Monday, June 09, 2008

News of interest

The U.S. dollar index rose today after April's Pending Home Sales came in better than expected. Additionally, Treasury Secretary Paulson did not rule out currency intervention in an interview on CNBC (like we honestly believe he's not doing it now?). Oil fell ~ $4 on the news and this caused downside pressure on Gold and Silver... All part of the smoke and mirrors charade

Speaking of Silver, looks like the physical silver pinch is getting worse: Eagle rationing gets tighter

The United States Mint has been informed by its silver blank vendors
that the volume of blanks they will be shipping to us in the coming
weeks will be significantly reduced. Specifically, the quantities they
will ship to us during the week of June 9 are expected to be less than
half the quantities they shipped to us during the week of June 2.

How about that Gasoline? National Average just broke the $4-a-gallon mark.

Don't know about you fine folks, but I just spent $4.13 gal for the cheap stuff here in Vegas today. Who would have thought it would some day cost >$60 to fill up a Honda Accord? Well, it's real and that day has arrived...

Moving on to the looming Credit Crunch Phase-2: Lehman Bros Expected $2.8B Quarterly loss Deepens Fears On Credit Market

NEW YORK, June 9 -- Lehman Brothers stunned analysts Monday by reporting that it expects a quarterly loss of $2.8 billion and would raise $6 billion in capital to shore up its balance sheet, signaling that turmoil in the credit market is far from over.

After weeks of speculation about financial weakness at Wall Street's fourth-largest firm, Lehman made public its intent to raise additional money and took the unusual step of disclosing its second-quarter results a week early in an effort to assuage investors' concerns.

The firm has been plagued in recent months by questions from investors about its financial health. Some were concerned it might be headed for the same fate as another Wall Street investment bank, Bear Stearns, which nearly went bankrupt in March and was sold for a bargain-basement price to J.P. Morgan Chase in a deal hastily arranged by federal regulators. Last week, Lehman had to issue a statement to deny a rumor that it had turned to the Federal Reserve's discount window for emergency funds.

Lehman's estimated loss of $2.8 billion, or $5.14 per share, for the second quarter that ended March 31 compares to profits of $1.3 billion, or $2.21 per share, a year ago. This marks the first quarterly loss since Lehman went public in 1994 and far exceeded analysts' estimates of several hundred million dollars in losses.

Moody's Investors Service downgraded its outlook on Lehman Monday to negative from stable, in part, it said, because of "concerns over risk management decisions that resulted in elevated real estate exposures."

Lehman's shares have suffered the steepest losses among the Wall Street investment banks this year -- down more than 50 percent -- amid questions about firm's leverage, or borrowing levels, and the values it has put on mortgages and otherassets.

Oh but have no fear, Ben Bernanke is here: Bernanke's not worried, Says Risk of `Substantial Downturn' Receded (Update2)

June 9 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the economic outlook has improved from a month ago, and central bankers will combat any increase in inflation expectations.

``The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so,'' Bernanke said today in remarks to a Boston Fed conference in Massachusetts. ``The Federal Open Market Committee will strongly resist an erosion of longer-term inflation expectations.''

Bernanke's remarks may reinforce investors' expectations the central bank will begin raising interest rates by year-end to contain increases in consumer prices. (HA! See my post from last Friday: Bernanke's next moves)

Lastly, I found this article very interesting: Social Security to offer benefits via debit card

The government plans to announce today that it will offer MasterCard debit cards to the estimated 4 million Social Security recipients who don't have bank accounts.

Instead of getting a paper check, a recipient's monthly benefit would be electronically transferred, at no cost, to the debit card's balance. Using the card to make purchases would be free, as would one ATM withdrawal a month.

"It's safer, more reliable and less expensive than writing checks," said Judith Tillman, commissioner of the Treasury's Financial Management Service, which handles Uncle Sam's checkbook. "This is great public policy and great use of a product."

Switching from paper checks to the debit card would save recipients -- and taxpayers -- a fair amount of money. It costs the government 88 cents more to send a paper check than it does to transfer money electronically. And people without bank accounts pay on average $6 to cash a check, according to the Treasury Department.

Plus, the card would save recipients the inconvenience of dealing with checks that are lost, stolen or delayed in the mail.

Some services and transactions do carry fees. Receiving a paper statement, for example, costs 75 cents a month. ATM withdrawals after the first one cost 90 cents. And there are surcharges for using the card in a foreign country.

My thoughts:

It's also a way for government to pander to Mastercard -- increasing their profits, as I'm sure they will capture a certain percentage of every transaction when used in a purchase transaction.

I also understand that card holders may run into some surcharge fees if they do not use an ATM in the "surcharge-free network. Additionally, I'm certain there will be overdraft/over-the-limit fees -- all adding to the unwitting consumer's misery... Why do you think many of these folks don't have a bank account to begin with? Many probably have credit problems due to poor money management... This "Mastercard" will only exacerbate their money problems as the ATM & overdraft fees add up -- taking a larger portion of their benefits every month...



Anonymous said...


I enjoy your site immensely, and agree with you 99%, but (you knew there was a but),

I don't agree about the Mastercard thing for social security recipients that don't have bank accounts.

Now, in theory, everyone should be paid in gold doubloons, but barring that, people without a bank account would much rather have the Mastercard than a check.

The usury at a 'check cashing' place makes Mastercard look like an angel, and people without a bank account by and large aren't prepping for TEOTWAWKI--they don't pay in cash conscientiously--heck, neither do I.

Anyway, keep up the writing and avoid the videos, but keep posting either way.

a reader

Randy said...

Really appreciate your thoughts reader @ 9:00 and I'm glad you enjoy the site.

TEOTWAWKI -- I had to go look that one up. Sound's like a fine "word/acronym of the day"

TEOTWAWKI: The End of the World As We Know it... I kinda like it!

Regarding videos: With a full-time job & family, sometimes the videos are just so much easier -- and they provide someone else's perspective too. Understand your point though.


Anonymous said...

Hi Randy;

Another view from another reader: DON'T GIVE UP THE VIDEOS! Sometimes on a busy day they are much easier to digest than thousands of printed words from yours and other pertinent sites.

Regardless, thanks for your continued efforts in keeping this information at the forefront.


Patrick said...

Florida at the Precipice of Depression

Mike Morgan, J.D., CRS, GRI

I was going to call this "Banks March Us Into Depression," or maybe more fitting is . . . "Complete Collapse of US Banking System." Folks, that is what we are looking at. I don't see any way around it. What we're seeing here in Florida, is your crystal ball. And what happens here, is coming to a town near you . . . soon.

This past week I didn't write anything, because what I am seeing unravel is disturbing to the point I had to question what I was seeing and hearing. So I decided to take as much time as I needed to digest it all, and then put something together for you. So here goes . . .