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Jim Sinclair’s Commentary
This is for starters.
CBO: Budget deficit hit record $1.4T in 2009
By ANDREW TAYLOR, Associated Press Writer Andrew Taylor,
Associated Press Writer – Wed Oct 7, 7:02 pm ET
WASHINGTON – The federal budget deficit tripled to a record $1.4 trillion for the 2009 fiscal year that ended last week, congressional analysts said Wednesday.
The Congressional Budget Office estimate, while expected, is bad news for the White House and its allies in Congress as they press ahead with health care overhaul legislation that could cost $900 billion over the next decade.
The unprecedented flood of red ink flows from several factors, including a big drop in tax revenues due to the recession, $245 billion in emergency spending on the Wall Street bailout and the takeover of mortgage giants Fannie Mae and Freddie Mac. Then there is almost $200 billion in costs from President Barack Obama’s economic stimulus bill, as well as increases in programs such as unemployment benefits and food stamps.
The previous record deficit was $459 billion and was set just last year.
The Obama health plan would be "paid for" with new revenues and curbs in spending. But the overhaul effort would eat up tax increases and spending cuts that could be used to bring the deficit down.
Jim Sinclair’s Commentary
With an $8000 credit and a little help from HUD, who knows, maybe you can get into a house for nothing. Stimulus Plan #2.
Democrats May Extend Tax Credit for Homes
By JACKIE CALMES
Published: October 7, 2009
WASHINGTON — Democratic Congressional leaders are working with the White House to extend an expiring $8,000 tax credit for first-time home buyers, and aides said Wednesday that they were considering making it available to current homeowners who purchase a new residence.
Extending and possibly expanding the popular home-buyers credit, which is due to expire after November, is high among options for further stimulating the economy and creating jobs, Congressional aides said, though a White House official said it was only briefly mentioned on Wednesday in an Oval Office meeting between President Obama, Speaker Nancy Pelosi of California and Senator Harry Reid of Nevada, the Senate majority leader.
The Democratic leaders met with the president to discuss a broad range of options to combat persistent high unemployment, officials say. The existing credit for first-time home buyers will expire at the end of next month if not extended, and two other components of the economic safety net — unemployment compensation and health care benefits for those who have been out of work for long periods — will expire at the end of the year.
Besides the likelihood of extending those measures, which were part of the $787 billion stimulus law earlier this year, the president and Congress were also weighing additional steps, given projections that jobs will continue to be lost into the middle of next year despite signs of economic recovery, possibly driving the unemployment rate above 10 percent. But they insist that any package will not add up to a second stimulus package, a prospect that would invite Republicans’ attacks on the effectiveness of the first.
Jim Sinclair’s Commentary
And the Fed is going to raise rates. Who in the world are they kidding.
Proposals to create jobs add up to second stimulus
Oct 8, 6:19 PM (ET)
By STEPHEN OHLEMACHER
WASHINGTON (AP) – Confronted with big job losses and no sign the U.S. economy is ready to stand on its own, Democrats are working on a growing list of relief efforts, leaving for later how to pay for them, or whether even to bother.
Proposals include extending and perhaps expanding a popular tax credit for first-time home buyers, and creating a new credit for companies that add jobs. Taken together, the proposals look a lot like another economic stimulus package, though congressional leaders don’t want to call it that.
Democratic leaders in Congress and the White House say they have no appetite for another big spending package that adds to the federal budget deficit, which hit a record $1.4 trillion for the budget year that ended last week.
But with unemployment reaching nearly 10 percent, many lawmakers are feeling pressure to act. Some of the proposals come from the Republicans’ playbook and focus on tax cuts, even though they, too, would swell the deficit.
"We have to do something for the unemployed, politically and economically," said Rep. Charles Rangel, D-N.Y., chairman of the tax-writing Ways and Means Committee.
Jim Sinclair’s Commentary
Somewhat deeper and therefore more difficult to understand, there is reality to this presentation with longer term significance.
The OTHER Economic Crisis
Wednesday, October 7, 2009
You know all about the subprime, alt-a, option arm, and commercial real estate crises.
You’re well-aware of the house of cards built with credit default swaps, securitized assets and other exotic investments.
You’ve heard about the massive debt overhang threatening individuals, companies and the country as a whole, and the massive de-leveraging which is still to occur.
You’re aware of the soaring unemployment rate, the tapped out consumer, and many other economic problems.
But do you know about the demographic crisis?
What Demographic Crisis?
Harry Dent and other financial advisors who have examined American demographics say that we’re in big trouble.
Specifically, they say that the basic health of any country’s economy is largely driven by the number of its citizens who are in their peak spending years.
For example, the peak Japanese spending range has been estimated to be comprised of 39-43 year olds. The more 39-43 year olds Japan has at any given time, the more consumer spending there will be, as these are the folks who are the big spenders in Japan. Dent argues that the Japanese economy will tend to grow when the number of 39-43 year olds grows, and to shrink when it shrinks.
Jim Sinclair’s Commentary
This problem dwarfs Iran even though few really understand why and when.
Taliban Threat to Pakistan’s Stability?
As Americans Fight for Stability in Afghanistan, Is Stability in Pakistan Even More Crucial?
By Terry McCarthy
(CBS) Swat Valley Pakistan went from tourist heaven to terrorist hell in less than two years.
CBS News Correspondent Terry McCarthy reports last February the Taliban were in control. Women were publicly flogged for daring to refuse forced marriages, or walking unaccompanied in the streets. The Taliban banned music, blew up schools and slit policemen’s throats at will.
"They were beheading in this square," said Dost Mohammad, a computer school owner.
For years the Pakistani government has allowed extremists to live along its borders, but it was only when the Taliban took over this once popular tourist valley that people suddenly started to realize the stability of their entire country was being threatened.
In May 30,000 troops retook the Valley but the Taliban’s advance into Pakistani heartland was shocking – particularly because this is a country that has some 80 nuclear weapons, and has conducted successful underground tests.
"I can assure you with full assurance, there is no danger at all," said Pakistan Interior Minister Rehman Malik.
Jim Sinclair’s Commentary
Stimulus Plan #2, not called Stimulus Plan #2, is definitely on its way.
U.S. Retail Center Vacancies Rise to 17-Year High, Reis Says
By Daniel Taub
Oct. 8 (Bloomberg) — Vacancies at U.S. shopping centers rose in the third quarter to a 17-year high as unemployment climbed, consumers cut spending and stores closed, real estate research company Reis Inc. said.
Vacancies at neighborhood and community shopping centers increased to 10.3 percent, the highest level since 1992, from 8.4 percent a year earlier, New York-based Reis said today. Vacancies at regional and super-regional malls rose to 8.6 percent from 6.6 percent a year earlier, a high for this decade.
“Until we see stabilization and recovery take root in both consumer spending and business spending and hiring, we do not foresee a recovery in the retail sector until late 2012 at the earliest,” Victor Calanog, Reis research director, said in a statement.
U.S. payrolls dropped by 263,000 in September and the unemployment rate rose to 9.8 percent, the highest since 1983, according to Labor Department data. Retail sales excluding automobiles, gas stations and restaurants fell 4.3 percent in August from a year earlier, according to the Washington-based National Retail Federation.
Occupied space at neighborhood and community shopping centers dropped by 5.3 million square feet in the third quarter while developers added less than 600,000 square feet that went empty, Reis said.
Jim Sinclair’s Commentary
We should change this headline to "The new economic order raises calls for the dollar’s slide."
Dollar’s Slide Gives Rise to Calls for New Reserve
By Frank Ahrens
Washington Post Staff Writer
Wednesday, October 7, 2009
The U.S. dollar continued its six-month slide this week amid a growing international chorus that wants the dollar replaced — or at least supplemented — as the world’s reserve currency, a move that would end the greenback’s six decades of global dominance.
The dollar has come under attack from abroad as the economic crisis has played out, thanks to the Federal Reserve’s decision to flood a seized-up financial system with liquidity last fall. The central bank’s moves likely staved off deflation, but the massive influx of new dollars has devalued existing ones. Foreign nations are worried that the massive U.S. national debt and rising deficits are not being addressed. And though inflation is not yet a concern in the United States, a prolonged slide in the dollar’s value could lead to higher prices for consumers.
Further, large emerging economies — such as China, Russia, Brazil and India — are tired of kow-towing to the American buck, and sense an opportunity to knock a weakened dollar off its imperial perch.
"The U.S. dollar is headed for also-ran status, and it will continue to lose its value against many other currencies and assets," Miller Tabak equity strategist Peter Boockvar said. "The rest of the world wants the U.S. dollar to lose influence, but no one wants it to be abrupt, as it’s in no one’s interest. An evolutionary process is what is wanted."
Jim Sinclair’s Commentary
Stimulus Plan #2 will be introduced in bits and pieces, but not named Stimulus Plan #2.
Senate Democrats reach deal on aid to jobless
Plan now includes 14 more weeks of benefits in all 50 states
WASHINGTON – Senate Democrats said Thursday they have reached a deal to extend unemployment insurance benefits
to the nearly 2 million jobless workers across the country who are in danger of running out of assistance by the end of the year.
The agreement would give an additional 14 weeks of benefits to jobless workers in all 50 states. Workers in states with an unemployment rate at 8.5 percent or above would receive six weeks on top of that.
Senate Majority Leader Harry Reid, D-Nev., tried to bring the measure to a quick vote on the Senate floor, but Republicans objected, saying they needed more time to study the proposal and its costs and possibly offer amendments
