Sunday, November 30, 2008
Saturday, November 29, 2008
Open Letter to B. Hussein Obama
in the Chicago Tribune
The heat on BHO is about to be turned up on Monday December 1 and Wed December 3.
A full page citizenship challenge will be run twice in the Chicago Tribune that has a circulation of over 500,000 readers and is BHO’s
Followed by a DC Press Club Conference on Dec 8th.
Full-Page Citizenship Challenge To Run Twice,
December 1st and 3rd
D.C. National Press Club Event Dec 8th
Our full-page Open Letter to Mr. Obama will be published in the Chicago Tribune on both Monday, December 1, 2008 and Wednesday, December 3, 2008. It will appear in the main news section. Click here to view a copy of the final ad.
Chicago is Mr. Obama’s hometown. His transition team is operating out of the Kluczynski Federal Building in downtown Chicago . He is known to be a regular reader of the Tribune, Chicago ’s principal newspaper, with a daily circulation of over a half-million readers.
The Open Letter to Mr. Obama is a formal Petition for a Redress (Remedy) for the alleged violation of the “natural born citizen” clause of the Constitution of the United States of America .
Mr. Obama is respectfully requested to direct the Hawaiian officials to provide access to his original birth certificate on December 5-7 by our team of forensic scientists, and to provide additional documentary evidence establishing his citizenship status prior to our Washington , D.C. press conference on December 8.
A First Amendment Petition to any official of the Government for Redress of a violation of the Constitution is substantially different from the garden-variety political petitions frequently received by government officials. This Petition demands it be given the highest priority for an expedited review and official Response by Mr. Obama.
As a formal “Notice of a Constitutional Violation,” the Petition naturally includes the People’s inherent Right to an official Response. As a time-sensitive, election related Petition involving the Office of the President, failure to Respond as requested would constitute an egregious breach of the public trust and confirm the certainty of a Constitutional crisis.
For the D.C. press conference the WTP Foundation has reserved the Edward R. Murrow Room at the National Press Club from 1-4 pm on Monday, December 8, 2008. We are hopeful that C-SPAN may cover what could be a pivotal, historic event.
The Petition for Redress/Open Letter to Mr. Obama is also expected to have a significant impact on the deliberations of the Electoral College as it proceeds toward selection of the U.S. President as provided for by the Constitution.
Many, many thanks to the many individuals who donated the money needed to cover the costs of publishing the Open Letter and conducting the Washington press conference.
We are now in the process of selecting the forensic scientists who would travel to Hawaii to examine Mr. Obama’s original birth certificate (assuming he responds to the Petition for Redress by directing the Hawaiian officials to provide access to the birth certificate). The budget for this task is currently estimated at $20,000. We need to raise the money quickly. Unfortunately, we are starting from zero and we have but one week before the scientists would need to be in Hawaii .
Thursday, November 27, 2008
Hafoc Yates is learning to bake.
She managed to make it to age 49 without learning how. But after the Seattle freelance Web designer lost an account that helped pay for rent and health insurance, she needs an inexpensive way to bring joy to her home.
If she can take a computer apart and put it back together, she can mix sugar and cocoa. She hopes.
Yates has had to cut food expenses by $100 per month to keep her 14-year-old son in music lessons. "Facing the holidays with a child, even though money's tight, you have to have fun," she said. "You have to find a way to celebrate."
Baking, she noted, has two uses: "heats the apartment and comfort food!"
Countless retail surveys predict that consumers will cut back on holiday spending this year -- but what will they do instead?
In early November, the Seattle P-I asked readers to share their holiday shopping plans. Responses via e-mail and letter showed that people love to give gifts for which there is no price tag: time and energy and love.
"I have told my children and grandchildren not to expect any gifts from me this year, and requested them not to give me gifts since they too are being negatively affected by the current economic crisis," wrote Gini Paulsen of Seattle.
Her limited retirement has been reduced by the collapse of the stock market, and she expects her income to drop more in 2009.
She has been drying and canning foods, baking goods, knitting scarves and making lavender sachets.
Paulsen will indeed give gifts -- "Gifts from the heart and hands instead (of) from stores."
Another Seattle resident, Deborah Marlott, has been socking away small bits of money per week, all year. $10 here. $25 there. She looks for goods that are on sale.
"But the best thing I have done for years is to make up a gift certificate for family, or friends, to clean their home, pull their weeds or organize a closet for them," she said. "If that is all I can give, it's the best, and all love that gift."
Otti Niami of Redmond spends her days visiting her husband at his nursing home. She buys gifts all year long, wishing to honor loved ones and friends who help her with doctor appointments.
"I'm living on a tight budget, like many people all over the world and after paying my rent, energy, power, medication and groceries, there isn't much left (for) spending on gifts," she said in a hand-written letter. "I also buy wool at Value Village and crochet pot holders in various colors as gifts. ... Even with a small budget, thinking before you spend, you can beat the slow economy."
Among popular handmade gifts this year will be "no sew" blankets, homemade cards and baskets of treats, said Terri Daniels, spokeswoman for Zabitatz.com, a New Hampshire-based Web site for home projects.
The no-sew blanket is made by cutting many slits in the edges of two pieces of fleece and then tying the fringes in knots, binding the fleece pieces together.
"There's so many creative things you can do, you can buy different colors of fleece," Daniels said.
Not all Seattle residents are cutting back -- a region as affluent as this one will still see heavy shopping activity. But people are being more thoughtful.
Julie Gramm said that she won't spend less, but will spend more wisely. She likes the hustle and bustle of the stores before Christmas, she said, so she'll go to look for bargains and things to donate to charity.
"I plan to support local merchants and artists at the Pike Place Market and our West Seattle Junction," she said in an e-mail. "I'm looking for items that I believe will be really treasured by the recipients, or else food gifts that won't linger on as clutter."
Another respondent, Susan Carlson, said that her family and friends are in a position to buy what they want, but "accumulating 'stuff' is not our goal."
"I am at the stage of paring down, not getting more. So we have decided a nice card and a donation to a charity of one's choice is it for this season," Carlson wrote in an e-mail. "Spending time with friends and family is the most important thing."
Sequim resident Connie Kinyon said that she changed her shopping habits a few years ago. She gives experiences instead of gifts.
"The grandkids and kids have enough 'stuff' and barely remember what material things were given or even wanted," she said. "But they always remember the experiences we had."
She recalled a whale-watching trip where nearly everyone got seasick, a bowling party and a visit to Cirque du Soleil. For the whale trip, she gave everyone little whales that were hanging on her tree. For the bowling party, she found a bowling ball and pins ornament.
And there's always baking. Yates, the optimistic but economically challenged Web designer, says that losing money is a part of life, and she's looking forward to better days.
Until then, "We're hoping that the fudge turns out."
By ANNE D'INNOCENZIO
NEW YORK -The holiday shopping season begins Friday with a blitz of early morning specials. For some merchants, though, it's practically over already.
Piles of jewelry, clothing and electric drills are bypassing store shelves and heading straight to liquidators by the caseload as stores try to save as much cash as they can.
Major department stores and mall-based chains have cut prices up to 70 percent to move out mounds of excess inventory stuck in the pipeline since the financial crisis hit in September and people snapped their wallets shut.
Big moves of merchandise happen every year — but usually after Christmas. This year stores are desperate to shed inventory even before Thanksgiving.
"The holiday season is over. The reason? It just never got started," said Marshal Cohen, chief industry analyst at NPD Group, a market research firm. "How cheap things are doesn't bode well for holiday success."
The deep price cuts even on luxury brands — think 40 percent off on $5,000 Chanel suits and 70 percent off on designer shoes at Saks Fifth Avenue and 40 percent off $695 Ralph Lauren leopard-printed pumps at Bloomingdale's — are only good news for the dwindling pool of consumers who are comfortable enough financially to take advantage of the deals.
Experts say discounts are only going to get even better as stores resort to more extreme measures to clear out unsold items. The value of coats and sweaters drops dramatically as the winter months wear on.
Still, there is some incentive for choosy consumers to buy early: increasingly lean inventories mean that certain colors, sizes and styles may sell out early. For those who are open minded, it's a bargain hunter's dream.
It wasn't supposed to be this bad. Stores, which typically place orders about four to seven months in advance, had cautiously planned their holiday inventories about 15 percent below last year's levels.
But because of the free fall in consumer spending, stores are now stuck with about 15 percent to 20 percent excess holiday inventory, estimated Burt P. Flickinger, managing director of Strategic Resource Group.
Richard D. Hastings, a consumer strategist with Global Hunter Securities, says the latest culprit — fear of deflation — is also causing stores to dump inventory. Clothing and other merchandise is worth less now than it was even three months ago.
"Prices are slipping too fast, and so by the time you sell the product, stores are not covering their operating expenses," he said.
But stores are only making matters worse. The more they discount and send to liquidators, the lower the prices become. Consequently, stores generate less in sales.
Still, in the current economy, they have no choice. Carrying inventory is a big expense, and stores need to preserve cash at a time of tightening credit.
At warehouses operated by Liquidity Services Inc., a leading online auction company for surplus goods, there are rows and rows of pallets of offloaded merchandise ranging from jewelry to consumer electronics.
At the company's Liquidation.com, which auctions surplus goods offered by stores and manufacturers to dollar stores and small businesses that sell on eBay , the number of auctions scheduled for the Thanksgiving weekend has soared to 2,100 — eight times more than last Thanksgiving, said chief executive Bill Angrick.
In other words, what normally happens after Christmas is taking place this weekend, he said.
"This is about survival. This is not about muddling through the holiday season," Angrick said.
Inventory has doubled from a year ago at Overstock.com, which offers brand-name merchandise at discount prices, said CEO Patrick Byrne. Stores are unloading top-notch brands such as Gucci and Prada in recent weeks at a rate he's never seen in the company's nine-year history. And more is arriving by the truckload.
"It's like an avalanche," Byrne said.
The financial crisis, the meltdown in the stock market and cascading job losses have sent shoppers into full retreat. Even before the holiday season, stores were reporting the biggest drops in sales in decades.
Eileen Klockow, 41, doesn't expect to start her holiday shopping until mid-December, when the post-Thanksgiving rush ends and she can shop in leisure. An accountant from the Milwaukee suburb of Wauwatosa, Klockow said she's not procrastinating, just biding her time for sweeter deals.
"I'm waiting because I think sales will be better later in the month," she said.
How bad will the season ultimately be for stores? Mark Vitner, senior economist at Wachovia Corp., expects total retail sales to fall 0.5 percent for November and December. That would be the first decline in holiday sales since 1982.
In the last few Christmas seasons, analysts have worried about holiday sales making only weak gains. This year sales are expected to contract from a year ago, making this a do or die season for the weakest stores.
Profits are eroding quickly, and there have already been a string of bankruptcy liquidations from Mervyns LLC to Linens 'N Things. Circuit City Stores Inc. filed for bankruptcy protection this month, and analysts expect more to come.
Even for Overstock.com, there's a limit to all those Pradas it can buy.
Byrne noted that his buyers are becoming "gun-shy" as they calculate how much a pair of Prada shoes, for example, will be worth after Christmas if the discounts at stores get even deeper.
"If goods are not sold by Christmas, the value keeps going down," he said.
Wednesday, November 26, 2008
Gunmen kill at least 78 in rampage across Mumbai By RAMOLA TALWAR BADAM, Associated Press Writer Ramola Talwar Badam, Associated Press Writer 27 mins ago MUMBAI, India – Teams of gunmen stormed luxury hotels, a popular restaurant, hospitals and a crowded train station in coordinated attacks across India's financial capital Wednesday night, killing at least 78 people and taking Westerners hostage, police said. A group of suspected Muslim militants claimed responsibility. Parts of the city remained under siege as dawn approached Thursday, with police and gunmen exchanging occasional gunfire at two hotels and an unknown number of people still held hostage, said A.N. Roy, a top police official. A raging fire and explosions struck one of the hotels, the landmark Taj Mahal, shortly after midnight. Screams could be heard and enormous clouds of black smoke rose from the at the century-old edifice on Mumbai's waterfront. Firefighters were spraying water at the blaze, and plucking people from windows and balconies with extension ladders. The attackers specifically targeted Britons and Americans, witnesses said. Officials said at least 200 people were wounded. The motive for the onslaught was not immediately clear, but Mumbai has frequently been targeted in terrorist attacks blamed on Islamic extremists, including a series of bombings in July 2007 that killed 187 people. State home secretary Bipin Shrimali said four suspects had been killed in two incidents when they tried to flee in cars, and Roy said two more gunmen were killed at the Taj Mahal. State Home Minister R.R. Patil said nine more were captured. They declined to provide any further details. An Indian media report said a previously unknown group calling itself the Deccan Mujahideen had claimed responsibility for the attacks in e-mails to several media outlets. There was no way to verify the claim. Police reported hostages being held at the Taj Mahal and Oberoi hotels, two of the best-known upscale destinations in this crowded but wealthy city. Gunmen who burst into the Taj "were targeting foreigners. They kept shouting: `Who has U.S. or U.K. passports?'" said Ashok Patel, a British citizen who fled from the hotel. Authorities believed seven to 15 foreigners were prisoners at the Taj Mahal, but it was not immediately clear if hostages at the Oberoi were Indians or foreigners, said Anees Ahmed, a top state official. It was also unclear where the hostages were in the Taj Mahal, which is divided into an older wing, which was in flames, and a modern tower that was not on fire. State Department spokesman Robert Wood said U.S. officials were not aware of any American casualties, but were still checking. He said he could not address reports that Westerners might be among the hostages. "We condemn these attacks and the loss of innocent life," White House spokesman Tony Fratto said. Johnny Joseph, chief secretary for Maharashtra state, of which Mumbai is the capital, said 78 people had been killed and 200 had been wounded. Officials at Bombay Hospital, speaking on condition of anonymity, said a Japanese man had died there and nine Europeans were admitted, three of them in critical condition with gunshot wounds. All were brought in from the Taj Mahal, the officials said. At least three top Indian police officers — including the chief of the anti-terror squad — were among those killed, a senior police official, A.N. Roy, said. Blood smeared the floor of the Chhatrapati Shivaji rail station, where attackers sprayed bullets into the crowded terminal. Press Trust of India quoted the chief of the Mumbai railway police, A.K. Sharma, as saying several men armed with rifles and grenades were holed up at the station. Other gunmen attacked Leopold's restaurant, a landmark popular with foreigners, and the police headquarters in southern Mumbai, the area where most of the attacks took place. The restaurant was riddled with bullet holes and there were blood on the floor and shoes left by fleeing customers. Officials also reported that terrorists attacked the city's Cama and Albless Hospital and G.T. Hospital, but it was not immediately clear if anyone was killed in those places. A British citizen who was dining at the Oberoi hotel told Sky News television that the gunmen who struck there singled out Britons and Americans. Alex Chamberlain said a gunman, a young man of 22 or 23, ushered 30 or 40 people from the restaurant into a stairway and ordered everyone to put up their hands. He said the gunman spoke in Hindi or Urdu. "They were talking about British and Americans specifically. There was an Italian guy, who, you know, they said: 'Where are you from?" and he said he's from Italy and they said 'fine' and they left him alone. And I thought: 'Fine, they're going to shoot me if they ask me anything — and thank God they didn't," he said. Chamberlain said he managed to slip away as the patrons were forced to walk up stairs, but he thought much of the group was being held hostage. Early Thursday, several European lawmakers were among people who barricaded themselves inside the Taj, a century-old seaside hotel complex and one of the city's best-known destinations. "I was in the main lobby and there was all of a sudden a lot of firing outside," said Sajjad Karim, part of a delegation of European lawmakers visiting Mumbai ahead of a European Union-India summit. As he turned to get away, "all of a sudden another gunmen appeared in front of us, carrying machine gun-type weapons. And he just started firing at us ... I just turned and ran in the opposite direction," he told The Associated Press over his mobile phone. Hours later, Karim remained holed up in a hotel restaurant, unsure if it was safe to come out. The British Foreign Office said it was advising all British citizens in Mumbai to stay indoors. Britain's foreign secretary, David Miliband, strongly condemned the attacks. "Today's attacks in Mumbai which have claimed many innocent victims remind us, yet again, of the threat we face from violent extremists," Miliband said in a statement. India has been wracked by bomb attacks the past three years, which police blame on Muslim militants intent on destabilizing this largely Hindu country. Nearly 700 people have died. Since May a militant group calling itself the Indian Mujahideen has taken credit for a string of blasts that killed more than 130 people. The most recent was in September, when a series of explosions struck a park and crowded shopping areas in the capital, New Delhi, killing 21 people and wounding about 100. Mumbai has been hit repeatedly by terror attacks since March 1993, when Muslim underworld figures tied to Pakistani militants allegedly carried out a series of bombings on Mumbai's stock exchange, trains, hotels and gas stations. Authorities say those attacks, which killed 257 people and wounded more than 1,100, were carried out to avenge the deaths of hundreds of Muslims in religious riots that had swept India. Ten years later, in 2003, 52 people were killed in Mumbai bombings blamed on Muslim militants and in July 2007 a series of seven blasts on railway trains and at commuter rail stations killed at least 187. Relations between Hindus, who make up more than 80 percent of India's 1 billion population, and Muslims, who make up about 14 percent, have sporadically erupted into bouts of sectarian violence since British-ruled India was split into independent India and Pakistan in 1947.
Tuesday, November 25, 2008
Wednesday, November 19, 2008
Nov. 17 (Bloomberg) -- The Bush administration will not seek the $350 billion remaining as part of the $700 billion financial-rescue package, leaving it to the next administration to request the funds, a person familiar with the matter said.
With weeks remaining in the Bush term, the Treasury Department will defer to President-elect Barack Obama to request the funds after he takes office on Jan. 20, the person said.
I guess getting caught lying (twice - see the previous Ticker) would raise the risk (quite a bit!) that Congress would say "stuff it!" to any "request" for the rest of that money, eh?
Or was it the G20? Maybe someone stuck a birdie in Bush's ear and told him that the rest of the world wasn't going to keep buying our Treasuries if they didn't cut that crap out? Inquiring minds want to know what was said behind those closed doors!
Further, there's no reason to use the rest of the money anyway. The first part was a giveaway that should lead to (but probably won't) indictments, and there is simply no argument for spending the rest on this abortion of a bill at all.
I can think of a number of good places to spend that $350 billion, including holding it in reserve for the inevitable need to feed, shelter and clothe millions of Americans who are going to be homeless and hungry during The Depression that Paulson, Bush and Bernanke's actions over the last 18 months have essentially guaranteed!
I go back to what Obama should make the centerpieces of his policy on the economy:
1. No more lying. No more off-balance-sheet anything. No more Level 3. No more shifting your losses onto the back of working Americans. You screwed up, you eat it. You try to do otherwise, you go to jail.
2. America needs to adjust down its economic expectations to what we can afford to actually pay for from present earnings, both at a personal and government level. "If you don't have the money, you can't afford it." Period.
3. Those who committed fraud need to go to jail. No matter who they are. End of discussion.
4. No bailouts. Period. Unsupportable debt must be defaulted. Do it, get it out in the open, and get it over with. Yes, its going to suck, but its going to suck no matter what we do. We can either have it suck hard and short, or far worse and far longer. The more we screw around with this the worse it is going to be.
5. We need to have a very serious discussion about health care and how we're going to ration (yes, we must) it when the bill is paid by society. Nobody wants to talk about this but we have to. It is unavoidable. There is not an unlimited amount of money available. Yes, this means that at some point society has to cut off the money, and no, your Medicare tax is not a license to spend unlimited amounts of someone else's money as you age - whether you'd like it to be that way or not.
We cannot afford to have a Treasury Market dislocation, and to avoid it we are going to have to demonstrate by clear example and policy that we will not try to issue trillions of debt in order to try to bail out speculators who made bad bets - both domestic and foreign, nor are we going to promise that which cannot be delivered. We also cannot bail out other nations who made bad bets (and investors in them) and we must make clear that this is not on our agenda now - and won't be in the future.
Oh, and by the way, let's add something else for Mr. Obama:
Do not even consider what is being floated in this article:
"TOKYO - Japanese economists, increasingly concerned that the United States might seek to pay its enormous and growing debt obligations in a weakened US dollar, are looking to the possibility of US Treasuries being issued in yen."
No no no NO NO NO NO NO!
This - sovereign debt denominated in other than your native currency - is how a nation winds up like Weimar Germany - or Argentina! We must not issue bonds denominated in foreign currency - period.
If foreigners do not want to buy our debt then we must cut back our government spending until they are willing to do so. But we must not, under any circumstances, issue Treasuries denominated in the currency of another nation. Down that road lies the ruin of our nation and monetary system - with certainty.
Now let's talk about the auto industry.
There is no fix for these firms in their present form.
We have been operating at a "run rate" for automobile sales of about 17 million units a year. The "no silly credit" number is closer to 11 million units.
Notice how you don't see the number of "older, junky" cars on the road you used to? That's the "chicken in every pot" that was silly-credit created.
The UAW has said they will not make any (more) concessions. Yet they have to make concessions, simply put, because the industry needs to shrink by 40% to be viable.
There is only one way out of this - Chapter 11. We must force these firms to downsize to that which can be sustained.
Yes, this will cost jobs.
It is going to cost jobs no matter what we do, because we have built an entire industry up around a totally unsustainable demand curve and that which cannot be sustained will not be sustained.
If we try to "bail them out" we are simply throwing money down a rathole. GM has a negative $60 billion net value right now. Toss 25 billion in, they still have a negative net value.
GM has been functionally bankrupt for more than a decade; this is not a new problem and both management and labor have refused to solve it for more than 10 years. There is absolutely no reason to believe they will solve it absent force, and the best "force" out there is the transparency that is forced upon a firm via the bankruptcy process.
Chapter 11 allows these firms to submit their labor agreements to the court to have them forcibly renegotiated (without favor to either side) and in addition it forces the pension problem into the PBGC where that is reduced as well.
I know the UAW doesn't like this but that's just too bad. There are only five gallons of water in a five gallon jug, no matter how much you'd like there to be eight. The demand at former levels will not return because it is dependent on a Ponzi Finance scheme where consumers roll over old balances into new loans, putting themselves instantly underwater by $5,000 or more before they even get in the driver's seat, and then they take a second $5,000 hit when they drive off the lot. That scheme has run to conclusion and cannot be pushed any further.
Second, we need to allow the diesels sold in Europe into the US. They can't be sold here due to the Greenie BS. That's stupid; hang the greenies up by their toenails. While we're at it, if the crash standards are good enough for Europe, they're good enough for the US. Now we can have small cars that get 60mpg with those diesel engines; a huge part of why we can't get there from here now is the crash standards in the US that prohibit the sale of vehicles available across the Atlantic. Why can't we build those here? Emissions and crash standards - period. We detune engines and then on top of it mandate hundreds of pounds of extra weight that make impossible the sort of fuel economy that is routinely achieved on European roads.
Its time to cut the crap and throw the Greenies and Weenies in the Love Canal.
Third, there are other automakers in the United States that do not need bailouts - several of them. Toyota, BMW and others have plants in this country that are building cars, and they'd doing ok. Yeah, their profits are down, but they're making money - and cars - with American workers.
If the UAW, GM, Ford and Chrysler can't compete with these other firms on our own soil in a down economy that's just too damn bad - its time for us to drive American-built Toyotas and tell GM management and the UAW to stick it in their ear!
Monday, November 17, 2008
Report: Big investment bank set to shrink its workforce to 300,000
updated 7:52 a.m. CT, Mon., Nov. 17, 2008
Citigroup will cut another 53,000 jobs in coming quarters, according to news reports Monday.
Citigroup’s Chief Executive Vikram Pandit is expected to announce the cuts at a company meeting Monday morning, CNBC reported. Souring economies and global credit conditions are leading the U.S. bank with the farthest reach worldwide to retrench.
The 53,000 job cuts are in addition to the 22,000 already being eliminated from Citigroup’s 375,000-member work force as of the end of 2007. The latest cuts bring the total job reductions to 20 percent. The job cuts are expected to be wrapped up in the first two months of 2009.
Cuts are expected to come from layoffs, the sale of units and attrition, CNBC said. Overall capital expenses may decline as much as 20 percent, and cuts are expected to be deep in investment banking, it said.
According to the Associated Press, Chairman Sir Win Bischoff said Monday at a Dubai conference, “What all of us have done, and perhaps injudiciously, we’ve added a lot of people over ... this very benign period.”
The cuts are Chief Executive Vikram Pandit’s most dramatic move yet to restore profitability and bolster a sagging share price. Last week, Citigroup’s stock fell into the single digits for the first time since Sanford “Sandy” Weill created the company in 1998 from the merger of Travelers Group Inc and Citicorp.
Pandit became chief executive last December and has faced much criticism from investors and others for failing to implement a workable turnaround plan for Citigroup.
The New York-based bank has lost more than $20 billion in the last year, hurt by bad bets on complex and risky debt, often tied to mortgages. Some analysts say the bank might not be profitable before 2010.
Pandit was holding a “town hall” meeting for employees Monday morning to discuss the bank’s plans.
Shares of Citigroup have fallen 68 percent this year, leaving the bank with a market value of only $51.9 billion, barely twice the $25 billion of capital it received from the U.S. Treasury Department’s bank bailout plan.
Citigroup was built principally by Weill, who ceded control to Pandit’s predecessor, Charles Prince, in 2003.
Analysts believe Citigroup never invested enough in technology or to make the bank’s parts work well together.
Its geographic diversity, including operations in more than 100 countries, is now also working against it as customers in such countries as Brazil, India and Mexico find it harder to keep up with their bills.
At the same time, Citigroup’s ability to grow at home is relatively limited. Last month, Wells Fargo & Co derailed Citigroup’s attempt to buy Wachovia Corp and its $418.8 billion of deposits.
Reuters and Associated Press contributed to this report.
Shipping at a standstill
The Associated Press
Article Created: 11/10/2008 02:03:18 AM PST
The growing financial crisis is constraining world trade with a jumbled mess of frozen credit that could mean shortages of food and energy supplies for some countries.
Shippers of drybulk goods such as grain and coal worry that importers won't be able to pay for the goods they receive. And while some anxious exporters hold on to their goods, rates to ship those goods have plummeted to 10-year lows. Some ship owners are even laying up their ships rather than operate at such low rates.
Jefferies & Co. analyst Douglas Mavrinac said while credit markets in general have stabilized somewhat in recent weeks, credit across the shipping industry still remains extremely tight. Some companies that buy goods transported by drybulk ships - including power plants, steel producers and food makers - are not able to secure letters of credit to facilitate shipments of coal, iron ore and grain they need.
Mavrinac said most markets around the world will work through stockpiles of commodities on hand, including coal and grain. But he said food and energy shortages could be a problem in 2009, especially in developing countries, if lending does not ramp up and shipping activity continues to stagnate.
"It will take a few months. It's definitely the worst-case scenario." Mavrinac said. "Right now there are plenty of ships, but no cargoes."
Rates for the biggest drybulk ships on the seas have plunged to an average of just $5,611 per day, compared with $166,377 a year
Sunday, November 16, 2008
WASHINGTON - Retail sales plunged by a record amount in October as shoppers reined in spending with home prices falling, although plunging gasoline prices also reduced outlays by consumers.
Sales slumped 2.8 percent last month to a seasonally adjusted $363.7 billion, the largest decline since the series began in 1992, the Commerce Department said. The previous record was a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year.
Retail sales fell 1.3 percent in September.
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Meanwhile, consumer confidence rose unexpectedly, according to a survey released Friday, as tumbling gasoline prices offset worries about unemployment and recession.
Retailers J.C. Penney and Abercrombie & Fitch added to the gloom. Both reported lower quarterly earnings and said soft conditions would extend into next year.
Stock prices were down sharply in midday trading as investors cashed in gains after a sharp rally Thursday.
The decline in retail sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched.
The 2.8 percent drop marked the fourth consecutive monthly decline in retail sales and was much bigger than the 2 percent fall economists expected.
“What you are seeing now is the turmoil in the credit and funding markets playing out into the consumer sector,” said Kevin Flanagan, fixed income strategist, global wealth management at Morgan Stanley in Purchase, New York.
The weakness was led by a 5.5 percent plunge in auto sales, the biggest drop since August 2005. Auto companies reported unit sales fell to the lowest level in 17 years as potential buyers, frightened by all the turmoil on Wall Street, stayed away from auto showrooms.
Excluding autos, retail sales fell by 2.2 percent, also a record decline, underscoring the widespread weakness last month.
“Consumers went into hibernation in October while concerns about the economy were at a peak,” said Rosalind Wells, chief economist for the National Retail Federation. “As economic uncertainty went from bad to worse, shoppers pulled back on everything but the basics to weather the storm.”
Consumer spending accounts for two-thirds of total economic activity, and weakness in this area was the major factor dragging down overall economic growth in the July-September quarter. The gross domestic product fell 0.3 percent at an annual rate during the third quarter, the strongest signal yet that the country has fallen into a recession.
In a bit of bright news, consumer sentiment edged up in early November. The Reuters/University of Michigan Surveys of Consumers said its index of confidence rose to 57.9 from 57.6 in October. Despite the rise, sentiment remains at depressed levels, with the index below the lowest levels hit during the depths plumbed during the last two recessions.
"Lower gas prices and sizable discounts at retailers helped to slightly improve consumers' assessments of current economic conditions, while higher unemployment and a deepening recession dimmed their expectations for future gains," the report said.
The index came in above economists' expectations of 56.0, according to the median of forecasts in a Reuters poll.
However, business inventories dropped in September by the greatest amount in more than three years, a possible sign of falling confidence in the face of a worsening economic slump.
Many economists believe the nation's GDP will drop sharply in the current October-December period and will continue falling through the first two quarters of next year. They are expecting that the financial crisis, the worst in seven decades, will produce the country’s worst recession since the 1981-1982 downturn.
The government reported last week that the unemployment rate shot up to 6.5 percent in October, and many economists believe it will top 8 percent before the economy starts to mount a sustained rebound.
The retail sales report showed that sales at general merchandise stores, the category that includes big chains such as Wal-Mart and department stores, fell by 0.4 percent, while sales at specialty clothing stores were down a bigger 1.4 percent.
Circuit City, the No. 2 U.S. consumer electronics retailer, filed for bankruptcy on Monday just weeks before the start of the crucial holiday shopping season, as its vendors tightened credit and shoppers closed their wallets.
Sales at furniture stores dropped by 2.5 percent, with sales at appliance stores and sport goods stores also showing declines.
One of the few areas to show an increase was the category that includes restaurants and bars which posted a small 0.3 percent gain, perhaps reflecting the desire of some to seek solace during turbulent economic times.
Saturday, November 15, 2008
From The Times
November 15, 2008
Freddie Mac says it is worth less than zero
Suzy Jagger in New York
Freddie Mac, the US mortgage giant, yesterday admitted that it is so overwhelmed by its liabilities that without government backing, it would no longer be a viable business. The company said that it had lost $13.7 billion (£9.2 billion) in the third quarter of the year and begged for $13.8 billion from the US Treasury in rescue funds.
The plea for the multibillion-dollar cash injection came just days after Fannie Mae reported a record $29 billion loss for the period and gave warning that it was haemorrhaging cash so rapidly, it might need federal funds by the end of the year to survive.
The US Treasury has been overwhelmed by requests for federal aid in the past few weeks. In addition to setting up a $700 billion bailout fund to take equity stakes in troubled banks, the Treasury is being pressed by the car industry for a cash bailout. Yesterday, Neel Kashkari, the Assistant Treasury Secretary, said that he was under pressure to consider ways of using the $700 billion bailout to stem a surge in foreclosures across the US.
The Freddie Mac request for funds would see the drawing down of part of the $100 billion in emergency reserves that were committed by the Treasury in September.
Freddie Mac’s problems during the third quarter fell into two categories – the continuing real-estate slump, which has been accompanied by a sharp increase in mortgage borrowers defaulting on repayments, and a tax-related charge. The company had to admit that it cannot use tax credits listed on its balance sheet as assets, because it has not generated enough taxable income.
Freddie Mac and Fannie Mae were taken under federal control in September. Between them, the two mortgage companies guarantee about half of all home loans in America. Washington took the two groups under state control after they gave warning that the rise in the number of mortgage defaults could wipe out their capital. Under the bailout’s terms, the Treasury has a right to seize 79.9 per cent stakes in both for a nominal sum. Yesterday, Freddie’s shares fell 6 cents to 67c and Fannie’s shares fell 8c to 54c. Since the US Government took control, the two groups’ shares have fallen more than 90 per cent.
In a fresh sign that the Bush Administration’s final weeks are being dictated by the incoming Obama team, the Federal Deposit Insurance Corporation (FDIC) proposed yesterday to use $24 billion in government funding to help 1.5 million American households to avoid foreclosure. The source of the money, however, is in dispute. FDIC officials want to use part of the $700 billion banking bailout, but the Treasury is opposed to the idea.
Copyright 2008 Times Newspapers Ltd.
Monday, November 10, 2008
Saturday, November 08, 2008
Friday, November 07, 2008
Unemployment rate claimed at 6.5%, with 240,000 jobs lost in October.
The ugly however, is that revisions were even more horrible, with 284,000 now lost in September and 127,000 in August.
Bet on that 240,000 being revised upward. It will be.
U6, which is my favored count of unemployed (this includes "marginally attached" workers and those who are employed part time for economic reasons (that is, not by choice)) is now at 11.1%, up from 7.9% last year at this time. While this is not in "Depression" territory the trend is especially bad, the revisions are stunning, and we haven't even had an official recession declared yet. With more than one in ten people who want a full-time job unable to get and hold one along with the rest of the economic outlook things are definitely getting worse and the only light I see in the tunnel is an oncoming bullet train.
On a technical basis the market is in extremely fragile territory. 897 is a key Fibonacci level on the SPX - we bounced off it yesterday afternoon - literally to the point. If this level fails today then the local bottom in the 825 level is almost certain to be retested, and given that from an Elliott Wave perspective this looks awfully "Wave 5"ish once that break occurs confidence is going to rise substantially that we'll go there - producing a likely cascade of selling.
The key is whether 825 holds. Below there is 768, which is the 2002/03 lows, and that is a truly critical level for the market.
Ultimately, given the underlying economics, I believe that level will fail, but the odds are that it does not fail this time. That is, my highest-probability scenario is that we either bounce here (off 897) or we head down and bounce somewhere between 825 and 768ish. That likely gives us a monster relief rally (see the "rip your face off" move after Bear Stearns), and then we head south again - this time with little chance that 768 on the SPX holds - as the reality of the recession and unemployment takes corporate earnings into the trashcan.
Without earnings prices will collapse, and the ugly is that we have tremendous overcapacity in our economy - still - as a consequence of the credit bubble.
We cannot get out of this until the bad debt is forced from the system via defaults. Changing who holds the bad debt does not restore productive capacity, it instead papers over losses and does exactly nothing to restore employment and productive capacity.
Those are the keys folks - and until and unless our President-Elect, along with Congress, stops trying to cover business failures with "TARP"s, withdrawing the fraudulent cover that excess leverage and bogus balance sheets have wrought on our economy and markets, we have no chance of the market - or economy - staging a meaningful recovery.http://market-ticker.denninger.net/
Wednesday, November 05, 2008
The ascent of an African-American to the presidency is a moment so powerful and so obvious that its symbolism needs no commentary.
November 5, 2008 03:06 AM EST
Nov. 4, 2008, was the day when American politics shifted on its axis.
The ascent of an African-American to the presidency — a victory by a 47-year-old man who was born when segregation was still the law of the land across much of this nation — is a moment so powerful and so obvious that its symbolism needs no commentary.
But it was the reality of power, not the symbolism, that changed Tuesday night in ways more profound than meet the eye.
The rout of the Republican Party, and the accompanying gains by Democrats in Congress, mean that Barack Obama will assume office with vastly more influence in the nation’s capital than most of his recent predecessors have wielded.
The only exceptions suggest the magnitude of the moment. Power flowed in unprecedented ways to George W. Bush in the year after the Sept. 11, 2001, attacks. It flowed likewise to Lyndon B. Johnson after his landslide in 1964.
Beyond those fleeting moments, every president for more than two generations has confronted divided government or hobbling internal divisions within his own party.
The Democrats’ moment with Obama, as a brilliant campaigner confronts the challenges of governance, could also prove fleeting. For now, the results — in their breadth across a continent — suggest seismic change that goes far beyond Obama's four-percent margin in the popular vote.
The evening recalled what activist Eldridge Cleaver observed of the instant when Rosa Parks refused to move to the back of the bus and a movement followed: “Somewhere in the universe a gear in the machinery shifted.”
Here are five big things about the machinery of national politics and Washington that will be different once Obama takes office on Jan. 20, 2009:
The crash of the conservative wave
For most of the past 30 years, since the dawn of the Reagan Era, conservatives have held the momentum in American politics. Even the Clinton years were shaped — and constrained — by conservative ideas (work requirements for welfare, the Defense of Marriage Act) and conservative rhetoric (“the era of Big Government is over”). Republicans rode this wave to win the presidency five of seven times since 1980, and to dominate Congress for a dozen years after 1994.
Now the wave has crashed, breaking the back of the modern Republican Party in the process.
Obama’s victory and the second straight election to award big gains to congressional Democrats showed that the 2006 election was not, as Karl Rove and others argued at the time, a flukish result that reflected isolated scandals in the headlines at the time.
Republicans lost their reform mantle. Voters who wanted change voted for Obama by an 89 percent to 9 percent margin. They lost their decisive edge on national security. They even lost the battle over taxes.
Republicans lost support in every area of the country. Virginia went Democratic, and North Carolina at midnight hung in the balance. Republicans still hold a significant, if smaller, chunk of the South and a smattering of western states. The cities were lost long ago. The suburbs fell last night — and even the exurbs are shaky.
Republicans lost one of their most effective political tactics. Portraying Al Gore or John F. Kerry as exotic and untrustworthy characters with culturally elitist values proved brutally effective for the GOP in 2000 and 2004, as it had in numerous other races for years. In 2008, such tactics barely dented Obama — who because of his race and background looked at first like a more vulnerable target — and they backfired against such candidates as Sen. Elizabeth Dole in North Carolina, who was routed badly after trying to paint Democrat Kay Hagan as an atheist.
The movement that brought so many conservatives to great power over the past 20 years — Gingrich, DeLay, Bush, Cheney and Rove — is left with without a clear leader, without a clear agenda and without clear route back.
The crash of the conservative wave does not necessarily mean the rise of a liberal one. By stressing middle-class tax cuts and the rights of gun owners Obama showed he is sensitive to hot buttons. But he will take power with the opposition party diminished, demoralized and divided by a draining internal argument about the future.
A Democratic headlock
Many people find Obama’s post-partisan rhetoric soothing. But it’s doubtful these sentiments, even if sincere, reflect the reality of the new Washington.
This is a city that defines itself by partisanship. Politicians and the operatives they support play for the shirts or the skins and believe that one side’s gain is the other’s loss.
In this environment, Democrats have the capital in a headlock, holding more power at both ends of Pennsylvania Avenue than they have had for at least 32 years (Carter) and, more realistically, 44 years (Johnson). Obama seems ready to press this advantage. The best early clue of his ambitions: he wants sharp-elbowed Democratic Rep. Rahm Emanuel to run his White House.
Democrats are positioned to do more than move legislation. They will flush Republicans out of key positions in the federal government and lobbying firms. They will install their people in the federal courts. They will be positioned to raise money for those who usually give to Republicans and easily recruit the most desirable candidates in 2010, as other Democrats look to join what looks like a winning team.
While Obama’s race hovered over this campaign, what was most striking was that it was not the all-consuming subject that it would have been in the past. Exit polls showed Obama pulling support from 43 percent of white voters, one percentage point higher than Sen. John F. Kerry.
And look around elsewhere in American politics. House Speaker Nancy Pelosi’s gender was a novelty when she first took the gavel, but now draws little notice. Rep. Jim Clyburn (D-S.C.) is a top member of the House Democratic leadership.
Meanwhile, the Republican Party’s inability to offer more diversity in its top ranks — Sarah Palin notwithstanding — threatens to become a crippling liability. Hispanics broke for Obama by a margin of 67 percent to 31 percent.
The party inexplicably failed to field a single minority candidate with a plausible chance to win a House, Senate and governorship. It will enter the next Congress just like it did the past two: without a single black member.
A party dominated by white males is poorly positioned to prosper among an increasingly diverse electorate. Somehow, the GOP needs to find new ways to appeal to minorities — or risk a long life in the wilderness as a percentage of the overall population continues to shrink.
For a couple of generations, it was conservatives who had the more effective political infrastructure. They used direct mail and talk radio to run circles around liberals in raising money and communicating their message around the filter of the establishment media. Some of that money flowed into think tanks that helped nurture ideas and operatives.
2008 was striking because the technology/communications advantage was decisively with the Democrats. Obama and other Democrats used this to raise vastly more money than McCain and to mobilize legions of people who had not previously been engaged with politics. Liberal think tanks like the Center for American Progress have served as a Democratic government in waiting.
Important to remember: This Democratic infrastructure advantage is not disappearing. Obama, regarded as a heroic figure among party activists, can use it to help raise even more money, and to mobilize support for his agenda. This is a potent force that will inspire fear, and give him clout, over legislators of both parties.
Obama is the Google of politics: He has technological expertise and an audience his political competitors simply cannot match. Looking ahead to 2010, House and Senate Democrats will be jealously eyeing Obama’s e-mail lists and technology secrets — giving him even greater leverage over them. Republicans will be forced to invest serious money and time to narrow the technology gap.
The 1960s are over — finally
For two generations, American politics has been dominated by issues and personalities that were shaped by the ideological and cultural conflicts of the Vietnam era.
The rest of the population may have been bored stiff, but the Baby Boomers continued their remorseless argument, as evidenced by Bush and Kerry partisans quarreling over Swift Boats and National Guard service in 2004.
Obama had not yet reached adolescence in the 1960s. He seems little interested in the cultural conflicts that preoccupy Baby Boomers. The fact that he admitted to using cocaine was hardly a factor in this election.
And this young president-elect exerted powerful appeal over even younger voters. They favored Obama by 34 points, 66 percent to 32 percent — a trend with huge potential to echo for years to come.
Guns, God and gays will not disappear from our politics. But they are diminished as electoral weapons as the country confronts a new generation of disputes: global warming, mortgage meltdowns and the detention of terrorism suspects, to name a few.
© 2008 Capitol News Company, LLC
Saturday, November 01, 2008
In US economic decline, worst is yet to come
WASHINGTON (AFP) – The US economy contracted in the third quarter as panicked consumers slashed spending, data showed Thursday in the first downside leg of what analysts say could be a deep and nasty recession.
In its first reading of gross domestic product (GDP) in the July-September period, the Commerce Department said output of goods and services fell at a 0.3 percent annual pace amid a sharp retrenchment by consumers and businesses.
The drop in gross domestic product (GDP) was the first negative figure since the fourth quarter of 2007.
The decline, not as steep as the 0.5 percent annualized drop expected by private economists, comes amid mounting expectations of a sharp falloff in the US economy amid the worst banking and financial crisis in decades.
Some analysts said the drop could be just the start of a deep and painful recession, which is normally defined as two consecutive quarters of negative growth.
"A heftier decline in real GDP is likely in the fourth quarter, which will confirm that the US economy is in recession," said Dawn Desjardins, economist at RBC Capital Markets.
The decrease marked a sharp fall from the 2.8 percent growth rate of the second quarter and reflected weaker consumer and business spending and housing activity, offset in part by strong exports and government spending.
With the decline, economic output was estimated at an annualized 14.43 trillion dollars.
"What is noticeable is that the US economy is hanging onto support from exports that will not last in the fourth quarter," said Avery Shenfeld, economist at CIBC World Markets.
"The rest of the world is slowing and the rising dollar will take some of the shine off exports. The fourth quarter is going to be much worse, with a decline of perhaps as much as two percent."
Consumer spending, the main driver of economic activity, fell 3.1 percent in the quarter on a sharp 14 percent plunge in spending on so-called durable goods like cars and appliances expected to last three years or more, the report showed.
Spending on nondurables such as food and clothing slid 6.4 percent, the biggest decline since 1950.
"The drop in consumer spending was the largest since the recession in the early 1980s," said Augustine Faucher at Economy.com.
"Households are cutting back because of the end of the tax rebates, tighter credit, the worsening labor market, falling house prices, the drop in the stock market, and general angst."
In housing, which has seen a horrific meltdown after a long boom, investment fell 19.1 percent, a major drag on the economy.
While the decline in activity was mild, the report comes amid expectations for one of the worst recessions in decades as the economy is strangled by a collapse in credit amid troubles from banks that bet on the US property bubble.
Ian Shepherdson, chief US economist at High Frequency Economics, noted the GDP number would have been even weaker without accounting for companies building up inventories, which added 0.5 percentage points on the positive side.
"This is the first of a run of negative GDP numbers," he said.
"The economy is in recession. We tentatively expect GDP of minus one percent in the fourth quarter and first quarter of 2009."
Activity had been supported in the second quarter by a big US government stimulus plan that sent out tens of billions of dollars in tax rebates to consumers, but the impact of that has now faded.
Exports, a main source of economic activity earlier this year, also helped keep the GDP figure from being weaker but growth slowed to 5.9 percent in the third quarter from 12.3 percent in the second.
Peter Kretzmer, economist at Bank of America, said another factor skewing the report was a 5.8 percent jump in government purchases,including an 18.2 percent annualized jump in federal defense purchases, which added 0.9 percentage points to GDP.
"We expect a faster pace of GDP decline in the current quarter, as capital spending declines far more rapidly, inventories are reduced at a faster pace, the housing decline remains steep and federal defense spending simmers down," he said.
Citigroup's Steven Wieting said it could get even uglier: "Production and employment declines, credit tightening, and wealth destruction are clearly more severe in the current (fourth) quarter, which should show shrinkage in GDP in excess of the 3.0 percent decline posted in consumption last quarter."