Archive - Nov 16, 2010

Last November it was Dubai, this November it's Ireland. And the fear mongering continues, allowing the big banks and top hedge funds to set themselves up for the next leg up...

The market crumbled today like Charles Rangel's reputation as apparently Europe went through the TSA's new back-scatter x-ray machine and was revealed to have a severely dangling Ireland.

Everyone else can eat cake ...

The city of Hamtramck, desperate for cash, has asked the state for permission to take an unprecedented step: filing for bankruptcy. City Manager Bill Cooper said the city of roughly 20,000 people is staring at a $3 million deficit, fueled by a dispute with Detroit. Unless Hamtramck files for bankruptcy, it won't be able to pay its nearly 100 employees or 153 retirees, he said

The city sent a letter to the state Department of Treasury last week asking for approval to seek bankruptcy protection. It has not received a reply, Cooper said. "I'm going to run out of money Jan. 31," Cooper said. Bankruptcy would allow the city wants to stave off creditors and force its unions to consider concessions.

After watching the total pandemonium and maelstrom of lies out of Europe today, some may have forgotten that our own rulers are among some of the most incompetent, corrupt, and stupid people on earth. Luckily, here is Dick Durbin to remind us that nothing compares quite to the chaos emanating from D.C. - it appears the extension of the Bush tax cuts which until early this week was taken for granted, until yesterday when Moody's implied a permanent extension of such cuts would lead to a rating cut, may have been all but killed after preliminary discussions between Senate Majority Leader Harry Reid, and Mitch McConnell, the chamber’s top Republican, “did not go well.” Bloomberg reports that not only is the Senate's #2 Democrat "not very optimistic" about the option of extensions, but nobody even has a clue what is going on: "I don’t even know what the options are at this moment,” said Washington Senator Maria Cantwell, a Democrat who serves on the tax-writing Finance Committee." Tangentially, the question of how this economy continues to chug along courtesy of central planning by an administration and a monetary institution, both of which are beyond clueless, will some day be the topic of extended Ph.D. papers (of course, by then having a Ph.D. will be perceived as the vilest form of socio-educational stigmata).

Some delightful observations on two sets of bubbles by United-ICAP's Walter Zimmerman: one are those blown with impunity by the Federal Reserve; the other are those that put even the Greenspan-Bernanke legacy to shame, with a diameter of 50,000 light years. The latter are entertaining, but the former are far more relevant to our everyday lives. And on those, Zimmerman says the following: "Now if one studies history one finds out that the Federal Reserve was formed to prevent speculative panics, to maintain the value of the dollar, to preserve the purchasing power of the consumer, and to responsibly manage the nations money supply. Has an organization ever strayed as far from accomplishing its goals as the Fed?" We can only hope Princeton's cosmological program is subpar (unlikely), as otherwise Bernanke may decide that 50,000 light years across is a perfectly reasonable number for a bubble. The next question, of course, is what amount of dollar bills would fill up a sphere with a radius of 25k light years...

EUR came under renewed selling pressure on Tuesday in spite of the fact the Irish government continued to argue that it does not need to tap the primary markets until next June. Still, given that the Irish banks are plagued with soar loans, which as a result is expected to lead to another liquidity injection suggests that the country may be forced to tap the stability fund just to save its beleaguered banks. GBP posted heavy losses against the USD on Tuesday which rose sharply amid renewed uncertainty over the Eurozone and further tightening moves in Asia. The USDJPY continued to edge higher and moved to mid-83.00 levels and toughed on highest levels since October the 5th amid a stronger USD which rose following ongoing uncertainty over the Eurozone, as well as potential monetary policy tightening moves by the PBOC.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 16/11/10

CNBC's Diana Olick reports that the investigation into the biggest financial fraud in recent history is about to be shelved: the reason, state AGs are nearing a settlement with banks, which will slap a few wrists, will see banks put some lunch money in a settlement fund, will result in some principal reductions, and everything will be well again, as banker bonuses surpass 2009 levels (as noted previously). Retroactively in perpetuity. In other news, state sponsored fraud in America is alive and well.

Something is happening. I am not saying it is a trend, but the data are suggesting some improvement in the economy. This is the first time I have said this in two years. It may just be a temporary phenomenon since there are so many headwinds against a recovery. Perhaps it is just that things aren't getting worse. But the data are important and should not be ignored.

Live coverage of the Senate Banking Committee's make believe grilling of Bank of America representative Barbara Desoer over fraudclosure starts live at 3:15pm, or was supposed to: just like the EU Press Conference, it is also late.

H.R. 3808 is known as the “Interstate Recognition of Notarizations Act.” It passed the House and Senate but was vetoed by the President. Well, from what I understand, further consideration of the veto message and the bill shall be heard and a vote will be made Wednesday, Nov. 17, 2010 to possibly override the veto.

This is so deja vu of the EU press conference when the Greek bailout was announced on Sunday, May 9. Although this time there is no silver lining, as no deal has been reached. Anyway, here is the link for the EU press conference which so far is agenda-less so anything could be announced... or nothing.

The heart of the matter is “Big fish eat little fish.” There’s not enough tax money to continue swelling the fortunes of the super rich while making even a pretense of saving enough to pay the pensions and related social support that North American and European populations have been promised. Something must give.

On one hand you have Phil Lebeau. On the other you have legendary hedge fund investor Mike Steinhardt. When asked whether he would sell a hypothetical allocation of GM stock, Steinhardt's response is about as priceless as it gets: "As quickly as I can. I don't think one should be a long-term holder in government securities, particularly government equity securities." q.e.d.