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Comments »Monthly Archives: November 2012
All Hail the Drinking Man
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Comments »Really?
“A Senate proposal touted as protecting Americans’ e-mail privacy has been quietly rewritten, giving government agencies more surveillance power than they possess under current law, CNET has learned.
Patrick Leahy, the influential Democratic chairman of the Senate Judiciary Committee, has dramatically reshaped his legislation in response to law enforcement concerns, according to three individuals who have been negotiating with Leahy’s staff over the changes. A vote on his bill, which now authorizes warrantless access to Americans’ e-mail, is scheduled for next week.”
Comments »When Being Beholden to Shareholders Becomes Too Much
I have grappled with this argument internally for some time. The jury is still out on my decision, but articles like this make me wonder about what are we becoming as a nation.
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Should We Continue to Subsidize Those That Live in Harms Way ?
“Although it was not impacted by super storm Sandy, a small coastal island off of Alabama has become an example for why the federal government should reconsider its rebuild-it-no-matter-what policy, critics contend.
Since 1979, Dauphin Island has been hit by nearly a dozen hurricanes and major storms, including Hurricane Katrina in 2005. Most recently, it was blasted by Hurricane Isaac in August of this year. The community of 1,300 residents has received plenty of help to rebuild houses and infrastructure. In fact, at least $80 million in federal tax dollars has been given to Dauphin Island over the decades.”
Comments »Starve-the-Beast, Major Fail
” Although it is commonly believed that the Laffer curve – the idea that tax cuts pay for themselves – is the core Republican idea about tax policy, this is wrong. The true core idea is something called starve-the-beast – the idea that tax cuts will force cuts in spending precisely because they reduce revenue. But there are slight indications that some conservatives have awakened to the reality that not only does starve-the-beast not work, but it also leads to higher spending.
The notion came into being in the 1970s to allow conservative Republican economists to reconcile their support for a balanced budget with their party’s intense desire to cut taxes without worrying about the deficit. Proposition 13 in California had proven unmistakably that voters didn’t much care whether spending was cut; they just wanted lower taxes.
I have traced the origins of Republican starve-the-beast theory to testimony by Alan Greenspan before the Senate Finance Committee on July 14, 1978 – just weeks after the passage of Proposition 13 on June 6. In explaining why he supported the Kemp-Roth tax bill, which proposed an across-the-board tax rate reduction of 30 percent, while also supporting deficit reduction, Mr. Greenspan said: ”
Comments »State of the Union
The bifurcated state of America seems to be getting worse. Food pantry requests are up 400% in some cases , and this year will see a record number of Americans using foods stamps for this week’s holiday feast.
Comments »Report: French Officials Accuse U.S. of Hacking Sarkozy’s Computers
“The United States used U.S.-Israeli spy software to hack into the French presidential office earlier this year, the French cyberwarfare agency has concluded, according to the newsmagazine l’Express.
The magazine reported late Tuesday that the computers of several close advisers to then-president Nicolas Sarkozy – including Chief of Staff Xavier Musca – were compromised in May by a computer virus that bears the hallmarks of Flame, which was allegedly created by a U.S.-Israeli team to target Iran’s nuclear program. Anonymous French officials pointed the finger at the United States.”
Comments »Blankfein Wants America to Work Longer
Private Equity to Blame for Hostess Inc. Failure
Hostess seems to be one of those stories where the unions may not be to blame. Meanwhile its the average Joe Twinkie that seems to get the short end of the stick.
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Feldstein: Fixing Fiscal Cliff May Not Avoid Recession
“Harvard University economics professor Martin Feldstein said the U.S. economy may fall into a recession next year even if Congress and President Barack Obama avert the full brunt of the so-called fiscal cliff.
“You are perilously close to the edge of another recession even if we don’t go over the fiscal cliff,” Feldstein said in a Bloomberg Television interview from New York. The end of payroll tax cuts will reduce gross domestic product by about 1 percentage point in 2013, and other tax increases and spending cuts may bring “over 2 percent of GDP tightening,” he said.
Feldstein was less optimistic than Federal Reserve Chairman Ben S. Bernanke, who said a fiscal agreement “could help make the new year a very good one.” Feldstein was one of two economists to question the central bank’s leader after his prepared remarks Tuesday to the Economic Club of New York.
The fiscal cliff refers to the $607 billion of tax increases and spending cuts that will kick in automatically next year unless Congress acts. The Congressional Budget Office said in an Aug. 22 economic report that fiscal tightening of that magnitude could cause a recession.
With the economy growing at less than a 2 percent rate, that may be too small of a cushion to withstand fiscal tightening resulting from a budget agreement, Feldstein said.
In response to Feldstein’s questioning about the impact of a budget agreement, Bernanke said “there’s a range of possibilities” for outcomes of the fiscal negotiations, though “some plausible scenarios” would result in “relatively contractionary fiscal policy overall.” The Fed chief said “what I’m particularly concerned about is that we avoid the full force of the cliff.”
Broadcast Interview”
Comments »Hostess Brands Inc. and the Union Fail to Make a Deal
“(Reuters) – Hostess Brands Inc, the bankrupt maker of Twinkies, said on Tuesday that it failed to reach a deal in mediation with the Bakery, Confectionary, Tobacco and Grain Millers Union.
The company said it will have no further comment until a hearing scheduled for Wednesday before the U.S. Bankruptcy Court for the Southern District of New York.
A representative of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) did not immediately respond to a request for comment.
The ailing company, which also makes Wonder Bread and Drake’s cakes, sought permission from bankruptcy court on Monday to liquidate its business, claiming that its operations were crippled by the bakers’ strike and that winding down was the best way to preserve its dwindling cash.
But Bankruptcy Judge Robert Drain of the Southern District of New York urged the sides to go into a private mediation, prompted by a desire to protect the more than 18,000 jobs at stake.
The 82-year-old Hostess runs 33 bakeries, 553 distribution centers, about 5,500 delivery routes and 527 bakery outlet stores throughout the United States. Bakery operations ceased last week, though product deliveries to stores continued in order to sell already-made products.
The company has blamed union wages and pension costs for contributing to its unprofitably. Hostess Chief Executive Gregory Rayburn has also said the company’s labor contracts have deterred would-be bidders for the company and its assets.”
Comments »Simply Put, GREECE IS A MESS, Haircuts and Debt Write Offs Coming
“BRUSSELS (Reuters) – Greece’s debt cannot be cut to 120 percent of GDP by 2020, the level deemed sustainable by the IMF, unless euro zone member states write off a portion of their loans to Greece, a document prepared for euro zone finance ministers shows.
The 15-page document, circulated among ministers, the European Central Bank and the IMF for a meeting that began on Tuesday and is still going on 10 hours later, sets out in black-and-white how far off-track Greece is in reducing its debt to the IMF-imposed target, from a level around 170 percent of GDP now.
The document sets out a variety of ways in which Greece’s debt ratio could be reduced between now and 2020, but concludes they would not be enough without euro zone creditors taking a hit on their own holdings — something Germany and others have declared would be illegal.
The document does say Greek debt could fall to 120 percent of GDP two years later without having to impose any losses on euro zone member states or forcing through a buy-back of Greek debt from private-sector bondholders.”
Comments »The Nikkei Pops 1% on a Weaker Yen and Horrible Trade Deficit Data
Investors buy up the Nikkei with advances decline line standing at 3:1. All this excitement comes from a weaker Yen and the expectations the Yen will get weaker based on horrible trade deficit data.
Comments »Obama’s Game of Chicken versus Big Ag
via Washington Monthly
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The untold story of how the administration tried to stand up to big agricultural companies on behalf of independent farmers, and lost.
By Lina Khan
In May 2010, Garry Staples left his chicken farm in Steele, Alabama, to take part in a historic hearing in Normal, an hour and a half away.
The decision to go wasn’t easy. The big processing companies that farmers rely on for their livelihood had made it known that even attending one of these hearings, much less speaking out at one, could mean trouble. For a chicken farmer, that’s no trivial thing. Getting on a processing company’s bad side can deal a serious blow to a farmer’s income—and even lose him the farm entirely. Still, Staples, a former Special Forces commander, and a number of other farmers decided to risk it. Many felt it was their only chance to talk directly to some of the highest-ranking officials in the country, including Attorney General Eric Holder and Agriculture Secretary Tom Vilsack, about the abusive practices now common in their industry. It was a chance, finally, to get some relief.
Staples and other farmers described a system that is worse in certain respects than sharecropping. It works like this: to do business nowadays, most chicken farmers need to contract with a processing company. The company delivers them feed and chicks, which farmers raise into full-size birds. The same company then buys those same birds back when they are full grown. The problem is that the big processing company is usually the only game in town. So it can—and usually does—call all the shots, dictating everything from what facilities a farmer builds on his farm to the price he receives for his full-size chickens.
Stocks Take a Low Volume Roller Coaster Ride
Today’s trading was dictated by headlines. Bulls were looking for follow through after yesterday’s monster rally. Over sold conditions were ripe for follow through.
Investors sat on the sidelines as robots pushed the markets in circle jerk fashion. Bernanke made a speech today putting the politicians in place to get the fiscal cliff resolved. He said that the Fed does not have the tools to offset a falling off of the fiscal cliff.
The DOW fell 100 points on the speech only to pare losses by the close.
DOW off 6
S&P up 1
NASDAQ up 0-.67
WTI down $2.24
Gold down $6.9
[youtube://http://www.youtube.com/watch?v=M37VucWh06Y 450 300] Comments »CITI: Gold Could Rise Up To 15% Per Year
“Gold is flat today and appears to be consolidating on yesterday’s gains. Conflict in the Middle East and Moody’s downgrade of France’s AAA rating will support gold. Indeed, the Moody’s downgrade of France shows how the global debt crisis is spreading to Europe’s core with obvious ramifications for the euro.
Oil prices surged yesterday as violence intensified in the Israel-Gaza conflict, sparking fresh concern about supplies from the crude oil rich Middle East should the conflict escalate and engulf other Middle Eastern nations such as Syria and Iran.
New York’s main contract, West Texas Intermediate (WTI) for delivery in January, soared 2.6% or $2.36 from Friday to settle at $89.28 a barrel.
This is strengthening safe haven demand for gold bullion.”
Comments »Jeremy Grantham: U.S. Growth Will Be 1% or Less for the Next 40 Years
“Famed investor Jeremy Grantham just released his new quarterly letter to GMO clients, and it’s depressing.
He writes that US economic growth will be less than 1 percent for the next 40 years. This is in contrast to the above 3 percent growth the economy has experienced for as long as we can remember.
People take Grantham seriously because he predicted bubbles in Japanese stocks in 1989, U.S. stocks in 2000, and most risk assets in 2007.
In his words: ”
Comments »Bernanke: No New Stimulus Despite Weak Recovery
“Federal Reserve Chairman Ben Bernanke called the economic recovery “disappointingly slow” but outlined no further stimulative measures, in a speech delivered at the Economic Club in New York.
Rather than meet expectations for more central bank easing, Bernanke instead again took Congress to task for leading the nation close to a dire fiscal situation that could cause another recession.
Bernanke has been preaching against the series of spending cuts and tax increases that will take place automatically in 2013, and he delivered yet another warning of what he has called the “fiscal cliff.”
“The realization of all of the automatic tax increases and spending cuts that make up the fiscal cliff, absent offsetting changes, would pose a substantial threat to the recovery — indeed, by the reckoning of the Congressional Budget Office and that of many outside observers, a fiscal shock of that size would send the economy toppling back into recession,” Bernanke said, according to prepared remarks.
While an address two days before a major holiday otherwise might not get much notice, chatter had increased that Bernanke would indicate additional stimulative measures from the central bank.
The Dow industrials turned negative as the chairman’s remarks were made public and uncertainty increased over the Fed’s future plans. (Read More: Full Text of Bernanke Remarks)
Traders appeared to focus most on comments Bernanke made that the Fed did not have the ability to completely offset poor fiscal policy.”
Comments »SEC Sues Hedge Fund in What They Describe As the Largest Insider Trading Case Ever
“WASHINGTON (MarketWatch) — The Securities and Exchange Commission said Tuesday it’s suing a hedge-fund manager and a doctor over what it says may be the largest insider-trading scheme ever charged.
The SEC alleged that $276 million in illegal profits or avoided losses were made by investment advisers and their hedge funds, by trading ahead of negative news in July 2008 on clinical trial involving an Alzheimer’s drug developed by Elan Corp. ELN -0.10% and Wyeth, now a Pfizer Inc. PFE +0.02%subsidiary.
Neither company is facing charges. Read related story on Elan-Wyeth trial.
In a suit filed with the U.S. District Court for the Southern District of New York, the SEC alleged that a professor of neurology at the University of Michigan Medical School tipped off a hedge fund run by CR Intrinsic to liquidate $700 million in positions in Elan and Wyeth as well as establish $960 million in short positions against the companies’ shares.”
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