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The Hive – Please Talk Among Yourselves

Here is our usual weekend discussion thread, where comments on the general topics of the day are welcome.

But please remember to post and comment on specific news items in the ‘News Selected By Our Correspondents’ thread below or via the link found in the sidebar.


This article was posted by Steve on Friday, December 30th, 2011. Comments are currently closed.

3 Responses to “The Hive – Please Talk Among Yourselves”

  1. Petronius says:

    December economic report and year-end highlights :

    • Most of the key problems that led to the 2008 meltdown remain unresolved, while the government has even added some new problems.

    • The regime continues to push its sub-prime mortgage program, threatening banks with DOJ prosecutions for red-lining. Fannie and Freddie are bankrupt but unrepentant and unreformed. Bank balance sheets remain weak, banks are saddled with sub-prime mortgages and other worthless paper, bank profits are under attack by Dodd-Frank, and banks and bankers are subject to ridicule and threats by the President and his followers. There is no agreement on the proper role of government as regards bailouts versus bankruptcy. On the plus side, Dodd is gone and Frank is going.

    • Meanwhile, the Fed is up to its neck in money printing. Government debt and spending are spiraling out of control. S&P has downgraded US public debt, and presidential leadership to address the fiscal crisis is lacking. The government pretends that unemployment is getting better simply because millions of people have given up looking for jobs. Government economic indicators are manipulated to prove there is no recession and no inflation. Only half the population pays income taxes. Endless unemployment benefits, FICA tax holidays, plentiful credit card debt and student loans, and the lowest mortgage rates in history have encouraged consumers to keep spending even when they can’t afford it. American businesses –– having laid off 20% of the US workforce –– have no more costs to cut. And who wants to hold US Treasury bonds for ten years at 1.9% yield when inflation is 7.5% and rising? Politicians can continue to kick the can down the road, but at some point the US dollar and US government bonds will become suspect; when they do, it will usher in a monetary and financial crisis.

    • The US national debt at year end stands at $15.16 trillion.

    • Total US gov’t unfunded liabilities are more than $117 trillion or $1 million per taxpayer.

    • Personal credit card debt increased considerably in 2011: $788 billion.

    • Student loan debt surpassed credit card debt for the first time ever: $1 trillion.

    • Unemployment finally dropped below 9% for the first time in 2½ years but remains very high. It is likely to stay above 8% for the rest of 2012.

    • The unemployment rate among young people below 30 years old is 45%.

    • “Just to replace all the jobs lost in the recession and keep up with the population growth, the economy would have to add 275,000 jobs a month for the next five years.” NY Times.

    • Stocks ended the year about where they started. The S&P 500 finished unchanged, the Dow was in the black (+5.5%), while the Nasdaq was in the red (-1.8%).

    • McDonald’s was the best performing Dow stock in 2011, showing a 30% gain.

    • United Kingdom: McDonald’s chose to open a new restaurant in Derby, England on Christmas Day. The company brought in a Muslim manager, Shahban Rehmat, for the grand opening ceremony. The local vicar said, “I’m sorry that we’ve got to this point in our society where something that means as much as Christmas seems to mean so little,” adding that the decision by McDonald’s illustrates “the continuing decline of Christendom in this country.” Rehmat rebuked the clergyman, “Who is the Church to object?” Who indeed?

    • Worst Dow stock was Bank of America (-58%). On 19 Dec BAC closed below $5 per share.

    • BAC coughed up $335 million to settle a discrimination suit brought by Tigellinus-Holder involving Countrywide’s mortgage lending practices.

    • Eurozone worries have affected markets throughout the year.

    • US stock markets remain risky, spiking or collapsing daily depending on the latest news out of Europe.

    • International stock markets are bearish. The Nikkei is down 18% on the year, the FTSE finished down 6.7% in 2011.

    • Big winners on the year were US Treasuries up 10%, and gold up 11% despite a sharp sell-off at year-end. Both assets benefitted from safe haven status.

    • Silver lost 9% on the year and is very oversold and bottoming.

    • TIPS funds are up 11% on the year while stock mutual funds are down 6%.

    • Firearms sales soared, with FBI background checks 32% higher than in 2008. People are buying guns & ammo for personal defense and as the ultimate safe haven.

    • Oil climbed 9% from $91 to $99 bbl on the year.

    • The $CRB commodities index lost 8% for the year and is due to rebound in 2012.

    • The commodity currencies (Australian dollar, Canadian dollar) benefitted from oil.

    • The euro –– the world’s second major currency –– is very shaky and in danger of collapse. German Chancellor Merkel has sworn to save the euro.

    • The US dollar and US Treasuries have benefitted from the decline of the euro, even while the US debt is being downgraded.

    • The strong intervention by the Swiss National Bank to peg the Swiss franc to the euro has effectively constrained the supply of safe haven currencies. As a result, the US dollar, the yen, the New Zealand dollar, and the Norwegian krone have all gained.

    • US interest rates sunk extremely low with the 30-year rate closing the year at 2.89% and the 10-year rate at 1.88%, creating a bond bubble.

    • Yields on money market funds are at an all time low, resulting in a negative interest rate. With stock prices flat or falling, the dividend yield on the S&P 500 is now higher than 10-year Treasury bonds, something that has happened only twice in over sixty years.

    • The Fed’s printing presses are juiced up now. The money supply has accelerated. The CPI ticked up 3.6% through November.

    • Inflation has arrived and more is coming in 2012.

    • The US dollar is benefitting from the fall of the euro. US bonds are also benefitting as safe havens. However, as inflation kicks in, bonds and the dollar will not hold up long-term. Savers, bonds, and the dollar are safe for now, but they are all heading for a big tumble.

    • The failure of the US government to deal with its public debt and deficits continues to erode the safe haven and reserve currency status that the US dollar has held for so long.

    • The possibility of the Fed instigating QE3 has risen, in part due to the stagnant US economic outlook, in part due to the weakening political outlook for Nerobama, but also because three Fed inflation hawks will be replaced next year, leaving only one voting member who is still considered a hawk (Jeffrey Lacker, the Richmond President).

    • New home sales hit a record low in 2011.

    • Housing starts are at the lowest level going back before WWII.

    • Housing starts jumped 9.3% in November. Most of the new construction was multifamily projects –– apartments and townhouses.

    • The National Association of Realtors corrected its previous estimate of existing home sales to eliminate 3.54 million home sales previously reported. To put this in perspective, the amount of sales wiped out was equal to the total amount of existing homes sales for the first ten months of 2011. The adjustment wiped out 14.3% of existing home sales post-2006.

    • About half of American homeowners are underwater on their mortgages.

    • The SEC charged six former executives of Fannie Mae and Freddie Mac with securities fraud for understating exposure to sub-prime loans.

    • Global economic growth is slowing.

    • China consumes 40% of industrial commodities worldwide.

    • The mild slowdown in Chinese growth and the risk of a new systemic financial crisis in Europe have curtailed demand for base metals, and prices fell across the board.

    • 20 Dec. IMF chief Christine Lagarde warned that the world economy “stands at a very dangerous juncture.” Speaking in Lagos, she said the European debt crisis posed a risk for “all economies of the world.”

    • Her warning followed strong economic data from Germany and a good bond sale in Spain, which helped to ease the eurozone crisis, at least for now.

    • S&P put Germany, France, Austria, and twelve other European countries on negative watch due to ongoing political, financial, and monetary turmoil in the eurozone. Moody’s said it will reevaluate the European countries.

    • Greece, Italy, Portugal, and Spain are like young girls. They just want to have fun.

    • There is no possible combination of taxes, budget cuts, and economic growth that will enable Greece, Italy, or Portugal to repay their sovereign debt.

    • The governments of these three countries cannot service their debt from tax revenue.

    • These countries have no choice but to continue to borrow new debt to pay down old debt and to keep the system going.

    • Ultimately a very significant portion of European sovereign debt will have to be written off as a loss. When this happens European banks will be hurt.

    • Such sovereign debt defaults could set off a domino effect of bank failures and a new global financial crisis.

    • The European debt crisis continues to dominate the global stock markets. Stocks moved higher in late Nov and Dec in response to rescue plan by the major central banks.

    • The European Central Bank injected €489 billion in loans to over 500 European banks. It is hoped that the low-rate loans will bolster banks, calm markets, and boost sales of Italian and Spanish bonds.

    • Estimated cost to taxpayers of the Obamas’ Hawaiian vacation: $4 million. Cost of Michelle’s solo trip? $100,000.

    • Now some good news. In Dec jobless claims fell and consumer confidence improved to its highest level in eight months.

    • Rajiv Jain, managing director and head of equities, Vontobel Asset Management: “Everyone is printing money. Inflation may not happen, but you’ve got to respect some probability that we may not be able to control things once the genie’s out of the bottle.”

    • Jeremy Grantham, chief investment strategist of GMO LLC: “The US and to some extent, the world, will not easily recover from the current level of debt overhang, the loss of perceived asset values, and the gross financial incompetence on a scale hitherto undreamed of.” And a government that shows no “willingness to concern itself with long-term issues” has put the US at a competitive disadvantage relative to the rest of the world.

    • Jim Rogers: “It’s going to get worse and worse … we’re shooting our bullets, we’re wasting money. … The problem of too much debt is not solved by more debt. This is ludicrous.” Rogers called the US dollar a “total disaster in the long term. … It’s not solving the problem, no country has announced we’re going to have less debt in a year or two or three. … And when things don’t get better, they’re going to print a lot more money. When they print money, you have to own silver, you have to own rice, you have to own real things if you’re going to survive.” Rogers said the Fed is “lying to us” and called its low interest rate program “something akin to QE3 in drag. … The government lies about the numbers that they put out. Don’t take your advice from any government, or you are going to go bankrupt.”

    • Gabelli Global Gold & Natural Resources Trust: “There seem to be two distinct ways for sovereign [debt] crises to be resolved. One involves austerity, reduced economic output, and deflation. The other seems to involve a short term sustainment of the [high spending] status quo, increased debt, more money printing to buy this debt, and increased inflation. In the deflationary scenario, resources will falter. In the inflationary scenario, resources will thrive.”

    • Richard Russell: “I continue to warn that with all the international ‘money’ printing, inflation lies ahead. This also means higher interest rates. … But when rates begin to advance, the compounding effect comes into play. This will present problems beyond anything ever seen by Americans and a massive slowdown in business. The slowdown will be addressed by the central banks by printing, printing and more printing!”

    • John Williams of Shadowstats.com: Says the government has been lying and that the US economy is actually getting worse. “Accordingly, the ongoing outlook for retail sales and the broad economy remains one of deteriorating bottom-bouncing––a second dip that eventually will be recognized formally––not a near-term economic recovery of any form. An unexpectedly weak economy has a wide range of negative implications, including for state, local and federal budget projections; for funding needs of the U.S. Treasury; and for banking system solvency.”

    • Hugo Salinas-Price: “There is no safe harbor for the middle class today. The middle class is being financially raped and decimated.”

    • Dr. Marc Faber (“Dr. Doom”): A “global collapse” is coming and “most people will be lucky to still have 50% of their wealth in five years’ time.”

    • Dr. Stephen Leeb of Leeb Capital Management: “So the Germans are really flirting with the same kind of situation that occurred in the 1930s. If Europe continues to sink and the Germans don’t relent on this stuff, we are going to head for a real deflationary depression. My big picture is that Merkel and the Germans will allow the printing of money, and once that happens, just as it happened in 2008, once you get a sign, that’s blastoff time for gold. Gold and silver will shoot up like rockets. In my opinion, gold will close 2012 at $2,500 or above, probably above. Gold could easily double from here in the next 12 months if you get the kind of money printing that I expect to happen in Europe.” http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/12/12_Stephen_Leeb_-_Gold_Bull_%26_Germany_Flirting_with_Depression.html

    • Tom Golisano, founder of Paychex Inc. : “If I hear a politician use the term ‘paying your fair share’ one more time, I’m going to vomit.”

    • Ken Langone, co-founder of Home Depot and chairman of the NYU Langone Medical Center : “I am a fat cat, I’m not ashamed. If you mean by fat cat that I’ve succeeded, yeah, then I’m a fat cat. I stand guilty of being a fat cat.”

    • Robert Rosenkranz, CEO of Delphi Financial Group : “It’s simply a fact that pretty much all the private-sector jobs in America are created by the decisions of the one percent to hire and invest. Since their confidence in the future more than any other factor will drive those decisions, it makes little sense to undermine their confidence by vilifying them.”

    • Jamie Dimon, CEO JPMorgan Chase : “Acting like everyone who’s been successful is bad and that everyone who is rich is bad––I just don’t get it.”

    * Albert Pujols, former firstbaseman for the world champion St Louis Cardinals, signed a $254 million contract with the California Angels. Albert’s very baaa-a-a-aad.

    • Gold has been going through a correction as the price fell from $1800 to $1570. But in an environment in which the value of most of the world’s paper currencies is in question, gold will be the currency of last resort. Gold and silver will rule.

    • Over the past decade gold has advanced 645% while the Dow has gained only 13%.

    • When measured in terms of Swiss francs (instead of US dollars) the Dow has lost half its value over the decade.

    • US bank stocks are at low valuations due to Dodd-Frank and ongoing concern about contagion from Euro-debt. The US stock market cannot advance very far as long as the financials are under such pressure.

    • US government bonds and gold remain the current safe havens of choice. Bond yields pushed lower and lower in 2011 as bond prices continued to surge. This bond bubble will not last.

    • The Fed is now the biggest buyer of US bonds, surpassing China. The Fed prints new money to buy them. More public debt translates into more dollars.

    • The Fed has pledged to keep interest rates low until 2013 (after the election). However, at some point the fundamentals are going to take charge, and when they do interest rates will climb and bond prices will sink.

    • This shift could happen at any time. When it does gold and silver will be the only safe havens.

    • In 2009, the Nerobama regime added 160,000 pages of new regulations to the Code of Federal Regulations––a record high.

    • For the present, Republicans have blocked Nerobama’s appointment of Richard Cordray to head the new Consumer Financial Protection Bureau established by Dodd-Frank. The director of the CFPB will have dictatorial powers over consumer financial products such as mortgages and credit cards. However, the CFPB cannot crack down on the financial industry until a new director has been appointed.

    • Sen. Scott Brown was the only Republican to vote with the Democrats; the CFPB was the brainchild of Elizabeth Warren, the Harvard Law professor, TARP czar, and anti-capitalist class warrior par excellence who is challenging Brown in the Massachusetts Senate race.

    • Elizabeth Warren quote : “There is nobody in this country who got rich on their own. Nobody.” As a matter of fact, two-thirds of American millionaires are self-employed. Over 80% made it entirely on their own, without an inheritance, trust, gifts, or marrying rich. Over half worked their way through college. They got rich through a lifetime of hard work, self-discipline, sacrifice, budgeting, scrimping and saving, careful planning, prudent investing, a sound marriage, a wise choice of occupation and targeting market opportunities. Stanley & Danko, “The Millionaire Next Door” (1996).

    • Warren continues : “You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.” Yes, let’s be clear about exactly who pays for all that stuff, Liz –– by and large, it is paid for by the taxpayers, i.e., by “the rich.” By the very people Warren loves to hate. Let’s be clear: The top quintile pays 72%. The top ten percent pays 56%. As for Warren’s heroes –– the Occupiers, the mob, those “marauding bands” –– and the bottom half, well, they pay practically no income taxes whatsoever. And when we leave aside Social Security, which is supposed to be a purchase of an old age retirement annuity, we find likewise that most of them pay very little in property taxes, sales taxes, etc. In other words, those people Warren is watching out for are overwhelmingly net recipients of government largesse. Whether many of them really benefit from public school education is itself another question. But the fact that government taxes almost everything under the sun is totally irrelevant –– except of course to full-bore Marxists like Warren –– since it is “the rich” whose taxes pay for nearly all government spending.

    • Warren continues : “Now look, you built a factory and it turned into something terrific, or a great idea –– God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.” So now we get to the nub of it. Warren does not want to leave the creation of wealth to the free market. No, she wants a government commissar to redistribute the wealth that you have created. Some faceless government bureaucrat to decide how big of a “hunk” of your property you will be allowed to keep, and then to decide how much of a “hunk” you must share with “the next kid who comes along.” And that somehow the government commissars will do a better job with all our money than we would do ourselves. Yes, we all need to be institutionalized. Society is responsible for us. It’s for our own good. And all in the name of looking out for the little guy … “for the next kid who comes along.” That would all sound very charming if it hadn’t already been tried in the Soviet Union, Cuba, North Korea, and a hundred other places –– always with the same result. To see how Warren’s idea would work, we would have to take a careful look inside the old Soviet Union, Mao’s China, North Korea, Cuba, East Germany, Venezuela, and the rest of those workers’ paradises and see exactly what goes on there. Unfortunately that is never part of a public school education. Nor part of the Harvard curriculum.

    • The Postal Service will cut 28,000 employees and shut 247 mail processing centers. Guess it will be impossible for anybody to get rich in America without the help of all those postmen.

    • The Army will cut 8,700 employees. This is in addition to 50,000 Army employees cut in October and 18,000 USAF employees cut in November. Deeper cuts will be needed to meet the 23% reduction in defense spending resulting from the super-committee fiasco.

    • Citigroup will cut 4500 jobs. Morgan Stanley will cut 1600 jobs. McGraw-Hill will cut 550 jobs.

    • 3M Company offered early retirement to 5,000 employees.

    • Sears will close 100 to 120 Sears and Kmart stores due to disappointing sales.

    • Harley-Davidson has offered a voluntary layoff package to 950 employees.

    • John Deere has been hiring as the company benefits from strong agricultural conditions around the world, but hiring has been predominantly overseas. Currently about 53% of its employees are located in North America, compared to 64% in 2000.

    • Happiness down-under: Australia’s economy grew 1.4% in the 2d Qtr and surged another 1% in the 3d Qtr, spurred on by a boom in mining and resources investment.

    • Jon Corzine––can you imagine a money manager who doesn’t know where his customers’ money is? $1.2 billion of customer money held by MF Global in segregated accounts remains missing and unaccounted for. Corzine doesn’t know where it went.

    • MF Global’s chief operating officer, Bradley Abelow, told Congress that he doesn’t know either. Abelow is also chairman of the EPA’s financial advisory board. Talk about the blind leading the blind.

    • Corzine’s bankrupt fund, MF Global, reportedly siphoned $50,000 a month in consulting fees to Bill Clinton in the months leading up to bankruptcy.

    • Corzine testified to Congress that his staff “explicitly” informed him that asset transfers immediately prior to filing bankruptcy were legal. Ha! Right, a former Democrat governor and senator who has never heard of a fraudulent conveyance? Democrats practically invented the fraudulent conveyance. Give me a break.

    • Iconic American brands under attack by the regime during December included AT&T, Duke Energy, Progress Energy, Avon, Gibson Guitar, Bank of America, and Wells Fargo.

    • Bad precedent: Boeing is finally off the hook, having agreed to build its new 737 shop in Washington and in return the Machinists Union agreed to drop its NLRB complaint against Boeing. The NLRB –– in cooperation with unions –– now decides where companies may and may not locate their businesses.

    • Raised outlook: Monsanto.

    • Lowered outlook: Honeywell, Texas Instruments, Altera.

    • Beat expectations: Nike, ConAgra, Adobe Systems, FedEx, AutoZone, Target, Goodyear.

    • Disappointed: First Solar, Sears, Oracle, General Mills, United Technologies, Caterpillar, Research in Motion, Cargill, Archer Daniels Midland, Bunge, Best Buy, Darden Restaurants (Olive Garden, Red Lobster), Red Hat.

    • Ratings cut: Goldman Sachs, Bank of America, Barclays.

    • Best Buy’s 3d Qtr profits fell 13%.

    • Kodak is attempting to raise a $900 million rescue fund to avoid bankruptcy by borrowing money and selling patents.

    • Rite-Aid is borrowing new debt to pay down old debt in an effort to keep going.

    • Swedish car maker Saab Auto declared bankruptcy.

    • US banks are still trying to figure out a way to recapture lost debit card revenues (Durbin fees). Banks will probably migrate away from free services for customers.

    • Run-up to class war (Indonesia): The violent 3-month strike at Freeport’s giant Grasberg mine is drawing to a close as Freeport agreed to 37% wage increase over two years plus a new benefits package. Shipments are expected to resume early in 2012. The mine employs 23,000 miners. Grasberg accounts for 1.6% of Indonesia’s annual GDP and a huge part of the country’s tax revenues. Freeport has spent hundreds of millions on community development and social responsibility programs. Union spokesman warned, “This is the first page of the struggle, and not the end.”

    • Run-up to class war (Peru): Newmont Mining has suspended work on the new Conga gold mine due to violent protests. Environmental protesters have closed the airport, roads, hospitals, and schools. Peru’s new left-wing president Humala declared a state of emergency and counterterrorism police rounded up left-wing protesters who claimed they were “practically kidnapped.”

    • Enlarging our carbon footprint: Chevron announced its $32.7 billion exploration budget for 2012. Only a fraction of this will be invested in the USA.

    • Greg Jaczko, chairman of the Nuclear Regulatory Commission, announced that the NRC is stepping up inspections. Jaczko, former staffer to Sen. Harry Reid and leftist Rep. Ed Markey, is no friend to nuclear energy. The NRC IG found that Jaczko “strategically” withheld information from other commissioners in order to block the Yucca Mountain nuclear waste repository. The effect has been to halt new plant construction. Not satisfied with this, Jaczko’s regulations require new nuclear plants be built to withstand direct impacts from an airplane crash, driving up construction costs.

    • In Oct all four remaining NRC commissioners –– two Democrats and two Republicans –– sent a letter to the White House complaining about Jaczko’s bullying and intimidation tactics. In Dec, Commissioner William Ostendorff, a Republican, told a House oversight committee that Jaczko’s “bullying and intimidation … should not and cannot be tolerated.” Fellow Democrat commissioner William Magwood testified to Congress that Jaczko has humiliated senior female staffers in meetings and “reduced [them] to tears in front of colleagues and subordinates.” The “most troubling” issue about Jaczko, Magwood testified, was his “raging verbal assault” of agency staff, particularly against women. Top House Republicans have called on Nerobama to fire Jaczko. Fat chance.

    • Texas lost 600,000 head of cattle this year as a result of the drought, a 12% decline. Oklahoma also experienced a 12% loss. Cost of hay for feed is up 40%. Beef prices will go up.

    • Half of Mel Gibson’s fortune went to wife Robyn Moore in divorce settlement of $423 million, plus half of Gibson’s film royalties from all movies made during their 31 year marriage. It is the biggest divorce settlement in Hollywood history, and the third biggest in history.

    • The new Democrat light bulb standards go into effect 1 Jan 2012. Republicans were able to block money for enforcement, but to no avail as the provisions of the light bulb law remain fixed in the US Code. You have time to stockpile the outlaw bulbs while they are still on the shelves.

    • canary says:

      “Ken Langone, co-founder of Home Depot and chairman of the NYU Langone Medical Center : “I am a fat cat, I’m not ashamed. If you mean by fat cat that I’ve succeeded, yeah, then I’m a fat cat. I stand guilty of being a fat cat.””

      Home Depot is not ashamed to be a fat cat with a partnership with USA stimulus green agenda. The EPA put the “star” on Pink insulation which is cancerous with formaldehyde and unnecessary “pink” dye thye won’t give ingredients for. This while other U.S. brands that are safer and better don’t get the global “star” deduct from you taxes. If you get things without the star they too are tax-deductible if you buy a large amount. Thanks to Obama’s ‘insulation, caulking act, and duct tape’ act prices for these products have skyrocketed.

  2. Mithrandir says:


    Gov. Chris Christie (R-NJ) campaigned in Iowa (circa 12/31/2011) at a Romney rally.
    Real Clear Politics: http://www.realclearpolitics.com/video/2011/12/30/christie_after_three_years_of_obama_we_are_hopeless_and_changeless.html

    POETIC JUSTICE FOR PROTESTOR skip through the video to minute, 1:48.

    “You are the 1%! You are the 1%”—CLANG!

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