And It Begins... Apologies to Everyone w/ a Governmental Pension

http://www.zerohedge.com/article/newt-gingrich-pushing-bill-allow-states-file-bankruptcy-allowing-them-renege-pension-and-ben

The Double Dipper

"The country’s real estate problems are “underappreciated,” and banks could face another $1 trillion in housing-related losses, Mr. Roubini said in a phone interview with DealBook on Monday. At the same time, he played down the issues in Ireland, Greece, Portugal and Spain, calling the matter “contained” for now.
The United States “real estate market, for sure, is double dipping,” Mr. Roubini said. “The apparent increase in prices has been fully reversed, demand is falling, and supply is going to increase.”
The drumbeat of bad news grows louder. Sales of existing homes fell more than expected in October, down 2.2 percent to an annual rate of 4.43 million, the lowest level in more than a decade, according to the National Association of Realtors. After rising in the second quarter, Standard & Poor’s Case-Schiller home price index fell 2 percent in the third quarter."

http://dealbook.nytimes.com/2010/12/06/dr-doom-predicts-another-1-trillion-in-housing-losses/?src=twt&twt=nytimesdealbook

30% vs 7%

In 1955, corporations accounted for roughly 30% of US tax revenues.  In 2009, this figure was roughly 7% of tax revenues.  I'm sure there are many ways to spin this, and many causes, but in any case the figures are very, very interesting.

http://blogs.reuters.com/felix-salmon/2010/12/03/chart-of-the-day-u-s-corporate-tax-revenues/

Extending Unemployment Benefits..

... doesn't help the 4MM people who will lose benefits by next November.

http://www.huffingtonpost.com/2010/12/03/unemployment-benefits-99ers-obama_n_791682.html

China is on FIRE

As though there was a need to further prove that China is a bubble... 

"Based on anecdotal evidence, the daily cost of living in Beijing is now running 20% higher than at this time last year, and for Shanghai it is even higher - about 25-30%. Electricity prices have risen by over 300% and gas prices by some 600% over the last two years in the Shanghai area, and local manufacturers complained to Simon that operating costs are now on par with those in Singapore...

..The political leadership in China seems to be focused on food inflation and have recently threatened to instigate price controls on everyday goods; however, I suspect that the source of inflation is to be found in the extremely lax monetary policy of recent years (see chart 6). According to one source, Chinese money supply (as measured by M2) has expanded by a whopping 54% over the past 2 years alone2. It now stands at $10.1 trillion against $8.6 trillion in the US. Meanwhile, China’s monetary base stands at $2.36 trillion versus $1.96 trillion in the US3. Given the fact that the Chinese economy is still only about one-third the size of the US economy, one wonders whether the Chinese leaders took their eyes off the ball and now face an almighty battle to get inflation under control again."


http://www.financialarmageddon.com/2010/12/ready-for-some-crowding-out.html

More Proof that the Rich Are Spending

 "Putting to rest any doubts that Art Basel Miami Beach had rebounded from recessionary doldrums, on Saturday afternoon the fair's entrance was briefly shuttered by fire marshals after the convention center reached its 10,000-person capacity..

New York dealer Zach Feuer said his major works, priced between $10,000 and $135,000, including two Nathalie Djurberg videos which sold for €19,000 apiece, were more popular than the more modestly priced drawings ($800-$2,500) hanging in his booth. "People don't want the little drawings—they want the big things," Mr. Feuer said. "It was a big hit.""


http://online.wsj.com/article/SB10001424052748703814404576001722879460428.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsForth

Channel Stuffing is Not the Same as Stocking Stuffing, GM

"So what would have happened if in October GM had held its dealer inventory flat (not declining, just flat): well, the top line number would have been 21,000 cars less sold. Which also means that total sales would have been not 169k but 148k, and instead of a 11.4% increase, GM would have reported a drop of 2.4% in November sales YoY, which would have made the life of GM DMM GETCO that more unbearable as the High Frequency Trader would soon end up with 100% of the stock float at $33."

http://www.zerohedge.com/article/channel-stuffing-gm

To Post Ratings, or Not To Post Ratings

The SEC has stated that it will not enforce part of the Dodd-Frank Act that requires asset-back security issuers to post credit ratings on their marketing collateral, at least for the time being.

""Given the current state of uncertainty in the asset- backed securities market and the benefits to investor protection resulting from Securities Act registration, the Division is extending the relief,” the SEC said."

Under Dodd-Frank, ratings firms could be held liable for their ratings.  Is it really that unrealistic to expect that firms, which create ratings that billions (if not trillions) of investment dollars hinge upon, have some culpability when it comes to the ratings they produce?  I would fully expect a sea change in the way the ratings agencies operate, but this regulation isn't exactly a surprise.  c'mon moodys!  

"The Dodd-Frank law, signed by President Barack Obama in July, subjects ratings companies to so-called expert liability, meaning they would face the same legal risks as accountants and other parties that participate in bond sales."

http://www.bloomberg.com/news/2010-11-23/sec-allows-asset-backed-issuers-to-omit-ratings-required-by-dodd-frank-act.html