Peeking under the economic hood: #1

I'll begin to occasionally post on economic conditions based on:

-General global, US and regional economic conditions
-Fun and interesting financial facts (may veer into the speculative)
-References to media sites and blogs that may be useful
-Economic and financial terms that may be useful to know
-Anything else that I fancy.

For those who are interested, a lively discussion is encouraged.
__________________________________________________

Yesterday, Italy proposed an "austerity" measure to reduce their debt. The day
before the Italian government instituted a ban on all cash transactions above
5,000 Euros. Hmmm. Maybe the Italian government is concerned about a run on
their banks…

4 Spanish banks were consolidated yesterday due to bad loans, and then today
there is rumor of another 4 banks being consolidated. Total bad debt between
these 8 banks totals over $200 billion. Very scary, because the Spanish
government does not have a FDIC to cover failed banks. The result is that the
Spanish government and their Central Bank has to print money to cover bad debt.
This could be very inflationary in the long term.

And then there is Ol' Kim buddy in North Korea who is threatening to blow up his
southern neighbor. Cross your fingers that this doesn't happen. Too many nukes….
Bad hair day…

No wonder that the markets are scared.

Finally, Andrew Wilkinson at Seekingalpha.com found an options trader who has
paid $1 million dollars for a "butterfly put spread" in an Emerging Markets ETF
fund. What this means is that he is betting that emerging markets will fall at
least an additional 20% over the next several months. He stands to make 1000% on
his money… We'll see…

Useful terms: CDS

From Wikipedia: "A credit default swap (CDS) is a swap contract in which the
buyer of the CDS makes a series of payments to the seller, and in exchange
receives a payoff if the credit goes into default." In brief, a CDS is an
insurance policy.

ETF: Exchange Traded Fund. Similar to an index mutual fund, in that it owns a
basket of stocks or bonds, but trades like a stock.


David Evraets

Peeking under the economic hood: #2

Chuck Butler at http://www.dailypfennig.com/ had this:

"EconomicPolicyJournal.com has learned that 32 states have run out funds to make
unemployment benefit payments and that the federal government has been supplying
these states with funds so that they can make their payments to the unemployed.
In some cases, states have borrowed billions. As of May 20, the total balance
outstanding by 32 states (and the Virgin Islands) is $37.8 Billion. The state of
California has borrowed $6.9 Billion. Michigan has borrowed $3.9 Billion,
Illinois $2.2 Billion."

Several things to be concerned about.

1) How does the Federal Gov't decide which states gets this free money. This may
induce "moral hazard" between lender (US Gov't), borrower (some states), and
would be borrower (other states that feel left out). Can't you hear it? At what
point do the politicians of the states that are doing relatively ok say: "hey,
what about me? It's not fair! I want some!"

2) If 32 states have run out of money for unemployment benefits, then that means
that 32 states are broke (please don't use the word "bankrupt". States can't go
bankrupt. They default on obligations). What is the next state bailout? I'm glad
you asked… Pension funds…

3) State and federal budget projections are assuming an economic recovery. What
if there is no recovery?

4) The US Gov't did not disclose this. It took a reporter to find it. Why the
secrecy?

5) Where is the money coming from? Are we adding more debt at the federal level,
or is this money coming indirectly from the US Federal Reserve? If from the Fed,
then this may become inflationary.


David Evraets

Hello,

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busclubadvisor <mbieler@...>

Hi there!

I just visited the business club yahoo group and wanted to say Hello to
everybody! Hope everyone is doing good! Probably keeping busy at the end of the
quarter! Wish you all the best and keep my fingers crossed and my thumbs pressed
(as we say in Austria) for finishing up the quarter! Miss you all!

All the best, Sabine

Hi all,

I would for you to review the tentative schedule for the 2010-2011 academic year
that is found in your Yahoo Club site in the "Attachments Section" . 
(http://finance.groups.yahoo.com/group/WCCBUSCLUB/) The new club Officers:

President - Michael Swift
Vice-President - Kendall Jones
Finance Officer - Natasha Chebanenko
Recorder - Lea Wibisono
Communications Officer - Yuka Ikeda

worked on this schedule to make it an interesting year for each of you.

Please review the schedule for any comments.  In addition, if we are unable to
confirm some of the guest speakers or field trip locations please let give some
suggestions on other speakers, topics, locations.  It is easier if you respond
to my WCC address:  mbieler@....

Take care and look forward to seeing many of you at the upcoming events.

Merrianne

Hello,

This email message is a notification to let you know that
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   File        : /BUSINESS CLUB TENTATIVE SCHEDULE 2010_2011.docx
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busclubadvisor <mbieler@...>

Hello,

This email message is a notification to let you know that
a file has been uploaded to the Files area of the WCCBUSCLUB
group.

   File        : /BUSINESS CLUB TENTATIVE SCHEDULE 2010_2011.docx
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busclubadvisor <mbieler@...>

Hi all,

I was wrong from the last message.  The 2010_2011 Business Club Tentative
Schedule is found in the "Files" section not "Attachments" section.  Please
review and get back to me.

Merrianne

Hi All,

We got word back from Lakeway and due to conflicts they are unable to have us
come on Friday, November 12th.  Therefore, there is not meeting or field trip on
the 12th.  Since Thursday is the Veteran's Day Holiday this means you will have
Thursday and Friday off on that week.

We are rearranging this field trip to be at the end of January.  When we get the
actual date I will let you know.

This means you have a real break next week.

Merrianne

Hi all,

When the calendar was set up I forgot to update the time so the message went out
stating the time was midnight.  I have changed the calendar to reflect the
correct time of 2-3 in BKR 114.

Our guest speaker is Dylan Swift from People's Bank and her topic is:

"The inner workings of a community bank and how they're responding to The Great
Recession".

I look forward to seeing many of your there.

Merrianne