach: Good news, there will probably be less than 100,000 foreclosures in the three-county South Florida area. In October only 272 foreclosures were filed every day. The Dow is back at 10,000 and Wall Street banker bonuses are up 40%. There are 36 million US citizens on food stamps.

Quiz: In the Fed's phrase “economic activity is likely to remain weak for a time”, how long is 'a time' ? How many hundreds of thousands of unemployed are hidden in the word 'weak'?

Patch: Congress has extended unemployment benefits for 20 additional weeks – to a total now of 99 weeks in some states. The cost was giving businesses 5 years to reach back and count losses against current income for tax purposes and continuing to re-inflate the housing bubble by extending the $8,000 please-indenture-yourself allowance and extending the same sort of 'help' to homeowners who don't feel they are far enough in debt.

Good News: “ Federal Reserve Chairman Ben Bernanke is learning the game of posturing. He didn’t say anything to upset the markets.”

Blowing Bubbles: Fannie Mae, in an attempt to protect the price level of houses backing their paper is going to let some deadbeats give their houses to Fannie in return for being allowed to rent those same properties at no more than 31% of their pretax income. This will let the pretense of a housing recovery be perpetuated while quietly building up even higher levels of shadow inventory pending eventual foreclosures.

Jesus Loves Me... Barclays CEO John Varley stood at the pulpit and announced that god wants banksters to be paid millions. It was, he claimed, a fair and just reward. He did not mention needles or camels.

Victimology: Longer warm seasons have encouraged the mountain pine bark beetle to proliferate over the Western forests. In Colorado about 2 million acres of pine forest has been turned into tinder. Not only does this raise the risk of catastrophic forest fires, it endangers hundreds of miles of major electrical transmission lines. Even a few falling trees brushing against the lines could be reminiscent of the great Northeast blackout of 2003. Look for the taxpayer to pay for clearing the trees from the power lines, at no cost to the power companies – it's become the American way.

Depends on what "is" is: To an economist (and you, eventually) oil in the ground is there or not there depending on the price of oil on the market. Last year, for the third year in a row, crude oil discoveries rose while consumption slowed, but “proved reserves” fell. That's because reserves don't count if you can't pump them at a profit.

Why not? There's a argument between Roubini and those who want him to quietly go away about the extent, if any, of the yen dollar carry trade. If speculators are not borrowing cheap dollars and investing them for greater safe returns, why not? Isn't that what Goldman Sachs and the other big US pretend banks are doing?

Prescription: The GOP has unveiled their health care reform plan. It would extend coverage to nearly 5% of those currently uninsured. Cue the applause track.

Porn O'Graph: Less bad is good.

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