Author: Serkadis

Overnight, Moody’s downgraded Greek debt, however it was only a one-notch downgrade, and bonds actually rallied on relief.

Still the agency suggested that future cuts are more likely than not.

But now the country — whose socialist government must cut spending — has to deal with a strike of government workers, according to ForexLive. That would reporetedly come as soon as January.

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See Also:

• Desperate Greek Minister Tries Instilling Confidence On CNBC, Doesn’t Get Interrupted By News Of A Governor And Prostitute
• It’s Spreading: The Greek Flu Comes To Austria
• Greek Finance Minister Comes Out Swinging, Hints At Similarities With US Debt Situation

Here's the good news - U.S. debt levels will be perfectly normal relative to other developed countries over the next few years, according to the International Monetary Fund.

Here's the bad news - It's because every advanced nation is piling on debt like there's no tomorrow.

Thus massive government debt is the new normal for the G20 nations. For the U.S. dollar, this is actually great news relative to other major G20 currencies. Meanwhile, developing nations will continue reducing debt to GDP, which is even better news for theirs.

The Economist: The IMF forecasts that gross government debt among advanced economies will continue to rise until 2014, reaching 114% of GDP, compared to just 35% for developing nations.

Chart via The Economist

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Rihanna is back and she is badass. In her GQ cover shoot, Rihanna mixes sexy with scary in equal measures. Don’t get me wrong – she looks hot and all, but she means business. This is one girl you don’t want to turn your back on.

Check out the Rihanna article at GQ.

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U.S. unemployment is so bad right now that even the unemployment benefits system has broken down.

Already, fully half of state unemployment benefit programs have already run out of funds. 80% could be broke within two years.

Washington Post: Debates over the state benefit programs have erupted in South Carolina, Nevada, Kansas, Vermont and Indiana. And the budget gaps are expected to spread and become more acute in the coming year, compelling legislators in many states to reconsider their operations.

Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of Labor estimates, 40 state funds will have been emptied by the jobless tsunami.

“There’s immense pressure, and it’s got to be faced,” said Indiana state Rep. David Niezgodski (D), a sponsor of a bill that addressed the gaps in Indiana’s unemployment program. “Our system was absolutely broke.”

What does it mean? Taxes.

State unemployment-compensation funds are separated from general budgets, so when there is a shortfall, only two primary solutions are typically considered — either cut the benefit or raise the payroll tax.

Industry and business groups often lobby against raising the payroll tax on employers, while unions and other worker groups protest benefit cuts.

Read more here.

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• Detroit’s Unemployment Nears 50%
• NYC Foreclosures Surge, As Unemployment Goes Into The Teens In Several Neighborhoods
• We Need 140,000 New Jobs A Month To Keep Unemployment From Going Higher

(This guest post originally appeared at the author’s blog)

Deutsche Bank recently released their 2010 investment outlook and although they remain bullish in the near-term (specifically through Q1) they are increasingly cautious as we head into the back end of the year.  They see sovereign debt and inflation as potential hurdles to the continuation of the rally.  After assessing all of the risks they came up with four potential outcomes for the market in 2010 and applied the probability of each:

Scenario 1 –This is the super bullish scenario.  Stimulus continues to impact markets to near perfection.  Reflation continues to work and money pours out of low risk assets and into high beta assets.  Stimulus continues to pour into the system as the long-term repercussions of stimulus are ignored in favor of short-term gains.  Rates stay low as a goldilocks scenario unfolds. Equities outperform and credit spreads continue to tighten.

Probability: 15%

Scenario 2 –This scenario is characterized by a gradual easing in stimulus and easy money policies.  As some momentum begins to grow in the first half of 2010 policy makers are comfortable beginning to tighten around the globe.  In this scenario risk assets still outperform, but are muted by rising bond yields.  Fixed income underperforms.

Probability: 50%

Total equity returns: 34%

Total equity returns: 20%

Scenario 3 –Under this scenario bond yields spike sharply higher.  The mountain of debt issuance and the end of quantitative easing programs fail to bolster the necessary demand.  Inflation becomes a growing concern and the potential for sovereign debt problems increase.  This is the Julian Robertson higher rates scenario.  Equities and bond both perform poorly.

Probability: 25%

Total equity returns: -11%

Scenario 4 –This is the absolute nightmare scenario where deflation reasserts itself and a double dip becomes evident.  The catalyst would be new banking scares, increased government regulation, sovereign debt scare, stimulus withdrawal.  A flight to quality ensues and fears of 2008 become all too familiar.  Stocks perform very poorly.

Probability: 10%

Total equity returns: -26%

Not surprisingly, scenario 2 is their most likely outcome.  This is an outlook favored by most of the big banks.  For the two contrarian banks we have previously covered please see MS Europes analysis and the Credit Suisse analysis.

Read more market analysis at The Pragmatic Capitalist –>

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See Also:

• Marc Faber: Avoid The US Disaster, Buy Wheat, Sugar, Natural Gas, And Japan In 2010
• Doug Kass’s Big Surprises For 2010: A Dollar Surge, A Gold Collapse, And Goldman Sachs Going Private
• UBS: The Risk-Trade Is Toast In 2010, Buy Emerging Markets, Dump Japan

The special edition Lamborghini Gallardo LP550-2 Valentino Balboni was dedicated to the veteran Lamborghini test driver, and here we see the man himself driving his car. This Gallardo is a rear wheel drive model, and it’s clear that Balboni loves this car – he can really drive.

I must say as an ex HTC Touch owner I find this installation particularly touching.

James Theopane was assigned to task to do something interesting with 50 HTC Touch phones that had become obsolete after an upgrade.  He created ‘Mobile Mobile’, a six metre circumference interactive sculpture, and signature piece for the entrance of the Brick Lane studio.

Each phone is individually addressed by a computer to cofunction and create a choral arrangement.  Assigning each phone a tone, the mass is transformed into an aural form that appears to come alive, shimmering and flirting for onlookers.

The conglomerate is available to control over the internet by anyone by visiting xmas.lbi.co.uk

You can also send a Tweet or visit the installation and play it in person.

Read more at Theopane.co.uk here.

Via Mylostblog

A new report from FirstAmerican Core Logic (via Jonathan Miller) offers an update on shadow housing inventory.

Here are the key stats:

As of September 2009, First American CoreLogic estimated there was a 1.7‐million‐unit pending supply of  residential housing inventory, up from 1.1 million a year earlier.  Pending supply, sometimes referred to as  “shadow” inventory, estimates real estate owned (REO) by banks and mortgage companies, as a result of  foreclosures and other actions, such as deeds in lieu, as well as real estate that is at least 90 days delinquent.   Normally shadow inventory would not be included in the official measures of unsold inventory. At the current  sales rate, the pending supply is 3.3 months, up from 2.4 months a year ago. The months’ supply measures how  quickly the inventory will run off given the current sales rate.  

• The visible supply of unsold inventory was 3.8 million units in September 2009, down from 4.7 million a year  earlier. The visible inventory measures the unsold inventory of new and existing homes that are currently on the  market. The visible months’ supply fell to 7.8 months in September 2009, down from 10.1 months a year earlier.  

• The total unsold inventory (which combines the visible and pending supply) was 5.5 million units in September  2009, down from 5.7 million a year ago. The total months’ supply was 11.1 months, down from 12.7 a year  earlier. This indicates that while the visible months’ supply has decreased and is beginning to approach more  normal levels, adding in the pending supply reveals there is still quite a bit of inventory that will impact the  housing market for the next few years, especially in the context of the current increase in home sales, which is in part due to artificially low interest rates and the homebuyer tax credit.  

FACL_Shadow_Inventory_121809 –

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See Also:

• Massive "Shadow Inventory" Overhang Will Keep Pressure On House Prices
• IHS: Housing Prices Deeply Undervalued Across The Country
• Deutsche Bank: Housing Still Has 10% To Fall

After getting hammered publicly for having e-voting machines that didn’t work well and had serious security problems, Diebold tried sell off its e-voting division for years with no luck. It then tried to change its name to Premier, hoping people wouldn’t realize it was Diebold. In the end, Diebold finally found a buyer in ES&S, the other large player in the market. Between them they own 70% of the US market, apparently. And that’s leading to some concern. The Justice Department is apparently looking into the deal to see if it should be unwound, out of fear that ES&S will jack up prices.

Honestly, I don’t see what the value is in unwinding the deal. Then you’ll have two awful e-voting companies with terrible track records with security and accuracy, rather than one. Instead, why aren’t we focusing on requiring truly open solutions so that we actually verify that an e-voting system is both secure and accurate?

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A reader sends along an interesting story from UAE’s The National concerning public sector pay, though we’re not quite sure what to make of it. Certainly a 70% increase in pay is not the kind of thing one would typically expect from a government that’s getting financially shellacked.

Emiratis working for the federal Government will receive a 70 per cent rise in their basic salary.

Yesterday’s announcement means the basic monthly salary of ministerial undersecretaries, who are at the highest grade of federal government positions, will increase from Dh31,250 (US$8,500) to Dh53,125. The lowest-grade government workers will see their basic pay rise from Dh1,175 to Dh2,000.

The scale also applies to jobs at bodies under the jurisdiction of the federal Government, including nurses and doctors in Ministry of Health hospitals, and teachers in state schools. The new levels do not apply to expatriates working in the same roles.

Also interesting are the comments, which draw attention to the plight of Asian expats:

It’s sad and discriminating reading salary pay for employees which doesn’t reflect on our pay slip.

We expatriates especially Asians bear the discriminating effect of this.

I just hope that when officials announce salary increase, it reflects on our pay slip..Not just a mere propaganda and enticing to the eyes of everybody showing UAE, as a place to envy with…

Rodel Mulao, Abu Dhabi

Added: 12/21/09 10:34:00 PM

Mounir S. PLs try to be a human first .regret for ur comment but if every expat had thought like that UAE would never b where it is now forget abt other govt objectives.Better understand that first. good to know that at least some one is getting a payrise in these conditions. But never offend anyone.Ever imagined the cost of living here .Its same for everyone here. Some gets more pay some gets less.i hope u realise the economic conditions here dont u.This is just a cold realisation for all residents of UAE. just try to think in a much more broader sense rather than small goals . As for the pay hike its a good move by uae Govt to support uae citizens & may be some expats. Congrats to those who get the benefits

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If you’re trying to take off the pounds, you probably step on the scale a few times a week. Sometimes that number is inspiring, sometimes it’s depressing. But what if that scale could actually help you lose weight?

The new Withings WiFi Body Scale scale sends your daily measurements to the web where you can monitor your progress via a website or an iPhone app. The scale also calculates an estimated body mass index based on a height measurement given during setup and figures out your lean body mass by measuring your body’s capacitance.

The scale can also be set to automatically tweet your weight so you can get motivation from your followers. Helpfully, the device now integrates with DailyBurn.com, a popular web-based service that allows individuals to track their weight, log their fitness activities and monitor their daily food intake/calories all in one place.

While the Withings scale won’t take the weight off for you, it could provide the motivation to keep you going until you do.

The scale is currently available on www.withings.com for $159.00.

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