What is wrong with the US economy? Part 2

[OmCheeto]

He bet that the value of a currency would go down, other people were happy to take his money and bet that the currency would go up.

I would like to know who those formerly happy people were. Or were they just banks doing their job?

The black wednesday when Britain left the ERM was different. The UK decided that the pound was worth 2.95 Deutschmarks - purely on the basis of national pride and fixed the exchange rate at that level. The market disagreed and would only give you say, 2.5DM for your pound. But the government had guaranteed the ERM rate, so you could buy a £ on the markets for 2.5DM, the government would exchange it for 2.95 DM and you could take that 2.95DM back to the markets and buy £1.18 - repeat!

Was the chunnel running at full capacity that day? I would imagine if everyone had known about that, the whole of London would be racing to France and back. - repeat.

One of my bosses quite a few years ago came back from a meeting and said something which I thought was very smart. Which surprised me because he never stuck me as being very smart. Anyways, he said; "If something goes wrong, it's usually no one's fault. It's almost always a problem with the system. We should therefore fix the system, daily."

I notice that the Black Wednesday brought out a lot of finger pointing, which usually indicates that someone thinks someone is to blame. I even see an odd little blurb that implies that the government was stupid and should have shorted itself to make a profit.

the main loss to taxpayers arose because the devaluation could have made them a profit. The papers show that if the government had maintained $24bn foreign currency reserves and the pound had fallen by the same amount, the UK would have made a £2.4bn profit on sterling's devaluation.

I'm not quite sure what to make of Mr. Soros sometimes. I've read that he was against financial regulations, and that he also thinks the market cannot be left to itself. But I guess he can say whatever he wants, now that his bank balance is fatter than a christmas hog.

But I do like the fact that he says we should learn from our mistakes.

And I do like his following idea, although I think it would be quite problematic to institute such a device.

http://online.wsj.com/article/SB121400427331093457.html?mod=hps_us_at_glance_markets"
JUNE 21, 2008

Mr. Soros's predictions in his books have fallen far short of his track record as a hedge-fund operator. In 1987 he wrote that the world had to ditch the dollar in favor of a new international currency system or risk "financial turmoil, beggar-thy-neighbor policies leading to world-wide depression and perhaps even war." His 1998 book said, "The global capitalist system ... is coming apart at the seams."

Beggar-thy-neighbor.

Ha! I think I'll start using that phrase.

 

[mgb_phys]

I even see an odd little blurb that implies that the government was stupid and should have shorted itself to make a profit.

A lot of the problems come from the assumptions that the market operates logically.
It doesn't - there is no such thing as the market or the government - only people.

The aim of the government isn't to make a profit - the aim of politicians is to cling to power. So the UK went into the ERM at a crazy level because that particular party had a lot of anti-europe voters and they believed the way to make them happy was to claim that the UK was bigger and richer than Germany and so that the pound was worth 2.95DM.
It's the same in the stock markets, in theory a market acts to find the best price, in practice individual traders act to cover up their mistakes and in bad times to hide in the herd. That explains a lot of the movements like the recovery of the US$, if everybody else in your office is buying $, do you want to be the one investing in something else if they are looking to make layoffs?

Market regualtion is tricky. anything you do to chnage the way the market works (by banning shorting or limiting bonuses) will either be worked around or they will simply trade in some other countries market. You do need market regulation to ensure that people can trust the market, if you need to send some guys from New Jersey around to the floor of NYSE with tire irons to collect on a debt - it becomes difficult to do business.

 

[Astronuc]

Woosshhh!

1:38pm ET: 7,939.61 -331.26 (-4.01%)

Concerns about the next Bailout measure, which could be anywhere from $1 trillion to 1.5 trillion!

And even then, some bank failures are expected.

So it appears that the economy is unable to provide the incomes (revenue) to sevice the current debt load. So intervention should have been initiated 2+ years ago, before this problem became a crisis.

Update: 2:35PM ET: 7,893.02 -377.85 (-4.55%)

 

[jreelawg]

The way the problem was ignored, as it was warned time an again where we were heading in the past, it almost feels as if it was intentional.

 

[Astronuc]

Dow closed down - 4:03pm ET: 7,888.88 -381.99 (-4.62%)

Investors are not impressed by the actions in Washington. One criticism is that the next bailout plan is short on specifics.

Stocks tumble after gov't unveils financial plan
http://news.yahoo.com/s/ap/20090210/ap_on_bi_st_ma_re/wall_street

 

[turbo]

The way the problem was ignored, as it was warned time an again where we were heading in the past, it almost feels as if it was intentional.

My wife and I saw this coming several years ago. We bought a small house that can be easily heated 100% by wood, with a garden spot so we could raise most of our own vegetables. When we sold our old place (much larger than we needed) we put all the money in the bank and hunkered down. We're watching her 401K and my roll-over IRA losing value steadily, and the Fed's constant downward pressure on interest rates means our money market and savings accounts are earning far less interest than is necessary to keep up with inflation. We'll ride this out, but I'm glad we acted when we did.

Several people on this forum had read the signs well enough to know that a recession was inevitable (and already in progress), only to get pooh-poohed and insulted by other posters for saying so in threads like this one. That's OK. My wife and I voted with our pocketbooks and acted early before real estate and stocks tanked. A few months after he sold our house for us, a close friend and his wife bought a modest little house not far from here with a nice garden spot, a large chicken-coop and a large shelter to raise pigs in. He left real-estate before the big exodus and started operating heavy equipment for a local town. If common people can see trouble looming, why were the "experts" in finance and government blind-sided?

 

[Astronuc]

Charlotte in same predicament as Wall Street
http://news.yahoo.com/s/ap/20090214/ap_on_bi_ge/charlotte_banks

CHARLOTTE, N.C. – The financial collapse has hit the city known as Wall Street South.

For years, Bank of America Corp. and Wachovia Corp. helped turn Charlotte into a financial powerhouse. Now, the big banks have thrust it into the same predicament as the real Wall Street — the city is losing thousands of jobs and an unquantifiable amount of prestige. Residents who invested heavily in the banks have seen their wealth dissipate and lifestyles change radically.
. . .

The loss of so many bank jobs is causing upheaval in other industries. Consumers who have been laid off or fear being out of work are curtailing their spending, forcing restaurants and retailers to close — among them Morton's, a high-end steakhouse, and a 15-month-old Home Depot Design Center. Even some of the Charlotte's lively night clubs have shuttered their doors.
. . . .

GM considering Chapter 11 Bankruptcy - and becoming a 'new' company
http://news.yahoo.com/s/nm/20090214/ts_nm/us_gm_plan

GM has been in talks with bondholders and the United Auto Workers union to get an agreement on a restructuring that would wipe out about $28 billion in debt for the auto maker, sources have told Reuters. However, it appears unlikely a deal could be reached by the Tuesday deadline, they said.
. . . .

Ain't capitalism wonderful! The management goes off and starts a new company, and the shareholders, bondholders, employees and taxpayers get screwed.

 

[mgb_phys]

Ain't capitalism wonderful! The management goes off and starts a new company, and the shareholders, bondholders, employees and taxpayers get screwed.

And if you happen to kill a few people you can leave all the fines and liability behind
http://www.cnn.com/2009/US/02/13/peanuts.bankrupt/index.html?

 

[turbo]

And if you happen to kill a few people you can leave all the fines and liability behind
http://www.cnn.com/2009/US/02/13/peanuts.bankrupt/index.html?

That only makes is more necessary for the owner, the plant manager, and anybody in the company who knew of the positive salmonella tests be prosecuted, and go to jail for a very long time. Real prison, not country-club prison. Part of the solution to our country's economic problems is prosecution of people who violate laws for personal gain.

 

[mheslep]

Charlotte in same predicament as Wall Street
http://news.yahoo.com/s/ap/20090214/ap_on_bi_ge/charlotte_banks

GM considering Chapter 11 Bankruptcy - and becoming a 'new' company
http://news.yahoo.com/s/nm/20090214/ts_nm/us_gm_plan
Ain't capitalism wonderful! The management goes off and starts a new company, and the shareholders, bondholders, employees and taxpayers get screwed.

Yes, now we see the violence inherent in the system.

https://www.youtube.com/watch?v=http://www.youtube.com/watch?v=o76WQzVJ434
Instead of capitalism, perhaps we should go with the autonomous collective.

 

[Astronuc]

Yes, now we see the violence inherent in the system.

Instead of capitalism, perhaps we should go with the autonomous collective.

No, we see the effects of corruption and unethical practices. We should clean up capitalism (and in parallel, clean up the political system) and regulate effectively and fairly.

The way capitalism has been practiced of late in the US and much of the world has failed, as the current global financial crisis has revealed.

There's a reason bank robbery and stealing are illegal. It should also be illegal to sell bogus derivatives like some of the CLO's, CDO's, CDS's, ABS's, MBS's, . . . . They were done to spread risk, but because of the increased default rates due to over-leveraging created by unscrupulous lenders and borrowers, it went beyond risk (or chance) to a certainty that someone was going to get his with losses. Rather than transfer risk, the banks effectively transferred losses to unsuspecting investors, which include mutual funds (as in 401Ks).

 

[Astronuc]

Empty Street
Commentary: As Washington wrestles with rescue packages, Wall St. stalls

By David Weidner, MarketWatch

NEW YORK (MarketWatch, Last update: 12:01 a.m. EST Feb. 12, 2009) --
. . . .

If the market's fall this (last) week wasn't enough of an indication, the statistics tell the story. Until something happens in Washington, ain't nuthin' happenin' on Wall Street except layoffs and losses.

Don't be fooled by the CEO testimony Wednesday before the House Financial Services Committee. Banks are not lending at a rate anywhere close to the pace they were a few years ago, or even back before credit standards got silly.

Syndicated lending -- the kind of big loans that corporations use for all types of expenditures -- has dropped, year-to-date, to just $93 billion, compared with $218 billion in 2008 (same period), according to Dealogic.

Remember, 2008 wasn't exactly a boom year for lending.

Not even existing loans are being renewed. Refinancing volume fell 78% to 32 deals worldwide, valued at a combined $7.5 billion year-to-date through Tuesday, according to Dealogic.

The bankers who testified said as much. Jamie Dimon, the chief executive of J.P. Morgan Chase & Co., said that if someone or some company is creditworthy, they're getting a loan. But in this environment, who is?

"We should not forget eroding standards by many market participants played a large role in creating the current economic malaise," he said.

In other words, banks are reluctant to make a bad situation worse by taking on more bad loans. This unwillingness to lend in the credit cycle's downdraft along with a stubborn inability to value collateralized assets remain the two biggest question marks hovering over the financial system. Until answers emerge, the Street remains in paralysis.

No-go IPOs

The initial-public-offerings market, which may be Wall Street's most profitable enterprise, remains close to a standstill.
. . . .

Debt doldrums

If banks aren't lending, you can bet that companies will be turning to the bond market. They are, but they're not exactly driving the market's 10% increase so far this year. Of the top 10 debt deals this year only one, a $10 billion offering by General Electric Co. (GE), was not issued by a bank, the government or a government-backed entity such as Fannie Mae (FNM).

It's good volume, but probably not enough to overcome the lost fees from the asset-backed and mortgage-backed securities markets. They are down 92% and 90%, respectively.

Again, 2008 wasn't exactly a boom year for ABS and MBS issuance.

There was a combined $446 billion, compared with $2.1 trillion in 2007 and $2.7 trillion in 2006, according to Dealogic.

. . . .

No advice

Finally, without the market for new debt and equity, few companies are willing to acquire rivals. Even those that do are having second thoughts, including Dow Chemical Co. (DOW), , which is looking to exit its $15 billion deal for Rohm & Haas (ROH), and Bank of America Corp. (BAC), which is taking a beating over its $19 billion acquisition of Merrill Lynch & Co.

Through January, mergers and acquisitions were down 37% globally. Wall Street made $20.9 billion for advising buyers and sellers in 2008, according to Dealogic. With a total value of $3.3 trillion, it still was the fourth-biggest year for M&A on record.

. . . Deal (M&A) volume dropped sharply, 36% in the fourth quarter, and a record 1,362 deals were scrapped, mostly near the end of 2008.

To sum up

You can see there are a lot of idle hands on Wall Street. There's no work. There's no income. No wonder Credit Suisse (CS), one of the few major global banks without significant exposure to toxic securities, posted a $2.75 billion loss for the fourth quarter. Credit Suisse has a big U.S. investment-banking arm. Not only was there no business, but the company couldn't trade its way out of the quarter, taking losses on hedging positions.

That's why as lacking as Geithner's plan is, it needs to be implemented -- and fast. For as much as the people on Main Street want to deny it, the business of Wall Street is essential to the American economy. . . .

Headlines on MarketWatch:

Illinois bank becomes 12th failure of the year
FDIC shutters four banks in one day
Riverside Bank of Cape Coral, Fla. fails

GM to say more aid or bankruptcy - WSJ

Trump Entertainment may face forced bankruptcy filing: Journal

On the upside:
2 Florida banks temporarily halting foreclosures
http://biz.yahoo.com/ap/090214/halting_foreclosures_florida.html

 

[DrClapeyron]

There's a reason bank robbery and stealing are illegal. It should also be illegal to sell bogus derivatives like some of the CLO's, CDO's, CDS's, ABS's, MBS's, . . . . They were done to spread risk, but because of the increased default rates due to over-leveraging created by unscrupulous lenders and borrowers, it went beyond risk (or chance) to a certainty that someone was going to get his with losses. Rather than transfer risk, the banks effectively transferred losses to unsuspecting investors, which include mutual funds (as in 401Ks).

I agree. Mortgages are necessary for two things; the purchase of a house and to finance overdrafts at the Federal Reserve.

This article was published shortly before the Iraq War in 2003.
http://news.bbc.co.uk/2/hi/business/2817995.stm

Buffett warns on investment 'time bomb'


The rapidly growing trade in derivatives poses a "mega-catastrophic risk" for the economy and most shares are still "too expensive", legendary investor Warren Buffett has warned.

The world's second-richest man made the comments in his famous and plain-spoken "annual letter to shareholders", excerpts of which have been published by Fortune magazine.

Economic growth in the 1990's came on the heel of a speculative bubble tied into rising stock value, now in the 2000's we have seen economic growth as a result from speculative MBS trades in the repo market to finance overdrafts at the Federal Reserve. Does anyone wish to predict what the new speculative-economic tool of the 2010's will be?

 

[Astronuc]

Let's add fiscal irresponsibility of state and local governments to the list.

From Slate's review of today's papers
So Long, Car Czar
By Daniel Politi

The New York Times leads with news that President Obama has decided to drop plans to name a single "car czar" who would oversee the restructuring of General Motors and Chrysler. Instead, Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers will oversee the Presidential Task Force on Autos, which will work with a number of government agencies on the issue. Ron Bloom, a restructuring expert, would also be named as a senior adviser to Treasury on the auto industry. USA Today leads with a look at how state and local governments have pretty much failed to set aside any money to pay for at least $1 trillion in medical benefits to retired civil servants. States have $445 billion in unfunded obligations to help retirees pay for health insurance, and local governments have obligations that surpass the $500 billion mark. Governments may now be forced to cut benefits or raise taxes in order to deal with the issue.

Benefits neglected for civil retirees
http://www.usatoday.com/news/washington/2009-02-15-retireehealth_N.htm

 

[mgb_phys]

There's a reason bank robbery and stealing are illegal. It should also be illegal to sell bogus derivatives like some of the CLO's, CDO's, CDS's, ABS's, MBS's, . .

Was it Engels that said "who is the greater criminal,he who robs a bank or he who owns one?"

 

[Astronuc]

Well - Bill doesn't get it.

Clinton Says Don't Blame Him for the Economic Crisis
http://news.yahoo.com/s/time/20090216/us_time/08599187977400

The magazine's story, which apportioned blame widely between such figures as Countrywide co-founder Angelo Mozilo, former Federal Reserve Chairman Alan Greenspan, Lehman Brothers CEO Dick Fuld and President George W. Bush, zeroed in on two specific economic policy decisions made during the Clinton administration. Clinton ushered out the Glass-Steagall Act, which for decades had separated commercial and investment banking, and signed the Commodity Futures Modernization Act - which exempted all derivatives, including the now-notorious credit-default swaps, from federal regulation. His administration also loosened housing rules, which added pressure on banks to lend in low-income neighborhoods.

"None of it was an endorsement of permissive lending and risk-taking," the magazine concluded. "But if you believe deregulation is to blame for our troubles, then Clinton earned a share too."
. . . .

Oh, no. Nod, nod, wink, wink.

The criticism at the time was that commercial or depository banks would divert cash to finance risky deals. Well that's what they did because people wanted high yields. Banks borrowed cheaply thanks to the Fed's rate cutting, and then loaned out lots of cash to finance deals. The borrowers of that capital then overleveraged on risky investments, which lost big time when the default rates escalated.

Now about 10-16% of households are at risk of default and forclosure - unless the government helps.

This morning I saw an interview with a woman who mentioned they received a default notice and warning of foreclosure. She is hoping for government assistance in order to remain in her $800K house, which is now worth ~$600K.

 

[Astronuc]

U.S. agents enter Stanford Financial Houston office
http://finance.yahoo.com/news/US-agents-enter-Stanford-rb-14381229.html

. . . .
About 15 people, some wearing jackets identifying them as U.S. marshals, entered the lobby of Stanford's office in the Houston Galleria area, the eyewitness said.

Houston-based Stanford Financial Group, which says it oversees more than $50 billion of assets, is being investigated by U.S. regulators, according to a person familiar with the matter.

The New York Times reported that U.S. securities regulators had accused three top Stanford executives, including Robert Allen Stanford, of fraud.
. . . .

Another scandal like Madoff's ponzi scheme?

 

[turbo]

A little more detail, here. Stanford fabricated very favorable past-performance data and promised continued high rates on CDs. Sure looks like the Madoff business model.

http://news.yahoo.com/s/ap/20090217/ap_on_bi_ge/stanford_sec_charges;_ylt=AqXZq5tReM5iw.2TkCafJMms0NUE;_ylu=X3oDMTFlNW8zajRkBHBvcwM5MQRzZWMDYWNjb3JkaW9uX2J1c2luZXNzBHNsawNzZWNjaGFyZ2Vzc3Q-

 

[Astronuc]

Stanford's firms include Antigua-based Stanford International Bank, broker-dealer Stanford Group Co. and investment adviser Stanford Capital Management, which are both based in Houston.

Notice the off-shore bank. I don't think it's clear yet, or at least not clear to many, the role of transfer of captial off-shore, which has been going on for 2+ decades at least.

 

[DrClapeyron]

I pulled this info from Stanford's site here http://www.stanfordfinancial.com/sir_allen

Sir Allen earned a Bachelor of Arts in Finance from Baylor University in 1974. He resides in St. Croix, US Virgin Islands, and holds dual citizenship, having become a citizen of Antigua and Barbuda ten years ago

Not just any off-shore banking but off-shore banking by a native Texan with dual US/US-Virgin Islander citizenship who has been knighted by the queen mum, really? I couldn't make this stuff up.

 

[mheslep]

...Commodity Futures Modernization Act - which exempted all derivatives, including the now-notorious credit-default swaps, from federal regulation.

That unqualified statement from TIME on CFMA is false. CDS's were exempted from regulation as commodities by the Commodity Futures Trading Commission which made sense because they are not traded on an exchange (a requirement for commodities). They were still under the control of the Securities Exchange Commission, who should have done a better job.

TIME also goes on to pick a '25 People to Blame' list and manages to leave sitting power brokers Barney Frank and Chris Dodd off this list. How convenient.

 

[Astronuc]

Economy Strains Under Weight of Unsold Items
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/16/AR2009021601391.html

The unsold cars and trucks piling up at dealerships and assembly lines as consumers cut back and auto companies scramble for federal aid are just one sign of a major problem hurting the economy and only likely to get worse.

The world is suddenly awash in almost everything: flat-panel televisions, bulldozers, Barbie dolls, strip malls, Burberry stores. Japan yesterday [Feb 15] said its economy shrank at an 12.7 percent annual pace in the last three months of 2008 as global demand evaporated for Japanese cars and electronics. Business everywhere are scrambling to bring supply in line with demand.

Downsizing can be tricky, though. No one knows how much worse the economy will get, and while everyone waits for the recession to peter out, businesses are grappling with how to cut costs and survive without sabotaging their ability to grow when the economy picks up.

And there is a lot to cut.

"There is over-capacity in everything," from "retail to manufacturing to housing," said Richard Yamarone, chief economist at Argus Research. "If capacity is too large, you don't need that many people employed, which is another reason we're seeing such high job losses."

As long as capacity far outstrips demand, businesses have little reason to expand, buy new equipment or hire workers. Even if the government funds bridge repairs and banks step up lending, many industries still have to go through massive restructuring before growth can resume. But executives say they have to tread carefully. If they put off critical investments in technology or research for too long, they could hobble their recovery and even the economy's.
. . . .

Now there is serious concern about deflation, although apparently inflation will affect some items, e.g. energy and perhaps food. So there could be potential significant social upheaval.

Apparently Paul Volcker made the comment that the global economy is deteriorating faster than previously thought or anticipated.

Meanwhile - EU leaders back sweeping financial regulations
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/22/AR2009022200454.html

WP - UAE government throws Dubai financial lifeline
"Analysts have speculated for months that the federal government in oil-rich Abu Dhabi might need to help debt-ridden Dubai. "

 

[OmCheeto]

Economy Strains Under Weight of Unsold Items
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/16/AR2009021601391.html
Now there is serious concern about deflation, although apparently inflation will affect some items, e.g. energy and perhaps food. So there could be potential significant social upheaval.

Apparently Paul Volcker made the comment that the global economy is deteriorating faster than previously thought or anticipated.

Meanwhile - EU leaders back sweeping financial regulations
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/22/AR2009022200454.html

WP - UAE government throws Dubai financial lifeline
"Analysts have speculated for months that the federal government in oil-rich Abu Dhabi might need to help debt-ridden Dubai. "

My acquaintance and I were discussing how metal prices have dropped over the last year. I noticed that http://www.kitcometals.com/charts/aluminum_historical.html" were down 75% and aluminum stockpile was up 300%.

Might be a fabulous time to rebuild our electrical infrastructure.

How many times have I mentioned that the wind farms in the Northwest were putting out too much power? That could have been sold to those silly Californians? But instead they had to take them off line? WTF?!

Time to make lemonade out of lemons, methinks.

 

[Astronuc]

But some people don't want high voltage power lines obstructing their view of the landscape, or windmills for that matter.

 

[Gokul43201]

TIME also goes on to pick a '25 People to Blame' list and manages to leave sitting power brokers Barney Frank and Chris Dodd off this list. How convenient.

There was a similar CNN article (actually an internet poll asking people to rate the most blameworthy). If I recall correctly, they had Clinton and Frank on their list, but I think they didn't have Dodd (kinda foggy on it now).

 

[OmCheeto]

Uh oh. Competition might be the culprit.

Saw this on the front page of the Sunday paper this morning at the market:

http://www.oregonlive.com/special/index.ssf/2009/02/solar_story.html"

"Soon, we'll be able to sell to our customers for just $1 per watt," says Sha, crossing the floor in towering heels. Little does Sha know her sky-high ambitions threaten to cast a shadow as far as Oregon.

At a buck-a-watt, solar — the world's most expensive energy — would beat today's cheapest power, coal-fired electricity. That would pave the industry's way to the rooftops of the masses, giving it a surefire edge in the world's race for affordable clean energy.

Ummm... A buck a watt? That's 1/4 the best going current rate. That cuts ROI time to a very reasonable level.(*1)

Gads. That means my thousand dollars worth of panels, which now generate 200 watts, will generate a thousand watts with my next thousand dollar investment. (*2)

Does anyone know how to say "I love you" in Mandarin and Cantonese?(*3)

I wonder if they waited on purpose for W to leave before they announced this. I'm sure he'd have found a reason to nuke them. "Damn Chinese gots weapons 'o mass destruction! We's got to woop them thar arses befores they comes and gets us!"(*4)

ps. I think I'll add copper and aluminum to my investments next month. (*5)

pps. Yes. I know. I've posted out of assigned topics. Can someone from admin please cut and paste my above comments to the appropriate threads. Who has time for all this posting:(*6)

*1: https://www.physicsforums.com/showthread.php?p=1920549#post1920549"
*2: https://www.physicsforums.com/showthread.php?p=2070516#post2070516"
*3: https://www.physicsforums.com/showthread.php?p=2066006#post2066006"
*4: https://www.physicsforums.com/showthread.php?p=2079335#post2079335"
*5: https://www.physicsforums.com/showthread.php?p=1986641#post1986641"
*6: https://www.physicsforums.com/showthread.php?p=1859991#post1859991" please don't ban me, please don't ban me...

 

[OmCheeto]

But some people don't want high voltage power lines obstructing their view of the landscape, or windmills for that matter.

Makes me wonder what the Dutch think about such an absurdity. Look at something spinning in the wind, or drown and starve? There's your choice.

People are so adverse to foopin' change and stuck on the "not in my backyard" nowadays, I just want to barf.

I've been a fan of http://en.wikipedia.org/wiki/Columbia_River_Gorge" for quite some time.
Home building is banned in the corridor.
I would personally love to see the thing lined with windmills.
It's big. It's windy. It could probably supply half this damn countries energy all by itself.(I might be off by a factor of 10 or 100, it just seems that windy most of the time)

And on top of that, I don't think my goldfish would even have noticed...

 

[Astronuc]

SEC probed Stanford companies; red flags abounded
http://news.yahoo.com/s/ap/20090223/ap_on_bi_ge/stanford_sec_warning_signs

WASHINGTON – For years, there were red flags — so many they could have massed into a crimson blanket.

As with the Bernard Madoff case, the scandal surrounding billionaire R. Allen Stanford now seems clear and obvious in hindsight. Yet Stanford managed to run his alleged scheme even while the Securities and Exchange Commission and other regulators had him on their radar screens and investigated his businesses. Stanford wasn't charged until last week.

From his tiny accounting firm's office near a North London fish-and-chips shop to certificates of deposit promising outsized returns sold by a bank in Antigua, ample warning signs over the years suggested Stanford's business wasn't what it seemed.

Among them: . . . .

Last week, the SEC accused Stanford in a civil lawsuit of a "massive" fraud. It said he peddled sham promises and funneled investors' money into real estate and other assets not easily turned into cash. FBI agents in Houston are running a parallel investigation.

Stanford, who was served legal papers by FBI agents last week, hasn't been charged with any crime.

The SEC began investigating Stanford's businesses in October 2006 but was asked by another, unidentified federal agency to suspend its inquiry, an SEC official in Texas told news organizations last week.
. . . .

So did Stanford have friends in the Bush administration?

 

[OmCheeto]

SEC probed Stanford companies; red flags abounded
http://news.yahoo.com/s/ap/20090223/ap_on_bi_ge/stanford_sec_warning_signs

So did Stanford have friends in the Bush administration?

I just had a weird vision run through my head. Somehow, it didn't seem right. I think I now understand the Serb-Milošević and Post WWII German-Hitler mindset.

It's very difficult to imagine the leader of your country in shackles.

Though I think I could get used to it in this case.

We should take a poll in Iraq and determine if anyone suffered any distress because of Saddam being hung.

 

[Astronuc]

Forecasters see higher unemployment in 2009
http://news.yahoo.com/s/ap/20090223/ap_on_bi_ge/troubled_economy

WASHINGTON – Brace yourself: The recession is projected to worsen this year.

The country stands to lose a sizable chunk of economic activity in 2009 as consumers at home and abroad retrench in the face of persistent economic troubles. And the U.S. unemployment rate — now at 7.6 percent, the highest in more than 16 years — is expected hit a peak of 9 percent this year.

That gloomy outlook came from leading forecasters in the latest survey by the National Association for Business Economics to be released Monday. The new estimates are roughly in line with other recent projections, including those released last week by the Federal Reserve.

"The steady drumbeat of weak economic and financial market data have made business economists decidedly more pessimistic on the economic outlook for the next several quarters," said NABE president Chris Varvares, head of Macroeconomic Advisers.

All told, Varvares and his fellow forecasters now expect the economy to shrink by 1.9 percent this year, a much deeper contraction than the 0.2 percent dip projected in the fall.

If the new forecast is correct, it would mark the first time since 1991 the economy actually contracted over a full year and would be the worst showing since 1982, when the country had suffered through a severe recession.

Vanishing jobs, shrinking nest eggs, rising foreclosures and tanking home values have forced American consumers to cut back, which in turn has caused businesses to lay off workers and slash costs in other ways, feeding a vicious downward cycle for the economy.

The current recession, which started in December 2007, is posing a major challenge to Washington policymakers, including President Barack Obama and Fed Chairman Ben Bernanke. That's because its root causes — a housing collapse, credit crunch and financial turmoil — are the worst since the 1930s and don't lend themselves to easy or quick fixes.

"As the news on the economy has darkened, so too, have the forecasts," said Ken Mayland, president of ClearView Economics. "We are suffering a period of maximum stress on the economy."
. . . .

Perhaps people are thinking positively enough. Bill Clinton was recently recommending that Obama talk more positively about the economy and the state of the world. But then we just finished with an administration in which the president confidently declared that the fundamentals of the economy were strong, or the economy was fundamentally strong.

Meanwhile - Asian, European stocks advance on Citigroup report
http://biz.yahoo.com/ap/090223/world_markets.html

HONG KONG (AP) -- Asian and European stock markets advanced Monday, as investors digested reports the U.S. government might expand its stake in troubled banking giant Citigroup to ease the financial crisis.

Worries that major Western banks like Citigroup Inc. and Bank of America Corp might have to be nationalized because of mounting bad debts sent global markets sharply lower last week.

But investors seemed relieved, at least for now, to have some clarity about the fate of Citigroup after the Wall Street Journal said late Sunday the company is negotiating with authorities to increase the U.S. government's stake in the teetering lender to as much as 40 percent.

Executives would prefer to keep the government's stake closer to 25 percent, according to the Journal, which cited people familiar with the situation. The talks arose after Citigroup made the proposal to regulators.

The Obama administration has not indicated whether it would back the plan, the Journal said. Just last week, Obama officials voiced support for keeping the banking system private as widespread talk about nationalization led investors to unload shares in Citigroup and Bank of America.

The news was unlikely to give stocks extended support, analysts said. Should the U.S. end up taking greater ownership, however, the move could help restore long-term confidence in the hard hit financial sector, raising prospects of a faster recovery in the world economy.

"People are taking it as a positive sign," said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. "It shows the government will not allow a major bank to fail again. They've learned their lesson with Lehman Brothers that the ramifications are so great, sometimes no amount of money can rebuild confidence."

. . . .

So the world markets expect the US government to intervene more than it has.

 

[Astronuc]

Vegas, Midwest seek the $8 billion for fast trains
http://news.yahoo.com/s/ap/high_speed_spending

WASHINGTON – The Republicans attacking President Barack Obama's economic stimulus package point to a project they dub the "Sin Express" — a high speed rail link between Anaheim, Calif., site of Disneyland, and Las Vegas.

Not so fast.

In fact, competition for the $8 billion in mass transit construction is just beginning. Backers of numerous other planned high-speed rail corridors around the country are making their case for the money.

They notably include a Midwest initiative long supported by someone with even more clout than Sen. Harry Reid, D-Nev., who strongly supports the Anaheim-Las Vegas line. That would be former Illinois Sen. Obama.

It was Obama's White House that, in the final hours of negotiations over the $787 billion stimulus bill, sought and won the big sum for high-speed rail projects, far above what either the House or Senate had passed. Reid was happy to agree but there's no guarantee the Anaheim-Las Vegas line will win dollars, to be determined by the Transportation Department.

Also in the running are proposed high-speed corridors in the Northeast, the Northwest, Florida and the South.

Howard Learner, president of the Chicago-based Environmental Law and Policy Center, a group promoting a Midwest high-speed rail network, said his area is in excellent position to capture a good chunk of that money. The Federal Railroad Administration, he said, has recognized the Midwest initiative connecting Chicago and 11 metropolitan areas within 400 miles as the system most ready to go.

He and others brushed aside claims that the $8 billion was set aside for Reid's favorite. Obama, who expressed strong interest in high-speed rail investment during the campaign, and his chief of staff Rahm Emanuel, are both from Chicago. Obama's transportation secretary, Ray Lahood, also is from Illinois. So is the Senate's no. 2 Democrat, Richard Durbin.

Quentin Kopp, chairman of the California High-Speed Rail Authority, said he was "delighted to see that the momentum has shifted in favor of high-speed train transportation." He outlined $2 billion in state projects that could be initiated before the Sept. 30, 2012, deadline for committing the $8 billion. Those include electrification of the line from San Jose to San Francisco, home to House Speaker Nancy Pelosi.

But Reid's involvement in crafting the bill still made him and the Las Vegas line a target.

"Billions of dollars for a sin express train from Los Angeles to Las Vegas. Necessary? I don't think so," said Rep. Mike Simpson, R-Idaho.

"Tell me how spending $8 billion in this bill to have a high-speed rail line between Los Angeles and Las Vegas is going to help the construction worker in my district," said House Republican leader John Boehner, whose district is just north of Cincinnati.

Actually, some of the money might ride his way. One offshoot of the Midwest network would connect the Ohio cities of Cleveland, Columbus and Cincinnati.

It certainly looks suspicious that HSR projects are under consideration for districts served by Pelosi and Reid. I'm not sure why the economy would benefit from a high speed rail project from LA to Las Vegas, in which the primary economic activity is entertainment and gambling. It would seem more appropriate to link LA with Phoenix, Tuscon, AZ with extension to Albuquerque, NM and perhaps Dallas, TX.

Advocates of the Anaheim-Las Vegas line envision using the futuristic magnetic levitation or maglev technology, where trains zoom on an air cushion created by powerful magnets instead of wheels. Obama recently cited the maglev system in Shanghai, China, as an example next-generation transit.

"Our prospects are certainly good," said Neil Cummings, president of American Magline Group, a private partnership that is promoting the Maglev train that will carry passengers the 268 miles between the two cities at speeds of up to 310 miles per hour. Last year Congress approved $45 million for environmental and other studies.

. . . .

Well if it's so great, then let the private partnership put up the money. And to use the electrification will require someone to build additional electrical generating capacity and transmission lines to supply the electrical current.

 

[OmCheeto]

Forecasters see higher unemployment in 2009
http://news.yahoo.com/s/ap/20090223/ap_on_bi_ge/troubled_economy

All told, Varvares and his fellow forecasters now expect the economy to shrink by 1.9 percent this year, a much deeper contraction than the 0.2 percent dip projected in the fall.

Perhaps people are thinking positively enough. Bill Clinton was recently recommending that Obama talk more positively about the economy and the state of the world. But then we just finished with an administration in which the president confidently declared that the fundamentals of the economy were strong, or the economy was fundamentally strong.

I think this "1.9 %" figure might be where everyone is coming from.
Even though the markets may have plunged anywhere from 50 to 80%, the economy seems not to have been affected anywhere near as much. I get the feeling that people equate the markets with the economy. Although interconnected, and dependent on each other, they are quite different things. I think it might actually help both if Obama starts flashing that figure around as an indicator that the American economy is not in as bad shape as the markets makes it out to be.

Meanwhile - Asian, European stocks advance on Citigroup report
http://biz.yahoo.com/ap/090223/world_markets.html
So the world markets expect the US government to intervene more than it has.

Why not? The economy's not in that bad shape.

And as for a Vegas-Anaheim rail line? It might turn out to be the newest version of "the bridge to nowhere" joke if they decide to build it:

http://www.lasvegassun.com/news/2009/feb/16/forbes-las-vegas-americas-emptiest-city/"
By Cara McCoy
Mon, Feb 16, 2009 (4:55 p.m.)

Empty and barren are words typically used to describe the desert that surrounds Las Vegas; however, they are now fitting adjectives for the city itself, according to a Forbes Magazine report.

The magazine ranked Las Vegas the No. 1 "emptiest" city in America. Using numbers from the Census Bureau released earlier this month, Forbes compiled data on homeowner and rental vacancy rates for 75 of the largest metropolitan areas in the country. It's the fallout from the housing boom and bust, Forbes said, that has garnered Las Vegas the undesirable title of "most abandoned."

An acquaintance of mine once called gambling "stupid tax".
Which I believe is an ellipsis, as I'm sure he implied that it is a "stupid person's tax".
(We have state run gambling here in Oregon which provides around 3% of the budget, which is good for the smart people because they get a 3% tax break because of all the stupid people.)

If there are enough stupid people in LA that would justify the expense of the line, then maybe...

 

[mgb_phys]

An acquaintance of mine once called gambling "stupid tax".

The bit I don't understand - there is a rollover in this weeks lottery - $50M (or something) and ticket sales have doubled.
So people don't bother buying a ticket for a mere $10M, but if it's $50M then it's worth a gamble!

If there are enough stupid people in LA that would justify the expense of the line, then maybe...

Trouble is it's the intersection of the set of LA people who are stupid enough to gamble and the ones who are careful enough to save money by taking the train and book in advance!

 

[Vanadium 50]

So people don't bother buying a ticket for a mere $10M, but if it's $50M then it's worth a gamble!

It could be rational. If they cut the price by a factor of five and kept the jackpot the same, would they also see sales double?

Of course, if you don't even buy a ticket your odds of winner are, to six decimal places, the same as if you do.

 

[mgb_phys]

Of course, if you don't even buy a ticket your odds of winner are, to six decimal places, the same as if you do.

Or you could buy last weeks ticket. Half price and your odds of winning are only 1 in a million less!