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Sunday, December 18, 2011

Economic Stories of Relevance in Today's World -- December 18, 2011

Airport needs $207,584 - City Council to get proposal for funding Hickory operation - Hickory A tow crew from the new - Hickory Daily Record - Larry Clark - December 16, 2011 - The Hickory City Council will vote Tuesday on a proposed amendment that will carry Hickory Regional Airport through the remainder of the budget year. Assistant City Manager Warren Wood will recommend a $207,584 budget amendment that will fund Fixed Base Operator functions through June 30....            The FBO was a source of revenue for the city through property lease agreements and fuel sales. Wood said Riverhawk still owes Hickory more than $150,000 in revenue payments...                 Warren said revenue from Riverhawk to the city averaged about $200,000 a year, a small percentage of the total FBO income.
He said some details probably will be ironed out in court – perhaps in federal bankruptcy court, but most likely in North Carolina courts. Some Riverhawk creditors have indicated they will claim a portion of future FBO revenue should be used to pay off Riverhawk’s debts because the company apparently used future income to gain credit in some instances. Hickory officials reject the notion. Wood said the city never signed or verbally agreed to any deal that obligated fuel sales or other FBO services to creditors, and it was never a co-signatory on Riverhawk loans. Riverhawk’s status as a lease holder and because of the concession agreement between Hickory and Riverhawk, it’s the city’s position that future FBO income is off limits to debt claims, as are airport assets. “It is our intention to provide stability at the airport and build back its reputation,” Wood said. “Hickory has a huge investment in the airport.” The city owns the terminal and the tower and maintains firefighting equipment and personnel at the airport.

If you would like to read this article without paying the ridiculous subscription fee that the HDR desires for what little real news they produce, then you have two choices. You can cut and past the article into a word precessing program such as Microsoft Word before the annoying pop up pops up or you can quickly scroll to the bottom of the screen and wait until the annoyance pops up and then read through the gray matter.

The Hound: I think it is wise that they put Warren Wood out as the spokesman on this issue, because I don't think he had much to do with the mistakes that took place 4 years ago. Mayor Rudy Wright and City Manager Mick Berry were at the forefront of allowing the transfer of the deed (Lease Arrangement) from Profile Aviation to River Hawk Aviation to go through even though the Aviation Attorney hired by the city recommended that they not go through with the deal. A deal that they were blind to until after it was already consummated.

Alders Sally Fox and Jill Patton were dead set against this deal going through four years ago. If city revenues from the contract with River Hawk were $150,000 in arrears, and total revenue was around $200,000, then that means that River Hawk hasn't been paying bills (to the city) for over 9 months and I have been told that this problem has been going on well back into 2010. Why did the city wait so long to deal with this issue?

A good thing is that the prices for aviation fuel at the Hickory Airport have come down substantially since the takeover by the city. The prices at Hickory Regional have now gone from being some of the highest in the region to being some of the lowest. That is what the Hickory Regional Task Force told the City would happen in their recommendations from 2006. This puts the Airport in a very good position competitively.

My only hope is that those who made the terrible decisions in 2007 will revisit their thought processes and understand the flawed logic so that the same flawed logic won't correlate to more bad decision processes related to other endeavors moving forward. This is a city that is continually managed in a risk averse manner and yet they were willing to move forward with a shaky arrangement (the deal with Profile) into another shaky arrangement (the deal with River Hawk) and this was done against the advice of an attorney the City had hired and a Task Force they had implemented. Are you starting to get the picture?

City of Hickory takes over operations at Airport - River Hawk Aviation OUT- 12/9/2011

Mind Blowing - The City's Mismanagement of the Hickory Regional Airport - 9/30/2009

Do people even know? Hickory Airport Operators (River Hawk Aviation) in Bankruptcy - 6/18/2011

Will Hickory Airport Operators be forced to liquidate -- and why is no one talking about this?!?!? - 9/16/2011

MF Global Told CME It Used Customer Funds: Timeline
- Bloomberg - Matthew Leising and Silla Brush - Dec 16, 2011 - MF Global Holdings Ltd. used about $700 million of customer funds to “meet liquidity issues” in the days prior to its bankruptcy, according to CME Group Inc. (CME), which had auditing authority over the failed futures broker.             CME Group detailed its dealings with MF Global in documents released yesterday by the oversight panel of the House Financial Services Committee. Christine Serwinski, chief financial officer for North America at MF Global, and Edith O’Brien, a treasurer, told Mike Procajlo, an exchange auditor, at around 1 a.m. on Oct. 31 in Serwinski’s Chicago office that the customer money was transferred on Oct. 27 and Oct. 28 and possibly Oct. 26, according to a CME Group timeline.              About $700 million was moved to the broker-dealer side of the business to meet liquidity issues in a series of transactions on Thursday, Friday and possibly Wednesday,” Serwinski and O’Brien told Procajlo hours before the firm filed for the eighth-largest bankruptcy following record quarterly losses and $6.3 billion in trades on European sovereign debt.             The timeline, the most detailed account yet of what may have happened to as much as $1.2 billion of missing customer money, was released as Jon Corzine, the firm’s former chairman, chief executive officer and architect of the European trades, faced his third congressional panel in the past week. The former senator and governor of New Jersey said he doesn’t know what happened to the money. New York-based MF Global’s failure marks the first time a futures broker’s bankruptcy has led to the loss of customer funds, according to Terrence Duffy, CME Group’s executive chairman.

“A statement that $700 million was taken implies a rule violation,” said Ronald Filler, who was a managing director in the global futures business at Lehman Brothers Holdings Inc. for 16 years. “That is not a permitted use of customer funds under Commodity Futures Trading Commission rules,” said Filler, who is now a professor at New York Law School, specializing in derivatives and futures brokers issues.

Once customer money is moved from the customer segregated accounts to the broker-dealer unit of a broker it can lose its designation as protected funds, Filler said.               “No one knows it belongs to the customer” and treasury officers may mistakenly think the funds are available for general use, he said.
Investigators are attempting to determine which transactions involving customer funds were illegitimate, Jill E. Sommers, the senior CFTC commissioner overseeing the investigation said in a telephone interview this week.                   If a transaction that was legitimate in the beginning “becomes illegitimate” later in a chain of transactions, then the chances of recovering the funds could be slim. “It may be gone,” Sommers said.

50 Economic Numbers From 2011 That Are Almost Too Crazy To Believe - The Economic Collapse - December 16, 2011 - Even though most Americans have become very frustrated with this economy, the reality is that the vast majority of them still have no idea just how bad our economic decline has been or how much trouble we are going to be in if we don't make dramatic changes immediately.  If we do not educate the American people about how deathly ill the U.S. economy has become, then they will just keep falling for the same old lies that our politicians keep telling them.  Just "tweaking" things here and there is not going to fix this economy.  We truly do need a fundamental change in direction.  America is consuming far more wealth than it is producing and our debt is absolutely exploding.  If we stay on this current path, an economic collapse is inevitable.  Hopefully the crazy economic numbers from 2011 that I have included in this article will be shocking enough to wake some people up.

At this time of the year, a lot of families get together, and in most homes the conversation usually gets around to politics at some point.  Hopefully many of you will use the list below as a tool to help you share the reality of the U.S. economic crisis with your family and friends.  If we all work together, hopefully we can get millions of people to wake up and realize that "business as usual" will result in a national economic apocalypse.

The following are 50 economic numbers from 2011 that are almost too crazy to believe....
#1 A staggering 48 percent of all Americans are either considered to be "low income" or are living in poverty.

#2 Approximately 57 percent of all children in the United States are living in homes that are either considered to be "low income" or impoverished.

#3 If the number of Americans that "wanted jobs" was the same today as it was back in 2007, the "official" unemployment rate put out by the U.S. government would be up to 11 percent.

#4 The average amount of time that a worker stays unemployed in the United States is now over 40 weeks.

#5 One recent survey found that 77 percent of all U.S. small businesses do not plan to hire any more workers.

#6 There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.

#7 Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

#8 According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006.  Today, that number has shrunk to 14.5 million.

#9 A Gallup poll from earlier this year found that approximately one out of every five Americans that do have a job consider themselves to be underemployed.

#10 According to author Paul Osterman, about 20 percent of all U.S. adults are currently working jobs that pay poverty-level wages.

#11 Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

#12 Back in 1969, 95 percent of all men between the ages of 25 and 54 had a job.  In July, only 81.2 percent of men in that age group had a job.

#13 One recent survey found that one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job.

#14 The Federal Reserve recently announced that the total net worth of U.S. households declined by 4.1 percent in the 3rd quarter of 2011 alone.

#15 According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.

#16 As the economy has slowed down, so has the number of marriages.  According to a Pew Research Center analysis, only 51 percent of all Americans that are at least 18 years old are currently married.  Back in 1960, 72 percent of all U.S. adults were married.

#17 The U.S. Postal Service has lost more than 5 billion dollars over the past year.

#18 In Stockton, California home prices have declined 64 percent from where they were at when the housing market peaked.

#19 Nevada has had the highest foreclosure rate in the nation for 59 months in a row.

#20 If you can believe it, the median price of a home in Detroit is now just $6000.

#21 According to the U.S. Census Bureau, 18 percent of all homes in the state of Florida are sitting vacant.  That figure is 63 percent larger than it was just ten years ago.

#22 New home construction in the United States is on pace to set a brand new all-time record low in 2011.

#23 As I have written about previously, 19 percent of all American men between the ages of 25 and 34 are now living with their parents.

#24 Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.

#25 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980.  Today they account for approximately 16.3%.

#26 One study found that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt.

#27 If you can believe it, one out of every seven Americans has at least 10 credit cards.

#28 The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#29 It is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars.

#30 The retirement crisis in the United States just continues to get worse.  According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

#31 Today, one out of every six elderly Americans lives below the federal poverty line.

#32 According to a study that was just released, CEO pay at America's biggest companies rose by 36.5% in just one recent 12 month period.

#33 Today, the "too big to fail" banks are larger than ever.  The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.

#34 The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to the bottom 30 percent of all Americans combined.

#35 According to an analysis of Census Bureau data done by the Pew Research Center, the median net worth for households led by someone 65 years of age or older is 47 times greater than the median net worth for households led by someone under the age of 35.

#36 If you can believe it, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.

#37 A higher percentage of Americans is living in extreme poverty (6.7%) than has ever been measured before.

#38 Child homelessness in the United States is now 33 percent higher than it was back in 2007.

#39 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.

#40 Sadly, child poverty is absolutely exploding all over America.  According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.

#41 Today, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.

#42 In 1980, government transfer payments accounted for just 11.7% of all income.  Today, government transfer payments account for more than 18 percent of all income.

#43 A staggering 48.5% of all Americans live in a household that receives some form of government benefits.  Back in 1983, that number was below 30 percent.

#44 Right now, spending by the federal government accounts for about 24 percent of GDP.  Back in 2001, it accounted for just 18 percent.

#45 For fiscal year 2011, the U.S. federal government had a budget deficit of nearly 1.3 trillion dollars.  That was the third year in a row that our budget deficit has topped one trillion dollars.

#46 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.

#47 Amazingly, the U.S. government has now accumulated a total debt of 15 trillion dollars.  When Barack Obama first took office the national debt was just 10.6 trillion dollars.

#48 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

#49 The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.

#50 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

Of course the heart of our economic problems is the Federal Reserve.  The Federal Reserve is a perpetual debt machine, it has almost completely destroyed the value of the U.S. dollar and it has an absolutely nightmarish track record of incompetence.  If the Federal Reserve system had never been created, the U.S. economy would be in far better shape.  The federal government needs to shut down the Federal Reserve and start issuing currency that is not debt-based.  That would be a very significant step toward restoring prosperity to America.

During 2011 we made a lot of progress in educating the American people about our economic problems, but we still have a long way to go.

Hopefully next year more Americans than ever will wake up, because 2012 is going to represent a huge turning point for this country.

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