“Dec 17

Fake-Out Thursday – Oil Scam Continues Unabated – First of all, the NYMEX contracts for January delivery close on Tuesday and there are still 132,168 open contracts or 1,000 barrels each (132M) scheduled for delivery to Cushing, OK, a facility that can handle at most, 45Mb of crude and is, at the moment, full.  The price of those barrels surged from $86.82 all the way back to our shorting target of $89 yesterday, where we once again had a nice ride down.  Now, in pre markets, it is back over $89 again and we’ll short it again so I’m not complaining about the action but I am upset that this blatant rip-off of the American consumer can go on right under our "leadership’s" noses.   Logic alone dictates that if 132M barrels are on order for delivery to a storage facility that can only handle 45M barrels that the orders are mostly bogus.  You can track the open interest every day right here so don’t take my word for it, watch what happens over the next few days as the people who are currently pretending to demand oil in January, roll their contracts to pretend demand for February (already at a ridiculous 268M barrels), March (172Mb) and April (60Mb).


Spain Oct bad loan ratio highest in nearly 15 yrs (Reuters) – The bad loans ratio for Spanish banks rose to its highest level in almost 15 years in October, the Bank of Spain said on Friday, as a stagnant economy and high unemployment weighed on debt repayments. The level of unpaid loans as a ratio of total lending by Spain’s financial sector — including banks, financial cooperatives and retail credit cards — rose to 5.66 percent in October from 5.49 percent a month earlier. Unpaid loans on Spanish banks’ books have been rising steadily since the bursting of a decade-long property bubble sent shock waves through the economy and left around one in five Spaniards out of work

Bleak health care scenario on retirees – Got a spare $5,500 lying around that you want to get rid of? If every single San Franciscan coughed up that amount, we could pay City Hall’s retiree health care bill – for now, anyway. A new report from the controller’s office shows the city has an unfunded health care liability of $4.36 billion. That means it’ll cost that much to pay the promised health care benefits for every current employee and retiree – and that number will keep growing as health care costs rise. By 2033, the tab will be a whopping $9.7 billion. Guess how much the city has saved to pay down the costs so far? You guessed it. Nuthin’

Atlanta Pension Fund Rescue Will Assume Lower Return Rate, Adviser Says – Atlanta, which runs the world’s busiest airport, may lower the assumed rate of return on pension assets as it confronts a $1.5 billion deficit in the funds.  An advisory board developing the city’s options is basing them on an expected earnings rate of 7.25 percent, down from 8 percent, in calculating the size of contributions needed to pay retirees, said John Mellott, chairman of the Atlanta Pension Panel, at a city hall meeting yesterday.  Atlanta, home of Hartsfield-Jackson International, joins public pensions from California to New York that cut their assumed rate of return on assets or are weighing such a move. The recession left 50 top municipal pensions $382 billion short of meeting promised benefits, according to a Northwestern University study in August.

S&P: US Healthcare Costs Rise 6.70% Over the 12-Months Ending October 2010 – Data released today by Standard & Poor’s for the S&P Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs rose 6.70% over the 12-months ending October 2010. This is a deceleration from the 7.08% reported for the 12-months ending in September 2010.  Claim costs associated with hospital and professional services for patients covered under commercial health plans rose 8.21% over the year ending in October, as measured by the S&P Healthcare Economic Commercial Index.  Looking at the S&P Healthcare Economic Medicare Index, Medicare claim costs for services rendered by hospitals and physicians rose at roughly half that growth rate, up 4.18%.  This is the lowest annual growth rate for Medicare claims costs since January 2008, when it was +4.02%. These two indices both saw growth deceleration versus their September reports of 8.53% and 4.68%, respectively.

) Portugal May Be Frozen Out in Issuance ‘Avalanche’ – (Bloomberg) — Portugal risks being frozen out of the bond markets next year amid a wave of auctions from higher- rated governments and agencies that threaten to force the nation into seeking a bailout to pay its debts. “It has become the market consensus that Portugal’s ability to fund on a standalone basis is fairly constrained,”  “People have investment alternatives.” Portugal has 11 billion euros of debt payments to make in the first quarter, according to data compiled by Bloomberg. Total euro government issues may reach 863 billion euros ($1.1 trillion) next year, said Morgan Stanley strategist Elaine Lin in London. While that’s down from 925 billion euros in 2010, it is “elevated compared to historical levels,” and higher than the average from 2000 to 2008, she said.

Euro rescue summit fails to impress – European Union moves to set up a permanent rescue mechanism to bolster the euro are unlikely to satisfy sceptical markets anticipating more trouble and bailouts to come, analysts warned Friday. At a summit Thursday, leaders of the 27-nation bloc agreed on a permanent emergency rescue fund from mid-2013 to replace a one-trillion-dollar joint EU-IMF facility set up after the Greek debt crisis hit the eurozone in May. Leaders pledged to do "whatever is required" to defend the single currency but were short on details — whether the fund would be increased or not, how it would operate and what conditions would come attached. For Jonathan Loynes, chief European economist at Capital Economics, the outcome of the last summit of tumultuous 2010 was "unlikely to ease pressures in the peripheral bond markets," suggesting Portugal was sure to come under renewed pressure in the New Year.

Moody’s says 2011 double dip damages US banks (Reuters) – U.S. banks will be "significantly strained" by credit losses if the global economy slips back into a recession, Moody’s Investor Service said on Thursday. The ratings agency, in its quarterly research note, said U.S. banks’ loan losses have begun to improve as the global economy has healed since the 2008 financial crisis.But losses remain near historic highs and have not improved as quickly as they deteriorated in 2009. Additional losses would strain banks’ credit ratings, absent moves to bolster capital, Moody’s said.

“Washington and the Regulators Are There To Serve the Banks” – At the urging of the administration, Congress passed a financial reform bill this past summer that expanded the theoretical powers of regulators, but also gave those regulators the power to write the rules implementing the bill and then to enforce the rules. The bill’s sponsors fended off efforts to write specific constraints, whether size limits or leverage limits, into the statute. Yet the bill did nothing that I am aware of to ensure that regulators do a better job than they did last time around, unless you count the creation of a standalone consumer protection agency. (Yes, this is a hard problem with no easy solutions, but ignoring it doesn’t make it go away.) Now we will see the results. Via Mark Thoma, Andrew Leonard provides the money quote, from incoming House Financial Services Committee chair Spencer Bachus: “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks


Labor Market Stagnant in Most U.S. States = Unemployment rates were little changed in most states in November, as employment was stagnant in most of the U.S. The Labor Department reported that 21 states and Washington DC experienced jobless-rate increases in November from October, while the rate fell in 15 regions and was unchanged in 14. In all, 13 states had rates above or equal to the 9.8% national figure released earlier this month. Nevada remained the state with the highest unemployment rate in the nation — 14.3% — nearly two percentage points higher than the 12.4% recorded in Michigan and California, tied for second place. Michigan’s unemployment rate has declined by two percentage points since 2009, but the employment situation hasn’t improved significantly. The number of unemployed people in the state has declined, but so has the overall labor force. Meanwhile, the number of people employed has also declined. Michigan had already been struggling with high unemployment before the recession started hitting other states, indicating that some of the long-term unemployed are just dropping out of the labor force altogether.


State Unemployment Rates in November: "Little changed" from October – From the BLS: Regional and State Employment and Unemployment Summary  Regional and state unemployment rates were generally little changed in November. Twenty-one states and the District of Columbia recorded unemployment rate increases, 15 states registered rate decreases, and 14 states had no rate change, the U.S. Bureau of Labor Statistics reported today.  Nevada continued to register the highest unemployment rate among the states, 14.3 percent in November. The states with the next highest rates were California and Michigan, 12.4 percent each, and Florida, 12.0 percent. North Dakota reported the lowest jobless rate, 3.8 percent, followed by South Dakota and Nebraska, 4.5 and 4.6 percent, respectively. This graph shows the high and low unemployment rates for each state (and D.C.) since 1976. The red bar is the current unemployment rate (sorted by the current unemployment rate). Nine states now have double digit unemployment rates. A number of other states are close.

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