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Tuesday, December 13, 2011

Financial News 12/13/2011-Federal Reserve Bank Meeting Today

Today the Federal Reserve Bank is scheduled to meet. According to the Reuters news agency, additional monetary stimulus will be side-stepped due to economic recovery in the United States. Some Federal Reserve decisions can be short lived in order to adapt monetary policy to changes in the economy. 

The Federal Reserve Board has a number of credit and liquidity programs such as central bank liquidity swaps that it uses to achieve monetary goals such as international banking regulation. Alternative monetary tools used by the Federal Reserve include partially undisclosed lending programs per Bloomberg. Moreover, even if direct economic stimulus is not implemented, this does not necessarily mean action via these alternative programs will not take place. 

U.S. Treasury: Government overspent in November by $137.3 billion
Bloomberg: Gingrich spending plan calls for $1.3 in deficit spending
U.S. Census: $399.3 billion in November retail sales; short of expectations
NFIB: Small business optimism about capital outlays increased 
Bloomberg via FP: Forecasters predict drop in the Euro to $1.3145
NYT: Occupy movement and others advocate 'Robin Hood Tax'

Thursday, December 8, 2011

Tens of thousands of Americans debilitated by federal student loan debt

American students and graduates are heavily indebted to the government and financial institutions for debt incurred via investment in education. According to Consumer Reports, the total amount of this debt exceeds $1 trillion an amount approximate to 7 percent of the nations annual gross domestic product. Federal Reserve Bank data indicates this $1 trillion in national student loan debt accounts for 40.7 percent of total consumer debt which includes revolving credit, real estate mortgages, and car loans.


 President responds, but not enough


A petition to the Whitehouse has been signed by over 32,000 debtors demanding action to a real problem. This is just one of several large scale efforts to shed light on the issue. President Obama addressed this nationwide problem of unsustainable student loan debt and interest. A recent  executive order allows student loan repayment terms for new graduates to go in effect in 2012, and eases income contingent payment plans to 10% of discretionary income. It also shortens terms of forgiveness to 20 years of repayment. The San Francisco Chronicle outlines additional details of these changes, however what these changes do not allow are relief to students already in repayment according to Mark Kantrowitz of the New York Times. Moreover, graduates in repayment are subject to a generational law that serves to facilitate student loan repayment under far different economic conditions, from a different time.

Federal law endorses double standard


A double standard also exists between how the government loans and private debt are handled. Essentially, government loans claim sovereign immunity from debt that would otherwise be able to be restructured or forgiven under Chapter 11 and Chapter 13 bankruptcy law. The purpose of these latter laws are to help individuals and families bogged down in unrealistically high debt rebuild their lives and contribute to a health economy with manageable bills rather than sink in to a sea of eternal repayment of interest that subjugates individual and small business development via financial dysfunction. Additionally, if a graduate in repayment loses a job or enters forbearance for medical reasons, the 25 year conditional repayment forgiveness resets. In other words, these loans can't  ever be forgiven is borrowers don't have a perfect life that doesn't cause interruptions in their loan repayment schedule; it's unrealistic.

Lender terms and practices are oppressive


Lower interest rates via consolidation do help, but lenders such as Nelnet, Inc. that claim to comply with federal regulations are not required to do anything more. For example, Nelnet, Inc. claims no correspondence is legally required to warn a secondary owner of a consolidation loan that reapplication for income contingency plan is about to expire. If the primary loan owner does not inform the secondary owner, then any bonus interest savings acquired from years of on-time repayment are automatically disqualified upon late payment. These small changes can vastly affect a student's ability to repay their loan both functionally and realistically with little consequence to lenders.

Wednesday, December 7, 2011

Zero Hedge website review

Zero Hedge, some describe it as a fiscal doomsday cult led by a copyright infringing ex-securities dealer. Others refer to it as a good source of financial research. In terms of information, Zero Hedge's Manifesto is to improve upon the media by liberating 'oppressed' information and provide skeptical critique of events among other things. The view of Zero Hedge appears to be that the Internet is a better place because of it since the information it presents provides insights into financial events that are occasionally reported in a less revealing analytical light.

Who is Tyler Durden?


Tyler Durden is the name of the publisher on the site and a movie character. The author's picture, up to this point in time, is a an image of Brad Pitt's character in the movie 'Fight Club'. There is one post in the original Zero Hedge blog by a person named 'Cornelius', however the blog 'Naked Capitalism' and New York Media, LLC refer to a former Securities Dealer named 'Daniel Ivandjiisk' as openly having stated to a hedge fund publication that he writes for Zero Hedge, but not as the sole author. Judging by the number of in depth posts, including guest posts per day, there is reason to agree with that statement.

What does Zero-Hedge mean?


Zero hedge is referring to the fact that on a long enough time horizon, risk off is the name of the game. In other words, we all die, therefore all attempts at risk management ultimately fail. Steven Hawking has a similar reasoning regarding the fate of the Earth, but not necessarily the human species as it at least has a chance of buying time if it can be relocated to other planets per  'Big Think'.

History


Zero Hedge began as a blog in July 24, 2009 with a post about the challenges facing legacy media products. The New York Times is an example of a legacy media product. The blog then goes on to dicuss Max Keiser, former Wall Street Broker and host of Russian Television's Keiser Report. Zero Hedge also favors the use of the word 'kleptocracy', used by Keiser to refer to those in power who wield authoritative decisions in an effort to steal. By July 29, 2009, only five days later, the Zero Hedge blog moved to the website http://www.zerohedge.com.

Copyright Infringement


Copyright infringement and violation of registered trademarks are apparently not an enormous concern for Zero Hedge.  There are a lot of posts on the website, whether or not all the texts, documents, slide shows, videos and images comply with the DMCA, fair use or applicable copyright licensing is up for debate and would take some research. In 2009 cease and desist notices were sent by Merrill Lynch to 'Tyler Durden' per the Citizen Media Law Project. For a publisher that seems so bent on kleptocracy, Durden may have a double-standard that echoes or hints of a similar agenda to WikiLeaks founder Julian Assange. Only thing is, Assange's content is probably copyright protected per  Plagiarism Today. Perhaps the Law Offices of Jeff Martin OR Goodman Acker could help 'him' out when they're not working on traffic claims as they both have license to the exact same commercial and attempt to give an intimidating impression.


Where is the Zero-Hedge Server located? Switzerland, and the IP address for the website  is 178.209.48.14. Tyler Durden may even knowingly or unknowingly be a Russian propaganda agent bent on undermining the confidence of investors in U.S. markets. That is 100% pure tongue in cheek speculation based on symmetries in anti-banking themes and terminology between Zero Hedge and the Keiser Report. The Zero-Hedge Google website traffic rank is 6 of a possible 10, and it has over 12,000 backlinks per Alexa Website Traffic Stats.

Tuesday, December 6, 2011

Financial news 12/06/2011: Why Keynesian economics is getting bashed

A key premise of Keynesian economics is that government spending spurs growth per the Cato Institute. Many argue this is little different than throwing good money after bad. Pointing to the Japanese economy as an example, the Wall Street Journal highlights how a decade of government stimulus did not amount to a whole lot of GNP growth. Before further discussing Keynesian economics, the illustrative video below serves as an introduction to the topic:


Perhaps what anti-Keynesian economics is overlooking is what will happen if stimulus spending does not occur. Government spending may not grow an economy by much, but it has prevented it from getting worse. However, as Chris Edwards of the Cato Institute suggests, long-run fiscal reforms are a suitable context with which to provide extended payroll tax cuts, a form of economic stimulus. 

The reasoning behind calls for fiscal responsibility and anti-Keynesian sentiment is the undeniable growing national debt; a debt that the 'Congressional Super-Committee' failed to come to terms with per USA Today. That's just the fiscal side of things; the Federal Reserve Bank has also been spending to buy with massive balance sheet expanding bond purchases, loan loss backstops, commercial paper funding, 'QE1 and QE2' etc. The CNN Money 'Bailout Tracker' illustrates just how massive the spending has been.

The U.S. no longer controls more than 25 percent of global manufacturing, as evident in U.S. manufacturing employment data in a Reason Foundation report by Anthony Randazzo. Additionally, U.S. GDP as a percent of Global GDP translates to increased competition for global market share from Asia according to data from the International Monetary Fund.  In other words, U.S. national wealth is not growing like it used to, but spending like it still is continues.

Reuters: S&P ratings agency puts Eurozone on credit watch
ISM: November non-manufacturing index slowed by .9%
Zero Hedge: Euro zone banks borrowed €252 billion to lose .35%
Asia Development Bank: East Asia growth rates to moderate
The Economist: Britain entering recession despite fiscal policy
Reuters India: Chinese service sector index declined 1.6% in November