Written on May 19, 2010
Greetings from a diverse place,
Today, I was served coffee by my Sri Lankan pal, sat next to some Germans while lunching with my Lebanese friend at a Thai restaurant. Apparently more than 75 foreign embassies in Doha. No Greeks though. Everywhere else, the Greeks, always the Greeks. Apparently nothing new…Lady Liberty via the words of Emma Lazarus, is given them the business today; like she has every minute of every day since 1912.
Not like the brazen giant of Greek fame, With conquering limbs astride from land to land;
Here at our sea-washed, sunset gates shall stand A mighty woman with a torch, whose flame
Is the imprisoned lightning, and her name Mother of Exiles. From her beacon-hand
Glows world-wide welcome; her mild eyes command The air-bridged harbor that twin cities frame. "Keep, ancient lands, your storied pomp!" cries she ' With silent lips. "Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed to me, I lift my lamp beside the golden door!"
Yearning to breathe free.
The word “mandatory” always bugged me…"obligatory because commanded." Though exerting a lot of effort, my parents had a rough time instilling that in me. Kinda goes against the whole “yearning to breathe free”…it is a word used often by smart guys implementing policies that support huge industries… as in mandatory health insurance, mandatory car insurance, mandatory FICA deductions.
In the Government owned Mandare Casino, you are incapable of handling your money or managing your own risk by yourself, but you have to play. They take your money and make all of the returns on it instead of you; and, on the off chance that something should happen to you, you will need an army of lawyers to recover anything from them. Read the smart guy small print…I win, you lose.
I am sure that you have done the math. 16-75 at $75/mo per car and two cars per household…$106,200 per family, health coverage….subtract another 12k/yr that’s $708,000.
Then FICA between you and your employer at 15.3% of your $97,500/yr salary …another $880,132.
And, $83k of that was for Medicaid, I am sure we will all get that rebate check for the new plan.
Don’t check my math or talk to me about making $97,500 at 16 yrs old…this is hyperbole…and I am on a roll!
Housing
Last week, Fannie Mae reported a first quarter net loss of $13.1 billion and a request for more capital from the U.S. Treasury. Fannie Mae’s net loss and need for capital is no surprise because the company has reported 11 straight quarterly losses since the third quarter of 2007 totaling $152.5 billion.
There is perhaps a silver lining here for US home owners. As prices usually get set at the margin, (the neighbor’s home being auctioned), serious delinquencies (loans 90 days or more past due) in FNMA’s loan portfolio have stabilized between 5-6% of total FNMA loans over the last several months after a non-stop march from 0.78% in 2007. This could signify we are nearing a low in overall US home prices. Not a bounce, more like a plane crash landing as the volume of homes being blown out at auction each month has stabilized at a record level.
Unions…coming to your business soon…
The National Mediation Board last Tuesday made it easier workers to unionize by ruling that employees of companies can organize if a majority of registered ballots are in favor of unionizing. Under existing rules, workers can unionize only if a majority of all employees vote “yes” to do so. The change creates an easier threshold to form unions.
Regarding other small sovereign defaults… Good luck on that refi Chief.
A federal-court decision last week allows a band of Chippewa Indians to stop making debt-service payments. Too bad, so sad for the lenders who, though clearly understanding Indian tribal sovereign immunity means “no recourse for your loan,” also understand that it will be the problem of the taxpayer eventually. Last week’s ruling allows the Lac du Flambeau tribe to stop making debt-service payments and keep their property. Too bad, so sad, taxpayers will cover it. Just one tribe you say…the total tribal gaming sector has a significant amount of debt coming due soon….about $1.4 billion, with a third of it maturing by 2012.
I heard a young loan officer asking “Think they will default alone, General Custer?”
Stocks are the best leading indicator.
The US consumer is dead, he owes so he pays. Not so the Chinese, the dead guy owes them. The customer (the US) is tapped out after running flat out for 10 years to fill both his houses with schtuff. He has started saving once again and US consumption is tepid at best. It stands to reason that goods bearing the “made in China” label will begin to stack up tall in warehouses; right alongside the former employees who used to work in the factory but can no longer afford housing in the city, that are now bunking there; Firstly, all those new men who migrated from the farm to the city have or are about to lose their job. Secondly, Chinese home speculation, which makes the US market look like child’s play, have never afforded the worker housing…prices have soared. Financial endeavors had been holding the GDP growth higher in China (as well as government expenditures on infrastructure). The tightening of lending executed aggressively in China this year may turn their economy fast.
The exodus of young men into the coastal cities that fuelled the boom in production now turns rather rapidly toward that of a disgruntled group of young me who are now “former employees”. Might make for a hot summer nights in Shanghai…stay tuned because their stock market is pointing their economy rapidly south.
The US CPI was negative again this month and shown above.
If the EURO is caput, a de facto strong dollar may halt any growth and put a export contraction deflation hard upon the US. A strong currency in a weak environment equals no exports. Be very careful.
Tight stops, still stormy,
Leon
No comments:
Post a Comment