ATC Collapses Stranding Truckers Across the Nation With Empty Tanks

The Case For Commodities

NO More Chicanery!

Time To Turn Out the Lights?

Pre currency crisis, public services and benefits continue to be cut. Peering into the future, survival of the fittest is the forecast.

Indiana Cities Pull Plug On Streetlamps to Save Money

Budget cuts and property tax caps are leaving many residents across Indiana in the dark.

Merrillville has turned off every other streetlight on its main roads. Valparaiso is turning off every other light in some areas and has set others to turn off at midnight. Muncie officials say the city will shut off 85 percent of overhead lights to help balance the 2010 budget.

The moves are a response to rising costs and shrinking revenue that's the result of the ailing economy and property tax caps.

Muncie Mayor Sharon McShurley says the move could result in more than just darker streets.

"I'm setting you on notice," she told the council. "The decisions you have made, unless you reconsider the budget, are going to be detrimental to the city."

But officials in several cities say the changes are necessary. Merrillville Public Works Director Bruce Spires said the city is more than a year behind on its NIPSCO bills.

The city will turn off 300 streetlights, for a savings of about $2,000 a month.

"The town has been very aggressive in putting up streetlights for the past 15 years, especially when we can get federal funding for them," Spires said. "They were either done as part of a road project or as a safety issue where we got 100 percent funding. These roads are well lit. A couple of them you could land an airplane on."

Merrillville's decision won't affect subdivisions, curves or intersections.

Valparaiso officials say they aren't sure how much electricity the city is using because it pays a flat rate per light each month, regardless of whether the light is working.

The city has shut off some lights and will meter others to determine their usage. Project and Facility Management Director Don McGinley said the city also is considering putting some lights that already are on photo cells on timers so the lights don't turn on simply if it's extremely cloudy or during a storm.

Valparaiso also has installed low-energy LED bulbs in city streetlights and has lowered pole heights to bring lights closer to sidewalks.

Valparaiso isn't sure how much it will save in electricity costs. Spires said Merrillville will review its bill in the coming weeks to see if any changes are needed.

"You really don't miss that they are gone," Spires said. "There's still plenty of light out there."

The Muncie City Council announced in early November that it had cut its $630,000 streetlight budget in half to help reduce a $1.5 million spending shortfall for next year.

But the city said this week it would have to shut off more lights than expected because the budget line item for electricity also includes traffic signals and power for city hall.

The city hall electric bill runs about $64,000, and traffic signals cost about $91,000 to operate each year. That leaves just $160,000 for overhead street lights next year, said Superintendent of Public Works Pete Heuer.

The cuts mean only 603 of Muncie's 4,107 street lights would remain in service after Dec. 31.

The city is meeting with Indiana Michigan power to discuss how to turn the lights off. "This task will no doubt be an engineering puzzle due to the fact that several lights may run off a single meter," Heuer said. The lights will be turned off Dec. 31.

Mayor Sharon McShurley told the city council that the power company had threatened to sue the city for breach of contract. Indiana Michigan &M spokesman Mike Brian denied that claim.

"There's been no threat as far as we know of any legal action," he said.

Unemployment Plague

This Is Not a Drill

There is no easy way, and perhaps no way out of the debt crisis the world finds itself in. Today another real estate bankruptcy as Fairfield Bites the Dust is a precursor to a crazy 1q for the industry that has not bottom. Brace for impact...although the free fall may take a while.

Shadowstats' John Williams: Prepare for the Hyperinflationary Great Depression

John Williams, who runs the popular counter government data manipulation site Shadowstats, has thrown down the gauntlet to deflationists, and in an extensive report concludes that the probability of a hyperinflationary episode in America over the next year has reached critical levels. While the debate between deflationists and (hyper)inflationists has been a long and painful one, numerous events set off in motion by the Bernanke Fed (as a direct legacy of the Greenspan multi-decade period of cheap and boundless credit) may have well cast America as the unwilling protagonist in the sequel of the failed monetary policy economic experiment better known as Zimbabwe.

Williams does not mince his words:

The U.S. economic and systemic solvency crises of the last two years are just precursors to a Great Collapse: a hyperinflationary great depression. Such will reflect a complete collapse in the purchasing power of the U.S. dollar, a collapse in the normal stream of U.S. commercial and economic activity, a collapse in the U.S. financial system as we know it, and a likely realignment of the U.S. political environment. The current U.S. financial markets, financial system and economy remain highly unstable and vulnerable to unexpected shocks. The Federal Reserve is dedicated to preventing deflation, to debasing the U.S. dollar. The results of those efforts are being seen in tentative selling pressures against the U.S. currency and in the rallying price of gold.

And even as Bernanke continues existing in a factless vacuum where he sees no asset bubbles, Williams takes aim at the one party almost exclusively responsible for the economic carnage that will soon transpire:

The crises have been generated out of and are centered on the United States financial system, triggered by the collapse of debt excesses actively encouraged by the Greenspan Federal Reserve. Recognizing that the U.S. economy was sagging under the weight of structural changes created by government trade, regulatory and social policies -- policies that limited real consumer income growth -- Mr. Greenspan played along with the political and banking systems. He made policy decisions to steal economic activity from the future, fueling economic growth of the last decade largely through debt expansion.

The Greenspan Fed pushed for ever-greater systemic leverage, including the happy acceptance of new financial products, which included instruments of mis-packaged lending risks, designed for consumption by global entities that openly did not understand the nature of the risks being taken. Complicit in this broad malfeasance was the U.S. government, including both major political parties in successive Administrations and Congresses.

As with consumers, the federal government could not make ends meet while appeasing that portion of the electorate that could be kept docile by ever-expanding government programs and increasing government spending. The solution was ever-expanding federal debt and deficits.

Purportedly, it was Arthur Burns, Fed Chairman under Richard Nixon, who first offered the advice that helped to guide Alan Greenspan and a number of Administrations. The gist of the wisdom imparted was that if you ran into problems, you could ignore the budget deficit and the dollar. Ignoring them did not matter, because doing so would not cost you any votes.

Back in 2005, I raised the issue of a then-inevitable U.S. hyperinflation with an advisor to both the Bush Administration and Fed Chairman Greenspan. I was told simply that "It's too far into the future to worry about."

Indeed, pushing the big problems into the future appears to have been the working strategy for both the Fed and recent Administrations. Yet, the U.S. dollar and the budget deficit do matter, and the future is at hand. The day of ultimate financial reckoning has arrived, and it is playing out.

Looking at the events over the past year demonstrates that Williams is not just being a drama queen.

Effective financial impairments and at least partial nationalizations or orchestrated bailouts/takeovers resulted for institutions such as Bear Stearns, Citigroup, Washington Mutual, AIG, General Motors, Chrysler, Fannie Mae and Freddie Mac, along with a number of further troubled financial institutions. The Fed moved to provide whatever systemic liquidity would be needed, while the federal government moved to finance corporate bailouts and to introduce significant stimulus spending.

Curiously, though, the Fed and the Treasury let Lehman Brothers fail outright, which triggered a foreseeable run on the system and markedly intensified the systemic solvency crisis in September 2008. Whether someone was trying to play political games, with the public and Congress increasingly raising questions of moral hazard issues, or whether the U.S. financial wizards missed what would happen or simply moved to bring the crisis to a head, remains to be seen.

More on the impending timing of the complete economic collapse of the US financial system:

Before the systemic solvency crisis began to unfold in 2007, the U.S. government already had condemned the U.S. dollar to a hyperinflationary grave by taking on debt and obligations that never could be covered through raising taxes and/or by severely slashing government spending that had become politically untouchable. The U.S. economy also already had entered a severe structural downturn, which helped to trigger the systemic solvency crisis.

The intensifying economic and solvency crises, and the responses to both by the U.S. government and the Federal Reserve in the last two years, have exacerbated the government's solvency issues and moved forward my timing estimation for the hyperinflation to the next five years, from the 2010 to 2018 timing range estimated in the prior report. The U.S. government and Federal Reserve already have committed the system to this course through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, gross mismanagement, and a deliberate and ongoing effort to debase the U.S. currency. Accordingly, risks are particularly high of the hyperinflation crisis breaking within the next year.

What are the alternatives for the US? In a word, none. Presumably this means you should ignore what the axed "experts" from various bailed out sell side research chop shops try to tell you.

The U.S. has no way of avoiding a financial Armageddon. Bankrupt sovereign states most commonly use the currency printing press as a solution to not having enough money to cover obligations. The alternative would be for the U.S. to renege on its existing debt and obligations, a solution for modern sovereign states rarely seen outside of governments overthrown in revolution, and a solution with no happier ending than simply printing the needed money. With the creation of massive amounts of new fiat dollars (not backed by gold or silver) will come the eventual destruction of the value of the U.S. dollar and related dollar-denominated paper assets.

What lies ahead will be extremely difficult, painful and unhappy times for many in the United States. The functioning and adaptation of the U.S. economy and financial markets to a hyperinflation likely would be particularly disruptive. Trouble could range from turmoil in the food distribution chain to electronic cash and credit systems unable to handle rapidly changing circumstances. The situation quickly would devolve from a deepening depression, to an intensifying hyperinflationary great depression.

While the economic difficulties would have global impact, the initial hyperinflation should be largely a U.S. problem, albeit with major implications for the global currency system. For those living in the United States, long-range strategies should look to assure safety and survival, which from a financial standpoint means preserving wealth and assets. Also directly impacted, of course, are those holding or dependent upon U.S. dollars or dollar-denominated assets, and those living in "dollarized" countries.

In other words, the economic cycle will come back with a vengeance. Having pulled America out of the abyss by the last hairs on its Rogaine infused head, the Fed and the Administration have merely purchased one-two years of excess time in which insiders can sell all their holdings (look at recent reports indicating the ratio of insider sellers to buyers) and banks can book one/two years of record bonuses before signing off.

And whether one is a deflationist or inflationist, the take home message from Williams' thesis that everyone should be able to agree on, is what everyone knows yet is unwilling to admit: that the US economy (and its derivative, the undecoupled global economy, which that most certainly includes China) is that we are now caught in the greatest Ponzi bubble of all time. One small hiccup in which there is no incremental hollow value added on the margin courtesy of printing presses pushing fiat pieces of paper in overtime, would lead to precisely the same outcome as the world saw with Bernie Madoff: from $50 billion to 0 overnight. It is somehow fitting that world GDP is 1,000 time greater, at $50 trillion. Take away the fiat illusion, and the real value collapses to those concepts of tangible value that will remain in a post bubble implosion scenario: whether these be spam, gold, or lead.

And just so there is no confusion about the course of events, Williams presents the Zimbabwe hyperinflation episode as the case study that the historian Bernanke should have been focusing on, instead of spending long nights, "learning" from the Great Depression.

Hyperinflation in Zimbabwe, the former Rhodesia, was a quadrillion times worse than it was in Weimar Germany. Zimbabwe went through a number of years of high inflation, with an accelerating hyperinflation from 2006 to 2009, when the currency was abandoned. Through three devaluations, excess zeros repeatedly were lopped off notes as high as 100 trillion Zimbabwe dollars.

The cumulative devaluation of the Zimbabwe dollar was such that a stack of 100,000,000,000,000,000,000,000,000 (26 zeros) two dollar bills (if they were printed) in the peak hyperinflation would have be needed to equal in value what a single original Zimbabwe two-dollar bill of 1978 had been worth. Such a pile of bills literally would be light years high, stretching from the Earth to the Andromeda Galaxy.

In early-2009, the governor of the Zimbabwe Reserve Bank indicated he felt his actions in printing money were vindicated by the recent actions of the U.S. Federal Reserve. If the U.S. went through a hyperinflation like that of Zimbabwe’s, total U.S. federal debt and obligations (roughly $75 trillion with unfunded liabilities) could be paid off for much less than a current penny.

What helped to enable the evolution of the Zimbabwe monetary excesses over the years, while still having something of a functioning economy, was the back-up of a well functioning black market in U.S. dollars. The United States has no such backup system, however, with implications for a more rapid and disruptive hyperinflation than seen in Zimbabwe, when it hits.

Maybe in retrospect it is good that banks are not lending out. If the $1.2 trillion in excess reserves were to actually hit circulating currency overnight, or even in a much more gradual fashion, then hyperinflation would surely be unavoidable, not so much as function of the consumer becoming a dominant force once again, which is the deflationists' key point, but as a result of the excess liquidity of the capital markets, which is the only reason why the S&P is where it is, into Main Street. As it stands, banks' unwillingness to recreate the cheap credit bubble by lending to anyone who has a pulse and can walk is the only thing that is so far preventing America's name change to the United States of Zimbabwe.

Stripes II: I Want You For Afghani Army

California Sale/Leaseback Insanity

The buzz of the commercial real estate world has been over the offering of California State office buildings by CBRE. California Hires Broker to Sell Government Buildings

The real topic of discussion behind closed doors is - what are they worth?

Pricing of commercial real estate assets are based on multiple factors: existing income, age/condition of building, location and risk of tenant default and or relocation. Typically, the most basic measuring stick of price is the "cap (capitalization) rate" which is net operating income divided by sales price of asset.

Let's take a look at a low risk, retail investment opportunity in North Highlands, California: a 10 year NNN lease to Walgreens.

WALGREENS - 6% CAP RATE - NORTHERN CALIFORNIA !

6819 Watt Ave., North Highlands, CA 95660

• Price:
  N/A
• Building Size:
  14,490 SF
• Property Type:
  Retail
• Property Sub-type:
  Free Standing Bldg
• Additional Sub-types:
  Street Retail
  Retail Pad
  Anchor
• Property Use Type:
  Net Lease Investment with 10+ years left on lease
• Cap Rate:
  6%
• Occupancy:
  100%
• No. Stories:
  1
• Tenancy:
  Single
• Year Built:
  2008
• Lot Size:
  91,198 SF
• 
  

Last Verified 9/22/2008 Listing ID 15873656

Highlights

• "Fortune 50" National Credit Tenant.
• NO Landlord responsibilities
• Very high average datily traffic count.

• Brand new freestanding corner building.
• Fee simple land and building. Cert of Occupancy 3/28/08.
• Rated #1 drug store company. 30+ years of record profits.

Description

TRUE NNN Walgreens in NORTHERN California (SACRAMENTO COUNTY) and the perfect 1031 exchange property. Certificate of Occupancy March 28, 2008.

Founded in 1901, Walgreens is not only the nation' s largest retail pharmacy chain, it is considered the leader in innovative drugstore retailing. The Company has pioneered many modern store and pharmacy features, some of which have become standards in the industry. Walgreens is a publicly traded "FORTUNE 50" Company and is ranked #1 in sales in the United States with sales totaling over $50 billion. The Company is included in the Forbes Platinum 400 list of best performing big companies in the United States. Walgreens has a net worth of over $10 billion and held an A+ rating by Standard and Poor' s.

* $ 412,000 Annual Rent + % rents.
* Property delivered debt free.
* New 25 Year Lease plus options.
* + 14,490 sf Bldg. on + 91,198 sf lot. 64 parking stalls.
* NNN Lease - No landlord responsibilities.
* Price: $ 6,866,888 Cap Rate 6% or purchase a 50% Tenancy In Common Interest for $3,500,000.

Sacramento/North Highlands is a strong, vibrant community that is enriched with a vast history and a diverse, family-oriented and an active community that works together today for a better tomorrow. North Highlands is a community of over 38,000 residents that is located approximately 10 miles northeast of downtown Sacramento.

The community was formally established with the opening of the North Highlands post office in July of 1952 and the development of the McClellan Air Force Base (now known as McClellan Business Park). McClellan Business Park is one of the largest business parks in California and will ultimately employ over 30,000 individuals.

Doing a quick analysis, this investment has several flaws for the conservative investor including a short fuse of 10 years of guaranteed income, a flat rental rate, no tenant diversification (with multiple tenants leases typically end at different times...with one tenant cash flow can dissappear entirely if tenant leaves/goes out of business) and a secondary market location.
However, in comparison to other opportunities the level of risk that a default could occur is relatively small with a fortune 50 company selling basic products that will ALWAYS be in demand.

Unlike Walgreens, California is not profitable - not even remotely so. It's level of debt is unsustainable and it pays its employees in IOUs. The situation is so terrible that I simply cannot comprehend how you can measure the risk of default which I perceive to be 100%. The only comparison may be purchasing a retail building/mall that is full of bankrupt tenants (nobody buys them in their right mind without another tenant in place!!!!) Sure, the contracts which will be created from sale/leaseback will spell out rent to be paid in US dollars...however, there is no way an investor can outmaneuver creditors in positioning to be in line to at least get pennies on the dollar of guaranteed rent after a default. Like the Walgreens deal, if the California Government were to leave - cash flow ends immediately and entirely and the ownership is left with an asset that needs to be maintained, property taxes need to be paid and leasing/tenant improvement fees to be shelled out to find a new tenant.

The idea of buying any of these assets is absolutely insane.

Retail Walking The Plank

Walking Company is the latest retail casualty, just in time for Christmas. Sales so far this season have been an absolute disaster as they have been down 8% per shopper, to $343.31 a person from $372.57 last year. According to Howard Davidowitz, Chairman of Davidowitz & Associates "They charged in and bought the door busters, and when the door busters were out, it was over, by 1 o'clock, there was no more Black Friday — it was over."

Retailers like WalMart, Target and Best Buy use promotional, loss leaders to draw consumers in for complementary purchases. Other than the deals, consumers are not buying.

Again, Walking Company will have company 1st Q next year. Companies like WC have DOZENS of corporate competitors and a similar number of regional and local concepts that battle them in different markets.

Specialty retail - profitable when times are good - is frequently not viable in times of contraction. Differentiating experience, product and price simply can not be done when the field is so over crowded.

Walking Company In Bankruptcy, Wants to Shut 90 Stores
Seeks to close 90 of its 210 stores immediately

* Has pre-negotiated reorganization plan

By Emily Chasan

NEW YORK, Dec 8 (Reuters) - U.S. shoe retailer The Walking Company Holdings Inc (WALK.PK) has filed for bankruptcy protection, with a plan to close almost half of its stores.

The company, which sells comfortable shoes at its namesake stores and also runs the Big Dogs sportswear clothing line, filed a voluntary Chapter 11 bankruptcy petition in California on Monday, saying it would seek approval to begin store closing sales at 90 of its 210 stores immediately.

With only a few weeks remaining in the holiday shopping season, the company said it has pre-printed store closing signs and was ready to begin the wind down, subject to court approval, according to court documents.

The retailer expanded rapidly, more than doubling in size from 2006 through 2008, by opening about 140 new stores. It said it was forced to seek court protection because it was unable to convince landlords to cut costs under its leases in a difficult retail environment. It has already started closing its Big Dog clothing store chain, which once had about 200 stores, and is set to close its final 8 locations by the year-end.

The retailer said it will be able to use bankruptcy to close underperforming stores under a "right sizing" strategy and expects to file a "pre-negotiated" reorganization plan within weeks.

The Walking Company, which is about 56 percent owned by its chairman, Fred Kayne, said in court papers it has assets of about $103 million and liabilities of about $76 million.

The retailer had sought to raise capital or sell itself to avoid bankruptcy, but those efforts failed due to a lack of operating profits amid the recession and above-market rents that it was paying for many of its stores.

The company has obtained debtor-in-posession financing from Wells Fargo Retail Finance and Wells Fargo is interested in providing exit financing, according to court documents. It said it had a commitment from an investor group led by Kayne Anderson Capital Advisors for $10 million in new capital to be provided to the reorganized company. That group is led by Richard Kayne, the brother of Fred Kayne.

Federal Bank Monopoly

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Fed's Dead
www.colbertnation.com
Colbert Report Full Episodes Political Humor U.S. Speedskating

Its too bad the only serious reporting on the Federal Reserve is a joke.

Detroit Insolvent

Not much of a surprise here. This simply can not go on forever - the madness of insolvency on a local, state and national level is absurd! Detroit, Cleveland, Baltimore & New Orleans are 3rd world interchangeable.

Detroit's Finances Poised to go From Bad, to Worse, to Insolvency

The Motor City is running out of cash. "In a nutshell, the city is insolvent," Joe Harris, the former chief financial officer under one-time interim Mayor Ken Cockrel Jr., told The Detroit News today. "The next few weeks will determine if they will survive."

Are you listening, AFSCME?

Audits of Detroit's books show a city borrowing to pay its everyday bills, ignoring deadbeats who owe unpaid taxes and hoarding overpayments by others because, well, City Hall needs the money. Imagine the uproar if Citibank booked a refund on your credit card because it needed to amass a stash.

Mayor Dave Bing can journey all he wants to Lansing to repiar relationships with the Legislature and to Washington to lobby for federal dollars from the Obama White House. In fact, he should -- if only because everyone else seems to be. But the mounting evidence -- and audits are just that, doubters -- is that Detroit's financial health is slipping from critical to grave.

Meaning Detroit's hottest topic of the new year is likely to be who Gov. Jennifer Granholm would appoint emergency financial manager of Detroit, which would be the largest to be American city to fall into receivership. Given recent political chaos and the deep historic resentment about heavy-handed Lansing involvement in Detroit's affairs, my guess is the guv would prefer that emergency financial manager and Mayor Bing to be the same person -- which would require a change in state law, I'm told.

Wouldn't be surprised if one of the mayor's unspoken reasons for working Lansing this week was to lay groundwork for legislation that would make him the emergency financial manager, if it becomes necessary.

Greece Troubled With Debt

Sounds like Icelandic rhetoric

Greece Says It Won't Default on Bonds

BRUSSELS -- Greece's finance minister promised Wednesday that the country wouldn't default on its loans as the cost of insuring its bonds soared to the highest among the 16 nations that use the euro.

George Papaconstantinou told reporters that he was trying to restore Greece's credibility after the country surprised credit markets by forecasting a massive 12.7% deficit this year — well above the 3% maximum fixed by EU budget rules.

Greece will put forward in January a plan and a timetable to reduce the yearly budget gap to 9.1% next year by widening the tax base and making spending cuts, he said, describing "an uphill struggle" to get the economy back on track.

He said speculation that Greece would not be able to pay back its borrowing was "completely unfounded" and there was "absolutely no risk to holders of government bonds."

Spreads on Greece's bonds -- the cost of insuring them against the risk of not being repaid -- overtook Ireland as the widest in the euro zone a month ago, even before markets were rocked by an announcement by Dubai's state investment company that it wanted to postpone debt payments.

Mr. Papaconstantinou said Greece was "hit for a day after the Dubai story broke" when stock markets dropped 7% but they rebounded by the same amount the next day.

"The battle with the markets is one that you win every day with a view to the credibility of your policy and this is what we are trying to build — credibility," he said.

Irish Finance Minister Brian Lenihan said his country was winning that battle because "Ireland is viewed by Europe has having taken effective action to control its finances."

He said Ireland expects this year's deficit to be lower than expected, coming in under 12% instead of the 12.5% it predicted earlier. Ireland plans to shave €4 billion ($6.03 billion) -- or 2% of economic output — from public spending next year in Tuesday's budget.

"That should give some confidence to the international bond markets because that means that the Irish [deficit] position is superior to that of the United Kingdom as well as Greece," Mr. Lenihan told reporters.

EU finance ministers told Ireland Wednesday to bring the deficit under 3% by 2014.

Anthracite Capital Defaults

Pocket change...the rolling, non performing commercial loans across the commercial real estate industry are losing momentum and will be coming back to the banks 1st Q 2010.

Expect the retail sector to have a rocky Christmas season with store closings to come early next year, igniting another round of retail ownership concerns.

Anthracite Shares Drop Sharply After Loan Default

SAN FRANCISCO -- Shares of Anthracite Capital Inc., a real estate investment trust based in New York, fell Wednesday after the company defaulted on $79.3 million in debt and said there is a chance the company would be forced to file for bankruptcy.

Shares fell 15 cents, or 62 percent, to 9 cents in afternoon trading. The stock was delisted Wednesday by the New York Stock Exchange because of its low price. It is now trading on the pink sheets under the ticker ACPI.PK.

The default on the senior notes with varying interest rates and due dates could accelerate the expiration of yet other debt, thus putting the company's future at risk.

"If acceleration were to occur, the company would not have sufficient liquid assets available to repay such indebtedness and, unless the company were to obtain additional capital resources or waivers, the company would be unable to continue to fund its operations or continue its business," Anthracite said in a statement.