Archive - Jan 6, 2011

Counterfeiting is an effective way to stimulate the economy, but the costs can be quite high.

In the early 80’s the attempt of the Brothers Hunt, Nelson Bunker and William Herbert Hunt, to fully clamp down the silver market was one of the most spectacular but at the same time also one of the most unsuccessful financials plans within the then fair world. Despite that the brothers failed in their attempt to clamp the silver market, they have succeeded to make a outright mess of the precious metals market and lose one of the largest fortunes in the world in no time.

Some time ago, there was a lengthy debate as to why anyone even cares about the manufacturing ISM number. After all America is now by and far a service economy. Obviously, that debate ended in a stalemate. Nonetheless, the sad truth is that with each passing year America is losing ever more of its once dominant industrial advantage, and with the chief export being "financial innovation", should the world experience another risk flare up it is very likely that the world will enforce an embargo on any future US "imports" and the country's current account deficit will drop to a level from which there is no recovery. So for those who are still not convinced of just how serious the deterioration is, The Economic Collapse blog has compiled this handy list of 19 fact that demonstrate the deindustrialization of America in all its glory.

Following today's sudden realization that the much vaunted December retail sales data, which if one had listened to CNBC in December, would have been left with the "consensus view" that it would be one of the greatest shopping periods in the history of the world, was a dud, here is a complete post-mortem of the various individual retailers and how they fared versus expectations from Goldman's Greg "Chewbacca" Chwatko.

We always thought sooner or later we'd make somebody's list...Just not this one.

Any time you bring the two Pauls together in an interview, and start discussing items such as the debt ceiling, government spending, and monetary policy you know the results will be good. Sure enough, in this rare ABC interview with father and son, the sparks fly, and among the topic touched is the most popular story on Zero Hedge from yesterday, namely President Obama fabulous hypocrisy, who after bashing the debt ceiling as a senator 4 years ago, has bet the outcome of his entire economic policy on maxing out every single credit card available to him. Paul's response: "we have to face the fact that we are bankrupt and we can't pay our bills." Not exactly bedtime material if one's name is Hu Jintao. That said you know the Paul-led interrogation of Bernanke will be something else, even if it is ultimately totally fruitless.

Art Cashin, who lately looks like he is coping with the market's lunacy in a very liquid fashion, pulled a Rosie and basically went medieval on Ben Bernanke and the chairman's now infamous explanation that interest rates are up because they are really down courtesy of Richard Feynman and quantum chromodynamics, in some parallel universe in which QE2 is actually working. In a nutshell, the most famous face on the NYSE has offered to sell the Princetonian a piece of very valuable East River real estate in exchange for agreeing with the BS that the FOMC's committee is dishing out now on an almost daily basis.

Either the republicans have fully adopted a role as the "charade" party, or they are actually serious about believing that by limiting Bernanke to controlling just inflation, the Chairman will actually start acting on behalf of the peasants (note: he won't - he will just ignore the fact that food prices are at an all time record, and focus instead on the ongoing collapse in home prices, which simply means that middle class has less equity and is paying more for staples). Either way, they are not wasting any time. Reuters reports that representative Paul Ryan, the new chairman of the House of Representatives' budget committee, said he will push for legislation paring back the Federal Reserve's mandate to focus solely on controlling inflation, not ensuring full employment. Well, the problem there is that Bernanke will say that instead of doing QE in perpetuity, or until the unemployment rate goes back to 5% (whichever comes first), he will simply print money (pardon, feed primary dealers with infinite 1s and 0s, which in no was have an impact on cotton prices now trading at unheard of levels). More from Reuters: "Republicans have made no secret of their desire to impose more limits on the U.S. central bank and have been critical of it on a number of scores, including its plan to buy an additional $600 billion in government bonds to try to speed up a sluggish economic recovery." As if the same republicans don't realize that the only reason the Fed is buying said additional $600 billion is to monetize their own damn deficit created when they passed the tax cut extension for the rich, now that China's holding of Treasuries have basically not budged in the past year. Well, someone has to monetize all that debt. And as Zero Hedge has been screaming since September, the only reason for QE2 (and QE3 next) is to fund the $3 trillion in budget deficits over the next two years, as nobody else wants it any more.

BofA - “The court should not take the steps outlined in the order because they are unnecessary and will cause a wholesale delay in administering foreclosure cases that is not in the public interest.”

At one point last year Bill Ackman, who had created an entirely separate fund to express his exbuerance in retailer Target, and created a standalone fund PSIV to invest in the same name, was down 99% at the point the fund was unwound. Many had hoped the supposed retail genius' bad luck would end there. Alas, no. Another stock in which Pershing Square now owns 37%, is on the verge of filing bankruptcy. And apparently it can't even afford to hire a decent financial restructuring advisor. According to reports, traditionally creditor-side advisor Jefferies has been retained to represent the company, while Jones Day is legal counsel. Look for a bankruptcy filing in the next week and for another wipe out for Mr Ackman.

Cramer is selling the snake oil, he is selling the hair tonic and he is selling the religion of "Buy High and Sell Higher," which makes him one of the most dangerous men in America.

Perhaps debates about inflation and deflation paint with too broad a brush, or too narrow a focus ...

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 06/01/11

Just crossing the wires now. If this passes, Blythe is most likely toast.

That ACA is suing Goldman over Abacus, as Charlie Gasparino first reported, is not surprising. After all, everyone wants a piece of free lunch, especially when there is a case in the docket. What is however surprising, is that according to plaintiff lawyer Marc Kasowitz, ACA has ‘documents that show Goldman Sachs told ACA Paulson was long on the ABACUS investment.’ If this is indeed the case, this becomes a clear case of fraud, pure and simple, no question about it, with clear intent to misinform, and is not even remotely defensible by Lloyd Blankfein's statement to Carl "Shitty Deal" Levin, that Goldman was merely making markets. If this piece of paper does exist, there is clear intent to misrepresent, and what is stunning is that this never was made clear during the SEC trial. Since we can assume that the SEC had access to this information, and had this been exposed, it would have made settlement virtually impossible as it would have clearly but Goldman in the position of having broken the law, we can merely validate once again, that the SEC is nothing short of Goldman's latest public-private acquisition a la Facebook.