May 2009

The Precipitous Decline in the U$D

Last years sudden surge in demand for the U$D as the debt bubble burst allowed an artificial jump in the U$D index. That .... is over.

The U$D is now sounding its death nell as our trading partners are seeking ways to minimize their exposure to our exported inflation.

You may have heard about the recent China/Brazil trade agreement.

Chinese President Hu Jintao and Brazilian President Lula da Silva witnessed the signing of 13 agreements in Beijing.

The highlight was a $10 billion loan from China Development Bank to Brazil's state-owned Petrobras oil company. In return, Petrobras is to supply China's state-owned Sinopec with up to 200,000 barrels of oil a day for the next 10 years.

[..}China last month overtook the United States to become Brazil's number one trading partner, with two-way trade in April reaching $3.2 billion.

GM gets more money to declare bankruptcy and offshore outsource the jobs?

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GM is getting yet another $4 billion of U.S. taxpayer money. This makes their bail out loan total $19.4 billion. This figure does not include the Canadian taxpayer money also given to GM.

Yet GM is heading towards bankruptcy at the end of the month. Supposedly the bankruptcy is a show down with GM bondholders and investors, but why pump more U.S. taxpayer money into a company that is planning to offshore outsource the jobs?

GM has already stated their intent to offshore outsource 98% of production, as part their (government approved) restructuring plans.

Do you want your taxpayer dollars going to a company who is busy squeezing workers and planning to offshore outsource their jobs?

Friday Movie Night - Frontline's Sick Around America Edition

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It's Friday Night! Party Time!   Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!

 

Tonight's video is Frontline's Sick Around America.

 

Now the start of this video shows someone from Microsoft who clearly is not under the age of 30. We know this is false and Microsoft uses thousands of H-1B workers, contractors and other methods to labor arbitrage workers and deny full participation in benefits. So take their corporate health care plug with a grain of salt.

 

Dollar decline taking on "life of its own"

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The trouble started yesterday when Pimco's Bill Gross said that America's precious AAA debt rating was in trouble.

The United States will face a downgrade in "at least three to four years, if that, but the market will recognize the problems before the rating services -- just like it did today," Gross told Reuters.

That admission, while obvious, forced the markets to recognize a trend that was already several months old.
Even Treasury Secretary Geithner had to speak up about the concern and call for cutting the federal deficit.

"Fed’s warn of possible inflation"

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No kidding?!?!?!  " Mr Plosser says, “To sum up, I am optimistic that the economy and the financial system will recover,” 

I could have said the same thing because it always does recover but recover to what?  Will it recover to a robust growing economy or to a leg-less economy?  

Their money printing presses have been burning up motors trying to print enough money to pay off whoever they've made arrangements to payoff.

Their favorite way to monetize debt is again going to raise its head.  I think we have discussed the good old Carter days of inflation.  I have a serious concern that if the inflation kicks in that we may wish for the Carter days. 

Add to the inflation the coming Cap and Trade energy inflation generator and we will wish that things were as calm as the carter days.

Bank Failure Friday Comes on Thursday - BankUnited - Failure 34 for '09

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Usually we get these announcements right after business close on Friday. But today the FDIC announced:

BankUnited, a newly chartered federal savings bank, acquired the banking operations, including all of the nonbrokered deposits, of BankUnited, FSB, Coral Gables, Florida, in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC). As a result of this transaction, BankUnited, FSB, offices and branches will be operated as BankUnited offices and branches.

BankUnited's 86 offices will be open tomorrow during normal business hours. BankUnited, the successor institution, will be the largest independent bank in Florida, as was its predecessor (BankUnited, FSB). The management team is headed by John Kanas, a veteran of the banking industry and former head of North Fork Bank.

World Health Organization - U.S. Health Care Costs Rose 47% in 6 years

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WHO has a new study out on United States Health care.

Bloomberg pulled out of the report some damning facts:

Americans paid $6,719 a person for doctors, medicines and hospital visits in 2006, up from $4,570 in 2000, according to a report released today by the World Health Organization in Geneva. The yearly spending is more than nine times the global average. With a life expectancy of 78 for a person born in 2007, the U.S. trails at least 27 other countries among 193 in the report.

Anyone else following the report link, if you read the report and find some overview stats not mentioned here I hope you post them in the comments.

Obama Backs Off Panama Trade Agreement after Populist Pressure

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Amazing but true, sometimes public opinion actually has a minor twinge. Obama backs off Panama Trade agreement:

A U.S. trade accord with Panama, which is opposed by labor unions, won’t be submitted to Congress for approval until President Barack Obama offers a new “framework” for trade, an administration official said.

The decision, announced by Assistant U.S. Trade Representative Everett Eissenstat at a Senate Finance Committee hearing today, is a reversal from statements in March that the U.S. wanted to pass the accord soon. Eissenstat said today the administration wants to outline how trade fits with other priorities such as assistance for unemployed workers and health care.

Is Congress Starting to Get It?

Congress still has a long way to go in representing their constituents and not their special interest benefactors (eg. cram down bill) but we should give credit when credit is due. Yesterday, two potentially significant pieces of legislation were signed by the President: Helping Families Save Their Homes Act of 2009 and the Fraud Enforcement and Recovery Act of 2009. These pieces of legislation are potentially significant not so much because of their main objectives (which are significant in their own way) but for two potentially powerful amendments included in each.

Helping Families Save Their Homes Act of 2009

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