Goldman Sachs Could be Largely Unaffected by ‘Financial Overhaul’
August 16th, 2010Don’t worry, I won’t bring back the smirking Blankfein banner.
Via: Los Angeles Times:
As Wall Street scrambles to find the best and most profitable way to operate under the new financial reform law, Goldman Sachs Group Inc. — the firm that was expected to suffer the most under the legislation — could emerge practically unscathed.
Right after Congress passed the regulatory overhaul bill last month, analysts estimated that as much as one-tenth of the preeminent investment bank’s earnings could vanish because of new restrictions on activities targeted by the regulatory overhaul.
More recently, however, top Goldman executives privately advised analysts that the bank did not expect the reform measure to cost it any revenue.
UAE Imports Five Tons of Fake Gold
August 16th, 2010Via: Emirates 24|7:
Several tons of gold imported into the UAE by traders and investors turned out to be fake on closer inspection, resulting in millions of dirhams in losses and high levels of stress to the victims.
Speaking to Emirates 24|7, Mohamad Shakarchi,, Managing Director of Emirates Gold, said: “A lot of people in the UAE who tried to import gold at lower prices or through dubious overseas companies have been cheated.
We have inspected many consignments from African countries, especially Ghana, and found that there is not an ounce of gold in them.
For importing pure dust or other metals with yellow colour, these traders have paid several million dirhams.”
Dubai Customs sources confirmed the incidence of fake gold imports, but did not reply to a questionnaire sent by Emirates 24|7 ten days ago.
“The concerned official is on leave,” said a spokesman.
Emirates Gold has stopped examining gold imported from Africa. “We send specialists to examine a gold consignment only if it is routed through a local company.
We don’t have time to waste because most of these so called gold imports are fake. The traders got greedy. They thought they were getting gold at a discounted rate.”
Mohammed said that at least five tonnes of fake yellow metal is lying with Dubai Customs.
Another Threat to Economy: Boomers Cutting Back
August 16th, 2010See the Bloomberg piece, U.S. Is Bankrupt and We Don’t Even Know It:
We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today’s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.
This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.
And now, the Baby Boomers know they’re getting screwed all over, and that younger people can’t/aren’t stepping into the role of greater fool to keep Social Security bubble going.
Via: Wall Street Journal:
America’s baby boomers—those born between 1946 and 1964—face a problem that could weigh on the economy for years to come: The longer it takes for the economy to recover, the less money they’ll have to spend in retirement.
Policy makers have long worried that Americans aren’t saving enough for old age. And lately, current and prospective retirees have been hit on many fronts at once: They have less money, they earn less on what they have, their houses aren’t rising in value and the prospect of working longer to make up the shortfall has dimmed significantly in a lousy job market.
“We will have to learn to make do with a lot less in material things,” says Gary Snodgrass, a 63-year-old health-care consultant in Placerville, Calif. The financial crisis, he says, slashed his retirement savings 40% and the value of his house by about half.
Banks, home buyers and bond issuers are all benefiting as the U.S. Federal Reserve holds short-term interest rates near zero to support a recovery. But for many of the 36 million Americans who will turn 65 over the next decade—and even for the 45 million who have another decade to go— the resulting low bond yields, combined with a volatile stock market, are making a dire retirement picture look even worse.
Low yields present retirees with a difficult choice: Accept the lower income offered by safer bonds, or take the risk of staying in the stock market. Either way, their predicament could put a long-term damper on the consumer spending that typically drives U.S. growth.
Companies Rush to Issue Riskier Debt as Investors Look for Higher Returns
August 16th, 2010Via: Wall Street Journal:
U.S. companies issued risky “junk” bonds at a record clip this week, taking advantage of keen investor appetite for returns amid declining interest rates and tepid stock markets.
The borrowing binge comes as the Federal Reserve keeps interest rates near zero and yields on U.S. government debt are near record lows. Those low rates have spread across a variety of markets, making it cheaper for companies with low credit ratings to borrow from investors.
Corporate borrowers with less than investment-grade ratings sold $15.4 billion in junk bonds this week, a record total for a single week, according to data provider Dealogic. The month-to-date total, $21.1 billion, is especially high for August, typically a quiet month that has seen an average of just $6.5 billion in issuance over the past decade.
Cattle Cloned from Dead Animals to Produce ‘That Memorable Taste’
August 16th, 2010Bon Appétit!
Via: BBC:
Some of the cattle cloned to boost food production in the US have been created from the cells of dead animals, according to a US cloning company.
Farmers say it is being done because it is only possible to tell that the animal’s meat is of exceptionally high quality by inspecting its carcass.
US scientists are using a variety of techniques to assess which animals have exceptional qualities.
These attributes include meat quality, productivity or longevity.
These exceptional animals are cloned to be used as breeding stock, with the aim of raising the quality of herds on beef, dairy and pig farms in the US.
There is a long tradition of resurrecting dead animals for cloning – Dolly the sheep being a case in point.
The head of the leading US animal cloning company has said that European farmers will fall behind the rest of the world unless they are allowed to use such techniques to improve the productivity of their livestock.
The aim of livestock cloning is to clone the best animals to produce the best beef.
But some cattle farmers believe it is impossible to pick the best quality animals until their meat has been properly analysed.
That is why there are cloned bulls here that have been produced from the cells taken from the carcasses of dead animals.
Brady Hicks of the JR Simplot company in Idaho said his organisation was among many that had tried out the technique successfully.
“The animals are hanging on a rail ready to go to the meat counter,” he told BBC News.
Even Street Criminals Are Spending Less
August 16th, 2010Via: Guardian:
Richard Gaines is one of the best-known faces on Camden’s Haddon Avenue. It is a rough-and-tumble street, lined with cheap businesses and boarded-up houses, and is prey to drug gangs. Gaines, 50, runs a barbershop, a hair salon and a fitness business. He works hard and is committed to his community. But Haddon Avenue is not an easy place to make a living in the best of times. And these are far from the best of times.
Just how badly the great recession has struck this fragile New Jersey city, which is currently the poorest in America, was recently spelled out to Gaines. In happier times – whatever that might mean for a city as destitute as Camden – local businesses on Haddon Avenue could at least rely on a bit of trade from those who made their money on the street.
Young men bought flashy clothes and got sharp haircuts and always paid in cash. But no longer. The economy is now so bad in Camden that even the criminals are struggling and going short. “Even the guys who got money from illegal means really don’t want to spend it,” Gaines said.
Such a development, though, is just a snapshot of the deep problems still hitting the wider American economy. Growth rates are stuttering and a recovery is struggling to take hold. It may even now be showing signs of going backwards again, as countries such as Germany start to power forward. Joblessness has taken hold in America, with the numbers of long-term unemployed reaching levels not seen since the Depression of the 1930s. The figures are frightening and illustrate a society that remains in deep trouble.
Hindenburg Omen
August 16th, 2010WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Many people are submitting the Hindenburg Omen thing, so this is mostly to let you know: Yes, I’ve seen that information.
As for what I think about it: I’d refer to what I wrote about the recent Cisco caper, which applies to holding stocks in general:
You should be extremely concerned if you have more than pocket lint riding on stock market. This isn’t a functional market, where buyers and sellers are efficiently determining prices by their activities. This is machines juggling chainsaws.
As for the signal itself, it was roughly right in 2007. You would have had to take a pants shitting drawdown before it went your way, though. This line from the Wall Street Journal should be kept in mind, “The Omen was present at every market crash since 1987, but has also occurred many other times without an ensuing significant downturn. Market analysts said only about 25% of Omen appearances have led to stock-market declines that can be considered crashes.”
My guess is that the INDU high of 11,258 on the April 30 weekly candle represents a pretty strong overhead resistance. (There’s multiple overlapping woowoo there.) If they can crank it back up to around that level, it would make for a delicious shorting opportunity. I might try some deep out of the money puts on DIA if they squeeze it back up around there. As for chasing short, based on mainstream news stories… *shaking head* Retail investors bring the money, the squid brings the matches.
Afghanistan Says Finds 1.8 Billion Barrel Oilfield
August 15th, 2010Via: Reuters:
Afghanistan said on Sunday it had discovered an oilfield with an estimated 1.8 billion barrels in the north of the war-ravaged country, where U.S. and other foreign forces are trying to tame a Taliban-led insurgency.
The discovery of the basin between northern Balkh and Shiberghan provinces was made after a survey conducted by Afghan and international geologists, said Jawad Omar, a spokesman for the ministry of mines.
Related: Afghan Mineral Deposits Actually Worth $3 Trillion, Not $1 Trillion
61 Trucks Loaded with 300 Tons of Explosives Missing in Central India
August 14th, 2010Via: Xinhua:
Some 61 trucks loaded with over 300 tons of explosives have gone missing in the central Indian state of Madhya Pradesh, a senior police official said Friday.
“The trucks were sent from a state-owned factory, Rajasthan Explosives and Chemicals Limited, in Dholpur to a private company called Ganesh Explosives in the state’s Sagar district. But it never reached there,” the official said.
A massive search is on to track down the trucks as fear is mounting that if the explosives, including detonators and gelatin sticks, reach the wrong hands it could be devastating, he added.
But Will It Make You Happy?
August 14th, 2010In the “normal” world, in our “normal” careers, we would have an annual combined income of roughly US$100,000. What horror would the U.S. government commit with the portion of the taxes it would demand from us? We now live well on a tiny fraction of what we would make in our “normal” careers. We have no debt. We own our small farm and our vehicles outright. We convert what’s left over at the end of the month into cash savings and gold. We also give money to people who are doing good work.
Whether you decide to leave the U.S. (like we did), or not, doesn’t matter. Living well on very little, encouraging others to do the same and actually funding people who are doing good work (allocating resources to values) are the main tactics of the frugal insurgent.
—We’re Inching Dangerously Close to the Point Where Consumers Run for the Hills
My take on frugal living is that it is a better response to the situation we’re facing than armed insurgency. Obviously, framing it in those terms doesn’t maintain the right appearances for publications like the New York Times and other dying bastions of polite circledom. Have no doubt about it, though, taking fiat confetti out of circulation hurts this thing bad, far worse than trying to kill it with fire, bombs or bullets. Things like consciously earning less taxable fiat confetti, keeping your fiat confetti “in a mattress” and buying precious metals (physical, not paper based) with previously accumulated fiat confetti are all weapons of mass destruction to the fascists of finance and the maniac vampire state that have built this concentration camp of a system.
If all of this sounds too frightening, here’s a vaguely hip, new black, new normal, cool kids spin on voluntary simplicity.
Via: New York Times:
A two-bedroom apartment. Two cars. Enough wedding china to serve two dozen people.
Yet Tammy Strobel wasn’t happy. Working as a project manager with an investment management firm in Davis, Calif., and making about $40,000 a year, she was, as she put it, caught in the “work-spend treadmill.”
So one day she stepped off.
Inspired by books and blog entries about living simply, Ms. Strobel and her husband, Logan Smith, both 31, began donating some of their belongings to charity. As the months passed, out went stacks of sweaters, shoes, books, pots and pans, even the television after a trial separation during which it was relegated to a closet. Eventually, they got rid of their cars, too. Emboldened by a Web site that challenges consumers to live with just 100 personal items, Ms. Strobel winnowed down her wardrobe and toiletries to precisely that number.
Her mother called her crazy.
Today, three years after Ms. Strobel and Mr. Smith began downsizing, they live in Portland, Ore., in a spare, 400-square-foot studio with a nice-sized kitchen. Mr. Smith is completing a doctorate in physiology; Ms. Strobel happily works from home as a Web designer and freelance writer. She owns four plates, three pairs of shoes and two pots. With Mr. Smith in his final weeks of school, Ms. Strobel’s income of about $24,000 a year covers their bills. They are still car-free but have bikes. One other thing they no longer have: $30,000 of debt.
Ms. Strobel’s mother is impressed. Now the couple have money to travel and to contribute to the education funds of nieces and nephews. And because their debt is paid off, Ms. Strobel works fewer hours, giving her time to be outdoors, and to volunteer, which she does about four hours a week for a nonprofit outreach program called Living Yoga.
“The idea that you need to go bigger to be happy is false,” she says. “I really believe that the acquisition of material goods doesn’t bring about happiness.”
While Ms. Strobel and her husband overhauled their spending habits before the recession, legions of other consumers have since had to reconsider their own lifestyles, bringing a major shift in the nation’s consumption patterns.
“We’re moving from a conspicuous consumption — which is ‘buy without regard’ — to a calculated consumption,” says Marshal Cohen, an analyst at the NPD Group, the retailing research and consulting firm.
