Archive for February, 2009

The State Of Advertising

Saturday, February 28th, 2009

If you search for “NASCAR sponsorship problems” at Google, there are over half-a-million results. NASCAR has seen a huge decline in advertisers. So much so, that entire race teams have been laid-off. It’s not just racing that is being hurt in this economic downturn. Most professional sports, such as the PGA, are feeling the crunch.

Print advertising is also under pressure. Newspapers have been failing at a rapid rate including some of the nations biggest and oldest. (See the Philadelphia Inquirer and Philadelphia Daily News)

Don’t Throw the Baby Out with the Bathwater
Yes, it is important for companies to examine the effectiveness of their marketing. Perhaps sports sponsorships and print advertising are not wise places to place your advertising budget. However, the current economic crisis calls for companies to do a better job of advertising than ever before. During the great depression, President Franklin D. Roosevelt said if he could do it all over again he’d “go into the advertising business in preference to almost any other. The general raising of the standards of modern civilization among all groups of people during the past half century would have been impossible without the spreading of the knowledge of higher standards by means of advertising.”

Internet advertising is one of the best returns on investment. For instance, there is a huge readership for employment opportunities and help wanted advertising. It’s a great time for a company to find the best qualified workers. It’s also a good way for a publisher to reach a wider audience.

Some of the other industries that are discovering the benefits of advertising during this economic downturn include:
Real Estate Foreclosures, Builders and Contractors for Energy Conservation, Doctors, Practitioners, Health & Wellness, Lawyers, Attorneys and Law Offices and Credit Repair Agencies.

Related Articles
Who Is Advertising?
Billboards Along The Information Superhighway
The Beauty of the Internet

The Ever Shrinking Economy

Friday, February 27th, 2009

Washington, DC — The Commerce Department released its report on the 4th Quarter GDP. Though it was expected to be bad, it came in even worse — down 6.2 percent on an annual rate.

FDIC Changes Charges

Friday, February 27th, 2009

In 2007, there were 3 bank failures. In 2008, there were 25 bank failures. So far in 2009, there have been 13 bank failures.

The Federal Deposit Insurance Corporation expects bank failures will cost the insurance fund $65 billion through 2013.

In response, the FDIC is raising fees on banks, as well as, adding emergency fee to help collect 27 billion dollars this year.

Insured Banks and Thrifts Lost $26.2 Billion in the Fourth Quarter

Friday, February 27th, 2009

from the FDIC

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported a net loss of $26.2 billion in the fourth quarter of 2008, a decline of $27.8 billion from the $575 million that the industry earned in the fourth quarter of 2007 and the first quarterly loss since 1990. Rising loan-loss provisions, losses from trading activities and goodwill write-downs all contributed to the quarterly net loss as banks continue to repair their balance sheets in order to return to profitability in future periods.

More than two-thirds of all insured institutions were profitable in the fourth quarter, but their earnings were outweighed by large losses at a number of big banks. Total deposits increased by $307.9 billion (3.5 percent), the largest percentage increase in 10 years, with deposits in domestic offices registering a $274.1 billion (3.8 percent) increase. And at year-end, nearly 98 percent of all insured institutions, representing almost 99 percent of industry assets, met or exceeded the highest regulatory capital standards.

“Public confidence in the banking system and deposit insurance is demonstrated by the increase in domestic deposits during the fourth quarter,” FDIC Chairman Sheila Bair said. “Clearly, people see an FDIC-insured account as a safe haven for their money in difficult times.”

For all of 2008, insured institutions earned $16.1 billion, a decline of 83.9 percent from 2007 and the lowest annual total since 1990. Twelve FDIC-insured institutions failed during the fourth quarter and one banking organization received assistance. During the year, a total of 25 insured institutions failed. The FDIC’s “Problem List” grew during the quarter from 171 to 252 institutions, the largest number since the middle of 1995. Total assets of problem institutions increased from $115.6 billion to $159 billion.

In its latest release, the FDIC cited deteriorating asset quality as the primary reason for the drop in industry profits. Loan-loss provisions totaled $69.3 billion in the fourth quarter, a 115.7 percent increase from the same quarter in 2007. In addition, the industry reported $15.8 billion in expenses for write-downs of goodwill (which do not affect regulatory capital levels), $9.2 billion in trading losses and $8.1 billion in realized losses on securities and other assets.

The FDIC provided data on industry use of the Temporary Liquidity Guarantee Program (TLGP), which was established in mid-October to address credit market disruptions and improve access to liquidity for insured financial institutions and their holding companies. The TLGP, which is entirely funded by industry fees that totaled $3.4 billion as of year-end, has two components. One provides a 100 percent guarantee of all deposits in noninterest-bearing transaction accounts, such as business payroll accounts, at participating institutions. The other provides a guarantee to newly issued senior unsecured debt at participating institutions. At the end of December, more than half a million deposit accounts received over $680 billion in additional FDIC coverage through the transaction account guarantee, and $224 billion in FDIC-guaranteed debt was outstanding.

“The debt guarantee program has been effective in reducing borrowing spreads and improving access to short- and intermediate-term funding for banking organizations,” Chairman Bair noted. “In recent weeks, banks have been able to issue debt without guarantees and other corporate borrowers have issued debt more frequently and in larger amounts. These are positive signs.”

Financial results for the fourth quarter and full year are contained in the FDIC’s latest Quarterly Banking Profile, which was released today. Among the major findings:

Provisions for loan losses continued to weigh on earnings. Rising levels of charge-offs and noncurrent loans have required insured institutions to step up their efforts to increase their reserves for loan losses. The $69.3 billion in provisions that the industry added to reserves in the fourth quarter represented over half (50.2 percent) of its net operating revenue (net interest income plus total noninterest income), the highest proportion in any quarter in more than 21 years.

The rising trend in troubled loans persisted in the fourth quarter. Insured institutions charged off $37.9 billion of troubled loans, more than twice the $16.3 billion that was charged-off in the fourth quarter of 2007. The annualized net charge-off rate of 1.91 percent equaled the previous quarterly high set in the fourth quarter of 1989. The amount of loans and leases that were noncurrent (90 days or more past due or in nonaccrual status) increased by $44.1 billion (23.7 percent) during the fourth quarter. At the end of 2008, a total of 2.93 percent of all loans and leases were noncurrent, the highest level for the industry since the end of 1992.

The FDIC’s Deposit Insurance Fund reserve ratio fell. A higher level of losses for actual and anticipated failures caused the insurance fund balance to decline during the fourth quarter by $16 billion, to $19 billion (unaudited) at December 31. In addition to having $19 billion available in the fund, $22 billion has been set aside for estimated losses on failures anticipated in 2009. The fund reserve ratio declined from 0.76 percent at September 30 to 0.40 percent at year end. The FDIC Board will meet tomorrow to set deposit insurance assessment rates beginning in the second quarter of 2009 and to consider adopting enhancements to the risk-based premium system.

The complete Quarterly Banking Profile is available at on the FDIC Web site.

# # #

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation’s banking system. The FDIC insures deposits at the nation’s 8,305 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at, by subscription electronically (go to and may also be obtained through the FDIC’s Public Information Center (877-275-3342 or 703-562-2200). PR-27-2009

Get Out Of Town… Or, At Least Iraq

Friday, February 27th, 2009

President Obama announced today that the USA would pull its military troops out of Iraq over the next 18 months.

The announcement comes one day after the Secretary of Defense announced a change to the Photographing of Caskets of Fallen Troops policy.

Fallen Soldiers Return From Iraq

Fallen Soldiers Return From Iraq

SEC. GATES: I’d like to address two subjects today.

First, I would like to make an announcement regarding the department’s policy toward media coverage of the return of our fallen heroes at Dover Air Force Base. As you know, the president asked me to review this policy. After receiving input from a number of sources, including all of the military services and organizations representing military families, I have decided that the decision regarding media coverage of the dignified transfer process at Dover should be made by those most directly affected: on an individual basis by the families of the fallen. We ought not presume to make that decision in their place.

Look to the Sea

Friday, February 27th, 2009

It’s getting closer. Faster. Sea level rise, globally averaged over the last 15 years is twice that averaged over the last 50.

1.6-1.8 mm/yr over the last 50 yr., to 3.5 mm/yr. over the last fifteen, as much as 1cm(10mm, 0.4 inch)/yr in parts of the western Pacific. Not much, one would think. Consider now, the average beach gradient is about 1in a 100. So 1cm/yr is 1 meter/yr (3 ft/yr) of shoreline intrusion.

This is just the beginning.

Other bits about accelerating carbon loading
of the atmosphere as well.

Read the whole thing at:

The Hidden Link Between Factory Farms, Toxic Chemicals and Human Illness

Friday, February 27th, 2009

* The Hidden Link Between Factory Farms and Human Illness
By Laura Sayre
Mother Earth News, February/March 2009
Straight to the Source

You may be familiar with many of the problems associated with concentrated animal feeding operations, or CAFOs. These “factory farm” operations are often criticized for the smell and water pollution caused by all that concentrated manure; the unnatural, grain-heavy diets the animals consume; and the stressful, unhealthy conditions in which the animals live. You may not be aware, however, of the threat such facilities hold for you and your family’s health - even if you never buy any of the meat produced in this manner.

Factory farms are breeding grounds for virulent disease, which can then spread to the wider community via many routes - not just in food, but also in water, the air, and the bodies of farmers, farm workers and their families. Once those microbes become widespread in the environment, it’s very difficult to get rid of them.

A 2008 report from the Pew Commission on Industrial Farm Animal Production, a joint project of the Pew Charitable Trusts and the Johns Hopkins Bloomberg School of Public Health, underscores those risks. The 111-page report, two years in the making, outlines the public health, environmental, animal welfare and rural livelihood consequences of what they call “industrial farm animal production.” Its conclusions couldn’t be clearer. Factory farm production is intensifying worldwide, and rates of new infectious diseases are rising. Of particular concern is the rapid rise of antibiotic-resistant microbes, an inevitable consequence of the widespread use of antibiotics as feed additives in industrial livestock operations.

Scientists, medical personnel and public health officials have been sounding the alarm on these issues for some time. The World Health Organization and the Food and Agriculture Organization (FAO) have recommended restrictions on agricultural uses of antibiotics; the American Public Health Association (APHA) proposed a moratorium on CAFOs back in 2003. All told, more than 350 professional organizations - including the APHA, American Medical Association, the Infectious Diseases Society of America, and the American Academy of Pediatrics - have called for greater regulation of antibiotic use in livestock. The Infectious Diseases Society of America has declared antibiotic-resistant infections an epidemic in the United States. The FAO recently warned that global industrial meat production poses a serious threat to human health.

The situation is akin to that surrounding global climate change four or five years ago: near-universal scientific consensus matched by government inaction and media inattention. Although the specter of pandemic flu - in which a virulent strain of the influenza virus recombines with a highly contagious strain to create a bug rivaling that responsible for the 1918 flu pandemic, thought to have killed as many as 50 million people - is the most dire scenario, antibiotic resistance is a clear and present danger, already killing thousands of people in the United States each year.

People, Animals and Microbes

From one perspective, picking up bugs from our domesticated animals is nothing new. Approximately two-thirds of the 1,400 known human pathogens are thought to have originated in animals: Scientists think tuberculosis and the common cold probably came to us from cattle; pertussis from pigs or sheep; leprosy from water buffalo; influenza from ducks.

Most of these ailments probably appeared relatively early in the 10,000-year-old history of animal domestication. Over time, some human populations developed immunity to these diseases; others were eventually controlled with vaccines.

Some continued to kill humans until the mid-20th century discovery of penicillin, a miracle drug that rendered formerly life-threatening infections relatively harmless. Other antibiotics followed, until by the 1960s leading researchers and public health officials were declaring that the war on infectious diseases had been won.

Beginning in the mid 1970s, however, the numbers of deaths from infectious diseases in the United States started to go back up. Some were from old nemeses, such as tuberculosis, newly resistant to standard antibiotic treatments; others were wholly novel.

“In recent decades,” writes Dr. Michael Greger, director of public health and animal agriculture for the Humane Society of the United States and author of Bird Flu: A Virus of Our Own Hatching, “previously unknown diseases have surfaced at a pace unheard of in the recorded annals of medicine: more than 30 newly identified human pathogens in 30 years, most of them newly discovered zoonotic viruses.” (Zoonotic viruses are those that can be passed from animals to humans.)

Why is this happening? There are many reasons, including the increased pace of international travel and human incursions into wild animals’ habitats. But one factor stands out: the rise of industrial farm animal production. “Factory farms represent the most significant change in the lives of animals in 10,000 years,” Greger writes. “This is not how animals were supposed to live.”

Chicken and pig production are particularly bad. In 1965, the total U.S. hog population numbered 53 million, spread over more than 1 million pig farms in the United States - most of them small family operations. Today, we have 65 million hogs on just 65,640 farms nationwide. Many of these “farms” - 2,538, to be exact - have upwards of 5,000 hogs on the premises at any given time. Broiler chicken production rose from 366 million in 1945 to 8,400 million in 2001, most of them in facilities housing tens of thousands of birds.

On a global scale, the situation is even worse. Fifty-five billion chickens are now reared each year worldwide. The global pig inventory is approaching 1 billion, an estimated half of which are raised in confinement. In China and Malaysia, it’s not unheard of for hog facilities to house 20,000 or even 50,000 animals.

Full story:

Another Quarter, Another 25 Billion

Thursday, February 26th, 2009

Fannie Mae reports US$25 billion loss for 4Q2008. Wants another 15 billion. Cash flow statements are rather revealing of the political mandate of large puchases of MBS last year. Wonder how much cash brother Freddie blew ? Not to speak of cousin Ginnie, whose paper is explicitly guaranteed by the full faith and credit of the United States of America…
From Fannie:

Peter Schiff Responds to Obama Speech to Congress

Wednesday, February 25th, 2009

Excellent message. Peter is 1000% correct that Obama’s speech reveals a total lack of understanding of basic economics:

Watch the Video:

Mining the Dead

Tuesday, February 24th, 2009

This reminded me of the book, ‘Dead Souls’ by Nikolai Gogol.

Companies are taking out insurance policies on dying employees, writing off “the premiums and the interest on the loans to buy the policies as a business expense.”

But wait, there’s more:

“In addition, the investment returns and death benefits aren’t subject to federal income tax”

Do you know what your boss is insuring ?

I shudder to think of the next great financial bubble.