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Thread: Financial Crisis - 2013 - ????

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    Default Re: Financial Crisis - 2013 - ????

    Yeah.

    Talk about a "Correction".
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    Default Re: Financial Crisis - 2013 - ????


    Most Workers Hate Their Jobs Or Have 'Checked Out,' Gallup Says

    June 18, 2013

    Seven out of 10 workers have "checked out" at work or are "actively disengaged," according to a recent Gallup survey.

    In its ongoing survey of the American workplace, Gallup found that only 30 percent of workers are "were engaged, or involved in, enthusiastic about, and committed to their workplace." Although that equals the high in engagement since Gallup began studying the issue in 2000, it is overshadowed by the number of workers who aren't committed to a performing at a high level -- which Gallup says costs companies money.

    The poll, released last week, examined worker engagement beginning in 2010 and ending in 2012. The previous poll period covered 2008 through 2010.

    The survey classifies three types of employees among the 100 million people in America who hold full-time jobs. The first is actively engaged, which represents about 30 million workers. The second type of worker is "not engaged," which accounts for 50 million. These employees are going through the motions at work.

    The third type, labeled "actively disengaged," hates going to work. These workers -- about 20 million -- undermine their companies with their attitude, according to the report.

    "The general consciousness about the importance of employee engagement seems to have increased in the past decade," said Jim Harter, Gallup's chief scientist for workplace management and well-being. "But there is a gap between knowing about engagement and doing something

    about it in most American workplaces."

    Gallup estimates that workers who are actively disengaged cost the U.S. as much as $550 billion in economic activity yearly. The level of employee engagement over the past decade has been largely stagnant, according to researchers.

    The report found that different age groups and those with higher education levels reported more discontent with their workplace. Millennials and baby boomers, for instance, are more likely to be "actively disengaged" than other age groups. Employees with college degrees are also more likely to be running on auto pilot at work.

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    Default Re: Financial Crisis - 2013 - ????


    Detroit To Stop Paying Some Debt, Putting It In Default

    June 14, 2013

    Detroit said on Friday it would stop making payments on some of its about $18.5 billion debt, which would put it in default, and the "insolvent" city called on most of its creditors to accept pennies on the dollar to help it avoid the largest municipal bankruptcy filing in U.S. history.

    In a forceful opening salvo of negotiations with debt holders, Detroit Emergency Manager Kevyn Orr announced a moratorium on some principal and interest payments, including one payment he said was due on Friday.

    Under his proposal, Orr said unsecured debt holders would be paid less than 10 cents on the dollar, but some creditors would get a bit more based on city revenue. Some $11.5 billion of the debt is unsecured and $7 billion secured, according to figures presented by Orr.

    Orr said secured creditors would get better treatment, although how much better was not specified.

    "We may try to get a discount from them, but the reality is they are secured," Orr said.

    Secured credit means an asset is pledged to back the debt. For example, Detroit has secured its interest rate swap agreements with casino revenue.

    He said the city would skip a $34 million payment due on Friday on $1.43 billion of pension certificates of participation, to allow the city to conserve cash needed to provide services to residents.

    Fitch Ratings and Standard and Poor's Ratings Services immediately downgraded Detroit's rating to a level reserved for borrowers about to default.

    "We expect default to be a virtual certainty," S&P said in a statement accompanying its downgrade to CC from CCC-negative.

    A trustee for the bond issue will have to certify that Detroit failed to make the payment on Friday, which would trigger a formal default.

    Detroit's crisis is being closely watched by U.S. debt markets. It did not immediately affect the $3.7 trillion U.S. municipal bond market, where prices ended higher on Friday.

    Orr said he would meet with creditors over the next 30 days. Market participants said the outcome of those talks could lead to higher interest rates for the state of Michigan and even the broader market if Orr wins concessions from secured creditors.

    "Financial mismanagement, a shrinking population, a dwindling tax base and other factors over the past 45 years have brought Detroit to the brink of financial and operational ruin," Orr said in a statement.

    Orr said the city was "insolvent," unable to pay its debts and needed shared sacrifices from everyone, including debt holders, to have any hope of a revival.

    Insolvency and inability to pay debts are two tests a government must meet for a judge to accept a Chapter 9 municipal bankruptcy.

    "It looks and feels like a pre-packaged bankruptcy plan," said Richard Ciccarone, managing director at McDonnell Investment Management, in reaction to the proposal.

    A pre-packaged bankruptcy is when an entity negotiates a deal with creditors and other interested parties in advance and presents that to a bankruptcy court judge.

    Orr, a bankruptcy attorney brought in by the state of Michigan to clean up the city's finances, repeated after the meeting that he sees a 50/50 chance of a bankruptcy filing.

    It would be a first for a major U.S. city as New York, Philadelphia and Cleveland all avoided formal bankruptcy filings during their financial difficulties.

    New York also declared a moratorium on some debt payments in the 1970s, but creditors were ultimately paid in full under a restructuring agreement, said Jim Spiotto, a municipal bankruptcy expert at law firm Chapman and Cutler in Chicago.

    In addition to the financial details, the 134-page document presented on Friday describes collapsing city services, rising crime and falling tax receipts.

    Detroit is the poorest large city in the United States, with more than a third of its residents living below the official government poverty line, while its population has shrunk to about 700,000 people.

    The city has the highest violent crime rate of any major U.S. city, some 78,000 abandoned and blighted structures and 40 percent of street lights dark, the document said. Only about a third of the city's ambulances were in service in the first quarter of 2013. Just 53 percent of owners paid their 2011 property taxes.

    The document disclosed that Detroit could face unfunded pension liabilities, such as for retired police and fire workers, of $3.5 billion, up from the $644 million previously estimated.

    Orr said unsecured creditors, including bondholders and pension funds, will receive a pro rata share of $2 billion of notes the city would issue and pay off as its financial circumstances improve.

    An oversight board could be created for Detroit, similar to one set up after New York City's financial difficulties in 1970s that would ensure reforms are sustained, Orr said. The New York board created in 1975 still exists, although it is largely symbolic.

    City workers and retirees would also face changes to their pensions and health care coverage "consistent with available funding."

    At the same time, Orr proposed investing $1.25 billion over the next 10 years to improve the city's infrastructure, remove or repair crumbling houses and update computer systems.

    Initial reaction from debt holders and labor unions was negative.

    Emerging from the meeting, one bond holder who asked not to be identified, said of Orr's proposal to pay them only pennies on the dollar: "It's just too much. It is an unprecedented amount to ask."

    In the past, bondholders have not lost the principal amount owed them as a result of the financial restructuring of major cities such as New York and Cleveland.

    Much of Detroit's debt is insured, giving bondholders protection against defaults. Two of the insurers, National Public Finance Guarantee Corp, a unit of MBIA and Assured Guaranty Ltd, confirmed they attended the meeting.

    "In the event that debt service payments by the City of Detroit are interrupted, National will ensure that its policyholders receive all of their principal and interest payments on time and in full," spokesman Kevin Brown said.

    Leaders of some of Detroit's 48 public sector unions were upset by Orr's proposals, which included spinning off water and sewer services into an independent authority, as well as making the changes to pensions and health care coverage.

    "When you're backed into a corner, the only thing you can do is fight and the only way we can fight is to strike," said Mike Mulholland, secretary and treasurer of AFSCME Local 207, the union that represents water and sewer workers.

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    Default Re: Financial Crisis - 2013 - ????

    Stocks soar, Dow posts triple digit gain

    Kim Hjelmgaard, USA TODAY 5:32 a.m. EDT July 1, 2013



    Stocks on Wall Street took off Monday after new economic data revealed a jump in manufacturing and construction spending.


    The Dow Jones industrial average was up around 150 1%, the Standard & Poor's 500 index stock was up 1.1% and the Nasdaq composite was sitting around 1.3% in early morning trading.


    Increases in manufacturing activity and construction spending boosted investor confidence and sent stocks that were already off to a strong start rocketing even higher.


    The yield on the 10-year Treasury note was holding steady at 2.51% while the price of gold was rebounding, up 1.2% to about $1,239 an ounce.Benchmark oil for August delivery was up $1.22 to $97.78 in electronic trading on the New York Mercantile Exchange.


    Stocks fluctuated Friday to end the day mixed as investors took a breather after the first three-day winning streak for the Dow Jones industrial average since late April.


    The Dow closed down 0.8% to 14,909.60. The broader S&P 500 index ended down 0.4% to 1,606.28. The Nasdaq composite ended the session modestly higher at 3,403.25.


    In Europe, Britain's FTSE 100 index was up 1.1% while Germany's DAX 30 index was up close to 0.4%. France's CAC 40 was up about 0.8% in afternoon trading.


    Asian stocks traded mixed Monday after China's manufacturing weakened in June amid fears of a credit crunch. China's benchmark Shanghai composite index rose 0.3% to 1,984.92 while Seoul's Kospi lost 0.4% to 1,855.73. The regional heavyweight, Tokyo's Nikkei 225, rose 1.3% to 13,852.50.


    HSBC's monthly purchasing managers index for China declined to 48.2 points from May's 49.2 on a 100-point scale on which numbers below 50 show a contraction. A separate measure by the state-sanctioned China Federation of Logistics and Purchasing declined to 50.1 from May's 50.8.
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    UPS Shares Slide on Dimmed Forecast

    July 12, 2013

    United Parcel Service (UPS) shares fell 5.3% Friday morning after the world’s biggest package delivery company slashed its 2013 outlook, as a weakening U.S. economy weighed on second-quarter performance.

    The company said adjusted earnings are expected to fall to $1.13 a share in the second quarter. That would reflect the first quarterly earnings decline for UPS in more than three years.

    Profit for the full year is now projected to grow between 3% and 7%. UPS lowered its forecast for adjusted earnings to $4.65 and $4.85 a share, compared to its previous estimate of $4.80 to $5.06. Wall Street was looking for $4.98 a share.

    UPS and rival FedEx (FDX) are considered economic bellwethers since they ship goods worldwide. The companies are facing headwinds as consumers seek less expensive shipping options.

    “We expect the second quarter market trends to persist and UPS is adapting to meet these conditions,” UPS Chief Financial Officer Kurt Kuehn said in a statement.

    Shares were trading at $86.57, down $4.88. As of Thursday’s close, the stock was up 24%.

    FedEx also slipped Friday morning, as the shares fell 1.7% to $102.59.

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    Default Re: Financial Crisis - 2013 - ????


    June Restaurant Spending Plunges By Most Since February 2008

    July 18, 2013

    On one hand restaurants and bars have been a boon to the US economy. As first reported in June, and updated two weeks ago, America's waiters and bartenders (increasingly more of which are part-time) have made up a disproportionately large portion of job creation in the nation, rising by more than 50,000 on average each month in the last three, and hitting an all time high of 10.34 million workers in July, accounting for 9% of all private-sector payrolls. The surge was enough for Joel Naroff of Naroff Economic Advisors to conclude that "Apparently, people are eating out again like crazy." It turns out this conclusion was 100% wrong.

    According to this week's very weak retail sales report, Food-service sales fell 1.2% in June, the largest decline since February 2008 and the year over year change in "eating out" rose by just 3.1% - the lowest annual increase since June 2010. But at least all those empty restaurant seats have a record number of waiters catering to the non-existent clients which on the surface should mean the speediest service in history.




    The WSJ comments:


    Restaurants and bars account for only 11% of total retail sales. But spending at those locations is largely discretionary and could signal Americans’ confidence in the economy. Meals out can be skipped more easily than trips to the gasoline pump or grocery store.
    In other words, yet another example of "capital misallocation" where either restaurants are hiring record numbers of workers to cater to demand that just isn't there or the BLS is simply extrapolating payroll numbers based on historical trend averages and which reflect nothing but what some statistical model says the waiter and bartender jobs should be.

    Of course we all know that the reason Americans aren't eating out any more is simple: they are all staring at their E-trade trading portals, generating their own personal wealth effect.

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    Behold The Part-Time Worker Society: "We Won't Start Hiring Full-Time People"

    July 15, 2013

    Once again, as always happens with a very substantial delay, two themes that have been covered extensively on these pages in the past much to the ridicule of the mainstream media, namely that while the US may have "No Manufacturing Jobs But More Waiters And Bartenders Than Ever" and that Obamacare has finally struck as "Part-Time Jobs Surge To All Time High; Full-Time Jobs Plunge By 240,000" are now begrudgingly covered and in fact, endorsed, by the very same MSM.

    Enter the Wall Street Journal which blends the two themes well known to our readers, and writes that "More Restaurants Replace Full-Timers, Concerned About Insurance."

    To wit: "Ken Adams has been turning to more part-time workers at his 10 Subway sandwich shops in Michigan to avoid possibly incurring higher health-care costs under the new federal insurance law. He added approximately 25 part-time workers in May and June as he reduced some employees' hours and replaced other workers who left. The move showed how efforts by some restaurant owners and other businesses to remake their workforces because of the Affordable Care Act may be turning the country's labor market into a more part-time workforce." In other words, the already worst paying jobs in the US are getting even more of the shaft, downgraded from full time to part time status. Precisely the New "part-time worker society" that we predicted would happen back in 2010...




    From the WSJ for those who are still unfamiliar:


    Restaurants and bars have been adding an average of 50,000 jobs monthly since April—about double the rate from 2012. In June, they added a seasonally adjusted 51,700 jobs, up from May's 47,900 tally, but below April's 51,800. Overall, leisure-and-hospitality establishments hired more workers than any other industry in June, accounting for 75,000 of the 195,000 jobs added last month, according to the most recent Labor Department report, although economists cautioned against reading too much into one month's preliminary figures.

    Views differ on exactly what is driving the hospitality industry's pickup. Other factors likely also were behind it, including the addition of new restaurants as well as a move to staff up hiring after scaling back during the downturn, according to some restaurant owners and industry experts. But a number of restaurants and other low-wage employers say they are increasing their staffs by hiring more part-time workers to reduce reliance on full-timers before the health-care law takes effect.

    "I'd be surprised if the Affordable Care Act didn't have something to do with" the pickup in part-time hiring, said Paul Dales, senior U.S. economist at Capital Economics. "Companies don't want to pay for health care unnecessarily if they can avoid it, so they'll try to avoid it." However, he said "the effects will be harder to discern in the data."

    For the entire U.S. workforce, employers have added far more part-time employees in 2013—averaging 93,000 a month, seasonally adjusted—than full-time workers, which have averaged 22,000. Last year the reverse was true, with employers adding 31,000 part-time workers monthly, compared with 171,000 full-time ones.

    The Affordable Care Act requires employers with 50 or more full-time equivalent workers to offer affordable insurance to employees working 30 or more hours a week or face fines. Some companies have said the requirement could increase their costs significantly, although others have played down the potential hit.

    The cost for small firms to comply with the health law will depend largely on the number of additional full-time employees that sign up for employer-sponsored coverage. Average annual premiums for employer-sponsored health insurance in 2012 were $5,615 for single coverage and $15,745 for family coverage, according to the Kaiser Family Foundation. That is up from $3,083 and $8,003, respectively, in 2002.

    The administration says the law ultimately will help businesses by allowing them to pool risk with other smaller businesses in order to get more competitive rates. "The health-care law will decrease costs, strengthen small businesses and make it easier for employers to provide coverage to their workers, as we saw in Massachusetts, where employer coverage increased when similar reforms were adopted," said Joanne Peters, spokeswoman for the Department of Health and Human Services.

    The cost for small firms to comply with the health law will depend largely on the number of additional full-time employees that sign up for employer-sponsored coverage. Average annual premiums for employer-sponsored health insurance in 2012 were $5,615 for single coverage and $15,745 for family coverage, according to the Kaiser Family Foundation. That is up from $3,083 and $8,003, respectively, in 2002.

    Restaurant owners who have already begun shifting to part-time workers say they will continue that pattern.

    "Does the delay change anything for us? Absolutely not," Mr. Adams of Subway said, explaining that whether his health-care costs go up next year or in 2015, he will have to comply with the law. "We won't start hiring full-time people."
    More here but the message is clear: the part-time "recovery" comes full circle, or as we showed here previously:


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    Default Re: Financial Crisis - 2013 - ????


    76% Of Americans Are Living Paycheck-To-Paycheck

    June 24, 2013

    Roughly three-quarters of Americans are living paycheck-to-paycheck, with little to no emergency savings, according to a survey released by Bankrate.com Monday.

    Fewer than one in four Americans have enough money in their savings account to cover at least six months of expenses, enough to help cushion the blow of a job loss, medical emergency or some other unexpected event, according to the survey of 1,000 adults. Meanwhile, 50% of those surveyed have less than a three-month cushion and 27% had no savings at all.

    "It's disappointing," said Greg McBride, Bankrate.com's senior financial analyst. "Nothing helps you sleep better at night than knowing you have money tucked away for unplanned expenses."

    Even more disappointing; The savings rates have barely changed over the past three years, even though a larger percentage of consumers report an increase in job security, a higher net worth and an overall better financial situation.

    So why aren't Americans saving more?

    Last week, online lender CashNetUSA said 22% of the 1,000 people it recently surveyed had less than $100 in savings to cover an emergency, while 46% had less than $800. After paying debts and taking care of housing, car and child care-related expenses, the respondents said there just isn't enough money left over for saving more.

    "There really hasn't been much relief," said Megan Staton, director of marketing for CashNetUSA "The economy is stagnant, $100 is not enough to help you out in an emergency."

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    101M Get Food Aid from Federal Gov’t; Outnumber Full-Time Private Sector Workers

    July 8, 2013

    The number of Americans receiving subsidized food assistance from the federal government has risen to 101 million, representing roughly a third of the U.S. population.

    The U.S. Department of Agriculture estimates that a total of 101,000,000 people currently participate in at least one of the 15 food programs offered by the agency, at a cost of $114 billion in fiscal year 2012.

    That means the number of Americans receiving food assistance has surpassed the number of full-time private sector workers in the U.S.

    According to the Bureau of Labor Statistics (BLS), there were 97,180,000 full-time private sector workers in 2012.

    The population of the U.S. is 316.2 million people, meaning nearly a third of Americans receive food aid from the government.

    Of the 101 million receiving food benefits, a record 47 million Americans participated in the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps. The USDA describes SNAP as the “largest program in the domestic hunger safety net.”

    The USDA says the number of Americans on food stamps is a “historically high figure that has risen with the economic downturn.”

    SNAP has a monthly average of 46.7 million participants, or 22.5 million households. Food stamps alone had a budget of $88.6 billion in FY 2012.

    The USDA also offers nutrition assistance for pregnant women, school children and seniors.

    The National School Lunch program provides 32 million students with low-cost or no-cost meals daily; 10.6 million participate in the School Breakfast Program; and 8.9 million receive benefits from the Woman, Infants and Children (WIC) program each month, the latter designed for low-income pregnant, breastfeeding, and postpartum women, as well as children younger than 5 years old.

    In addition, 3.3 million children at day care centers receive snacks through the Child and Adult Care Food Program.

    There’s also a Special Milk Program for schools and a Summer Food Service Program, through which 2.3 million children received aid in July 2011 during summer vacation.

    At farmer’s markets, 864,000 seniors receive benefits to purchase food and 1.9 million women and children use coupons from the program.

    A “potential for overlap” exists with the many food programs offered by the USDA, allowing participants to have more than their daily food needs subsidized completely by the federal government.

    According to a July 3 audit by the Inspector General, the USDA’s Food Nutrition Service (FNS) “may be duplicating its efforts by providing participants total benefits in excess of 100 percent of daily nutritional needs when households and/or individuals participate in more than one FNS program simultaneously.”

    Food assistance programs are designed to be a “safety net,” the IG said.

    “With the growing rate of food insecurity among U.S. households and significant pressures on the Federal budget, it is important to understand how food assistance programs complement one another as a safety net, and how services from these 15 individual programs may be inefficient, due to overlap and duplication,” the audit said.

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    McDonalds Misses Revenue And Earnings Due To "Economic Uncertainty And Pressured Consumer Spending"

    July 22, 2013

    It must have been the weather: at least that is what we expect McDonalds will blame the latest (in a long series) of Q2 revenue misses, but also earnings as moments ago the fast food giant reported $1.38 EPS in Q2 earnings, while revenue of $7.08 billion missed expectations of $7.09 billion. The internals were just as ugly: Q2 comp sales rose 1% on expectations of a +1.5% print; Europe was down -0.1% with the bulk of the hit coming strangely enough from Germany and France. The rest was in line, with global comp sales up 1% vs Exp. 1%, however this being the weakest of all categories it is hardly offsetting what is becoming increasing a weak lower-end consumer story, as well as one of FX headwinds with forex eating into Q2 EPS by $0.02.

    Sadly, after reading the press release it appears the neither cold or hot spring/summer weather was at scapegoated fault (as it was for Coke and Google): "McDonald's results for the quarter reflect our efforts to strengthen our business momentum for the long-term," said McDonald's President and Chief Executive Officer Don Thompson. "We remain strategically focused on the global growth priorities that help us better serve our customers. While the informal eating out market remains challenging and economic uncertainty is pressuring consumer spending, we're continuing to differentiate the McDonald's experience by uniting consumer insights, innovation and execution." Innovation in the $1 meal? Good luck. More importantly, someone actually told the truth about end-demand, and the fact that consumer spending is deteriorating. Unpossible.

    In other news, today's revenue misses, so far, include McDonalds, Kimberly-Clark and Hasbro. Expect many, many more.


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    Two Americans Added to Food Stamp Rolls for Every Job Administration Says It Created

    July 23, 2013

    White House Press Secretary Jay Carney said yesterday that the Obama administration has pulled the nation from the depths of the "Great Recession" with the creation of 7.2 million private sector jobs.

    "And what is absolutely true is that we have come a long way since the depths of the Great Recession. We've created over 7.2 million private sector jobs," Carney told reporters at a press briefing.

    Here's what Mr. Carney didn't say:

    Since February of 2009, the first full month of Obama's presidency, 9.5 million Americans have dropped out of the labor force. Nearly 90 million Americans are not working today!

    That means that 1.3 Americans have dropped out of the labor force for every one job the administration claims to have created.

    There are 15 million more Americans on food stamps today than when Obama assumed office.

    At the end of January 2009, 32,204,859 Americans received aid from the Supplemental Nutrition Assistance Program. As of April 2013, there were 47,548,694 Americans on food stamps.

    That means that more than two Americans have been added to the food stamp rolls for every one job the administration says it has created.

    Under Obama, 1.6 million more Americans are collecting disability insurance. In February 2009, 9,334,369 Americans received disability payments. Today, that number is 10,953,733.

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    Default Re: Financial Crisis - 2013 - ????

    A symptom of crappy movies, a crappy economy, or both?


    Blockbusters Struggle To Sustain Fanbase Amid 'Summer Of Doom'

    Industry insiders fear for future of big budget spectaculars, with US box office down 19% on same period last year

    July 26, 2013

    At last week's Comic-Con event in San Diego, the film director Zack Snyder bounded on stage to announce a bold new merger. His next Warner Bros blockbuster would pit Batman against Superman, two costumed superheroes in one movie. "Let's face it," said Snyder, "this is beyond mythological." The fanbase was galvanised. Hyperbole hit the roof. But in Hollywood, alarm bells were ringing.

    Industry insiders are referring to this season as "the summer of doom" – an overcrowded huddle of big-budget spectaculars, without the audience to sustain them. US box office takings are down 19% on the same period last year, while the studios are smarting from such high-profile casualties as The Lone Ranger, After Earth and the supernatural action-thriller RIPD. While the runaway success of Iron Man 3 and Despicable Me 2 helped soften the blow, major figures claim that the industry needs to adapt quickly or die.

    Speaking on a panel at the University of Southern California last month, the film-makers George Lucas and Steven Spielberg suggested that the era of the $300m movie dinosaur may well have run its course. "There's eventually going to be a big meltdown," Spielberg said. "There's going to be an implosion where three or four or maybe even half a dozen of these mega-budgeted movies go crashing into the ground – and that's going to change the paradigm."

    Under Hollywood's current business model, nothing succeeds like excess. Prevailing wisdom stipulates that action movies or established franchises – such as Transformers, Pirates of the Caribbean or superhero movies – come with a pre-sold fanbase and vast potential for spinoff merchandise.

    It makes more sense for studios to spend $300m on a summer blockbuster than $50m on original mid-range pictures that must then be marketed to audiences. The larger the film, the larger the return. "Go big or go extinct," is the motto in Pacific Rim, a Warner Bros production in which giant monsters battle giant robots. And yet Pacific Rim is already being filed as another casualty of the summer of doom.

    "It's unlikely that the studios are going to drastically change course as the result of one bad summer," said Steven Gaydos, executive editor at Variety magazine. "However, it is imperative they diversify their slate. They're laying down too many big bets without anything else on the agenda. They have to kick their dependency on $300m blockbusters. If they don't, they're going out of business."

    Yet Gaydos cautioned that the situation was complicated by the opaque nature of studio accounting, in which the US box office tally is just the tip of the iceberg. "Take a film like Pixar's Cars. It made so much money from bedsheets, towels and coffee mugs that the movie is essentially a commercial for the toys." Action blockbusters such as Pacific Rim, which have merchandise potential and a decent overseas audience, may not turn out to be the box-office disaster that they first appear.

    Despite stormy forecasts, Hollywood appears to be too unwieldly or too unwilling to shift direction towards smaller, cheaper pictures. Guests at Comic-Con learned about upcoming studio productions including Pirates of the Caribbean 5, Thor 2, Fantastic Four 3 and a reboot of Godzilla. The director Joss Whedon came to the event to lament that "pop culture is eating itself" and called for "new universes, new messages and new icons". He then revealed the title of his next film to be Avengers: Age of Ultron.

    "Look at Comic-Con and then tell me if you think Hollywood is going to cut back on its comic-book dependency," said Gaydos. "Look at how that event was covered by the critical establishment and you'll see how everything still validates the conglomerates' bottom line. By and large, people are not looking for intelligent, edgy, mid-range movies. They're looking for superheroes and special effects. They're looking for amusement rides. They're like the kids in Pinocchio who still want to go to Pleasure Island. They're voting to be donkeys."

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    Default Re: Financial Crisis - 2013 - ????


    Chicago Next? Windy City Cash Balance Plummets To Only $33 Million As Debt Triples

    July 28, 2013

    While everyone's attention is focused on the Detroit bankruptcy, and just what assets the city will sell in lieu of raising a DIP loan, perhaps it is time to refocus attention to the city 300 miles west: Chicago. According to the Chicago Sun Times citing year-end audits, Obama's former right hand man, Rahm Emanuel, closed the books on 2012 with $33.4 million in unallocated cash on hand — down from $167 million the year before — while adding to the mountain of debt piled on Chicago taxpayers. In addition to a liquidity problem, Chicago may also be quite insolvent as the city's total long-term debt soared to nearly $29 billion. That’s $10,780 for every one of the city’s nearly 2.69 million residents. More than a decade ago, the debt load was $9.6 billion or $3,338 per resident. Of course, in a world in which debt is "wealth", this is great news... at least until debt becomes "bankruptcy."

    Ironically last year, now-retiring City Comptroller Amer Ahmad argued that the city’s debt load was not “troubling” because, "We still have a very strong bond rating. Our fiscal position is getting better every year and we are aggressively managing our liabilities and obligations" (very much awhat the ECB's Mario Draghi tells the world when he gives the periodic monthly update of European capital markets during the central bank's press conference). It is ironic because last week, Moody’s downgraded Chicago from Aa3 to A3 in an unprecedented three notch cut in the city’s bond rating, citing Chicago’s "very large and growing" pension liabilities, "significant" debt service payments, “unrelenting public safety demands” and historic reluctance to raise local taxes that has continued under Emanuel.

    Moody’s noted that the city’s total fund balance at the close of 2012 was $231.3 million and that Chicago has just $625 million in “leased asset reserves.” Had the city fully funded its $1.5 billion “actuarially required contribution” to its four under-funded city employee pension funds in 2012 alone, “these two reserves would have been entirely depleted,” Moody’s said.

    The “unassigned” balance is $33.4 million. Experts recommend a cash cushion of at least $200 million for a budget the size of Chicago’s, according to the Civic Federation. The city ended 2009 with an unallocated checkbook balance of just $2.7 million.

    According to the Sun Times, Chicago budget Director Alex Holt blamed the $133.6 million drop in cash on hand balances on "honest" budgeting and ending the long-standing practice of carrying “ghost” vacancies. "We’re trying to be more transparent about what we’re really spending and taking in — not just carrying a bunch of people who took up money in the budget and left money on the table at the end of the year," Holt said. Well that's a welcome development - unfortunately the inevitable outcome of honest in the New Normal is bankruptcy.

    "Let’s be straightforward about what we’ve got to spend and not pretend we’re gonna hire for a position we haven’t hired for, who know how many years when those resources are need to provide other services. ... This is about matching revenues with expenses. You don’t want to over-tax people."

    Wait, did someone from Chicago just say that?

    As also disclosed by the Sun Times, audits by the accounting firm of Deloitte & Touche provide a treasure trove of information about city finances and operations.

    Interesting nuggets include:




    • Chicago’s principal private employers were: J.P. Morgan Chase (8,168 workers); United Airlines (7,521); Accenture LLP (5,590; Northern Trust (5,448); Jewel Foods (4,572) and Ford Motor Co. (4,187). The 2012 city payroll was 33,708 — down from 40,297 in 2006.
    • The number of “physical arrests” by Chicago Police officers declined again — from 152,740 in 2011 to 145,390 in 2012. That continues a six-year trend that coincides with the hiring slowdown that caused a dramatic decline in the number of police officers. Police made 227,576 arrests in 2006. The number of arrests has been dropping like a rock ever since. The Chicago Police Department has long argued that it doesn’t measure the success of crime-fighting strategies simply by the number of arrests.
    • Emergency responses continued their steady rise — to 472,752. That’s up from 300,971 in 2006.
    • O’Hare Airport operating revenues were up by $23.2 million, a 3.3 percent increase, thanks to rising terminal rental and use charges. Operating expenses rose $19.1 million because of rising personnel and contracting costs. Airline ticket taxes known as “passenger facility charges” generated $154.5 million in 2012.
    • The number of passenger “enplanements” rose by a modest 37,000 — to 33.24 million. That’s despite a continued decline by O’Hare’s two largest carriers — from 8.7 million passenger boardings in 2011 to 7.4 million in 2012 at United Airlines and from 7.6 million to 7.2 million by American.
    • In 2003, United and American together accounted for 67.7 percent of O’Hare enplanements. Now, it’s just 44 percent.
    • Budget-oriented Midway Airport is thriving, spelling potentially good news if, as expected, Emanuel chooses to revive the $2.5 billion deal to privatize Midway that collapsed for lack of financing.
    • Midway boardings rose from 9.45 million in 2011 to 9.78 million last year. Operating revenues were up just $462,000 because of decreased landing fees and terminal use charges. That’s even though concession revenues rose by $1.8 million due to an increase in parking, restaurant and auto rentals. Operating expenses rose by $4.2. Ticket taxes generated $43.9 million.
    • The 55 percent subsidy to retiree health care that Emanuel wants to phase out and retirees are suing to maintain cost the city $97.5 million in 2012.
    • Daily refuse collections declined from 3,983 tons in 2011 year ago to 3,763 in 2012. Last year’s 52-ton increase had reversed a five-year trend. The amount of garbage generated by the 600,000 Chicago households was 4,451 tons a day in 2006 to 4,240 in 2008.
    • Thanks to last year’s record heat and drought conditions, average daily water consumption rose by 23 million gallons — to 793 million gallons — reversing a steady decline. In 2006, Chicago’s 1.04 million households were guzzling 884.9 million gallons-a-day. Operating revenues in the city’s water fund were up by $122.1 million or 29.6 percent, thanks to Emanuel’s 25 percent increase in water rates.
    • Chicago’s 165 tax-increment-financing districts had a collective balance of $1.5 billion. Most of that money is uncommitted, fueling an aldermanic demand Emanuel has rejected: to declare a TIF surplus and use the money to reduce some of the 3,000 layoffs at Chicago Public Schools.
    • The condition of Chicago’s four city employee pension funds is growing ever more precarious. The firefighters pension fund has assets to cover just 25 percent of liabilities, followed by: Police (31 percent); Municipal Employees (38 percent) and Laborers (56 percent).
    • Chicago’s historical collections and works of art are valued at $13.2 million.



    There's all that, and then there is the now traditional weekend slaughter of countless people as irrefutable proof that guns laws work, although maybe not in the city they were implemented.

    By July 31, Emanuel must release a preliminary city budget. It’s almost certain to include another massive deficit — strengthening the city’s case in contract talks with city unions — that will have to be closed with more layoffs, service cuts and new revenues.

    Since Emanuel’s 2013 budget held the line on taxes, fines and fees — beyond those set in motion the year before and annual increases in parking meter rates locked into the 75-year lease - what appears inevitable is another rise in the cost of Chicago living. The mayor also eliminated 275, mostly-vacant jobs while making strategic investments in tree-trimming, rodent control and children’s health and after-school programs.

    But, aldermen warned that it was the calm before the storm: a painful solution to the city’s pension crisis that will require both new revenues and concessions from city employees.

    Of course, now that Detroit has shown the way, and since he who defaults first, defaults best (and the second best and so on), there is a far more realistic outcome...

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    Default Re: Financial Crisis - 2013 - ????

    I know I've posted stuff, mostly video, of Charlie LeDuff before. Here's a new piece of his...


    Come See Detroit, America’s Future

    By Charlie LeDuff
    July 25, 2013

    I know an old woman who hasn’t opened her windows in a decade, afraid that what’s outside will climb inside. Inside, there is the stale odor of dead air.

    I know another woman who called me about a corpse lying outside her window for six and a half hours. This was because of cutbacks at the morgue. No dignity in death here. They do it better in Baghdad.

    The latest trend? When a person is murdered, he is thrown into an abandoned house, and it is set on fire. There are tens of thousands to choose from.

    I know of an 11-year-old boy who was shot, the bullet going clean through his arm. The cops stuffed him in the back of a squad car and rushed him to the hospital. That’s how we do it. There was no ambulance available. About two-thirds of the city’s fleet is broken on an average day.

    I know a cop who drives around in a squad car with holes in the floorboards. There is no computer, no air-conditioning, the odometer reading 147,000 miles. His bulletproof vest has expired. His pay has been cut 10 percent.

    I knew a firefighter who died in a fire, but not from the fire. He died when the roof of an abandoned house collapsed on him and his brethren could not find him because his homing alarm was broken and did not sound. He suffocated.

    In our town, the 911 dispatch system recently went down for 15 hours, and no one seemed to give a damn. When the system is running, the average wait is 58 minutes. Firefighters can’t use hydraulic ladders on fire trucks to do their jobs unless there is an “immediate threat to life.” In a fire — imagine that. The ladders haven’t been inspected in years.

    If this were New York, these stories would have ricocheted around the world. But this is Detroit and, of course, nobody gives a damn. Even here people have been conditioned to accept these things as normal, a nuisance, the buzz of a fly.

    This numbness, in a peculiar way, is a sign of strength. People here manage to get along somehow.

    So we went broke, bust, bankrupt. We’ve known that in Detroit for years. Only now it is official with a Chapter 9 filing last week. The biggest municipal default in United States history — at least $18 billion. Suddenly, America gives a rip.

    How did it get this way, I’m asked? After all, it was just 99 years ago that Henry Ford offered the workingman $5 a day and profit-sharing. How, in less than a century, did it come to this?

    The short answers: municipal mismanagement, race riots, white flight, black flight, dead flight (people routinely disinter their deceased and relocate them to the suburbs). There were the overreaching unions and management that couldn’t balance a ball. Proof? The multibillion-dollar bailout of the auto industry. Thank you, American taxpayers!

    Then there is our spectacular civic corruption: A former mayor, Kwame M. Kilpatrick, waits for a bed in federal prison, convicted of extortion, racketeering and bribery. He looted the city of millions of dollars and stole the future of thousands of children. They can send him to hell for all I care. I don’t want to pay for his upkeep. But thank you, taxpayers! You will pay for it. And the ex-mayor’s team of super lawyers will also be paid with the public dime.

    So Detroit files for bankruptcy. What does this mean? Pay close attention because it may be coming to you soon, Los Angeles, Baltimore, Chicago, Philadelphia. In 2011, Moody’s calculated the unfunded liabilities for Illinois’s three largest state-run pension plans to be $133 billion. (It is expected to be even larger this year.) That’s the size of six Detroit bankruptcies — give or take a few hundred million.

    Of Detroit’s debt of at least $18 billion, about $7 billion is secured by collateral like casino revenues and utility taxes. That means creditors — read: big banks — will get paid. Of the remaining $11 billion dollars or so in unsecured debt, about $9 billion is owed to retirees and current municipal workers, people like firefighters and police officers. These debts come in the form of promised pension checks and health care benefits, all backed by a false, unsecured promise. These are the people who are likely to lose out.

    In simple math, do we sacrifice 30,000 former and current workers to save a city of 700,000 people and their progeny? Most Detroiters will tell you yes. Don’t judge. We feel bad about it. But we’re simply Americans. We are a gaunt dog. We are desperate. And you are watching and studying us.

    Pension checks will be much smaller than planned and health care benefits will get foisted off on Medicaid and Obamacare. Thanks again, taxpayers!

    There is hope up here on the Great Lakes. We have fresh water, profitable auto companies, more than $130 billion a year in trade with Canada crossing through our city, a world-class research university and, eventually, a clean balance sheet. Hey, it helps to be first. What do you have, Atlanta?

    So come visit Detroit, my fellow Americans. Come take a look at your future. Come give the tires a kick. And if you want your money back, come strip copper pipes and wiring from the abandoned buildings — if you can find any copper. Chances are, someone beat you to it.

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    Statism Is Turning America Into Detroit – Ayn Rand's Starnesville Come To Life

    July 21, 2013

    Look at this description of Detroit from today’s Observer:

    What isn’t dumped is stolen. Factories and homes have largely been stripped of anything of value, so thieves now target cars’ catalytic converters. Illiteracy runs at around 47%; half the adults in some areas are unemployed. In many neighbourhoods, the only sign of activity is a slow trudge to the liquor store.


    Now have a look at the uncannily prophetic description of Starnesville, a Mid-Western town in Ayn Rand’s dystopian novel, Atlas Shrugged. Starnesville had been home to the great Twentieth Century Motor Company, but declined as a result of socialism:

    A few houses still stood within the skeleton of what had once been an industrial town. Everything that could move, had moved away; but some human beings had remained. The empty structures were vertical rubble; they had been eaten, not by time, but by men: boards torn out at random, missing patches of roofs, holes left in gutted cellars. It looked as if blind hands had seized whatever fitted the need of the moment, with no concept of remaining in existence the next morning. The inhabited houses were scattered at random among the ruins; the smoke of their chimneys was the only movement visible in town. A shell of concrete, which had been a schoolhouse, stood on the outskirts; it looked like a skull, with the empty sockets of glassless windows, with a few strands of hair still clinging to it, in the shape of broken wires.

    Beyond the town, on a distant hill, stood the factory of the Twentieth Century Motor Company. Its walls, roof lines and smokestacks looked trim, impregnable like a fortress. It would have seemed intact but for a silver water tank: the water tank was tipped sidewise.

    They saw no trace of a road to the factory in the tangled miles of trees and hillsides. They drove to the door of the first house in sight that showed a feeble signal of rising smoke. The door was open. An old woman came shuffling out at the sound of the motor. She was bent and swollen, barefooted, dressed in a garment of flour sacking. She looked at the car without astonishment, without curiosity; it was the blank stare of a being who had lost the capacity to feel anything but exhaustion.

    “Can you tell me the way to the factory?” asked Rearden.

    The woman did not answer at once; she looked as if she would be unable to speak English. “What factory?” she asked.

    Rearden pointed. “That one.”

    “It’s closed.”


    Now here’s the really extraordinary thing. When Ayn Rand published those words in 1957, Detroit was, on most measures, the city with the highest per capita GDP in the United States.


    The real-life Starnesville, like the fictional one, decayed slowly, then collapsed quickly. I spent a couple of weeks in Detroit in 1991. The city was still functioning more or less normally, but the early signs of decomposition were visible. The man I was staying with, a cousin of my British travelling companion, ran a bar and restaurant. He seemed to my teenage eyes to be the embodiment of the American dream: he had never been to college, but got on briskly and uncomplainingly with building a successful enterprise. Still, he was worried. He was, he told me, one of a shrinking number of taxpayers sustaining more and more dependents. Maybe now, he felt, was the time to sell up, while business was still good.

    He wasn’t alone. The population of Motown has fallen from two million to 700,000, and once prosperous neighbourhoods have become derelict. Seventy six thousand homes have been abandoned; estate agents are unable to shift three-bedroom houses for a dollar.

    The Observer, naturally, quotes a native complaining that ‘capitalism has failed us,’ but capitalism is the one thing the place desperately needs. Detroit has been under Leftist administrations for half a century. It has spent too much and borrowed too much, driving away business and becoming a tool of the government unions.

    Of Detroit’s $11 billion debt, $9 billion is accounted for by public sector salaries and pensions. Under the mountain of accumulated obligations, the money going into, say, the emergency services is not providing services but pensions. Result? It takes the police an hour to respond to a 911 call and two thirds of ambulances can’t be driven. This is a failure, not of the private sector, but of the state. And, even now, the state is fighting to look after its clients: a court struck down the bankruptcy application on grounds that ‘will lessen the pension benefits of public employees’.

    Which brings us to the scariest thing of all. Detroit could all too easily be a forerunner for the rest of the United States. As Mark Steyn puts it in the National Review:

    Like Detroit, America has unfunded liabilities, to the tune of $220 trillion, according to the economist Laurence Kotlikoff. Like Detroit, it’s cosseting the government class and expanding the dependency class, to the point where its bipartisan “immigration reform” actively recruits 50–60 million low-skilled chain migrants. Like Detroit, America’s governing institutions are increasingly the corrupt enforcers of a one-party state — the IRS and Eric Holder’s amusingly misnamed Department of Justice being only the most obvious examples. Like Detroit, America is bifurcating into the class of “community organizers” and the unfortunate denizens of the communities so organized.

    Oh dear. No wonder the president would rather talk about Trayvon Martin. If you want to see Obamanomics taken to its conclusion, look at Starnesville. And tremble.

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    Default Re: Financial Crisis - 2013 - ????


    Signs Of Declining Economic Security

    July 28, 2013

    Four out of 5 U.S. adults struggle with joblessness, near poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.

    Survey data exclusive to The Associated Press points to an increasingly globalized U.S. economy, the widening gap between rich and poor and loss of good-paying manufacturing jobs as reasons for the trend.

    The findings come as President Barack Obama tries to renew his administration's emphasis on the economy, saying in recent speeches that his highest priority is to "rebuild ladders of opportunity" and reverse income inequality.

    Hardship is particularly on the rise among whites, based on several measures. Pessimism among that racial group about their families' economic futures has climbed to the highest point since at least 1987. In the most recent AP-GfK poll, 63 percent of whites called the economy "poor."

    "I think it's going to get worse," said Irene Salyers, 52, of Buchanan County, Va., a declining coal region in Appalachia. Married and divorced three times, Salyers now helps run a fruit and vegetable stand with her boyfriend, but it doesn't generate much income. They live mostly off government disability checks.

    "If you do try to go apply for a job, they're not hiring people, and they're not paying that much to even go to work," she said. Children, she said, have "nothing better to do than to get on drugs."

    While racial and ethnic minorities are more likely to live in poverty, race disparities in the poverty rate have narrowed substantially since the 1970s, census data show. Economic insecurity among whites also is more pervasive than is shown in government data, engulfing more than 76 percent of white adults by the time they turn 60, according to a new economic gauge being published next year by the Oxford University Press.

    The gauge defines "economic insecurity" as experiencing unemployment at some point in their working lives, or a year or more of reliance on government aid such as food stamps or income below 150 percent of the poverty line. Measured across all races, the risk of economic insecurity rises to 79 percent.

    "It's time that America comes to understand that many of the nation's biggest disparities, from education and life expectancy to poverty, are increasingly due to economic class position," said William Julius Wilson, a Harvard professor who specializes in race and poverty.

    He noted that despite continuing economic difficulties, minorities have more optimism about the future after Obama's election, while struggling whites do not.

    "There is the real possibility that white alienation will increase if steps are not taken to highlight and address inequality on a broad front," Wilson said.

    ___

    Sometimes termed "the invisible poor" by demographers, lower-income whites are generally dispersed in suburbs as well as small rural towns, where more than 60 percent of the poor are white. Concentrated in Appalachia in the East, they are also numerous in the industrial Midwest and spread across America's heartland, from Missouri, Arkansas and Oklahoma up through the Great Plains.

    More than 19 million whites fall below the poverty line of $23,021 for a family of four, accounting for more than 41 percent of the nation's destitute, nearly double the number of poor blacks.

    Still, while census figures provide an official measure of poverty, they're only a temporary snapshot. The numbers don't capture the makeup of those who cycle in and out of poverty at different points in their lives. They may be suburbanites, for example, or the working poor or the laid off.

    In 2011 that snapshot showed 12.6 percent of adults in their prime working-age years of 25-60 lived in poverty. But measured in terms of a person's lifetime risk, a much higher number — 4 in 10 adults — falls into poverty for at least a year of their lives.

    The risks of poverty also have been increasing in recent decades, particularly among people ages 35-55, coinciding with widening income inequality. For instance, people ages 35-45 had a 17 percent risk of encountering poverty during the 1969-1989 time period; that risk increased to 23 percent during the 1989-2009 period. For those ages 45-55, the risk of poverty jumped from 11.8 percent to 17.7 percent.

    By race, nonwhites still have a higher risk of being economically insecure, at 90 percent. But compared with the official poverty rate, some of the biggest jumps under the newer measure are among whites, with more than 76 percent enduring periods of joblessness, life on welfare or near-poverty.

    By 2030, based on the current trend of widening income inequality, close to 85 percent of all working-age adults in the U.S. will experience bouts of economic insecurity.

    "Poverty is no longer an issue of 'them', it's an issue of 'us'," says Mark Rank, a professor at Washington University in St. Louis who calculated the numbers. "Only when poverty is thought of as a mainstream event, rather than a fringe experience that just affects blacks and Hispanics, can we really begin to build broader support for programs that lift people in need."

    Rank's analysis is supplemented with figures provided by Tom Hirschl, a professor at Cornell University; John Iceland, a sociology professor at Penn State University; the University of New Hampshire's Carsey Institute; the Census Bureau; and the Population Reference Bureau.

    Among the findings:

    —For the first time since 1975, the number of white single-mother households who were living in poverty with children surpassed or equaled black ones in the past decade, spurred by job losses and faster rates of out-of-wedlock births among whites. White single-mother families in poverty stood at nearly 1.5 million in 2011, comparable to the number for blacks. Hispanic single-mother families in poverty trailed at 1.2 million.

    —The share of children living in high-poverty neighborhoods — those with poverty rates of 30 percent or more — has increased to 1 in 10, putting them at higher risk of teen pregnancy or dropping out of school. Non-Hispanic whites accounted for 17 percent of the child population in such neighborhoods, up from 13 percent in 2000, even though the overall proportion of white children in the U.S. has been declining.

    The share of black children in high-poverty neighborhoods dropped sharply, from 43 percent to 37 percent, while the share of Latino children ticked higher, from 38 to 39 percent.

    ___

    Going back to the 1980s, never have whites been so pessimistic about their futures, according to the General Social Survey, which is conducted by NORC at the University of Chicago. Just 45 percent say their family will have a good chance of improving their economic position based on the way things are in America.

    The divide is especially evident among those whites who self-identify as working class: 49 percent say they think their children will do better than them, compared with 67 percent of non-whites who consider themselves working class.

    In November, Obama won the votes of just 36 percent of those noncollege whites, the worst performance of any Democratic nominee among that group since 1984.

    Some Democratic analysts have urged renewed efforts to bring working-class whites into the political fold, calling them a potential "decisive swing voter group" if minority and youth turnout level off in future elections.

    "They don't trust big government, but it doesn't mean they want no government," says Republican pollster Ed Goeas, who agrees that working-class whites will remain an important electoral group. "They feel that politicians are giving attention to other people and not them."

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    Default Re: Financial Crisis - 2013 - ????


    Breaking: 2Q GDP Growth Only 1.7 Percent; 1Q Revised Down To 1.1 Percent

    By Herman Cain
    July 31, 2013

    The Commerce Department has just announced the early estimate on GDP growth for the second quarter. Not good. It's only 1.7 percent, which is even worse than the paltry annualized growth of 2.0 percent we've been seeing throughout Obama's presidency. It gets worse: GDP growth for the first quarter, which was already downgraded from 2.4 percent to 1.8 percent, has been downgraded again to a mere 1.1 percent.

    That's horrendous!

    I wonder what the eventual downgrade of the 2Q estimate will ultimately reveal.

    But it gets worse yet. The Commerce Department has recently changed the way it calculates GDP growth, and the new method inflates the figure to make it look better than it really is. Under the old method, 2Q growth would have only been about 1.0 percent.

    Now we've discussed many times why this is: There are no pro-growth policies coming out of this White House. Even Obama's current proposal, which pretends to cut taxes on corporations, is really a disguised plan to take more from the business community while jacking up spending yet again. Obama knows he sometimes has to pretend to be pro-growth, but the truth is he is not, and the actual growth figures reflect that.

    GDP growth of 1.7 percent is simply terrible, but it's the new normal under this administration.


    Just think on what type of path we'd be now if Herman had been the Republican nominee and elected.

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    Default Re: Financial Crisis - 2013 - ????

    I can't even imagine what the path would be like.....

    This is why we're having problems in this country in the financial sector.

    This site has a couple videos on this.
    Obama mocks us, laughs at us over Pipeline

    July 31, 2013 — bunkerville This one really ticked me off. Maybe it was the morons sitting behind Obama smiling as he spoke, forgetting that their a**es are getting gored every time they go to the gas pumps to fill up their cars.
    Maybe it was his Rasputinesque grin, evil to the core as he lied through a faux smile.
    In the end, it was his mocking us, smirking at us, knowing exactly what he was doing and no one gives a darn and he knows it.
    And you know who else is laughing at us? Why good old Warren Buffet as he makes his millions off of his Railroads. Lets all sing along with Warren as he wishes China a great new year working on the Railroads. Throw in the Rockefellers as well.
    Warren Buffett’s Burlington Northern Santa Fe LLC is among U.S. and Canadian railroads that stand to benefit from the Obama administration’s decision to reject TransCanada Corp. (TRP)’s Keystone XL oil pipeline permit.
    With modest expansion, railroads can handle all new oil produced in western Canada through 2030, according to an analysis of the Keystone proposal by the U.S. State Department. (Chuckle time)!
    “Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in an interview. If Keystone XL “doesn’t happen, we’re here to haul.” From: Bloomberg
    US billionaire Warren Buffett has appeared singing and playing the ukulele on Chinese state television. The billionaire popped up on CCTV and wished the people of China “a happy new year.” The Lunar New Year of the Dragon begins at midnight on Sunday. “Your country has accomplished amazing things, and the best is yet to come,” Buffett told the broadcaster. The investor is well respected in China for his financial success.
    The keystone pipeline is actually just one of several oil sands pipelines targeted by the Rockefeller Brother’s Fund. Ezra Levant calls it industrial sabotage and, based on their own Power Point, that certainly seems an apt description. H/T: Heritage From Rockefeller Fund sabotages Keystone pipeline approval. The Rockefeller Brother’s Fund in a coordinated, 4-year, $28 million dollar campaign was on the march to defeat it.


    The Keystone Pipeline project was expected to create tens of thousands of high paying jobs in the oil industry. The project itself would create 20,000 construction jobs. And the pipeline would bring oil from Canada and North Dakota to refineries in the United States.
    But it was just a big pipe dream. Obama rejected the plan. (Bob McCarty)
    Today Barack Obama mocked Republicans for pushing Keystone pipeline, a no brainer. Obama says the pipeline would only create 50 jobs. He’s not just offensive, he’s an idiot.

  19. #139
    Creepy Ass Cracka & Site Owner Ryan Ruck's Avatar
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    Default Re: Financial Crisis - 2013 - ????

    As I posted elsewhere, this government is engaged in practices straight out of Enron, cooking the books. If this were a private company doing this, there would be perp walks all day long.

    The Government Just Added $559 Billion To GDP Through Revisions

    July 31, 2013

    In an effort to "modernize" its account, the Bureau of Economic Analysis today revised GDP figures dating back to 1929 — something it does about every 5 years.

    Definitional and accounting changes meant that in 2012, for example, the level of current-dollar GDP was bumped up $559.8 billion. From the BEA, here is a summary of the revisions made:


    • For 1929–2012, the average annual growth rate of real GDP was 3.3 percent, 0.1 percentage point higher than in the previously published estimates. For the more recent period, 2002–2012, the growth rate was 1.8 percent, 0.2 percentage point higher than in the previously published estimates.
    • For 2002–2012, the average rate of change in the prices paid by U.S. residents was 2.3 percent, 0.1 percentage point lower than in the previously published estimates.
    • For 2009–2012, the average annual growth rate of real GDP was 2.4 percent, 0.3 percentage point higher than in the previously published estimates. The percent change in real GDP was revised up 0.1 percentage point for 2010, was unrevised for 2011, and was revised up 0.6 percentage point for 2012.
    • For the period of contraction from the fourth quarter of 2007 to the second quarter of 2009, real GDP decreased at an average annual rate of 2.9 percent; in the previously published estimates, it decreased 3.2 percent.
    • For the period of expansion from the second quarter of 2009 to the first quarter of 2013, real GDP increased at an average annual rate of 2.2 percent; in the previously published estimates, it increased 2.1 percent.


    Click here for full report from the BEA.

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    Creepy Ass Cracka & Site Owner Ryan Ruck's Avatar
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    Default Re: Financial Crisis - 2013 - ????


    American Dream Slipping as Homeownership at 18-Year Low

    July 30, 2013

    The U.S. homeownership rate, which soared to a record high 69.2 percent in 2004, is back where it was two decades ago, before the housing bubble inflated, busted and ripped more than 7 million Americans from their homes.

    With ownership at 65 percent and home values rising, housing industry and consumer groups are pressing lawmakers to make the American Dream more inclusive by ensuring new mortgage standards designed to prevent another crash are flexible enough that more families can benefit from the recovery. Regulators are close to proposing a softened version of a rule requiring banks to keep a stake in risky mortgages they securitize, according to five people familiar with the discussions.

    Lawmakers currently shaping housing finance are seeking to reduce the government’s role in keeping rates affordable for riskier borrowers while ensuring homeownership is within reach of minorities and first-time buyers who could be needed to sustain the housing recovery as borrowing costs rise from record lows. Who will be able to buy property depends on the balance they reach, according to Anthony Sanders, a professor of real estate finance at George Mason University in Fairfax Virginia.

    “Low down-payment loans coupled with exotic adjustable rate mortgages helped fuel a massive housing bubble, which ultimately burst and took down the financial sector,” said Sanders, who was the former head of mortgage-bond research at Deutsche Bank AG. “So the question now is do we want to do this again?”

    Hitting Bottom

    The homeownership rate in the second quarter was unchanged from the prior three month period, according to Census Bureau data released today. It will hit bottom at about 64 percent in the next year as families leave the foreclosure pipeline and enter rental homes, according to a May analysis by London-based Capital Economics Inc. It’s currently the lowest in almost 18 years after averaging about 64 percent for 30 years through 1995.

    First-time buyers and minorities are among the groups that have seen the sharpest declines since the crash. While property ownership among senior citizens was little changed at about 81 percent, the share below age 35 that own a home fell to about 37 percent from almost 42 percent five years earlier.

    The rate for blacks reached almost 50 percent in the second quarter of 2004 from about 43 percent in 1995, Census Bureau data show. By the second quarter of this year, it had dropped to 42.9 percent. The rate for whites fell to 73.3 percent in the second quarter, from 76.2 percent in 2004.

    Economic Push

    In the midst of a new economic push, President Barack Obama, who spent much of his first term managing the foreclosure fallout, is now turning to buying homes.

    “The key now is to encourage homeownership that isn’t based on bubbles, but is instead based on a solid foundation where buyers and lenders play by the same set of rules, rules that are clear, transparent and fair,” Obama said in a July 24 speech.

    Presidents have been promoting homeownership at least since the Federal Housing Administration was created by Franklin Delano Roosevelt in 1934 to insure mortgages so more borrowers could qualify. Over more than 50 years, administrations touted property buying as a way to put lower-income families on a path to social and financial stability by forcing savings and making for a more involved citizenry.

    Successive Clinton and Bush administrations unleashed ambitious programs to widen buying. Clinton’s “National Homeownership Strategy” in 1995 set a goal of allowing millions of families to own homes, in part, by making financing “more available, affordable, and flexible.”

    Everybody Wants

    President Bush credited his policies with homeownership reaching an all-time high after he set a goal in 2002 of allowing 5.5 million poor and moderate-income and minority families to buy homes so that “everybody who wants to own a home has got a shot at doing so.”

    At the center of these efforts were Fannie Mae and Freddie Mac, which financed mortgages for low- and moderate-income borrowers according to goals set by the federal government that steadily increased until 2008.

    As Wall Street helped create subprime and riskier mortgages for borrowers with low credit scores and zero down payments, Fannie Mae and Freddie Mac bought more of the loans to meet those targets. After house prices peaked in 2006 and then fell as much as 35 percent, defaults surged and the companies required a $187.5 billion bailout from the taxpayer.

    Mid-2000s Rhetoric

    Stuart Gabriel, finance professor and director of the Ziman Center for Real Estate at UCLA, said the crisis was brought on in part by the belief that homeownership could drive the economy and give the middle class access to a relatively safe leveraged investment, combined with the housing industry’s thirst for profits.

    “The rhetoric going into the mid-2000s was that on a national basis and subsequent to the Great Depression housing prices only moved in one direction and that was up,” Gabriel said. “If you study the housing policies of the Obama administration, there’s an effort to push the needle back to some balance with rental assistance. There are reasons for that, including the massive homeownership failure he was dealing with.”

    As the economy heals, first-time buyers and second-chance borrowers with damaged credit want a crack at property. While affordability is near a record, they’re facing a tight mortgage market, rising borrowing costs as the Federal Reserve weighs reducing its stimulus efforts, and a housing market drained of low-cost listings by private-equity firms building an industry of single-family houses for rent.

    Prices Rise

    The median home price rose 13.5 percent in June from a year earlier as 1 in 3 properties were purchased with cash, according to the National Association of Realtors. The share of first-time buyers, which historically averaged about 40 percent, has fallen to 29 percent, according to the Realtors’ group.

    Buyers in their 20s and early 30s are often at a disadvantage because they have thin credit files and limited assets for down payments, said Sarah Rosen Wartell, president of the Urban Institute, a Washington-based nonprofit organization that studies social and economic issues.

    “I’m not suggesting indiscriminate access to homeownership but there are many borrowers who are capable of demonstrating the capacity to pay,” Wartell said. “Those who are able to benefit from the low rates and prices are the investors and those families who weathered the recession most successfully. And those who had a job loss or foreclosure, in many cases through no fault of their own, have the double whammy of being shut out of a rising market.”

    Adult Transition

    Julie McKinney, 26, and her fiancÚ Chris Miller are saving for a down payment so they can begin married life in a house of their own. McKinney, a college marketing coordinator, took on weekend work at a gym and winery and the couple moved into her sister’s basement outside Baltimore. McKinney and Miller, a first grade teacher, also bag lunches and cut grocery coupons, she said.

    “We’ve never taken anything on that is this big and it’s so exciting to have a goal in mind,” said McKinney, who hopes to amass about $7,000 for a down payment on a Baltimore starter home. “It’s a transition into adult life.”

    Their opportunity to buy depends on a mortgage underwriting system that’s in transition.

    Six regulators, including the Fed and the Securities and Exchange Commission, plan in the next few weeks to ask for public feedback on a rule mandated by the 2010 Dodd-Frank Act that’s known as the Qualified Residential Mortgage rule, or QRM.

    Facing Pushback

    Facing pushback from a coalition of more than 50 organizations advocating homeownership including homebuilders, Realtors and consumer groups, the panel is preparing to unveil a weakened version of a proposal that will require lenders to keep a stake in risky mortgages that they securitize.

    The agencies are scrapping an earlier, more stringent proposal that would have required banks to hold a share of mortgages issued to borrowers spending more than 36 percent of their income on debt and those who made less than a 20 percent down payment. Instead, it will require lenders to retain risk on loans issued to borrowers spending more than 43 percent of their income on debt.

    “If what we’ve heard about the proposed QRM rule is true, then we are very pleased that the agencies are moving towards a broad definition that will benefit the American people by ensuring access to safe, affordable options for buying a home,” Gary Thomas, president of the National Association of Realtors, said in an e-mailed statement.

    Fannie-Freddie Future

    Meanwhile, the U.S. Senate and the House of Representatives have both introduced bills that would overhaul the housing finance system by winding down government-owned Fannie Mae and Freddie Mac, which back more than two-thirds of all mortgage originations.

    A House bill from Representative Jeb Hensarling, a Republican from Texas, would eliminate Fannie Mae and Freddie Mac and remove the federal backstop from most of the residential mortgage market.

    The Senate bill, written by Tennessee Republican Bob Corker and Virginia Democrat Mark Warner, reflects a growing bipartisan consensus that the U.S. should have a role as a catastrophic reinsurer of mortgages, behind significant private capital. The bill was written with input from the Treasury Department.

    ‘Our Goals’

    “They’re looking for a way to accomplish goals that very much reflect our goals,” Treasury Secretary Jacob Lew said in a July 18 interview on Bloomberg Television.

    Those goals include limiting taxpayer risk, getting private capital back into the mortgage markets and maintaining access to credit for worthy borrowers, Lew said.

    Obama said in the July 24 speech in Galesburg, Illinois, that he is acting on his own “to cut red tape for responsible families who want to get a mortgage but the bank is saying ‘no.’”

    “We’ll work with both parties to turn the page on Fannie Mae and Freddie Mac, and build a housing finance system that’s rock-solid for future generations,” Obama said.

    While legislators delve into the intricacies of mortgage lending, what they aren’t debating is homeownership and how much of it is a good thing, said Isaac Boltansky, an analyst with Compass Point Research & Trading LLC in Washington.

    “We don’t have as much of a focus on the big picture,” Boltansky said. “We don’t talk about whether we should be a homeownership society any more. It’s not where the debate is. There’s a discussion about mechanism.”

    Taxpayer Strain

    Owning a home that is fully paid off provides stability in retirement and if the U.S. has a greater share of aging renters that could put a strain on taxpayers, said Christopher Mayer, a real estate professor at Columbia Business School in New York.

    “Having a path that people can become a homeowner is an important path,” Mayer said. “And it’s really important for middle to lower income folks who have a hard time saving and for whom targeting savings programs are not very successful.”

    While homeownership has a natural appeal because people like permanence and the ability to make a property their own, it has been oversold, Yale University economist Robert Shiller said.

    The 65 percent homeownership rate may even be high compared with robust economies such as Germany’s, where 53 percent own homes and Switzerland, which has a rate of about 35 percent, Shiller said. Homeownership may inhibit economic growth by limiting the ability of families to move as freely for jobs and the government subsidies could be used for other purposes, he said.

    “We’ve learned that the risks matter,” Shiller said. “We’ve seen the consequences of encouraging people to put all their life savings in one investment. Public support for homeownership will be lower for years to come and I would be surprised if this boom turned out to be as big as the last one.”

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