Home Refinance Calculator: November 2010

Tuesday, November 30, 2010

Mish's Global Economic Trend Analysis

California School Employees’ Association (CSEA) Liars Prove "It's NOT About the Kids"
"Portugal Insolvent" says Citigroup Chief Economist; Why Ireland Will Default
Google to Offer Groupon $5-6 Billion; From Startup to Megabucks in 2 Years; "Grouponicus" Holiday Deals
Effect of Housing and Trade with China on Durable Goods Shipments 1994 to October 2010
China Approves Gold Fund; India Inflation Hits 8.5%; Universal Dumping of Spain; Lobster Smuggling Hits Australia; Asia Slowdown led by Japan, Korea

California School Employees’ Association (CSEA) Liars Prove "It's NOT About the Kids"

Posted: 30 Nov 2010 08:31 PM PST

Anyone thinking clearly knows full well public unions are blatant liars when they request more money for schools under the pretense "It's for the kids".

Well it's NOT for the kids and CSEA moves to the top of the list in proving it. If it was "all about the kids" we would not see articles like this one by Pete Peterson in The City Journal: No Volunteers, Please, We're Unionized

Petaluma is one of those idyllic small cities (population 58,000) that dot Route 101 on the way north from the Golden Gate Bridge through the wine country. But Petaluma, struggling like most municipalities in California under the current fiscal crisis, has found delivering public services—from education to public safety—anything but pleasant.

The Petaluma City Schools district has trimmed millions from its budget over the last two years, as the deficit-ridden California state government has decreased its local support by 25 percent. The cuts have meant layoffs for district employees at all levels, from teachers to playground supervisors. In response, parents and concerned Petalumans have stepped forward to try to fill the non-teaching gaps, volunteering their time to maintain school services. The volunteers have worked in new roles identified by the school administration, but they've also stepped in to perform jobs eliminated by budget cuts. But those positions are unionized by the California School Employees' Association (CSEA)—and that's where the problems started.

When volunteers began to help answer phones in the office and support the school librarian at Petaluma Junior High School, CSEA Local 212 president Loretta Kruusmagi immediately objected.

Representing 350 clerical and janitorial staff in the Petaluma school district, Kruusmagi betrays not the least concern for the kids her union supposedly serves when she glowers: "As far as I'm concerned, they never should have started this thing. Noon-duty people [lunchtime and playground assistants]—those are instructional assistants. We had all those positions. We don't have them anymore, but those are our positions. Our stand is you can't have volunteers, they can't do our work."

Public Servants or Public Liars?

Peterson precisely sums up the situation with a couple of short, to the point, and appropriately sarcastic comments about the liars at SCEA.

Notice the possessiveness with which Kruusmagi regards these "public servants." Nice to see that it's "all about the kids" at the CSEA.

If you live in Petaluma, or any other city being raped by CSEA (or any other public union on "behalf of the kids"), it is your duty to stand up to the unions and tell the unions where to go.

After all, it's you (via taxes) and your kids (via arrogant attitudes of unions acting on their behalf) who are suffering so public unions can pad their pockets with wages and benefits those in the private sector will never see, all while chanting "it's for the kids".

No matter where you live, please write your city representatives today and demand that at the next contract renewal, the city immediately outsource any and every position possible with a message that volunteers are welcome "for the sake of the kids".

Unlike CSEA, Loretta Kruusmagi, and her ilk, you will be on solid ground. Do it now. Demand change. Nothing will happen until you do, and until you do your kids will suffer.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

"Portugal Insolvent" says Citigroup Chief Economist; Why Ireland Will Default

Posted: 30 Nov 2010 01:33 PM PST

Citigroup's chief economist, just threw fat in the Euro-fire with his statement 'Insolvent' Portugal Needs Loans Soon

Portugal is "insolvent" and will probably need soon to join the emergency-loan program from the European Union and the International Monetary Fund that's available to Greece and Ireland, according to Willem Buiter, Citigroup Inc.'s chief economist.

"The market's attention is likely to turn to Portugal's sovereign, which at current levels of interest rates and growth rates is less dramatically but quietly insolvent," Buiter wrote in a report dated yesterday. "We consider it likely that it will need to access the European Financial Stability Facility soon."

"Despite the recent drama, we believe we have only seen the opening act, with the rest of the plot still evolving," Buiter wrote. "Accessing external sources of funds will not mark the end of Ireland's troubles. The reason is that, in our view, the consolidated Irish sovereign and Irish domestic financial system is de facto insolvent." This means "either the unsecured non-guaranteed creditors of the banks, and/or the creditors of the sovereign may eventually have to accept a restructuring."

Europe Debt Fears Hit More Secure Countries

As long as we are tossing fat in the fire let's discuss the fact that Europe Debt Fears Hit More Secure Countries

Fears among European bondholders spread Tuesday from the weakest members of the euro zone to other countries, including Italy and Belgium, spurring a stepped-up search for a solution to a crisis that is increasingly putting political as well as financial strain on Europe's decade-old monetary union.

Despite the commitment of 200 billion euros, or $260 billion, in bailout funds to Europe's two most stricken nations — Greece and Ireland — institutional investors were unimpressed with the rescue effort this weekend of Ireland and continued to sell bond holdings in the weaker euro-zone economies.

But what is worse for the European Union and an increasingly stretched International Monetary Fund is that investors have begun to disgorge some of their positions in Belgium, Italy and even Germany.

The recent bond market attacks on Ireland and other weak European debtors set off as soon as the German chancellor, Angela Merkel, broached the idea of requiring bondholders to take a share of the loss. They gathered speed this week when it became clear that Ireland, as well as Greece, would have to pay a still-steep 5.87 percent interest rate on their loans — a tacit acknowledgement on Europe's part, analysts say, that even with its bailout package Ireland remains a significant default risk.

"We have created more doubts than existed before," said Paul De Grauwe, an economist in Brussels who advises the president of the European Commission, José Manuel Barroso. "The interest rate now being charged for Ireland is a vote of no confidence for the package and it has obviously been inspired by a notion that we should punish our sinners. If we don't succeed in containing this thing it could lead to a disaster in terms of the euro's survival."

Another idea that has gained some ground recently is a Brady plan for indebted European economies. The plan was recently put forward by a former Treasury secretary, Nicholas F. Brady, who led an effort in 1989 to help Mexico and other Latin American economies restructure their debt — requiring bondholders to take a loss of 30 percent in exchange for new, longer dated debt instruments that had lower rates and were backed by 30-year United States zero-coupon bonds. Much criticized at the time, the plan is now seen as the first step of Latin America's recovery.

"The key was getting banks to write down their debt and accept a new security," Mr. Brady said during an interview. "Why don't people get to work and get something done?"

Why Don't We Get Something done?

Gee. That's a good question. Let's ask Christian Noyer, governor of the Bank of France, and ECB president Jean-Claude Trichet.

Noyer said "As far as I'm concerned, I exclude that there will be haircuts in the future" (yes, that's a real quote).

Trichet warned German Chancellor Angela Merkel not to "unsettle bondholders".

The ECB wants a free lunch but no haircuts. That's why nothing of merit gets done.

Moreover, the current scheme is guaranteed to blow sky high. Here's why: Ireland has to pay an average interest rate of 5.8% for the loans while shrinking its deficit from 30% of GDP to 3% of GDP.

It is impossible for Ireland to grow enough to pay back interest on the loan. Ireland will default.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Google to Offer Groupon $5-6 Billion; From Startup to Megabucks in 2 Years; "Grouponicus" Holiday Deals

Posted: 30 Nov 2010 12:15 PM PST

It's not easy to to go from startup to $6 billion in two short years. That Groupon is about to do so is testimony as to just what can happen when a good idea goes viral.

Certainly Groupon had the right idea in these cost-conscious times: super-deals on goods and services that people want.

Groupon hooks up buyers with sellers at fantastic prices, but only if enough people sign up. Sellers determine how big the group of buyers need to be in advance, and how many offers they wish to make.

That simple idea will now net Groupon a reported $5-6 Billion deal with Google.

Please consider Google Is Said to Be Poised to Buy Groupon

Google is near a deal to acquire Groupon, the pioneering online discounter, for as much as $6 billion, people with direct knowledge of the matter told DealBook on Monday.

At that price, Groupon — known for its daily discounts — would be one of Google's largest acquisitions, dwarfing its $3.1 billion purchase of DoubleClick, the display advertising giant, in 2007.

The deal would also be Google's boldest foray in local business online advertising, a large and untapped market it has been trying to get into, most recently by promoting Marissa Mayer to oversee the local business and attempting to buy Yelp, the local review site, last year.

The average Groupon deal offers 50 to 90 percent off retail goods and services, from restaurant certificates to skydiving lessons. It has grown beyond local merchants to encompass retailers like Gap, which offered a nationwide deal this summer. On the day of the Gap promotion, Groupon sold 440,000 units and generated $11 million in revenue.

Groupon's success has helped turn the company into a cash-generating machine, signing up more than 12 million registered users and reaping more than $350 million in estimated annual revenue.

"Grouponicus Deals"

Techland reports Groupon Starts "Grouponicus Deals" Series For Holiday Season

If you're one of the people who like taking advantage of Groupon's deals, your holiday is about to get better. In addition to posting a deal of the day, Groupon will also post Grouponicius offers, additional items that would make great gifts for the season.

There will be a total of 650 deals throughout this season, according to TechCrunch.Unlike the typical deals that are done at the end of the day, Grouponicius offers will last from three to five days. The first deal is a download of Rihanna's newest album LOUD, available for only $5. It marks the first time that the social buying site has attempted to distribute digital music. Some of the other offers will include popular deals that people might have missed the first time, Groupon's CEO Andrew Mason told the Wall Street Journal.

Refer Friends and Get $10 "Groupon Bucks"

Groupon has a referral program in which participants can accumulate $10 Groupon Buck for each referral.

A few months back I had the idea of accumulating the biggest pile of Groupon Bucks ever (although I have no idea what I would do with them). Alas someone actually has to buy something within 72 hours for anyone to get $10.

It's a catchy system. People getting all their friends to sign up, Groupon gets free names, and few ever collect $10 in Groupon bucks.

My aspiration of accumulating a mountain of Groupon bucks is thus now shattered, but if you are going to join anyway (it's free), you may as well use my ID to Sign Up For Groupon Offers For Your City.

After having done so, you can "Embrace Grouponicus"

Is it Possible to Live Off Groupon Alone for a Full Year?

It began with a challenge from Groupon's founder, Andrew Mason to see who would be willing to "Live Off Groupon" for an entire year, with no help from family.

Could you live off Groupons for an entire year?

The premise is simple: No cash. The Groupawn (customer chosen to Live Off Groupon) has nothing but a year's supply of Groupons good for the best things to eat, do, see and buy across the country. From skydiving and upscale cuisine to body waxing and foreign language classes, Groupon deals will shape the Groupawn's daily life. He will need to rely on the kindness of strangers for social niceties (like tax and tip) and basic human needs (like somewhere to sleep and a ride to any of Groupon's 60 cities.)

The entry page warned, "Who shouldn't apply!? Probably everyone shouldn't apply. We want to be honest from the beginning: this will be a catastrophic disruption to your life. But you will have zero expenses for a year. You'll get to travel across the country trying all the cool stuff we feature on Groupon. And you might get $100,000…in money."

But Josh Stevens stood out from the pack, displaying creativity and a will to do anything (like hitching a ride on a mail truck during the semifinal interviews in Chicago.) We confiscated his wallet, sublet his apartment and put his belongings in storage. He is ours.

Josh began his journey on May 10, 2010 – if he lasts until May 10, 2011, he will earn $100,000.

The Rules

NO CASH
Only five people allowed to visit Josh once during one year
No overnight visits from friends/family
No care packages unless approved by Groupon
No performing jobs for goods or money
Bartering Groupons for goods or services is allowed
Must be an exemplary Groupon customer at all times / polite, excellent tipper

About Josh - The Contest Winner

Josh Stevens is a 28 year old man from Chicago, Illinois, who applied for Live Off Groupon in between applying for grad school. He sports two arms, two legs, a lot of height and a jolly demeanor. He considers himself a foodie, a night owl and a Rockband enthusiast, but above all else, he is the Groupawn.

One Brave Soul Lives Off Groupon

It's now 200 days in. "Groupawn" Josh Stevens is still going strong. You can follow him at Live Off Groupon.

Back in August I had a few questions for Groupon. My questions were promptly answered by Groupon's Julie Mosser.

I had intended to do an article on Groupon back then. For some reason it just never happened. Here are my questions as they are still pertinent.

Contest Questions

How can someone live off Groupons, be a generous tipper and not use cash? It seems physically impossible. Even without the tipping factor and "unlimited Groupons" the deals all have a cash price. Even a helicopter ride for $70 and a savings of $200 or whatever, still costs $70.
Can you please explain how "unlimited Groupons" can possibly cover all costs including tipping?
Other Josh Stevens with an "unlimited" amount, what is largest amount of Groupons anyone has?
What percentage of the time so far, is Josh Stevens living in a hotel vs. other offers.

Groupon Replies

Hi Mish

Thanks for your interest in Groupon! All good questions...

Josh has been provided with unlimited Groupons that he didn't have to pay for, so even if the deal "still costs $70," Groupon gave it to him.

Groupons do not cover tax or gratuity, which is what makes the program such a smart marketing vehicle - Josh has to reach out on his blog (www.liveoffgroupon.com) Twitter, and Facebook in order to find complete strangers willing to help him.

To date he has found people willing to donate lodging, plane tickets, etc....but he can only accept them if there's some sort of barter or trade.

It's difficult to say what's the largest amount of Groupons someone has because they're constantly redeemed - it's not unusual for our best customers in each market to have a 'bank' of 40-60 that they're constantly using and replenishing.

Although we have Marcus Hotels and the Fairmont West Coast collection, Josh has spent less than half his time in hotels.

Let me know if I can get you anything else.

Julie Mosser

There you have it. "Groupawn" Josh Stevens is sailing for $100,000 and the story of a lifetime. The Groupon owners are sailing for $6 billion and the deal of a lifetime. Dreams are still possible and it can all start with the simplest of ideas.

Best wishes to both Josh Stevens and Groupon.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Effect of Housing and Trade with China on Durable Goods Shipments 1994 to October 2010

Posted: 30 Nov 2010 09:52 AM PST

Inquiring minds may be interested in a chart of the dollar value of durable goods shipments 1994 to October 2010 in nominal and real (inflation-adjusted) terms.

click on chart for sharper image

The chart is courtesy of my friend Tim Wallace.

The trends tell two distinct stories. In nominal terms note the housing boom-bust story. During the recession, shipments plunged all the way back to 1997 levels and have since "recovered" to 2005 levels.

In real (inflation-adjusted) terms, shipments fell off the scale to pre-1994 levels and in spite of a big rally, shipments are still below 1994 levels.

Those looking to bash China will note that the US and China signed an agreement for China to enter the World Trade Organization (WTO) right at the inflation-adjusted peak in durable goods shipments.

However, China did not join the WTO for another two years and besides, correlation does not imply causation (although other evidence such as trade deficits does suggest a relation).

Moreover, many see falling prices as a good thing. Others don't. For a discussion, please see Miracle of Survival and Falling Inflation Expectations

Regardless of whether you see falling prices as good or bad, China has been a deflationary force when it comes to manufactured goods. That situation is unlikely to change and it is stirring up protectionist sentiment in Congress and the administration.

Trade wars are not a good thing.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

China Approves Gold Fund; India Inflation Hits 8.5%; Universal Dumping of Spain; Lobster Smuggling Hits Australia; Asia Slowdown led by Japan, Korea

Posted: 30 Nov 2010 02:01 AM PST

International news is flying this evening. With most eyes focused on Ireland and the Euro, let's take a quick look at other news stories of merit.

China Approves Gold Fund of Funds

MarketWatch reports China Approves Gold Fund of Funds

China's securities regulators have given the go ahead for a mutual fund to invest in foreign exchange-traded gold funds, potentially tapping interest among mainland China investors who face negative real interest rates on their bank deposits and want to hedge against inflation.

Lion Fund Management Co. said they received approval from the China Securities Regulatory Commission on Monday to proceed with the fund, the first of its kind for mainland China, according to a statement posted on the Beijing-based fund provider's website.

The fund has been granted permission to invest outside of China under the Qualified Domestic Institutional Investor (QDII), the fund managers said in the statement.

The fund will invest in gold-backed exchange-traded funds operated outside of China, though the fund provider's statement didn't specify which ETFs, or which markets, it was considering.

India Economy Overheats, Inflation Hits 8.5 Percent

It's safe to add India to the list of countries growing too fast for their own good. China is the other major one.

Please consider India's Economy Expands Faster-Than-Estimated 8.9%

India's economy grew more than economists estimated last quarter, adding to evidence of a strengthening in domestic demand that's stoked inflation by placing strains on the nation's transport and power systems.

Gross domestic product rose 8.9 percent in the three months through September from a year earlier, matching the revised pace of growth in the previous quarter, the Central Statistical Organisation said in a statement in New Delhi today. That was above the 8.2 percent median estimate of 30 economists in a Bloomberg News survey.

Central bank Governor Duvvuri Subbarao on Nov. 2 raised the benchmark repurchase rate and the reverse repurchase rate by a quarter-point each to 6.25 percent and 5.25 percent, saying inflation continues to hold above the "comfort zone."

The wholesale-price inflation rate was 8.58 percent in October, compared with the "ideal" level of 4 percent to 5 percent, according to Finance Minister Pranab Mukherjee. Consumer prices are rising at a pace near 10 percent, the fastest in the Group of 20 nations after Argentina.

I fail to see how 4-5% inflation is ideal. Regardless, 8.58% is certainly not ideal and India will have to step on the brakes hard sooner rather than later. India is clearly overheating.

Asia-Wide Slowdown

China has its foot on the brakes right now and the market does not seem to be enjoying the recent ride at all. Meanwhile, please note Japan, South Korea factory output slumps as Asia shifts

Japanese companies cut production for the fifth month and by the biggest margin since February 2009, while South Korea's industrial output fell for the third month in a row, disappointing markets which had bet on a rebound.

South Korea, among the first economies to regain cruising speed after the global recession, is also losing steam, though Seoul still bets on solid export growth next year.

"The inventory rebuilding cycle after the recession has come to an end, and what we're left with is final domestic demand, which isn't doing that well across the globe," said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong.

Economists had long expected Asia and the world economy would slow in the second half of this year and early in 2011 as the rebuilding of inventories that had been depleted during the recession was drawing to an end and the effects of stimulus packages were wearing off.

But the cool-down came sooner and turned out to be more pronounced than many economists had anticipated. The economies of the Philippines, Thailand and Singapore all contracted in the past quarter, while growth in South Korea, Taiwan and Indonesia slowed markedly.

That leaves China, which slowed only marginally to a 9.6 percent annual clip in the third quarter, and India, as the mainstays of growth in the region.

The "mainstays" of the region are overheating while everyone else has stalled or contracting. Good luck with that investment-wise.

Universal Dumping of Spain

Meanwhile, back in Euroland, Spanish Banks Face Funding Hurdle in 2011 Amid Bailout Threat.

Spain's banks may struggle to refinance about 85 billion euros ($111 billion) in debt next year as costs surge on concern continental Europe's fourth- biggest economy may need an Irish-style bailout.

"There's a universal dumping of Spain going on," said Andrea Williams, who helps manage about 623 million pounds ($968 million), including shares in Banco Santander SA, at Royal London Asset Management. "The fear is that Portugal, Spain and Italy are now in line after what happened in Ireland."

The average yield investors demand to hold euro-denominated Spanish bank bonds, relative to government debt, rose 117 basis points to 361 basis points in November -- the biggest monthly jump on record, according to data compiled by Bank of America Corp.

As the cost of insuring the country's debt against default rose to its highest level, Spanish lenders now pay the biggest premium ever on their debt relative to other banks in Europe. Spreads on Spanish bank bonds in euros rose to a record 147 basis points more than the average for all lender debt denominated in the currency, up from a gap of 63 basis points on Oct. 31, according to Bank of America data.

"The big elephant in the room is not Portugal but, of course, it's Spain," Nouriel Roubini, the New York University professor who predicted the global financial crisis, said at a conference in Prague yesterday. "There is not enough official money to bail out Spain if trouble occurs."

The country's lenders have about 30 percent of their medium- and long-term debt maturing by December 2012, according to the Bank of Spain's October financial stability report. The report says the fact that 50 percent of maturities fall after 2013 "softens" the refinancing needs of the lenders, even as it advises them to rely more on debt with longer maturities.

"Asking the Spanish banks how they are going to meet these refinancing needs is absolutely a fair question for them," Claire Kane, a banking analyst at MF Global in London, said in a phone interview.

Lobster Smuggling Hits Australia

In the most bizarre story in this international roundup, Lobsters Caught in China Smuggling Crackdown

Australia's lucrative rock lobster export industry has been hit by a Chinese crackdown on illegal smuggling into the mainland through Hong Kong, industry representatives said Tuesday.

Since Sunday, Australian exporters haven't been able to get any of the live crustaceans into China, said Rodney Treloggen, chief executive of the Tasmanian Rock Lobster Fishermen's Association.

"Our major market has disappeared overnight," he said.

Mr. Treloggen said the Australian industry has "obviously done something to upset the Chinese" but what that is remains a mystery. "There's no formal banning of the product."

Lobster prices in Australia have fallen by half to less than A$25 a kilogram from A$50 since the trade row began, he said.

Risks to the Downside

China is overheating.
India is overheating.
Philippines, Thailand and Singapore are all in contraction.
Growth in South Korea, Taiwan and Indonesia has slowed markedly.
Contagion threatens Spain.
The property bubble in Australia is busting.
Ireland cannot possibly pay back its debts.
Greece needs an extension.
US corporate bond sales have collapsed.
There are significant tax cut and unemployment insurance issues in the US.

In case you did not figure it out, risks to the global economy are enormously skewed to the downside.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Mortgage and Loans - Mortgage Refinance, Home Loans

Affiliate Marketing Mistakes You Never Want To Make
Are Payday Loans a Long-Term Debt Solution?
How to encourage an insurance company to cover in vitro?
Hasta La Vista: 100000 mortgage files missing in US
Loan scam: 17 companies on CBI radar
High Produce Money Market – Maybe you have Tried to Know The way Money Market Will work

Affiliate Marketing Mistakes You Never Want To Make

Posted: 30 Nov 2010 06:30 AM PST

For years, every single day hundreds if not thousands of new affiliate marketers come on board – and probably all of them make the same old tired mistakes. It’s not so unusual for these people to act on bogus and erroneous information received by some who call themselves ‘gurus.’ Another general statistic, known to experienced marketers, is the vast majority of affiliate will never see a single thin dime from their marketing efforts. There must be a reason why the same mistakes are constantly seen, over and over… what’s the reason? It’s not hard to figure out, any marketer needs to have the right information and basically adhere to certain ‘rules’ of doing business. And now, we’ll cover some affiliate marketing strategies that do work, and they’ll help you to get going in the right direction.

Profit Instruments review You can significantly increase your profits and build a real business with an email marketing list. It’s an old slang saying around the web and in IM, “the money is in the list.” Many marketers have reported that it wasn’t until they began list marketing that they didn’t see incredibly profits. One other aspect is you’ll have the ability to market a wide range of products that are relevant to your niche area. It helps you get repeat customers without paying a cent. People who don’t build lists are giving up a great deal of future revenue all to the owner of the product you’re promoting. You really should avoid this at all costs. A long-term business provides stability and growth. You’ll do a lot better if you recommend products and services to people rather than try to sell them. If you are trying to sell a product, you don’t want to make the mistake of having lots of ads about it and hardly any solid information. If you want to be a successful affiliate, you have to do more than just get your viewers to visit the product owner’s main sales page. Tell your prospects some interesting and informative facts about the product and what it can do for them. A well written product review that mentions the product’s good points is a good way to do this. You won’t sell many products if you only put up a lot of ads; people have learned to ignore these. People don’t want to be sold, but they want to be helped out. The more helpful information you can provide, the more likely it is that people will trust you and buy your product. Profit Instruments review

You may already know about affiliate commission thieves, it’s there so take appropriate measures to prevent it. For years, affiliates have been using link cloaking technology to help protect their links. So many marketers risk profit loss because they don’t know about cloaking, or how to do it. Just do all you can to learn about it and use it. All in all, if you want to have a successful affiliate business, then you have to make sure that you don’t make the above mistakes. Be patient, do your research, choose wisely, and only promote products you believe in.

A new course has been released and is causing a buzz, visit the Senuke bonus web page and find out more.

Are Payday Loans a Long-Term Debt Solution?

Posted: 30 Nov 2010 05:01 AM PST

A payday loan is a short-term borrowing option, end of story. In the short term you might have a little peace of mind and keep your lenders at bay; however, if you continue doing this and building up a greater debt as a consequence your finances could become even more muddied. They work differently to traditional forms of borrowing. No doubt you probably will have seen seemingly extortionate APR rates of 2000%. Whilst this isn’t representative of the cost of short term loans (this is usually between 20-25%), the more you borrow and the longer you are dependent on this borrowing, the more debt you’ll create.

Let’s take a quick example. Say you’re looking to borrow

How to encourage an insurance company to cover in vitro?

Posted: 29 Nov 2010 08:49 PM PST

A family member of mine had a reversed vasectomy about 3 years ago.Currently, he and his wife are trying to have a baby, but are having trouble. His doctor informed him that he is healthy and able to reproduce, but his wife is unable to conceive. His insurance company denied them coverage for in vitro because of the reversed vasectomy. His doctor wrote a letter to the insurance company explaining that it was the wife who is having trouble conceiving, but the insurance company still denied them coverage. Does anyone have any advice on how to encourage the insurance company to cover in vitro for them?

Hasta La Vista: 100000 mortgage files missing in US

Posted: 29 Nov 2010 08:34 PM PST

Watch full Keiser Report №99 on Tuesday. This time Max Keiser and co-host, Stacy Herbert, look at the scandals of silver shortages and quitting the dollar. In the second half of the show, Max Keiser talks to Paul Mladjenovic, author of Precious Metals for Dummies, about silver market manipulation. RT on Facebook: www.facebook.com RT on Twitter: twitter.com

Loan scam: 17 companies on CBI radar

Posted: 29 Nov 2010 11:05 AM PST

With mounting evidence that top executives at public sector banks accepted bribes to grant large loans to companies, the CBI has issued notice to 17 corporate groups who allegedly benefitted from the collusion.

High Produce Money Market – Maybe you have Tried to Know The way Money Market Will work

Posted: 29 Nov 2010 07:58 AM PST

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Monday, November 29, 2010

Mish's Global Economic Trend Analysis

Critical Middle-Class Tax Cut Vote Coming Up: Will Democrats Divide and Conquer Strategy Work?
Corporate Bond Sales Collapse, Corporates on Pace for Worst Monthly Returns Since October 2008
UPS, Dow, Northrop Grumman Borrow Money to Fund Pension Plans; Massive Lies at CalPERS to Hide Pension Losses
Miracle of Survival and Falling Inflation Expectations
Vote of No Confidence
Terms of Enslavement; Irish Citizens Say "Default"; Agreement Violates EU and Irish Laws; 50 Ways to Leave the Euro

Critical Middle-Class Tax Cut Vote Coming Up: Will Democrats Divide and Conquer Strategy Work?

Posted: 29 Nov 2010 10:16 PM PST

A critical vote on tax cuts and unemployment insurance benefits is coming up in the lame-duck session.

The president wants middle-income tax cuts extended, but he wants tax cuts for those making over $250K to expire. The Republicans have generally said "all or nothing".

Unless Congress acts, consulting firm Deloitte Tax LLP estimates the tax bill for a family earning $70,000 would rise by about $2,600. Moreover, tax rates on dividends and capital gains will go up, as will federal taxes on estates worth over $1 million.

All or Nothing?

It's very difficult to believe Republicans would throw everything down the toilet if they do not get tax cuts extended for those making over $250,000.

Moreover, Democrats want a number of things Republicans don't, such as unemployment insurance. This creates bargaining opportunities on both sides.

The Unemployment Benefits Bargaining Chip

Unemployment benefits for roughly 2 million unemployed are about to expire. That so many have used up 100 weeks of benefits is a testament to the length and severity of the recession.

It's the Democrats who want to extend unemployment benefits, not the Republicans.

This bargaining chip is why I have said on a couple of occasions that I expect a deal: Republicans will get their tax breaks while the Democrats get unemployment insurance extended yet again.

A Test of Mettle

With that backdrop, please consider Democrats to Test Republican Mettle With Tax-Cut Vote

U.S. House Speaker Nancy Pelosi will schedule a vote this week on legislation that would retain lower tax rates and increased credits that apply to the first $250,000 of a married couple's gross income or $200,000 for a single person, said her assistant, Maryland Democrat Chris Van Hollen.

"There should be an early vote on middle-income tax cuts" before the Senate considers alternatives on Bush-era tax cuts set to expire on Dec. 31, said Baucus, a Montana Democrat. The vote's timing will depend on the rest of the Senate's agenda, he said.

Extending the tax cuts permanently would cost the government $5 trillion in revenue and interest on the debt over the next decade, the Congressional Research Service estimated in October.

Failure to extend all the tax cuts would subtract 1 percentage point from growth in the gross domestic product, according to an estimate released in November by Barclays Capital, reducing projected growth in 2011 from 2.8 percent to 1.8 percent, with "sharply lower growth" in the first quarter.

Senator Dick Durbin of Illinois, the senate's No. 2 Democrat, said negotiations over extending the tax cuts also will include prolonging emergency unemployment benefits and other tax credits.

"I want to put a couple other things on the table," Durbin said today on NBC's "Meet the Press" on Nov. 28. "We do have unemployment running out," and "I also want to make sure the earned-income tax credit, the childcare tax credit, and the 'Making Work Pay' tax credit are part" of the discussion.

Divide and Conquer

The Democrat strategy is to divide and conquer. Dare the Republicans to veto middle-income tax cuts, while delaying votes on everything else.

Will divide and conquer work?

With procedural issues in the Senate the overriding factor, the question comes down to which party would get most of the blame if nothing passes. Sadly, that's what's become of politics.

There are several of ways this could progress:

1. Congress passes a bloated, unaffordable bill with every favor either side wants
2. Nothing passes at all
3. Something in between.

Let's assess the odds of each scenario.

The Bloated, Unaffordable Option

Senator Durbin may cave into Republican wishes as long as he gets everything he wants (earned-income tax credit, the childcare tax credit, the 'Making Work Pay' credit, and and extension of unemployment benefits).

Should that happen, expect one hell of a bloated tax bill which would prove the Republicans are hypocrites about reducing the deficit. It would also test Obama's mettle given that he has stated the country can't afford to borrow $700 billion to extend lower tax rates for top earners.

Would the president then veto the legislation?

I doubt it, and that would make Obama a hypocrite for signing the bill and the Republicans hypocrites for passing it. Unfortunately, neither side really cares about the "hypocrites label" given that hypocrisy is an everyday occurrence in both parties.

Thus, I believe passage of a bloated bill that both sides agree we cannot afford is the most likely possibility. Assume something like a 45% chance.

The Nothing Passes Option

It is certainly possible that nothing gets passed because of Senate infighting. Should that prove to be the case, it would be a forerunner of something that is all but guaranteed to happen in the next Congress.

If "nothing passes" expect a huge jump in bankruptcies and foreclosures and the economy to veer back towards recession, with everyone pointing the finger at everyone else.

Also expect Bernanke to go ape-sheet in unpredictable ways.

Bear in mind a huge jump in bankruptcies and foreclosures my be coming anyway, but passing noting will provide the opportunity for more political finger-pointing.

I rate "nothing passes" as the least likely possibility with something like a 15% chance.

The In-Between Scenario

In-between covers so much ground that it's hard to address every case. Should this happen, I would think it would be closer to the "one hell of a bloated bill" than not.

If so, the likely compromise would be extending most of the tax cuts but capping them at $350,000 or $500,000 instead of $250,000. In return, look for scrapping the 'Making Work Pay' credit, and a minimum extension to the number of weeks of unemployment insurance coverage.

I have the odds of this at roughly 40%, not much different than the odds that "one hell of a bloated bill" passes.

Depending on the exact nature of the compromises, this could be an extremely bloated bill as well.

Looking Ahead To 2011

Don't expect unemployment insurance extensions next year, don't expect cap-and-trade, and in fact don't expect much of anything other than gridlock and for Congress to pester Bernanke.

Whatever passes in this lame-duck session (if anything) could easily be it.

If banks get into trouble again (as is highly likely), bailouts discussions will be dead-on-arrival.

Bernanke needs help from Congress to continue his misguided reflation efforts, and he has even admitted as much. I doubt that help is coming.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Corporate Bond Sales Collapse, Corporates on Pace for Worst Monthly Returns Since October 2008

Posted: 29 Nov 2010 05:41 PM PST

Bernanke's QE II policy did nothing for jobs, nothing for bank lending, nothing for the real economy and had negative benefits for small businesses. However, the Fed did ignite a rally in the stock market and corporate bonds.

That corporate bond story now shows signs of unraveling. Please consider Bond Sales Tumble as Ireland Crisis Spills Over

Corporate bond issuance worldwide is tumbling on concern that Ireland's debt crisis will spread across Europe as returns on the securities head toward their worst month since the credit market seizure two years ago.

Issuance has slumped 31 percent since Nov. 15, compared with the same period a year earlier, after surging 34 percent in the first half of the month, according to data compiled by Bloomberg.

The Organization for Economic Cooperation and Development cut its global growth forecast for next year, predicting a "soft spot" as stimulus dwindles.

Corporate bonds are poised for their first monthly loss since May, when they fell 0.4 percent, according to the Bank of America Merrill Lynch Global Broad Market Corporate index as of Nov. 26. They're on pace for the worst monthly returns since October 2008, when the debt lost 4.44 percent as credit markets froze in the wake of Lehman Brothers Holdings Inc.'s bankruptcy.

Elsewhere in credit markets, Hewlett-Packard Co. sold $2 billion of bonds to repay commercial paper. The cost of protecting corporate bonds from default in the U.S. rose to the highest in more than five weeks. Leveraged loan prices fell for a sixth straight day, the longest streak since August. Interest- rate swap spreads narrowed from the widest in more than four months.

Companies are cutting back on commercial paper, short-term borrowings that typically mature in 270 days or less. The seasonally adjusted amount outstanding fell for a fourth straight week to $1.065 trillion in the period ended Nov. 24, the lowest since the week ended Sept. 22, Federal Reserve data show.

Global corporate bond sales declined 64 percent last week to $30.8 billion as European sovereign-debt concerns mounted, Bloomberg data show.

Companies may be postponing bond sales until after Ireland's situation is resolved, said Greg Tornga, the head of investment-grade fixed income at Los Angeles-based Payden & Rygel, which oversees about $55 billion.

"I don't think you can find anyone who thinks rates are going to go up so much in 30 days that they can't wait to issue until Ireland isn't in the headlines anymore," Tornga said.

It's Not Just Ireland

Corporate bond bulls like Greg Tornga may even be correct that no one thinks corporate bond rates are going up. If so, everyone should be buying the dip.

Then again, if Tornga really can't find anyone who thinks rates are going to go up much in 30 days, then perhaps everyone is already "all in".

The hook Tornga offers is just what the bulls want to hear - Don't worry; it's all about Ireland; the Irish spillover will soon go away.

I am not a corporate bond investor, but I suggest the time to buy corporates is when yields are high and defaults priced in, not when fools are chomping on the bit in belief lower yields are a "sure-thing".

Record-Low Coupon Punishes Investors

On November 23, Bloomberg reported Microsoft Record-Low Coupon Punishes Investors

Redmond, Washington-based Microsoft's $1 billion of 10-year, 3 percent notes have fallen 1.95 cents on the dollar from their Sept. 22 issue to 97.19 cents as of Nov. 18, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The 2 percent loss on the top-ranked debt compares with a 0.2 percent decline for investment-grade bonds since Sept. 23, Bank of America Merrill Lynch index data show.

Since July, companies from McDonald's Corp., the world's largest restaurant chain, to drugmaker Johnson & Johnson, sold debt at record low borrowing costs as investors priced in a slower economic recovery and the Fed held interest rates near zero.

Microsoft, rated Aaa by Moody's Investors Service and AAA by S&P, obtained the second-lowest borrowing costs for 10-year debt, after Johnson & Johnson and Colgate-Palmolive Co., Bloomberg data show. Investor demand and record-low yields on investment-grade debt helped the world's largest software maker issue the securities in its second bond offering.

Wal-Mart, the world's largest retailer, sold $750 million of 0.75 percent bonds on Oct. 18 at the lowest borrowing cost for three-year notes, according to Bank of America Corp., which helped manage the offering. The notes lost 0.41 cent on the dollar to trade at 99.24 cents as of Nov. 18, Trace data show.

JNK - Lehman High Yield Bond Fund

click on chart for sharper image

What's the Risk/Reward Setup?

I use the Lehman JNK index as a proxy for junk bond risk. How much lower can corporate bonds yields go? If not much, then all investors are doing is locking in low yields.

On the other hand, consider the risks. There is a very decent chance that corporate bond yields have bottomed and companies are going to have to offer much higher rates to attract buyers. If so, junk bond funds are going to get hit hard.

Moreover, if corporates get hit hard, it is highly likely equities get hit at least as hard.

Admittedly, that is a decent sized series of ifs.

However, the gain for being an investment-grade bond bull is locking in pathetically low yields just because they are 30 basis points higher than treasuries. Whoop-To-Do.

I fail to see how buying 3-year Walmart bonds at .75% is an attractive offer. I would rather sit in cash, waiting for the right opportunity than to take such rates. Hells bells, a quick check shows 3-year treasury rates are .75%. Is it impossible for treasury rates to dip while corporate bond yields soar? Here's a hint at the answer - think about what happened in 2008.

Admittedly, the potential gain for junk bonds is higher, but so are the risks, especially after the massive rally in corporate bonds across the board.

On the other hand, if corporate yields soar for any reason, then corporate bond investors are going to get hit with underperformance on assets held to term, and huge realized losses if they sell.

How soon we forget what happens when credit markets turn. Was 2008 that long ago?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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UPS, Dow, Northrop Grumman Borrow Money to Fund Pension Plans; Massive Lies at CalPERS to Hide Pension Losses

Posted: 29 Nov 2010 02:08 PM PST

Thanks to Bernanke's efforts to push down interest rates by flooding the world with dollars, companies have gotten the not-so-brilliant idea to borrow money to fund their pension plans, hoping returns will exceed their borrowing costs.

Please consider UPS Fights 'Fire With Fire' to Fill Pension Gap

Companies facing the biggest pension deficit since at least 1994 are selling bonds at the fastest pace in more than seven years to plug the hole, betting that future returns will exceed their borrowing costs.

United Parcel Service Inc., the world's largest package- delivery business, Dow Chemical Co., Northrop Grumman Corp. and PPG Industries Inc. sold at least $5.25 billion of investment- grade U.S. corporate bonds in November to fund their pensions, making it the busiest month since June 2003, according to data compiled by Bloomberg.

The Federal Reserve's effort to hold down interest rates to stimulate the economy has caused corporate pension obligations, which are pegged to bond yields, to rise by $105.8 billion this year to $1.44 trillion as of October, according to Milliman Inc. Now, companies are taking advantage of borrowing costs at about the lowest on record as Goldman Sachs Group Inc. says interest rates will rise as the global economy recovers.

"They're fighting fire with fire," John Lonski, chief economist at Moody's Capital Markets Group in New York, said in a telephone interview. "They're being victimized by low bond yields, so why not go ahead and use them as an offset?"

Few, if any, borrowers have had their credit ratings cut for issuing debt to fund pension obligations, Lonski said.

Yields may not move substantially higher over the next several years, he said. "They're willing to make a gamble that future returns will exceed the current cost of debt," he said.

"If you truly believe that rates are going up, you should be issuing debt," said Gordon Latter, a managing director at RBC Global Asset Management in Minneapolis. Latter said his firm is proposing that clients issue bonds to help fill pension deficits.

Poor Advice

You do not borrow money to invest just because rates are going up. There's a set of not so insignificant factors including expected rate of return as well as risk management that should come into play.

After this massive rally in equities, commodities, and bonds, cheerleaders think speculating in the markets is a good idea. It could work out, but it's extremely foolish.

Equity prices in the US are priced for perfection if not far beyond perfection, China is tightening, a slowdown in Europe is inevitable, and commodities have been on fire but will likely come under stress because of China and Europe.

Moreover, state cutbacks are coming, and as many as 2 million people will lose all source of income unless Congress approved a benefits extension in the lame-duck session.

I can hardly conceive of a worse backdrop in which to go into debt for the sole purpose of betting on the market, yet that is the advice given. Just what are those companies supposed to do with the cash they raise from bond sales?

I suspect nearly all of it will go into long-this-long-that strategies. If correct, I smell a disaster for the borrowers.

But hey, Wall Street will win twice, first on underwriting the bond deals, then on fees to manage the investments. It's a sweeeet deal, for someone, namely those handing out poor advice.

Video Reveals Gimmicks Used by CalPERS to Hide The Decline in Assets

Inquiring minds are reading California State Pension System Makes Madoff Proud by Gwilym McGrew

Much has been written about The California Public Employees' Retirement System (CalPERS) being underfunded by $500 billion due to massive investment losses over the last decade, but now we have video of a CalPERS Senior Pension Actuary, Kung-pei Hwang, describing how they intend to change basic assumptions in their financial model to (please allow me to mix my metaphors) Hide The Decline in their assets held for municipal, county, and state employee's retirement.

Through this statistical gimmickry, CalPERS can push the loss into later years and appear solvent today. Of course, at some point in the future it will need to raise funds from state and local governments to compensate for these losses. But for now, they seem content to hide the disastrous condition of their fund.

As you can hear Mr. Hwang say in his presentation to the Huntington Park City Council last week, "that means we will defer most of the loss to future years." "This means the city will realize another increase in future years. I hate to bring bad news, but those are the facts." Well, the fact is this bad news will hit budgets for all cities, counties and the state of California and not just Huntington Park. By playing with its financial model in this way, CalPERS is treating all California taxpayers like Madoff investors by cooking its actuarial books to Hide The Decline in its assets.

The video in the above link is somewhat hard to understand. However, Gwilym McGrew details exactly what CalPERS is attempting to get away with via various "smoothing" and "re-smoothing" extend-and-pretend operations that are doomed to fail.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Miracle of Survival and Falling Inflation Expectations

Posted: 29 Nov 2010 11:37 AM PST

In Unthinking Economic Parrots and Deflation Fighting Madness I trashed unthinking writers who parrot the Fed's misguided beliefs about the importance of inflation expectations and why falling prices are bad.

I specifically quoted one parrot who said "Deflation is particularly damaging to economic growth as consumers delay purchases until prices fall further."

This was my rebuttal....

The ineptitude of Japan's policies hoping to combat deflation is staggering. Worse yet, unthinking economic parrots talking about the "economic damages of deflation" have no idea what they are even saying.

I wish economic writers had the ability to think rather than parrot ideas espoused by Keynesian clowns.

Series of Questions

If your refrigerator conks out, will you buy a new one or wait 6 months to take advantage of lower prices?
If the transmission on your car fails will you wait 6 months to get it fixed?
If your pantry is bare, will you wait 1 month to buy food even if you expect food prices to drop?
If you need a new winter coat, will you wait and if so, how long?

The answer to that last question is "Perhaps for a bit, but you will not wait 3 years even if you expect prices will be even lower 3 years from now."

Short of assets like stocks, bonds, and housing (and except for periods of hyperinflation) it is tough to cite any examples where inflation expectations mean a damn thing.

Miracle of Survival

Today I received an even better example from "Chris" who writes...

Hello Mish

The best argument in your "winter coat" deflation comparison is consumer electronics. Everyone knows that as soon as they buy something from the consumer electronics department the price next month will go down or the same product will be offered with more bells and whistles for the same price. Yet by some miracle Best Buy seems to survive!

Thanks Chris

Thus, the next time you hear the Fed or some parrot taking about the importance of inflation expectations and how people will hold off buying stuff if they expect prices to fall, please calmly ask them how the hell Best Buy stays in business, making a huge profit on hundreds of stores, selling merchandise that will undoubtedly be lower in price in a few months.

According to the incredibly silly "inflation expectations" model, Best Buy cannot possibly exist, so it must be a miracle that it not only exists, but thrives.

Are Falling Prices a Bad Thing?

Ask anyone on fixed income if falling prices are a bad thing. Ask students or those on minimum wage if falling prices are a bad thing. Ask anyone but the Fed, the Banks, or Government if Falling Prices are a Bad Thing. Look in a mirror and ask yourself.

Parrots trumpeting nonsense about inflation expectations and why lower prices are bad, are nothing but pawns for the wealthy, for central bankers, and for government officials all of whom benefit from inflation because of rising taxes and/or because they have first access to money.

Government in particular benefits from a bigger piece of your paycheck via rising sales taxes, rising property taxes, and rising income taxes.

In reality, inflation is theft from the middle and lower classes for the benefit of government, the wealthy, and also public union workers who have inflation adjusted benefits written into many of their contracts.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Vote of No Confidence

Posted: 29 Nov 2010 10:05 AM PST

Inquiring minds might be interested to see the "Vote of No Confidence" by the market in response to the agreement that was supposed to "Save the Euro".

The brief feeling of "Hooray We're Saved" lasted from approximately 1:00AM to 2:00AM depending of course on your time zone. Regardless of time zone, the rally was 1 hour long.

No Confidence in Trichet, Noyer

The exit poll by market participants, shown in the above chart, is a vote of no confidence for ECB President Jean-Claude Trichet who forced German Chancellor Angela Merkel to abandon her plans to make bondholders participate in the pain.

And certainly no one in their right mind believes ECB policymaker Christian Noyer and Governor of the Bank of France, who said "As far as I'm concerned, I exclude that there will be haircuts in the future." See ECB Noyer plays down chance of haircuts on euro debt

How Will The Fed Respond?

One hour is not a season, nor is a day, so we really do not know precisely what lies ahead, or what cockamamie plan the Fed will come up with in response to trash the dollar.

However, that vote of no confidence has to strike fear into those who want to save the euro as well as those on this side of the Atlantic who want to trash the dollar.

Make a New Plan, Stan

I am not a lawyer, but I suggest it is not up to either the EU or Prime Minister Brian Cowen to casually violate Irish law and the laws of the EU. Given the Terms of Enslavement violate both EU and Irish law, the agreement is arguably unconstitutional.

If I am correct, all it takes is for the next Irish Parliament to abide by the will of the people and say "It's time to make a new plan, Stan. The old plan was unconstitutional."

As an alternative, I suggest "Drop off the key Lee and get yourself free." After all, there must be "50 ways to leave the Euro" and threats of doing so would soon get Ireland a much better deal than the preposterous terms Prime Minister Brian Cowen and Finance Minister Brian Lenihan agreed to.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Terms of Enslavement; Irish Citizens Say "Default"; Agreement Violates EU and Irish Laws; 50 Ways to Leave the Euro

Posted: 29 Nov 2010 08:48 AM PST

ANY Ireland bailout terms are onerous given that it is not Ireland that is bailed out but rather banks in the UK, Germany, US, and France (in that order).

Moreover and unfortunately, the exact deal foolishly agreed to by Irish Prime Minister Brian Cowen is not only amazingly bad for Ireland, but one of the provisions violates EU and Irish law.

Terms of Enslavement

Please consider these terms as outlined in EU agrees on $89 billion bailout loan for Ireland

Ireland gets Euro 67.5 billion ($89.4 billion) in bailout loans
The 16-nation eurozone, the full 27-nation EU, and the global donors of the International Monetary Fund each commit euro 22.5 billion ($29.8 billion).
Interest rates on the loans would be 6.05 percent from the eurozone fund, 5.7 percent from the EU fund and 5.7 percent from the IMF.
Ireland will have 10 years to pay off its IMF loans.
The first repayment won't be required until 4 1/2 years after a drawdown.
Prime Minister Brian Cowen said Ireland will take euro 10 billion immediately to boost the capital reserves of its state-backed banks

Comparison to Greece

For comparison purposes Greece has three years to repay its loans at an interest rate of 5.2 percent.

Debt Slave Entrapment

The key to understanding how quickly Ireland is made a debt slave can be found in this not so innocuous paragraph.

Ireland first must run down its own cash stockpile and deploy its previously off-limits pension reserves in the bailout. Until now Irish and EU law had made it illegal for Ireland to use its pension fund to cover current expenditures. This move means Ireland will contribute euro 17.5 billion to its own salvation.

The last sentence in the above paragraph should read "Ireland will contribute euro 17.5 billion to its own destruction"

Moreover, once all of its own funds have been deployed, Ireland would be dependent on the IMF for life.

Salt Onto Open Wounds

Like pouring salt onto an open wound, the EU finance ministers agreed on a permanent mechanism, starting in 2013, that would allow a country to restructure its debts once it has been deemed insolvent.

One aspect of that provision is that it would encourage any country needing help to delay getting help until 2013. The other aspect is that any country wanting to renege on a bailout may wish to hold off until 2013.

Those aspects explains the provision "Ireland first must run down its own cash stockpile and deploy its previously off-limits pension reserves in the bailout."

If Ireland "runs down its own cash stockpile" as required by the agreement, it will be broke by 2013.

Just who were the morons negotiating these terms on behalf of Ireland? They are so egregious that one has to wonder "What the hell did the EU promise Cowen to accept these terms?"

Default! Say the people

The Independent reports Default! Say the people

A SUBSTANTIAL majority of the Irish people wants the State to default on debts to bondholders in the country's stricken banks, according to a Sunday Independent/Quantum Research poll.

The finding that 57 per cent favour and 43 per cent oppose default reflects a growing view among policymakers and opinion formers that the State simply cannot support the debt burden it has taken on.

The telephone poll of 500 people nationwide has also found that a majority of around two-thirds opposes the headline measures in the Government's four-year plan.

As Ireland awaited the fine details of the international bailout, which are expected tonight, it was learned last night that the Irish delegation negotiating with the EU-IMF last week raised the issue of default.

"The Europeans went completely mad," a senior government source said.

Completely Mad

If you want to know who is "completely mad" look straight at fools like Irish Prime Minister Brian Cowen who agreed to these preposterous terms.

Certainly Irish voters, in aggregate, are not mad.

European Banks "Nearly Bust" If Euro Collapses

To help understand the pressure placed on Ireland, please consider European Banks 'Nearly Bust' If Euro Collapses, Evolution Says

The European banking system would be "nearly bust" if the euro were to be abandoned which means the 16-member currency "cannot and should not go," Evolution Securities Ltd. said.

"If the euro is abandoned, and we go back to the peseta, lira, escudo, drachma etc., devaluations would follow immediately," said Arturo de Frias, head of bank research at Evolution in a note to investors today, adding the industry is a "great buying opportunity." Devaluations mean write-offs "of a size that would render the whole European banking system completely insolvent."

If Spain, Italy, Greece, Portugal and Ireland devalue by 30 percent on the way to readopting national currencies, total losses for German banks alone would be 120 billion euros, said de Frias. That's almost half the total equity of German lenders, he said.

In such a scenario, losses at U.K. banks would reach 80 billion euros, equivalent to nearly half the equity of Barclays Plc, Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc., he said.

"And this is only the banks. What would happen with the investments of the large European multinationals" like Siemens AG, Tesco Plc and others. "More multi-billion losses, and future profits lost."

Once it's clear that the euro will survive, "it will become clear that some of our banks are 50 percent, 70 percent or 80 percent" undervalued, he wrote.

In Search of Madness

If you are searching for madness, the statements from Arturo de Frias, head of bank research at Evolution, certainly qualify.

Somehow European banks would be "nearly bust" if countries abandoned the Euro but otherwise banks are as much as 80% undervalued. Yeah right.

Excuse me for asking the obvious but what happens if the Euro is saved but after extending "bailouts", Ireland, Greece, Portugal, and Spain simply opt to default?

To Ireland With Love

Some may have missed this weekend's edition of Sunday Funnies so I offer this repeat.

IMF's Trojan Horse Gift to Ireland

I believe we have all heard the story and know how it ends.

For additional commentary and details including a comparison of Ireland and Iceland, please see

By agreeing to take on that debt and sticking it to the Irish taxpayers who will be forced to accept various austerity measures to pay back that debt, Irish Prime Minister Brian Cowen and Finance Minister Brian Lenihan just sold Ireland down the river.

50 Ways to Leave the Euro

With a tip of the hat to Paul Simon

The problem is all inside your head, I say to thee
The answer is easy if you take it logically
I'd like to help you in your struggle to be free
There must be fifty ways to leave the Euro

You just slip out the back, Jack
Make a new plan, Stan
You don't need to be coy, Roy
Just get yourself free
Hop on the bus, Gus
You don't need to discuss much
Just drop off the key, Lee
And get yourself free

Make a New Plan, Stan

I am not a lawyer, but I suggest it is not up to either the EU or Prime Minister Brian Cowen to casually violate Irish law and the laws of the EU. Given the terms of agreement violate both EU and Irish law, the agreement is therefore unconstitutional.

If I am correct, all it takes is for the next Irish Parliament to abide by the will of the people and say "It's time to make a new plan, Stan. The old plan was unconstitutional."

As an alternative, I suggest "Drop off the key Lee and get yourself free." After all, there must be "50 ways to leave the Euro" and threats of doing so would soon get Ireland a much better deal than the preposterous terms Prime Minister Brian Cowen and Finance Minister Brian Lenihan agreed to.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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