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U.S. nonfarm payrolls dropped 54,000 in August as the unemployment rate rose to 9.6% from 9.5% in July. This was fueled by more people entering the job force looking for jobs. The jobs loss was about half what economists had expected; thus, stocks soared early in the day, continuing their rally of the last few days. There were 121,000 government jobs lost, including 114,000 temporary Census workers. The private sector added 67,000 jobs. This was a surprise, because earlier in the week, the ADP National Employment Report showed a loss of 10,000 private sector jobs. In the federal report, temporary and healthcare jobs rose impressively. However, manufacturing jobs were down 27,000 and state and local governments shed 10,000 positions. The birth/death adjustment model, a purely statistical estimate of new jobs not counted in the regular process, rose 72,000.

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Comments

Visduh Sept. 3, 2010 @ 10:49 a.m.

In 1940, Churchill promised the people only "blood and sweat and tears." His nation had blundered into war with the Axis and was unprepared. Later on, at some time in 1943, he was asked if the favorable news was the beginning of the end (for their enemies and for the war.) He, always reluctant to make promises although he himself always seemed to have faith that Britain would prevail, replied that it might be the "end of the beginning." We can only hope that this tiny uptrend could be, if not the beginning of the end of the recession, at least the end of the beginning of the recession and that things will get no worse. Personally, I fear the dreaded "double dip" of recession. Too many promises have been made by all sorts of experts and by politicians from Obama down that the recession was manageable and would be short. It is now obviously not manageable and will not be short.

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Don Bauder Sept. 3, 2010 @ 1:49 p.m.

Response to post #1: This was really not a good report. Wall Street just rejoiced because it was not as bad as expected. If you take the full panoply of numbers that have come out in the last 5 months or so, it certainly looks like a very weak economy ahead, with about a 25% chance of a double-dip. But whither the stock market? The yields in the bond market are ridiculously low. Some say it's a bond bubble, but it depends what you mean by a bubble. The tech stock bubble of the late 1990s and the residential real estate bubble of the early part of this century were caused by absurd over-exuberance. The bond market rally (which has lasted 30 years) is caused by the reverse of exuberance: lugubriousness, or fear of stocks and commodities, and fear of risk. If the economy grows a bit (say 2% or so) for the next couple of years, stocks could do well. I just bought some stocks yesterday. I only buy ones that yield 4% or more (sometimes only close to 4%). That's because I also think a stock plunge is possible. I've never seen a time like this in my life. You can make a plausible case for an explosive stock rally and bond selloff, or another stock selloff with still more strength in bonds and lower rates. Best, Don Bauder

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SurfPuppy619 Sept. 3, 2010 @ 4:48 p.m.

I think there is a better than 25% chance of a double dip recession.

But double dip or not-we are going nowhere fast. Jobs are not being created and the trillion dollar plus budget deficits are almost as bad as a double dip recession. Who knows, it may be worse.

I am still PO'd we bailed out AIG/Goldman/Wall St., we should have FORCED those losers into BK court as a flaming signpost of what happens when you gamble with other peoples money. And then tattooed the letters "BK" onto their CEO's foreheads (got that from the movie "Inglorious Bastards"!!) I can guarantee you one thing, if the feds did that you would NEVER, EVER again see 300-1, 30-1 or even 15-1 leverage on Wall Street.

The feds should NOT be proping up the states, or anyoen else with these so called garbage stimulas spending.

When is someone going to grow a set and stop the runaway spending??????

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Don Bauder Sept. 3, 2010 @ 8:55 p.m.

Response to post #3: That 40-1 leverage of Wall Street firms was one result of deregulation. The SEC took a cursory look and permitted it. Bank reserves have improved (of course; they are getting money for nothing) and I would suspect the leverage is coming down. Best, Don Bauder

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Visduh Sept. 4, 2010 @ 4:31 p.m.

Today's offers of credit cards that pay 5% back have me totally puzzled. Those cards are for real. Where can Chase be getting enough profit to make an offer like that? The merchants complain that they pay too high a discount to the banks for the processing, and they are probably right. But they don't pay 5%--no way. So the issuers must be profiting handsomely from the finance charges they are collecting from those who are in debt on a month after month basis. Discover is getting about 14% on its cardholder debt, and whacks the borrower with about 24% on cash advances. The others are generally comparable. So, the bank borrows for nothing and lends at usurious rates in the double digits. Even rebating 5% can leave a generous profit margin.

If you can stay out of debt, and pay off those credit card balances in full every month, and have a card that rebates as little as 1%, it doesn't make sense to pay cash. My current card pays "only" 2%, but it really does rebate that 2% every month, like clockwork, no strings attached. If you want to play with Discover, you can get 5% on certain categories that change monthly and quarterly. Then there's Chase that seems to now offer a card that pays 5% on all purchases. Sounds too good to be true. Has anyone had a real experience with them? Is it for real?

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Founder Sept. 4, 2010 @ 6:01 p.m.

Reply #5 I think of all these credit card offerings as "teaser" rates, they are betting that you will over use your card and if they get a month or two out of you, then they win big! + As time goes on more folks get caught with a balance on their card as they "suddenly" find they have be laid off or have their work hours and or pay cut!

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Don Bauder Sept. 4, 2010 @ 8:34 p.m.

Response to post #5: Actually, the banks -- particularly the big ones -- have lots of money. They have been borrowing for zero for some time. All they have to do is borrow at zero and buy a T bond. So that may be one reason why they can afford such a credit card. Even though the banks have lots of money again, they are not making loans heavily. The regulators are telling them to be very cautious. Why? With the Fed having created so much money, a wave of lending would bring back inflation fiercely. Best, Don Bauder

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Don Bauder Sept. 4, 2010 @ 8:36 p.m.

Response to post #6: They could be teasers. The devil is in the small print. Maybe Visduh has looked at the caveats in small type. Best, Don Bauder

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Founder Sept. 5, 2010 @ 11:01 a.m.

Reply #5 & #8 I know folks that have lots of airline miles adding up because of large credit card bills, now if folks could only afford to "go" someplace...

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Founder Sept. 5, 2010 @ 11:15 a.m.

Reply #7 By the FED loaning at almost zero and the Banks borrowing and holding onto all this "new" the money, the Fed has propped up the balance sheets of all these Big Banks with their own NEW PAPER MONEY!

Everything "looks" better on paper but in reality our economy is actually going South. That is why everyone fears inflation, it will burst the Banking stability Bubble!

I wonder Don, is there a way to find out how much money is being moved offshore, where to and most importantly, what that trend is, say over the last 5 years?

That to me, would be the BEST indicator of our Economy's health/recovery...

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Don Bauder Sept. 5, 2010 @ 6:53 p.m.

Response to post #9: One factor that has always bolstered San Diego tourism is that in downturns, Los Angelenos and Arizonans, instead of going to Paris or New York, come to San Diego. This works in inflation, too; LAers can get down to SD on a tank of gas. Best, Don Bauder

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Don Bauder Sept. 5, 2010 @ 6:56 p.m.

Response to post #10: Why do individuals and institutions move money offshore? To avoid detection. There are estimates on how many trillions are stashed in secret offshore caches, but nobody really knows. Best, Don Bauder

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Founder Sept. 5, 2010 @ 7:10 p.m.

Reply #12 What is your best guess as to how to determine the size of the "dollar" drain leaving the USA?

It's size would seem to indicate the "worth" of the buck to say the Yuan or even the Peso!

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Don Bauder Sept. 6, 2010 @ 8:12 a.m.

Response to post #13: A 2006 Congressional committee looking into offshore tax evasion estimated that the U.S. loses $40 billion to $70 billion a year in taxes to offshore havens. My guess is that is vastly understated, because corporations get all kinds of legal tax breaks (say, the ability to sell products through offshore havens) that would swell the number tremendously. You can google "congressional investigation" + "offshore" + "2006" and find a lot on it. There was a great study of the Texas-based Wyly brothers. The Financial Action Task Force, an international group, did studies around 2000-2002 but they focused mainly on mob and terrorist money. The Organization for Economic Cooperation & Development (OECD) has done studies. You might find something on the website of United for a Fair Economy. Worldwide, the amount of money stashed to avoid taxes is deep into the trillions. The U.S. accounts for a huge amount of this.

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SurfPuppy619 Sept. 6, 2010 @ 2:47 p.m.

Why do individuals and institutions move money offshore? To avoid detection. There are estimates on how many trillions are stashed in secret offshore caches, but nobody really knows.

I always wanted to know how individuals were able to take money offshore without getting audited or otherwise busted. You cannot move more than $10K through a bank account without the IRS being notified. I can see how large corps could do it through subsidiaries, but not wealthy individuals.

On 60 Minutes a few weeks a go they had a guy from United Bank of Scotland who said he smuggled diamonds out of the USA-but what about cold hard cash???

Does anyone know how they move $$ move it out of the country??

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Don Bauder Sept. 6, 2010 @ 8:11 p.m.

Response to post #15: They move money electronically, often in increments to avoid detection. They can go to the haven and set up an account in person. There are all kinds of retailers who will cooperate in moving money in small enough increments to avoid detection. There are many ways. Best, Don Bauder

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