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May 14 (Bloomberg) -- President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.
“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”
Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”
The president pledged to work with Congress to shore up entitlement programs such as Social Security and Medicare and said he was confident that the House and Senate would pass health-care overhaul bills by August.
“Most of what is driving us into debt is health care, so we have to drive down costs,” he said.
Bidders for BankUnited Financial Corp. are asking federal regulators to put the company into receivership before selling its assets, a step that could wipe out shareholders, people familiar with the matter said.
BankUnited, the biggest lender based in Florida, has more than tripled in the past month in Nasdaq Stock Market trading on speculation the company would be acquired. In a receivership, bidders would buy the bank’s assets from the government.
Potential buyers, including a private-equity group led by former North Fork Bancorp Chief Executive Officer John Kanas, have expressed an interest in purchasing the Coral Gables, Florida-based lender out of receivership, said the people, who declined to be named because the talks are private. The bidding deadline was pushed to May 19 from today, the people said, which may help the Federal Deposit Insurance Corp. find a buyer willing to avert receivership.
BlackRock Inc., the largest publicly traded U.S. asset manager, said Mark Williams and Kevin Booth, two managing directors who ran high-yield debt portfolios, resigned.
Williams ran the New York-based company’s bank-loan investment team and was co-head of its leveraged finance business. Booth was co-head of the firm’s high-yield team and also co-ran the leveraged finance business, according to regulatory filings.
James Keenan, Mitchell Garfin and Derek Schoenhofen are now managing the BlackRock High Yield Bond Portfolio, according to a May 8 filing with the U.S. Securities and Exchange Commission. Leland Hart and Adrian Marshall are now the portfolio managers for the BlackRock Senior Floating Rate Fund, which invests in high-yield, high-risk loans, according to another regulatory filing that day from the $1.3 trillion investment firm.
U.S. prosecutors have subpoenaed New Mexico’s $11.8 billion state endowment funds for documents regarding investment activities, according to a state spokesman.
The New Mexico Investment Council, which includes Governor Bill Richardson, received the request earlier this month, said spokesman Charles Wollman, in a telephone interview. He declined to describe the contents of the subpoena, issued by the U.S. Attorney in Albuquerque.
“We’re working to comply with the request of the authorities,” Wollman said. “We’ll be cooperating fully.”
The Justice Department is already investigating whether a California financial adviser was awarded $1.5 million in bond and interest-rate swap work in New Mexico in 2004 in exchange for $100,000 in donations to Richardson political committees. Richardson, who has denied wrongdoing, withdrew from consideration as U.S. commerce secretary following disclosure of the probe.
The U.S. Federal Reserve may revise rules that currently favor Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, Fed Chairman Ben S. Bernanke said in a letter released today by Connecticut Attorney General Richard Blumenthal.
The Fed is “conducting a broad review of our approach to using rating agencies,” Bernanke said in an April 13 letter written in response to a complaint from Blumenthal that the central bank’s rules unfairly favor the companies that helped cause the financial crisis.
“That review encompasses the ratings of securities of all types accepted as collateral at all our recently established credit facilities as well as collateral accepted to secure regular discount window loans,” Bernanke wrote.
David Skidmore, a Fed spokesman, didn’t return calls seeking additional comment.
Longtime technical analyst Robert Prechter, who forecast the 1987 stock market crash, predicted this week that U.S. equities may plunge to half their lows hit in March as a deflationary depression bites.
Oil and U.S. Treasury bonds are also locked in long term bear markets, while corporate bond prices will plunge precipitously by next year as broad economy, banking system and company earnings sustain more damage from a financial crisis that's akin to the Great Depression, he said.
The U.S. S&P 500 stock index's .SPX rebound by nearly 40 percent since it sagged to a 12-year closing low of 676 points on March 9 is not sustainable, Prechter said in an interview with Reuters.
"It's not the start of a new bull market," said Prechter, chief executive at research company Elliott Wave International in Gainesville, Georgia. "Our models are (showing) right now that it is a much bigger bear market than most people realize, something along the lines of 1929-1932," he told Reuters in a wide ranging interview. "It's a very rare event," he added.
"I think the next leg down will be at least as severe if not more severe than what we just experienced. So you want to stay on the side of safety," he said.
Next Financial Collapse Could be Looming, Worse than Current ,
Americans are being lulled into a false sense of economic security through misleading economic indicators that have been pushed upward by optimistic investors - a phenomenon that has the potential to lead Americans to return to living well beyond their means, according to Edward Hadas of breakingviews.com.
“While the economic arrows are still mostly pointing downward, markets seem to be twisting the data in a positive direction,” he writes. “A few numbers suggest that a little bit of the exuberance of the go-go credit years could be returning.”
One of the indicators of economic data being twisted in a positive direction is the fact that the trade deficit is once again on the rise. As a matter of fact, the trade deficit experienced its first month-over-month rise since last July.
Originally posted by GreenBicMan
And I only say that b/c they dont want to lose their seat, so they do what you say.. if the common are bleeding, well they at least better pretend to care
Same thing could be said for that gov. from texas and wanting to break away from USA
Originally posted by marg6043
reply to post by stander
Nah, I am no risk taker when you get to live four decades and see what has become in this nation, the government, the corporate raise to corruption you think two times before taking risks.
And as for the bikini, well at least you are nice enough and no asking for naked pictures, like somebody else ask me on another thread (as a joke)
Originally posted by stander
marg, sweetie, you are too smart to answer to by shooting-from-the waste style.
Yep, you got it, girl. It's all fu-ked up.
The Treasury yesterday granted preliminary approval for some of the nation's largest insurance companies to receive capital infusions under the government's Troubled Assets Relief Program, Treasury spokesman Andrew Williams said.
Recipients are Hartford, Prudential, Allstate, Ameriprise, Lincoln National and Principal Financial Group, he said. The insurers notified yesterday are among hundreds of financial institutions in the pipeline "that are being reviewed and funded as appropriate on a rolling basis," Williams said.
The money could shore up the life insurance industry, which plays a major role in the economy and has been weakened by the financial crisis. In addition to paying death benefits, life insurers deliver retirement income in the form of annuities. They are big investors in corporate bonds and commercial real estate.
Screw the little people, but help the fatcats. We are nothing more than worthless eaters anyway, right???
Originally posted by GreenBicMan
reply to post by redhatty
that bailout was going to pass no matter what though.. the wheels were in motion prob. quite a while before that is all announced
either way, neither of us, or 99.99% of the population will prob. never know what really went on