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kmi

kmi
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  • The state of Illinois has days to plug a $13B hole that it took years to dig, as its new legislative session begins. But a potentially bigger concern than massive defaults among states and cities is investor overreaction and the possibility of a sell-off in bonds that would lead to losses - "as bad as an actual default."  [View news story]
    Default is the only medecine for the municipal bond-underfunded budget addiciton.

    Let's get some defaults going and a collapse of munis so governments balance their budgets in a fiscally responsible way.
    Jan 3, 2011. 12:27 PM | Likes Like |Link to Comment
  • White House economic adviser Austan Goolsbee warns of "catastrophic" consequences if the new Republican majority in the House follows through on threats to reject an increase in the U.S. debt ceiling. "If we hit the debt ceiling, that's... essentially defaulting on our obligations... a worse financial economic crisis than anything we saw in 2008."  [View news story]
    There have been no wars, it's all police action and training excersizes, you must be new!
    Jan 3, 2011. 12:25 PM | 2 Likes Like |Link to Comment
  • White House economic adviser Austan Goolsbee warns of "catastrophic" consequences if the new Republican majority in the House follows through on threats to reject an increase in the U.S. debt ceiling. "If we hit the debt ceiling, that's... essentially defaulting on our obligations... a worse financial economic crisis than anything we saw in 2008."  [View news story]
    And so will a huge chunk of middle Americas wealth as they funnel it to the oligarchs.

    We need a new set of criminals in politics like we need another Katrina.
    Jan 3, 2011. 12:23 PM | 3 Likes Like |Link to Comment
  • White House economic adviser Austan Goolsbee warns of "catastrophic" consequences if the new Republican majority in the House follows through on threats to reject an increase in the U.S. debt ceiling. "If we hit the debt ceiling, that's... essentially defaulting on our obligations... a worse financial economic crisis than anything we saw in 2008."  [View news story]
    Meh, reality and history will both prove that a "spirit of compromise" was the reason for Obama's fall, hardly the opposite.

    That said, if Reps and Dems both show up looking for a fight, it'll be middle America taking it on the chin. As usual.
    Jan 3, 2011. 12:21 PM | 4 Likes Like |Link to Comment
  • Dollar General (DG) becomes the new year's first jobs creator, announcing plans to hire 6,000 workers in 2011 as part of its effort to open 625 U.S. stores. The company also says it will remodel or relocate 550 stores. (PR)  [View news story]
    Family Dollar was already expanding. Dollar stores appear to be the fastest growing retail product in the market right now...
    Jan 3, 2011. 12:19 PM | Likes Like |Link to Comment
  • The deepwater drilling ban has officially ended, but approvals to resume drilling are nowhere to be seen. Experts say oil firms won't get the green light until H2 2011 at the earliest, and will have to shell out millions in the meantime on rigs they're being forced to idle.  [View news story]
    Let's not forget or ignore that Obama was bringing an expansion to offshore drilling to the table and that it was BP/Transocean/Halliburton that pissed in the pool.
    Jan 3, 2011. 12:17 PM | 4 Likes Like |Link to Comment
  • Fearing that many are overreacting to recent good economic news, Paul Krugman believes that "even though we may finally have stopped digging, we’re still near the bottom of a very deep hole." For the next few years, even with fairly strong growth, he says the U.S. will be bogged down by unemployment rates that not long ago would have been considered catastrophic.  [View news story]
    I don't know why people seem content in having 1 in 10 Americans unemployed...

    Of course, depending which camp you live in, it's significantly higher - via those no longer on the dole, the underemployed, the young - or significantly lower - via those receiving benefits working cash jobs, the barter/cash economy, multiple part time jobbers - but at least the S&P keeps going up....
    Jan 3, 2011. 12:14 PM | 2 Likes Like |Link to Comment
  • If something can't go on forever, it will stop. Irritation over public union pay and benefits continues to fester. The reality of strapped governments having to meet these promises is clashing with resistance to further tax hikes. Taxpayers are winning some of these battles, a rare occurrence.  [View news story]
    That's a tough case to argue.

    Are you suggesting that every single union employee is an equivalent value creator to a Warren Buffett, or Bill Gates, or Steve Jobs?
    Jan 2, 2011. 09:48 PM | 2 Likes Like |Link to Comment
  • Will 2011 be the year of the option ARM default crisis? Not likely, according to Calculated Risk. He's more concerned with falling home prices and negative equity.  [View news story]
    The double whammy from a potential second "dump" may also be that a lot of REOs have been purchased by speculators/investors, and if a lot of product hits the market fast, there is likely not to be much absorption from that segment, and that may cause a super spike downwards, especially if it gets assisted by rising interest rates...

    Scary endgame scenarios!
    Jan 2, 2011. 07:10 PM | 2 Likes Like |Link to Comment
  • If something can't go on forever, it will stop. Irritation over public union pay and benefits continues to fester. The reality of strapped governments having to meet these promises is clashing with resistance to further tax hikes. Taxpayers are winning some of these battles, a rare occurrence.  [View news story]
    The union issue as supported by the pro union folks is always phrased in terms of the fact that the union protects wages. There are two issues at play;

    One seems to be that the protection that necessitated the rise of unions (minimum wage, overtime, etc) are now ensconced in federal law - much like equal rights for non whites, the disabled, women, etc; and that the protection of worker's rights via unionization is no longer meaningful.

    The other issue at hand appears to boil down to the fact that unions today are perceived, and in many cases actually are, better paid than their private counterparts and expected to be only half as productive.

    The proponents of Unions cite this reality as the success of Unions and the opponents cite this as the reason they are strangling the economy (i.e. for pre bankruptcy GM, it cost approx $2000 more to manufacture same product as Japanese competitors, and therefore GM product was either made worse or more expensive).

    My own opinion is that it is much easier for the private sector to regroup, cut costs, and improve its bottom line when not hampered by unions, and in my area I've repeatedly seen senior members screw over junior members in unions whenever some kind of cut or negotiation was in play, so I think the "protect worker rights" thing is highly suspect.
    Jan 2, 2011. 07:00 PM | 4 Likes Like |Link to Comment
  • Will 2011 be the year of the option ARM default crisis? Not likely, according to Calculated Risk. He's more concerned with falling home prices and negative equity.  [View news story]
    I agree; additionally, in CRE banks are pushing hard to clean up problem loans (the formerly hugely popular interest only bridge loans) doing workouts to get defaulted loans performing again O(easier in CRE since there is a revenue stream).

    The unfounded fears with regards to CRE were precisely these bridge loans which are now being worked out, and CRE's revenue streams allowed them to keep it together long enough to get them done.

    So, even though rates may go up, CRE will likely be mostly unaffected, and the bridge/ARMs etc on those properties won't create problems.

    If rates drive up dramatically, the workouts will encounter hiccups, and the folks getting extensions to their bridges ELOCs and ARMs will be in a pickle, along with the banks...
    Jan 2, 2011. 08:19 AM | 1 Like Like |Link to Comment
  • People who have been delaying selling their homes should do so now, a housing industry consultant says. Steve Harney warns the cork in the dam is about to pop: the "cork" being banks' indecisiveness, and the "water" being their bulging stockpiles of foreclosed homes.  [View news story]
    Between having written off bad loans and all indicators showing economy improving and banks balance sheets improving as well, it makes sense the banks would drop product on market... except that a glut of new product hitting thje market in the slow season will only exacerbate housing oversupply and underdemand, drive prices further into the ground and compounded by rising interest rates the problem gets worse..

    And then more people walk away from their underwater homes...

    It's a silly vicious circle, I think this Harney is giving out poor advice. Why anyone who doesn't have to would drop product on the market in January - the weakest month for home sales of the year - is beyond me.

    Even if the banks do pop the cork in Spring, or want to, there's a good chance there will be more clarity on interest rate movement and real housing demand.

    At the end of the day, I expect the banks and buyers to both continue to act with trepidation, and the housing market to continue to be weak and maintain its steady decline. I'd also propose we have a lot of folks who no longer believe in owning real estate - in particular those most screwed by their inability to sell their homes and get a better paying job in another geographic area - and any expectation of rapid movements in residential real estate values without external stimulation is exaggerated..
    Jan 2, 2011. 08:11 AM | 2 Likes Like |Link to Comment
  • Howard Davidowitz sees a gloomy future for the U.S. economy and wrenching changes ahead in the retail sector. "We have 21 square feet of selling space for every man woman and child in this country. We already have double of what we need. With the explosion of online sales, what happens to all these retail malls and shopping centers which are marginals?"  [View news story]
    We had, 30 years ago, a single large sized shopping center near us, then one opened to the north a bit and they split the retail dollars, then another one opened and another. My area is densely populated but the amount of retail even in this area - not marginal by a long stretch - is still overblown.
    Dec 31, 2010. 05:58 PM | 1 Like Like |Link to Comment
  • For the second day, fog has stymied ship traffic in the Houston Ship Channel, with 20 ships delayed inbound and 22 outbound, though the Coast Guard expects weather to improve this afternoon. It's not an uncommon winter occurrence in the channel, but it has a disproportionate effect on petroleum products that account for the bulk of the traffic. Crude now +1.5% to $91.25.  [View news story]
    "but it has a disproportionate effect on petroleum products that account for the bulk of the traffic."

    Helloooo supply crunch...
    Dec 31, 2010. 02:20 PM | Likes Like |Link to Comment
  • It's the time of year for hundreds of 2011 prediction articles, but Charles Hugh Smith goes a more tongue-in-cheek direction - foreseeing QE3 including Treasurys issued directly to households, and markets rising and falling unpredictably but losing money for most. That's not to mention his expectation that President Obama will start subbing for the Lakers and Tim Geithner will head for Dancing With the Stars. (via)  [View news story]
    Wild predictions?

    US annexes Mexico and Canada and adopts the Renmibi as its currency.

    Savor that for a minute!
    Dec 31, 2010. 02:17 PM | Likes Like |Link to Comment
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