Queen Running Out Of Money By 2012

The total cost of keeping the monarchy increased by £1.5 million to £41.5 million during the last financial year, up three pence per persona year, to 69 pence.

The newly published accounts reveal that the Queen raided the reserve fund by £6 million, the largest ever, to supplement the Civil List.

The Queen's Civil List, which pays for the running of the Royal household including staff salaries, was £13.9 million but the government provides only £7.9 million which has been frozen since 1991.

The reserve, which was £35 million at its peak, has now dwindled to £14 million and Buckingham Palace estimates it will have disappeared by the end of 2011 when a new Civil List settlement is due to come into effect.Full Story

Dollar Cliff Diving

Chinese banks : Global Economy Threat

China's banks are veering out of control. The half-reformed economy of the People's Republic cannot absorb the $1,000bn (£600bn) blitz of new lending issued since December.

Money is leaking instead into Shanghai's stock casino, or being used to keep bankrupt builders on life support. It is doing very little to help lift the world economy out of slump.

Fitch Ratings has been warning for some time that China's lenders are wading into dangerous waters, but its latest report is even grimmer than bears had suspected.

"With much of the world immersed in crisis, China appears to be one of the few countries where the financial system continues to function largely without a glitch, but Fitch is growing increasingly wary," it said.

"Future losses on stimulus could turn out to be larger than expected, and it is unclear what share the central and/or local governments ultimately will be willing or able to bear." Full Story

Stock Of The Week: UNG

(Click the above imagine for sharper view)

United States Natural Gas Fund, LP (USNG) is a limited partnership. The Company is a commodity pool that issues units that may be purchased and sold on the NYSE Arca, Inc. The investment objective of USNG is for the changes in percentage terms of its net asset value to reflect the changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the changes in the price of the futures contract on natural gas as traded on the New York Mercantile Exchange (the NYMEX) that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case the futures contract will be the next month contract to expire. USNG invests in futures contracts for natural gas, crude oil, heating oil, gasoline, natural gas and other petroleum-based fuels that are traded on the NYMEX, ICE Futures or other United States and foreign exchanges. The Company’s general partner is United States Commodity Funds LLC

Bernanke's Nightmare Cont......

WASHINGTON (Reuters) - If 2008 was a tough year for Federal Reserve Chairman Ben Bernanke, 2009 is looking no easier as political battles pile on top of tough economic challenges.

With the end of his term looming in January, Bernanke's skill in avoiding pitfalls on both fronts will influence whether he wins another four years at the helm of the Fed.

First, there's the economy: with the U.S. unemployment rate at 9.4 percent and rising, Bernanke faces the challenge of fostering a recovery from an 18-month-old recession with unconventional policies that some worry will ignite inflation.

Then, there's politics: he must convince Congress the Fed deserves a leading role in a restructured financial oversight system even as he addresses criticism of Fed failings before the financial collapse and some actions since.Full Story

California Can't Pay Thier Bills

LOS ANGELES — Signaling that California is slipping deeper into financial crisis, the state’s controller said Wednesday that his office would soon be forced to issue i.o.u.’s to scores of the state’s creditors, as lawmakers failed at their first attempt as a body to close the state’s multibillion-dollar shortfall.

If the i.o.u.’s are issued as threatened, it would be the first time since 1992 — when Gov. Pete Wilson paid roughly 100,000 state employees with them — that the warrants were used to hold over those to whom the state owed money. Before that budget crisis, California last issued the warrants during the Depression.

“Next Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression,” the controller, John Chiang, said in a written statement. He added, “Unfortunately, the state’s inability to balance its checkbook will now mean short-changing taxpayers, local governments and small businesses.”Full Story

Belated Happy FOMC Meeting

Benjamin Bernanke testifying before congress about the BoF and Merill deal back in Sept before the major decline back in Oct 2008. Posted a video on this and its still there if you can check at the bottom of my blog with Breaking The Bank as title.

So FOMC meeting gone as I thought in previous post i.e pause in the interest rates, not expanding fed's balance sheet and god for the first time they did not see any shoots this time.Y'day's statement predicts "inflation will remain subdued for some time," vs. "inflation will remain subdued," from the last session. Missing: no indication about any exit statergy, And no change to the Fed's Treasury buyback program which way is good for the dollar and overall economy.

Goldman Sachs : World Market Villians

We're in crisis

With $7.5 million less to spend, Charlotte's United Way is slashing next year's grants for virtually all of the 90-plus local charities it supports.

The new spending plan, approved Tuesday by United Way board members, focuses the deepest cuts on nonprofits serving children, seniors and the disabled.

The board's reasoning: The recession and banking crisis are pushing basic needs to unprecedented levels, so limited dollars must be used to get food, clothing and shelter to victims of the economic downturn.

Charities across five counties have been dreading the news for months. Last fall, leaders watched while the recession and fallout from a United Way CEO pay scandal wrecked the agency's 2008 campaign.Full Story

Bailout Nation: 200 Years Of Govt Spending

The amount of US taxpayer money committed to bailouts over the last 12 months by far exceeds the combined cost of major historical events dating back over 200 years.

The combined amount spent, lent, consumed, borrowed, printed, guaranteed, assumed or otherwise committed to bailouts by the government from March 2008 to March 2009 amounts to some $15 TRILLION.

To emphasize how much money that is, the producers of the book Bailout Nation, put together the following graphic, which illustrates how almost every large one time expenditure of the US over the last 206 years is a drop in the ocean compared with the current level of spending.Full Story

Fed: A Game Changer

(Click the imagine for sharper view)

The current market before the fed meeting tells us that :
1. Pause the Interest Rates.
2.Expand fed balance sheet with micro dollar
3.Talks about more green, purple shoots or may talk about the recovery will stall for the rest of year.Lets see how he plays this afternoon but markets looks more speculative on fed's move.

Markets here are showing some positive sign which means fed does not like to pull the plug on equities which is good sign for the broader markets.Anyway here are the possible moves to upside to downside on following indicies:

1.Dow Jones Industrial Average: 8600-8300
2.S&P 500 : 925-890 (closing below 875 will be carnage to markets something fed surprised us)
3. Nasdaq : 1750- 1820

Bigger Crash Is Coming

An international economic forecaster says another big crash lies ahead for global share and property markets within the next two years.

Harry Dent predicted the Japanese recession in the 1990s and also forecast the current global financial crisis.

He has told ABC News Breakfast that the Australian share market will continue to make gains during the next few months, before bottoming in about 2011.

"I'd say maybe the Australian All Ordinaries will get back up near 4,500, the Dow maybe close to 10,000," he said.

"And then you'll see another crash late this year and into next year, as banking systems melt down again. I think the next one's going to start in Europe and Eastern Europe, housing prices would lag.

"I think stocks are going to end up down 60 or 70 per cent before it's all over, and I think housing prices in Australia will probably be down 40, maybe 50, per cent, maybe more than that in the United States and Europe." Full Story

No Recovery For Housing Until 2017

NEW YORK (Reuters) - The U.S. urban commercial real estate markets probably will not recover until 2017, the head analyst of commercial mortgages for Deutsche Bank Securities (DBKGn.DE: Quote, Profile, Research, Stock Buzz) said on Monday.

"The froth is still working itself out," Richard Parkus, Deutsche Bank head of Commercial Mortgage-backed Securities and Asset-Backed Securities Synthetics Research said at the Reuters Global Real Estate Summit in New York. "We are currently in something which is comparable to what we saw in the 1990s and potentially worse."

U.S. commercial real estate values could fall by more than 50 percent from the peak in 2007, he said.

Although asking rents are down about 28 percent in New York, factoring in free rent and other perks by landlords, rents are down about 50 percent, Parkus said.

"Rents will be back to where they were in 2017," Parkus said. Building prices also will take six to eight years to recover, he said.Full Story

Last Resorts in Budget Crisis

In Hawaii, state employees are bracing for furloughs of three days a month over the next two years, the equivalent of a 14 percent pay cut. In Idaho, lawmakers reduced aid to public schools for the first time in recent memory, forcing pay cuts for teachers.

And in California, where a $24 billion deficit for the coming fiscal year is the nation’s worst, Gov. Arnold Schwarzenegger has proposed releasing thousands of prisoners early and closing more than 200 state parks.

Meanwhile, Maine is adding taxes on candy and ski tickets, Wisconsin on oil companies, and Kentucky on alcohol and cellphone ring tones.

With state revenues in a free fall and the economy choked by the worst recession in 60 years, governors and legislatures are approving program cuts, layoffs and, to a smaller degree, tax increases that were previously unthinkable.Full Story

Insiders Exit Statergy

June 22 (Bloomberg) -- Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.

Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years.

Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects. Full Story

25% of Companies Suspending 401(k)

U.S. companies that offer 401(k) plans have recently ended their employer contributions or plan to do so. Details

'Vultures' circling commercial properties

Now that the housing crash appears to be nearing bottom, all eyes have turned to offices, hotels and other commercial real estate as the next properties that might be poised to collapse.

So-called vulture investors have begun popping up in search of troubled commercial buildings, which they hope to acquire at steep discounts.

In San Diego, the latest of these investors is Cypress Realty Advisors LLC, founded by commercial real estate veterans Ron Lack and Mark Wayne.

They say they have commitments from wealthy investors – they wouldn't disclose the amount – to help fund the purchases of offices and other distressed commercial properties in San Diego County, Orange County and Silicon Valley.

“Look at anybody who purchased commercial real estate in the last three years, 2005 to 2008. They're upside down,” said Wayne, a former broker with Cushman & Wakefield. “Their equity has evaporated, their occupancy has evaporated, and their debt is maturing.” Full Story

Happy Father's Day

Happy Father's day.Hacked this to post :)

From
Avi

Watz Goin On In This World

June 17 (Bloomberg) -- It’s a plot better suited for a John Le Carre novel.

Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.

Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?

The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale.

The trillions of dollars of debt the U.S. will issue in the next couple of years needs buyers. Attracting them will require making sure that existing ones aren’t losing faith in the U.S.’s ability to control the dollar. Full Story

Recession's Knockout Punch

The End Is Near (for This Recession).

So read some of the economic placards that have been trotted out in policy statements these days with catchphrases such as 'Sustainable Recovery.' 'Recession Is Coming To An End.' 'Policy Actions Having an Effect.' 'Seeing Green Shoots of Growth.' and 'The Crisis Has Stabilized.' Many pointed to the more than 2,000-point climb in the Dow Industrial Average over the last three months as proof that federal stimulus measures appeared to be having an effect in rousing the slumping economy.

Just this week, chief economists from JPMorgan Chase & Co., Wells Fargo & Co., PNC Financial Services Group, Morgan Stanley and others said they expect the economy to "recover from its deep slump by late summer." The group that makes up the Economic Advisory Committee of the American Bankers said they expect the nation's gross domestic product (GDP) to increase 0.5% in the July-September quarter -- this after falling a projected 1.8% in the April-June period.Full Story

Florida fund running dry

WEST PALM BEACH, FL -- The state of Florida is burning through money to pay unemployment claims.

There is $534 million in the Unemployment Compensation Trust Fund but the state is paying out $65 million a week.The fund could be dry by August and the state will have to borrow money from the federal government to pay claims.

Nearly a million Floridians are out of work these days. "There will be no lapse in benefits. Everyone will receive their benefits who is entitled to them," says AWI Spokesman Robby Cunningham.Uncle Sam isn't the only one coming to the rescue.

Florida businesses will also be paying higher taxes to help replenish the fund.The Florida Chamber of Commerce supports the tax increase because it puts money into the hands of consumers. Full Story

S&P Cuts Credit Ratings on 22 Banks

On a day when many banks announced they are paying back their TARP loans, Standard & Poor’s credit analysts cut the credit ratings or revised the outlooks on 22 national and regional banks Wednesday.

The firms on S&P’s list included such large names as Wells Fargo & Co. (WFC), U.S. Bancorp (USB), PNC Financial (PNC), BB&T Corp (BBT) and KeyCorp (KEY).

S&P, the largest of the three major credit agencies, said it was revising the credit ratings of these banks in light that “operating conditions for the industry will become less favorable than they were in the past.”

Several smaller regional banks were also cut to “junk” status as part of S&P’s broad revisions. The banks pushed into junk territory are Carolina First Bank, Citizens Republic Bancorp Inc. (CBRC), Huntington Bancshares Inc. (HBAN), Synovus Financial Corp. (SNV) and Whitney Holding Corp. (WTNY).FullStory

Gold Going vending

TG-Gold-Super-Markt aims to introduce the machines at 500 locations including train stations and airports in Germany.The company, based near Stuttgart, hopes to tap into the increasing interest in buying gold following disillusionment in other investments due to the economic downturn.

Gold prices from the machines – about 30 per cent higher than market prices for the cheapest product – will be updated every few minutes. Customers using a prototype "Gold to go" machine at Frankfurt Airport on Tuesday had the choice of purchasing a 1g wafer of gold for €30, a 10g bar for €245, or gold coins. A camera on the machine monitors transactions for money laundering controls.

Thomas Geissler, who owns the company behind the idea, said: "German investors have always preferred to hold a lot of personal wealth in gold, for historical reasons. They have twice lost everything. Full Story

The biggest bill in history

THE worst global economic storm since the 1930s may be beginning to clear, but another cloud already looms on the financial horizon: massive public debt. Across the rich world governments are borrowing vast amounts as the recession reduces tax revenue and spending mounts—on bail-outs, unemployment benefits and stimulus plans. New figures from economists at the IMF suggest that the public debt of the ten leading rich countries will rise from 78% of GDP in 2007 to 114% by 2014. These governments will then owe around $50,000 for every one of their citizens (see article).

Not since the second world war have so many governments borrowed so much so quickly or, collectively, been so heavily in hock. And today’s debt surge, unlike the wartime one, will not be temporary. Even after the recession ends few rich countries will be running budgets tight enough to stop their debt from rising further. Worse, today’s borrowing binge is taking place just before a slow-motion budget-bust caused by the pension and health-care costs of a greying population. By 2050 a third of the rich world’s population will be over 60. The demographic bill is likely to be ten times bigger than the fiscal cost of the financial crisis.Full Story

Another Blow to US Bonds/Dollar

June 16 (Bloomberg) -- Brazil, Russia, India and China are considering buying each other’s bonds and swapping currencies to lessen dependence on the U.S. dollar, Russian President Dmitry Medvedev’s top economic adviser said.

The leaders of the so-called BRIC countries will discuss measures to promote regional currencies when they meet later today, Arkady Dvorkovich told reporters in the Ural Mountains city of Yekaterinburg before the first BRIC summit.

“There will be talk about increasing the share of mutual trade in national currencies, possibly placing part of reserves in the financial instruments of partner countries,” Dvorkovich said.

Medvedev is hosting back-to-back summits of developing economies in Yekaterinburg as he seeks to lessen the world economy’s dependence on the U.S. dollar. Medvedev will hold talks later today with Chinese President Hu Jintao, Indian Prime Minister Manmohan Singh and Brazilian President Luiz Inacio Lula da Silva. Full Story

U.S. likely to lose AAA rating: Prechter

NEW YORK (Reuters) - Technical analyst Robert Prechter on Monday said he sees the United States losing its top AAA credit rating by the end of 2010, as he stuck by a deeply bearish outlook on the U.S. economy and stock market.

Prechter, known for predicting the 1987 stock market crash, joins a growing coterie of market heavyweights in forecasting the United States will lose its top credit rating as the government issues trillions of dollars in debt to fund efforts to bail out the economy.

Fears about the long-term vulnerability of the prized U.S. credit rating came to the fore after Standard & Poor's in May lowered its outlook on Britain, threatening the UK's top AAA rating. That move raised fears that the United States could face a similar risk, with the hefty amounts of government debt issued in both countries to pay for financial rescues causing budget deficits to swell.Full Story

Next, the Retirement Bubble

POLITICIANS ARE IRRITATING UNDER THE BEST of circumstances, but they are downright dangerous some of the time. How can they profess to have been shocked or surprised by the collapse of the real-estate bubble?

There was nothing secret about the dangerous direction that mortgage lending was taking a few years ago. It was a topic discussed widely in the financial press from all perspectives, including those who hit the nail right on the head. It wasn't just Nouriel Roubini, Peter Schiff and others who were ignored. Even someone as respected as Robert Shiller could get little more than passing notice when he published the second edition of Irrational Exuberance in 2005. In it, he spelled out the dangers for the real-estate market in the same clear terms that he had used earlier, when warning of the stock-market bubble.Full Story

U.S. credit card defaults rise

NEW YORK (Reuters) - U.S. credit card defaults rose to record highs in May, with a steep deterioration of Bank of America Corp's lending portfolio, in another sign that consumers remain under severe stress.

Delinquency rates -- an indicator of future credit losses -- fell across the industry, but analysts said the decline was due to a seasonal trend, as consumers used tax refunds to pay back debts, and they expect delinquencies to go up again in coming months.

"I find it hard to believe that it is really a trend. You need to see stabilization in unemployment before you see anything else," said Chris Brendler, an analyst at Stifel Nicolaus. "It is too early to see some kind of improvement."

Bank of America Corp -- the largest U.S. bank -- said its default rate, those loans the company does not expect to be paid back, soared to 12.50 percent in May from 10.47 percent in April.Full Story

Extended Stay Chain Files for Bankruptcy

By Bob Van Voris and David M. Levitt

June 15 (Bloomberg) -- Extended Stay Hotels, the operator of mid-priced hotels acquired at the peak of the commercial real estate market for $8 billion, filed for bankruptcy protection as the recession cut corporate and leisure travel.

The Spartanburg, South Carolina-based chain, with more than 680 properties in 44 states, collapsed two years after Lightstone Group LLC bought the company with $7.4 billion in financing. The company said it had $7.1 billion in assets and $7.6 billion in debt at the end of last year, according to papers filed today in U.S. Bankruptcy Court in New York.

Lightstone bought the chain from Blackstone Group LP in April 2007 in its first purchase in the lodging business. Since then, prices have declined nationwide. The U.S. hotel industry is enduring its “weakest year on record,” according to PKF Hospitality Research, a research firm based in Atlanta. U.S. hotel occupancy fell 14 percent in the week ended June 6 from a year earlier and average daily room rates declined 11 percent to $95.90, according to data from Smith Travel Service. Full Story

Wall Of Debt

The leveraged loan market got accustomed to big numbers over the past decade. There's $3.6 trillion, the amount of leveraged loans made since 2000, according to Thomson Reuters' Loan Pricing Corp. There's 735-fold, the amount of growth between 2003 and 2007 in the volume of collateralized loan obligations -- the funds that helped fuel the loan market's surge after the tech and telecom bust of 2001. And there's $375 billion, the amount of bank debt used to fund leveraged buyouts completed between 2005 and 2007.

But right now, the leveraged loan market is fixated on one number: $430 billion, the amount in leveraged loans due to mature between 2012 and 2014. Despite the big numbers of the past, this might be simply too big. Indeed, the $430 billion figure is already worrying lenders, borrowers and loan-market investors alike as they struggle with the possibility that a large portion of those loans will neither be repaid nor refinanced, raising the specter of a wave of defaults among the debt-fueled LBO borrowers of 2005 through 2007.Full Story

Obama: America Going Broke

CHICAGO (AP) -- President Barack Obama asked skeptical doctors Monday to get behind an overhaul of the nation's health care system, declaring the system a "ticking time bomb" for the federal budget that could force the entire nation to "go the way of GM."

The difficulty of his sales job was evident when he said he was against limiting awards in malpractice lawsuits, a top priority for doctors. That statement brought him a smattering of boos -- a remarkable public response to a popular president accustomed to cheering audiences.

Flying to his hometown to speak at the annual meeting here of the American Medical Association, Obama struck back at critics of his efforts to reshape the health care delivery system to bring skyrocketing health care costs under control and expand coverage to the millions of uninsured.Full Story

VIX : A Loaded Shot Gun

Stay Away from this markets as the volatility in the markets can increase with the time frame.

Watch out for the support on the indices:
S&P 500 : 925
Dow : 8550
NASDAQ : 1800

Six Flags Nose Dive

NEW YORK (Reuters) - Six Flags Inc (SIXF.OB) will not sell assets or reduce its workforce as a result of its Chapter 11 bankruptcy filing this weekend, the theme park operator's chief executive told CNBC on Monday.

"This isn't a liquidation," said CEO Mark Shapiro. "This is about the past. This is about debt that's been around for just too long."

Six Flags, which operates or owns 20 parks in North America, filed for Chapter 11 bankruptcy protection in the early hours of Saturday morning. The company was saddled with a $2.4 billion debt load and faced a looming cash $300 million payment to preferred stock holders in August.

The company tried to convince lenders to swap debt for equity in the last two months, but abandoned the measure after the measure drew little interest.Full Story

George Soros: Urges To End CDS Markets

Mr Soros, the Hungarian-born US fund manager, said that the swaps were ‘truly toxic’, grossly distorting risk, encouraging speculation and with the potential bring ruin on financial institutions and companies.

Citing the recent bankruptcy of General Motors in America, Mr Soros said that some bondholders had stood to gain more from bankruptcy than re-organisation as a result of their CDS positions.

“It’s like buying life insurance on someone else’s life and owning a licence to kill him,” he said of the swaps, which pay the buyer face value if a borrower defaults, in exchange for the underlying securities or the cash equivalent.

In remarks to a meeting of international bankers and financiers in Beijing, Mr Soros set out his vision for a new regulatory system for global finance that would require regulators to intervene to stop the kind of credit and asset bubbles which precipitated last year’s banking crisis. Full Story

Failed Promise of Innovation

"We live in an era of rapid innovation." I'm sure you've heard that phrase, or some variant, over and over again. The evidence appears to be all around us: Google (GOOG), Facebook, Twitter, smartphones, flat-screen televisions, the Internet itself.

But what if the conventional wisdom is wrong? What if outside of a few high-profile areas, the past decade has seen far too few commercial innovations that can transform lives and move the economy forward? What if, rather than being an era of rapid innovation, this has been an era of innovation interrupted? And if that's true, is there any reason to expect the next decade to be any better?

These are not comfortable questions in the U.S. Pride in America's innovative spirit is one of the few things that both Democrats and Republicans—from Bill Clinton to George W. Bush to Barack Obama—share. Full Story

IMF BONDS : Big Blow To US Bonds

The International Monetary Fund is putting final touches on its plans to issue its first bonds. Russia has already said it would buy $10 billion of the bonds, which would be priced in the IMF’s quasi-currency, “special drawing rights.” SDRs are a basket of currencies consisting of the euro, yen, pound sterling and U.S. dollar. As of Friday, 1 SDR equals $1.55.

China, Brazil and India also have said they are interested in buying IMF bonds, with China likely to purchase more than $20 billion of instrument. The IMF wants to issue bonds as a way to build up its lending war chest as the global economic nosedive continues.

But don’t start lining up at the IMF to buy some yourselves. Only the IMF’s 185 member nations and some central banks will be eligible to purchase them and trade them — among themselves. Some at the World Bank worry that the IMF bonds might push up borrowing rates somewhat for the Bank, though IMF officials doubt the IMF bond issuance will be large enough to affect World Bank borrowing costs much Full Story

California : 50 days away from a meltdown

SAN FRANCISCO (Reuters) - California's government risks a financial "meltdown" within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state's controller said on Wednesday.

Underscoring the severity of California's cash crisis, Controller John Chiang, who has previously warned the state's government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.

Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger's budget plan by $827 million, Chiang said.

He warned California's state government is speeding toward a financial disaster unless officials act urgently to balance its books.

"Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government," Chiang said in a statement.Full Story

Fed Beige Book

Reports from the twelve Federal Reserve District Banks indicate that economic conditions remained weak or deteriorated further during the period from mid-April through May. However, five of the Districts noted that the downward trend is showing signs of moderating. Further, contacts from several Districts said that their expectations have improved, though they do not see a substantial increase in economic activity through the end of the year.
Reports from the twelve Federal Reserve District Banks indicate that economic conditions remained weak or deteriorated further during the period from mid-April through May. However, five of the Districts noted that the downward trend is showing signs of moderating. Further, contacts from several Districts said that their expectations have improved, though they do not see a substantial increase in economic activity through the end of the year.

Manufacturing activity declined or remained at a low level across most Districts. However, several Districts also reported that the outlook by manufacturers has improved somewhat. Demand for nonfinancial services contracted across Districts reporting on this segment. Retail spending remained soft as consumers focused on purchasing less expensive necessities and shied away from buying luxury goods. New car purchases remained depressed, with several Districts indicating that tight credit conditions were hampering auto sales. Travel and tourism activity also declined. A number of Districts reported an uptick in home sales, and many said that new home construction appeared to have stabilized at very low levels. Vacancy rates for commercial properties were rising in many parts of the country, while developers are finding financing for new commercial projects increasingly difficult to obtain. Most Districts reported that overall lending activity was stable or weak, but with mixed results across loan categories. Credit conditions remained stringent or tightened further. Energy activity continued to weaken across most Districts, and demand for natural resources remained depressed. Planting and growing conditions varied across Districts as did agricultural input costs..Full Story

Source: FederalReserve.

International Trade Data

Click on the Image for details



Source: Govt Census

Oakland, California heading for bankruptcy

Even though city officials would prefer to avoid a public conversation, behind closed doors the Oakland City Council has discussed filing for bankruptcy protection in the midst of a $100 million budget deficit.

"We have asked the (bankruptcy) question because we wanted to know the impact," said District 5 council member Ignacio De La Fuente. "In closed session, the question has been asked, and an answer was given." He would not elaborate. "It's a possibility," he acknowledged. "Things are that bad."

Council President Jane Brunner was equally aloof. She ably acknowledged the city's dire financial problem while managing to avoid the b-word altogether."We're going to try to avoid it, but am I going to say it would never happen? I can't say that," Brunner said.Full Story

"Buy American" irks Canada, EU

WASHINGTON — The United States' largest trading partners are warning that protectionist moves by Congress could poison global trade relations, despite President Barack Obama's assurances that he wants to keep U.S. markets open.

Businesses in the European Union and Canada complain they have been shut out of U.S. markets because of the "Buy American" provision in the massive stimulus bill passed in February, which requires the use of U.S.-manufactured products.

Congress is considering adding similar measures to other spending bills. Buy American supporters want to make sure that the billions of U.S. taxpayer dollars being spent to revive the economy create jobs at home. The U.S. unemployment rate is the highest in 25 years.Full Story

Foreclosure: Subprime to Prime mortgages

The pace of prime borrowers going into foreclosure is accelerating, especially in states with mounting unemployment or property values that saw a big run-up during the housing boom.

It's a marked shift from earlier this year, when foreclosures were driven by defaults on subprime loans. And it has major implications — ravaging the credit scores of borrowers who once had unblemished records and dragging down property values in more affluent neighborhoods.

It also threatens to undermine the housing recovery.

"It's definitely a concern," says Brian Bethune at IHS Global Insight. "(Unemployment) is a major driver of foreclosures, and it will frustrate the housing recovery process."

In the first quarter, almost half of the overall increase in the start of foreclosures was due to the increase in prime, fixed-rate loans, according to the Mortgage Bankers Association (MBA). At the end of the fourth quarter, 2.4% of prime mortgages were seriously delinquent, more than double the 1.1% at the end of March 2008, according to a report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.Full Story

Regulation In The Wake Of Crisis

As has been widely observed in recent weeks, there are signs that the rapid decline in economic activity of the past few quarters is slowing. The latest data give some reason to hope that we are approaching a bottom in economic activity and that growth will resume later this year. Yet stabilization or improvement would begin from very low levels compared with those that prevailed in recent years. Recovery may be painfully slow, and the economy will remain unusually vulnerable to new shocks. The news remains bad in two areas of direct importance to American families: Unemployment continues to rise and housing prices continue to decline.

One important reason why many observers predict only a gentle slope on the upward side of the recession curve is that, despite some progress, financial markets continue to exhibit signs of strain. Government-provided liquidity and guarantees remain as necessary supports in many areas. Because the collapse of these same markets set off the present crisis and the serious recession that has followed, the case for far-reaching reform appears a strong one. Full Story

Funny Cartoon: Life After Graduation

Unemployment no's are really hurting the freshers to enter into the job markets. Track daily here whose hiring/Laying off.


And what about the debt after the graduation.

The Economy Is Still at the Brink

WHETHER at a fund-raising dinner for wealthy supporters in Beverly Hills, or at an Air Force base in Nevada, or at Charlie Rose’s table in New York City, President Obama is conducting an all-out campaign to try to make us feel a whole lot better about the economy as quickly as possible. “It’s safe to say we have stepped back from the brink, that there is some calm that didn’t exist before,” he told donors at the Beverly Hilton Hotel late last month.

Mr. Obama thinks that the way to revive the economy is to restore confidence in it. If the mood is right, the capital will flow. But this belief is dangerously misguided. We are sympathetic to the extraordinary challenge the president faces, but if we’ve learned anything at all two years into the worst financial crisis of our lifetimes, it is that a capital-markets system this dependent on public confidence is a shockingly inadequate foundation upon which to rest our economy.Full Story

Fed Hires Lobbyist

June 5 (Bloomberg) -- The Federal Reserve intends to hire a veteran lobbyist as it seeks to counter skepticism in Congress about the central bank’s growing power over the U.S. financial system, people familiar with the matter said.

Linda Robertson currently handles government, community and public affairs at Johns Hopkins University in Baltimore, and headed the Washington lobbying office of Enron Corp., the energy trading company that collapsed in 2002 after an accounting scandal. She was also an adviser to all three of the Clinton administration’s Treasury secretaries.Full Story

Marcy Kaptur grills Ben Bernanke


Videos on anyone tracking the fed printing press account.


Congressmen Comments

Pension Funds Block Chrysler Sale

WASHINGTON -- A group of Indiana pension funds opposed to Chrysler LLC's sale to Fiat SpA filed an emergency appeal with the U.S. Supreme Court to stay the sale while they continue their attempts to block it.

The emergency stay request, filed shortly before midnight Saturday, came after the 2nd U.S. Circuit Court of Appeals in New York approved the acquisition of most of Chrysler's assets by a group led by Fiat, the Italian auto manufacturer. A U.S. bankruptcy judge early last week approved the sale. A coalition of consumer groups lodged a separate stay request early Sunday morning, arguing Full Story

Commodity ETF's

I was been asked to discuss about the following ETF's going forward and most of you know its better to be in ETF rather than in a individual stock. Okay, lets look briefly these commodity ETF's as per request:

UYM is long basic materials fund. Got whacked off during Oct decline due to demand destruction and need to pull back around $15 area before we can even enter into this as we don't see any demand coming soon this year in this sector for sure. Getting back to 100's is out of cards anytime before 2011-2012 and I don't see 2005-2006 partying going to come soon.



DXO is oil related long double fund. This puppy can move way higher as oil prices sky rockets beyond $100 in coming months and years due to weak dollar but for now it had extended its rally and need to pull back around $3-$3.50 before going higher but add this fund on any pull backs.Previous Oil Post



BOS is Short Precious metal Fund. My personal view on this is you don't want to short at this moment as we are entering into a bull markets until 2015 so better be on side lines until your long precious metals.



DGL is gold fund. This fund will be higher as gold goes higher and we will see new highs on this. Add this on any pull backs and my initial target on this would be around $45 in coming months.



DBA is commodity agriculture Fund. This is very bullish to me due to dollar weakness. Banks sold most of thier commodity baskets around the globe to fix thier balance sheets due to loss orginated from housing related sector.We are definitely entering to multi decade commodity bull market and we might see new highs in 2010 on this. This got extended and to retrace little so add this @ around $26 for good entry point.



If you need to know or ask any question regarding Markets/Economy please do ping me at the bottom of my blog so that everyone can have any idea and knowledge to learn more about the Markets/Economy. Thanks.

Region's economy to shrink further

Central Florida's incredible shrinking economy will continue its vanishing act this month, according to the Sentinel's Central Florida Economic Index.

All five measures are expected to once again post year-over-year declines, another sign the recession, while easing in some respects, is still settled over Central Florida. The overall index, a rolling projection of local economic activity, is expected to fall 9.38 percent this month from June 2008.

The construction-industry index remains the big loser, with residential building permits projected to decline more than 56 percent from last year at this time. The index projects 682 permits will be issued, fewer than half of the total issued in June 2008.

Hotel-tax collections are projected to come in at $13.5million, a decline of 33.6 percent from last year. Tourist taxes have been declining for a year.Full Story

Bernanke Presses For Fiscal Restraint

Prolonged Deficits Threaten Economy, Fed Chief Warns

The nation needs to begin planning now to eventually bring taxes and spending in line, Federal Reserve Chairman Ben S. Bernanke said yesterday, arguing that large budget deficits, if sustained, could deepen the financial crisis and choke off the economy.

Bernanke's testimony to Congress reflected growing concern among economists and investors that the nation's long-term fiscal imbalances could stand in the way of economic recovery by driving up the interest rates that the government, businesses and consumers pay to borrow money. The rate the government pays has already risen in recent weeks. Full Story

It's the Economy, Stupid

Tomorrow will likely bring more bad news for President Barack Obama on the number one issue for voters -- the economy. The Labor Department's monthly job report will almost certainly show unemployment topping 9%, with a couple hundred thousand more jobs lost in May.

It will get worse before jobs get better. Congressional Budget Director Douglas W. Elmendorf recently predicted that unemployment will continue rising into the second half of next year and peak above 10%.

Mr. Obama has an ingenious approach to job losses: He describes them as job gains. For example, last week the president claimed that 150,000 jobs had been created or saved because of his stimulus package. He boasted, "And that's just the beginning." Full Story

Moody's : Loan Losses on U.S Banks

Moody’s Investors Service says that both the U.S. banking industry rating outlook and the industry’s broader fundamental credit outlook continue to be negative because of the recession.

In a new report, Moody’s indictaes that it expects rated U.S. banks will incur a total of approximately US$470 billion (pre-tax) of loan losses and writedowns in 2009 and 2010. The vast majority of this estimated loss, US$415 billion worth relates to expected loan losses, which represents 8% of the industry’s outstanding loans at the end of last year.

As a result of these substantial asset quality problems and the need to build reserves, many U.S. banks will be unprofitable in 2009, placing considerable strain on their capital levels, the rating agency believes. Moody’s notes that, despite heightened provisioning over the past several quarters, banks’ coverage of bad loans continues to drop; the ratio of allowance for loan losses to non-performing loans stood at 70% at March 31, versus 100% in the first quarter of 2008. Full Story

Stock Of The Week :TransDigm Group Inc

TransDigm Group Inc is a defense stock and look for the details below. Possible market pull back so watch out, And Ideal entry would be $38-$39 zone so act accordingly.Possible move on this would be around 15-20%. Previous week stock gained around 20% Click here

TransDigm Group Incorporated (TD Group), through its wholly owned subsidiary, TransDigm Inc. (TransDigm), is a global designer, producer and supplier of engineered aircraft components for use on all commercial and military aircraft. On September 26, 2008, TransDigm, through its wholly owned Champion Aerospace, LLC subsidiary, acquired the magneto and harness product line business of Unison Industries, LLC (Unison). The acquired product line includes the SLICK magnetos, harnesses and components, which are used on general aviation piston aircraft. On May 7, 2008, TransDigm acquired CEF Industries, Inc. (CEF). CEF is a designer and manufacturer of specialized and highly engineered actuators, compressors, pumps and related components for the aerospace market. In December 2008, the Company acquired Aircraft Parts Corporation (APC) from Unison Industries LLC, a wholly owned subsidiary of General Electric Company's GE Aviation business unit.

Terrible Stats

Newspaper ad sales during the first quarter shrank 28.3%, or $2.6 billion, from where they were during the same quarter a year ago, according to a new slew of statistics from the Newspaper Association of America.

More bruising stats from the report:

* Print ad sales declined 29.7% to $5.9 billion
* Online sales down 13.4% to $696.3 million
* Classifieds down 42.3% to $1.5 billion
* Ad sales collapse 16.6% to $37.8 billion in 2008. The worst decline ever.
* 2009 revenues will likely come in lower than $30 billion, less than they did in 1987
* Employment advertising shrank 67.4% to $205.4 million
* Real Estate down 45.6% to $336.9 million
* Auto down 43.4% to $332.8 million
* National campaigns down 25.9% to $1.1 billion
* Retail down 23.7% to $3.3 billion
* "Other" down 16.5% to $587.7 million
Source

Debt Issues Resolved Temp ?

Obama to Sell B-2 Bomber Blueprints to China to Pay Off Debt

Record deficits and a crashing economy appear to be taking a toll on the young Barack Obama Administration. The Administration has been talking about hiking income taxes and perhaps instituting a VAT tax.

China is also concerned with the mounting deficits in the United States budget. China is the single biggest holder of US Treasury Bonds and is one of Washington’s biggest trading partners. The People’s Republic has had a burgeoning economy, but is increasingly wary of the falling US dollar.

While the exact amount of Chinese ownership of US treasuries is unknown, it is estimated to add up to over a trillion dollars. If China were to call in US guarantees on these bonds, economists fear it could lead to an economic collapse larger than the Great Depression.

China has recently expanded its defense budget, ostensibly to keep up with its economic growth. China is reportedly working on its own version of a stealth bomber (the US has the only functioning model) but is lagged by technological defects.Full Story

Did they do their Due Diligence ?

Northwestern Mutual Makes First Gold Buy in 152 Years

June 1 (Bloomberg) -- Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time the company’s 152-year history to hedge against further asset declines.

“Gold just seems to make sense; it’s a store of value,” Chief Executive Officer Edward Zore said in an interview following his comments at a conference hosted by Standard & Poor’s in Brooklyn. “In the Depression, gold did very, very well.”

Northwestern Mutual has accumulated about $400 million in gold, and Zore said the price could double or even rise fivefold if the economy continues to weaken. Gold gained 10 percent last month, the most since November. The commodity has more than tripled since 2000, rising for eight straight years. Gold futures for August delivery slipped $4.80 to $975.50 at 4:03 p.m. in New York.Full Story

GM new Ad Campaign

Timmy Needs Math Class

Global Crisis ‘Inevitable’ Unless U.S. Starts Saving, Yu Says

By Bloomberg News

June 1 (Bloomberg) -- Another global financial crisis triggered by a loss of confidence in the dollar may be inevitable unless the U.S. saves more, said Yu Yongding, a former Chinese central bank adviser.

It’s “very natural” for the world to be concerned about the U.S. government’s spending and planned record fiscal deficit, Yu said in e-mailed comments yesterday relating to a visit to Beijing by U.S. Treasury Secretary Timothy Geithner.

The Obama administration aims to reduce the fiscal deficit to “roughly” 3 percent of gross domestic product from a projected 12.9 percent this year, Geithner reaffirmed today. The treasury secretary added that China’s investments in U.S. financial assets are very safe, and that the Obama administration is committed to a strong dollar.

It may be helpful if “Geithner can show us some arithmetic,” said Yu. “We need to know how the U.S. government can achieve this objective.”

The deficit is projected to reach $1.75 trillion in the year ending Sept. 30 from last year’s $455 billion shortfall, according to the Congressional Budget Office.

The U.S. needs a higher savings rate and a smaller deficit on the current account, which is the broadest measure of trade, or “another financial crisis triggered by a dollar crisis could be inevitable,” the Chinese academic said.

The U.S. current account deficit fell to $673.3 billion or 4.74 percent of GDP last year from $731.2 billion, or 4.91 percent of GDP, the year earlier.Full Story

The Fall of the Mall

What does a recession look like? Well, here’s one view, as seen through retail sales. The theoretical mall maps below show 27 companies with stores or restaurants in malls across America. (In some cases, these companies own more than one chain of stores.) In the bottom map, the change in the size of the stores is determined by sales in the first quarter of 2009 as compared to the same quarter in the previous year. Color in the bottom map is meant to indicate the depth of the drop — or the height of the rise — in sales. The deeper the red, the steeper the loss.Full Story

Fed Is Been Warned by CHINA

China warns Federal Reserve over 'printing money'
By Ambrose Evans-Pritchard
Last Updated: 1:52PM BST 27 May 2009

Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature."

"I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal.

His recent trip to the Far East appears to have been a stark reminder that Asia's "Confucian" culture of right action does not look kindly on the insouciant policy of printing money by Anglo-Saxons.

Mr Fisher, the Fed's leading hawk, was a fierce opponent of the original decision to buy Treasury debt, fearing that it would lead to a blurring of the line between fiscal and monetary policy – and could all too easily degenerate into Argentine-style financing of uncontrolled spending. Full Story