Saturday, September 19, 2009

Noteworthy - Week of September 13th

This week yet another undercover investigation into ACORN was made public. This time, the investigation made its way to San Bernardino, CA, where, once again, an employee there gave the young pimp and prostitute couple advice on how to set up a prostitution business involving underage illegal aliens. This time, however, the employee admits that she used to run a call girl business, that Heidi Fleiss is her idol, and that she was in a violent relationship with her ex husband until she killed him, seemingly admitting to premeditated murder.

The next day, the senate voted to 83-7 to end HUD and transportation funding to ACORN. The seven senators voting to continue ACORN funding were: Dick Durbin (D-IL), Roland Burris (D-IL), Robert Casey (D-PA), Kirsten Gillibrand (D-NY), Patrick Leahy (D-VT), Bernie Sanders (I-VT) and Sheldon Whitehouse (D-RI).

That same morning ABC news anchor Charlie Gibson stated on Chicago's WLS-AM 890 that he "didn't know" about the ACORN undercover investigations and allegations, although Senior ABC White House Correspondent Jake Tapper had reported on his blog that the senate was voting to stop HUD and transportation funding to ACORN.

Senator Mike Johanns (R-NE) wrote Attorney General Eric Holder requesting an investigation into ACORN and Representatives John Boehner (R-OH), Eric Cantor (R-VA) and Dave Camp (R-MI) sent a letter to IRS Commissioner Doug Schulman to sever ties with the agency, which they state has received over $50 million from taxpayers since 1994.

Japan's parliament named Yukio Hatoyama as the country's new prime minister and Hirohisa Fujii, the country's new finance minister, among other posts this week. Mr. Fujii recently stated that the government should reject weakening its currency in order to help exporters.

A lobby group representing the largest banks in the world urged the G-20 nations to continue their stimulus programs and recognize the steps that the financial industry is taking to improve its practices. The IMF issued guidelines this week for ending bank relief.

The Fed is likely to buy $1.45 trillion in mortgage-linked securities despite possible resistance by a few regional Fed presidents.

The U.S. Treasury stated this week that it will shrink the emergency debt program that it started during the crisis in order to avoid hitting the $12.1 trillion debt ceiling. There is concern that the Fed will have to sell securities or print money in order to pay for interest payments.

Anti-Fed activists, led by Texas Senator Ron Paul, continue push for an audit of the Federal Reserve.

Foreign demand for long-term U.S. financial assets fell in July. China, Japan and the U.K. increased their holdings, but Russia, Luxembourg, Switzerland, Ireland and oil exporting nations decreased. Foreign investors also shunned U.S. corporate and agency bonds, as well as Treasury bonds and notes.

In a speech on the anniversary of the Lehman Brothers collapse, President Obama told Wall Street to "embrace serious financial reform, not fight it."

Citigroup is considering a multi-billion dollar sale of shares in order to minimize the government's share of the company. Under the potential scenario, the government would sell its shares in Citigroup as the company sells additional shares, a move that could net taxpayers profit as much as $10 billion.

After threatening to restrict U.S. imports of chicken and auto products, China said that it would like to openly discuss a trade solution between China and the U.S. Last week, President Obama moved to place a 35% tariff on Chinese tires, sighting unfair competition. China believes the tariffs are to support U.S. unions, are unfair and, contacted the WTO last week after the tariffs were initiated.

The rise in Asian markets has brought back the theory of decoupling, which was prominent prior to the financial collapse in 2008.

Fed Chairman Ben Bernanke stated that the recession is "very likely over" but added that the recovery is likely to be so moderate that it wouldn't produce many jobs.

William White, the well-respected former chief economist at the Bank for International Settlements, warned of a double-dip recession earlier in the week.

Senate Finance Committee Chairman Max Baucus (D-MT) unveiled his health care reform proposal this week. Some prominent Democrats are threatening not to back the bill, which is without Republican support and is estimated to cost $880 billion. The bill mandates, among other things, that all citizens have health insurance, which is likely to pinch middle class Americans the most. President Obama is pushing for union support on the health care reform bill, which allegedly contains mandates for union funding.

Russian President Medvedev called for change in the nation's "primitive" economy and corrupt practices in an attempt to separate himself from former President Putin. Medvedev stated that he could run for president in 2012. Last week, Putin signaled that he might run for president again in 2012.

The bankruptcy estate of Lehman Brothers is claiming that executives of the firm worked with Barclays to give the U.K. bank a "windfall" of at least $8.2 billion when it bought Lehman's broker-dealer business amid its fall from grace last year.

Losses by the largest U.S. credit card issuers eased last month but not enough to indicate that the business is improving materially.

The U.S. said that it would discontinue its land base missile defense agreement with Poland and the Czech Republic in favor of a mobile defense system. The announcement came on the 70th anniversary of the Russian invasion of Poland at the onset of WWII and is said to have damaged relations between both countries and the U.S. Russia applauded the move.

Turkey said that it is planning to spend close to $1 billion for its first long-range missile defense program.

Former Fed Chairman Paul Volcker, the current chairman of the White House's Economic Recovery Advisory Board, said that banks should not be allowed to place bets against their capital, rather only with their client's funds, this week. The statement is certain to stimulate debate over the topic, which may put him at odds with the Obama administration, who is requesting more oversight of the banks but does not restrict the industry's abilities as much.

Under a new proposed policy, pay policies of the banking industry would require approval from the Federal Reserve, a decision traditionally reserved for the banks' corporate boards and executives.

Dairy farmers are asking antitrust regulators to investigate their industry. Milk prices have dropped 36% in the past year, bringing prices to their lowest level in three decades. European dairy farmers are requesting their governments help prop up their industry.

The EU nominated Jose Manuel Barroso to a second term of the European Commission.

The Brazilian financial exchange is pursuing agreements with its counterpart bourses in Chile, Columbia, and Peru that would allow for cross-trading of stocks and derivatives.

Investors are using the U.S. dollar as a carry-trade, a move traditionally reserved for the Japanese Yen.

U.S. household wealth grew by 3.9% during the 2nd quarter, the first growth in income in nearly two years.

The FCC proposed new rules that would treat all internet traffic the same, meaning that applications that drain bandwidth will be equal to that of lesser uses.

Complex U.S. tax laws are costing many small business owners millions of dollars in fines, as after receiving word from the government that their tax shelters are abusive in nature.

Big power producers are fighting the derivatives bill proposed by the Obama administration, stating that the changes would make it more difficult to hedge against swings in commodity prices.


The World Bank managing director, Dr. Okonjo Iweala discussed how the financial crisis has effected Africa.

The Americas:

Argentina is in the process of passing a bill that would limit the power of media conglomerates.

A federal judge threw out the SEC's proposed settlement with Bank of America, which failed to disclose to shareholders Merrill Lynch's planned bonuses prior to their merger with the asset manager.

Google bought a Carnegie Mellon spinoff that will helps its effort to scan and newspapers and books for internet distribution.

Kodak is raising $700 million in cash via a debt investment from private equity firm KKR.

Wells Fargo CEO John Stumpf stated that Wachovia's losses are "in the same zip code" as the firm's original estimates.

Adobe is buying web-tracking firm Omniture for $1.8 billion. The deal will help customers track and make money from websites that were created with Adobe products.

Blockbuster is planning to close up to 40% of its stores during the next two years.

Best Buy raised its forecast for annual earnings and stated that holiday earnings for electronics could be stronger than expected.

Twenty-three people, including nine American Airlines employees, were indicted on cocaine trafficking allegations.

The Department of Defense endorsed sending more troops to Afghanistan, making it easier for President Obama to folllow General Stanley McChrystal's recommendation, against the wishes of the Democrat majority Congress.


Chinese farmers are raising their rent prices for their land, raising rural income purchasing power.


Corn prices rose this week as fear of a frost late next week damaging an underdeveloped crop.

The CME is expected to urge the CFTC to apply commodity-position limits across different markets so that they cannot circumvent the CME to sell on another exchange.

Natural gas rose more than 25% this week.

Mining firms are starting to resume capital spending, as companies gain confidence that demand and prices for commodities are improving.

The Anadarko Group said that it found oil this week off the coast of Sierra Leone, which could potentially open up a new oil region in the world.

U.K. firm Tullow announced that it has found the largest oil discovery in the Lake Albert region of Uganda yet-- a region where it has already found more than 700 million barrels of oil.

Italian gas and oil company Eni has decided against buying rival firm Tullow, citing cost concerns.


Auto makers are pushing European governments to continue their "cash for clunkers" programs, fearing that sales could fall dramatically if the programs are allowed to expire.

The Italian government is offering the largest tax amnesty of all the nations thus far cracking down on tax evasion.

The Irish government proposed a plan to buy up to $132 billion in property loans from struggling banks in order to shore up their balance sheets and bring liquidity into the market. The country's recession is among the worst in Europe.

Turkey's central bank reduced its interest rates by 0.50% to 7.25% and suggested that it would continue to cut rates, even as news support that its economy is stabilizing.

Middle East:

Iran agreed to meet with the U.S., China, Russia, France, U.K. and Germany to discuss its nuclear program. The meeting will take place on October 1 but the location has not yet been finalized.


BHP Billiton, the world's largest miner, is hunting for mergers, having accrued more than $18 billion in cash during the last year.


This week's Barron's "Up & Down Wall Street" by Alan Albelson.

Barron's review of this week's market news and its preview of next week's market events.

The Economist:

The Economist's review of this week's politics and business news.

The Economist's Economic and Financial Indicators:
Output, prices and jobs
The Economist commodity-price index
Economic freedom
Trade, exchange rates, budget balances and interest rates
Foreign direct investment

Et Cetera:

In a study to determine how occupation affects happiness, business owners came out on top.

WSJ 2009 Technology Innovation Awards

Possible candidates for the Nobel Prize

Education for Executives

Patrick Swayze died of cancer at the age of 57. A video montage.

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