You North Americans are simply not doing debt slavery quite right. I am obliged to point out Queensland, Australia is a clear winner. ...Addendum
You want to be the kennel helper? You're on the hook for the poop. You'll spend part of every day scooping it up (if all digestive systems work as designed) or mopping it (when they don't).In a spoof response "Cat" says ...
"Usually I get high-school kids applying. Or maybe a college kid for the summer. I've never seen anything like this." says Palumbo.
Who now wants to be a dog-kennel assistant?
- A laid-off graphic designer
- A freelance photographer.
- Two out-of-work teachers sent r�sum�s.
- Someone in their mid-40s who had worked as a financial controller at an environmental services company.
- Past customer-service reps from WaMu, AT&T, J.C. Penney and Sprint.
- Retail clerks and cashiers.
- Out-of-work waiters.
They may say the recession's over, on paper or on the nightly news. Palumbo's electronic stack of r�sum�s says otherwise.
"It's simply amazing to me, and I still can't believe it," he said, "that from age 14 up into their 60s this many people are dying to be a minimum-wage dog-kennel assistant."
We are forming dog kennel poop scrapers union #223. It's quite obvious that Palumbo's kennel is in need of 2 poop scooper and a fair wage of $65k/year plus full benefits. Of course we require enough fees out of those paychecks to pay my salary as well. I will be in touch.Why stop there?
� Last week�s bond auctions did not go well. It seems that Japan and China did not show much interest. The lack of bids was no better underscored than in the 7-year Treasury note auction where the median yield was 3.29% versus 3.05% a month earlier. April is a cruel month for the U.S. Treasury market, with 10-year yields rising in each of the past 4 Aprils and in 6 of the past 7, and by an average of 25 basis points.Fear Of Missing More Rally
� That, in turn, could spook the equity market since another 25bps of upside pressure could then generate a fund-flow spiral as was the case in the summer of 2007 � 3.85% (where we are now) ostensibly is a trigger point for selling of mortgage bonds. As rates rise, homeowners are less likely to pay their mortgages early, which extends the life of the mortgage and that in turn encourages mortgage investors to neutralize the duration of their portfolios by selling T-bonds and notes. We have seen this happen before and while it will likely provide a nice buying opportunity given the deflationary headwinds the economy now faces, the prospect of a spasm in the Treasury market is worth considering. Every equity market correction in the past � 1987, 1994, 1998, 2000, and 2007 � was preceded by what turned out to be a brief but significant runup in yields. See Stock Rally at Mercy of Rising Rates on page C1 of today�s WSJ). And, the more overvalued the equity market is, the more the downside risks if bonds begin to provide greater yield competition in the near-term. Jeffery Hirsch over at the Stock Trader�s Almanac is in today�s NYT predicting a 20-30% correction ahead (see Stocks Soar, But Many Ask Why on page B1) � he notes the modest number of stocks hitting new 52-week highs with every new interim peak being reached by the overall market.
� The leading indicators are all pointing to a slowdown, and this could show up in a critical data-release week in mid-April with retail sales on the 14th, industrial production on the 15th, and housing starts, as well as consumer sentiment, on the 16th. The broad money supply measures are contracting again as the Fed is no longer boosting its balance sheet at a time when both the money multiplier and money velocity are showing no signs of turning higher.
� Greece will be put to the test in April when �15 billion of bonds have to be rolled over (through the end of May).
� The Fed ceases to buy mortgage securities on Wednesday and this is happening at a time when mortgage rates have already climbed back above 5% and the housing market is showing signs of rolling over again. See Spike in Treasury Yields Jolts Mortgages on page C2 of today�s WSJ. There is also pressure from within the Fed (Plosser the latest) to soon begin to sell securities outright. One thing that is very likely on its way again is another 50bps hike on the discount rate � has anyone noticed the TED spread beginning to widen ahead of this? The banks, going forward, will not have easy access to the window and will have to rely on each other for funding.
� April 15 looms as a critical day from a geopolitical standpoint. It is the day that the Treasury Department will issue its report concluding whether or not China is a currency manipulator. If it is viewed as such then trade sanctions are likely to ensue and very likely some bilateral tensions. This could be very good news for the bullion market (as well as the Bloomberg News report today stating that gold imports in India are surging right now � up six-fold from a year ago � as there are an expected 1 million marriages planned for April and May). Sentiment is so negative on the U.S. Treasury market it�s not even funny. Everyone seems to focus strictly on supply without realizing that the only way to predict a price is by forecasting both supply and demand
� Speaking of geopolitical risks, President Obama has allowed U.S. relations with Israel to deteriorate to such an extent, and is handling the Iran nuclear situation with such a kid-gloves approach, that disturbing columns like this are now popping up in newspapers like the NYT (Rift Exposes Larger Split In Views On Mideast � page A4), the National Post (Iran Preparing to Build Two More Secret Nuclear Sites in Mountains, Experts Say � page A8), and the WSJ (How the Next Middle East War Could Start � page A23). Even the prospect is enough to underpin the energy stocks, which are currently priced for $69/bbl on WTI.
Although that is an impressive looking worry list, it is important to understand those are things that very few are really worried about.Hi MishOntario's Record Debt Level
Love your blog. Read it on a daily basis.
Heard on the radio today that Ontario, Canada budget deficit is going to be around $21 billion and thought I do some quick comparisons.
State/Province Population Deficit Per Capita Deficit Ontario 11,410,046 $21 Billion $1,840 California 36,961,664 $20 Billion $ 541
Hate to say it, but by this simple comparison California is looking pretty good.
Record debt levels in Ontario may translate into higher borrowing costs for Canada�s largest province relative to other regional governments.Ontario Finance Minister Dwight Duncan Unveils 8-Year Plan
The province�s net debt will rise to C$220 billion ($216 billion) in 2010-11, or a record 37 percent of gross domestic product, according to budget documents released yesterday. That�s almost twice as high as the debt-to-GDP ratio in British Columbia.
The province, home to 13.1 million people who account for more than a third of Canada�s economy, outlined plans to balance its budget in eight years. Standard & Poor�s last year cut the province�s credit rating on concern over escalating debt as the global recession buffeted the manufacturing industry, which accounts for almost a fifth of output.
�The government�s challenges remain formidable,� Mary Webb, a senior economist at Bank of Nova Scotia in Toronto, said in a note to clients. �Over the next eight years it must accomplish substantial fiscal repair.�
Finance Minister Dwight Duncan tabled a $125.9 billion budget that had little in the way of new spending or direct cuts to programs but promised to reduce the deficit by half in five years and eliminate it completely in eight.Unrealistic and Irresponsible
The finance minister called the budget "realistic and responsible" and said it represents a balance between economic responsibility and encouraging a healthy economy.
Savings
- Two-year wage freezes for about 350,000 non-unionized public sector workers and a two-year extension of a pay freeze for MPPs introduced last year. Combined, the moves will save $750 million.
- Slowing the pace of Toronto's Metrolinx transit projects, resulting in savings of about $4 billion over the next five years. Transit lines needed for the 2015 Pan American Games remain on schedule.
- Slowing long-term infrastructure investments for a savings of more than $1.4 billion over the next five years.
- Canceling the $174 million bus replacement program for municipalities.
Investments
- $63.5 million to make up a gap in federal investment in child care, which will preserve 8,500 child care spaces.
- $150 million a year over three years to help industries in Northern Ontario reduce energy costs.
- $45 million over the next three years for skills training to help aboriginal residents and northern Ontarians find work.
- A permanent energy tax credit to help residents of Northern Ontario with high energy bills.
- The introduction of full-day kindergarten for four- and five-year-olds, beginning in September 2010 with up to 35,000 children and across the province by 2015-16.
Ontario Finance Minister Dwight Duncan is calling on municipal governments to follow the province's lead and clamp down on wages. In Thursday's budget presentation, Duncan announced a freeze for some provincial workers. On Friday, he strongly hinted that he expects municipalities to follow suit.What are they freezing?
�We will not be funding increases in overall compensation,� Duncan said.
�Is it cynical or is it shrewdness? Pick your descriptor,� David Docherty, a Wilfrid Laurier University political scientist, said Friday. �There is a lot of politics in this, there are a lot of optics in this,� Docherty said.
For most provincial employees the wage freeze does not kick in for years. About 750,000 provincial workers will not be affected until after their contacts expire. About 310,000 non-union workers will face an immediate wage freeze.
The province gave the Ontario Provincial Police wage increases that totaled more than 12 per cent over three years. Registered nurses in hospitals will see their compensation package increase by 13.4 per cent over three years. Secondary school teachers signed a four-year contact that increases their pay by 12 per cent. College teachers got a three-year contract that increases salaries by nearly six per cent.
�What are they freezing?� Waterloo Mayor Brenda Halloran said.
Ontario Finance Minister Dwight Duncan tabled a budget on Thursday that mapped a slow road to balancing the province's books, projecting deficits until 2017-18 and offering little in the way of new spending or direct cuts to programs.Ontario's Plan To Eliminate The Deficit
It froze wages for non-unionized public sector workers for two years, but also referred indirectly to unionized public sector workers when it based its deficit projections on no increases in future collective bargaining agreements.
Ontario Public Sector Employees Union president Warren (Smokey) Thomas said the plan sets up adversarial negotiations in the future, particularly in light of the province's plan to increase hospital budgets by only 1.5 per cent, or about half of what the Ontario Hospitals Association said was needed to maintain the status quo.
"We are disappointed that the government would declare, without consultation, that thousands of these workers will see their incomes go down for the foreseeable future, or lose their jobs," said Thomas.
California had $83.5 billion in long-term bond debt, with most of the debt, $64 billion, in general obligation notes, which are financed by the state's general fund.Total Debt Comparison
Bill Watkins, executive director the Center for Economic Research and Forecasting at California Lutheran University in Thousand Oaks, Calif., agreed and urged state officials to begin discussions with the Obama administration and the Federal Reserve in case California defaults on its debt.
"In my opinion, California is now more likely to default than it is to not default," Watkins wrote in an economic forecast released Dec. 16. "It is not a certainty, but it is a possibility that is increasingly likely."
Canada did not avoid a crisis because their banks were better or smarter or used less leverage. Canada avoided a crisis because for whatever reason, their housing bubble did not yet blow sky high. However it will, and Canada's banking crisis is yet to come.Despite supposedly tougher regulation and similar leverage limits on paper, Canadian banks were actually significantly more leveraged � and therefore more risky � than well-run American commercial banks. For example JP Morgan was 13 times leveraged at the end of 2008, and Wells Fargo was 11 times leveraged. Canada�s five largest banks averaged 19 times leveraged, with the largest bank, Royal Bank of Canada, 23 times leveraged. It is a similar story for tier one capital (with a higher number being safer): JP Morgan had 10.9% percent at end 2008 while Royal Bank of Canada had just 9% percent. JP Morgan and other US banks also typically had more tangible common equity � another measure of the buffer against losses � than did Canadian Banks.
If Canadian banks were more leveraged and less capitalized, did something else make their assets safer? The answer is yes � guarantees provided by the government of Canada. Today over half of Canadian mortgages are effectively guaranteed by the government, with banks paying a low price to insure the mortgages. Virtually all mortgages where the loan to value ratio is greater than 80% are guaranteed indirectly or directly by the Canadian Mortgage and Housing Corporation (i.e., the government takes the risk of the riskiest assets � nice deal if you can get it). The system works well for banks; they originate mortgages, then pass on the risk to government agencies. The US, of course, had Fannie Mae and Freddie Mac, but lending standards slipped and those agencies could not resist a plunge into assets more risky than prime mortgages. Let�s see how long Canada resists that temptation.
The other systemic strength of the Canadian system is camaraderie between the regulators, the Bank of Canada, and the individual banks. This oligopoly means banks can make profits in rough times � they can charge higher prices to customers and can raise funds more cheaply, in part due to the knowledge that no politician would dare bankrupt them. During the height of the crisis in February 2009, the CEO of Toronto Dominion Bank brazenly pitched investors: �Maybe not explicitly, but what are the chances that TD Bank is not going to be bailed out if it did something stupid?� In other words: don�t bother looking at how dumb or smart we are, the Canadian government is there to make sure creditors never lose a cent. With such ready access to taxpayer bailouts, Canadian banks need little capital, they naturally make large profit margins, and they can raise money even if they act badly.
Proposing a Canadian-type model to create stability in the U.S. is, to be blunt, nonsense.
There�s no doubt that during the coming months many people will advocate some form of a Canadian banking system in America. Our largest banks and their lobbyists on Capitol Hill will love the idea. For some desperate politicians it may become a miracle drug: a new �safer� system that will lend to homeowners and provide financing to Washington, while permitting politicians and regulators to avoid tough steps. Let�s hope this elixir doesn�t gain traction; smaller banks with a lot more capital � and able to fail when they act stupid � are what U.S. citizens and taxpayers really need.
Samsung To Drop Two New Point-And-Shoot Cameras
Samsung is set to drop two new point-and-shoot cameras for the mass market in the form of the ST5000 and ST5500. Both cameras are equipped with a 14.2-megapixel image sensor, a 7x optical zoom lens, a 3.5-inch touchscreen display (ST5000), a 3.7-inch AMOLED display (ST5500), Dual Image Stabilization, 17 automatic scene recognition, WiFi (ST5500), Bluetooth (ST5500), an HDMI output and 720p HD video recording at 30fps in H.264 format. The ST5000 will ship this month for �279.99 (about $417), while the ST5500 will arrive in stores next month for �349.99 (about $521). [Samsung]
Genius G-Shot HD501 Pocket HD Camcorder
Genius has announced a new pocket HD camcorder to its line by bringing you the G-Shot HD501. This weatherproof video camera is equipped with a 1-megapixel CMOS image sensor with autofocus, a 2.0-inch vivid LCD display, an SD card slot (up to 16GB), an MP3 player, an HDMI output and a rechargeable Li-ion battery. In terms of performance, it�s capable of capturing both 1280 x 720p HD video at 30fps (H.264 format) as well as 3-megapixel digital still images (interpolated mode). No info on pricing so far.
[Genius]
Samsung SMX-C20UN Ultra Compact Camcorder
The new Samsung SMX-C20UN ultra compact digital camcorder features a unique 25-degree active angle lens that allows you to shoot in complete comfort for extended periods of time. The Edit function of the Samsung C20 allows you to combine and divide files directly on the camcorder, enabling you to edit without transferring files to a PC. The Samsung SMX-C20UN also supports Superior Video Compression (H.264), so you can record more using less memory. The Samsung SMX-C20UN retails for $199.99 a pop. [Samsung]
