Weekend Economists Better Late Than Never December 18-20, 2009

[Demeter]

Greetings and Salutations and apologies, all. I had a rehearsal of Beethoven's Chorale Fantasie this evening, which is why this is appearing so late.

The performance is Sunday afternoon, and then the season for singing is over--at least, the official part...

It's been a busy week. Aside from the 7 banks that closed this evening.

On the domestic front, my Mountain of Mending is down to a molehill, and I'm taking in mending from the elderly. The Kid now has all her clothes mended--enough for 3 weeks without doing laundry! And I've found some things I'd forgotten we had.

My sister, who is still here, amazingly (she says she'll stay until we have a fight, or Christmas..since I've been in performance and rehearsal these last two weeks, fighting is difficult, as I'm really too tired. And the Kid is feeling so much better, what with the gall bladder pain gone, and her willingness to not eat the foods that upset her digestion, so harmony of all kinds pervades our little abode) has been helping us dig out and renovate. The results are dramatic, but the work seems to expand.

There's a problem with fixing things...first you hang a shade, and you find it makes such a difference that you decide to get shades for all the windows, then curtains to match, and then touch up the paint, and pretty soon, you have 3 times the work originally scheduled.

Perhaps that's WHY Obama hasn't bothered to start fixing anything. Think of it...first a little Constitutional mending, which cancels the Patriot Act, leading to war crime trials and the end of US imperialism, bringing the troops home and shutting bases; shutting down Zombie banks leads to mortgage rewriting or payoffs to stop the foreclosure bleeding us dry, leads to stimulating jobs through govt. programs, leads to to reviving manufacturing, leads to tarriffs to protect the reviving industries, leads to shutting down the multinational corporate fascist takeover and K Street lobbyists.....pretty soon, Chavez is remarking on how clean and pure the air is in the US...

Ah, well, a girl can dream...or make a list for Santa. Hence today's theme song:

http://www.youtube.com/watch?v=kzd6oCP3FKk

Eartha Kitt, you are missed.

[Hugin]

1. Oh, there you are...

I was in the midst of preparing a hollow stand-in WEE.

:hi:

[Demeter]

4. I Had Plans to Start Early, before leaving for rehearsal

but I fell asleep and really needed the nap. It's been a hectic week. I even lost my purse (in a church, thank goddess) for an hour. When I start losing track of things, it's time for shuteye.

[Hugin]

6. I'm glad to hear, it's all good...

You had me concerned there for a brief while. :o

[Demeter]

2. SEVEN Banks SEVEN

First Federal Bank of California, a Federal Savings Bank, Santa Monica, California, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with OneWest Bank, FSB, Pasadena, California, to assume all of the deposits of First Federal Bank of California.

The 39 branches of First Federal Bank of California will reopen on Saturday as branches of OneWest Bank, FSB...As of September 30, 2009, First Federal Bank of California had approximately $6.1 billion in total assets and $4.5 billion in total deposits. OneWest Bank, FSB did not pay the FDIC a premium for the deposits of First Federal Bank of California. In addition to assuming all of the deposits of the failed bank, OneWest Bank, FSB agreed to purchase essentially all of the assets.

The FDIC and OneWest Bank, FSB entered into a loss-share transaction on $5.3 billion of First Federal Bank of California's assets. OneWest Bank, FSB will share in the losses on the asset pools covered under the loss-share agreement... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $146.3 million... First Federal Bank of California is the 140th FDIC-insured institution to fail in the nation this year, and the seventeenth in California. The last FDIC-insured institution to be closed in the state was Imperial Capital Bank, La Jolla, earlier today.

Imperial Capital Bank, La Jolla, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with City National Bank, Los Angeles, California, to assume all of the deposits of Imperial Capital Bank.

The nine branches of Imperial Capital Bank will reopen during normal business hours on Monday as branches of City National Bank...As of September 30, 2009, Imperial Capital Bank had approximately $4.0 billion in total assets and $2.8 billion in total deposits. City National Bank paid the FDIC a .24 percent premium for the right to assume all of the deposits of Imperial Capital Bank. In addition to assuming all of the deposits of the failed bank, City National Bank agreed to purchase $3.3 billion of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and City National Bank entered into a loss-share transaction on $2.5 billion of Imperial Capital Bank's assets. City National Bank will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $619.2 million.

The Federal Deposit Insurance Corporation (FDIC) created a bridge bank to take over the operations of Independent Bankers' Bank, Springfield, Illinois, after the bank was closed today by the Illinois Department of Financial and Professional Regulation—Division of Banking, which appointed the FDIC as receiver. The newly created bank is Independent Bankers' Bank Bridge Bank, National Association.

Independent Bankers' Bank did not take deposits directly from the general public nor did it make loans to consumers. It was a commercial bank that provided correspondent banking services to its client banks.

Independent Bankers' Bank had approximately 450 client banks in four states, and operated one regional office. It provided a variety of services for its clients, including clearing accounts, investments, consulting, purchasing loans, and selling loan participations. Since the FDIC created a new bank to take over the operations of Independent Bankers' Bank, there is not expected to be any meaningful impact on the bank's clients.

The creation of the bridge bank allows the client banks to maintain their correspondent banking relationship with the least amount of disruption. The FDIC will operate Independent Bankers' Bank Bridge Bank, to allow preexisting marketing efforts for the bank to continue.

As of September 30, 2009, Independent Bankers' Bank had approximately $585.5 million in assets and $511.5 million in deposits. At the time of closing, the bank had an estimated $269,000 in uninsured funds...The FDIC has contracted for operational management of Independent Bankers' Bank Bridge Bank.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $68.4 million. Independent Bankers' Bank is the 138th bank to fail in the nation this year and the twenty-first in Illinois. The last FDIC-insured institution to fail in the state was Benchmark Bank, Aurora, on December 4, 2009.

Citizens State Bank, New Baltimore, Michigan, was closed today by the Michigan Office of Financial and Insurance Regulation, which then appointed Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC created the Deposit Insurance National Bank of New Baltimore (DINB), which will remain open for approximately 45 days to allow depositors access to their insured deposits and time to open accounts at other insured institutions.

At the time of closing, the receiver immediately transferred to the DINB all insured savings, checking, and secured public units of Citizens State Bank. Certificates of deposit (CDs) and Individual Retirement Accounts (IRAs) were not transferred over to the DINB. The FDIC will mail checks directly to deposit customers who had CDs and IRAs with Citizens State Bank.

The Huntington National Bank, Columbus, Ohio, will provide operational management of the DINB under a contract with the FDIC. The main office and all branches of Citizens State Bank will open on Saturday, December 19, 2009. Banking activities, such as direct deposit and writing checks, ATM and debit cards, can continue normally for former customers of Citizens State Bank during the 45-day transition period. It is also important to note that Citizens State Bank official checks will continue to clear and will be issued to customers closing accounts.

All insured depositors of Citizens State Bank are encouraged to transfer their insured funds to other banks. They may do so by asking their new bank to electronically transfer their deposits from the DINB or by writing checks for the amount in their accounts.

Under the FDI Act, the FDIC may create a deposit insurance national bank to ensure that depositors have continued access to their insured funds where no other bank has agreed to assume the insured deposits. The DINB allows for uninterrupted direct deposits and automated payments from customers' accounts for customers with checking and NOW accounts and allows them time to find another institution with which to do business.

As of September 30, 2009, Citizens State Bank had $168.6 million in total assets and $157.1 million in total deposits. At the time of closing, deposits of approximately $803,000 potentially exceeded the insurance limits. Uninsured deposits were not transferred to the DINB. This estimate is likely to change once the FDIC obtains additional information from these customers.

Customers with accounts in excess of $250,000 should contact the FDIC toll-free at 1-800-350-2746 an appointment to discuss their deposits. This phone number will be operational this evening until 9 p.m., Eastern Standard Time (EST); on Saturday from 9 a.m. to 6 p.m., EST; on Sunday from noon to 6 p.m., EST; and thereafter from 8 a.m. to 8 p.m., EST. Due to the Christmas Holiday, the toll-free number will not be operational between the hours of 3 p.m., Thursday, December 24, and 8:00 a.m., Monday, December 28. At that time the toll-free number will resume its normal hours.

Customers who would like more information on today's transaction should visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/citizensstate-mi.html.

Beginning Monday, December 21, 2009, depositors of Citizens State Bank with more than $250,000 at the bank may visit the FDIC's Web page "Is My Account Fully Insured?" at http://www2.fdic.gov/dip/Index.asp to determine their insurance coverage.

The FDIC as receiver will retain all the assets from Citizens State Bank for later disposition. Loan customers should continue to make their payments as usual.

The cost to the FDIC's Deposit Insurance Fund is estimated to be $76.6 million. Citizens State Bank is the 136th bank to fail this year and the fourth in Michigan. The last FDIC-insured institution closed in the state was Home Federal Savings Bank, Detroit, on November 6, 2009.

New South Federal Savings Bank, Irondale, Alabama, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Beal Bank, Plano, Texas, to assume all of the deposits of New South Federal Savings Bank.

The sole branch of New South Federal Savings Bank will reopen on Monday as a branch of Beal Bank...As of September 30, 2009, New South Federal Savings Bank had approximately $1.5 billion in total assets and $1.2 billion in total deposits. Beal Bank did not pay the FDIC a premium for the deposits of New South Federal Savings Bank. In addition to assuming all of the deposits of the failed bank, Beal Bank agreed to purchase essentially all of the failed bank's assets.

The FDIC and Beal Bank entered into a loss-share transaction on $1.2 billion of New South Federal Savings Bank's assets. Beal Bank will share in the losses on the asset pools covered under the loss-share agreement.
Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/newsouth.html.

Furthermore, the FDIC transferred to Beal Bank all qualified financial contracts to which New South Federal Savings Bank was a party.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $212.3 million. Beal Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. New South Federal Savings Bank is the 137th FDIC-insured institution to fail in the nation this year, and the third in Alabama. The last FDIC-insured institution closed in the state was CapitalSouth Bank, Birmingham, on August 21, 2009.

Peoples First Community Bank, Panama City, Florida, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Hancock Bank, Gulfport, Mississippi, to assume all of the deposits of Peoples First Community Bank.

The 29 branches of Peoples First Community Bank will reopen during normal business hours beginning Saturday as branches of Hancock Bank...As of September 30, 2009, Peoples First Community Bank had approximately $1.8 billion in total assets and $1.7 billion in total deposits. The Hancock Bank will pay the FDIC a premium of one percent to assume all of the deposits of Peoples First Community Bank. In addition to assuming all of the deposits of the failed bank, Hancock Bank agreed to purchase approximately $1.6 billion of the failed bank's assets. The FDIC retained the remaining assets for later disposition.

The FDIC and Hancock Bank entered into a loss-share transaction on approximately $1.4 billion of Peoples First Community Bank's assets. Hancock Bank will share in the losses on the asset pools covered under the loss-share agreement...Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/peoplesfirst-fl.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $556.7 million. Hancock Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Peoples First Community Bank is the 135th FDIC-insured institution to fail in the nation this year, and the fourteenth in Florida. The last FDIC-insured institution closed in the state was Republic Federal Bank, N.A., Miami, on December 11, 2009.

The Federal Deposit Insurance Corporation (FDIC) approved the payout of the insured deposits of RockBridge Commercial Bank, Atlanta, Georgia. The bank was closed today by the Georgia Department of Banking and Finance, which appointed the FDIC as receiver.

The FDIC was unable to find another financial institution to take over the banking operations of RockBridge Commercial Bank. As a result, checks to the retail depositors for their insured funds will be mailed on Monday. Brokered deposits will be wired once brokers provide the FDIC with the necessary documents to determine if any of their clients exceed the insurance limits. Customers who placed money with brokers should contact them directly for more information about the status of their funds...

As of September 30, 2009, RockBridge Commercial Bank had approximately $294.0 million in total assets and $291.7 million in total deposits. At the time of closing, the bank had an estimated $2.1 million in uninsured funds. This amount is an estimate that is likely to change once the FDIC obtains additional information from these customers...

Beginning on Monday, customers of RockBridge Commercial Bank with deposits exceeding $250,000 at the bank may visit the FDIC's Web page "Is My Account Fully Insured?" at https://www2.fdic.gov/drrip/afi/index.asp.

RockBridge Commercial Bank is the 134th FDIC-insured institution to fail this year and the twenty-fifth in Georgia since The Buckhead Community Bank, Atlanta, was closed on December 4, 2009. The FDIC estimates the cost of the failure to its Deposit Insurance Fund to be approximately $124.2 million.

WELL, HERE'S A FINE XMAS PRESENT: IN TOTAL 1.8 BILLION AND CHANGE, NOT COUNTING LATER LOSSES AS "ASSETS" ARE DISPOSED OF...

[Hugin]

3. S-E-V-E-N (Digest Version)

2009

December

* December 18, 2009:

PR-239-2009 OneWest Bank, FSB, Pasadena, California, Assumes All of the Deposits of First Federal Bank of California, Santa Monica, California

* December 18, 2009:

PR-238-2009 City National Bank, Los Angeles, California, Assumes All of the Deposits of Imperial Capital Bank, La Jolla, California

* December 18, 2009:

PR-237-2009 FDIC Creates Bridge Bank to Take Over Operations of Independent Bankers' Bank, Springfield, Illinois

* December 18, 2009:

PR-236-2009 Beal Bank, Plano, Texas, Assumes All of the Deposits of New South Federal Savings Bank, Irondale, Alabama

* December 18, 2009:

PR-235-2009 FDIC Creates a Deposit Insurance National Bank to Facilitate the Resolution of Citizens State Bank, New Baltimore, Michigan

* December 18, 2009:

PR-234-2009 Hancock Bank, Gulfport, Mississippi, Assumes All of the Deposits of Peoples First Community Bank, Panama City, Florida

* December 18, 2009:

PR-233-2009 FDIC Approves the Payout of the Insured Deposits of Rockbridge Commercial Bank, Atlanta, Georgia

From... (The horse's mouth) http://www.fdic.gov/news/news/press/2009/index.html

[Demeter]

5. Notice How the FDIC Is doing More Creative Things

as they try to unwind the morass we are in.

Why is it they are the only ones even attempting to help ordinary people?

[dixiegrrrrl]

42. If the FDIC wanted to be so helpful, it would close the banks earlier.

It has been revealed that the FDIC is actually buying back the closed banks debt at face value, instead of the much much lower market value.
Which is why FDIC went into the red.
The fact is, the banks that are being closed were in deep trouble all along, when their loans went bad.
Legally, banks cannot be more than 90 days in the red. In reality, they have been in trouble for years.
The longer the FDIC waits to do the LEGALLY REQUIRED "Prompt Corrective Action", the worse the debt becomes.
The commercial loans are going bad now, it will get much worse, I'm afraid.

[Demeter]

43. Well, Until this year, Bush Was in Charge

and he was doing everything to stop government in its tracks....he largely succeeded, too, on the regulatory side.

[dixiegrrrrl]

77. And for the past year, FDIC STILL has not followed the rules.

Changelicious.

[hamerfan]

15. La Jolla bank failure!

Apologies to Ozy, but banks in Georgia are a dime a dozen. When there's a bank failure in ritzy La Jolla, CA it demands attention:

"Imperial Capital Bank, La Jolla, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with City National Bank, Los Angeles, California, to assume all of the deposits of Imperial Capital Bank.

The nine branches of Imperial Capital Bank will reopen during normal business hours on Monday as branches of City National Bank...As of September 30, 2009, Imperial Capital Bank had approximately $4.0 billion in total assets and $2.8 billion in total deposits. City National Bank paid the FDIC a .24 percent premium for the right to assume all of the deposits of Imperial Capital Bank. In addition to assuming all of the deposits of the failed bank, City National Bank agreed to purchase $3.3 billion of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and City National Bank entered into a loss-share transaction on $2.5 billion of Imperial Capital Bank's assets. City National Bank will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $619.2 million."


Get some rest, Demeter. And as always, thank you for this thread! Great grist for the nightmare mill.

[DemReadingDU]

88. Bridge Bank?

The Federal Deposit Insurance Corporation (FDIC) created a bridge bank to take over the operations of Independent Bankers' Bank, Springfield, Illinois, after the bank was closed today by the Illinois Department of Financial and Professional Regulation—Division of Banking, which appointed the FDIC as receiver. The newly created bank is Independent Bankers' Bank Bridge Bank, National Association.
******

In the United States law of banking regulation, a bridge bank is a temporary bank organized by Federal bank regulators to administer the deposits and liabilities of a failed bank. Under the Competitive Equality Banking Act (CEBA) of 1987, the Federal Deposit Insurance Corporation is authorized to operate a failed bank for a period of up to three years, until a buyer can be found for its operations.
http://en.wikipedia.org/wiki/Bridge_bank


What if a buyer is never found?

edit - more from Wikipedia...
Bridge banks must be chartered as national banks. To the extent possible, bridge banks are required to honor the commitments of the failed bank to its customers, and not to interrupt or terminate adequately secured loans. Bridge banks are authorized to seek to liquidate failed banks, either by finding buyers for the bank as a going concern, or by liquidating its portfolio of assets, within two years, which can be extended for cause by an additional year. Should the bridge bank fail to wind down its operations within the allotted time, the bridge bank must notify the Comptroller of the Currency of its intent to dissolve the bridge bank. Under this situation, the FDIC is appointed as the receiver of the bridge bank's assets.

[Demeter]

7. Oil advances on report of Iranian incursion into Iraq

http://www.marketwatch.com/story/oil-futures-rise-above-73brl-as-dollar-falls-2009-12-18?siteid=YAHOOB

Crude-oil futures finished higher on Friday, but were well off highs, as a stronger dollar capped an early rally sparked by reports of an Iranian incursion into an Iraqi oil field....Iranian forces took over an oil well in a disputed region in the south of Iraq, the news agency Agence France Presse reported, citing U.S and Iraqi officials.

"There has been no violence related to this incident and we trust this will be resolved through peaceful diplomacy between the governments of Iraq and Iran," a U.S. military spokesman told AFP.

Oil futures had finished virtually flat on Thursday...

[Demeter]

20. Opec leaves Iraq oil surge off agenda

http://www.ft.com/cms/s/0/ec9c4e00-eb3e-11de-bc99-00144feab49a.html

When the Opec oil cartel meets next week, its members will discuss everything except the one thing that threatens their unity most: Iraq’s potential surge in production.

The meeting in Angola, the bloc’s newest member, comes barely a fortnight after Iraq, one of Opec’s founding members, invited foreign oil companies back into the country to develop its vast oil reserves.

The auction promises to bring Iraq’s oil production from 2.5m barrels a day to as much as 12m barrels a day within a decade, an increase equal to Saudi Arabia’s current output. A significant portion of the oil will arrive far sooner, analysts say.

“Iraq has the potential to be a game changer,” says Lawrence Eagles, head of commodities research at JP Morgan. “But you need political stability in the country.”

Hussein Sharistani, Iraq’s oil minister, has already acknowledged the friction that higher Iraqi output could create over time within the cartel. “Iraq is a very active member of Opec. We will be co-ordinating with its effort to make sure Iraq and all other countries can maximise the revenues from oil sales.”

For Opec, the situation could open up a “Pandora’s box” in the next decade as member countries would have to reduce their own production quotas – and therefore their potential revenue – to accommodate Iraq’s surge. Baghdad’s Opec quota has been suspended since, under Saddam Hussei, it invaded Kuwait in August 1990.

Within the cartel, many countries, such as Algeria and Libya, argue that their production capacity has increased since the division of quotas was last decided and that they are, therefore, entitled to a bigger, not smaller, slice of the pie.

But countries such as Iran and Venezuela, whose production has shrunk since the quota allocations were decided, are loath to admit it and will likely prove unwilling to accommodate Iraq’s new production by reducing their own quotas.

[Demeter]

8. The Funny Pages--Because Right Now We Could ALL Use a Laugh

Although the postings in Friday's SMW thread about Larry Summers' Harvard Days was pretty funny.

http://dilbert.com/dyn_file/str_strip/76734/gif/strip.print/



http://www.markfiore.com/political-cartoons/watch-wall-st-holiday-animation-fat-cat-banker-bonus

[DemReadingDU]

65. Fiore: Rake it in, Rake it in, Rake it in all

I think that's the plan...rake in all the money before end of year, then crash the market in January.

[Demeter]

9. Thieves steal Auschwitz 'Work Sets You Free' sign

http://news.yahoo.com/s/ap/20091219/ap_on_re_eu/eu_poland_auschwitz_sign_stolen

OSWIECIM, Poland – Thieves stole the notorious sign bearing the cynical Nazi slogan "Work Sets You Free" from the entrance to the former Auschwitz death camp on Friday, cutting through rows of barbed wire and metal bars before making their escape through the snow.

The brazen seizure of one of the Holocaust's most chilling symbols brought worldwide condemnation....

WONDER WHERE THE US IS GOING TO HANG THAT SIGN...

[Demeter]

10. P&G warns over growth of global protectionism

THE CORPORATE FASCISTS ARE GETTING WORRIED--AS THEY SHOULD BE!

http://www.ft.com/cms/s/0/5dda4234-eb3a-11de-bc99-00144feab49a.html

Robert McDonald, the chief executive of Procter & Gamble, has warned of the risks to global growth posed by increased protectionist sentiment in the US and around the world stemming from the global recession.

“I’m concerned about what’s happening with trade around the world. One could argue that the US government has become less free-trade oriented,” he said.

Mr McDonald took over this summer from AG Lafley as chief executive of the world’s largest consumer goods company.

He questioned the Obama administration’s focus on the multi-lateral Doha trade negotiations and over pressing for approval of bilateral free trade agreements negotiated under the Bush administration with Korea, Colombia and Panama.

“Right now in the US you have at least three free trade agreements that are sitting there. They are not acted on. And the current administration says they are going to count on Doha to solve free trade.”

Mr McDonald said that 20 per cent of P&G jobs in the US depended on the international business that accounts for about 60 per cent of the company’s annual sales of $79bn.

“It is short-sighted for the US government to think they can create jobs at home by hurting our ability to compete internationally,” he said.

Mr McDonald, who wants to expand P&G’s presence in developing markets, argued that a free-trade environment had fuelled global growth and increased global prosperity.

“If you look at what happened in the previous five years before the economic downturn, you’ve got half a billion people coming out of poverty in India and China ... and you probably have the best economic growth in the history of the world. That economic growth happened in a period of free trade.”

Mr McDonald said P&G had also seen a notable increase in interest from business school graduates over the past year, which he attributed to a deeper shift in values created by the experience of last year’s financial crash.

“I’m finding from students that they want to live a life with meaning. And for many of them, making products or marketing brands that improve people’s lives is more meaningful than being involved in a financial transaction that creates no value.”

However, he also expressed scepticism over the depth of what some US consumer and retail companies have described as “a new normal” in consumer purchasing habits that have emerged during the downturn. “We’ve been there before ... We see behaviour change during the recession; we see it come back with resilience at the end of the recession.”

Mr McDonald will also become chairman of P&G next month, when Mr Lafley retires.

HE AIN'T SEEN NOTHING, YET.

[Demeter]

11. THE BANKSTERS SUBTHREAD

IT ALL GOES HERE.

[Demeter]

12. Citigroup ‘wanted debt-for-equity swap at EMI’

http://www.ft.com/cms/s/0/b3bcee0c-eb3c-11de-bc99-00144feab49a.html

Citigroup tried to take control of EMI before Terra Firma, the music company’s private equity owner, launched its legal attack against the bank, according to three people familiar with the negotiations.

The stand-off began with a letter from Citigroup in September proposing a debt-for-equity swap that would have given the bank a majority of EMI’s equity and given Terra Firma a share in the upside from restructuring the company, according to two of the people. The third person said the proposal offered Terra Firma a management fee.

EMI

The move is said to have come before Terra Firma launched a legal attack against Citigroup


Typically, when senior debt is written off in a restructuring, equity holders are left with nothing.

The thinly sketched idea was aimed at allowing Citigroup to cut its current heavy debt exposure to EMI to a sustainable level. A “sliding scale” would have allowed Guy Hands, Terra Firma’s chairman, a share in any improvement in the value of the company if he managed to make disposals to pay back part of the debt, or if earnings grew faster than expected.

Terra Firma rejected the proposal, which offered little financial detail. Citigroup then rejected an offer from Terra Firma to put £1bn of new equity into EMI in exchange for the bank writing off £1bn of debt. Terra Firma has already written down its investment by 90 per cent.

Citigroup was stuck with the £2.6bn of debt it lent to finance the £4bn acquisition after credit markets seized up just as the deal was closing in 2007.

“Covenant-lite” loans have allowed Terra Firma to inject new equity to make up shortfalls in EMI’s earnings against targets in its banking agreements. The next covenant test falls due at the end of this month, and will depend on sales in the Christmas period.

The news of Citigroup’s desire for a financial and corporate restructuring, beyond the severe cost cutting Terra Firma has already overseen, comes amid raised expectations in the music industry that EMI may try to sell assets to lower its debtload.

Terra Firma tested the market more than a year ago to gauge interest in its Japanese, country, classical and jazz labels, but attracted no offers at high enough prices.

Industry members are now speculating that EMI could sell some catalogues from its more stable music publishing division, although one person familiar with the situation said there were no active talks.

[Demeter]

32. Citigroup’s share sale under fire

http://www.ft.com/cms/s/0/4dcd8f70-ea1a-11de-aeb6-00144feab49a.html

Citigroup’s problems mounted on Wednesday after it was accused of misleading a major shareholder and sold $17bn of shares at such a low price that the US government was forced to delay the partial sale of its stake in the bank.

The Treasury said it had scrapped plans to sell up to $5bn in Citi’s shares, a move that would have lowered its stake from 34 per cent to about 30 per cent, after the troubled lender priced its share offering at $3.15.

At that price, the government would have suffered a loss on its investment. The authorities received their shares at $3.25 each this year after bailing out Citi.

The $3.15 price is a 20 per cent discount to the price before Citi announced the share sale on Monday. It compares with the 4 per cent discount Bank of America offered investors who bought its $19.3bn share offering last week and the 2 per cent discount for a $12.3bn issue by Wells Fargo on Tuesday.

The disappointing offering came after the Abu Dhabi Investment Authority, one of the world’s largest sovereign wealth funds, filed an arbitration claim against Citi, saying it had been misled when it invested $7.5bn in the bank two years ago.

People close to the matter said Adia’s unusual move was driven by the losses it stands to suffer under the original investment, which requires it to buy shares at $31.83 each, and frustration at a lack of contact with top Citi management.

Vikram Pandit, Citi’s chief executive, has never visited Adia, one of Citi’s largest investors, although senior executives, including Ned Kelly, a vice-chairman, have been to Abu Dhabi in recent months, insiders say.

Adia alleged “fraudulent misrepresentations in connection with the sale and seeks rescission of the investment agreement or damages in excess of $4bn”, Citi said in a statement. Citi said the allegations were without merit and it intended “to defend against them vigorously”.

Citi will use the $17bn from the share offer, as well as $3.5bn in convertible bonds sold on Wednesday, to repay $20bn in federal aid.

Coupled with the end of a deal with regulators to insure $250bn of troubled assets, the repayment will free the bank from government restrictions on pay and operations.

However, the Treasury’s failure to reduce its stake ensures the authorities’ presence on Citi’s share register will weigh on the company for months. The Treasury said it would sell its 7.7bn shares over the next year – rather than the six to 12 month time frame it gave on Monday – but would not sell any shares for the next three months.

Citi also came under fire over a little-noticed decision by the US tax authorities to allow it to keep a $38bn tax break.

[dixiegrrrrl]

47. There is a huge back story on Citi. Huge.

Citi's real price is in the toilet,the people/companies who bought the now worthless derivatives are pissed and suing, meanwhile Citi makes a yet another sweetheart deal with the Government so it can dole out huge end of year bonuses.
And ever so helpful Geithner agrees to hold on to the 1/3 stake in Citi for 3 months more, which just happens to be the time frame Citi needs to make its quarterly statement look good.

Citi is going down, big time. The bad paper holding it up is falling apart.

[Demeter]

50. I Have a Dream

I dreamed that Obama got Geithner, Summers and Rubin to stage a great big confab, and brought all the Big Names together in one room.

Then the doors would be locked and all the banksters and frauds and conmen, including Geithner, Summers and Rubin, would be handcuffed by the FBI and SEcret Service and anybody else with a badge and guts, and secret federal fraud indictments that Eric Holder's been generating by the hundreds would be unsealed. Several thousand grand jury members would be released from protective custody in a simultaneous exchange.

The freshly indicted would all be transported to high security, private prisons in states with impoverished populations.

And then I wake up.

After all, the courts would have to be purged, first. Starting at the top.

[DemReadingDU]

66. all banks must look good at year end

gotta have all those bonuses paid to the banksters too

Then in January, when everyone is taking back Christmas gifts because they need money to pay bills, the stock market will crash, and Citi goes bankrupt. Ya think?

[dixiegrrrrl]

78. I know the cookie is gonna crumble.

Since this year has only 2 more weeks to go......
Yeah, next year should be interesting.

[Demeter]

22. Bernanke moves closer to second term

http://www.ft.com/cms/s/0/d4262eb6-eb36-11de-bc99-00144feab49a.html

Ben Bernanke moved closer to a second term as chairman of the Federal Reserve in the face of a revolt in Congress against his appointment by Senate Republicans.

In a high-stakes hearing, the Senate Banking Committee voted 16 to 7 to advance Mr Bernanke’s renomination to a full vote of the Senate. But while the Fed chief won overwhelming support from Democratic senators on the committee, more than half the Republican members voted no, including ranking member Richard Shelby.

“I strongly disapprove of some of the past deeds of the Federal Reserve when Ben Bernanke was a member and its chairman, and I lack confidence in what little planning for the future he has articulated,” said Mr Shelby.

Supporters cited efforts made by Mr Bernanke – who was named Time Magazine’s Man of the Year this week – to battle the financial crisis. “He did bring us back from the brink of a Depression,” said Democrat Robert Menendez.

Mr Bernanke is expected to win the full Senate vote when it is held early next year. But the unusually contentious nature of his confirmation highlights the risk facing the US central bank as it struggles to deflect reforms that could trim its powers and curb its independence.

Worryingly for the Fed, many of the Senators voting for Mr Bernanke faulted the Fed for regulatory failings and financial sector bailouts, with several expressing support for proposals to take away its bank supervision powers.

Robert Corker, one of the four Republicans on the committee who did back Mr Bernanke, said Mr Bernanke was “by far the most qualified” person to lead the central bank but added: “Does he need to quit trying to expand the empire of the Fed? Absolutely.”

Mr Bernanke opposes stripping the Fed of banking supervision, arguing this would limit its capacity to prevent future credit bubbles and make it difficult for the central bank to act as an effective lender of last resort.

But Thursday’s vote suggests Mr Bernanke may be unable to block this and other potentially damaging proposals, including plans to centralise control of the regional Fed system and to subject the central bank to more intrustive government audit.

With public anger over the financial crisis and Wall Street bailouts channeled against the Fed, there is pressure on those backing Mr Bernanke to distance themselves from the central bank in a subsequent vote.

Democratic committee chairman Chris Dodd said full Senate vote on Mr Bernanke would not happen before the end of the year and said it would be up to the Senate leadership to schedule a vote in late January.

With at least four critics threatening to filibuster the nomination, the Democratic leadership will have to muster a supermajority of 60 votes simply to force a decision.

Analysts say that this will eventually get done, but with a congested legislative timetable, the full vote on Mr Bernanke could slip past January 30 when his current term expires, particularly if healthcare reform slips into next year.

Mr Dodd said that would require Mr Bernanke to temporarily step down as chairman in favour of vice-chairman Don Kohn, although Mr Bernanke would remain on the Fed board as a governor.

[Demeter]

23. Fed ponders exit strategy questions

http://www.ft.com/cms/s/0/1d4790e8-e9bc-11de-9f1f-00144feab49a.html

A debate is bubbling away inside the Federal Reserve system as to how the US central bank should sequence, communicate and execute its eventual exit from unconventional monetary policy.

The statement issued at the end of Wednesday’s Fed policy meeting may not cast much light on this, beyond perhaps emphasising that the exit from unorthodox liquidity provision is already well advanced and can proceed independently from monetary policy.

But the central bank will have to flesh out its thinking as 2010 progresses. “The order in which the committee will chose to use its exit tools matters,” says Larry Meyer, a former Fed governor.

At the heart of the exit sequence debate are five interlocking questions. Should the Fed focus on tightening short-term rates as normal or tightening long-term rates through asset sales?

Assuming the Fed focuses on short-term rates, does it need to reduce the more than $1,000bn excess bank reserves substantially, early in the process and ideally before raising rates?

When it starts raising, should it communicate its policy stance in terms of an interest rate on bank reserves rather than a target for the Fed funds rate as in the past?

If it starts tightening without draining the excess reserves, will it have to move more aggressively than it would otherwise have done? And what is the end destination in terms of the monetary policy regime the Fed wants when the exit is complete?

The tentative answers from the Fed leadership appear to be respectively: yes, no, maybe, probably and something different from the pre-crisis regime.

But a number of Fed policymakers favour a different approach that would hew more closely to the Fed’s pre-crisis way of doing business.

Since the start of the crisis in August 2007 the Fed balance sheet has more than doubled in size from $874bn to $2,190bn, with much of the increase financed by creating bank reserves. AND MOST OF IT TOXIC TRASH THAT NOBODY WANTS, EVER

In recent months loans to the financial system have declined sharply from $1,623bn to $265bn. But the Fed has continued to accumulate assets and reserves now stand at $1,107bn – roughly 50 times the pre-crisis level.

Some economists think reserves play a special role in the creation of credit and the Fed must reduce reserves early in the exit process or risk excess inflation.

Jim Bullard, president of the St Louis Fed, proposes tightening policy by selling back Fed assets, which would raise long-term rates, while also reducing reserves, before raising short-term rates. But the Fed leadership views this as potentially risky, so it remains focused on tightening at the short end.

The central bank has tested tools – including reverse repo operations in which the Fed borrows money against some of its assets – that would allow it to drain reserves, potentially on a large scale, and replace them with other short-term liabilities.

But the Fed leadership does not think reserves have a unique role in the inflation process. So it will probably end up draining reserves only to the degree necessary to buttress its favoured new tool: the ability to pay interest on bank reserves and thereby put a floor under the Fed funds rate.

Such operations could be near-simultaneous with the first Fed rate rise and not provide advanced warning. “When I told audiences early on that they would see this coming well in advance, that actually doesn’t have to be true,” Charles Evans, president of the Chicago Fed, told the FT in a recent interview.

Once Fed tightening begins, officials see some logic in making the rate on bank reserves the main focus of communication, though market habit could force them to stick to the fed funds rate, which is expected to trade in a range near the reserves rate.

If the Fed does start tightening with more than a trillion of excess reserves in the banking system, senior Fed officials acknowledge that it may have to raise rates more rapidly than in a world in which banks had only $20bn reserves.

Calibrating this will be difficult. Allan Meltzer, a professor at Carnegie Mellon, says when Fed officials tell him they will raise rates higher if necessary to offset swollen reserves, “I ask them how high? They don’t know the answer”.

Moreover, as the tightening cycle gets under way, the Fed will have to indicate where it wants to end up post-crisis. If left alone, the asset portfolio will gradually run off, reducing reserves. But many officials would like to end up in a situation in which reserves are substantially higher than they were pre-crisis – and rates managed differently than before – believing this would improve financial stability.

[Demeter]

24. Fed Graphs Worth a thousand words

[Demeter]

25. US jury indicts duo in insider trading case

http://www.ft.com/cms/s/0/95ebae68-e9d4-11de-ae43-00144feab49a.html

A federal grand jury on Tuesday returned indictments against Raj Rajaratnam, the billionaire founder of the Galleon hedge fund, and Danielle Chiesi, a former Bear Stearns employee, in an insider trading case that has ensnared top executives across corporate America.

The formal charges against the two come nearly two months after US prosecutors accused them and four others of being part of an insider trading scheme involving shares in IBM, Google, Hilton and Advanced Micro Devices, among others.

There were few new details in the indictment charging Mr Rajaratnam and Ms Chiesi, who worked for New Castle, the equity hedge fund group of Bear Stearns Asset Management. It is the only one to be returned so far in the case, which widened in recent weeks to include 21 people. US prosecutors have until Wednesday to decide whether to obtain indictments for at least four other people accused in the case or ask a judge for a 30-day postponement.

“Mr Rajaratnam is innocent and looks forward to his day in court when a jury of his fellow citizens will examine and evaluate all of the evidence,” said Mr Rajaratnam’s lawyer, John Dowd. Ms Chiesi “intends to plead not guilty and fight the case vigorously”, said her lawyer, Alan Kaufman.

Tuesday’s indictment contained 17 counts of securities fraud and conspiracy against Mr Rajaratnam and Ms Chiesi. It seeks to recover at least $20.8m in profits allegedly made in the scheme.

Prosecutors used court-authorised wiretaps of telephone conversations and co-operating witnesses to build their case, the biggest insider trading case involving hedge funds. Six of the people who have been charged have pleaded guilty and are co-operating witnesses for the government. All the others accused have denied wrongdoing.

Roomy Khan, a former employee at Intel and a co-operating witnesses, appears to be a central figure in the case against Mr Rajaratnam, based on court documents. In exchange for inside information Mr Rajaratnam allegedly received from Ms Khan, he allegedly provided her with inside information on a number of companies.

Tuesday’s indictment contained details about an instant message Ms Khan allegedly sent to Mr Rajaratnam regarding shares in Polycom. On January 9 2006, she wrote: “donot buy plcm till i het guidance; want to make sure guidance OK,” according to the indictment, which alleged that Mr Rajaratnam directed his hedge fund to buy about 60,000 shares in the company three days later.

[Demeter]

30. SEC charges four with insider trading

http://www.ft.com/cms/s/0/07d223d6-ea89-11de-a9f5-00144feab49a.html

The US crackdown on insider trading widened on Wednesday as the Securities and Exchange Commission accused four people, including former employees of Lazard and TPG, of trading improprieties involving some of the decade’s biggest deals.

Adnan Zaman, a former vice-president at the Lazard investment bank, and Vinayak Gowrish, a former associate at the TPG private equity firm, allegedly gave confidential information about five deals – including the $45bn leveraged buy-out of TXU in 2007 by KKR, TPG and Goldman Sachs – to two friends in exchange for cash, free rent or other items of value, according to the SEC complaint.

“These financial professionals betrayed their firms and clients to make some easy money with their friends, and they tried to cover their tracks to no avail,” said Robert Khuzami, director of the SEC’s enforcement division.

The two friends, Pascal Vaghar and Sameer Khoury, who allegedly made about $500,000 based on inside tips, were also accused in the civil complaint filed in California, where all four men live.

Mr Zaman, Mr Vaghar and Mr Khoury have offered to settle with the SEC, the regulator said. The three neither admitted nor denied the accusations. The SEC is seeking financial penalties against Mr Gowrish. Mr Gowrish’s lawyer predicted that her client would be found innocent of the charges.

Mr Gowrish allegedly passed on information about deals involving TXU, Sabre Holdings and Alliance Data Systems. Mr Zaman allegedly passed on tips regarding acquisitions of WebMethods and Myogen. The alleged insider trading occurred from at least December 2006 to May 2007.

The complaint said Mr Vaghar was currently unemployed and Mr Khoury was a mortgage broker. Mr Zaman and Mr Gowrish attended high school and college together and were fraternity brothers. To avoid detection, they allegedly exchanged information on yellow sticky notes and through coded text messages. They deliberately traded relatively small amounts to avoid scrutiny, the SEC claimed.

Mr Vaghar often wrote cheques made payable to himself or cash rather than to Mr Gowrish or Mr Zaman directly so as not to create a paper trail, the SEC alleged. He allegedly gave his credit card to Mr Zaman so he could charge purchases for himself in Mr Vaghar’s name.

In October, the biggest ever insider trading case involving hedge funds was revealed.

[Demeter]

31. AIG Asian unit listing set to raise up to $20bn

http://www.ft.com/cms/s/0/35d2d5d8-ea8d-11de-a9f5-00144feab49a.html

AIG is in advanced preparations for a listing of its flagship Asian life assurance unit, forecast to raise billions of dollars that will be used to start repaying the more than $80bn that the company owes the US government.

The Hong Kong initial public offering of American International Assurance, which could file a prospectus as early as next week, is expected to raise between $10bn-$20bn in what would be one of the world’s largest IPOs...

[Demeter]

35. Tough year leaves GE more focused

http://www.ft.com/cms/s/0/6b543292-e9d9-11de-ae43-00144feab49a.html

General Electric’s earnings in 2010 are likely to be flat, but Jeffrey Immelt, its chief executive, expects a simpler, more focused company to post healthy returns in 2011 and 2012.

Mr Immelt, discussing the challenges and opportunities facing GE at a summit for investors and analysts, said the company had come through a difficult year, but had outperformed all other industrials in the S&P 500 over the past three years. He said it would return to its strengths in infrastructure, technology, energy and finance OH, WHEN WILL THEY EVER LEARN?.

“We were playing defence a year ago,” Mr Immelt said, “but in 2010 you can think of the company being back on offence. We have a much easier hand to play than we had five years ago, or 10 years ago.”

GE is coming off one of the most challenging years in its history, having had to cut its dividend in 2009 and endure a decline in its share price to $6.66 in March, down from the $38 it had reached a year earlier.

The company’s finance arm, GE Capital, will no longer be the engine of the conglomerate’s profits, as it had been in the years prior to the credit crunch, but Mr Immelt said GE remained committed to the business. “The worst days are behind us,” he said.

Mr Immelt said that healthcare reform in the US would be a big opportunity for the company, as would government stimulus spending in the US and abroad. “Our focus on government intervention is not going to change”, he said.

In terms of energy, Mr Immelt said GE was well positioned to take advantage of trends towards gas and wind technologies. “This is going to be the gas and wind world,” he said. “This is just a great GE business.”

GE would also perform well in developing economies such as India, China and south-east Asia, he said. Referring to a series of contracts and joint ventures that the company has struck recently, Mr Immelt said: “I don’t think anybody has played China better than GE has.”

GE recently sold a majority stake in its NBC Universal unit to Comcast, generating much-needed cash for the parent company.

Up until two years ago, GE had enjoyed a decades-long streak of meeting earnings targets every quarter. In early 2008, Mr Immelt assured investors that GE would once again meet expectations, but the collapse of Bear Stearns hurt the company’s ability to sell assets and resulted in a negative surprise for investors. GE has not provided earnings forecasts since then.

Analysts expect GE to earn 99 cents per share for 2009. Mr Immelt said on Tuesday that 2010 was likely to be flat.

Based on the amount of cash that GE’s far-flung operations generate, Mr Immelt said he would consider a share buyback once GE’s earnings are on the rise again. He also said his goal was to restore the company’s dividend within several years.

[Demeter]

40. Barclays head stands up for big banks

http://www.ft.com/cms/s/0/a6084dde-e8e3-11de-a756-00144feab49a.html

Bob Diamond, the president of Barclays, mounted a spirited defence of big banks and their trading arms on Monday, saying “to make banks smaller and narrower is not the solution”.

In an appearance before the Council on Foreign Relations in New York, Mr Diamond argued against suggestions that banking could be safer by limiting the activities of banks or breaking them up into smaller companies that would not be “too big to fail”. “Big and systemic are not synonymous,” said Mr Diamond, who heads Barclays’ investment banking and asset management operations. “To make banks smaller or narrower is not the solution. An integrated universal bank is the best structure.”

Mr Diamond defended trading operations, including those in derivatives, as necessary parts of banking rather than a form of gambling, as some critics have alleged. He said most losses suffered by banks during the financial crisis stemmed from lending rather than trading.

“We have got to end the rhetoric around ‘casino banking’,” he said. “Trading is important to financial institutions. Ninety-eight per cent of the losses didn’t come from trading, they came from loans.”

Richard Bove, banking analyst at Rochdale Securities, said he thought Mr Diamond’s loss estimates were most likely based on a narrow definition of bank trading, which would not include securities that banks own as investments and hold to maturity.

“If he was talking about the securities banks buy and sell for their own account, the losses were moderate,” Mr Bove said. “But if he was talking about the securities banks own , then there were huge losses.”

Mr Diamond said he hoped that any changes in the global regulatory landscape would leave a level playing field in finance, with consistent rules for capital, accounting and compensation across national boundaries.

He said he thought bankers should be paid for performance, meaning more of their compensation should take the form of equity awards, rather than cash. He also favoured compensation “clawbacks” if the performance of a bank deteriorates.

Mr Diamond sounded a cautious note on the economy, saying he believed the recovery was real, but raised doubts about its sustainability. He expressed particular concern that governments might keep fiscal stimulus and monetary stimulus programmes in place for too long, fuelling inflation.

[Demeter]

13. LET'S PICK IT UP IN THE MORNING

I need some more sleep!

http://www.youtube.com/watch?v=lzTG0fTLAlU

[Tansy_Gold]

14. I'll catch you Saturday evening or Sunday morning

Last arts & crafts show of the season is Saturday. I'm all packed and ready to go, just need to get some sleep myself.

Already recced but will :kick: again




TG2012

[Demeter]

16. Activist targets CEO succession

http://www.ft.com/cms/s/0/184ef728-eb4e-11de-bc99-00144feab49a.html

US companies including Bank of America, American Express and Whole Foods are to be targeted by activist shareholders over plans to replace their chief executives, in a further sign of investors’ increasing power in corporate America.

The Laborers’ International Union of North America, whose pension funds manage about $30bn, said it had filed proposals with 14 companies asking them to detail succession planning policies and put them to a vote in their annual meetings.

The move takes advantage of a recent decision by the Securities and Exchange Commission to relax rules that prevented a shareholder vote on succession, long regarded as the responsibility of boards.

The need for an orderly CEO succession was highlighted by BofA’s long and tortuous search for a chief executive, which ended on Wednesday with the appointment of Brian Moynihan after several external candidates had turned the job down.

News of the initiative on succession planning comes a day after the SEC passed a raft of reforms that will force companies to provide more information on the pay of executives and the background of boards. The decisions underscore a regulatory agenda by the SEC’s new management, led by the chairman Mary Schapiro, that is increasingly moving towards empowering shareholders.

Liuna’s proposals ask companies to “adopt and disclose a written and detailed CEO succession policy”, but stop short of demanding a list of potential candidates for the top job.

“We are not interested in telling companies who the CEO should be but we are interested in making sure that boards are paying attention and they are doing succession planning,” said Richard Metcalf of Liuna, which has 500,000 members.

After failing to convince companies to put succession planning to a vote for two years, Liuna had secured a vote for its proposal at the 2010 shareholder meeting of Whole Foods, he said. The retailer did not have an immediate comment.

Mr Metcalf said he expected similar proposals to be adopted at other companies.

American Express did not have an immediate comment. BofA declined to comment.

In the past, the SEC let companies leave out shareholder proposals on succession planning because it regarded them as day-to-day business matters. But in a little-noticed decision in October, the regulator told companies such proposals would have to be included as long as shareholders met other requirements.

[mbperrin]

46. Imagine actually allowing the investors, the people who provide the money

so that the company exists, imagine actually allowing those people a say in the running of the company, especially the selection of management and their pay!

Why, it's practically Communism!


This violates the sacred principles of Kleptocracy!

Won't somebody think of the CEOs!?

[Demeter]

17. International News Subthread

In local news, we have our first snow, a dusting that doesn't even cover all the grass...

[Demeter]

18. Dubai’s ruler tightens financial controls

http://www.ft.com/cms/s/0/768f03bc-eb3c-11de-bc99-00144feab49a.html

Dubai’s ruler sought to boost his oversight of the emirate’s finances on Thursday when a new law increased control over the budgets of government departments.

Law Number 35 of 2009, covering the management of public funds, introduces procedures designed to control spending, said an official statement. The law, replacing one passed in 2006, requires departments to transfer any excess revenues to the public purse.

The measure covers all departments and includes government companies that have tapped credit markets, such as the Dubai Water and Electricity Authority and the state holding company Investment Corporation of Dubai, which owns Emirates airline and a one-third stake in Emaar Properties, a developer.

But the statement made clear: “The law does not in any way relate to government-related entities such as Dubai World and Dubai Holding.”

These two entities are responsible for the lion’s share of Dubai’s $80bn-plus (€56bn, £50bn) debt burden.

The commercial arms of the Dubai government took on significant debt during the petrodollar boom as the emirate expanded domestically and went on an overseas spending spree.

They contributed to the rise of the emirate as a global trading and financial centre, but the economic downturn and the punctured property bubble have since left many struggling.

The new law is the latest in a series of measures intended to bolster the emirate’s regulatory framework after a tough year, culminating in last month’s shock request for a standstill in $26bn of distressed debt at Dubai World.

This week, Dubai took a $10bn bail-out loan from its neighbour, Abu Dhabi, to pay off a $4bn sukuk bond and help the government restructure Dubai World’s holding company and property developers.

The government has announced the formation of an insolvency law and a tribunal focused on disputes arising from the restructuring of Dubai World. If banks fail to agree on a standstill, this process could end in the holding company’s insolvency.

Officials also say a new bankruptcy law could soon come into force across the United Arab Emirates to provide protection to companies, updating outdated existing legislation.

[Demeter]

21. Dividend and bonus rules face reform

http://www.ft.com/cms/s/0/40dc3876-eb04-11de-a0e1-00144feab49a.html

Banks will be blocked from paying dividends to shareholders or bonuses if their capital levels fall below a minimum threshold, under the terms of a new, more invasive international regulatory regime unveiled on Thursday.

The Basel Committee on Banking Supervision, which is reviewing the rules governing banks’ strength, said the ban would apply if a bank failed to maintain a yet-to-be determined buffer above a new regulated minimum.

The European Central Bank is taking advantage of the economic slowdown to press ahead with a new €500m-plus headquarters in Frankfurt

The shock measure, whose details will be fixed over the coming months, is part of a package of reforms that is the most ambitious regulatory response yet to the financial crisis.

There was immediate criticism from regulatory experts, centring on the focus on bonuses.

“It is intellectually wrong-headed,” said Simon Gleeson, partner at Clifford Chance, the law firm. “Bonuses are costs of doing business and are not ‘discretionary’ in the same way that dividends are.”!!

In a widely expected move, the committee said that hybrid capital – a form of debt that has been substituted for equity – must be phased out as top-ranking capital to “ensure that large, internationally active banks are in a better position to absorb losses”.

Also included in the package are the introduction of a global leverage ratio, a new liquidity regime, new asset risk weightings to reflect counterparty credit risk, and countercyclical capital buffers to ensure banks build up financial reserves in good times.

Analysts at Credit Suisse called the measures “pretty punitive”. They said: “In particular, the new definitions of common equity tier one appear to take a very hard line with the majority of deferred tax assets, insurance equity capital, excess expected losses, unrealised debt losses, minority interests and pension fund liabilities being deducted.”

The measures will be the subject of an impact assessment in the first half of next year.

Nout Wellink, chairman of the committee, said: “The capital and liquidity proposals will result in more resilient banks and a sounder banking and financial system. They will promote a better balance between financial innovation and sustainable growth.”

The 72-page document released on Thursday is the latest regulatory response to the financial crisis. In the summer the committee published details of requirements to allocate more capital to back risky trading activities, which on average have obliged banks to hold three times more trading capital.

The committee made clear that its changes to the tier one capital regime were the key reform. In a consultation document, the committee said the so-called tier one capital base – a measure of top-ranking capital – would have to comprise predominantly common shares and retained earnings.

The committee said: “Innovative hybrid capital instruments with an incentive to redeem through features like step-up clauses, currently limited to 15 per cent of the tier one capital base, will be phased out.” Hybrid capital, blamed by critics for failing banks in the crisis because of its inability to absorb losses, was expected to be outlawed.

All elements of capital would have to be disclosed to improve the transparency of the capital base.

The committee said it would discuss the role that contingent capital instruments could play in banks’ balance sheets at a follow-up meeting next July.

Lloyds Banking Group recently raised £9bn ($14.5bn, €10bn) by switching existing debt into contingent convertible, or CoCo, bonds. CoCos count as debt instruments but convert into equity if a bank’s capital ratio comes under stress.

The committee said the ratio would be adjusted to smooth differences between US and international accounting standards.

Banks will also be required to comply with a new 30-day liquidity coverage ratio.

[Demeter]

26. Greek unions to strike over reforms

http://www.ft.com/cms/s/0/cc3355cc-e9af-11de-9f1f-00144feab49a.html

Greek trade unions have vowed to go ahead with a 24-hour strike on Thursday, further undermining the prime minister’s efforts to push through reforms aimed at calming market fears of a sovereign default.

“We will fight for the rights of every worker in Greece” said Giorgos Skiadotis, spokesman for PAME, a communist-led trade union that staged a symbolic takeover of the finance ministry on Tuesday.

George Papandreou, the Socialist prime minister, held crisis talks with the opposition in an effort to win agreement for austerity measures and head off strikes and further social unrest.

Measures announced on Monday, including a freeze on monthly salaries above €2,000 and a 10 per cent cut in allowances, have incensed public sector trade unions, although lower paid workers will receive above-inflation increases next year.

Mr Papandreou said a two-hour meeting chaired by Karolos Papoulias, the president, resulted in “several points of agreement” including a crackdown on widespread graft in procurement agencies and tax offices.

However, the conservative New Democracy party refused to support an increasingly isolated prime minister. Antonis Samaras, the conservative leader, said: “If this indecisiveness continues, it will be catastrophic for the economy.”

Greek debt markets tumbled again on Tuesday as yields, which have an inverse relation to price, on two-year bonds rose 23 basis points to 3.30 per cent, a 150bp rise over the past week.

The cost to insure Greek bonds against default rose $11,000 to $234,000 annually for $10m of five-year debt. This cost has risen $59,000 over the past two weeks.

The Athens stock exchange fell 2.1 per cent, led by a 4 per cent fall in bank shares.

Joaquin Almunia, European economic commissioner, praised the prime minister’s announcement as “a step in the right direction.”

“We look forward to the spelling out….of concrete measures that will strengthen fiscal adjustment in 2010 and ensure a fast consolidation of public finances,” Mr Almunia said.

But analysts were sceptical about the government’s plans to cut the budget deficit next year to 8.7 per cent of gross domestic product, a drop of four percentage points, and start reducing the public debt in 2012.

Details of the measures will only become clear next month when Greece presents its three-year stability and growth programme to the European Commission.

“The prime minister didn’t give details of short-term measures to curb spending – some of which have been announced by previous governments that then failed to implement them,” said Joanna Tellioudi, chief analyst at HSBC Pantelakis Securities in Athens.

Erik Nielsen, European economist at Goldman Sachs, said the plan “remained vague” on key structural issues.

[Demeter]

34. Greece sees few glimmers of hope

http://www.ft.com/cms/s/0/bca40d88-e9a8-11de-9f1f-00144feab49a,s01=1.html

With Greece’s budget deficit at record levels and the country’s banks exposed to troubles both at home and abroad, doomsayers are predicting that Greek banks will go the way of Iceland’s...

On Monday, Standard and Poor’s, the ratings agency, said Greek banks face the “highest risks in western Europe”. Last week it warned of a possible downgrade of Greece??s A minus credit rating.

Athens-based lenders have borrowed about €40bn ($58bn) from the European Central Bank at cheap rates to invest in higher-yielding Greek bonds, which they used as collateral. Their bondholdings helped the four big banks to show respectable nine-month profits in spite of a drastic slowdown in domestic credit expansion.

And local analysts remain broadly sanguine about Greek banks’ prospects.

Greek lenders still have core tier one capital ratios – a measure of balance sheet resilience – at close to 9 per cent, according to Greece’s central bank.

Dimitris Haralabopoulos, banks analyst at HSBC Pantelakis Securities in Athens, says: “Corporate lending should come back next year so we should see positive loan growth of around 2-3 per cent.”

Local customers still seem confident about the country’s future. Greeks have withdrawn more than €2bn of bank deposits in the past two months to invest in bonds.

Industry participants, however, point to a more worrying future. A deadline looms in May, when Greek lenders are due to repay a total of €4bn in capital injections provided by the government...

Fitch has already put covered bonds issued by Greek lenders on negative watch. And with the economy set to shrink again next year by about 0.3 per cent, against a predicted 1.3 per cent this year, Greek households are increasingly cautious about borrowing.

Credit expansion this year is forecast at less than 2 per cent, while consumer borrowing will be flat, according to analysts.

Non-performing loans are likely to peak in the second half of next year at about 9-10 per cent. They are estimated to have reached 5 per cent at the end of the third quarter.

The Greek banks’ incursion into south-east Europe has compounded their bad-debt problems. Bulgaria is believed to be the worst affected, followed by Romania and Serbia. Although the banks’ international exposure is relatively small at about a fifth of total lending, the portion of loans that are non-performing is higher than in Greece.

Greek banks have stopped making transfers to southeast European subsidiaries, leaving them to fund lending entirely out of local deposits.

Their customers are being encouraged to borrow in local currency rather than euros to reduce exchange rate risk.

Even if credit demand does pick up – EFG Eurobank, for example, which suffered especially heavy losses in Ukraine, expects its international division to return to profit in 2010 – a significant challenge is to make the economics of lending stack up.

Alpha Bank, for example, has a 112 per cent loan-to-deposit ratio, meaning that a chunk of its lending is funded by wholesale finance.

And with Greece’s economy in such a fragile state the cost of that finance has ballooned.

Mr Yannopoulos says: “If the Greek government is paying 250 basis points over Libor we can’t expect to pay less”.

As one senior Greek banker points out, the macroeconomic situation will determine the banks’ immediate future.

“What happens next in the bank sector depends on how the government handles the debt crisis. The next 60 days will be critical,” the banker says.

[Demeter]

27. UK Treasury hints at extending supertax

http://www.ft.com/cms/s/0/9e24bf9c-e9b7-11de-9f1f-00144feab49a.html

Treasury ministers and officials threatened on Tuesday to extend the one-off levy on bank bonuses if avoidance became widespread.

The temporary 50 per cent bank payroll tax on bonuses is due to end on April 5 2010. But on Tuesday officials warned banks thinking of simply deferring bonus decisions into the new financial year that the legislation could easily be extended....

[Demeter]

33. Darling defies threats on bonus tax

http://www.ft.com/cms/s/0/eadb41b4-e8f7-11de-a756-00144feab49a.html

Alistair Darling has warned banks that he will not water down his 50 per cent supertax on bonuses or offer special deals in a standoff in which brokers and banks have threatened to move key staff out of the UK.

The chancellor has been deluged with claims by banks that the tax would raise far more than the £550m he predicted. They have demanded that he make the levy less onerous.

But an aide to the chancellor said: “The solution to their problem is that they pay less in bonuses. The banks don’t seem to realise this tax is about changing their behaviour, not raising revenue.”

Mr Darling expects the City regulator to intervene if the banks continue to pay big bonuses in spite of the levy on the pool of discretionary bonuses in excess of £25,000....

[Demeter]

39. Bank calls City’s bluff on regulation

WHO CALLED WHOSE BLUFF? IT SEEMS TO BE TO BE THE OTHER WAY AROUND...

http://www.ft.com/cms/s/0/f1001c36-eb4f-11de-bc99-00144feab49a.html

A senior Bank of England official said that if some banks migrated overseas in response to tougher UK regulation “it might be a price worth paying” to protect the reform of the financial system in the wake of last year’s crisis.

The comments, made by Andy Haldane, the Bank’s head of financial stability, in a BBC World Service interview to be broadcast on Friday, are certain to exacerbate tensions between the authorities and the financial sector...

Mr Haldane said there were advantages in the UK acting alone in beefing up regulations, even if officials cannot persuade other countries of the benefits.

“Some of the downside of carrying around a big financial system is now evident to all. If some of that were to migrate overseas that would be unfortunate but given the costs of carrying that financial system around, it may be a price worth paying,” he said.

In its twice-yearly Financial Stability Report issued on Thursday, the Bank made it clear it believes the recent stabilisation and profitability of the banking system owed little to the skill of the bankers themselves.

Instead, the Bank said the temporary loss of competition in financial services since the crisis started had allowed banks, particularly large investment banks, to raise prices and boost their earnings.

The sector should use the extraordinary profits generated this year to build buffers against future shocks rather than giving money back to employees or shareholders, the Bank said. It warned the future is unlikely to be as rosy as the easy-money days of the past nine months and “banks should take advantage of favourable market conditions”.

The consequence of squirreling away the profits is that bonuses and dividends should be “materially lower than in the past”, the report adds.

The Bank said if staff costs were reduced by a tenth and dividend pay-outs by a third, “UK banks increase retained reserves by close to £70bn over the next five years”.

That sum is more than the taxpayer cost of the bank recapitalisations that have so far been needed in the crisis...

[Joe Chi Minh]

84. Add another 10% on the windfall tax on bonuses for dumb insolence, Ally..

[Joe Chi Minh]

82. Anticipatory repetition - if you get my gist.

[Joe Chi Minh]

83. Well done, lads. I'm beginning to see Brown in a new, more favourable light. Maybe it was Darling's

initiative, but Brown looks to be a trailblazer into pastures new and more responsible for the rest of NuLab(c)'s neoliberal reluctant time-travellers.

[Demeter]

36. Credit Suisse settles with US over Iran

http://www.ft.com/cms/s/0/ef64c312-e9b6-11de-9f1f-00144feab49a.html

Credit Suisse surprised financial markets on Tuesday night after revealing it expected to pay US authorities about $536m to settle issues relating to financial dealings with Iran.

The Swiss bank, which has gained a reputation for avoiding accidents during the credit crisis, declined to provide details beyond the contents of a brief press release:

Credit Suisse confirms settlement discussions with US authorities related to US dollar payments involving parties subject to US sanctions

Zurich, December 15, 2009 Credit Suisse confirms that it is in advanced settlement discussions with the New York County District Attorney’s Office, the United States Department of Justice, the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York, and the Office of Foreign Assets Control ("OFAC"). The discussions relate to a previously disclosed investigation into US dollar payments during the period 2002 to April 2007 involving parties that are subject to US economic sanctions. As part of the settlement, Credit Suisse is likely to pay a total of USD 536 million combined.

Credit Suisse has previously disclosed the investigation by US authorities and that it was conducting an internal review into certain US dollar payments involving countries, persons or entities that may be subject to US economic sanctions. In December 2005, Credit Suisse decided to exit the business in question and subsequently proactively undertook an extensive independent investigation into the Zurich-based payment activity and other practices, working closely and constructively with regulators and US authorities. Credit Suisse’s internal review has now been concluded and discussed with these and other government authorities including Credit Suisse’s main regulator, the Swiss Financial Market Supervisory Authority, FINMA.

Credit Suisse is committed to the highest standards of integrity and regulatory compliance in all its businesses, and takes this matter extremely seriously. Credit Suisse has enhanced its procedures to prevent practices of this type from occurring in the future. In particular, Credit Suisse:

* Terminated its business with all OFAC-sanctioned parties in 2006, including closing its representative office in Tehran;

* Enhanced its global compliance program by, among other things, appointing a global sanctions compliance officer, establishing competency centres and designating individuals responsible for coordinating and monitoring compliance with sanctions programs and enhancing its global policies, procedures and employee training programs, which will continue to be regularly reviewed for effectiveness; and

* Enhanced sanctions filters screening designed to cover incoming and outgoing transactions.

While Credit Suisse had recorded provisions for this matter through the end of the third quarter of 2009, it expects to record an additional pre-tax charge of CHF 445 million in the current quarter, which is estimated to be approximately CHF 360 million after tax.


Credit Suisse will promptly disclose additional information after having reached a final resolution of the matter with the US authorities.

In its statement, Credit Suisse said the negotiations related to “US dollar payments during the period 2002 to April 2007 involving parties that are subject to US economic sanctions”. A person familiar with the situation said the case involved more than $1bn of funds.

The deal, for which some provisions have already been taken, is expected to require an additional charge of SFr445m before tax in the fourth quarter, equivalent to a net impact of SFr360m in the period.

The bank declined to indicate when it thought its negotiations, involving five US authorities including the Manhattan District Attorney’s Office, the US justice department and the Federal Reserve, would be concluded. However, officials indicated the surprise statement had been prompted by a leak.

The US investigations into Credit Suisse had been disclosed previously but had been largely overlooked in the thick of the credit crisis. The US authorities are believed to be investigating nine banks in relation to Iran. Lloyds Banking Group of the UK has already reached a $350m settlement.

Credit Suisse stressed that it had decided to terminate business with Iran in December 2005.

However, it was not until the following year that the group shut its representative office in Tehran and ended all business with parties sanctioned by the Office of Foreign Assets Control, the US body involved in policing business with countries, entities or people subject to US economic sanctions.

[Demeter]

72. Credit Suisse Caught Allowing Iranian “Rogue Players” Secret Access to US Dollars By Rocky Vega

http://dailyreckoning.com/credit-suisse-caught-allowing-iranian-rogue-players-secret-access-to-us-dollars/

The US government already had to crack down on one Swiss bank, UBS, fining it $780 million earlier this year for illegally aiding American citizens in evading their taxes. Now, it’s Credit Suisse in the crosshairs for helping clients in Iran, Libya, Sudan, and other countries perform illegal transactions. The bank has since “accepted and acknowledged responsibility for its criminal conduct” and is now settling with New York City, New York State, and the federal government on fines totaling nearly $1 billion.

According to the Wall Street Journal:

“The men announced a $536 million settlement by Credit Suisse, one of several banks accused in a long-running case that has netted roughly $1 billion in fines. The bank, which paid the biggest of the fines, reached a 24-month deferred prosecution agreement, meaning it could face criminal prosecution if further problems occur.

“Mr. Holder said Credit Suisse built a business based on actively helping its clients avoid detection by U.S. authorities on their financial transactions. The bank produced a pamphlet titled, ‘How to transfer USD payments’ and told Iranian clients that bank employees would check each message individually to make sure it would avoid detection.

“The bank also circulated images of payment applications showing how to properly format them to avoid detection. ‘The settlement we announce today ensures that Credit Suisse will not flout the law again for its own financial gain,’ Mr. Holder said.”

Sure, Credit Suisse has since shut down its Tehran office, but $536 million really seems like a slap on the wrist for what some have referred to as a “treasonous” act. Ironically its shares were up about 5.4 percent on the news. The complete story is available in the Wall Street Journal’s coverage of secret deals by Credit Suisse.

[Demeter]

37. Deutsche Bank to ‘globalise’ bonus pain

http://www.ft.com/cms/s/0/1c0163c2-eb55-11de-bc99-00144feab49a.html

Deutsche Bank will spread the pain of Britain’s controversial supertax on bankers’ bonuses among its staff around the world, becoming the first leading international group to spell out how it will deal with the financial hit.

“We will clearly globalise it,” Josef Ackermann, Deutsche’s chief executive, told the Financial Times, in remarks that risk angering staff outside London. “If parts are paid out of the bonus pool, we would seek to globalise it. It would be unfair to treat the UK bankers differently.”

A number of US banks are considering similar measures, spreading the effects of the tax among shareholders, UK employees and staff around the world despite fears that such a response could upset bankers outside Britain.

Alistair Darling, the UK’s chancellor of the exchequer, last week announced a surprise 50 per cent supertax to be levied on banks’ bonus pools, in an effort to curb banker remuneration. The year has seen profits artificially buoyed by the direct and indirect benefits of government bail-outs.

But Mr Ackermann said he opposed government interference in setting pay. “Bonuses should be the result of supply and demand for skilled people,” he said.

The industry is furious about the levy. If its cost is passed on to bankers, bosses say they are trapped in a Catch-22 situation: either UK bankers feel disgruntled at being paid less than their US peers, say, or New York bankers are punished indirectly by the UK government. Some tax experts have suggested the affair could spark a transatlantic political dispute.

Mr Ackermann admitted that the German bank’s investors could end up taking some of the hit. “We will monitor what banks are doing, how much of the cost will be borne by staff and how much will be taken by shareholders. That is absolutely undecided.”

In a separate interview, Eric Daniels, chief executive of Lloyds Banking Group, warned that the supertax could harm London in the same way that the US crackdown after the Enron and WorldCom scandals hit New York’s status.

“Some would say that the Sarbanes-Oxley legislation in the US basically caused a ripple effect of people saying ‘well not only is this an onerous requirement so would I want to list here but also, if this can happen what’s going to be the next step?’,” he told the FT. The bankers’ comments came as the Basel Committee on Bank Supervision, the global regulator, announced tough new measures to promote bank strength.

[Joe Chi Minh]

85. Slap another 10% tax on for squealing like stuck pigs. Where's that British-

bulldog, stiff upper lip then, biys and girls?

[Demeter]

38. Standard owner closes in on The Independent

http://www.ft.com/cms/s/0/204ec294-eb4b-11de-bc99-00144feab49a.html


A deal in which Alexander Lebedev, the owner of London’s Evening Standard and a former lieutenant-colonel in the KGB, takes over The Independent and The Independent on Sunday is “pretty likely”, according to people familiar with the talks,.

In a statement, Independent News & Media said it was in exclusive but non-binding talks to transfer ownership of its UK national newspapers to Mr Lebedev.

Geordie Greig, the editor of the Standard, returned from talks with his Russian boss in Moscow on Friday morning and a statement followed at lunchtime. No price has been set and both sides were keen to stress that there was no certainty a deal would follow.

However, any deal would be a straight change of ownership rather than a joint venture or partnership and one person familiar with the talks said it was unlikely that more than nominal sums of money would change hands.

The two Independent papers are losing high single-digit millions of pounds a year although people close to the company suggest that with a long and painful series of cuts, they could return to profitability by the spring if as much as two-thirds of pre-recession advertising returns.

Independent executives see the proposed deal as the salvation of the newspaper and its Sunday sister title, and Mr Lebedev as their saviour.

They believe his record as owner of the Standard shows that he is a believer in independent journalism. A person familiar with Mr Lebedev’s position said that he was “a good proprietor who is prepared to put his money where his mouth is”. Another said it was “potentially terrific news” for a newspaper group that had been starved of investment by INM’s own financial struggles.

INM has been wracked by debt problems and only recently finished a complex restructuring of its balance sheet which saw Sir Anthony O’Reilly and Denis O’Brien, formerly the main shareholders, diluted to below 15 per cent each. If the deal comes off, it will be the culmination of a 14-month effort by Simon Kelner, the editor-in-chief and managing director of the titles, to bring Mr Lebedev in as the owner.

Shares in INM rose 11 per cent to €0.12 in Dublin on the news. The loss-making UK titles were seen as a significant drag on INM’s potential for a turnaround.

People close to INM said there had been some level of talks for an extended period of time, mostly held between Mr Kelner and Mr Lebedev. However, any plans were put on hold over the summer as INM started wrangling with its lenders about the restructuring of its €1.3bn (£1.2bn, $1.9bn) debt pile.

Mr Lebedev was not available for comment. INM declined to comment.

INM’s board, led by Gavin O’Reilly, Sir Anthony’s son, had faced significant pressure from Mr O’Brien, the telecoms tycoon who currently holds 14 per cent, to dispose of the titles.

The Independent would be the second UK newspaper purchase for Mr Lebedev, chairman of the National Reserve Bank in Russia. He bought the loss-making Evening Standard for a nominal fee from Daily Mail & General Trust in January. DMGT wrote off debts of more than £8m in the deal.

DMGT remains a minority holder in the Standard with 24.9 per cent.

Estimates of the annual losses of the Standard ranged between £10m and £20m at the time, but these have been reduced since.

In September, Mr Lebedev decided to make the London evening paper available for free, relying entirely on advertising and increasing its distribution by almost threefold.

A successful deal on the Independent titles would result in cost savings because INM announced it was moving its UK newspapers into offices at DMGT’s London headquarters last year in an effort to save £2m-£3m in costs. The Independent group had already undergone several waves of job cuts.

Circulation has been falling steadily. Last week’s official sales figures showed the daily title down 14 per cent year on year at an average of just under 190,000 total sales. The Sunday paper had fallen 15.2 per cent year on year to 159,000 sales.

Mr Lebedev, who lives in Moscow, is the first Russian citizen to own a leading UK newspaper and would be the first to have control of a national title.

[Demeter]

45. Venezuelan Government Continues Restructure of Banking Sector

http://www.venezuelanalysis.com/news/5015

The Venezuelan government announced on Wednesday that it will take control of a private insurance company that had contracted with the government to serve public sector employees. The move came amidst a month-old state intervention into the private banking and finance sector to combat fraud. Also, the National Assembly passed a banking law reform to increase depositor insurance and tighten banking regulations.

After determining that the insurance company Seguros La Previsora was two months behind on its payments for contracts with public institutions, the state decided to take over the administration of the company, President Hugo Chavez announced from Copenhagen, Denmark, where he is currently participating in the United Nations climate change conference.

Over the past month, the government opened national investigations of eight private banks, one state-owned bank (Banfoandes), and several stock brokerage firms for alleged fraud. Two of the banks were liquidated, two were rehabilitated and incorporated into Banfoandes, and four were fused into a new, state-owned bank called Banco Bicentenario. Several investigations are still pending.

National authorities have arrested ten bankers and issued arrest warrants for dozens of others in the crack down on fraud, including, most recently, the head of the national securities commission. They have also seized dozens of small companies, tens of thousands of hectares of land, and other such assets owned by the bankers who are under investigation, four of whom are suspected to have fled the country to avoid going to trial.

“We are assuming the obligations of the state,” Chavez said, emphasizing the contrast between his government’s intervention in the banking sector and the massive bailouts issued by the U.S. government to private banks during the financial crisis that hit in 2008.

National Assembly Legislator Rafic Souki, from the Finance Committee, said six out of the eight private banks that the state intervened in recently will re-open on Monday.

Economic Restructuring

On Tuesday, the National Assembly approved a reform to the General Law on Banks and Other Financial Institutions. The reform increased the bank deposit guarantee from 10,000 bolivars (US $4,650) to 30,000 bolivars (US $13,950) per depositor, increased banks’ mandatory contributions to the public deposit insurance fund and granted the government more power to enforce this, and placed prohibitions on long-term credits in some sectors of the economy.

With the law reform and the recent bank interventions, which increased the state’s share to nearly a quarter of the national banking sector, the government seeks to gradually change Venezuela’s capitalist economy into one that reflects the values of “21st Century Socialism.”

A long-term blueprint for this transition was laid out in a seven-year development plan after Chavez was elected to his second term in 2006. A series of laws passed in 2008 further outlined the transition by detailing new types of social and communal property that may co-exist with private property, and new forms of enhanced democratic participation in economic decision making.

Next year, the government plans to increase and focus investments in the productive sector, including food production and manufacturing, to accelerate the diversification of Venezuela’s oil-dependent economy.

National Assembly Legislator Carlos Escarrá, who is from the governing United Socialist Party of Venezuela (PSUV), was quoted by the Venezuelan daily El Universal saying that the country is in a “phase of the installation of socialism.”

Escarrá said part of the long-term vision for the economy is a network of productive units managed by local community councils on the basis of social property, rather than private property, according to El Universal.

The new state-owned Banco Bicentenario that was created as a result of the recent bank interventions “will be a development bank for the socialist productive model,” Escarrá said.

[Demeter]

19. Growing liberal revolt over US healthcare

http://www.ft.com/cms/s/0/df0df5d8-eb37-11de-bc99-00144feab49a.html

The Obama administration was grappling on Thursday with a growing revolt from liberals over its $848bn (€592bn, £525bn) healthcare bill with one standard-bearer of the Democratic party’s left calling on the White House to scrap it and start again.

“If I were a senator I would not vote for the current healthcare bill,” Howard Dean, the former presidential candidate, wrote in Thursday’s Washington Post. Mr Dean, whose visceral opposition has turned him into a spokesman for the disenchanted left, accused the White House of doing the bidding of the private insurance industry by caving in to demands to drop a public insurance option from the Senate version of the bill.

The White House, which briefly considered Mr Dean as a potential health secretary in January, hit back, saying criticisms from the former Vermont governor were “predicated on . . . erroneous conclusions”.

David Axelrod, Mr Obama’s senior adviser, told MSNBC it would be “very very tragic” if eleventh hour liberal opposition were to scupper the biggest expansion of healthcare in more than a generation.

Privately, officials said they suspected Mr Dean was partly motivated by a long-running feud with Rahm Emanuel, Mr Obama’s chief of staff, who has made clear the White House’s overriding aim is to pass healthcare reform and signalled much less concern about the precise contours of the bill.

But supporters of the administration said Mr Obama faced a backlash from progressives that could damage him in next year’s mid-term congressional elections. “Every political party needs to energise its base as well as appeal to independents to win elections,” said Simon Rosenberg, president of NDN, the liberal think-tank. “The White House should be concerned about how disaffected the base is becoming.”

Thursday’s escalation of the dispute between liberals and the White House coincided with opinion polls showing sharply declining support for healthcare reform. A poll by the Wall Street Journal and NBC also showed that Mr Obama’s personal approval ratings had dropped below 50 per cent for the first time since he took office.

The descent by the Democratic party this week into a form of civil war was prompted on Monday by the Senate leadership’s decision to remove a measure from the bill that would have give people aged between 55 and 64 the option to buy into Medicare – the government programme for retirees.

The climbdown was precipitated by Joe Lieberman, the independent Democrat from Connecticut, who said the measure would promote a government takeover of the healthcare industry and had said he would vote against the bill. Harry Reid, the Democratic majority leader in the Senate, had little choice but to accede to Mr Lieberman’s demands since he needs all 60 votes from the Democratic caucus to prevent a crippling opposition filibuster.

Many believe that Mr Lieberman, whose state is home to the headquarters of many insurance companies, and who backed John McCain in last year’s presidential election, was trying to take revenge on liberals who tried and failed to unseat him in 2006.

Senate liberals, such as Sherrod Brown of Ohio and Jay Rockefeller of West Virginia, have pointedly declined to join Mr Dean’s rebellion. Both said they would vote for the bill in spite of misgivings. They also pointed out that it would bring 30m uninsured Americans into the net and debar insurance companies from excluding customers with pre-existing conditions. The pair also said that the insurance industry continued to lobby heavily against the bill.

SO OUR LITTLE CONTRETEMPS IS BECOMING AN INTERNATIONAL GOSSIP ITEM---

[Demeter]

28. US advances plans to close Guantánamo=Obama's Job Stimulus Program

http://www.ft.com/cms/s/0/72fed090-e99f-11de-9f1f-00144feab49a.html

The US plans to move as many as 100 suspected terrorists held at Guantánamo Bay to a specially-acquired detention centre in Illinois and try them there, the White House said on Tuesday, as president Barack Obama starts delivering on his promise to close the prison camp.

The decision to move detainees on to American soil is highly controversial but the Obama administration said it would help prevent future attacks.!!

“In taking this action, we are removing from terrorist organisations around the world the recruiting tool that Guantánamo has come to symbolise that would harm our nation and seek to alter the way we live,” Jim Jones, the president’s national security adviser, said. The president on Tuesday ordered the US government to buy the Thomson Correctional Centre, an under-utilised 1,600-cell maximum security prison about 150 miles west of Chicago, to house the detainees. In Illinois, of course! Political payoff for the President's home state!

There are about 215 prisoners still being held at Guantánamo but the administration said only a “limited number” would be transferred, without providing details or a timeframe. Dick Durbin, Democratic senator from Illinois, said as many as 100 would be moved to Thomson.

Many would be tried at Thomson by military commission tribunals, the White House said, while inmates not to be tried would be sent home or to third countries. About 550 detainees have already been transferred out of Guantánamo in this way.

The Illinois facility would cost about half as much as Guantánamo to operate but would still be run by the military, the administration said, seeking to assuage concerns about security at the prison, which it said would be beefed up to exceed “supermax”.

Mr Obama signed an executive order on his second day in office directing the closure by January 2010 of the Guantánamo Bay prison, where suspected terrorists were held without charge or trial during the Bush administration following the September 11 attacks.

That timetable has slipped as the White House encountered resistance on Capitol Hill. The plan and additional funding require Congress’s consent but Mr Durbin, the Democratic whip in the senate, said he was confident it would gain support.

Republicans immediately criticised the plan on Tuesday.

“The administration has failed to explain how transferring terrorists to Gitmo North will make Americans safer,” said Mitch McConnell, minority leader in the Senate. THAT'S RICH, COMING FROM A REPUBLICAN!

The Thomson centre was on a shortlist of facilities the Federal Bureau of Prisons had considered to house detainees from the Guantánamo Bay base. Others were in Montana, Michigan and Colorado.

The prospect of having Guantánamo detainees in such close range had been greeted with mixed feelings by the residents of towns on the shortlist.

Some have expressed concern about having suspected terrorists in their midst, fearing escape or attacks being planned. Officials on Tuesday said extra security measures, including a new perimeter wall, would be put in place to make the facility the most secure in the US.

Others have welcomed the jobs and economic boost the revamped centre would bring.

“It’ll be good for the village and the surrounding area, especially with all the jobs that have been lost here,” Jerry Hebeler, president of the 450-strong Thomson village, told the Associated Press on hearing the news.

[Demeter]

29. Insurers to launch reputational risk product

http://www.ft.com/cms/s/0/a47dee16-ea90-11de-a9f5-00144feab49a.html

Insurers are planning to introduce a new product to help companies limit the financial fall-out when their brands or high-profile spokesmen such as Tiger Woods suffer reputational damage.

DeWitt Stern, a 110-year-old US insurance broker, has already received expressions of interest from London underwriters about backing a reputational risk product it aims to launch early in 2010.

Scott Brady, Dewitt Stern managing director, told the Financial Times that the product could develop into something akin to directors’ and officers’ liability insurance, designed to protect boards from shareholder lawsuits. Over 30 years, “D&O” cover has grown into a multi-billion dollar market, he said.

DeWitt Stern has been working on the product for six months. But the business turmoil caused by Mr Woods’ admission of infidelity has starkly highlighted companies’ vulnerability if the reputations of their brands or pitchmen are struck by scandal.

Accenture, the consultancy, dropped the golfer from its advertising this weekend as other sponsors began to distance themselves from the sportsman. Accenture said it had seen no material impact on its business, however.

Many consultants predicted in 2005 that brands would be wary of using celebrities to endorse their products after Hennes & Mauritz and others dropped Kate Moss from their advertising following drug allegations.

DeWitt Stern would insist on individuals it covers undertaking a pre-screening process, including a detailed questionnaire about their lifestyle, and would attempt to limit the losses from any reputational damage with a crisis communications strategy. Companies’ demand for background investigations when hiring new executives or assessing business partners have already created a lucrative business for security groups such as Kroll.

Amy Lashinsky, managing director of Alaco, a London business intelligence consultancy, said many “responsible” companies already used due diligence to manage reputational risks. “Crises are not cheap. A reputational event could cost you billions of dollars,” said Robbie Vorhaus, a crisis communications executive working with DeWitt Stern.

Figures from TNS Media Intelligence this week estimated that Accenture was Mr Woods’ biggest backer, using him in 83 per cent of its $50m advertising spending last year, while he appeared in 27 per cent of Tag Heuer’s marketing and 4 per cent of Nike’s.

They also underscored the threat to the $600m spent by marketers on PGA golf broadcasts in the US each year, noting that for matches in which Mr Woods played advertisers paid a 53 per cent premium last year over those from which he was absent.

According to Willis, one of the world’s biggest insurance brokers, there is already cover available for reputational risks as part of some D&O policies. It is often referred to as “spin-doctor cover” because it helps pay for the publicists and brand consultants needed to help manage hits to reputation.

[AnneD]

41. I want to repost this nugget here as it is well worth your time.....

Surprisingly I have been doing many of these things


10 Ways to Screw Over the Corporate Jackals Who've Been Screwing You" by Scott Thill
www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x7269987

The only thing I caution about is cell phones don't work in post hurricane situations. Heck, my friend could use her land line phone in the middle of Ike. And as a Musician's wife...we haven't figured a way to get pajd for his work other than cd sales.

[Demeter]

44. Live Performances? Gigs?

Get an agent and tour--like the Beatles. Hard life, but...

or provide a soundtrack for a major film and get some kind or residuals...

become an artist in residence at a public school or other institution of learning...

hook up with Zee TV?

I'll keep looking for ideas. Still haven't figured out Tansy's mystery ear worm...

but I know I've heard it before and loved it.

[AnneD]

53. We are hoping to record more....

we have some recordings and he does tour but it is hard for small lesser known musicians to get credit and there for money for their music via the web. The Grateful Dead have been the most successful and I have been studying their model. I fear though that their large numbers is part of their success. We are just now getting into the web as a marketing tool.

But no matter, Hubby has had a good year and I am very proud of him. He works very hard and I want him to benefit from his hard work. esp. in his later years. I think all artists should have a good manager like me, if I do say so my self. I am the Jerry McGuire of the music biz. The industry is littered with cautionary tales.

[Demeter]

54. If You Were In Ann Arbor, You Could Tour the Clubs

Ditto Detroit and Chicago. Lots of interest in such things in bigger cities.

[AnneD]

67. We haven't had much success on the club sccene......

Indian sitar evokes a different tone. As Hubby says , with a Gee-tar you git up and go...with a See-tar you sit. down.

[bread_and_roses]

71. buy almost everything used

due to decades of over-consumption there is a mountain of stuff for sale used. I buy practically everything except underwear used, and have for years. Now that we have the internets and I can buy off Craigslist, I even replace the occasional appliance (toaster, microwave) off craigslist, which is a treasure trove of things people got for gifts that they didn't need and never used. And with the meltdown, especially, high-end goods are out there cheap at various re-sale, thrift, and craigslist sales. I buy clothes at thrift stores that still have the tags, as well as used items like beautiful sweaters, made from real fabrics like wool, a vast collection of silk, rayon, and wool scrarves and shawls, the extra supply of sweatshirts we always need in the winter, whatever.

Buying used makes, I figure, a very small carbon footprint. Besides, it denies our Corporate Masters their cut.

[DemReadingDU]

76. Same here

Thrift stores are great places for bargains.

[AnneD]

81. That is one of the best ideas.......

good on ya mate! I bet he would have put it on the list if he had thought of it.

[Tansy_Gold]

86. Absolutely!

And when you have something you don't want or can't use but still has useful life in it, recycle it back the same way.

"Waste not, want not."



TG2012

[ozymandius]

48. The recession is over but the depression has just begun

By Edward Harrison and posted at The Big Picture

...
We are in a fake recovery that could last as long as three or four years or could peter out very quickly in a double dip recession. You may have seen my April post on the fake recovery. Read it. I won’t cover that ground here. However, I will highlight how I came to believe in the fake recovery and how asset prices have played into this period (the S&L crisis played out nearly the same way). I see writedowns as core to the transmission mechanism of debt and credit problems to the real economy via reduced supply and demand for credit.

..The mark-to-market model died and mark-to-make believe began. It was then that I knew a recovery was likely to take hold. And it was going to be bullish for bank stocks and the broader market. What you should realize is that, despite the remaining problems in credit cards, commercial real estate or high yield loans, limiting credit growth, the changes instituted by government definitely have meant 1. that banks will earn a shed load of money and 2. that house price declines have stalled, underpinning the asset base of lenders. This necessarily means an end to massive writedowns, a firming of banks’ capital base, and a reduction in private sector deleveraging. And the recent brouhaha over Citi’s favorable tax deal in exiting TARP should tell you the government will stop at nothing to keep accounting favorable for the big banks.

As for the recent asset-based economic reflation, be under no illusion that these measures ‘solve’ the problem. The toxic assets are still toxic and banks are still under-capitalized. But increased asset values and the end of huge writedowns has underpinned the banks and led to a rise in the broader market in a feedback loop that has been far greater than I could have imagined at this stage in the economic cycle.
.....

Right now, if you listen to what President Obama is likely to do, you know that the government prop for the economy is going to be taken away. Get ready because the second dip will occur. It will be nasty: unemployment will be higher and stocks will go lower than in 2009. I The question now is one of timing: when will the government stop propping up the economy? The more robust the recovery, the quicker the prop ends and the sooner we get a second leg down.

This is an extremely well written piece that draws upon Harrison's previous two years of examinations of how layers of debt have managed to wreak havoc on the global economy.

[Demeter]

49. 3 to 4 YEARS? I Wouldn't Give It More Than 3 to 4 Months!

There's nothing left to slow it down. Nothing.

[ozymandius]

57. I believe Mr. Harrison is counting on the government to continue fluffing asset prices.

His long-term prognosis is for prices to come crashing down as necessary structural changes have yet to be made. Three to four years seems a long way off for engineered fluffery to maintain bank assets. Will this come to a head in 3 to 4 months? I dunno - my crystal ball hasn't worked since I didn't have enough money to pay the bill.

However, I believe that no amount of magical thinking will relieve us of the debt burdens created over the past thirty years. Individual consumers are restructuring, as Harrison says, with scissoring credit cards and eschewing new forms of unsecured debt. There is no handy link that I can offer right now - but the latest consumer credit numbers provide evidence for my claim.

The point is: big banks that rely on the established business model of unsecured debt are dead. They just don't know it yet. We are now growing a new kind of consumer that is part of the pay-as-you-go generation.

[DemReadingDU]

73. graph chart of debt burdens

Denninger has put together graph chart of the debt outstanding



read more here...
http://market-ticker.denninger.net/archives/1752-There-Is-No-Way-Out-Of-This-Box.....html


The current data is taken from Fed Z1 report, Flow of Funds, p 16, D.3, 2009Q3, last line on page
http://www.federalreserve.gov/releases/z1/Current/
http://www.federalreserve.gov/releases/z1/Current/z1.pdf edit to add the 125 page report
Note that last column of D.3 is called foreign, that is foreign debt held in U.S.
Denninger calls it 'Rest of World')


I also found via google, this matrix of debt outstanding by sector D.3
You can find data that Denninger used for his graph chart, example 1980Q1 and 2009Q3
This website includes data from 1952 to current. Also includes lots more charts from FedZ1 reports.
http://www.econstats.com/fof/fof_DD__3q.htm

[ozymandius]

51. Meanwhile... concerning jobs and real estate prices...

Less than Mets the Eye by Michael Panzner

To the rose-colored glasses set, all the "good" data we've been seeing lately is proof that economic recovery is at hand. But is that really the case?

Take the decline in initial and continuing jobless claims that has taken place over the past several months. In theory, that's a sign that the worst may be over as far as unemployment is concerned.

There's more to it than that, however. For one thing, the number of people claiming emergency unemployment benefits has surged nearly 500 percent since November of last year.

Moreover, the claims data fails to account for those who have exhausted their benefits, or who are ineligible because they still have one of the two or more low-paying jobs they need to survive.

And the Economic Populist points to the artificial floor installed under real estate values:

It was only last week that the real estate industry was celebrating the good news.

The number of home listings within 27 major U.S. metropolitan areas slipped 2.42 percent in November 2009, compared to a month prior, and is down 27.64 percent compared to a year ago, according to a monthly report of homes listed for sale on Multiple Listing Services (MLS) in the markets surveyed by ZipRealty, a national real estate brokerage.

Fewer homes for sale means the supply and demand dynamics have turned up, which means that the housing market is bottoming, right?
Not so fast.

(Bloomberg) -- The number of homes that may be in the pipeline for a sale because of foreclosure and delinquency climbed about 55 percent to 1.7 million at the end of September, according to estimates by First American CoreLogic.

...What is actually going on is that the homes that should be hitting the market in rock-bottom auction sales, are actually being held up in the pipeline because of HAMP, temporary state moratoriums on foreclosures, and already overwhelmed banks reluctant to take on more inventory.

[Demeter]

52. Time for Breakfast--And I Still Want that Hula Hoop!

http://www.youtube.com/watch?v=lzTG0fTLAlU&feature=related

[AnneD]

64. I'm going out for breakfast too.....

Think I'll go for some eggs Benedict.:9 . I am preparing for a big road trip and will post about on Monday. We got some great news to share too. I will be doing lots of on the ground 'reporting'.

Over the River and Through the Woods...

www.youtube.com/watch?v=gHZSaikgKG8&feature=related


I saw this sweet video that reminded me of my summer days with my Grandmother....

www.youtube.com/watch?v=UIdPT_rtCx8

[Demeter]

55. Bill Bonner on Bernanke

Of course, those who misunderstood the financial bubble of '03-'07 (Ben Bernanke thought it was a period of "Great Moderation" caused largely by his own superior handling of the Fed) now misunderstand the post- bubble world.

They think it is a technical challenge. They imagine that if Bernanke - whose bid for another term cleared the House yesterday - can just make the right adjustments, everything will be hunky dory.

Alas, Bernanke will do an even worse job than we would do. We have no idea. He has a bad one.

Ben Bernanke is Time's "Man of the Year." Reading the commentary, it is clear that the popular press has even less of an idea of what is going on than Bernanke himself.

The more we think about it, the more our jaw drops. In Copenhagen this week, a large group of apparatchiks and hacks got together to discuss a 'climate deal.' There, Hillary Clinton pledged US support to a plan to spend $1 trillion to try to influence the earth's climate. Governments can do many things, but can they really improve the weather? There is no evidence for it. Not even a respectable theory.

In Washington, meanwhile, Ben Bernanke is spending trillions to try to improve the economy. Can he really do that? Again, there's no evidence for it.

[Demeter]

56. The depression continues...with Bill Bonner

Jobless claims went up last week. And Bloomberg reports that the "shadow inventory" of houses is going up with it.

In the "shadow inventory" are houses that would be for sale if owners thought they could find a buyer at a decent price. We would add in the houses of people who are about to make "strategic defaults" on their mortgages.

The WSJ reports:

"A growing number of people in Arizona, California, Florida and Nevada, where home prices have plunged, are considering what it known as a 'strategic default,' walking away from their mortgages not out of necessity but because they believe it is in their best financial interests."

Some 5.5 million people have houses that are 20% or more underwater. One of them, spotlighted in the WSJ, had a house worth $230,000 and a mortgage of $318,000.

Here is one way the problem of too much debt is solved...not by paying it off, but by writing it off. The homeowner in this situation can improve his balance sheet - wiping out $88,000 worth of debt - without lifting a finger. Logically, he could go to the lender and cut a deal. But lenders won't want to get their customers started on bad habits. So, he will just cease paying his mortgage. His credit rating will suffer. But what does he care? He's fed up with debt.

The house will be seized by the bank. Then, it will come out of the shadow inventory and into the light of the active housing market - pushing prices down.

The good ol' WSJ has noticed the big shift in attitudes. No longer able to afford spending, Americans are deciding that spending isn't cool.

"We seem to be at a cultural inflection point that we haven't seen since WWII," said one market researcher.

"Their value system is shifting from aspiring to material wealth to aspiring to a better life," said another one.

Yes, dear reader, runaway consumerism has run off the road. With 6 billion people now competing for stuff, the whole idea of having a lot of stuff is being called into question. In the first place, there's not enough stuff around to permit everyone to have as much as Americans - at least not without some huge technological breakthroughs. In the second place, Americans have run out of money to buy stuff. In the third place, it takes a lot of energy to make and transport so much stuff; the US no longer has access to cheap energy. And finally, the US economic model - in which growth is a result of stimulating consumers to buy more stuff - no longer works.

What will replace consumerism? Hey...we don't know. Besides, we feel pretty proud of ourselves for just figuring out this much.

[Demeter]

58. Depression on Wheels By Bill Bonner

http://dailyreckoning.com/depression-on-wheels/

When the price of oil hit $150 a barrel, the first major alarm sounded. Something was wrong. Now we have a clearer idea of what it was.

To make a long story short, leading economists have a one-stop solution for just about everything: stimulate consumer spending. But $150 oil warned us: continue down that road and you will run out of gas. There isn't enough oil in the world to allow US-style consumption for everyone.

Two weeks ago, Dubai gave us another wake-up call. Thought to be risk- free, since it was implicitly backed by all the oil in the Middle East, Dubai World nevertheless stopped paying its debts. And this week yet another bell banged our eyes open. Greece announced first that it would not try to reduce its deficits...then, that it would. Hearing the news, the financial world rolled over and went back to sleep. But The Wall Street Journal offered a hint of trouble to come: "Markets force Greek promise to slash deficit," said its page one headline.

If markets could force the Greeks to trim their deficit - about 13% of GDP...not far from the US level - could they not force Britain and America too? Coming right to the point, the fixers face not just one crisis, but many. They have a growth model that no longer works. They have aging populations and social welfare obligations that can't be met. They have limits on available resources, including the most basic ones - land, water, and energy. They have a money system headed for a crack-up, and an economic theory that was only effective when it wasn't necessary. Now that it is needed, the Keynesian fix is useless. If a recovery depends on borrowed money, what do you do when lenders won't give you any?

But let us backtrack to a smaller insight. Then we will stretch for a bigger one. Americans are supposed to be insatiable shoppers. For at least three decades, the world counted on it. It was the growth model for almost all the Asian manufacturing economies...and for resource producers everywhere. But as we approach the biggest shopping season of the year, a survey of consumers signals an earthquake. Americans plan to spend an average of 15% less during this holiday season than the year before. Only 35% say they will take advantage of post-Christmas sales, traditionally when the stores unload unwanted inventory. They seem to be satiable after all.

Push come to shove, Americans react like everyone else. Now, they are being shoved into a new world, very different from the one they have come to know. In 1973, the American working stiff went into a decline. His weekly earnings, in real terms, went down for the next 36 years. The typical worker earned the equivalent of $325 a week in 1973...adjusted to constant 1982 dollars. By US official accounting he was down to $275 a week in 2009. Unofficial estimates put the loss as high as two-thirds of his purchasing power.

Yet, his spending increased anyway. How? He squeezed the rest of the world. The US trade gap began to go seriously negative in 1992. By 2006-2007, foreigners were shipping to America nearly $900 billion more per year in goods and services than they received in exchange. This gave the typical American a standard of living few people could afford; too bad, he wasn't one of them.

Now he's up against billions of Patels and Hus. They work for less. They save more. They want more stuff too. And they're suspicious of the dollar.

Their economies are growing faster...and better. Because they don't have 50 years of accumulated success on their backs. That's the trouble with success; it adds weight. In their heyday, the mature economies could afford to squander and regulate. But that trend, too, is reaching its limits. Even without the cost of 'stimulus,' practically all the world's leading economies are headed for insolvency. And yet, this week, Paul Krugman gave his solution to the weak results from stimulus spending so far - add $2 trillion more!

All of a sudden, the most reliable givens of the past half a century aren't given any more. Americans were the big winners of the post-WWII period. They got used to it. At first, they wanted to make things; later they just wanted to have them. And with the benefit of cheap oil and resources, and then cheap labor and cheap credit, they were able to get more stuff than any race ever had. Now they are shackled to it, unable to move forward or to back up.

Meanwhile, Europe - led by post-war neoclassical Jacques Rueff in France and Ludwig Erhard in Germany - pursued a different course. While Americans subsidized consumption, Europe taxed it. Credit was expensive, not cheap. And then, the European Central Bank had the great advantage of having a chief banker whom no one paid any attention to. He might talk about stimulating consumption, but he did nothing.

And now the world is reckoning with much more than a consumer debt bubble. It is reckoning with a depression on wheels...the end of the consumer spending era. We don't know what kind of world will take its place. But it won't be the one the feds are trying so desperately to save.

Enjoy your weekend,

Bill Bonner,
for The Daily Reckoning

[Tansy_Gold]

87. Housing prices -- Arizona

There was a house I almost bought in March 2006. The sellers wanted $400K for it; I offered $368K and was accepted with appx $300K cash down, but the house needed some repair and renovation and the banks were getting leery on lending. This was literally at the very top of the bubble. I didn't like the lending terms, and I got out of the deal. The sellers were furious, vowed not to accept a penny less than $400K in the future.

It sold in November of 2006 for $240,000.

It now has a completely new kitchen, two completely (and apparently expensively)remodeled bathrooms, laminate flooring throughout, outdoor kitchen and fireplace, major repairs to the 3-car detached garage.

It was listed on Zillow yesterday at $145,000, with an estimated value of $95,000 - $151,000.


I haven't even gone back to see what my old house in Buckeye is doing. That's too scary.

My current place isn't fancy, but it's mine.



TG2012

[Demeter]

61. Time’s Most Dubious Man of the Year

http://dailyreckoning.com/times-most-dubious-man-of-the-year/

We have an extremely graphic issue for you today, dear reader. Therefore, if you are easily unsettled, morally hypersensitive or generally lacking in good humor...please continue reading anyway.

Ben Bernanke has been named Time Magazine's Man of the Year.

Bernanke Time Cover

Immediately after the announcement yesterday, the blogosphere lit up with colorful remarks about what a "complete buffoon" the Fed Chairman is and how his "gross negligence" caused "the very conditions he is lauded as having combated."

As is generally the case, however, those quick to emotion are slow to the point. By all means, lambast the rag's editor, Richard Stengel, who crooned in the editor's note:

"We've rarely had such a perfect revision of the cliché that those who do not learn from history are doomed to repeat it...Bernanke didn't just learn from history; he wrote it himself and was damned if he was going to repeat it."

..but don't be surprised that the magazine chose an incompetent, control-freak figure as their célébrité de l'année. One only need thumb through a few past issues to understand what it takes to win the dubious accolade. Here are a few forgettable covers:

Stalin Time Cover

Hitler Time Cover

Putin Time Cover

Of course, Time Magazine is not ONLY dedicated to annually commemorating the contributions of power-mongering central planners and liberty thieves, they also offer prescient analysis of hard-hitting topics...like the housing bubble.

Housing Time Cover

Oh wait...scratch that last one...

[Demeter]

63. Awaiting a Fix of the Bubble Mistakes By Bill Bonner

http://dailyreckoning.com/awaiting-a-fix-of-the-bubble-mistakes/

Ben Bernanke’s extended his “extended period” pledge? He said, in effect, if this economy doesn’t come out of its slump, it won’t be his fault. He’ll keep monetary policy as loose as possible for as long as possible. Not that we had any doubt about it. He has a theory. It’s a bad theory, but it’s all he has. And it tells him that you fight a depression with loose money.

So, what do you expect? Interest rates will remain artificially low as long as Bernanke can get away with it…or until the depression ends…whichever comes sooner. That said, he hardly has to lift a finger. Judging from the last auction of short-term Treasury debt, lenders can’t think of anything better to do with their money than to give it to the government – in return for nothing. The last auction produced a yield of zero on one-month loans.

We went to visit a pair of clever Swiss bankers yesterday. These fellows manage money for clients all over the world. What do they think? They were focused on stocks:

“This year, the people who made the most money were those who were most heavily invested in equities. And if the patterns of the past hold up, 2010 will be a good year for equities too. Whenever the 10-year performance goes close to zero, the next few years tend to be very good for stock market investors. In fact, there has never been an exception, going all the way back to 1881. Last year was one of the worst years in stock market history. This has been one of the best. And next year should be one of the best too.”

He handed us a chart to illustrate his point. It shows the 10-year performance of the stock market. We see that very rarely are stock market returns negative over a 10-year period. In fact, there are only two worth mentioning. One was in the ’30s, when in August ’39 stocks had returned MINUS 4.68% for the previous ten years. The other major losing period came in February of this year, when investors had gotten an average annual return of -3.43% since 1999.

The message seems simple enough. When the market turns down sharply…expect a sharp turn-up to follow. But studying the chart more carefully, we see two things. First, we see sloppiness in the figures. The thirties pattern was not a clean break and then a clean bounce…but a series of breaks and bounces. In fact, investors endured 10 years of losses running up to ’30…and then more 10-year periods of losses in the years ’37, ’38, ’39, and ’40.

The other thing we notice is that an investor could have made a lot of money in the ’30s…if he was lucky. The year 1933 was one of the best years ever. Of course, the investor was well advised to take his gains off the table. Prices slipped in ’34…bounced…and then fell apart. By the end of the ’40s, the poor long-term, buy and hold investor had not made a penny in two decades of investing. This pattern, by the way, is not so different from what the Japanese have suffered during the last 20 years. They’ve seen good times. They’ve seen bad times. But the general trend of the markets has been down for two decades.

We have a feeling that the worst is still ahead for this market too. Few of the mistakes of the bubble period have been corrected. None of the challenges of the new post-bubble economy have been met. Little of the huge mountain of debt trash has been taken away and disposed of properly. The big reckoning is still to come.

Which brings us back to the price of gold. It was over $1,200 just a few days ago. It’s had a little correction. But we doubt that it has had the correction we’ve been waiting for. There is still no sign of consumer price inflation. Nor is there any sign that consumers are returning to their old spendthrift habits. Nor is there any sign that jobs are becoming more plentiful…or that this depression is going to end any time soon. When that becomes clearer, stocks will fall again. Gold should fall too.

People will want safety. But where will they seek it? Ah, that’s another big question. In the first stage of the crisis, they sold gold and bought dollars. Will they do the same the next time? Or will they fear that the dollar may be part of the problem, rather than part of the solution? If so, won’t they flee stocks for gold?

We don’t know.

[Demeter]

69. Sit Back and Enjoy the Depression By Bill Bonner

http://dailyreckoning.com/sit-back-and-enjoy-the-depression/

..We still trust gold. And we still don’t trust central bankers. But now we see that the central bankers are even more unreliable than we imagined. They are diligently trying to do the wrong thing, as usual. But they’re not very good at it.

They increase the monetary base at central banks. But they can’t melt the huge overhang of cash and credit frozen in the system. A depression has iced over the economy. The feds turn on the pumps, but the liquidity freezes up. This cold snap could last a long time. In fact, with the feds blocking necessary adjustments, it could turn into an Ice Age. And there’s not much they can do about it – except make the situation worse.

Bond yields are already rising. There is a report of rising prices at the producer level. It wouldn’t take much to spook lenders and force the Fed to retreat…just as Greece did.

What’s more, there are two major trends underway. Neither has fully expressed itself. The bear market that began in 2007, for example, never took stock prices down to the levels you’d expect at a major bottom. Far from it. That means a major bottom is still ahead. We have had Crisis I. We will probably have Crisis II in 2010. It will make it easier for the feds to finance their deficits. But it will make it harder for the rest of the world to pay its debts.

On the other hand, the other major trend that has not fully expressed itself is the bull market in gold. When we were in the US last week we saw an ad encouraging people to sell gold “while prices are high.” People think the rise in gold is a fluke. But markets make opinions. At the top, they will believe that higher gold prices are permanent. Then, we will see ads encouraging consumers to buy gold before the price goes higher.

But don’t expect the top in gold any time soon. The major top in gold may have to wait for the major bottom in stocks. And the whole process could take many years.

So, relax. Sit back. Keep your seatbelt buckled. And enjoy the depression.

[Demeter]

59. Ben Bernanke “Can Create a Trillion Dollars in Secret” By Rocky Vega

http://dailyreckoning.com/ben-bernanke-can-create-a-trillion-dollars-in-secret/

The Senate Banking Committee backing of Fed chairman Ben Bernanke’s nomination, combined with his designation as Time’s person of the year, seems to necessitate the healing perspective of the good Doctor Ron Paul this week.

As colleague Joel Bowman astutely noted in The Daily Reckoning, in hindsight Bernanke, with with his new designation, is more apt to be seen as joining the ranks of misguided notables like Stalin and Hitler than the other more celebrated persons of the year.

Witness the video below to hear Dr. Paul describe how Bernanke “can create a trillion dollars in secret without any monitoring by the Congress,” and how “this whole mess that we’re in, which has a long way to go, has been caused by the Federal Reserve.”

http://www.youtube.com/watch?v=P9xRjBb61hc&feature=player_embedded

[Demeter]

60. China is Running Low on the Dollars it Uses to buy US Treasuries By Rocky Vega

http://dailyreckoning.com/china-is-running-low-on-the-dollars-it-uses-to-buy-us-treasuries/

Americans are increasing their personal savings and as a result the sales of imported goods are decreasing. This means that the rest of the world has fewer US dollars to spend on, among other things, US Treasuries.

The problem is the shrinking US current-account gap… Zero Hedge explains:

“With the entire world embarking on an unprecedented spree of domestic bubble blowing to mask the collapse in global GDP, everyone forgot to trade … with every country intent on merely printing more of its own currency, whether it is to build bridges or to make the stock of electronic book fads trade at 100x earnings, said countries ran out of non-domestic cash. Alas, this is most critical for the United States, now that Treasury monetization is over, as the US needs to constantly find foreign buyers of its debt to fund unsustainable deficits. Foreign buyers who have US dollars. And according to Shanghai Daily, this could be a big, big problem.

“Here is what the BOC’s Zhu Min said earlier:

“‘The United States cannot force foreign governments to increase their holdings of Treasuries,’ Zhu said, according to an audio recording of his remarks. ‘Double the holdings? It is definitely impossible.’

“‘The US current account deficit is falling as residents’ savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world,’ he added. ‘The world does not have so much money to buy more US Treasuries.’”

America’s fiscal problems are going to get worse much more quickly if China begins to slow its purchasing of US debt. Read more of the detailed and insightful explanation from Zero Hedge of how there are fewer foreign dollars with which to buy US treasuries.

[Demeter]

62. The Second Wave is Already Ashore By Jim Nelson

http://dailyreckoning.com/the-second-wave-is-already-ashore/

12/17/09 Baltimore, Maryland – The second wave of ARM resets and foreclosures might come sooner than you think. According to Whitney Tilson and Glenn Tongue of T2 Partners, the experts on this subject, about 80% of option ARMs are negatively amortizing. Meaning these so-called top-tier borrowers are heading further into the hole. Once their rates reset, they could be in serious trouble.

And that could be happening very soon:



Subprime ARM Resets

The chart above, which should look familiar, shows the two peaks in this long-term housing conundrum. The first mountain is comprised of subprime ARM resets. And the second is mostly constructed of option ARM resets. We appear to be in the eye of the storm.

That alone shook our nerves when we first discovered it. But it was a different chart in Tilson and Tongue’s most recent presentation that really got us startled… It’s also the reason I’m predicting the dollar spike in 2010.



Early Option ARM Resets

Instead of resetting as expected after the first five years, many option ARMs are so negatively amortized that they are hitting their automatic reset cap.

That means they are resetting early…like right now — with unemployment reaching quarter-century highs every month, and a massive number of homeowners about to receive mortgage bills for two-three times what they are used to paying.

It takes anywhere between three-12 months for most homes to actually go into foreclosure. It’s tough to say exactly when the storm will come. But my guess is the second half of 2010.

[DemReadingDU]

75. uh oh. looks ominous

:scared:

[CatholicEdHead]

80. Have some of the second wave already gone bad?

As the layoffs have gone up the food chain? Would that then lessen the second wave by then assuming they are already accounted for in the foreclosing numbers?

[Demeter]

68. FOMC Sings the Same Old Tune By Chris Gaffney

http://dailyreckoning.com/fomc-sings-the-same-old-tune/

12/17/09 St. Louis, Missouri – The dollar continued to gain strength throughout the day as investors waited on news from the FOMC. Overnight, Greece sustained another rate cut, this time by S&P, which caused investors to move back toward the ‘safety’ of the US dollar. The news caused the dollar to rally to a 3-month high versus the euro (EUR), and post gains across the board. The currency markets are becoming a bit volatile again, and much of this volatility can be linked back to the return of a transaction that dominated currency markets over the past decade.

The carry trade – where investors borrow at low rates and invest into higher yielding (but sometimes riskier) investments – has become popular again. This trade was extremely popular during the last few years, and helped push down the value of the Japanese yen (JPY) as it was the preferred funding currency of the carry trade. But as Chuck pointed out the other week, the US dollar has now replaced the yen as the funding currency of choice, as investors take advantage of the low rates here in the US to borrow funds and invest them into riskier assets. This is one of the factors that has been weighing on the value of the greenback. These carry trades use a high degree of leverage enabling investors to look for short-term trading gains. This leverage and short-term outlook makes the markets pretty volatile, as investors put on and take off the trades on an almost daily basis.

Overnight we saw the S&P downgrade Greece’s credit rating from A- to BBB+, matching an earlier move by Fitch. This move was largely expected, but it still shook investors’ confidence, as everyone is looking for the next downgrade. So the past few days have been ‘risk off’ days and investors moved monies back into US dollars. This move back into the dollar is a bit perplexing, as the problems facing Greece are the same facing the United States. As Chuck pointed out, California has a larger GDP than Greece and is in a lot worse financial position. But when you look at the information versus the explanation of the carry trade, the move makes a bit more sense. Investors see the downgrade of Greece as a possible precursor for additional credit problems and therefore took money off the risk table and back into the US dollar to sit and wait for another opportunity.

Chuck told readers yesterday that I would be reporting on Norway’s Norges Bank, and shared his thoughts that they would follow up on their previous hike of 25BPS with another hike of the same size. As usual, Chuck was bang on with his prediction, as the Norges bank surprised all of the non-Pfennig readers with a 25 BPS increase. Mike Meyer was putting some research together for Chuck, and also shared his research with me so I could include it in today’s Pfennig:

“In statements following the rate decision, policy makers commented that growth in private consumption is strong and home prices are rising sharply, so the bank considered the alternative of keeping rates unchanged, but said interest rates are low and the October increase had a limited impact on bank lending rates. The Norwegian economic recovery has gained steam since October’s policy meeting, but the market was assuming that fear of a perpetually higher krone (NOK) fueled by rate hikes would keep Norges Bank sitting on their hands until next year.

“The NOK is basically in a 3-way-tie with Brazil and Japan for third place over the past 6 months by posting about an 11% gain against the US dollar. Looking year-to-date, the krone has climbed up a bit to the number 5 spot and is currently sitting on a 20% return, which has led the exchange rate to trade close to the 5.50 handle during that period of time. In fact, it topped out at 5.5126 on 10/23, which are levels we haven’t seen in well over a year. Norway, the world’s 2nd largest natural gas and 5th largest oil exporter, suffered a milder recession than most industrialized economies thanks to its oil industry and stimulus measures employed by the government.”

Thanks to Mike for his excellent analysis of the NOK rate increase. While you would think a surprise rate increase would rally the NOK, the opposite occurred as the rate talk was overshadowed by the events in Greece. Norway has been plagued by worries about Baltic bank loans to weaker countries such as Iceland. But Norway still has excellent economic fundamentals, and continues to be one of the best-run economies in all of Europe. With a global recovery pushing oil prices higher, and interest rate differentials in Norway versus the US and Europe widening, the Norwegian krone should appreciate. I believe the current prices of the krone make it an excellent time to invest.

But lets move back to the US where the FOMC hit the repeat button and played the same old tune. As expected, Bernanke and his boys (and girls) kept rates unchanged and continued to tell the markets that rates would remain low for some time. The Fed continues to walk a fine line between trying to keep the stimulus measures in place, while sounding positive on the state of the US economy. Policy makers said the labor market is stabilizing (we will see the weekly jobs numbers this morning) but still kept a pledge to keep interest rates ‘exceptionally low’ for an ‘extended period’. The Fed did say most of its lending programs that benefited Wall Street dealers would end as scheduled on February 1 of 2010.

In addition to the weekly jobs numbers, we will see the release of the index of US leading indicators for November, which probably rose for an eighth consecutive month. Rising stocks seem to be bolstering consumer confidence even though unemployment remains in the double digits. A report released yesterday showed that the cost of living in the US accelerated in November from a month earlier, propelled by higher energy and medical costs. The 0.4% increase followed a 0.3% move up in October. The core index numbers (ex food and energy) were unchanged for the first time this year, throwing cold water on those warning of the inflationary impact of quantitative easing programs. But I am still of the opinion that these programs will bring higher inflation rates in the coming months. We may not see it immediately, but the amount of money creation that has occurred will (in my opinion) eventually filter into consumer prices. An extended period of extremely easy credit markets, along with the printing presses working overtime, has got to have an inflationary impact eventually.

Inflation certainly seems to be taking hold in India, where wholesale food prices rose tat the fastest pace in eleven years. An index of food prices increased 19.95% in the week following a 19.05% gain last week. Policymakers across Asia have started to exit monetary stimulus programs as their economies rebound. Rates throughout Asia will likely start rising, as inflation begins to take hold. This latest increase in food prices will put additional pressure on the Indian central bank to increase rates, which were cut in half over the past 12 months. The combination of a growing economy and rising interest rates should provide good support to the Indian rupee (INR) over the coming months. This currency, like the Norwegian krone, should be considered a good buy at current levels.

I’ll end today’s Pfennig with a rather humorous quote sent to me by Ty Keough. Fed Chairman Ben Bernanke’s confirmation hearing will start today in the Senate Banking Committee. And in spite of Ben being named Time’s Man of the Year, some believe he should not be confirmed as he has enabled the administration to put our future at risk by letting them run up record deficits. Ty came across the following quote on the Internet from a former member of our Armed Forces:

“I take exception to saying that Bernanke, Obama, and Pelosi are spending like drunken sailors.

“When I was a drunken sailor, I quit spending when I ran out of money.”

[Demeter]

70. Rule By Outlaws By Ian Mathias

http://dailyreckoning.com/rule-by-outlaws/

12/17/09 Baltimore, Maryland – Technically speaking, the U.S. government is now illegitimate.

Not in the way most people use that word… like describing the product of a lonely housewife and the mailman, or as a synonym for illogical. But we mean, as Webster’s puts it, “not sanctioned by law: illegal.”

Yesterday the national debt, as reported by the Treasury, reached $12.13 trillion. Rest assured, it’s even higher by now. The official debt ceiling — a rule of law which the government must obey, lest it render all other laws illegitimate — currently does not allow the national debt to exceed $12.10 trillion.

Viva la revolucion!

If our system of government weren’t a laughable mess of loopholes and earmarks, this would be a problem. But you can sleep easy… an unnamed Treasury official told CBS News that government has some “extraordinary accounting tools” at its disposal to move the official national debt up or down $150 billion. This has happened before, we’re assured, so it’s no big deal.

Still, the typical homo sapiens response to this kind of dilemma might be to cool off debt accumulation, if only for a little while. Heh… yeah right:

The American government has approved almost $1.8 trillion in new spending in the last 24 hours. It’s a sad day when we have to bullet point one day’s worth of Uncle Sam’s tab… but here we go:

* President Obama signed into law a 1,000-page, $1.1 trillion spending bill. The bill encompasses six of the 12 appropriations bills for the fiscal year 2010, including:

* $447 billion for operating budgets of various government agencies… the mind-boggling expense of “keeping the lights on” for the federal government

* $650 billion for Medicare and Medicaid payouts

* And about $4 billion for more than 5,000 local projects and earmarks. (The gears of American legislature don’t grease themselves, if you know what I mean.)

* The House approved the $636 billion defense budget yesterday. Evidently, it was too massive and complicated to be fit into the spending bill Mr. Obama signed.

* The House also passed a $154 billion “jobs bill.” House Democrats, the sole supporters of the bill, aim to pump up the populism for the 2010 elections by throwing some billions at new infrastructure, state aid and funding for “safety net programs.”

Also earmarked in that House “jobs bill” is legislation to raise the debt ceiling to $12.39 — not because Nancy Pelosi and her brood actually give a s$*t, but probably because it will entice Senate Republicans to push it through. Incredible, these people…

[Demeter]

74. James Turk at The Free Gold Money Report

The Federal Reserve is pursuing a pernicious policy that is insidiously debasing the dollar. This policy has generally been met with indifference, if it has even been noticed at all.

The Federal Reserve is debasing the dollar by purchasing inferior assets of poor quality. These assets are mortgage-backed securities issued by federal agencies like the insolvent, and for all practical purposes bankrupt, Fannie Mae.

These are assets neither the banks nor private investors want. If there was a legitimate, real-world demand for these assets, the Federal Reserve would not need to buy them. But it is. Thus, instead of acting in its historical role as the "lender of last resort," the Federal Reserve has on its own expanded its mandate to become the "buyer of last resort."

By purchasing mortgage-backed securities, the Federal Reserve is debasing the dollar. Just how pervasive - and therefore serious - this debasement has become is apparent from the following chart prepared by BusinessInsider:



The Wall Street Bailout Continues

According to its latest report, the Federal Reserve now owns over $1 trillion of mortgage-backed securities, which is 45.6% of all assets on its balance sheet. One year ago mortgage-backed securities were only 0.6% of the Federal Reserve's total assets!



The Federal Reserve is very highly leveraged, much more than most banks. It is carrying $2.15 trillion of debt on $52.8 billion of capital, giving it a leverage of 40.8-times more debt than capital. The Federal Reserve's mortgage-backed securities alone, represent 19-times its capital, meaning that if the true value of these assets is 5.3% less than their book value, the Federal Reserve's capital is wiped out, effectively making it another insolvent institution.

Given that Fannie Mae is itself insolvent and most other mortgage generating federal agencies are not far from perilously sliding down to that same dire financial condition, it is reasonable to assume that the true value of these mortgage-backed securities is less than 94.7% of their book values. Therefore, on a strict accounting basis, the Federal Reserve is probably insolvent.

That said, the Fed could always remedy its "insolvency" by creating more dollar bills for itself. And, in fact, the Fed is already in the process of doing this exact thing. How else could its assets have mushroomed from $800 billion last year to more than $2 trillion currently?

We call this "inflation."

[Karenina]

79. May I tell of my brush with greatness? Eartha Kitt was my heroine!!!

:blush::hide::blush:

[Demeter]

89. Last Minute News Flash! Tansy Gold's Earworm Identified!

Tansy, it's the theme from the fourth movement of Brahms' Symphony #1.
I personally know very little Brahms, but I had heard that tune before...so I asked around.

While performing this afternoon in a pick-up choir (Beethoven's Choral Fantasy and Xmas songs), I asked the group. They had no trouble at all. Where else can you round up 40+ people for 3 rehearsals, or 150 to sing through the Messiah?

I love the music scene in Ann Arbor, and just wish I could devote more time and energy to it.

[Demeter]

90. Is That Going to Be Your Campaign Song?

You could do worse...

[Tansy_Gold]

91. You wanna know something?

I ********KNEW*********** it was Brahms' #1 because years ago I had a vinyl recording of it. I have three record players, none of which has a functioning needle at the moment. I do still have vinyl, however.

Lemme find it online and I'll let you know.


THANKYOU!!!!!!!!!!!!!!!!!!!!!!!!!!!!


ETA:

http://www.youtube.com/watch?v=P5vzkYFHW0g&feature=related

This is an 8-minute (incomplete) 4th movement. The theme starts at 5:21.

I GOT MAJOR GOOSEBUMPS!!!!!!!!!



SECOND EDIT TO ADD ---

Better clip at

http://www.youtube.com/watch?v=kxhKDT-RS54&feature=related

Theme at 2:38

[Tansy_Gold]

92. Too late to edit -- so I'll have to reply to myself

And third edit --

I knew you guys were the smartest in the room -- and if you didn't know the answer you knew where to go to get it.

But I'm glad I had at least part of the answer to start with:


Tansy_Gold (1000+ posts) Fri Dec-11-09 08:20 AM
Response to Reply #44
47. I wanta say it's later than either of those
More in the Brahms, Schubert, Tchaikovsky generation. Maybe. It's not as heavy as Bach, not as delicate as Mozart, if that makes any sense. Brahms was my first reaction, but I couldn't find it last night.



Tansy Gold, who will sleep better tonight knowing this mystery is solved but who really hasn't minded having this as an earworm for the past 9 days

[DemReadingDU]

93. Excellent!

and pleasant dreams tonight
:)