Thursday, October 01, 2009

Yesterday's News

There were some events of importance in the world yesterday, apart from the spectacle
surrounding Roman Polanski, although nothng of that significance as Brad and Angelina did not adopt the octuplets.

For one thing, continuing the work of his predecessor, Obama [his face
rapidly changing to resemble that of Ronald Reagan] followed through on the
investigation into the legal status of workers employed by the Los Angeles
based American Apparel. The company decided to resolve the issue by firing
1800 workers.

Most of those fired, reported the New York Times, were women; many the sole
support for their families. Meet the internal maquiladora, same as the
external maquiladora.

The owner of the company, Dov Charney was busy assuring investors that the
firings would not impact business as production was already down due to the
recession. Oh, happy synchronicity-- firing the workers brings the company
into compliance with the demands of the Dept. of Homeland Security, and..
right sizes the company in these difficult times. Who says markets aren't

Meanwhile, John T. Morton, Asst. Sec. of Homeland Security, and in charge of
the Immigration and Customs sector stated:

"Now all manner of companies face the very real possibility that the
government, using our basic civil power, is going to come knocking at the

Isn't that wonderful? Wonder how the US Chamber of Commerce feels about
that? Actually, I don't. But I do wonder why Homeland Security has such all encompassing
power-- currently the dept. has initiated audits of the employment records
of 645 companies-- but OSHA seems to have so little. OK, I lied again. I
don't wonder, I know why.

Meanwhile... the Census Bureau reported that the TARP and stimulus programs
are working just as intended as poverty rates rose in 31 states and DC in
2008, with children particularly hard hit. Poverty rates for children in
poverty rose in 26 states and DC. Yes, we can! Yes, we can, can, sang
the Pointer Sisters.

Trent Lott isn't worried, as Mississippi kept its pole position as number
one with a bullet in the poverty derby with a rate of 21.2% of the
population existing below the poverty line. Way to go, Trent! Give us a
rebel yell!

Meanwhile, Venezuela will issue 3 billion dollars in bonds, denominated in
US currency in an attempt to soak up some dollars in the system and close
the gap, hopefully, between the official rate of exchange and the real,
street rate of exchange. The issue is being managed by Deutsche Bank and
Citigroup. So nice of Hugo to throw a little business to these two
hard-pressed financial corporations

Meanwhile, I don't want to rain on anybody's parade, or parade on anybody's
green shoots, but the FDIC admitted its insurance fund is tapped out after
only 95 banks have failed so far this year, and will ask for pre-payment by
member banks of premiums due over the next 3 years. Each bank remitting
the amount in full before January 1, will receive a "Get Out of Jail Free"
card, endorsed by Sheila Bair and countersigned by Ben Bernacke.

In other news, none of it good for the old FDIC insurance fund, the IMF
expects write downs in the financial sector of another 1.5 trillion dollars,
bringing the estimated total to 3.4 trillion dollars. Of that 3.4, 2.8 trillion in losses belong
to banks. IMF also estimates that US banks have written down 60% of their
non-performing troubled assets, but the European Union has written off only
40 percent. Do the math and the estimates yield totals of $900 billion in
losses for US banks, and $1.9 trillion in losses for European banks. What
was it Brody said to Quint in Jaws? "You're gonna need a bigger boat."
Note to Ben Bernacke-- keep those open ended credit swap lines in place for

The IMF is way too optimistic, and way underestimating the exposure of US
banks to bad loans; to commercial real estate; construction companies;
private equity corporations; to commercial mortgage backed securities; to
bad credit card debt. Me, ever the one to look on the bright side, think
the remaining exposure is about twice what the IMF estimates, and US banks
are nowhere near the 60% level. Sorry, Sheila, perhaps you should get the
4th and 5th years prepaid while your at it. Tell the banks to think of it
as..... as a loan? No, they don't do much of that anymore. As an asset?
Nah... hey tell them to think of it as a collateralized debt obligation,
since you could post as collateral all those assets you absorbed as part of
the deals persuading bad banks to take over worse banks. Then keep the
money, and give the assets right back to the banks, so we can start all over

Meanwhile, CIT is facing, again, bankruptcy, again. This primary source of
credit for small and medium and enterprises, for financing inventory and
purchase-- for "factoring," is going down, and the third time is not the

Not to worry, companies start reporting 3rd quarter results soon and the
street is abuzz with talk of major companies, and major numbers of
companies, exceeding analysts' expectations. In the words of Hudson, "I
feel safer already." Hudson also said [in
Aliens. Did I mention that?]
"Stop your grinnin, and drop your linen" which I think is somehow a bit
more accurate in describing the current and future conditions.

Anyway, that's the news, now back to our 24 hour coverage of the Polanski
story, with expert analysis provided by Kobe Bryant of the Los Angeles
Lakers, and Luis Polonia former major league baseball outfielder.

S. Artesian, October 1, 2009
address all comments to-- oh, never mind.

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