Important News - Oct. 13 update 1

1) Asian central banks to restrain gains in currencies

“More Asian central banks yesterday signalled they would intervene to curb gains in their currencies against the faltering US dollar, fearing uncertain worldwide recovery and slower growth in their economies.”

2) Now even SmartMoney has an article called 4 Ways to Short the U.S. Dollar

3) Steep losses pose crisis for pensions

“The losses were typical of what pension funds suffered around the country. State and local government officials had predicted before the crisis they would have $3.6 trillion in their accounts by now, according to the Center for Retirement Research at Boston College. Today, they are $1.2 trillion short of that mark.”

4) The U.S. dollar fell 0.8% versus the Canadian dollar to C$1.0275, despite ideas Canadian authorities may soon intervene for the first time in a decade to stem the Canadian currency’s rise.

5) Intervention suspected as dollar suffers

“Renewed weakness in the U.S.

dollar on Tuesday pushed the Thai baht and Philippine peso

towards last week’s multi-month highs, triggering fresh

official intervention to curb their strength. The Singapore dollar rose but its gains were also limited

by suspected official dollar-buying, a day after the monetary

authority kept its zero appreciation policy intact and sounded

wary on the economic outlook.”

6) CIT debt swap struggles, bankruptcy looms

“One investor that would take a hit in a CIT bankruptcy is the U.S. government. The United States’ Troubled Asset Relief Program invested $2.3 billion in CIT in December and much or all of that could be lost if the company files for bankruptcy, analysts said.”

7) Capmark Financial bankruptcy due soon: source

“Capmark, based in Horsham, Pennsylvania, has three main commercial real estate businesses: lending and mortgage banking, investments and funds management and servicing. It had more than $288 billion in commercial real estate loans as of June 30.

The company has about $20 billion in liabilities, of which about $10 billion are at Capmark Bank. It has about $8 billion in debt at the holding company level that is associated with the leveraged buyout.”

Ohio has 8 percent spike in Medicaid enrollment

“Medicaid now insures nearly 2 million Ohioans - nearly 1 in 5 state residents. Most of the new enrollees fell into poverty as the result of a lost job or cut hours.”

9) State Revenues Continue Sharp Drop Bigger Budget Deficit Feared For 2010-2011 (California)

10) The Next Big Bailout? FHA Facing “Cataclysmic” Default Rates

“The FHA’s portfolio is exploding [and] the taxpayer is now on the hook for 100% of the losses.”

How big of a hook? The FHA’s mortgage portfolio is now approaching $1 trillion. You can’t assume all those mortgages will default but you can assume the FHA’s exposure will only grow in the months ahead as politicians continue to look for ways to support the housing market (especially in an election year.)

In other words, FHA is looking very much like the “new Fannie Mae.”"

11) Humboldt Bay’s economy and the harbor district’s future

“The pulp mill closure meant the loss of the monthly ships, and lost tariffs caused the harbor district budget deficit to increase from $500,000 to $750,000. Although we trimmed the budget deficit to somewhere between $300,000 and $500,000 in the current fiscal year (2009-2010), our trajectory would indicate insolvency and the need to reorganize under Chapter 9 of the bankruptcy code in 2013 or 2014. Our prospects for digging out of the hole with ship traffic have diminished to near zero.”

12) NY’s ‘private’ affair

“State close to leasing out major public-works deals to investors

Faced with a $3 billion deficit, the state is about to roll out a plan to lease to private investors everything from schools to bridges — and it could result in new costs for New Yorkers, sources told The Post.”

13) All this points, unfortunately, to a bigger crisis soon. (David M.)

Just over one year, it is rather depressing to see that nothing has really changed and, to the contrary, if anything has, it is for the worse. The most striking item, of course, is the continued dominance of politicians by bankers. Banks are universally seen - including by bankers - as being at the heart of the problem, and having created the crisis through reckless behavior and worse. And yet, after having being bailed out at a staggering cost, in a highly asymmetrical way (the losses were socialised, but not the banks), not only have they managed to eliminate the likelihood of any meaningful regulatory change, but more importantly they have managed to maintain the fiction that finance was the reason for earlier prosperity.

saxplayer