Obama’s Unemployment Analysis – A Bubble-Pipe Dream?

Frame By Frame

Frame by frame, death by drowning
in your own in your own
analysis.
Step by step, die by numbers
in your own in your own
analysis…
King Crimson

Below is a chart from CalculatedRisk, one of my favorite spaces. It depicts the expectations Obama’s team is using when they created this year’s budget. You can read the team’s “Economic and Budget Analysis” by clicking that link (64 pages pdf). The blue line is the historical unemployment and the red line is the Obama projection. (Click the chart to see the original – it’s much clearer.)


Obama 2010 Budget Unemployment Forecast
Obama 2010 Budget Unemployment Forecast

The beauty of this is the way it’s presented. The forecast is for an average over the year. So for 2010, the unemployment rate can keep increasing for the next 5 months before anyone can say the estimates are off. And even then, the point could be argued all the way into December.

Bubble Bubble, Toil and Trouble

Looking back over the peaks in that chart I see and remember the things that ‘turned it around’ – In 2003 the housing boom was just getting really fueled up after the tech crash, in 1992 the Tech boom was just powering up after the S&L crisis was cleaned up. In 1982 the Reagan team had just remodeled the financial markets, aka, “Reaganomics”. In 1975 we had just come off the gold standard for our currency, allowing the Federal Reserve to print as much cash as they wanted.

You can argue the particulars of each instance, but I think I’ve got it down to its simplest form. Each time there was a crisis, our government turned to some form of credit inflation to produce employment. In each of the times I described it worked. The numbers are right there on that chart.

So why am I so certain it won’t work this time? Because each of those times, jobs were created by easy money in the form of cheap loans. For the last 4 decades, that’s what they’ve been doing – blowing bubbles made of different kinds of credit. They were using debt to create a false appearance of prosperity, a bubble. Each time the bubble burst, a new one was formed somewhere else.

This last bubble was a real doozy, too. To actually get it to work, they had to create loans (they like to call them ‘Financial Instruments’) which were literally impossible to pay off, then present them to the public as cheap cheap cheap (my brother steals it and I sell it), somehow forgetting to mention the suicidal nature of actually signing one of these things. I’m not condemning them (at the moment) for that, it’s just a fact and I’m stating it because it leads to the next thought…

They had to create those liar loans to get the less wealthy in a debt because the more wealthy middle class and rich were already tapped out on their credit.

With that in the front of my mind I have to ask: What kind of credit bubble do they think is possible to inflate that will create jobs this time?

WHO Raises Phase to 5 – Pandemic Imminent

Don’t Panic

Below is the current statement from the World Health Organization.

Ladies and gentlemen,

Based on assessment of all available information, and following several expert consultations, I have decided to raise the current level of influenza pandemic alert from phase 4 to phase 5.

Influenza pandemics must be taken seriously precisely because of their capacity to spread rapidly to every country in the world.

On the positive side, the world is better prepared for an influenza pandemic than at any time in history.

Preparedness measures undertaken because of the threat from H5N1 avian influenza were an investment, and we are now benefitting from this investment.

For the first time in history, we can track the evolution of a pandemic in real-time.

I thank countries who are making the results of their investigations publicly available. This helps us understand the disease.

I am impressed by the work being done by affected countries as they deal with the current outbreaks.

I also want to thank the governments of the USA and Canada for their support to WHO, and to Mexico.

Let me remind you. New diseases are, by definition, poorly understood. Influenza viruses are notorious for their rapid mutation and unpredictable behaviour.

WHO and health authorities in affected countries will not have all the answers immediately, but we will get them.

WHO will be tracking the pandemic at the epidemiological, clinical, and virological levels.

The results of these ongoing assessments will be issued as public health advice, and made publicly available.

All countries should immediately activate their pandemic preparedness plans. Countries should remain on high alert for unusual outbreaks of influenza-like illness and severe pneumonia.

At this stage, effective and essential measures include heightened surveillance, early detection and treatment of cases, and infection control in all health facilities.

This change to a higher phase of alert is a signal to governments, to ministries of health and other ministries, to the pharmaceutical industry and the business community that certain actions should now be undertaken with increased urgency, and at an accelerated pace.

I have reached out to donor countries, to UNITAID, to the GAVI Alliance, the World Bank and others to mobilize resources.

I have reached out to companies manufacturing antiviral drugs to assess capacity and all options for ramping up production.

I have also reached out to influenza vaccine manufacturers that can contribute to the production of a pandemic vaccine.

The biggest question, right now, is this: how severe will the pandemic be, especially now at the start?

It is possible that the full clinical spectrum of this disease goes from mild illness to severe disease. We need to continue to monitor the evolution of the situation to get the specific information and data we need to answer this question.

From past experience, we also know that influenza may cause mild disease in affluent countries, but more severe disease, with higher mortality, in developing countries.

No matter what the situation is, the international community should treat this as a window of opportunity to ramp up preparedness and response.

Above all, this is an opportunity for global solidarity as we look for responses and solutions that benefit all countries, all of humanity. After all, it really is all of humanity that is under threat during a pandemic.

As I have said, we do not have all the answers right now, but we will get them.

Thank you.

Don’t panic – just remember this: in a universe like this you need to ALWAYS know where your towel is.

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H1N1 Swine Flu Map

Pandemic Alert

IMPORTANT UPDATE

29 April 2009 — Based on assessment of all available information and following several expert consultations, Dr Margaret Chan, WHO’s Director-General raised the current level of influenza pandemic alert from phase 4 to 5. She stated that all countries should immediately activate their pandemic preparedness plans. At this stage, effective and essential measures include heightened surveillance, early detection and treatment of cases, and infection control in all health facilities.

UPDATE:

27 April 2009 — The Emergency Committee, established in compliance with the International Health Regulations (2005), held its second meeting on 27 April 2009. The Committee considered available data on confirmed outbreaks of A/H1N1 swine influenza in the United States of America, Mexico, and Canada. The Committee also considered reports of possible spread to additional countries. On the advice of the Committee, the WHO Director-General has raised the level of influenza pandemic alert from the current phase 3 to phase 4. The change to a higher phase of pandemic alert indicates that the likelihood of a pandemic has increased, but not that a pandemic is inevitable.

Thanks to WikiProtest.com for mashing this map together.


View H1N1 Swine Flu in a larger map

For another look, including migration paths and dates of infection for the entire planet, check out the map at Live.com.

From the CDC website:

CDC is working very closely with officials in states where human cases of swine influenza A (H1N1) have been identified, as well as with health officials in Mexico, Canada and the World Health Organization. This includes deploying staff domestically and internationally to provide guidance and technical support. CDC has activated its Emergency Operations Center to coordinate this investigation.

Laboratory testing has found the swine influenza A (H1N1) virus susceptible to the prescription antiviral drugs oseltamivir and zanamivir and has issued interim guidance for the use of these drugs to treat and prevent infection with swine influenza viruses. CDC also has prepared interim guidance on how to care for people who are sick and interim guidance on the use of face masks in a community setting where spread of this swine flu virus has been detected. This is a rapidly evolving situation and CDC will provide new information as it becomes available.

There are everyday actions people can take to stay healthy.

* Cover your nose and mouth with a tissue when you cough or sneeze. Throw the tissue in the trash after you use it.
* Wash your hands often with soap and water, especially after you cough or sneeze. Alcohol-based hands cleaners are also effective.
* Avoid touching your eyes, nose or mouth. Germs spread that way.

Try to avoid close contact with sick people.

* Influenza is thought to spread mainly person-to-person through coughing or sneezing of infected people.
* If you get sick, CDC recommends that you stay home from work or school and limit contact with others to keep from infecting them.

There is no vaccine available at this time…

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Victoria Burning

Australian Heat Wave

Many of us here in the US don’t follow the weather overseas. Australia is going through one of its worst droughts on record at the same time as a record-setting heat wave.

And they’ve caught fire.

From TheTimesOnline:

The fires began on the hottest day ever recorded in Melbourne and were fanned by gale-force winds. Many of the dead were said to have waited too long in their homes before fleeing and were burnt alive in their cars as multiple fires tore through the countryside of Victoria state. Some of the blazes were set by arsonists.

Witnesses said the sky had turned to ash, began to rain embers and the fires which obliterated entire houses in seconds had turned parts of the picturesque Victorian countryside into something resembling a nuclear holocaust.

Cars became tombs as people tragically tried to out-run the flames. Others made lucky escapes by diving into dams and local reservoirs. One group broke into a local pub to seek refuge in the cool room until the blaze had passed.

[…]

Described as “hell on earth”, the bushfires began on Saturday amid record-breaking temperatures as the mercury hit 46.4C, Melbourne’s hottest day on record. The fires left a trail of death and destruction across the state, burning through 350,000 hectares (1,350 square miles). Fifty fires also began burning across the border in New South Wales, where temperatures reached 46C on Sunday.

The Australian Army was called in to assist the thousands of weary firefighters who battled the blazes over the weekend, and the government announced a $10 million (£4.5 million) emergency relief fund as well as immediate $1,000 cash grants to help the thousands of Victorians now left homeless. The fires are now officially the worst in Australia’s history, surpassing the death toll of the Ash Wednesday fires which claimed 76 lives when they tore through Victoria and South Australia in February, 1983.

For those of us who are Celsius-challenged, 46C is about 115F.

I am Jon, always looking forward to something.

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Thanks to TreeHugger

2 By 2

lung cancer among branchesImage by sara b. | 2009 via Flickr

Inches, That Is…

Regular readers here @ Wordout will recognize that I haven’t been publishing anything lately. You’ll also remember that I’ve been fighting an illness for quite awhile. The two are related.

Last week I was diagnosed with lung cancer. The cancer seems to be about 2 inches by 2 inches (4.5cm X 5cm), as measured using the CT scan. The lymph nodes in my lungs appear to be clear and healthy, which is a great sign that it may not have spread yet. More test results are required to verify that it’s still only in the lung. I will have those results next week, after the biopsy has been done.

So far I’ve been through the xrays, the CT scans, the PET scan and an MRI on my brain. Next week I will be laying on a table quietly while a doctor punctures my chest with a huge honkin’ needle to withdraw some of the mass for direct observation. A couple of days after that I’ll be able to know exactly how bad the situation is.

Only then will I know what treatment options are available. Right now, it appears that I will either 1) Be a good candidate for surgery or 2) Have no options at all.

Either way, I am alive today.

I’ve done a bit of reading, and here’s a couple of excerpts and links for you, in case you’re interested.

National Cancer Institute

Survival rates can be calculated by different methods for different purposes. The survival rates presented here are based on the relative survival rate which measures the survival of the cancer patients in comparison to the general population to estimate the effect of cancer. The overall 5-year relative survival rate for 1996-2004 from 17 SEER geographic areas was 15.2%. Five-year relative survival rates by race and sex were: 13.4% for white men; 17.9% for white women; 10.4% for black men; 14.5% for black women.

The stage distribution based on historic stage shows that 16% of lung and bronchus cancer cases are diagnosed while the cancer is still confined to the primary site (localized stage); 25% are diagnosed after the cancer has spread to regional lymphnodes or directly beyond the primary site; 51% are diagnosed after the cancer has already metastasized (distant stage) and for the remaining 8% the staging information was unknown. The corresponding 5-year relative survival rates were: 49.5% for localized; 20.6% for regional; 2.8% for distant; and 8.3% for unstaged.(See Fast Stats for more detailed statistics)

Mayo Clinic

Fluid in the chest (pleural effusion). Lung cancer can cause fluid to accumulate in the space that surrounds the lungs in the chest cavity (pleural space). Pleural effusion can result from cancer spreading outside the lungs or in reaction to lung cancer inside the lungs. Fluid accumulating in the chest can cause shortness of breath. Treatments are available to drain the fluid from your chest and reduce the risk that pleural effusion will occur again. Cancer that spreads to the pleura is considered inoperable, so surgery isn’t an option for treatment.

Cancer that spreads to other parts of the body (metastasis). Lung cancer often spreads (metastasizes) to other parts of the body — most commonly the opposite lung, brain, bones, liver and adrenal glands. Cancer that spreads can cause signs and symptoms, including pain, nausea, headaches or others based on what organ is affected. In some cases, treatments are available for isolated metastasis, but in most cases, the goal of treatment for metastasis is only to relieve signs and symptoms.

Death. Unfortunately, survival rates haven’t improved for people diagnosed with lung cancer. In most cases, the disease is fatal. Almost 60 percent, or three out of every five people, diagnosed with lung cancer die within a year. Keep in mind, however, that this number includes people diagnosed with all types of lung cancer at all stages of the disease. People diagnosed at the earliest stages have the greatest chances for a cure. Your doctor can discuss more relevant statistics about your chances for survival with you.

No Doubt

There is no doubt that my lung cancer is caused by excessive smoking. I could spend my time doing the ‘If Only…’ and that time would be wasted, so I’m not doing that. It’s too late to change that past and as stubborn as I am, I probably wouldn’t change it anyway. I bought the ticket, and that train is never late.

But look – it’s not too late for you to stop. If you’re smoking, it’s like making payments for your own ticket. Ask yourself: Is that the (one way) trip I really want to take? Look around you. Are these the people you want to watch you die?

I am Jon. Put out that damned cigarette.

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Oh Crap – Arctic Methane Confirmed

Arctic regionImage via Wikipedia
Climate Progress

From the University of Alaska, Fairbanks:

‘A team led by International Arctic Research Center scientist Igor Semiletov has found data to suggest that the carbon pool beneath the Arctic Ocean is leaking.

The results of more than 1,000 measurements of dissolved methane in the surface water from the East Siberian Arctic Shelf this summer as part of the International Siberian Shelf Study show an increased level of methane in the area. Geophysical measurements showed methane bubbles coming out of chimneys on the seafloor.

“The concentrations of the methane were the highest ever measured in the summertime in the Arctic Ocean,” Semiletov said. “We have found methane bubble clouds above the gas-charged sediment and above the chimneys going through the sediment.”

The new data indicates the underwater permafrost is thawing and therefore releasing methane. Permafrost can affect methane release in two ways. Both underwater and on land, it contains frozen organic material such as dead plants and animals. When permafrost thaws, that organic material decomposes, releasing gases like methane and carbon dioxide. In addition, methane, either in gas form or in ice-like methane hydrates, is trapped underneath the permafrost. When the permafrost thaws, the trapped methane can seep out through the thawed soil. Methane, a greenhouse gas 20 times more powerful than carbon dioxide, is thought to be an important factor in global climate change.

The East Siberian Arctic Shelf is a relatively shallow continental shelf that stretches more than 900 miles into the Arctic Ocean from Siberia. The area is a year-round source of methane to the globe’s atmosphere. However, until recently, scientists believed that much of the area’s carbon pool was safely insulated by underwater permafrost, which is, on average, 11 degrees Celcius warmer than surface permafrost.’

Arctic region

From ClimateProgress:

These observations are extremely worrisome for four reasons. First, many fear that a huge methane release is what happened during the Permian-Triassic extinction event and the Paleocene-Eocene Thermal Maximum. Second, releasing even a small fraction of the sub-sea methane would make a stabilizing greenhouse gas emissions at non-catastrophic concentrations all but impossible.

Third, as NOAA reported earlier this year, levels of methane rose sharply last year for the first time since 1998…

Fourth, the findings are apparently based on very new and credible in situ measurements: “Semiletov said this year’s expeditions used both chemical and geophysical measurement techniques, a first in the area.”

From the original announcement published in the the online British journal, TheIndependent:

The first evidence that millions of tons of a greenhouse gas 20 times more potent than carbon dioxide is being released into the atmosphere from beneath the Arctic seabed has been discovered by scientists.

The Independent has been passed details of preliminary findings suggesting that massive deposits of sub-sea methane are bubbling to the surface as the Arctic region becomes warmer and its ice retreats.

Underground stores of methane are important because scientists believe their sudden release has in the past been responsible for rapid increases in global temperatures, dramatic changes to the climate, and even the mass extinction of species. Scientists aboard a research ship that has sailed the entire length of Russia’s northern coast have discovered intense concentrations of methane – sometimes at up to 100 times background levels – over several areas covering thousands of square miles of the Siberian continental shelf.

In the past few days, the researchers have seen areas of sea foaming with gas bubbling up through “methane chimneys” rising from the sea floor. They believe that the sub-sea layer of permafrost, which has acted like a “lid” to prevent the gas from escaping, has melted away to allow methane to rise from underground deposits formed before the last ice age.

The amount of methane stored beneath the Arctic is calculated to be greater than the total amount of carbon locked up in global coal reserves so there is intense interest in the stability of these deposits as the region warms at a faster rate than other places on earth.(ed: more than 7 degrees F in the past several decades.)

Orjan Gustafsson of Stockholm University in Sweden, one of the leaders of the expedition, described the scale of the methane emissions in an email exchange sent from the Russian research ship Jacob Smirnitskyi.

“We had a hectic finishing of the sampling programme yesterday and this past night,” said Dr Gustafsson. “An extensive area of intense methane release was found. At earlier sites we had found elevated levels of dissolved methane. Yesterday, for the first time, we documented a field where the release was so intense that the methane did not have time to dissolve into the seawater but was rising as methane bubbles to the sea surface. These ‘methane chimneys’ were documented on echo sounder and with seismic [instruments].”

At some locations, methane concentrations reached 100 times background levels. These anomalies have been seen in the East Siberian Sea and the Laptev Sea, covering several tens of thousands of square kilometres, amounting to millions of tons of methane, said Dr Gustafsson. “This may be of the same magnitude as presently estimated from the global ocean,” he said. “Nobody knows how many more such areas exist on the extensive East Siberian continental shelves.

“The conventional thought has been that the permafrost ‘lid’ on the sub-sea sediments on the Siberian shelf should cap and hold the massive reservoirs of shallow methane deposits in place. The growing evidence for release of methane in this inaccessible region may suggest that the permafrost lid is starting to get perforated and thus leak methane… The permafrost now has small holes. We have found elevated levels of methane above the water surface and even more in the water just below. It is obvious that the source is the seabed.”

Arctic region

and a related story from TheIndependent:

The rapid rise in greenhouse gases over the past century is unprecedented in at least 800,000 years, according to a study of the oldest Antarctic ice core which highlights the reality of climate change.

Air bubbles trapped in ice for hundreds of thousands of years have revealed that humans are changing the composition of the atmosphere in a manner that has no known natural parallel.

Scientists at the British Antarctic Survey (BAS) in Cambridge have found there have been eight cycles of atmospheric change in the past 800,000 years when carbon dioxide and methane have risen to peak levels.

Each time, the world also experienced the relatively high temperatures associated with warm, inter-glacial periods, which were almost certainly linked with levels of carbon dioxide and possibly methane in the atmosphere.

However, existing levels of carbon dioxide and methane are far higher than anything seen during these earlier warm periods, said Eric Wolff of the BAS.

“Ice cores reveal the Earth’s natural climate rhythm over the last 800,000 years. When carbon dioxide changed there was always an accompanying climate change,” Dr Wolff said. “Over the past 200 years, human activity has increased carbon dioxide to well outside the natural range and we have no analogue for what will happen next.

I usually don’t quote me but here it is anyway, from the post titled ‘Arctic Methane’:

Remember a few months ago Wordout reported that scientists had discovered evidence in ice cores which showed that in the past, drastic changes in climate have occurred in as little as one or two years? One of the tipping points appears to be the release of massive amounts of methane into the atmosphere.

This year is the 1st in the history of Man that the arctic sea ice has melted enough to open shipping routes through the Arctic ocean.

We all need to wake up to the real catastrophe brewing right under our noses. If you think the financial meltdown is bad, just wait ’til the climate meltdown gets your undivided attention.

I am Jon. Time to wake up and smell the methane, folks.

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Wake Up, Freak Out – Then Get A Grip

Tipping Points

Watch this really well-made and insightful video for a great explanation of what we’re really up against when it comes to Climate Change. Click the arrows to go full screen.


Wake Up, Freak Out – then Get a Grip from Leo Murray on Vimeo.

What Is The Sound Of No Hands Clapping?

This isn’t just about the polar bears any more… as a matter of fact, it never really was.

It’s about our survival.

The earth will be here, regardless of what we do.

The question is this: If the earth is still here, does it really matter to any of us if we aren’t here to enjoy it?

I am Jon. Get a grip.

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Thanks to Worldchanging… see for yourself. Click the link and go there.

Riots In Greece – Started Over A Week Ago

public anger?Image by murplej@ne – under deconstruction via FlickrAnd We’re Just Hearing About It?

Click this link to the Boston Globe and look at the photos. It’s just terrible…

From the Boston Globe, published December 15th:

‘On the night of Saturday, December 6th, two Special Guards of the Greek police clashed with a small group of young men. The exact details of what took place are still unclear, but it is known that one of the Guards fired three shots, and one of those bullets caused the death of 15-year-old Alexander Grigoropoulos – whether the injury was made by an accidental ricochet or deliberate shot remains to be determined. The two Guards are now in jail awaiting trial, the shooter charged with homicide. This incident sparked an immediate and widespread response in the form of angry demonstrations and riots in many Greek cities that have continued at varying levels to this day – though dimming in intensity recently. Alexander’s death appears to have been a catalyst, unleashing widespread Greek anger towards many issues – police mistreatment of protesters, unwelcome education reforms, economic stagnation, government corruption and more. (37 photos total)’

I guess our US mainstream ‘media’ wanted to make sure the riots were a big enough story before they showed us. Or maybe they were just hoping this kind of news would quietly go away. Well, a week into it, the unrest continues, as reported by the UK based DailyMail, published Dec 15th:

‘Although the intensity of protests has tailed off in recent days pockets of violence are still occurring and more rallies have been planned for this week.

Today, around 50 demonstrators hurled eggs at police outside the main Athens court, where a hearing took place for dozens of people arrested during Greece’s worst riots in decades, sparked by the killing of Alexandros Grigoropoulos on December 6.’

As things get worse, I think we will start seeing more of this, and closer to home.

Then again, maybe we won’t be seeing this? But that doesn’t mean it won’t be happening. Mainstream media sucks anymore.

I am Jon, and I want to know why we in the US are just hearing about this?

(edit) It has been pointed out to me that this story was indeed reported here in the US back on the 6th of December – I must have missed it. Sorry ’bout that.
Nevertheless, as the situation unfolded the riots became worse, evidently reaching a peak around the 13th. I still stand by my criticism of US MSM. We were not kept informed as the situation in Greece deteriorated, whereas I found in my research that in Europe (for example) daily reports were published in most of the bigger outlets.
Still, I was wrong in asserting that we were never informed at all.

Thanks to Paul at InfectiousGreed for pointing us to this.

WTF Treasury Notes – A Negative Yield?

An example of combustionImage via WikipediaT-Bills Negative?

Q: When was the last time you ever saw 3-month Treasury Bills yield a NEGATIVE amount?

A: NEVER.

What amazes me the most is the amount of cash that was willing to be dropped into this hole: $30 Billion. According to Barry (below) the ‘demand was so great even for no return that the government could have sold four times as much’.

Check it out, via Barry at TheBigPicture:

We mentioned this yesterday as it happened, but Treasuries traded down to previously unseen yields. The 3 month T-bill went negative yield for the first time ever.

When was the last time you invested in something that you knew wouldn’t make money?

In the market equivalent of shoveling cash under the mattress, hordes of buyers were so eager on Tuesday to park money in the world’s safest investment, United States government debt, that they agreed to accept a zero percent rate of return.

The news sent a sobering signal: in these troubled economic times, when people have lost vast amounts on stocks, bonds and real estate, making an investment that offers security but no gain is tantamount to coming out ahead. This extremely cautious approach reflects concerns that a global recession could deepen next year, and continue to jeopardize all types of investments.

While this will lower the cost of borrowing for the United States government, economists worry that a widespread hunkering-down could have broader implications that could slow an economic recovery. If investors remain reluctant to put money into stocks and corporate bonds, that could choke off funds that businesses need to keep financing their day-to-day operations.

Investors accepted the zero percent rate in the government’s auction Tuesday of $30 billion worth of short-term securities that mature in four weeks. Demand was so great even for no return that the government could have sold four times as much.

In addition, for a brief moment, investors were willing to take a small loss for holding another ultra-safe security, the already-issued three-month Treasury bill.

As Barry concludes in a rather understated manner: ‘Quite remarkable.’

I am Jon. Do you think there’s a recession underway, or a full-fledged Depression?

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Citibank Risk 3 – Another WTF Bailout

It may not be a popular view, but I stand by it: If these asshats ran their firms into the dirt, we should hand them shovels to dig their graves, not cash. They were trading below $4 and the bailout ‘buys’ shares at more than $10. Who else but the Goldman Sachs-run US Treasury would do this? Would YOU pay more than twice the going rate? You say ‘no, of course not’, but your taxes pay for these bailouts. The Fed and the Treasury pays it for you.

Citigroup's corporate logo as of March 17, 2007Image via Wikipedia Citi Bailout – US Govt Screws US Again

Once again, the US Government has screwed us all with another undeserved bailout of a financial behemoth. Citigroup, whose exposure to subprime mortgages and their derivatives caused a more than 87% drop in ‘value’ this year, has been bailed out with not just a cash infusion, but substantial guarantees against future losses.

Longtime readers will recall that I’ve published pieces on Citi already twice this year. First, I reported on their choice of using known spam outfits to deliver official emails from the company, opening up their customers to more spam, as well as having their emails blocked by most spam filters.

Then in September I reported on their exposures to several types of risk, most notably in the subprime and derivatives markets, which made them particularly susceptible to failure. At that time, their share’s prices had declined only around 60% through the year. The conclusion of that piece was that Citi was indeed a risk to any and all who held their paper.

The Trick Is To Try To Swallow It

Of course, both of those were published BEFORE the Treasury Department rammed the $700 billion bailout down our throats. Had I known then that the Goldman Sachs alumni who are in control of our economy would be so eager to leverage the Fed up to 50%, higher even than any of the ‘Not Quite Big Enough To Save’ firms that have since disappeared (think Lehman Brothers, et al), then my conclusion would have been a bit different.

As long as our Goldman government is allowed to just create cash, adding to the already back-breaking burden of future taxes, companies like Citi will continue to survive and even to flourish.

From the AP report (emphasis mine):

The sweeping plan is geared to stemming a crisis of confidence in the company, whose stock has been hammered in the past week on worries about its financial health.

“With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy,” the three agencies said in a statement issued late Sunday night. “We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks.”

The Citigroup rescue came after a weekend of marathon discussions led by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. Timothy Geithner, president of the Federal Reserve Bank of New York, who is being tapped by President-elect Barack Obama as his Treasury chief also participated.

The $20 billion cash injection by the Treasury Department will come from the $700 billion financial bailout package. The capital infusion follows an earlier one – of $25 billion – in Citigroup in which the government received an ownership stake.

As part of the plan, Treasury and the FDIC will guarantee against the “possibility of unusually large losses” on up to $306 billion of risky loans and securities backed by commercial and residential mortgages.

Under the loss-sharing arrangement, Citigroup Inc. will assume the first $29 billion in losses on the risky pool of assets. Beyond that amount, the government would absorb 90 percent of the remaining losses, and Citigroup 10 percent. Money from the $700 billion bailout and funds from the FDIC would cover the government’s portion of potential losses. The Federal Reserve would finance the remaining assets with a loan to Citigroup.

Note the names in BOLD up there. Each of them have close connections to Goldman Sachs. Some of you might be surprised to see Obama’s name listed. After all, isn’t he ‘change we can believe in’? You may be surprised to learn that he recieved nearly a million dollars from Goldman Sachs in support of his campaign for president. They were, in fact, the second largest contributor to his campaign.

But don’t feel bad. The whole world believed the earth was the center of the universe for thousands of years.

The Slaves Rise Up… And Say Hoo-ray!

So, in other words, we ( yes, you and me) will have not only given Citi $45 billion in cash, we (right again, you and me!) are on the hook for up to $275 billion of almost certain losses due to their bad paper. Add it up: it means they’ve got up to $310 billion out of US, thanks to our Goldman Sachs controlled government.

America. Earth. Have you guys been paying attention? Is it starting to become obvious to you yet? Don’t you see what is happening right in front of your nose? You and your children and their children and theirs will not pay enough taxes to generate this kind of cash.

We are being sold into slavery, and as a species, we seem to be applauding.

I am Jon, with not even one hand clapping.

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IOUSA – Byte Sized 30 Minute Version

I Know You Have No Time

But this is something you really need to see. From the YouTube hosting page:

By now, you may have heard about our acclaimed documentary I.O.U.S.A., a film that boldly examines the rapidly growing national debt and its consequences for the United States and its citizens. The film has been a huge hit, getting rave reviews from Roger Ebert and others.

Now, we proudly release a 30-minute condensed version of I.O.U.S.A. designed specifically for watching and sharing on the web – for free.

So if you haven’t had a chance to see the movie yet, watch the condensed I.O.U.S.A. today. If you’ve already seen it in a theater, check out the abbreviated version for a refresher. Then, tell your friends, your family, your Facebook friends and your Twitter followers about the staggering amount of money – $53 trillion – in financial obligations owed by the federal government to foreign investors and to every single American in the form of pensions, health benefits, Social Security and Medicare.

Then, visit http://www.IOUSAtheMovie.com and join us in our Fiscal Wake-Up Movement. Together, we can make American fiscal responsibility a reality.

Watch the video. I did…


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I am Jon, and I’ve been feeling pretty bad lately. I hope you’re doing well.

Stretching

Circuit City (And Others) Closing 150 Stores

UPDATE: Here is the list of CC store closings.

The Bankrupt/$10,000/Bankrupt space, as seen i...Image via WikipediaAccording to The Consumerist, Circuit City will be closing around 150 stores and completely removing itself from a dozen markets by the end of this year. Click the link above to see the letter that was sent to store employees.

According to anonymous insider tips, Circuit City is closing 155 stores and withdrawing from 12 markets. This will be officially announced tomorrow at 8am, says our source. A scan we received of a letter distributed to CC employees helps corroborate the story. The tipsters say that store employees were told this morning. No information was provided at that time about severance pay. Employees in certain departments, like car installation, and Firedog, will likely be out of a job within 48 hours. Warranties will still be honored. A Consumerist commenter on this post says this story is true, and a few posts in Google Finance forums also attest to the store closing. One post there says the store closings will be effective 12/31/08. The news wouldn’t be entirely unexpected as…

WSJ reported on Oct 20th that the retailer was considering closing 150 stores. On Friday, Oct 31, trucks carrying SONY goods to Circuit City were ordered to turn around and come back to the SONY warehouses due to concerns about CC being able to pay for the inventory. That same day, CC was warned it get delisted from the New York Stock Exchange because its stock price averaged below $1 for 30 days.

Suffice to say, even if the store closings don’t get announced tomorrow, Circuit City is officially fried.

That’s just a sign of these times, folks. Calculated Risk helps us to draw a larger picture:

And from BusinessWeek: Mervyns to liquidate remaining 149 stores

Regional department-store chain Mervyns LLC said Friday it will close its remaining 149 stores and will hold going-out-of-businesses sales beginning Saturday.

Here is a partial list of companies that have closed stores (or bankruptcy / out of business): Linens ‘n Things, Steve & Barry’s, Sharper Image, Starbucks, CompUSA, The Disney Store, Wilson’s Leather, Talbots, Ann Taylor, Bombay Co. and on and on …

This is more bad news for mall owners.

Look at that list. While our government is busy as beavers bailing out their dishonest cronies in the banking industry, the rest of us are going under. Who do you work for? How long do you think that will last?

Back in March I started thinking that this whole thing was a planned affair, planned for years by a core group of folks intent on literally taking over the world through debt manipulation.

I’ve been hesitant to write that opinion here. I have insinuated it many times, but never came outright to state it. That hesitancy is eroding, folks.

I am Jon. We’ve been had. And the plan seems to be to ‘have’ us as much as they can.

EdgeOn

TIPS – For Today

Global MeltdownImage by Barrybar via FlickrYet Another Market To Watch

In my RSS feeds this afternoon I came across a great piece over at denninger.net. There are 3 parts to the article, each worthy of a posting in itself.

You should make Karl Denninger a regular habit.

Anyway, in the last section of the article, I came across this quote, which really perked my interest(emphasis NOT mine):

The Treasury TIPS auction today was a disaster. The market is sending Treasury and Congress a very strong warning that you both better cut this crap out or the Treasury market may dislocate, ending the party for America entirely.

If you want to know where that nasty selloff came from in the market late this afternoon, you just found the reason.

We now sit right on the precipice of a critical break of technical levels in the market – if they fracture (and they must be expected to do so, possibly as early as the overnight hours and/or tomorrow morning) the expected move is 2,000 – 3,000 points on the DOW – straight down.

Well, after that I certainly wanted to know what TIPS was! So off to Google I went, where I found the latest addition to my reading schedule, a guy named John Jansen who publishes Across The Curve (HIGHLY recommended. As you’ll see, he explains things). Here is part of what he had to say about today’s bond markets(emphasis mine):

The interesting outcome in the Treasury market today was the result of the auction of $6 billion 4 year 6 month TIPS. For the uninitiated that stands for Treasury Inflation Protected Securities. The auction was rather sloppy as the auction tail was 14 basis points. (In bond market jargon the tail is the distance from the level at which bonds were trading on a when issued basis immediately prior to the auction, to where the Treasury was able to complete the sale. That long tail represents a lack of interest from clients and dealers who would normally underwrite the security.)

The average yield was 3.27 percent which means that the new bond yields more than the nominal 5 year note. The so called breakeven spread is the spread at which inflation would need to average for the holder of the TIPS to breakeven with the nominal bond and it generally predicts a positive rate of inflation.

In this case, the TIPS is yielding above the nominal bond by about 70 basis points in which case the market is saying that it thinks that inflation will average negative 0.7 percent per year for the next 4 ½ years.

There are some forecasters who have extrapolated from the drop in oil prices that cumulative inflation for the last 3 months of this year could be as much as -3.0 percent.

For those of us too afraid to make the leap:

Saying NEGATIVE inflation is the same thing as saying DEFLATION.

Look for the rest of the week to just get worse.
(UPDATE Tues5:30am: Except, evidently, for the little bump we might get on Tuesday…
Asian and European stocks are doing generally well.
Let’s hope the same for the US.)

I am Jon, and that is TIPS for the day.

Stretching

Activist Or Terrorist?

What Is Wrong Here?

Thanks to EarthFirst for pointing us to this video. From their site, quoting the NYT:

For a 13-month stretch starting in March 2005, three environmentalists working for the Chesapeake Climate Action Network were listed in a Maryland State Police data base as being “suspected of involvement in terrorism.” The description went on to note that the police had “no evidence whatsoever of any involvement in violent crime,” and the listing, and possible tracking, did not continue. But the activists — not surprisingly — were not happy to hear about this when they received letters from the state police earlier this month informing them of the situation.


This is exactly the sort of thing we should expect nowadays in America. We let the Department of Homeland Security be created. We let the so-called Patriot Act be passed and then extended. We let the Congress literally gut our FISA protections.

We have no recourse in matters such as these. And with the economy getting worse, I am certain we’ll see more of these types of stories emerging.

I am Jon, and I am certainly on a list somewhere… and I couldn’t care less.

How It All Ends

Greg Craven

As he requests in the video, I am sharing this with you today. Please enjoy one of the best short videos (10 minutes) I have seen lately. Greg does a great job of taking us through a quick decision making process of possibility evaluation focusing on risk management.


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I am Jon. Like the man said, spread the word, tell your friends.

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Global Markets Snapshot: How Far We’ve Fallen

How Much Have The World Markets Lost In (Roughly) The Past Year?

LATimes


Train wreck at Montparnasse Station, at Place ...Image via Wikipedia

…even though America is the source of the credit debacle that is ravaging the global financial system, many foreign markets — both developed and emerging — are faring much worse than Wall Street.

I tallied up how much some major and minor markets have fallen from their recent highs, most of which were reached in the second half of 2007.

Here’s a sampling (not meant to be all-inclusive):

Markets down more than 70%: Vietnam (-70.5%), Peru (-73.2%), Ireland (-73.4%), Russia (-73.9%), Iceland (-88.7%).

Markets down between 60% and 70%: Hong Kong (-60.1%), Poland (-62.6%), China (-69.8%).

Markets down between 50% and 60%: South Korea (-54.5%), Italy (-55.2%), Egypt (-56.9%), Brazil (-57.2%), Japan (-58.1%), Singapore (-58.2%), Turkey (-58.5%), India (-58.3%).

Markets down between 40% and 50%: Great Britain (-42.3%), Australia (-43.3%), US S&P 500 (-44.0%), Spain (-46.4%), Germany (-47.0%), Mexico (-48.3%)

As one commenter noted:

The DJIA can now be added to the list of markets that have lost between 40% – 50%. The Dow reached an all-time high of 14,164.53 on 9 October 2007. It closed today, 24 October 2008, at 8,378.95. (A 40% loss from the the all-time high of 14,164.53 would be 8,498.72).

Thanks to CalculatedRisk for pointing me at this. Those are some numbers to think about.

All Together, Now

We are all in some serious trouble, economically. This weekend, all over the world, people are re-assessing their strategies. A peculiar kind of panic is setting in, one which disguises itself as rational, prudent thought but is indeed, pure emotional reaction.

Our planet, all of us, have become globally reliant on each other. There is a complex web of trade around the world, and our lives actually depend on it working. For instance, we NEED that Pakistani registered ship to bring our Chinese made computer parts so that your mom at Dell has a job and can buy the food, which is mostly shipped in from around the world.

So how do you measure how well shipping is doing around the world? Well, glad you asked.

There is a thing called the Baltic Dry Index, which measures to some degree international trade of ‘dry’ goods. The chart of it from October 24th tells a mean story. Since June of this year, the index has lost 90% of its value. Most of that was a continuous plummet nearly straight down.

A commenter on a post over at InfectiousGreed is able to explain what’s happened so suddenly with the index:

…the issue with dry shipping is that the commerce was all based on letters of credit and now most of the parties simply can’t get that credit even though the demand for the freight commerce is still there. He claimed that there are currently a long list of sovereign nations that can’t even get letters for international commerce, and that the tendency to gauge the problem by focusing only on LIBOR was missing the real story.

If the shipping stops, everything stops. We’ve never been this interconnected before, this interdependently connected. When any of us fall, the chances are great that we will all fall.

I am Jon. Watch your step.

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Wall Street Gets The Bailout

biatchImage by jeeked via Flickr

EDIT:
AFTER the bailout passed into law this afternoon,
stocks plunged more than 400 points
on the Dow Jones Industrial Average.
Even Wall Street knows this is a bad idea.

New World Order Strikes Again

The House has passed the legislation with a vote of 263-171. This is a sad day for us here in the United States, the day that our government finally told the masses who elected them, “So, what are you gonna do about it?”

Recap

Let’s recap the crisis, for anyone who still doesn’t get it.

Congress passed laws allowing investment firms to do shady deals and use more leverage to bring in more income.

The securities firms sold ‘new and improved’ assets which were really worth less than the paper they were printed on, all the while knowing there was no real value there.

After a few years of this the investors became hip to this ponzi scheme and decided not to trust any more of this crap. Suddenly there were hundreds of billions of ‘dollars’ worth of the things that were worthless.

About the same time, the SEC and the government made them actually value the things according to how much they could be sold for, which was zero because nobody was buying them. The trust eroded on Wall Street and without trust, that system falls apart regardless of its value.

Since nobody was buying them much of the cash flow had dried up, and these huge corporations were in danger of falling apart. Some of them did fail: you know their names. But it’s important to remember that they failed because of the LEVERAGE they had assumed, not because they had no cash at all. When you are leveraged 30:1, it only takes a drop of about 3% to bankrupt you.

Meanwhile, while all this was happening, we got a new Treasury Secretary from the investment firm of Goldman-Sachs, a man who had been intimately involved with and a major mover of these worthless instruments. In 2005, the year before coming to the US government and the peak of the economic boom, Paulson pocketed over 35 million for his efforts.

Now Mr. Paulson has successfully bullied a bill through Congress that will reward all the major players in the subprime fiasco. There’s practically nothing in that bill to help homeowners, but those CEO golden parachutes are alive and well and will soon be paying out millions of dollars to the same greedy people who caused all this to happen.

And once again, worthless paper can be valued at whatever price seems good to the guys selling it. And even though it’s well known that these papers are worthless, Paulson has promised to pay an inflated price for them. Buyers BEWARE!

Summary

Since they couldn’t win at their game, even when they cheated and lied, they got the rules changed during the endgame and now the rules say they win even when they lose.

You and me? We lose.

Thank you United States Senators and Representatives. We will remember you at the polls next month.

I am Jon, and I say Vote Them OUT!

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Arctic Methane

Arctic regionImage via WikipediaWake Up!

Russian scientists have released a report which, if proven true, is the absolute worst information about the climate yet. ALERT ALERT ALERT: THIS IS REALLY, AND I MEAN HORRIBLY BAD FOR ALL OF US.

Remember a few months ago Wordout reported that scientists had discovered evidence in ice cores which showed that in the past, drastic changes in climate have occurred in as little as one or two years? One of the tipping points appears to be the release of massive amounts of methane into the atmosphere.

This year is the 1st in the history of Man that the arctic sea ice has melted enough to open shipping routes through the Arctic ocean. Back in August, when the waterways first melted clear, that information worried me a bit. But when I found the information below, it almost floored me…

From The Independent(emphasis mine):

The first evidence that millions of tons of a greenhouse gas 20 times more potent than carbon dioxide is being released into the atmosphere from beneath the Arctic seabed has been discovered by scientists.

The Independent has been passed details of preliminary findings suggesting that massive deposits of sub-sea methane are bubbling to the surface as the Arctic region becomes warmer and its ice retreats.

Underground stores of methane are important because scientists believe their sudden release has in the past been responsible for rapid increases in global temperatures, dramatic changes to the climate, and even the mass extinction of species. Scientists aboard a research ship that has sailed the entire length of Russia’s northern coast have discovered intense concentrations of methane – sometimes at up to 100 times background levels – over several areas covering thousands of square miles of the Siberian continental shelf.

In the past few days, the researchers have seen areas of sea foaming with gas bubbling up through “methane chimneys” rising from the sea floor. They believe that the sub-sea layer of permafrost, which has acted like a “lid” to prevent the gas from escaping, has melted away to allow methane to rise from underground deposits formed before the last ice age.

The amount of methane stored beneath the Arctic is calculated to be greater than the total amount of carbon locked up in global coal reserves so there is intense interest in the stability of these deposits as the region warms at a faster rate than other places on earth.(ed: more than 7 degrees F in the past several decades.)

Orjan Gustafsson of Stockholm University in Sweden, one of the leaders of the expedition, described the scale of the methane emissions in an email exchange sent from the Russian research ship Jacob Smirnitskyi.

“We had a hectic finishing of the sampling programme yesterday and this past night,” said Dr Gustafsson. “An extensive area of intense methane release was found. At earlier sites we had found elevated levels of dissolved methane. Yesterday, for the first time, we documented a field where the release was so intense that the methane did not have time to dissolve into the seawater but was rising as methane bubbles to the sea surface. These ‘methane chimneys’ were documented on echo sounder and with seismic [instruments].”

At some locations, methane concentrations reached 100 times background levels. These anomalies have been seen in the East Siberian Sea and the Laptev Sea, covering several tens of thousands of square kilometres, amounting to millions of tons of methane, said Dr Gustafsson. “This may be of the same magnitude as presently estimated from the global ocean,” he said. “Nobody knows how many more such areas exist on the extensive East Siberian continental shelves.

“The conventional thought has been that the permafrost ‘lid’ on the sub-sea sediments on the Siberian shelf should cap and hold the massive reservoirs of shallow methane deposits in place. The growing evidence for release of methane in this inaccessible region may suggest that the permafrost lid is starting to get perforated and thus leak methane… The permafrost now has small holes. We have found elevated levels of methane above the water surface and even more in the water just below. It is obvious that the source is the seabed.”

From a related story at The Independent site(emphasis again all mine):

The rapid rise in greenhouse gases over the past century is unprecedented in at least 800,000 years, according to a study of the oldest Antarctic ice core which highlights the reality of climate change.

Air bubbles trapped in ice for hundreds of thousands of years have revealed that humans are changing the composition of the atmosphere in a manner that has no known natural parallel.

Scientists at the British Antarctic Survey (BAS) in Cambridge have found there have been eight cycles of atmospheric change in the past 800,000 years when carbon dioxide and methane have risen to peak levels.

Each time, the world also experienced the relatively high temperatures associated with warm, inter-glacial periods, which were almost certainly linked with levels of carbon dioxide and possibly methane in the atmosphere.

However, existing levels of carbon dioxide and methane are far higher than anything seen during these earlier warm periods, said Eric Wolff of the BAS.

“Ice cores reveal the Earth’s natural climate rhythm over the last 800,000 years. When carbon dioxide changed there was always an accompanying climate change,” Dr Wolff said. “Over the past 200 years, human activity has increased carbon dioxide to well outside the natural range and we have no analogue for what will happen next.

I am Jon. Like my friends at Climate Progress always say:
The time to act is yesterday.

Follow-up: Oh Crap – Arctic Methane Confirmed

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Pigs Attack in the 21st Century

Pig Mentality

All you young people: Have you ever wondered why my generation called most of the police ‘PIGS’? Watch the video of a bona fide New York City pig, doing what pigs do, and you will understand.

I am not saying that all police are this way. As I have said before, I count among my friends many who wear the blue and many who wear the brown.

None of them would do this.


Watch the pig go out of his way to slam the guy on the bike, who tries his best to avoid the pig

To the friends I have in uniform: I humbly thank you for the job you’re doing. I know you would never do something like this, so please, don’t.

To the cyclist who was arrested because the pig attacked: Sue the City of New York. Sue the NYPD. And sue that pig who attacked you.

To the asshats like the pig in this video: I dare you to come do that to me, pig. Please come try it.

To the NYPD: Who the hell do you guys think you are? Fire that son of a bitch and every pig on the force. You are there to protect, to serve the People! What part of that do you NOT UNDERSTAND?

Then again, what should we expect from PIGS….

I am Jon, and I eat pigs for breakfast.

(edit: I’ve been told that this one was a bit over the top in the anger category. Gee, I hate being angry. But I’d hate lying about it more…
You see, Wordout is a blog. I am allowed to display emotions here. I am allowed to state an opinion here. I am allowed to say anything here that I would say in public, as the blog itself is public, and open to commentary.
If you had seen the rampant brutality of the 60s and early 70s in America, the beatings of innocent and peaceful citizens simply exercising their patriotic rights of voicing dissenting opinions, if you had seen the pigs from that era, you would understand why I feel so vehemently about this story.
Just the fact that it happens at all is enough to make us fear a return to that way of government brutality. We cannot turn our eyes from it, and we cannot stifle our outrage. If we do that, we do not deserve the freedoms our Constitution guarantees.)

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