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Economy - Economics USA

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Reuters

U.S. authorities announced what they believed to be the largest hacking and identity theft case ever prosecuted on Monday in a scheme in which more than 130 million credit and debit card numbers were stolen.

Three men were indicted on charges of being responsible for five corporate data breaches in a scheme in which the card numbers were stolen from Heartland Payment Systems, 7-Eleven Inc and Hannaford Brothers Co, federal prosecutors said in a statement.

 

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Reuters

For their one-and-only family getaway this year, the Billingtons checked in to an upscale San Diego resort on Sunday with many of the usual vacation accessories -- bathing suits, board games and golf clubs.

But they also brought flashlights, sleeping bags and an inflatable mattress because the pool-side room they booked for just $19 comes with a tent where the beds normally would be. They even had to pack their own toilet paper.

 

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Houston Chronicle

This week, annual federal spending surpassed the $3 trillion mark for the first time in our nation's history. In July, the U.S. government spent more money -- $332 billion -- than in any other month in history.

The current deficit for the year stands at $1.27 trillion -- three times last year's record of $459 billion. The individual share of this year's deficit for every American is $4,100 -- by fall that share will approach $6,000. The national debt currently stands at $11.7 trillion, or $38,000 for every American.


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Bloomberg

More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival. The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged. Almost 300 reported 3 percent or more of their loans were nonperforming, a term for commercial and consumer debt that has stopped collecting interest or will no longer be paid in full.

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The Hill

The Senate and House are both moving to extend costly unemployment insurance benefits included in the $787 billion economic stimulus package amid fears about a jobless recovery and growing fiscal deficits. The nation's unemployment rate stands at 9.4 percent and actually dipped one-tenth of a point in July, but is widely expected to increase in coming months. Unemployment hasn't been this high in a quarter-century, and a record number of workers have been unemployed for an extended period of more than 27 weeks. Rhode Island Sen. Jack Reed (D), whose state has a 12.4 percent unemployment rate that trails only Michigan, introduced legislation Friday to extend enhanced unemployment benefits through the end of 2010. The benefits were first included in the stimulus bill and are set to expire at the end of the year. The stimulus extended the time unemployed workers are eligible for benefits and offered a $25-per-week increase in payments. Reed's bill would provide an additiona

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abcnews.go.com/

TARP Special Inspector Says Treasury Is Keeping Taxpayers in the Dark. 

"The total potential federal government support could reach up to $23.7 trillion," says Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, in a report released today on the government's efforts to fix the financial system.

Yes, $23.7 trillion.

"The potential financial commitment the American taxpayers could be responsible for is of a size and scope that isn't even imaginable," said Rep. Darrell Issa, R-Calif., ranking member on the House Oversight and Government Reform Committee.

"If you spent a million dollars a day going back to the birth of Christ, that wouldn't even come close to just $1 trillion -- $23.7 trillion is a staggering figure."

To be sure, we aren't there yet.

The government has about 50 different programs to fight the current recession, in

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AP

Businesses reduced inventories for a 10th straight month in June, although total business sales posted the first increase in nearly a year.   The Commerce Department said Thursday that businesses cut stockpiles 1.1 percent in June, slightly larger than the 0.9 percent drop economists expected. The reductions have translated into sharp production cutbacks at factories, adding to the steep recession.

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AP

Consumers continued to curtail their spending last month as rising gasoline prices dampened purchases of other goods, a fresh indication of a cooling economy.

The cutback unexpectedly pushed retail sales into negative territory in June, when they dipped 0.1 percent after edging up by the same amount in May, the Commerce Department reported Friday.

Excluding gasoline sales, June retail sales fell 0.2 percent.

 

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AP

With layoffs spreading, the number of initial claims for jobless benefits rose last week, while the total number of people continuing to receive benefits set a record high, the government said.     The Labor Department reported that first-time requests for unemployment insurance rose to 654,000 from the previous week's upwardly revised figure of 645,000, above analysts' expectations.

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The Business Insider

Bernie's whistleblower sends a chilling message. Memo to regulators: be forewarned about frauds in the credit-default swap market. They'll make Bernie Madoff's $65 billion fraud "look like small-time." That's what Harry Markopolos -- Madoff's whistleblower ignored by federal investigators -- is saying anyway. New York Post: [Markopolos] says there are evildoers out there who will make the Ponzi scum "look like small-time." Markopolos gave a speech to 400 of the faithful at the Greek Orthodox Church in Southampton and predicted major scandals will soon be revealed about the unregulated, $600 trillion, credit-default swap market. "To put it in simple terms, it is like buying fire insurance policies from five different insurance companies on your neighbor's house and then burning down the house," he said.

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The Market Ticker

Home price declines in the U.S. accelerated in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosures weighed on values. The median price of an existing single-family home dropped to $174,100, the most in records dating to 1979, the National Association of Realtors said today. Total sales rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million from the first quarter and fell 2.9 percent from 2008’s second quarter. Remember, Cramer said housing bottomed June 30th. Jim, we haven't seen seen a decline in the second derivative. In fact, housing prices dropped by a RECORD 15.6% in the second quarter. Record - you know, never dropped this fast year-over-year before? Yeah. But remember Jim - you promised your viewers that it was over. That it was ok - and safe - to go back into the market. You in fact told everyone last night to buy stocks again, and you were in fact on an unmitigated pumpfest. The facts don't bother you

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Economic Policy Journal

WSJ's Brett Arends calls the period between Labor Day and Halloween the fright show, and with good reason. He lists the following stock market crashes that have occurred during this period: It was, of course, in September last year that Lehman collapsed and everything fell apart. But then it was also September-October 2002 that the last bear market plunged to its lows. The 1998 financial crisis? It began late August, and rolled on for two months. The famous crash of 1987 came in October. But most people have forgotten that the market actually started sliding downhill in late August. That's almost exactly what happened in 1929 too. The big crash came in October, but the market peaked just after Labor Day. Prices began falling through September, then tumbled further still. The worst month of the Depression? September, 1931, when the Dow fell about 30 percent.

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The Business Insider

Hopefully deficits don't matter, because if they do, then boy are we screwed. Today's chart was put together by Diapason Securities analyst Sean Corrigan (via Alphaville), and it shows the stunning rise of outlays and similar collapse in receipts. The blue line is the real killer, though, as it shows just how meager our tax revenue is compared to outlays.

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USA Today

stagnant unemployment, shrinking tax revenue and a struggling economy threaten to quadruple the size of last year's federal budget deficit, raising more questions about the timing of costly proposals to overhaul health care. As the White House and Congressional Budget Office (CBO) prepare to release new deficit estimates this month, several economists say the news is likely to be as bad as or worse than forecasts. "This is going to be a very depressing outlook," predicts former CBO director Douglas Holtz-Eakin, top adviser to Republican John McCain in last year's presidential election. "They have just a nightmare in terms of these health care bills, which do nothing but make things worse." A fiscal year 2009 deficit of $1.8 trillion was anticipated by the White House, $1.7 trillion by Congress. Reaching that level would produce a deficit four times last year's $459 billion deficit, just as Congress is considering health care overhaul plans that could

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Economic Policy Journal

Comments mine Think Iceland and Socializing the Losses! “The nation’s banks continue to hold on their books billions of dollars in assets about whose proper valuation there is a dispute and that are very difficult to sell,” said the Congressional watchdog panel headed by Harvard Law School professor Elizabeth Warren. Warren's panel report really can't be viewed as anything but a veiled call for another bailout. It urged the Treasury to either expand its current program to soak up troubled assets, the Public-Private Investment Program, “or consider a different strategy.” Since Warren believes in government regulation starting with how you tie your shoes in the morning, the thought of she means by a "different strategy,” should cause any liberty loving person to shudder. For her a reasonable solution would be nationalization of banks she deems to be operating with insufficient capital

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Reuters

Stocks slid on Tuesday after a prominent banking analyst warned that the sector's fundamentals have not yet improved, sparking a sell-off in bank shares. Economic data showing an unexpectedly large fall in wholesalers' inventories added to the bearish sentiment. The drop in inventories in June, which was nearly double expectations, suggests that businesses remained skeptical about a return in demand. Financial stocks, which had gained about 25 percent in the last month, tumbled after Rochdale Securities analyst Richard Bove painted a gloomy outlook for the banking industry. He said bank stocks are trading on "fumes," and he expects a short-term pull-back in their stock prices.

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Investment Watch

When people lost their job and carry around a lot of debt, they are likely to file for bankruptcy. Banks will face more losses during the next quarters. “Aug. 10 (Bloomberg) — Consumer bankruptcies show no sign of abating after rising more than a third this year and may hit 1.4 million by Dec. 31 as jobs are lost and loans are harder to get, according to the trade group American Bankruptcy Institute. More than 126,000 consumers filed for bankruptcy in the U.S. last month, 34 percent more than in July 2008, the ABI said in its latest report on Aug. 4. The increase came after a 36.5 percent rise in personal bankruptcies nationwide in the first six months, to 675,351, according to the ABI research group, which interprets data collected by the National Bankruptcy Research Center. “Rising unemployment on top of high pre-exiting debt burdens is a formula for higher bankruptcies through the end of this year,”

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Investment Watch

The coming FOMC meeting will focus on the commercial real estate problem. CRE Vacancy has been skyrocketed for the past few month and current situation is very dangerous. Nearly 16% of office space in Los Angeles County is sitting vacant as tenants close up shop or move out of expensive properties. Nearly a third of the space around up-market Playa Vista sits empty; office buildings in the Inland Empire and parts of Orange County are completely vacant. James Helsel, on behalf of the National Association of Realtors, is even more negative. He argues that this sector supports 9 million jobs and many of these are now in jeopardy. Of course, he is looking for a bailout of some kind (who isn’t?) but still he is right about emerging problems in and around the retail sector. “July 9 (Bloomberg) — The $3.5 trillion commercial real estate market is a ticking “time bomb” that may lead to a second wave of losses at large U.S. banks, congressional Joint Economic Committee Chairwoman Carolyn

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Financial Times

Some analysts think the Fed should adopt a flexible approach and extend the terms of the Treasury buying programme until the end of the year.

That way, the Fed could buy fewer mortgages and more Treasuries, should yields rise sharply in the coming months.

“It would make sense for the Fed to give themselves room to buy more Treasuries later this year, if that is required,” said George Goncalves, head of fixed income strategy at Cantor Fitzgerald.

 

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Investment Watch

I just get such a kick out of the “positive” jobs report - think about this, July lost jobs for the 19th consecutive month, but the unemployment rate went DOWN! How do you do that? Well, you move 422,000 people out of the “Civilian labor force”, 155,000 out of “Employment”, 267,000 OUT OF “UNEMPLOYMENT” - even though more are unemployed!!, and move 637,000 INTO “Not in labor force” - there is your reality folks, July LOST 637,000 jobs!! And the market rallied on the bull that unemployment decreased! This administration has taken restating the numbers to a new height! Government and media have taken “spin” to a whole new level. You can’t just listen to/read the news anymore. You have to actually look at the reports and know how to interpret them. Since most folks can’t/won’t do that, most folks remain mis-informed. Sad. And dangerous.

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BusinessWeek

As the Administration weighs options for reorganizing Fannie Mae and Freddie Mac in the wake of their dismal financial performance. Months ago, policymakers and outside experts weighed the benefits of creating a "bad bank" to hold commercial banks' toxic assets, but the idea never gained traction. Now, some suggest, the concept could help to restructure the mortgage giants—but the hurdles that caused commercial banks to adopt a different solution remain.

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McClatchy News

Although hundreds of well-trained eyes are watching over the $700 billion that Congress last year decided to spend bailing out the nation's financial sector, it's still difficult to answer some of the most basic questions about where the money went.

Despite a new oversight panel, a new special inspector general, the existing Government Accountability Office and eight other inspectors general, those charged with minding the store say they don't have all the weapons they need. Ten months into the Troubled Asset Relief Program, some members of Congress say that some oversight of bailout dollars has been so lacking that it's essentially worthless.

 

Opinion • Global

Justin Buell

 The economy is quite the complex area of study. Most people find it too boring and tedious to ever fully delve into it’s science. Those that have only a moderate understanding of how economics work, usually only for personal use in business and private finances, still do not find the topic of the economy attractive or exciting in any way.

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