We need to catch a whale or two...

Many are the crimes. . . . .

Well, GOPee. What's your answer?!?!

Britain
FTSE 100
6,468.62
–18.57
–0.29%Germany
DAX
8,677.26
–47.57
–0.55%France
CAC 40
4,206.10
–13.88
–0.33%

http://www.businessinsider.com/whats-behind-chinas-ugly-export-data-2013-10

Earlier this weekend, China reported trade data which showed exports fell 0.3% year-over-year in September.
This compares with a 7.2% rise in August.

A breakdown by region showed that exports to the U.S. climbed 4.2% in September, compared with 6.1% the previous month. While exports to the EU fell 1%, compared with a 2.1% rise in August.

Exports to Japan ticked up. But exports to the Association of Southeast Asian Nations (ASEAN) climbed just 9.8% in September, compared with 30.8% in August.



Read more: http://www.businessinsider.com/whats-behind-chinas-ugly-export-data-2013-10#ixzz2hgpdXBEJ

http://www.businessinsider.com/china-inflation-for-september-2013-10

Chinese consumer prices climbed 3.1% year-over-year (YoY) in September, beating expectations for a 2.8% rise.
This compares with a 2.6% rise in August.

Meanwhile, producer prices fell 1.3% in September, compared with expectations for a 1.4% fall. This compares with a 1.6% fall the previous month.

Producer prices were down for the sixth straight month, but economists believe they bottomed out in July.



Read more: http://www.businessinsider.com/china-inflation-for-september-2013-10#ixzz2hgsAwZWT

http://www.businessinsider.com/asia-market-open-october-13-2013-10

Asian markets are open, and Australia has followed U.S. futures into negative territory.
The S&P/ASX 200 was off -0.62%, which closely tails U.S. S&P futures, which are now down -0.77%.

Korea's Kospi opened higher, turned red, and how now settled at +0.02%.

The Nikkei is closed.

Chinese export data unexpectedly fell over the weekend.



Read more: http://www.businessinsider.com/asia-market-open-october-13-2013-10#ixzz2hgsej6Vo

http://www.businessinsider.com/debt-ceiling-disaster-scenario-that-doesnt-involve-default-2013-10

Zachary Goldfarb and Jim Tankersley at The Washington Post have a nice look at what a post-debt ceiling economy would look like, and the scary thing is that it could be very bad even if you assume there's some way to go on without an out-and-out default on the nation's debt.

According to the Bipartisan Policy Center, which has done the most detailed analysis of federal finances in a debt-ceiling breach, administration officials would have to consider delaying or suspending tens of billions of dollars in critical payments to low-income people and seniors.

Under the most alarming scenario, as soon as Friday, payments to Medicare and Medicaid providers, unemployment benefits, Social Security checks and tax refunds would be postponed for one to four days.

Food stamps due to be distributed Oct. 25 could be held until Oct. 30. The same would happen to payments to defense contractors.

With huge payments due in early November, the situation would become grimmer. Nearly $60 billion in Social Security checks, veterans benefits and pay for active-duty troops is due Nov. 1. Those could be delayed nearly two weeks, according to the Bipartisan Policy Center’s analysis.



Read more: http://www.businessinsider.com/debt-ceiling-disaster-scenario-that-doesnt-involve-default-2013-10#ixzz2hgtcV8v3

It is exactly what they wished for.

Whereas, we would prefer to shut down the Military Occupations and Corporate Subsidies, including Energy and Agribusiness and the abusers of comsumers, wherever they may operate...

WELL WORTH THE READ

http://www.nytimes.com/2013/10/14/opinion/krugman-the-dixiecrat-solution.html



...Stocks surged last Friday in the belief that House Republicans were getting ready to back down on their ransom demands over the government shutdown and the debt ceiling. But what Republicans were actually offering, it seems, was the “compromise” Paul Ryan, the chairman of the House Budget Committee, laid out in a Wall Street Journal op-ed article: rolling back some of the “sequester” budget cuts — which both parties dislike; cuts in Medicare, but with no quid pro quo in the form of higher revenue; and only a temporary fix on the debt ceiling, so that we would soon find ourselves in crisis again...I do not think that word “compromise” means what Mr. Ryan thinks it means. Above all, he failed to offer the one thing the White House won’t, can’t bend on: an end to extortion over the debt ceiling. Yet even this ludicrously unbalanced offer was too much for conservative activists, who lambasted Mr. Ryan for basically leaving health reform intact. Does this mean that we’re going to hit the debt ceiling? Quite possibly; nobody really knows, but careful observers are giving no better than even odds that any kind of deal will be reached before the money runs out. Beyond that, however, our current state of dysfunction looks like a chronic condition, not a one-time event. Even if the debt ceiling is raised enough to avoid immediate default, even if the government shutdown is somehow brought to an end, it will only be a temporary reprieve. Conservative activists are simply not willing to give up on the idea of ruling through extortion, and the Obama administration has decided, wisely, that it will not give in to extortion. So how does this end? How does America become governable again?

One answer might be that we somehow stumble through the next 13 months, and voters punish Republican tactics by returning the House to Democratic control. Recent polls do show a large Democratic advantage on the generic House ballot. But remember, Democratic House candidates already “won” in 2012, in the sense that they received more votes in total than Republicans. Yet the vagaries of district boundaries — partly, but not entirely, the result of gerrymandering — meant that the Republican majority in seats remained, and it would probably take a really huge Democratic sweep to dislodge G.O.P. control. There is, however, another solution, and everyone knows what it is. Call it Dixiecrats in reverse.

Here’s the precedent: For a long time, starting as early as 1938, Democrats generally controlled Congress on paper, but actual control often rested with an alliance between Republicans and conservative Southerners who were Democrats in name only. You may not like what this alliance did — among other things, it killed universal health insurance, which we might otherwise have had 65 years ago. But at least America had a functioning government, untroubled by the kind of craziness that now afflicts us. And right now we have all the necessary ingredients for a comparable alliance, with roles reversed. Despite denials from Republican leaders, everyone I talk to believes that it would be easy to pass both a continuing resolution, reopening the government, and an increase in the debt ceiling, averting default, if only such measures were brought to the House floor. How? The answer is, they would get support from just about all Democrats plus some Republicans, mainly relatively moderate non-Southerners. As I said, Dixiecrats in reverse.

The problem is that John Boehner, the speaker of the House, won’t allow such votes, because he’s afraid of the backlash from his party’s radicals. Which points to a broader conclusion: The biggest problem we as a nation face right now is not the extremism of Republican radicals, which is a given, but the cowardice of Republican non-extremists (it would be stretching to call them moderates). The question for the next few days is whether plunging markets and urgent appeals from big business will stiffen the non-extremists’ spines. For as far as I can tell, the reverse-Dixiecrat solution is the only way out of this mess.

AIN'T GONNA HAPPEN, DR. KRUGMAN. THE NON-EXTREMISTS ARE NOT EVEN HEELING TO THEIR CORPORATE MASTERS. THEY AREN'T SUICIDAL...THEY ARE TERRORIZED BY THEIR TEA PARTY RELATIONS.

AND THE LAST THING THIS COUNTRY NEEDS IS ANOTHER UNHOLY ALLIANCE. THE DIXIECRAT/GOP CONSPIRACY WAS AND IS AN ENDURING BLOT UPON THE DEMOCRATS OF THAT PRE-REAGAN TIME, WHO SHOULD HAVE EXERCISED SOME PARTY DISCIPLINE AND KICKED OUT OR PRIMARIED OUT THE DIXIECRATS, OR AT THE VERY LEAST, DEPRIVED THEM OF COMMITTEE CHAIRS.

So the struggle is not one to convert Southern Baptists to Darwinism or to get racists to celebrate diversity. The on-going power struggle between the local elites of the former Confederacy and their allies in other regions and the rest of the United States is not primarily about personal attitudes. It is about power and wealth.

"...and their allies in other regions and the rest of the United States..." Many of whom are Democratic Party supporters and electeds and who just want to give the dupes a wee bit more bread to keep them coming to the circuses, off the streets, and somewhat grumbling-ly but basically content with the status quo.

http://hosted.ap.org/dynamic/stories/E/EU_EUROPE_ECONOMY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-10-14-05-59-22

LONDON (AP) -- Industrial output across the eurozone rebounded in August, official figures showed Monday, raising hopes that the sector will contribute to a pick-up in economic growth.

Eurostat, the EU's statistics office, said industrial production rose 1 percent. The increase was roughly in line with market expectations and the biggest monthly rise since July 2011. It also recouped July's equivalent decline - summer figures can be volatile given the holiday season.

The increase suggests the sector will contribute to the eurozone economic recovery if September shows a rise. Recent surveys have suggested that the sector continued to grow during September, though not spectacularly given the headwinds facing the eurozone, such as high government debt and near-record unemployment in many countries. The elevated value of the euro may also put a dampener in the months ahead as it potentially makes eurozone exports less competitive in the international marketplace.

"The recovery in eurozone manufacturing should gain momentum in the second half of the year," said Anna Zabrodzka, economist at Moody's Analytics. "Nevertheless, euro area growth risks remain weighted to the downside."

http://hosted.ap.org/dynamic/stories/U/US_BUDGET_BATTLE?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-10-14-03-47-38

WASHINGTON (AP) -- The United States moved perilously closer to an economy-rattling default and a partial government shutdown entered its third week as Senate Democratic and Republican leaders remained at odds over spending in their last-ditch negotiations to end the crises gripping the nation.

Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., spoke by phone Sunday but failed to agree on a deal to raise the nation's borrowing authority above the $16.7 trillion debt limit or reopen a government still shuttered on its 14th day. Congress is racing the clock with Treasury Secretary Jack Lew warning that the U.S. will quickly exhaust its ability to pay the bills on Thursday.

The reaction of world markets and the Dow Jones on Monday could provide the necessary jolt to Senate leaders, who represent the last, best chance for a resolution after talks between President Barack Obama and House Republican leaders collapsed.

The shutdown has furloughed 350,000 federal workers, impeded various government services, put continued operations of the federal courts in doubt and stopped the IRS from processing tax refunds. Some parks and monuments remain closed, drawing a protest at the National World War II Memorial on Sunday that included tea party-backed lawmakers who had unsuccessfully demanded defunding of President Barack Obama's 3-year-old health care law in exchange for keeping the government open.

http://www.bbc.co.uk/news/business-24515290


The head of the International Monetary Fund, Christine Lagarde, has warned that a US default could tip the world into recession.

In a US TV interview she said a default would result in "massive disruption the world over".

The US Treasury will start to run short of funds on Thursday if no agreement is reached for it to raise its debt limit.

Democratic and Republican leaders in the Senate held direct talks for the first time in weeks on Saturday.

http://www.afp.com/en/node/1118281

Tax the rich and better target the multinationals: The IMF has set off shockwaves this week in Washington by suggesting countries fight budget deficits by raising taxes. Tucked inside a report on public debt, the new tack was mostly eclipsed by worries about the US budget crisis, but did not escape the notice of experts and nongovernmental organizations (NGOs).

"We had to read it twice to be sure we had really understood it," said Nicolas Mombrial, the head of Oxfam in Washington. "It's rare that IMF proposals are so surprising."

Guardian of financial orthodoxy, the International Monetary Fund, which is holding its annual meetings with the World Bank this week in the US capital, typically calls for nations in difficulty to slash public spending to reduce their deficits. But in its Fiscal Monitor report, subtitled "Taxing Times", the Fund advanced the idea of taxing the highest-income people and their assets to reinforce the legitimacy of spending cuts and fight against growing income inequalities.

"Scope seems to exist in many advanced economies to raise more revenue from the top of the income distribution," the IMF wrote, noting "steep cuts" in top rates since the early 1980s.

According to IMF estimates, taxing the rich even at the same rates during the 1980s would reap fiscal revenues equal to 0.25 percent of economic output in the developed countries.

"The gain could in some cases, such as that of the United States, be more significant," around 1.5 percent of gross domestic product, said the IMF report, which also singled out deficient taxation of multinational companies.

In the US alone, legal loopholes deprive the Treasury of roughly $60 billion in receipts, the global lender said. The 188-nation IMF said that it did not want to enter into a debate on whether the rich should pay more taxes. But, it said: "The chance to review international tax architecture seems to come about once a century; the fundamental issues should not be ducked."

The IMF managing director, Christine Lagarde, kept up the sales pitch for a more just fiscal policy.

"It's clearly something finance ministers are interested in, it's something that is necessary for the right balance of public finances," said Lagarde, a former French finance minister, in a panel discussion Wednesday.

"There are lot of wasted opportunities," she added.

...Organisation for Economic Co-Operation and Development, which is leading the global battle against tax havens and tax evasion by multinationals, welcomed the IMF at its side.

"We're happy to see this. There is a place for everyone. The Fund can bring a real contribution on economic analyses," Pascal Saint-Amans, head of the OECD's center for tax policy, told AFP.

In the corridors, however, a quiet skirmish is underway between the two organizations for the leadership of the tax-haven offensive ordered by the Group of 20 major economies...

http://www.bbc.co.uk/news/world-middle-east-24517595

The 2013 Nobel Prize in economics has been awarded to Eugene Fama, Lars Peter Hansen and Robert Shiller.

It was awarded for their "empirical analysis of asset prices".

http://www.bbc.co.uk/news/business-24516289


India's inflation rate rose to a seven-month high in September, limiting the room for authorities to ease monetary policy as they look to spur growth.

The Wholesale Price Index, India's main gauge of inflation, rose 6.46% from a year earlier, up from 6.1% in August.

Rising consumer prices have been a concern for policymakers, preventing them from taking aggressive measures to boost India's slowing economy.

Analysts say the central bank could raise interest rates as a result.

http://www.bbc.co.uk/news/business-24516280

Consumer prices in China rose more than forecast in September, fuelled mainly by a surge in food prices.

Prices rose 3.1% during the month, from a year earlier, up from 2.6% in August, the National Bureau of Statistics said.

The bureau said that food prices rose 6.1% from a year ago due to the impact of national holidays, as well as droughts and floods in some regions.

Some analysts said that rising prices had reduced the chance of any major monetary policy moves by Beijing.

http://admin.alternet.org/economy/bank-fines-and-crime?akid=11023.1084699.fHwAAY&rd=1&src=newsletter907366&t=3&paging=off&current_page=1#bookmark

...Since the recent financial crisis and housing collapse, some of Wall Street’s biggest banks have faced fines from regulators reaching into billion-dollar territory. In the latest news, JPMorgan Chase is looking at $11 billion in fines for pushing crap mortgage securities on unwary investors. That sounds like a hefty amount of cash—it’s about the gross domestic product of Kenya, and tops that of Iceland and Bahrain. As journalist Pat Garafalo has noted, $11 billion is equal to what all the major banks paid together in 2012. The sum would be the largest single financial fine in history, if in fact it ever is paid (JPMorgan Chase is reported to be in negotiations that might reduce it).

So what happens to all that dough? Will it really change anything? Let’s follow the money trail. Who gets fined, and for what? Investigators from the SEC, the U.S. Justice Department, a smorgasbord of state governments, and other regulatory agencies have been fining financial institutions for everything from concealing risky products, to illegally kicking soldiers out of their homes, to trying to scam bailout money...Now, keep in mind that so far we’re only talking about the SEC, which deals with various kinds of market scammers like inside traders, accounting fraudsters, and crooks who dupe investors. If you start going through all the various agencies and the frauds they deal with, you may feel as if you’ve plunged into the 9 Circles of Financial Hell. The U.S. Commodity Futures Trading Commission has its own list of enforcement actions, which covers hustlers who screw around with futures and option markets. Then there’s the Consumer Financial Protection Bureau, which deals with jerks who rip off consumers with products like credit cards and criminals who take kickbacks that raise prices on things like mortgage payments. Over at the Department of Justice, they watch out for your price-fixers, your rate-riggers, and your money launderers. The Office of the Comptroller of the Currency handles swindlers of the sort who steal your financial info and make up phony investment programs, along with debt collectors. And so on. There’s a good bit of overlap between regulators, and when there’s a big scam afoot, several agencies will often file suit against the same company... The SEC has a list of firms whose activity “led to or arose from” the financial crisis on its website. It tells you what they have been charged with, what fines have been sought and what has been paid. The list is pretty long. Here’s just a small sample of the 161 entities and individuals charged for a grand total of $2.73 billion collected so far in settlements:

Goldman Sachs: Charged with conning investors on a financial product tied to subprime mortgages as the U.S. housing market started tanking. Goldman agreed to pay a record penalty in $550 million settlement and reform its business practices. A jury found former Goldman Sachs vice-president Fabrice Tourre liable for fraud.

Citigroup: The SEC charged the company and two executives with misleading investors about exposure to subprime mortgage assets. Citigroup paid a $75 million penalty to settle charges, and the executives also paid penalties.

Bank of America: Charged with misleading investors about billions of dollars in bonuses being paid to Merrill Lynch executives at the time of its acquisition of the firm, and failing to disclose ginormous losses that Merrill sustained. BofA paid $150 million to settle charges.



Where does the money go?

That’s the billion-dollar question. Regulators love to brag about all the money they extract from financial transgressors, which comes in the form of various fines and “disgorgements” (returns of wrongful profits) to settle charges. But does the money go to victims? Does it end up in the Treasury? Do regulators use it to fund more investigations? Buy snazzy new furniture for the office? The answers are not always easy to come by. Let’s take a look at JPMorgan. This year alone, the megabank has paid $3.68 billion to settle various criminal probes into stuff ranging from manipulating electricity markets to ripping off credit card customers. A big fish was the “London Whale” debacle in which over $7 billion vanished due to risky derivatives bets.For its failed risk management and unsafe practices related to that Moby Dick of a f*ck up, JPMorgan is settling for $920 million. Out of that particular amount, $200 million will go to the SEC, and another $200 million to the Federal Reserve Board. The Office of the Comptroller of the Currency will receive $300 million, while the British regulator will get $220 million. And we still haven’t gotten to the $11 billion whopper JPMorgan may have to pay out to end mortgage-bond investigations by federal and state authorities. That lump sum would presumably take care of all of the charges and would reportedly include $4 billion for relief for people who lost their houses and so on. The rest would go to pay various penalties. Where that $7 billion or so ultimately goes depends on what agency you’re talking about, and the particulars of the case.

I contacted the Department of Justice to find out how it handled fines, and no one returned my messages. (Perhaps during the shutdown, justice has been put on hold—or maybe that already happened when Attorney General Eric Holder admitted that banks had gotten too big to jail.) In any case, a former DOJ officer, Billy Jacobson, has gone on record as saying that the fines don’t pay for coffee and donuts for investigators. Instead, the money has to go the U.S. Treasury. Restitution for victims is rare, and constitutes a trivial amount of what the DOJ brings in. In 2011 the DOJ took in $2 billion in judgments and settlements, and only $116 million went to restitution. At the SEC, I got hold of a spokesperson who tersely informed me that money collected from fines does not ever come back to the agency, but rather goes into the Treasury’s general fund. Anything else would violate the agencies' statutes.

The Sarbanes-Oxley Act of 2002 also directed the SEC to create something called the Fair Fund, which in some cases, distributes monies collected from fines and disgorgements to investors. So if you invested in a company like, say, Enron, you might end up seeing some of your money returned, though rarely all of it, and the process can take years. If you happen to own stock in a company or owned a mutual fund that has been charged by the SEC, you can check the SEC website to see if there’s a settlement fund. Only a small portion of what’s in the Fair Fund has been returned to investors, so don’t hold your breath....continued my quest to follow the money by calling up the Consumer Financial Protection Bureau. The folks at the CFPB were the most helpful so far, and explained that when the bureau collects civil penalties, it drops them into something called the Civil Penalty Fund, which was established by the Dodd Frank legislation in 2010. The bureau will use the money in the Civil Penalty Fund to provide some compensation to victims, an amount which depends on various factors such as how much the victim has gotten from other sources. When the CFPB can’t find the victim or determines, for whatever reason, that it’s not “practicable” to pay them, the money goes to “consumer education” and “financial literacy programs.” That last bit is a little vague. In the end, we seem to have a large chunk of money from fines and penalties going to the U.S. Treasury, which, if you’re a deficit hawk, ought to cheer you. But the amount going to victims, though on the rise, still appears to be inadequate. Case in point: 10 megabanks, including Citi, JPMorgan Chase, and Bank of America, will have to fork over $3.3 billion in direct payments to customers who were in foreclosure during 2009 and 2010. That adds up to about $125,000 for each person who was foreclosed on even though they were up to date with their mortgage payments. Does that amount really cover the horrific cost of being kicked out of your home, losing equity, and all the other costs and inconveniences that go along with such a cataclysmic disruption? Some victims are saying no, it doesn’t, by a long shot....MASSIVE SNIP....What is clear is that fines, even the biggest ones, do little to deter criminal activity. Big banks appear to be simply calculating fines into their business models: fines, after all, don’t exceed profits, and in this scenario, what do you think the incentive is for banks to cease their fraudulent and criminal activity? If you answered, “none whatsoever,” you are likely correct. Bank fines are simply baked into financial business. Until fines are much, much bigger and perpetrators at the top face the possibility of prosecution, the crime spree will go on.

Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of 'Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.' She received her Ph.d in English and Cultural Theory from NYU, where she has taught essay writing and semiotics. She is the Director of AlterNet's New Economic Dialogue Project. Follow her on Twitter @LynnParramore.


...

http://www.bloomberg.com/news/2013-10-14/buffett-turns-to-deputies-to-help-find-successors-for-unit-ceos.html

Warren Buffett isn’t the only chief executive officer that Berkshire Hathaway Inc. (BRK/A) shareholders have to worry about replacing. Managing CEO turnover has become more demanding with the company’s expansion.

Last week the Benjamin Moore paint unit named its third chief in two years, bringing in an executive who worked before with Ted Weschler, 52, one of Buffett’s investing deputies.

As the company grows and managers get older, Buffett, 83, can’t always count on his preferred method of naming CEOs, which is to ask leaders of the more than 80 businesses to find their own successors. Benjamin Moore shows that Buffett is relying on newcomers like the paint maker’s chairman, Tracy Britt Cool, 29, and Weschler to help with the task.

“Occasionally, you’re going to find subsidiaries that just don’t have a second-in-command,” Robert Miles, author of “The Warren Buffett CEO: Secrets from the Berkshire Hathaway Managers” said by phone. “But I think the system works.”

http://www.informationclearinghouse.info/article36502.htm

President Barack Obama is determined to prevail in his battle with GOP congressional leaders on the debt ceiling issue, but not for the reasons stated in the media. Obama is less concerned with the prospect of higher interest rates and frustrated bondholders than he is with the big Wall Street banks who would be thrust back into crisis if there is no resolution before October 17. Absent a debt ceiling deal, the repurchase market–known as repo–would undergo another deep-freeze as it did in 2008 when Lehman Brothers defaulted triggering a run on the Reserve Primary Fund which had been exposed to Lehman’s short-term debt. The frenzied selloff sparked a widespread panic across global financial markets pushing the system to the brink of collapse and forcing the Federal Reserve to backstop regulated and unregulated financial institutions with more than $11 trillion in loans and other obligations. The same tragedy will play out again, if congress fails lift the ceiling and reinforce the present value of US debt.

Repo is at the heart of the shadow banking system, that opaque off-balance sheet underworld where maturity transformation and other risky banking activities take place beyond the watchful eye of government regulators. It is where banks exchange collateralized securities for short-term loans from investors, mainly large financial institutions. The banks use these loans to fund their other investments boosting their leverage many times over to maximize their profits. The so called congressional reforms, like Dodd Frank, which were ratified after the crisis, have done nothing to change the basic structure of the market or to reign in excessive risk-taking by undercapitalized speculators. The system is as wobbly and crisis-prone ever, as the debt ceiling fiasco suggests. The situation speaks to the impressive power of the bank cartel and their army of lawyers and lobbyists. They own Capital Hill, the White House, and most of the judges in the country. The system remains the same, because that’s the way they like it.

US Treasuries provide the bulk of collateral the banks use in acquiring their short-term funding. If the US defaults on its debt, the value that collateral would fall precipitously leaving much of the banking system either underwater or dangerously undercapitalized. The wholesale funding market would grind to a halt, and interbank lending would slow to a crawl. The financial system would suffer its second major heart attack in less than a decade. This is from American Banker:


By some estimates, the amount of liquidity that would be drained from the system immediately following a default would be roughly $600 billion, enough to require emergency action by either the Fed or the US Treasury. Despite post-crisis legislation that forbids future bailouts, the government would surely ride to rescue committing taxpayer revenues once again to save Wall Street.

Keep in mind, the US government does not have to default on its debt to trigger a panic in the credit markets. Changing expectations can easily produce the same result. If the holders of US Treasuries (USTs) begin to doubt that the debt ceiling issue will be resolved, then they’ll sell their bonds prematurely to avoid greater losses. That, in turn, will push up interest rates which will strangle the recovery, slow growth, and throw a wrench in the repo market credit engine. We saw an example of how this works in late May when the Fed announced its decision to scale-back its asset purchase. The fact that the Fed continued to buy the same amount of USTs and mortgage-backed securities (MBS) didn’t stem the selloff. Long-term rates went up anyway. Why? Because expectations changed and the market reset prices. That same phenom could happen now, in fact, it is happening now. The Financial Times reported on Wednesday that “Fidelity Investments, the largest manager of money market funds… had sold all of its holdings of US Treasury bills due to mature towards the end of October as a “precautionary measure.” This is what happens when people start to doubt that US Treasuries will be liquid cash equivalents in the future. They ditch them. And when they ditch them, rates go up and the economy slips into low gear. (Note: “China and Japan together hold more than $2.4 trillion in U.S. Treasuries” Bloomberg)

Now the media has been trying to soft-peddle the implications of the debt ceiling standoff by saying, “No one thinks that holders of USTs won’t get repaid.” While this is true, it’s also irrelevant. The reason that USTs are the gold standard of financial assets, is because they are considered risk-free and liquid. That’s it. If you have to wait to get your money, then the asset you purchased is not completely liquid, right? And if there is some doubt, however small, that you will not be repaid in full, then the asset is not really risk free, right? This is what the Fidelity flap is all about. It’s about the erosion of confidence in US debt. It’s about that sliver of doubt that has entered the minds of investors and changed their behavior. This is a significant development because it means that people in positions of power are now questioning the stewardship of the present system. And that trend is going to intensify when the Fed begins to reduce its asset purchases later in the year, because winding down QE will precipitate more capital flight, more currency volatility and more emerging market runaway inflation. That’s going to lead to more chin scratching, more grousing and more resistance to US stewardship of the system. None of this bodes well for Washington’s imperial aspirations or for the world’s reserve currency, both of which appear to be living on borrowed time. The media has done a poor job of explaining what’s really at stake. While, it’s true that higher interest rates would make consumer loans more expensive and put the kibosh on the housing recovery, that’s not what the media cares about. Not really. What they care about is the looming massacre in shadow banking where USTs are used as collateral to secure short-term loans by the banks so they can increase their leverage by many orders of magnitude...



Mike Whitney lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. Whitney’s story on declining wages for working class Americans appears in the June issue of CounterPunch magazine. He can be reached at fergiewhitney@msn.com.

http://finance.yahoo.com/news/world-top-bankers-warn-dire-175607831.html

Three of the world's most powerful bankers warned of terrible consequences if the United States defaults on its debt, with Deutsche Bank chief executive Anshu Jain claiming default would be "utterly catastrophic."

"This would be a very rapidly spreading, fatal disease," Jain said on Saturday at a conference hosted by the Institute of International Finance in Washington.

"I have no recommendations for this audience...about putting band aids on a gaping wound," he said.

Jain, JPMorgan Chase chief executive Jamie Dimon and Baudouin Prot, chairman of BNP Paribas, said a default would have dramatic consequences on the value of U.S. debt and the dollar, and likely would plunge the world into another recession....On Saturday, Dimon said banks are already spending "huge amounts" of money preparing for the possibility of a default, which he said would threaten the global recovery after the 2007-2009 financial crisis.

"We need global growth," he said. "We are on the verge of getting it. Please let's not shoot ourselves in the foot."

Dimon also defended JPMorgan against critics who say the bank has become too big to manage. It has come under scrutiny from numerous regulators and on Friday reported its first quarterly loss since Dimon took over, due to more than $7 billion in legal expenses.

http://finance.yahoo.com/news/europe-prepares-come-clean-hidden-131235605.html

Euro zone countries will consider on Monday how to pay for the repair of their broken banks after health checks next year that are expected to uncover problems that have festered since the financial crisis. Nobody knows the true scale of potential losses at Europe's banks, but the International Monetary Fund hinted at the enormity of the problem this month, saying that Spanish and Italian banks face 230 billion euros ($310 billion) of losses alone on credit to companies in the next two years. Yet five years after the United States demanded its big banks take on new capital to reassure investors, Europe is still struggling to impose order on its financial system, having given emergency aid to five countries.

Finance ministers from the 17-nation currency area meeting in Luxembourg will tackle the issue of plugging holes expected to be revealed by the European Central Bank's health checks next year. The president of the European Central Bank underscored the need for action in Washington at the meetings of the International Monetary Fund and the World Bank.

"The effectiveness of this exercise will depend on the availability of necessary arrangements for recapitalizing banks ... including through the provision of a public backstop," Mario Draghi said on Friday. "These arrangements must be in place before we conclude our assessment," he said.

But the ministers' talks face an additional hindrance because Germany's finance minister, Wolfgang Schaeuble, is not expected to attend the two-day Luxembourg meeting. Germany, Europe's biggest economy, is in talks to form a new government.

During the region's debt turmoil, the European Union conducted two bank stress tests, considered flops for blunders such as giving a clean bill of health to Irish banks months before they pushed the country to the brink of bankruptcy. The ECB's new checks are seen as the last chance to come clean for the euro zone as the bloc tries to set up a single banking framework, known as banking union. The debate opens amid ebbing political enthusiasm for banking union - originally planned as a three-stage process involving ECB bank supervision, alongside an agency to shut failing banks and a system of deposit guarantees. It would be the boldest step in European integration since the crisis.

"We have to find a solution now," said Michel Barnier, the EU Commissioner in charge of financial regulation, urging faster progress in the slow talks. "The next financial crisis is not going to wait for us."

MORE ROAD BUMPS AT LINK

to stand by with the O2 tank....

::snort::

http://www.bloomberg.com/news/2013-10-13/property-bonds-earn-five-times-global-debt-return-china-credit.html

Dollar bonds issued by China’s developers are delivering five times the global average for debt denominated in the U.S. currency as housing demand strengthens in the world’s most-populous nation.

Property securities, which account for 32 percent of the Bank of America Merrill Lynch index of China’s dollar bonds, have advanced 5.7 percent since the end of June, after handing investors a 1.6 percent loss in the first six months of this year. That compares with a 3.5 percent average gain in overall Chinese notes in the greenback and 1.2 percent for debt in the currency globally, according to BofA indexes.

Home sales in China have increased as the economy shows signs of a rebound and the government refrains from adding to market-cooling measures. Country Garden Holdings Co., controlled by Yang Huiyan, the nation’s richest woman, said last week it had already exceeded its 2013 property sales target by the end of September. Premier Li Keqiang plans to build homes as an estimated 260 million migrant workers, twice the population of Japan, need to move into cities to meet demand for labor.

“With almost half of China’s population still living in rural areas, housing demand will rise as the nation continues its urbanization drive,” said Ken Hu, Hong Kong-based chief investment officer at BOCHK Asset Management, a unit of China’s fourth-largest lender. “Developers are getting lower profit margins but turnover has increased, which is positive for bondholders. We prefer those with strong cash flows and continue to buy property bonds on a selective basis.”

http://www.bloomberg.com/news/2013-10-14/u-s-corporate-profit-growth-slows-as-shutdown-risks-rise.html

Prospects for a recovery in U.S. corporate profits this year are dimming after third-quarter earnings growth slowed and the federal government’s shutdown hindered trade and threatened to crimp consumer spending.

Earnings rose an estimated 1.4 percent for Standard & Poor’s 500 Index companies last quarter, trailing gains of 3.8 percent in the previous three months and an average 10 percent over 15 years. Analysts have reduced the quarterly estimate by 75 percent since June, according to data compiled by Bloomberg.

Higher payroll taxes weighed on shoppers at retailers such as Wal-Mart Stores Inc., and industrial companies such as Caterpillar Inc. confronted slowing sales at a time when there was little room left to boost profit through cost-cutting. The two-week-old shutdown and impasse over increasing the U.S. Treasury’s borrowing limit add to the risk of derailing an economic recovery whose bright spots include revivals in housing and for Detroit’s automakers.

“The rebound in earnings is getting postponed,” said Todd Lowenstein, a fund manager in Los Angeles for Highmark Capital Management Inc., which manages about $19 billion. “What’s going to drive earnings going forward is really top-line growth. For that, we need a lift in global economic activity.”

When I started that topic, I did not know that Isaac Asimov died of AIDS due to a contaminated blood transfusion during heart surgery...it is a tragic thing to contemplate. And his family was so alarmed by the press treatment given Arthur Ashe, the tennis pro who also died from such a contamination, they suppressed the information for years.

I salute them for the revelation. And grieve yet again for the loss of this great mind.

America faced a real, natural disaster when AIDS walked in the door, and America has developed a massive amount of information, medication, and maybe now, a cure. Asimov would expect no less from his colleagues.

I salute that portion of America which makes real, useful change, Change that alleviates suffering, prevents death, cures disease, and goes global with their discoveries, for the benefit of all mankind.

Such a contrast to the Tea Party.

and the Corporate Scum that funds them....

Update on my brother.
According to my sister, his motorcycle is not in too bad a shape. My brother, not so good. All ribs on his left side are broken and 3 ribs on the right. One, or more, ribs on the left punctured his lung. My brother is scheduled for surgery today to screw a piece a metal to hold the broken rib together to prevent further punctures to the lung. When I visited him this weekend, he was semi-awake and talking and joking, but anxious about the surgery. Continued prayers are welcome for a successful surgery. Thanks.

I know how he feels. I spent 6 weeks in the hospital in '81 from a bike accident.

with hubby over this. Remember he is a sitar player.

He wants to ride and I has already had some minor accidents (in parking lots). He just is not an aggressive driver, and you have to have a tad of that. I always tell him there are 2 types of Cycle drivers: those who have had accidents and those that haven't. Eventually you will fit in both categories.

But prayers and well wishes to your brother. He has to be in a world of hurt.

Cause the live ones don't bounce as far.

Glad your bother is on the mend.

On the bright side if he complains about the metal plate, you can tell him he may have a

screw loose.

and, yes, twice, thank gawd for dumb ass helmet laws

Who can resist such cuteness.

She said... I hope so..

and ROFL at that photo - goddess, that's one cute pup! Lab or Newfie?

But I've never had much to do with puppies.

It's a stock photo, sort of. I googled it