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State Tax Collections Rise 5.7% in 32 States

“The financial condition of states looked dire after the 2008-09 financial crisis, but now things are starting to look up.

In 32 states for which data are available, state tax collections in the first 10 months of fiscal year 2013 were 5.7 percent higher on average than in the same period last year, according to a June report from the Center on Budget and Policy Priorities.

Just a year ago the Center wrote that “states’ ability to fund services remains hobbled by slow economic growth.” At that point, 31 states still suffered from budget deficits, CNBC reports.

States appear to be handling their increased revenue wisely. State “rainy day” funds surged to $57.7 billion, or 8.3 percent of spending, in fiscal 2013, from $32.5 billion, or 5.2 percent of spending in fiscal 2010, according to the National Association of State Budget Officers. …”

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Regulators Take a Closer Look at Dark Pools

“WASHINGTON—Regulators are ramping up scrutiny of an opaque corner of the market where stocks change hands in the dark.

The Financial Industry Regulatory Authority, Wall Street’s self-regulatory body, last month sent 15 examination letters to operators of “dark pools”—lightly regulated, off-exchange trading venues that have been a rising concern for regulators and some investors as more activity shifts away from exchanges.

Finra is seeking details about how the increasingly popular venues operate, what they disclose to clients and whether they adequately police trades. It could bring enforcement action against dark-pool operators or issue recommendations for tighter oversight, depending on the answers it receives and additional examinations, said John Malitzis, executive vice president of market regulation at Finra. The letters are a follow-up to an initial round of questions the regulator circulated last fall.

“We want to understand whether [dark pools] are disclosing to their customers how their orders work [and] whether customers are informed who their orders will interact with,” Mr. Malitzis said in an interview. “A big part of this is to get an understanding of practices that may or may not be problematic.”

Credit Suisse Group AG, CSGN.VX -1.56% Goldman Sachs Group Inc. GS -2.14%and Barclays BARC.LN -2.31% PLC, which operate three of the largest U.S. dark pools, were among the firms that received a letter, according to people familiar with the matter. Representatives for the three banks declined to comment.

Dark pools don’t disclose traders’ buy or sell orders and only publish trade data after transactions occur. About 13% of all stock-market action takes place on dark pools, up from about 4% five years ago, according to Tabb Group, a market-research firm. Most dark pools are run by broker-dealers—firms overseen by Finra that buy and sell assets on behalf of customers as well as trade for their own accounts.

While dark pools command an expanding slice of trading volume, regulators still have little idea about how they operate since, unlike exchanges, they aren’t required to regularly disclose detailed information about their trading systems. Finra is weighing whether to submit a plan to the Securities and Exchange Commission this summer that would allow it to more closely track dark-pool trading volumes…..”

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Andy Haldane Praises Brown-Vitter Bill To End ‘Too Big To Fail’

“A senior Bank of England official influential in global policy debates has praised proposed U.S. legislation that would forever end the perception that the biggest banks are too big to fail, providing support for a bipartisan bill that forces the biggest American banks to either make themselves safer or shrink.

Andy Haldane, Bank of England executive director for financial stability, said legislation introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.)“has attractions” that may have long-term appeal. The bill, dubbed the “Terminating Bailouts for Taxpayer Fairness Act” and introduced April 24, would force banks with more than $500 billion in assets to fund at least 15 percent of their balance sheets with equity capital. If implemented, the largest U.S. banks would have to raise more than $1 trillion in fresh capital, on top of the tens of billions of dollars in capital they’ve raised over the past year to meet impending requirements.

The proposed legislation and Haldane’s cautious support comes as policymakers in Washington and around the world target the phenomenon known as “too big to fail,” or the perception that some banks are either so large or so important that government officials would never allow them to default on their obligations.

Three years after President Barack Obama heralded the Dodd-Frank overhaul of U.S. financial regulation as ending “too big to fail,” policymakers ranging from Ben Bernanke, Federal Reserve chairman, to Tom Hoenig, Federal Deposit Insurance Corp. vice chairman, have conceded that “too big to fail” remains and that the largest banks continue to benefit from the perception.

“Despite enormous progress in developing policy proposals, too big to fail is an itch that remains unscratched,” Haldane said in a paper dated April 9 that was made public on Thursday.

Community banks, represented by the Independent Community Bankers of America, have supported the Brown-Vitter bill as a way to end “too big to fail.” Former regulators have publicly backed it, while some current U.S. regulators privately support it as well.

The level of support for the bill has alarmed the biggest U.S. banks, which vehemently oppose the legislation….”

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Hit the Bricks: Classic NYC Attitude

Hats off to the Italian Eatery, Collegno’s Pizzeria, in Brooklyn!!!

“New York Mayor Michael Bloomberg was denied a second slice of pizza today at an Italian eatery in Brooklyn.

The owners of Collegno’s Pizzeria say they refused to serve him more than one piece to protest Bloomberg’s proposed soda ban, which would limit the portions of soda sold in the city.

Bloomberg was having an informal working lunch with city comptroller John Liu at the time and was enraged by the embarrassing prohibition. The owners would not relent, however, and the pair were forced to decamp to another restaurant to finish their meal.

Witnesses say the situation unfolded when as the two were looking over budget documents, they realized they needed more food than originally ordered.

“Hey, could I get another pepperoni over here?” Bloomberg asked owner Antonio Benito.

“I’m sorry sir,” he replied, “we can’t do that. You’ve reached your personal slice limit.”

Stop and Tisk

Mayor Bloomberg, not accustomed to being challenged, assumed that the owner was joking.

“OK, that’s funny,” he remarked, “because of the soda thing … No come on. I’m not kidding. I haven’t eaten all morning, just send over another pepperoni.”

“I’m sorry sir. We’re serious,” Benito insisted. “We’ve decided that eating more than one piece isn’t healthy for you, and so we’re forbidding you from doing it.”

“Look jackass,” Bloomberg retorted, his anger boiling, “I fucking skipped breakfast this morning just so I could eat four slices of your pizza. Don’t be a schmuck, just get back to the kitchen and bring out some fucking pizza, okay.”

“I’m sorry sir, there’s nothing I can do,” the owner repeated. “Maybe you could go to several restaurants and get one slice at each. At least that way you’re walking. You know, burning calories.”….”

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The Pope Speaks About ‘Slave Labour’

“Pope Francis on Wednesday condemned as “slave labour” the conditions for hundreds of workers killed in a factory collapse in Bangladesh and urged political leaders to fight unemployment in a sweeping critique of “selfish profit”.

The pope said he had been particularly struck by a headline saying workers at the factory near Dhaka were being paid just 38 euros ($50) a month.

“This is called slave labour!” the pope was quoted by Vatican radio as saying in his homily at a private mass in his residence to mark May Day.

More than 400 workers have been confirmed dead and scores are missing in the collapse, which occurred in a suburb of the capital Dhaka last week in the country’s worst-ever industrial disaster.

“Today in the world this slavery is being committed against something beautiful that God has given us — the capacity to create, to work, to have dignity,” the pope said at the mass.

“How many brothers and sisters find themselves in this situation!” he said, as protesters in May Day demonstrations around the world rallied against unfair work conditions and unemployment.

“Not paying fairly, not giving a job because you are only looking at balance sheets, only looking at how to make a profit. That goes against God!” the pope said in his strongly-worded address.

The Argentine pope, formerly the archbishop of Buenos Aires Jorge Bergoglio, became a powerful voice on the side of the poor during his homeland’s devastating economic crisis….”

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The University of Wyoming Finds a Huge Lithium Deposit

“University of Wyoming researchers found the lithium while studying the idea of storing carbon dioxide underground in the Rock Springs Uplift, a geologic formation in southwest Wyoming. University of Wyoming Carbon Management Institute director Ron Surdam stated that the lithium was found in underground brine. Surdam estimated the located deposit at roughly 228,000 tons in a 25-square-mile area. Extrapolating the data, Surdam said as the uplift covered roughly 2,000 square miles, there could be up to 18 million tons of lithium there, worth up to roughly $500 billion at current market prices.

As a yardstick, the lithium reserves at Silver Peak, Nevada, the largest domestic producer of lithium total 118,000 tons in a 20-square-mile area. The University of Wyoming stated that in a best-case scenario, the Rock Springs Uplift’s 18 million tons of potential lithium reserves is equivalent to roughly 720 years of current global lithium production. UW researchers suggest that the lithium mining could be part of a carbon dioxide sequestrationoperation, since the lithium-bearing brine must be pumped to the surface from the underground rock formation to extract the lithium, creating space to store the CO2 in its place. Surdam highlighted the economic advantages to the combined lithium-CO2 storage operation, commenting, “You get paid to put the carbon in the subsurface and that’ll pay for the wells to remove the lithium.” …”

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South Africa’s Middle Class Doubles Since 2004

“The black middle class in South Africa, which held its first all-race elections in 1994, has more than doubled in size over the past eight years, exceeding the number of white people in the same bracket and the amount of money they spend.

The number of black South Africans classified as middle class rose to 4.2 million people last year from 1.7 million in 2004, the University of Cape Town’s Unilever Institute of Strategic Marketing said in a statement. South Africa has a population of 51.8 million people.

“South Africa’s black middle class continues to rapidly expand and is more influential and powerful than ever before,” John Simpson, a director at the Unilever Institute, said in the statement, which was e-mailed yesterday. “The black middle class is helping create a vibrant and stable society by increasing South Africa’s skills base, deepening employment, and widening the tax net.”

South Africans in this group now spend 400 billion rand ($44 billion) annually, more than the 323 billion rand spent by 3 million white people classified as middle class, according to the study. The number of white South African in the group rose from 2.8 million in 2004.

High Unemployment

South Africa’s unemployment rate of 24.9 percent is the highest of more than 30 emerging-market nations tracked by Bloomberg. Retail sales advanced 3.8 percent in February from a year earlier, with South Africa’s Reserve Bank keeping its benchmark interest rate at the lowest level in more than 30 years to spur spending….”

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Consumer Delinquencies Show a Surprising Trend

“Delinquencies in consumer bank payments have hit a favorable trend, with credit card delinquencies in particular hitting an 18-year low in the fourth quarter of 2012, according to the American Bankers Association (ABA).

The upbeat assessment also found delinquencies, defined as a late payment that is 30 days or more overdue, in all three home-related loan categories — property improvement loans, home equity loans and home equity lines of credit — fell in the fourth quarter.

During the fourth quarter of 2012, bank card delinquencies fell 28 basis points to 2.47 percent of all accounts — an 18-year low and well below the 15-year average of 3.87 percent.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, ranging from personal loans to auto loans and property loans, fell 17 basis points to 1.99 percent of all accounts in the fourth quarter, below the 15-year average of 2.39 percent.

James Chessen, ABA’s chief economist, said the reduction in overdue bank payments by Americans shows they are building defenses against economic uncertainty.

“Consumers continue to carefully manage their finances in an effort to get debt levels under control and build up a secure financial base,” he noted.

“While this conservative approach to credit may slow economic growth in the short term, it portends stronger, more consistent growth in the future. The sharp decline in delinquencies reinforces the notion that the economic recovery has become more self-sustaining and is on a path to increased growth.”

But Chessen said potential fiscal pitfalls have not disappeared altogether for American consumers….”


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The Death of Peak Oil

“On November 7, 1973, President Nixon addressed the nation with a serious warning: America was running out of oil.

The Yom Kippur War had disrupted imports, and there weren’t enough domestic supplies to plug the gap.

As a result, he said, we were going to have to make sacrifices:

…not just here in Washington but in every home, in every community across this country. If each of us joins in this effort, joins with the spirit and the determination that have always graced the American character, then half the battle will already be won.

The immediate crisis actually proved relatively short-lived: after spiking from about $4 to $10, oil prices settled around $13 until 1979, when the Iranian revolution hit.

But the announcement raised from the dead a wild-eyed theory that’d been proposed a generation earlier: American oil production was soon going to peak.

In 1948, M. King Hubbert, a geophysicist for Shell, predicted that given estimates of the amount of crude in the ground and contemporary production rates, we were going to run out of oil by 1965. He articulated his findings eight years later in a paper called “Nuclear Energy And The Fossil Fuels.”

By Hubbert’s own admission, the study didn’t get much reaction.

But with Nixon’s announcement, Hubbert’s hypothesis began to look a lot more credible.

For the next 40 years, “peak oil” became the boogeyman of the U.S. economy. Google ngrams nicely summarizes its hold over the psyche of many Americans.


peak oil

Google ngrams



But today, it is probably safe to say we have slayed “peak oil” once and for all, thanks to the combination new shale oil and gas production techniques and declining fuel use.

With the advent of fracking, U.S. oil production has climbed back to levels not seen since the mid-90s…”

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Time to Celebrate: Synthetic CDOs Return to Wall St.

“Japan swore off nuclear weapons for generations after the bombings of Hiroshima and Nagasaki. Wall Street’s memory vis-a-vis weapons of mass destruction is just a bit shorter.

Ladies and gentlemen, whether you like it or not, the synthetic collateralized debt obligation (CDO) is making a comeback, Bloomberg reports. The numbers are small so far, and the bets being made with them appear to be sober. But that’s always how these things start out.

What on earth is a synthetic CDO, you likely ask? It is a side bet on a bunch of side bets on somebody else’s debt. First you take a bunch of corporate bonds. Then you write insurance protection on those bonds, in the form of derivatives called credit default swaps. And then you jam a bunch of those credit default swaps together into a toxic meatball called a synthetic CDO, on which you can also bet as much money as you like, assuming you have any money, considering you are the kind of doofus who bets money on toxic meatballs.

These have absolutely no economic value, aside from enriching the bankers that sell them and maybe giving investors a way to make an extra buck. And they are potentially disastrous, depending on how they’re filled: These were among the derivatives that helped nearly bring down American International Group and the financial system less than four years ago. Now, with investors hungry for anything that offers the slightest bit of yield, these derivatives are making a comeback, which I’m sure is totally fine, because Wall Street has of course learned its lesson.

So far these things are only being sold to hedge funds; they’re not getting credit ratings or being sold to investors the way synthetic CDOs were during the crisis. The filler in the meatballs so far are corporate bonds, not subprime mortgages. And we’re not talking about a bunch of money here, yet. Synthetic CDOs on about $2 billion in debt were sold last year, Bloomberg writes, citing Citigroup data, and CDOs on another $1 billion have been sold so far this year.

And those totals overstate the total amounts actually being wagered on CDOs, Felix Salmon points out — they’re what’s known as “notional” amounts, or the total of the underlying debt on which investors are betting.

If you’re betting on the default of $100 million in bonds, for example, you don’t have to bet $100 million. You can just bet $1 million. So far, the amounts being bet in the synthetic CDO market are pretty tiny….”

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Ina Drew Throws a Molotov Cocktail in Jamie Dimon’s Lap

  • “Since my departure I have learned of the deceptive conduct by members of the London team, and I was, and remain, deeply disappointed and saddened to learn of such conduct and the extent to which the London team let me, and the Company, down.

Maybe it is time to call back Jamie “This is why I am richer than you” Dimon? ..”

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NFIB: Small Biz Cap Ex and Confidence Rise

“(Reuters) – Confidence among small businesses rose in February as owners shrugged off a tightening in fiscal policy and raised plans to increase capital spending and restock their warehouses.

The National Federation of Independent Business said on Tuesday its optimism index increased 1.9 percentage points to 90.8 last month, continuing to recover from a 2-1/2 year plunge in November.

The improvement in sentiment came even as small businesses braced for about $85 billion in across the board government spending cuts that started to take hold on March 1.

A two percent payroll tax cut expired on January 1 and tax rates for wealthy Americans went up.

Capital spending plans gained four points, while plans to increase inventories climbed six points last month. The share of owners viewing inventories as too low rose two points….”

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Cap. Ex. Spending Plans Increase The Most in a Year

“A gauge of planned U.S. business spending increased by the most in just over a year in January and new orders for long-lasting manufactured goods excluding transportation rose solidly, pointing to underlying strength in factory activity.

The Commerce Department said on Wednesday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 6.3 percent, the biggest gain since December 2011, after slipping 0.3 percent in December.

Economists had expected this category to only rise 0.2 percent.

“The strong gains in core capital goods orders suggests that business investment activity, which has been one of the sour points of this economic recovery, could provide a meaningful lift to overall economic activity this quarter,” said Millan Mulraine, a senior economist at TD Securities in New York.

U.S. stock index futures were little changed and U.S. government debt prices were higher in morning trading. The dollar pared losses against the yen after the data.

Durable goods orders excluding transportation increased 1.9 percent, the largest gain since December 2011, after increasing 1 percent in December. That was well above economists’ expectations for a 0.2 percent increase…..”

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The Nightmare Carnival Cruise is Over, Passengers Rejoice on Dry Land

“MOBILE, Ala. (AP) — Passengers who finally escaped the disabledCarnival cruise ship Triumph were checking into hotels early Friday for a hot shower, food and sleep or boarding buses for a long haul home after five numbing days at sea on a ship left powerless by an engine-room fire.

The vacation ship carrying some 4,200 people docked late Thursday in Mobile after a painfully slow approach that took most of the day. Passengers raucously cheered after days of what they described as overflowing toilets, food shortages and foul odors.

“Sweet Home Alabama!” read one of the homemade signs passengers affixed alongside the 14-story ship as many celebrated at deck rails lining several levels of the stricken ship. The ship’s horn loudly blasted several times as four tugboats pulled the crippled ship to shore at about 9:15 p.m. CST. Some gave a thumbs-up sign and flashes from cameras and cellphones lit the night.

Less than four hours later, the last passenger had disembarked.

Some, like 56-year-old Deborah Knight of Houston, had no interest in boarding one of about 100 buses assembled to carry passengersto hotels in New Orleans or Texas. Her husband Seth drove in from Houston and they checked into a downtown Mobile hotel.

“I want a hot shower and a daggum Whataburger,” said Knight, who was wearing a bathrobe over her clothes as her bags were unloaded from her husband’s pickup truck. She said she was afraid to eat the food on board and had gotten sick while on the ship.

At the Mobile airport, a dozen passengers from the Triumph slept on couches for a few hours before catching flights Friday morning….”

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US Posts First January Budget Surplus In Five Years

“According to the latest Monthly Treasury Statement, the U.S. posted a budget surplus of $2.88 billion in January.  Economists surveyed by Bloomberg were expecting a deficit of $2.0 billion.

According to Reuters, this is the first January budget surplus in five years.

Receipts were $272.2 billion while the spending was $269.3 billion.  This is important to remember, because budget deficits and surpluses aren’t just about spending levels.  Indeed, growth plays just as important a role.

Economists have been expecting the January report to benefit from the recent expiration of the payroll tax cut.  However, this report nevertheless surpassed expectations….”

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Sandy Hook Father Owns Congress

[youtube://http://www.youtube.com/watch?v=dhXPlCjr0Vw 450 300]

Link for iPhone users: http://www.youtube.com/watch?v=dhXPlCjr0Vw

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California Debt Rating Raised by S&P After Surplus Forecast


“California had the credit rating on its general-obligation bonds raised by Standard & Poor’s for the first time since 2006 as tax increases championed by Governor Jerry Brown bolster the state’s fiscal outlook.

The move by S&P affects $73 billion of debt and lifts the state’s credit grade one step to A, the sixth-highest level, according to Gabriel Petek, a San Francisco-based analyst at the company. California’s outlook was moved to stable from positive, and the grade on its lease-revenue bonds increased to A- from BBB+, said Petek.

Brown, a Democrat, this month proposed a budget for the fiscal year that begins July 1 that he expects will leave the state with an $851 million surplus, the first in almost a decade. He persuaded voters in November to approve higher taxes on income and sales.

“S&P’s actions recognize the strides California has made toward improving its fiscal management, producing a sounder budget and getting itself on a more sustainable financial path,” Tom Dresslar, a spokesman for California Treasurer Bill Lockyer, said in an interview….”

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