May 12th, 2011
A little under a year ago Moody's Mark Zandi and Princeton economist and former Fed vice chairman Alan Blinder penned a paper titled "How we Ended the Great Recession" which did nothing but extoll the virtues of spending trillions in both fiscal and monetary stimuli and preventing U3 from hitting 16% (of course how one proves a counterfactual is irrelevant: just remember - if the Fed disclosed its top secret bailout plans the world would end. Same thing here - accept it - after all the guy is a professor at Princeton). In a nutshell Blinder is nothing but Paul Krugman on steroids: a man who believes that there is nothing worse in this world than establishing fiscal (and monetary) discipline now. Well, in an interview with Tom Keene earlier, Blinder fired the first shot across the QE3 bow, telling his Bloomberg host that the US needs "somewhat more" fiscal stimulus once again in order to boost employment (hold on: didn't we end the Great Recession, and certainly the normal one in the summer of 2009 according to the NBER?). How this would be accomplished in the current climate is not explained. Instead what Blinder says makes one wonder just who is on the tenure committee at Princeton - when asked how we bring the deficit in without austerity, the Princetonian responds: "Unfortunately I think it is very subtle for most political processes especially for the political process in the US. What we should be doing is somewhat more fiscal expansion but at the same time legislating into law fiscal consolidation for the future. Starting 2 years from now, 3 years from now, 18 months from now. But not now." Of course never now: why bite the bullet now when it can be kicked to some other administration in the indefinite future? Especially when tenure money and/or Wall Street bribes are at stake...
For the first time (and when it comes to the Fed's balance sheet that phrase will be heard many times) the total notional value of Treasurys, MBS and agencies held by the Fed surpasses $2.5 trillion. $2.518 trillion as of May 11 to be precise, of which Treasurys amounted to $1.466 trillion (excluding today's POMO), $927 billion in MBS (unchanged for the third week in a row), and $125 billion in Agency paper. The total is an increase of $24.4 billion from a week prior. Following the last schedule and a half of POMO, it appears the Fed will hold approximately $1.6 trillion in total debt. On the liabilities side, to go with all this debt, the Fed also had a total of $1.544 trillion in total bank reserves (including excess and required), also a record. As the chart below shows, reserve growth has slowed down substantially after it overshot materially following the unwind of the SFP program designed to provide the Treasury with debt space. As noted above, and as we discussed previously, the level of prepayment of the Fed's agency portfolio has slowed substantially (as confirmed by this month's forecast of only $13 billion in monetizations via QE Lite), which means the natural roll off of and remonetization of the Balance sheet will be far slower than some expected. Total Fed paper maturing in under a year continues to be just under $150 billion: a number we don't expect will change substantially. Elsewhere, total other assets continue to climb, and have now hit another record of $130 billion. Lastly, the Fed's lead on the second largest holder of US debt, China, continues to increase.
If we are going to once again become sovereign entities and autonomous individuals we must begin the process by thinking and perceiving as one who is sovereign. A slave or captured mind does not see the world through his or her own eyes, but rather through those of his master.
You're FIRED! | Erin Collins Cullaro, Pam Bondi's Assistant Attorney Gerneral FIRED for "Moonlighting" at Foreclosure Mill, Florida Default Law GroupSubmitted by 4closureFraud on 05/12/2011 18:07 -0500
It's about damn time... "The best way to stop an investigation is to become one of the investigators" 4closureFraud 2010
Following up on earlier reports that the fuel rods in reactor 1 were truly exposed, NHK now reports another speculation from long ago, finally confirmed by official sources, namely that the reactor is now melting down. NHK reports that "Tokyo Electric Power Company says the No.1 reactor at the Fukushima Daiichi nuclear power plant is believed to be in a state of "meltdown". The utility company said on Thursday that most of the fuel rods are likely to have melted and fallen to the bottom of the reactor. Earlier in the day, it found that the coolant water in the reactor is at a level which would completely expose nuclear fuel rods if they were in their normal position." And from Reuters: "The finding makes it likely that at one point in the immediate wake of the disaster the 4-meter-high stack of uranium-rich rods at the core of the reactor had been entirely exposed to the air." Had been, or are? At this rate of admissions (we claimed precisely this happened in March) the next thing we might get a confirmation of from official sources is that there is actual recriticality going on. Which, of course, will be used by the market as another excuse to BTFD, as under central planning everyone lives happily ever after. Oh, and in the meantime, if we recall correctly, the cores of reactors 2 and 3 have also melted down. But Bernanke will just kiss them and make them better.
The Other Side Of The Story: CME On "Understanding Margin Hikes" And Why "They Are Not A Means To Move A Market"Submitted by Tyler Durden on 05/12/2011 16:02 -0500
It is not surprising that following a relentless barrage of margin calls, many have speculated, jokingly or not, that the CME has recently set out on a path of outright warfare with commodities investors and speculators, which was further escalated after the exchange decided to hike WTI margins on a day when priced broadly declined and not in a violent manner either. As the article author herself notes, much to the incredulity of some of her readers: "margins are set as part of the neutral risk management services we
provide. They aren’t a means to move a market one way or another, or to
encourage or discourage participation from one kind of market
participant or another." The response was in question to when the CME will reduce margins now that the price of silver has tumbled by 30%. We would actually love to get an answer to that as well...
The stock of clearing and settlements firms Penson tumbled and was halted today after it was disclosed that the firm had $42.6 million in receivables collateralized by bonds issued by Retama Development Authority - a Texas racetrack. The problem is that the receivable had moved to a non-accrual category, in other words the collateral is most likely now worthless. What is odd is that the first mention of this appeared three days ago in the risk factors of the company's 10-Q: "With respect to the Nonaccrual Receivables, at March 31, 2011, approximately $42.6 million were collateralized by bonds issued by the Retama Development Corporation (“RDC”) and certain other interests in the horse racing track and real estate project “(Project”) financed by the RDC’s bonds. In each case these are owned by customers and pledged to the Company and/or its affiliates. Certain related parties to the Company own approximately $14.7 million of RDC bonds that are pledged to the Company and/or its affiliates." Since this goes directly to the company's liquidity, it is no surprise that investors decided to shoot first, and not even ask questions.
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 12/05/11
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 12/05/11
It has been a while since the non-paid media saw much from Rosie, who recently decided to go premium. It is ironic then that one of his most controversial pieces came out while he was behind a paywall, namely that he has gone bullish. Today, he takes the time to explain his real position, and share the report that started it all.
Bad news ... or some Norwegian scientist's video game?
Eric Sprott making headlines in Vegas:
- SPROTT SAYS GOLD IS NOW THE WORLD'S RESERVE CURRENCY
- SPROTT SAYS SILVER WAS `MANIPULATED' DOWN IN PRICE
- SPROTT SAYS PEOPLE IN IRELAND, GREECE ALREADY FLEEING BANKS
- SPROTT SAYS SAVERS WILL FLEE BANKS TO PUT MONEY INTO GOLD
Naturally he will be called a nutjob and a tin foil-hat wearing moron, until he is, of course, proven right, at which point the conspiracy theory becomes non-conspiracy fact.
As Foreclosure Activity Drops To 40 Month Low, Delinquent New Yorkers Have Lived Mortgage-Free For Nearly 3 YearsSubmitted by Tyler Durden on 05/12/2011 14:29 -0500
Today's foreclosure update from RealtyTrac is chock full of interesting data, although none of it is surprising. Those who have been following the complete debacle that is the fraudclosure crisis know that over the past 6 months the foreclosure activity has plunged. Indeed in April, total foreclosures, split between default notices, foreclosure auctions, and bank repossessions affected 219,258 properties: a 9% decline from April, a 34% plunge from a year earlier, and the lowest in 40 months! And while REO events (or disposals once a bank has the keys to the property in its possession) took an average of 400 days, up from 340 days a year earlier, and compared to 169 in Q1 2007, it is the length of the foreclosure process that explains not only the persistent surge in retail stocks, but why US GDP is artificially inflated by at least 0.5-1.0% (and likely has a major impact on inflation): from the release: "The average timeframe from initial default notice to REO in New Jersey and New York was more than 900 days in the first quarter of 2011, more than three times the average timeline in the first quarter of 2007 for both states." In other words, once a deadbeat stops paying their mortgage in NY or NJ, it takes nearly 3 years to get them to vacate. It also means that those who stopped paying their mortgages around time Lehman filed are still living mortgage free in the Empire and Garden States! And there are those who wonder why the "squatters rent" amounts to at least $50 billion...
But Cheney, Rumsfeld and their many minions in the corporate media will still say torture was justified ...
Save yourself the $1,000 bottle service at Tryst (not to mention the always failing Martingale strategy (unless you are the Fed or a Primary Dealer with discount window access of course) at the high rollers table), and cut right to the chase with this summary of the key points by Stevie Cohen, Jamie Dinan, Lee Ainslie, Izzy Englander and Jeremy Siegel.