Misery Index

Silva thought not too long ago, in fact just weeks ago, there were buffered from the economy woes that the rest of the world suffered.  Wonder why Silva isn’t talking about the homeless, where 71 out of 100 homeless people work but still have no home?  A country where 19% of the people live on $2 a day or less in a country where the minimum wage is about $100 a month.  A country where there there was renewed illegal occupations of empty buildings, over a year ago, with one building holding around 2,000 people in San Paulo.  A country where a little nine year old girl has never owned or even worn a pair of shoes.  And where a family stipend of $50 a month has Brazil claiming to have reduced poverty and narrowed the gap between the have and have-nots.  A country that operates in slum warfare.  And a country that spends half of its GDP on social programs.  A country that has an infant mortality rate of 23.33 deaths/1,000 live births (US has a rate of 6.3).  And they have major street gang problems in the Favaelas (slums) of Rio de Janerio.

Silva also fails to mention that two of the largest banks in Brazil, announced a merger in November creating a bank with combined assets of 575 billion reais ($263 billion).  Officials have also moved to shore up the banking system.  The government has reserved the right to take stakes in struggling banks, via the two big state-owned ones.

Silver seems to have forgotten that on Oct 29 the US Federal Reserve announced a deal with Brazil, Singapore, South Korea and Mexico under which it will provide up to $30 billion to each of them.

There are reports that farmers are finding it hard to find credit to buy supplies which could affect next year’s investments.  The Brazilian government is helping farmers finance via increased farm credits amounting to $49 billion due to the rising food prices to encourage Brazilian farmers to grow more food, thus depending less on exports.  And this was in August, before the market collapsed.

Oh and you remember that little rice shortage back in April of 2008?  Brazil decided to ban rice exports when they were needed most although Brazil grows more rice than it consumes, yet the price of rice in Brazil jumped 19.8 percent for domestic rice.  Also in May alone, food prices rose 2%, bread jumped 4.7%, meat increased 3.5%.  In January 2009, it was announced that Brazils 12-month inflation rate was at 6.4%  And currently Brazil posted its smallest trade surplus in six years in 2008.

In October, there was a sell-off of Brazilian shares and the currency as foreign investors rushed to cover losses elsewhere.  The sell-off triggered unexpected losses on foreign-exchange derivatives that were meant to limit the exposure of Brazilian companies to currency moves but have exacerbated it instead.    The Brazilian press estimated that some 200 companies hold such contracts.

External funding has dried up.  Figures from the central bank show that credit lines to finance trade, normally considered low-risk, are running at about half the level of mid-September. 

Consumer credit is becoming scarcer as banks anticipate a rise in bad loans.  The monthly payments demand for everything is rising.

At the end of October, Paulo Bernardo, the planning minister, confirmed that the government had reduced its target for the primary fiscal surplus (the difference between revenue and spending before debt payments) for 2009 from 4.3% to 3.8% of GDP.  This plan depends on private investors being able to raise credit.

In the free-trade zone around Manaus, in the Amazon, a dozen companies have told their staff to take unpaid leave.  Jobless claims rose unexpectedly in November, rising from 7.5% to 7.6%, must lower than a Nov 2007 rate of 8.2%. 

In December, output, new orders, employment and purchases all contracted at series-record rates as confidence and demand fell sharply.  Inflation rose.  The PMI dropped to a new low of 40.0 in December with the PMI registering below the no-change mark of 50.0 for three consecutive months.

In late December, 2008 that new measures to help Brazil counter the effects of the economic crisis will be announced by Jan 20.  He said the country is “strong economically” but will act immediately to keep the “perverse effects” of the crisis from affecting the nation.  There were no details during his past weekly radio address, with him only saying that the government will start 2009 working hard to boost the economy.

RANT ON

So if your country is all hunky-dorey and is immune from the economic problems that everyone else in the world is suffering, why is there a plan to boost the economy?  I mean seriously.  Previously $50 bucks a month in welfare makes the difference between poverty and middle class in Brazil?  Sounds like to me, the “perverse effects” are already happening, were happening before the market dropped out in October and Silva’s blowing smoke to cover his country’s problems.  The president of Brazil needs to keep his Socialist cover story with lies and his Socialist ideas within Brazil.

This commentary comes from a “We Beat the Street” commentary, an Investment Strategy company, via KITCO.   The author is Roger Wiegand, who I’ve also never heard of before and don’t know too much about, other than his biography on We Beat the Street and a bio on IIC.  But , lets take a gander into his crystal ball, shall we? [Hat Tip to Nightblogger]

Our new president is determined to hand out $860 Billion to One Trillion dollars in a Herculean effort to literally buy a new economic recovery.  While some of his ideas are noble indeed the overall plan will have little effect and Great Depression II shall take hold in 2009 with crashing stock markets in May and September-October 2009.  We think the worst of the worst hits in late September 2009.

Hey, what do you know, the one year anniversary of when millions lost nearly all of their 401(k)s when the market dropped out.  What a time to choose!  But I’m getting ahead of myself… lets hear about spring.  A time of green, fresh air, and everything coming back to life.  But the death of the stock market according to Wiegand.

During the spring of next year we see:

(1)  A second larger wave of residential housing mortgage failures; [Now, to be honest, I heard about this about two months ago.  Its a different kind of mortgage than the ARMs but it’s more “deadly” to the market  and banks.  Good thing we don’t have to pay a mortgage!]

(2)  The first big wave of auto loan failures and repossessions; [I heard about this one too about two months ago.  But if people can’t pay their mortgages, the next big ticket item is their car.  Good thing we don’t have to pay a car loan or lease!]

(3)  Over $40 billion in credit card defaults, smashing the bank lenders; [This is already happening, and again, another “big ticket” item are peoples credit cards.  Good thing we’ve never EVER used them.  If you can’t pay for it in cash, you don’t need it.]

(4)  The first wave of commercial mortgage failures and foreclosures on shopping malls, office buildings and other commercials; [This too is inevitable.  It is estimated that over 16,000 businesses will fail in the next year, leaving a lot of empty space in malls, strip malls, and business complexes.  Already, Circuit City has left quite a few leases up in the air, due to them filing bankruptcy.  Whose next?]

(5)  And finally, the grand smashing finale of CDS Credit Default Swaps originated with No margin money or down payments!  We heard today the total is 500 trillion!  I cannot even fathom that number.  These five converging train wrecks could take the Dow from a dead cat bounce of 10400-10800 back to 7250, or even 6600, or 5600.  [My other half and I have said, the Dow will crash out around 5000 in 2009.  So much for our stocks.]

But if you think the Dow at 5000-6000 is bad, you haven’t heard it all yet.  The above is just in the spring of 2009.  There’s how many months in the year, and how many seasons?

Then, in late September and early October, the New York, London, Tokyo and Asian markets take a monster crash.  how low is low and how bad can it get?  We think the Dow could end-up on November 1st, 2009 anywhere from 5,600 to a low of 3,000 or even 1,500. 

Ouch…. and how interesting that it’s just about the same time that the stock market crashed in 1929.  But the best.. err.. worst is yet to come.  And the capitalization isn’t my emphasis, it’s Wiegand’s.

Unemployment nationally in the USA is now touching 16%.  The officially posted number is somewhere near half of that.  By the fall of 2009, American REAL UNEMPLOYMENT WILL BE NEAR THE ALL TIME 1930’S DEPRESSION HIGH OF 25% UNEMPLOYED.  SADLY, THAT IS NOT THE WORST AS IT GETS MORE DIRE.  WE PREDICT, USA UNEMPLOYMENT REACHES 30-40%.  IN THE RUST BELT STATES OF MICHIGAN AND OHIO, WHILE 40% IS NOT UNREALISTIC.

Great… wonderful.  Buy your tents, Coleman stoves and sleeping bags now.  And maybe a nice little 9mm and shotgun.  Aww heck, splurge for a Desert Eagle.  Size is intimidating!  Make sure to not forget the ammo!  And begin to stockpile food, you might need it.  This might be the “new” money and a good bartering tool, as long as people don’t kill ya for it.  And LOTS of stocking up on toilet paper and um.. ah… guys look away on this one… feminine items.  And don’t forget things like cold medicine, aspirin, and topical antibiotics!But more realistically, stockpiling at least two months of food is a good way to make sure you have a food supply and “other” items if you lose your job or have to choose between food and a house payment.

The American federal government departments for food stamps and the job of providing welfare provisions will be overwhelmed.  This will be a Katrina event for the hungry citizens of the United States.  Urban areas will see skyrocketing crime and in parts of some cities, life could become totally uninhabitable.

The last report we’ve seen on those receiving food handouts and related welfare amounted to 11 million USA citizens with 700,000 children going hungry each day.  We suspect the true amount of those needing food help will rise to 35 million with an untold tragic number of them being little, defenseless children.  Governments remain in denial and are not prepared for this national emergency whatsoever.  As things worsen, food riots and others with violence aimed at the “have” are common.

Did I happen to say that I am also professionally trained in sword fighting?  And raised by a Father who taught me to shoot a .38 & .45 around the age of 8 and a shotgun at the age of around 10?  Who would have ever thunk it that I would need those skills in my personal life!  And a chick to boot!

And as for that stockpiled food, didn’t I just say it was going to be the new “money”?  Dollars will be worthless. 

The number of bank failures over the next three years will be in the thousands.   In addition, the US Dollar’s valuation could break recent lows near 70.00 on the index, dropping to 46.00 by 2011 or 2012.  Inflation or potentially hyperinflation is quite real as the Federal Reserve and US Treasury strain to print and circulate cash to prod our stalled economy.  It is simply not working even with the dramatically lower interest rates of late.

But to continue, Wiegand says just like in the Great Depression, families are “renting” out rooms, or “bunking” up to pool their money.

Consumers are broke and going broker.  Households of interrelated families are doubling and tripling up even with several employed members being under one roof.  Basic costs of rent, mortgage payments, health care, food, utilities and taxes are too much to bear on stagnant and in some cases falling wages.  In some areas of America, there are entire subdivisions of homes totally abandoned or existing with only a hand full of occupants.  The millions thrown at lenders for new mortgages are not getting through to buyers, as there are fewer of them.  We are witnessing a system breakdown.

Isn’t this already happening?  I recently blogged about Detroit and how many of the homes are already empty, and have been gutted for their copper and such.  And additionally, many who are behind on their mortgages, and said bank gets a bailout, refinances the mortgage, only to increase the payment by $300 to $500 a month, and also demands several thousand dollars just to stop the foreclosure within 30 days!

And states and cities will be broke also, so forget about getting any help from them, which is already happening.  Say bye bye to welfare and to schools.

Municipalities and states are sinking into a spending, debt-ridden morass.  It was reported today that 22 of 50 USA states are in serious budgetary trouble.  California is one of those in terrible condition and Michigan is already technically broke as many of her cities. [Don’t forget Ohio as the governor called Rahm and said he needed $5 billion!]  Detroit will file bankruptcy in 2009 and there will [be] many other surprises as well.  There will be a cascade of bond defaults and the outcome will cap the ability of these cities, states and countries to borrow ever more.

Hey, at least we are all in this together….. *smirk*  True worldwide Socialism!  YIPPIE!

The shining light through all of this is the faster we find the bottom the faster we can recover.  Sadly, the recovery process will take years.  Futures and commodities traders should continue to earn steady profits as the stock markets slide into oblivion for years.  We see no recovery until 2015.

Let see… Obama Jan 2009 – Jan 2013.  I wonder if he will run for re-election?

I find it interesting that there is no mention of the Big 3, or of a company such as Wal-Mart still being in business.  If Wal-Mart collapses, we are in trouble.

But wait.. according to the Russian nutjob, by 2010 we will be in a civil war and the United States will be split between Canada, China/Japan, Mexico and the EU with Alaska going back to Russia and Hawaii going to China/Japan so all of this won’t happen!

Of course there’s always Gerald Celente’s prediction of a total collapse of the economy and a revolution by 2012.

So well.. there’s my first post of the new year…… oh and… um… might be a little late… but have a happy and prosperous  New Year, while you still can? *shrug* *nervous smile*

He based the forecast on classified data supplied to him by FAPSI analysis, he says.  He predicts that economic, financial and demographic trends will provoke a political and social crisis in the U.S.  When the going gets tough, he says, wealthier states will withhold funds from the federal government and effectively secede from the union.  Social unrest up to and including a civil war will follow.  The U.S. will then split along ethnic lines, and foreign powers will move in.

And since 1998, he has said that the United States will fall in 2010 splitting into six independent pieces.  Renewed interest in his theory as come into the spotlight due to a recent interview with Izvestia, one of Russia’s biggest national dailies.  And those in Russia are listening.

So why does he think this will happen?  “The dollar is not secured by anything.  The country’s foreign debt has grown like an avalanche, even though in the early 1980s there was no debt.  By 1998, when I first made my prediction, it had exceeded $2 trillion.  Now it is more than 11 trillion.  This is a pyramid that can only collapse.”  Panarin calls U.S. foreign debt “ a pyramid scheme,” and predicts China and Russia would usurp Washington’s role as a global finance regulator.

Panarin posits, in brief, that mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar.  Around the end of June 2010, or early July, he says, the U.S. will break into six pieces.

The White House’s reaction to Panarin’s forecast at a December news conference was a “I am perplexed and therefore I think I will have to decline to comment,” from Dana Perino, which received laughter from the press.

From the November, 2008 interview: [Video, in English/Russian from Russia Today]

Q[Izvestia]:  Will the entire American economy collapse?

A [Panarin]:  It is collapsing now.  Three out of the five largest and oldest banks on Wall Street ceased to exist because of the financial crisis; and the other two are on the verge of surviving.  Their losses are the largest in history.  Now we are talking about replacing the regulation system in the world:  America will no longer be the world regulator.

Q:  Which country will replace it?

A:  Two countries are making a claim for this role:  China with its large reserves, and Russia as a country which could play the role of a regulator on the Eurasian territory. … The gold reserves of Chian come to more than 2 trillion dollars.  It is the largest creditor to the USA.

Q:  What makes you believe in the possible division of the country?

A:  There are a number of reasons.  First, the financial problem of the USA will increase.  Millions of citizens have already lost their savings.  Prices and unemployment keep growing.  General Motors and Ford are on the verge of collapse which means that entire town will end up unemployed.  The governors are not harshly demanding money from the federal center.  Complaints are growing.  They’ve been restrained so far by the presidential election and by hope that Obama could perform a miracle.   However, by spring it will become clear that a miracle will not happen.

The second factor is the vulnerability of the political mechanism in the USA.  There is uniform legislation on the territory of the country.  There aren’t even general uniform traffic rules.  The skeleton which keeps the USA together is fragile.  Event eh armed forces in Iraq are represented by the non-citizens of the United States to a large extent.  They fight for the promise of American citizenship.  Thus the army, as a melting pot has stopped fulfilling a consolidating function for the American state.  And finally, the split of the elite has made itself especially clear under the conditions of the crisis.

Q:  How will the country be divided?  Mexico is obviously in the south.  What else?

A:  There are six part altogether.  The first one is the Pacific Ocean coast of the USA.  I can give you an example: 53% of San Francisco’s population is Chinese.  The Governor of Washington state was an ethnic Chinese; its capital, Seattle, is called the gate of the Chinese emigration to the USA>  It is obvious that the Pacific Ocean coast has been gradually influenced by China.  The second part in the south is definitely the Mexicans.  In some areas, Spanish has become the official language already.  Then comes Texas which has been openly fighting for independence.  The Atlantic coast has a totally different ethnos and mentality.  It could be split into two parts as well.  And then we are left with two central depressed areas.  May I remind you that five central states where the Indians live had announced their independence.  It was perceived as a joke or a kind of a political show.  But the fact remains the same.  Canada is making a strong influence in the North.  By the way, Russia may require returning Alaska, as it had been rented out… [And Hawaii goes to Japan or China.]

[…]

Q:  Could you tell us about the division of the elite.  Are these democrats and the republicans?

A:  No, that is not right.  There are two groups in the US authorities.  The first one may be called the globalists, or the Trotskyites.  Leon Trotsky had already formulated their idea in the past:  it’s not Russia that we need, but a world revolution.  Soviet Russia was viewed by them as a base for control over the world.  The second group is the statists which want prosperity for their country.  Representatives of these two clans are present in both Democratic and Republican Parties.  Take voting for the anti-crisis plan of Paulson, which was suggested by the Republican administration, for example.  It was voted down in the Congress by the Republicans first of all.

Q:  Who is in charge of the clans?

A:  The key persons of the globalists are Secretary of State Condoleezza Rice and Vice President Dick Cheney.  The key persons of the statists are Robert Gates, Defense Secretary; Michael Hayden, CIA Director; and Admiral Mike McConnell, director of national intelligence.  Globalists are mainly the financial elite, and statists are the armed forces, special services and military and industrial complex.  Recently the confrontation between these two clans have become open.  In December last year the statists presented a reported which completely denied the existence of the nuclear program in Iran.  It directly contradicted conclusions made by Condoleezza Rice and Dick Cheney.  The second important event took place at the hearings of the US Congress concerning the 5-day war in the Caucasus.  The globalists represented by Condoleezza Rice insisted that Russia had started the war an d that it would be punished for it.  Georgia was the project of Condoleezza.  And representatives of the intelligence community presented a diametrically opposite statement:  that Georgia had started the war.  We see an open confrontation between very outstanding political figures.

Q:  And who’s Obama company?

A:  The statists with Gates in charge were the key players who had enabled Obama to win.  They are demanding that he change the general line in return.  IN this light, a very interesting factor is that Gates the Republican is viewed as the most important candidate as to whether he remains the US Defense Secretary or becomes the Secretary of State.  This is the influence of the statists on the President.  By the way, the first session which Obama held was with the American Intelligence community.

NOT THE FIRST TIME RUSSIA PREDICTS DEMISE OF THE US

Perhaps the most famous was when Soviet Premier Nikita Khrushchev promising before the United Nations to “bury” the United States and again in his famous “kitchen debates” telling Richard Nixon that the superiority of the Soviet Union would overtake the U.S. and the Soviets would say “Dasvidania” to the U.S.

In the “Kitchen Debate”, which took place in 1955, then Vice-President Nixon and Khrushchev discussed the merits of each of their respective economic systems, capitalism and communism.  While Nixon focused on American technology such as supermarkets filled with foods, dishwashers, lawnmowers, makeup, cake mixes, TV dinners, Pepsi and the washing machine, Khurshchev  stressed that the focus on “things that matter” rather than luxury was more important.

ANOTHER PREDICTION FOR THE US FROM THE US

Back in November, I blogged about Gerald Celente Predicts Total Collapse of Economy and Revolution by 2012.

RANT ON

This guy is really clueless about many parts of the United States and is nothing more than Communist propaganda.  He obviously doesn’t realize that here in the US, states are allowed to make their own laws, but you as a regular civilian don’t need “papers” to cross the border to enter another state.

Kentucky, Tennessee, South Carolina and North Carolina in the same country as New York or Maine and them being part of the European Union?  Yea, as IF.  Obviously he doesn’t know much about that little thing called the Mason-Dixon line and the south believes it will “Rise Again” versus the North.

And Idaho and Utah, with the Mormons being a part of the same country as California, under Chinese influence.  Forgive me with a valley girl expression but, “As If!  Like, I am SO sure, ya know?”

And Georgia, Alabama and Louisiana becoming part of Mexico….. umm.. yea.. okay.  I can just see it now, deep in the heart of Dixie, Mexicans in the bayou, drinking Budweiser, and four-by-fourin in the mud listening to Alan Jackson singing “Chattahoochee”.

And Mexico not taking California?  Heck, hasn’t that pretty much already happened?  Or will the Pacific and the “South TX region”  “sell” California, along with Arizona, and New Mexico back to Mexico.  Or would Mexico just say it’s theirs, and we stole it.  Wait.. that’s already happened too….

And then there’s Texas.  As IF they would even become part of Mexico, remember they have been screaming about their own independence for years.  To expect Texas to submit to Mexico?  Talk about the start of a new MX-TX war….

And Ohio being part of the same “country” as Montana?  Sha… right!  Maybe part of the NE but not the Midwest.

I wonder what Sarah Palin would have to say about Russia taking back Alaska.  NYET?

Perhaps Panarin got hold of some bootlegged Vodka, and is suffering from a permanent case of the DTs….. and his years with the KGB and communist ways are showing.  And he’s trying to shed light on the US failing, while trying to minimize the fact that Russia’s own economy is in failure with his “Nothing to see here, move along and look at the US falling apart” story.  Sorry, no “Red Dawn” fantasy here.

But ultimately, I think Panarian has been watching reruns of Jericho lately, where nuclear detonations around the US spirals the country into division, with one country based in Cheyenne, WY and the other in TX.

ADDITIONAL SOURCES:

• “As if Things Weren’t Bad Enough, Russian Professor Predicts End of U.S.”, WSJ, 29DEC08
• “A new Canadian province, eh?”, Star Tribune, 29DEC08
• “Cyr:  Sudden celebrity of Panarin troubling”, ScrippsNews, 30DEC08

UNEMPLOYMENT INCREASES 

The unemployment rate in Detroit is currently 21%, meaning nearly 1 our of 4 people are unemployed.

UTILITIES INCREASE

Michigan regulators recently approved electricity and natural gas rates for customers of Detroit Edison and Consumers Energy.  The $83.6 million in hikes for Detroit Edison included a rate “realignment” for commercial customers designed to cut energy costs for businesses, while apparently raising the cost for residential consumers.  Consumers Energy’s hike in natural gas prices totaled $22.4 million.

HOME VALUES PLUMMET AND FORCLOSURE RATES HIGH

The average sale price of a Detroit home so far in 2008 was $18,513, in the first nine months of the year, down from $40,011 in 2007, a drop of 55 percent, according to the Detroit Board of Realtors.  According to The Detroit News, home values in Detroit plummeted to an average value of less than $10,000; some foreclosed homes, gutted by scrappers, were placed on the market for $1.00; many other stand vacant or are burned to the ground.

Protestors recently picketed Bank of America, chanting “Bail out the people, not the banks.”  According to one protestor, her 30-year, fixed interest rate requires a monthly payment of $1,030.  Bank of American then received $25 billion in federal bailout money.  Under the terms of the restructured mortgage offered by the bank, her payment would go up $300 monthly and she would have to make a $2,000 payment in ten days.  But this would only put off the sale of her home until some time in January.

HOMELESS INCREASES

The chronically homeless community makes up 20% of the 19,000 people in metro Detroit who at any given time have no place to live.  According to Amber Arellano, a columnist on Detroit News, “Tent cities are sprouting up like winter grass in public parks here.”  “Doctors say they’re seeing suicide and depression skyrocket.”

DEMAND FOR FOOD BANKS SERVICES INCREASE

DeWayne Wells, president of Gleaners Community Food Banks of Southeastern Michigan, said demand is up by 25 percent from a year ago in the region’s food banks.  “Many people are first-timers – they have no idea how to navigate the system, how to qualify for food stamps.”  In a different report, Gleaners was reporting a 70 percent increase in need for food help this fall compared to fall 2007.

By next year, Gleaners anticipates local emergency food needs will rise as much as 50 percent.  “Its going to take much more than just food banks,” Gerry Brisson, Gleaners’ senior vice present said.  “The food bank network was designed to be a short-term stop gap.  It’s going to take good government to really help families who are really going to need the help in the mid-term.”

SCHOOLS CLOSING

Detroit is contemplating the closure of 63 schools by 2013.  At two area high schools there is now a lack of heat and lights in the classrooms and a shortage of teachers.

POVERTY LEVELS

According to the most recent numbers from 2007, 47.8 percent of Detroit children lived below the poverty line of $21,000 for a family of four while the national rate at the time was 18 percent.  Detroit’s overall poverty rate was 33.8 percent, the highest of any major city.

CRIME DOWN DUE TO LACK OF ‘VICTIMS’

The FBI’s latest statistics, for 2007, show Detroit with the highest violent crime rate of any major city. 

According to Jeriel Heard, chief of jails and courts for Detroit’s Wayne County, he reported that property crime in some Detroit neighborhoods had actually stabilized or declined because targets of opportunity were fewer now that most remaining residents are poor and many of the homes have been abandoned and cannibalized.  About 44,000 of the 67,000 homes that have gone into foreclosure since 2005 remain empty.

But yet, Detroit’s closure rate on homicides this year is expected to be 30 percent, half the U.S. average.

JAIL BETTER THAN THE REAL WORLD, SOME CHOOSING TO REOFFEND CHOOSING JAIL OVER HOMELESSNESS

Jeriel Heard, chief of jails and court for Detroit’s Wayne County, said jail conditions may deteriorate because of budget-related pressure to eliminate a quarter of the roughly 800 jail deputy positions.  He also confirmed that some offenders, notably those without homes of their own, were now expressing reluctance to leave jail when their sentences were done.

“For the first time, I’m seeing guys make a conscious decision they’ll be better off in a prison than in the community, homeless and hungry,” Joseph William of New Creations Community Outreach said, which assists ex-offenders.  “In prison they’ve got three hots and a cot, so they commit a crime to go back in and come out when times are better.”

CHRISTMAS DAY IN DETROIT

The Salvation Army of Detroit expected to feed as many as three thousand homeless and needy people on Christmas Day.  A breakfast was provided by the Salvation Army and consisted of eggs, French toast, fresh fruit and a variety of breakfast meats that was served at Detroit’s Masonic Temple.  In addition to hot meals, the homeless and needy were also given gifts of winter hats and scarves, and counseling by a social worker if needed.  A full turkey dinner was also handed out to thousands of needy individuals and families via the Salvation Army’s Bed and Bread program.

Christmas day was also Mitzvah Day – the day many in the Jewish community do good deeds, or mitzvahs.    There were nearly 1,000 Mitzvah Day volunteers at more than 40 metro Detroit locations.  At one church, 18 volunteers handed out clothes and served a Christmas meal to nearly 300 people gathered at the church.

NOT ONLY DETROIT, BUT MICHIGAN OVERALL

According to the Battle Creek Enquirer, Michigan is the only state in the union that experienced both a drop in personal income and a rise in the poverty level in 2007.  According to a New York Times story in Nov, 08; Michigan is in its fifth year of a recession, leading the nation in unemployment and 130,000 residents have been out of work for so long that they have run out of unemployment benefits.

Michigan’s overall unemployment rate rose again to 9.6 percent in November, the highest monthly rate since March 1992, and the highest monthly state unemployment rate in the country.  About 113,000 jobs were eliminated through November.  And meanwhile, Michigan has now lost people for a third straight year, the only one of the 50 states to do so.  And the state unemployment fund is in the red.  The state borrowed about $566 million from the U.S. Department of Labor, which is nearly $100 million more debt than just three weeks ago.  Next month, Michigan will begin levying a special “solvency” tax, said The New York Times.  This “solvency” tax will charge employers whose workers have cost the unemployment insurance fund more than the companies have paid in an additional $67.50 per employee.

Michigan faces a $1.8 billion deficit.  Governor Jennifer Granholm and lawmakers have approved a plan to cut $146 million from the state budget, including the closure of prison facilities in Ionia and Coldwater.  The plan reduces state spending on welfare programs by more than $63 million, due largely to fewer cases as a result of tighter eligibility requirements.  The state also recently increased its income tax rate from 3.9% to 4.35%.  Gov.

Medicaid enrollment was up 70,000 in the last year, according to the health department, for the entire state of Michigan.

Gleaners has secured additional food via the USDA to help reach the target goal of about 9 million donated pounds through Dec. 31 for more than 400 area soup kitchens, shelters, churches and pantries.  That figure is a 30 percent jump from 2007, which stems partly from greater need in outlying areas of Macomb and Livingston counties.

Demand for food is high at the Salvation army Eastern Michigan Division’s Farmington Hills corps who at one time only needed to restock its shelves once a month, is now restocking once a week.  “Our food is flying off the shelves.”  The Salvation Army hoped to have netted $8.5 million from its annual Red Kettle Campaign however, as of the beginning of the week of Christmas, donations were down about $623,000 from the same period last year, but overall demand for services was up 20 percent.

Homeless is up in cities in Michigan and nationwide, by an average of 12 percent, according to a survey by the U.S. Conference of Mayors 0 and the worst could still be to come.  The Michigan Coalition Against Homelessness reports there are at least 80,000 homeless people in the state.

About 71 percent of more than 300 nonprofits statewide noted a spike in demand for services this past year.  Meanwhile, 63 percent of the Metro Detroit agencies surveyed reported a drop in financial and in-kind support.  Many of the states' approximately 43,000 nonprofits are reducing staff, scaling back operations or exploring partnerships to offset a steep decline in funding. 

A once thriving auto hometown of Pontiac according to one columnist, resembles war-torn Baghdad.  Recently it’s unemployment rate hit the Great Depression-level of 20 percent.  GM is its only large-scale employer left.  The city is too broke to pay for adequate police staffing.  Vigilantes have begun patrolling neighborhoods to counter the community’s rising murder rate.  Even the columnist was not immune to this new rage.  On a recent evening her husband and brother walked along Pontiac’s Main Street, a truck load of four 30-something men, two armed with gun, drove up and asked if he had seen a man they were looking for. 

In Kalamazoo, the average number of children staying at the Gospel Mission on any given night is up 19 percent over last year, with an average of 64 children staying each night.  An average of three newborns a month start their lives at the Gospel Mission, after their mothers are discharged from the maternity ward.  Additionally in Kalamazoo, the Kalamazoo County Child Abuse and Neglect Prevention Council reported that their agency is getting more and more reports from concerned neighbors and others who are worried about children being left home alone by parents who cannot afford childcare while they work.

In Saginaw County, the Child Abuse and Neglect Council of Saginaw County reportes that overall their agency has seen a 23 percent increase in demand for services over last year.

In Grand Rapids, at the Guiding Light Mission, a steak dinner was served to just over 100 people on Christmas Day.

SOURCES:

• “Detroit Replaces New Orleans As Most Beleaguered American City”, South Florida Times, 26DEC08
• “Project Helping Hands combs Detroit daily offering help and hope”, Detroit Free Press, 26DEC08
• “Stats illustrate Detroit’s challenges”, AP, 20DEC08
• “Detroit:  America’s largest shrinking metropolis”, 13DEC08
• “Salvation Army Feeds Thousands Christmas Day”, WWJ, 25DEC08
• “Cutbacks threaten public education across U.S.”, WorkersWorld, 22DEC08
• “Members of the Jewish community perform good deeds on Christmas Day”, Detroit Free Press, 26DEC08
• “Michigan electricity, gas rates to rise slightly”, Detroit Free Press, 23DEC08
• “Ontario:  Detroit taking Canada water without OK”, Detroit Free Press, 23DEC08
• “Commentary:  Southeastern Michigan braces for safety net to break”, Detroit News, 15DEC08
• “Hunting a Killer”, Detroit Free Press, 16DEC08
• “Protestors ask Bank of America to help Metro Detroit residents keep homes”, Detroit News, 10DEC08
• “Poll:  Most in Mich. fear new Great Depression”, MLive, 24DEC08
• “Homeless treated to steak and scripture reading at Guiding Light Mission”, MLive, 25DEC08

THE NEW YORK TIMES

The New York Times, the third-largest U.S. newspaper, is facing a $400 million debt repayment in May and may borrow as much as $225 million against its Manhattan headquarters although it only owns 58% of the building.

The NYT, which finished the third quarter with $46 million in cash and equivalents, must refinance or repay a $400 million credit line that expires in May.  The company has about $366.3 million remaining under a second credit agreement that becomes payable in June 2011.

Last month, the NYT said October ad revenue at its newspapers fell 17.2% and classified sales dropped nearly 35%.

In the third quarter, NYT’s total advertising revenue dropped 14% and classified sales dropped 29%.

What the NYT Has (Short Term)

  ■  $46 million in cash
  ■  $366 million owned to it by advertisers

What the NYT Owes (Short Term)

  ■  $398 million of short-term debt due in May
  ■  $161 million of accounts payable (Newsprint, travel, etc.)
  ■  $100 million of payroll 
  ■  $159 million of other expenses
  ■  $50 million owned on long-term debt and rent

Grand total:  $865 million

Short Term Bottom line:  The NYT owes $453 million more than it has, thus it has a negative net wroth in the hundreds of millions.

What the NYT Has (Long Term)

  ■  $1.355 billion of buildings, real-estate, printing presses, trucks, etc.
  ■  $146 million of investments in joint ventures (Red Sox, etc.)

Total:  $1.501 billion

What the NYT Owes (Long Term)

  ■  $673 million of long-term debt
  ■  $7 million of long-term rent
  ■  $284 million of pension benefits
  ■  $214 million of retiree healthcare and other benefits
  ■  $290 million of other liabilities

Total:  $1.468 billion

Bottom Line:  The NYT has only about $33 million more than it owes.

CHICAGO TRIBUNE, LOS ANGELES TIMES, BALTIMORE SUN, ORLANDO SENTINEL

The publisher of the Chicago Tribune and the Los Angeles Times declared bankruptcy on Monday.  Tribune Co., which owns eight major daily newspapers and several television stations, filed for Chapter 11 bankruptcy protection after collapsing under a heavy debt load just a year after real estate mogul Sam Zell took it private.  It too is suffering from declining advertising revenue and circulation and maybe just bad business.

A year ago Zell loaded up the privately held publisher with about $8 billion in additional debt when he took the company private in a transaction largely financed by company contributions to an employee stock option plan.

As it sits, Tribune Co. had about $7.6 billion in assets and $12.97 billion in debt as of December 8, according to its bankruptcy filing.

The filing however, does not include Tribune’s Chicago Cubs Major League Baseball team or its ballpark, Wrigley Field – both of which Zell has struggled to sell.

Tribune Co. has said its unsecured creditors include J.P. Morgan Chase & Co’s JPMorgan Chase Bank with an $8.57 billion claim under a senior faculty, and Merrill Lynch & Co Inc’s Merrill Lynch Capital Corp with a $1.6 billion claim under a bridge loan facility.

Tribune Co. wholly owns “ForSalebyowner.com”, and partially owns CareerBuilder and Topix.  They are also owners of the Chicago Cubs and Wrigley Field, Tribune Media Services, Brass Ring, Zap2it, Chicago Magazine, Channel Guide Magazine, and partial owners of Classified Ventures, LLC.

The newspapers that Tribune Co owns are:  AM New York, Los Angeles Times, Chicago Tribune, RedEye (Chicago), Baltimore Sun, South Florida Sun-Sentinel, Orlando Sentinel, Hartford Courant (CT), Morning Call (Allentown, PA), Daily Press (Newport News, VA), Hoy (Chicago, Los Angeles), and El Sentinel (Orlando, South Florida).

In addition to owning the WGN-720 radio station, Tribune Co. also has assets in TV shows such as Andromeda, Mutant X, BeastMaster, Family Feud, South Park, Soul Train, Candid Camera, Ron Hazleton:  House Calls, Pet Keeping, City Guys, and Earth:  Final Conflict.

Tribune Co, owns 23 television stations, which are expected to be hit by the typical advertising declines that follow major elections and also owns Chicagoland’s Television, better known as CLTV, a 24-hour cable news station based in Oak Brook, IL.

The stations that Tribune Co owns are:

OTHER NEWSPAPERS

Media reports say McClatchy Co has approached potential buyers about a sale of the Miami Herald; The Minneapolis Star-Tribune is restructuring while its owner, private equity firm Avista Capital Partners, has skipped debt payments.

SOURCES:

• Bloomberg
• Silicon Alley Insider
• Market Watch
• Reuters
• Wipikedia

Well, it turns out that their complaints have worked.  Say goodbye tot he double cheese burger on McD’s Dollar Menu.  In a voting by franchisees, they approved a new sandwich for the Dollar Menu, while taking the Double Cheeseburger off the Dollar Menu.

McD’s announced that the recommended price for the Double Cheeseburger will increase from $1.00 to $1.19, a 16% increase, beginning December 1. 

However, you will still be able to get a double cheeseburger on the Dollar Menu called the McDouble.  It however, will come with only one slice of cheese.  Removing one piece of cheese will save franchisees about 6 cents per sandwich.  A memo to franchisees says the changes could boost cash flow by about $15,000 a year per restaurant.  Additionally, some media outlets are reporting that by reducing one slice of cheese, the fat content is lowered by 15% and reduces calories by 11%. [And maybe, just maybe the employees of McD’s will finally be able to actually put the slice of cheese somewhat ON the burger, instead of half on and half off.  This ain’t exactly brain surgery ya know.]

“Beginning December 1, we will add the new McDouble burger, made with two-all beef patties and one slice of cheese, to our popular Dollar Menu.  The Double Cheeseburger will still be available on our menu, and will still be offered at a great value.  We want our customers to know they can depend on McDonald’s to provide the everyday value and convenience they’ve come to expect, every time they visit our restaurants.  These changes will ensure we continue to satisfy our customers’ tastes and wallets.”

In test markets offering both versions prior to the menu change, about 60% to 70% of customers continued to order the classic double burger with two pieces of cheese.

The $1.19 price is a “suggested” price for franchisees from McDonald’s however, prices will vary.

“It is then up to the individual franchisees to decide how to price the classic Double Cheeseburger, which I expect will sell for $1.19 to $1.99, depending on the area of the country,” says Dick Adams, a McDonald’s franchisee consultant.

McD’s has already raised prices about 4% on its main menu items this year, while previously leaving the Dollar Menu items unchanged.

McD’s competitors will not be outdone however.  Wendy’s however, has a double-patty “stack attack” for a dollar, getting only one piece of cheese however, however in some markets it comes with lettuce, tomato, onion and pickles, a better value for the same price than McD’s McDouble.

In the meantime, Burger King seems to be bringing back the Whopper Jr. to the chains dollar menu.   Fair warning however, BK was testing a slightly smaller $1 Whopper Jr. in order to offset rising food costs in August.  The “new” Whopper Jr. sandwiches are made with 2-ounces of hamburger instead of the 2.2-ounce patty it typically uses.

What you don’t hear about, and I’m looking for, is if the weight of the beef patties for these burgers changes.

Of course, if your REALLY hungry and want to waste $15, you could get a giant 2-pound cheeseburger with eight 1/4-pound patties and eight slices of cheese.

But before you do that, you might want to watch the video of the guy who has been collecting McD’s burgers, for 18 years……..  I bring you, the “Bionic Burger”! “Ba-La-Pa-Pa-Paaaaa.. I’m Lovin’ It!”