Twister and The Fifth

The big news of the day will be the results of the FOMC meeting.  I don't expect any surprises.  They will commence Operation Twist.  Which means they will sell the short term treasuries on their balance sheet and buy long term treasuries with those funds.  It is a way to force the banks to lend money instead of just making money off the spread.

Fed is expected to take new action to lift economy

By MARTIN CRUTSINGER

(AP) In this Sept. 30, 2010 file photo, Federal Reserve Chairman Ben Bernanke testifies on... Full Image

WASHINGTON (AP) - The Federal Reserve is running out of options to try to boost a slumping economy and lower unemployment. So policymakers are expected to reach 50 years back into their playbook for their next move.
Most economists expect the Fed to announce a plan Wednesday to shift money in its $1.7 trillion portfolio out of short-term securities and into longer-term holdings.
The plan could lower Treasury yields further. Ultimately, it could reduce rates on mortgages and other consumer and business loans, too.
Fed Chairman Ben Bernanke is expected to advocate the move despite criticism from within the Fed and from Republican lawmakers and presidential candidates.
On Monday, the four highest-ranking Republicans in Congress sent Bernanke a letter cautioning the Fed against taking further steps to lower interest rates. Their letter suggested that lower rates could escalate the risk of high inflation.
The plan the Fed is considered most likely to unveil Wednesday has been dubbed "Operation Twist" and dates to the early 1960s. The Fed used a similar program then to "twist" long-term rates lower relative to short-term rates.
Expectations that the Fed will do so again, along with renewed fears of another recession, have led investors to buy up U.S. Treasurys. Treasury yields have dropped in response.
The yield on the 10-year Treasury note last week touched a historic low of 1.87 percent. On Tuesday, it finished slightly higher, 1.93 percent.
Once the Fed announced last month that it would expand its September meeting from one to two days, most economists have predicted that policymakers would unveil some new step. Chairman Ben Bernanke has said that the Fed is considering a range of options.
The central bank is under pressure to revive an economy that has limped along for more than two years since the recession officially ended. In the first six months of this year, the economy grew at an annual rate of just 0.7 percent. In August, the economy didn't add any jobs, and consumers didn't increase their spending on retail goods.
Most economists foresee growth of less than 2 percent for the entire year. Many say the odds of another recession are about one in three.

 
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Finally, Obama is starting to feel the heat.  This Solyndra scandal isn't going away.  It's just another case of crony capitalism.


Solyndra-Gate


Executives from the bankrupt solar company Solyndra, the subject of multiple probes relating to a $535 million loan from the Obama administration, have backed out of a congressional hearing this Friday and are set to plead the Fifth instead of testifying.
The House Energy and Commerce committee received letters today from lawyers representing Solyndra CEO Brian Harrison and CFO W.G. Stover saying they would not testify. The two executives previously informed the committee that they would testify without invoking the Fifth amendment to the Constitution.
But Committee Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL) said in a statement that they would continue the probe without them.
“Our investigation has gotten this far without much cooperation from Solyndra, and it will continue with or without their voluntary testimony," they said.
Last week, officials from the White House Office of Management and Budget and the Department of Energy testified that the Obama administration did not speed up the review process for the loan as some assert. The loan was awarded weeks after the company's auditors raised alarm about the company's finances and future.
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Here is the second flame under Obama

Confidence Men


Pulitzer Prize-winning author Ron Suskind is out with a new book today on President Barack Obama's economic team that has the White House rattled.
The book, "Confidence Men: Wall Street, Washington, and the Education of a President," reveals a disorganized — and at times insubordinate — staff working under Obama, and an inexperienced president struggling to control them.
“The administration’s domestic policy was fast becoming a debate society run by Larry Summers,” Suskind writes. “Obama would sit on high, trying to judge if there was any shared ground between the competing debate teams that might coalesce into a policy.”
One of the more shocking revelations that leaked last week is that Treasury Secretary Tim Geithner is said to have disobeyed an order from Obama to plan to dissolve Citigroup in the aftermath of the financial crisis.
Geithner denied the allegations Monday, saying that while he hasn't read the book "I lived the reality. The book bears no resemblance to the reality — no resemblance."
Suskind was granted remarkable access to the West Wing — including a sit down interview with Obama in February, when the president explained why he continues to get dragged down into the weeds of policy debates.
"What I do think is that myself, Clinton and Carter all have sort of the disease of being policy wonks," Obama told Suskind. "And I think that if you get too consumed with that you lose sight of the importance of the larger message."
Another embarrassment comes from former White House Communications Director Anita Dunn, who told Suskind, that "if it weren’t for the president, this place would be in court for a hostile workplace. Because it actually fit all of the classic legal requirements for a genuinely hostile workplace to women."
The White House has launched an aggressive strategy to undermine the book's veracity by pointing out every minor factual and spelling error, for instance, Suskind misstated that Geithner served as 'Chairman' of the New York Fed instead of 'President.'
Press Secretary Jay Carney even accused Suskind of "lifting" a passage from Wikipedia — a particularly stunning accusation against a prominent journalist and author.
Suskind pushed back on the Today Show this morning, saying his book is "solid as a brick."
For the White House to get this defensive, it's clear they fear this book will have a deeply damaging impact on the President.
We'll bring you more from the book — and the fallout — later today.


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This makes me as mad as anything right now.  How about the government and banks reward the people who pay their mortgage, instead of bailing out the deadbeats.

The New Face of Foreclosure: Strategic Defaults          

Gene Kessler, 67, may be the new face of mortgage default. The tech industry retiree is in the process of walking away from the home he purchased for $166,000 in 2004 in a small town 75 miles southwest of Minneapolis.

Its value has plummeted to $111,000, wiping out Kessler's $45,000 down payment and leaving him with a mortgage that's more than the home is worth. He stopped paying the loan six months ago, and estimates he'll have to vacate by March 2012.

But Kessler isn't in financial trouble, and he could afford the monthly payments. He has no other debts and two pensions from former employers, as well as Social Security. He also has a woodworking hobby, and runs a small business selling the artisan lamps he makes in galleries. He's single now, and his two children are grown and gone.

"I was looking for a way to get back to a larger city, and this was the only way I could get out of this house," says Kessler, who paid $800 to YouWalkAway.com to help guide him through the process known as strategic default. He's anticipating a move to a warmer climate and a more active art and dating scene in Santa Fe, N.M.

First notices of default jumped 33% in August, a nine-month high and the biggest month-over-month increase since August 2007, according to figures by RealtyTrac released Wednesday.

"There are 3 million to 4 million seriously delinquent mortgages that under normal circumstances would be in foreclosure but have been kept out by procedural delays and paperwork problems," says Rick Sharga, RealtyTrac senior vice president. The recent spike in foreclosure starts suggests lenders are "hitting the restart button" on cases that were delayed by documentation problems such as robo-signing, he explains.

There's no data on the demographics or financial histories of the people receiving recent default notices. But among them are some homeowners who have never defaulted on a loan before, at least according to one poll. YouWalkAway.com surveyed several hundred of its clients earlier this year, and just 23% said they had previously shirked a financial obligation.

"The people we are now seeing are nearing retirement age, who never missed a payment on anything in their lives," says Jon Maddux, co-founder and CEO of the Carlsbad, Calif., firm. "They are trapped. They can't sell or get a modification and they need to downsize or move for a job."

Attitudes toward default have also shifted, Maddux says. "Back in 2008 people were very emotional, very scared, in disbelief or denial," he says. "Now they are simply fed up. It's a very calculated, black-and-white business decision. People feel very relieved."

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Now for the most important question of the day.  Will Mizzou come to the SEC?  We know the Big 12 is over.  I like the idea.  I think it fits geographically and the SEC could use another basketball school.

Mizzou Receives Offer to Join The SEC

The Southeastern Conference and the University of Missouri have informally agreed that, barring new developments, the school will join the league and that Auburn University will move to the SEC East Division, according to two people familiar with the discussions.
A majority of presidents has endorsed the informal agreement, the sources said.
Early Tuesday night, the SEC issued a statement: "The Southeastern Conference has not agreed formally or informally to accept any institution other than Texas A&M and there have not been conference discussions regarding changes in divisional alignment."
The league already plans to add Texas A&M as its 13th member, provided potential legal challenges from some remaining Big 12 members disappear. Missouri, also a member of the Big 12, would be the 14th member of the SEC.
A timetable for when Missouri would join the SEC, if the informal agreement becomes official, was not immediately known.
Earlier today, The Kansas City Star reported Missouri has an offer to join the SEC and that the league is willing to wait for an answer until the Big 12's future is decided.
SEC spokesman Charles Bloom said the SEC has not extended "any invitation" to any school other than Texas A&M. Bloom declined to say whether the SEC and Missouri have had any discussions.

Because both Missouri and Texas A&M are located to the western side of the SEC's basic footprint, that prompted discussions of moving a current West Division school to the East Division. Auburn is the easternmost school in the West Division. A third person familiar with the discussions confirmed that Auburn would move to the East if Missouri joins the league.
If Auburn moved to the SEC East, that could cause the Iron Bowl date to be changed. Moving Alabama-Auburn from the final week of the regular season would eliminate the possibility of a rematch the following week in the SEC Championship Game.

Auburn President Jay Gogue said Sept. 8 he would not be bothered if Auburn moved to the SEC East to accommodate a 14-team conference. Gogue said a benefit for Auburn would be renewing annual games against old rivals Florida and Tennessee, and that Auburn would pick Alabama to be an annual cross-division partner.
"If that's what it took, if you ever went to 14 and needed to make it work, that wouldn't be something I would be upset about," Gogue said.
In an interview last week, Auburn Athletics Director Jay Jacobs supported Gogue's position.
"We have so many students come from Florida, Tennessee, Georgia, they come on campus and say, 'Why aren't we playing Florida, Tennessee, Kentucky, South Carolina? ' " Jacobs said. "I think Dr. Gogue's point is, which is mine too, whatever is best for the league to make it work, we're willing to do that.
"We went through this a year ago. I just think until all that happens, until we know what the outcome is going to be, why spend a lot of time and energy concerned about who's going to play who?"
When the SEC added Arkansas and South Carolina for the 1992 season, the conference wanted competitive balance between the divisions. That's how Auburn landed in the West even though it is farther east than Vanderbilt, which plays in the East Division.
The SEC identified six traditional powers and divided them accordingly: Florida, Georgia and Tennessee in the East, and Alabama, Auburn and LSU in the West. If Auburn shifted divisions, four of the six traditional SEC powers would be in the East.
Adding Missouri to the SEC would bring two large television markets to the SEC. St. Louis has the nation's 21st-largest, and Kansas City is 31st. The state touches three SEC states: Arkansas, Tennessee and Kentucky.

"Missouri makes some sense," said Neal Pilson, a television consultant and former president of CBS Sports. "It's got some big markets. It's a prestigious academic institution. It would add a rather populous state to the SEC footprint. And it wouldn't leapfrog into another part of the country, which I don't think the SEC wants to do."
Discussions with Missouri have been sensitive on a number of fronts. The SEC agreed to accept Texas A&M on the condition that remaining Big 12 members waive their right to sue the SEC.
Also, Missouri Chancellor Brady Deaton is the chairman of the Big 12 Board of Directors and has said publicly he is working to keep the Big 12 together. He told The St. Louis Post-Dispatch last week there is no complication for him to serve as chairman of the Big 12 while also working in Missouri's best interests.

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The chart of the day has to do with all the photos EVER TAKEN.
   
Facebook hosts 140 billion photos, and will add 70 billion this year, according to the blog of photo-sharing site 1000memories.

Putting this in context, 1000memories made the following visualization which shows how big Facebook's library of photos are in comparison to other photo sharing sites, as well as the Library of Congress.

Incredibly, Facebook is hosting 4% of all photos ever taken, according to 1000memories. It estimates 3.5 trillion photos have been taken through history.