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Karl Otto Poehl is pouring some major cold water on all the optimistic talking heads saying eurozone defaults can be avoided. According to the former Bundesbank president, a default of smaller member of the euro region is only a matter of time.

What was that president Obama, you will cut the budget deficit to $500 billion by 2012?

2009 deficit to be $1.75 trillion, 12.5% of GDP. It will be "eliminated" as the rich are taxed right into lower middle class.

Explains why the market performs like a schizophrenic day trader, as investors try to game the greater fool in unison, running the market up and down especially in market leading sectors such as financials. As long as a fund is not the last man in, the first 50% in any wave are set to make profits.

Explains why the market performs like a schizophrenic day trader, as investors try to game the greater fool in unison, running the market up and down especially in market leading sectors such as financials. As long as a fund is not the last man in, the first 50% in any wave are set to make profits.

Developing story, but with such blockbusters as Lyondell and Continental AG one had to expect they would pull the plug sooner or later.

New home sales tumble over -10% month over month to 309,000, on an expectation of a -2% drop. Market rips. Logical? Who cares. When horrendous news is fantastic news we advise everyone to pull their money out of the market for one reason - it is terminally broken.

In the meantime, a brief look at the real housing picture, and why anyone may soon be able to afford a Palm Beach waterfront house.

New home sales tumble over -10% month over month to 309,000, on an expectation of a -2% drop. Market rips. Logical? Who cares. When horrendous news is fantastic news we advise everyone to pull their money out of the market for one reason - it is terminally broken.

In the meantime, a brief look at the real housing picture, and why anyone may soon be able to afford a Palm Beach waterfront house.

After the prompt futures' rebound following the earlier horrific durables and initial jobless claims, we are 99% convinced the market is set on ignoring any pig that isn't smothered in lipstick (the technical argument goes pigs with lipstick are priced in), so the following piece of news will definitely not have any impact on the whole bunch of "leap of faith" focused investors cum Indiana Jones and The Last Crusade fans (best of the four by far).

• Durable Goods: -5.2% vs -2.5% consensus, Jobless Claims: 667k vs 625k; Continuing: 5112k vs 5025k
• More black hole...
  

• Capmark in default, hires Lazard to restructure balance sheet (PR)
• Lyondell fails to win DIP approval, hearing to pick up Thursday morning after profuse objections (Debtwire)
• Citi to announce agreement with government on Thursday (Reuters)
• One perspective of the government's Prime Brokerage program aka TALF (

The recent spillover of the threat of an Eastern European collapse, and its gradual spread into the Eurozone, has manifested itself best in the dramatic widening of sovereign CDS. The so-called socialization of risk had resulted in a tightening of corporate and bank default risk at the expense of the respective sovereign domiciles.

All bank holding companies with assets over $100 billion will be stress tested. The test will use a baseline scenario and a worst case- longer recession one. Here is where the Fed shows its disconnect with reality yet again, as the worst case scenario is already the optimistic one for several parts of the country. Bank testing under the worst case assumes:

Rumors have swirled today that mall jewelry retailer Finlay, owner of such chains as Bailey Banks and Biddle, Carlyle and Congress, may file bankruptcy as early as tomorrow, and the only thing preventing it from filing is the hope that its vendors, who are owed $25 million, will agree to receive that money in delayed installments over the next 180 days. The vendor negotiations were first presented in a report circulated by Israeli Diamond Industry.

Not wanting to be left as the only stock in the world distributing its lack of retained earnings to shareholders, and following in the footsteps of such heavyweights as JP Morgan and competitor New York Times, Gannett, which was last seen trying to raise the price of its USA Today paper to parity with Amazon's Kindle, has had enough pampering those ungrateful shareholders who only short it anyway, and cancelled its dividend. Whether this extends the life of its business is questionable - CDS was last trading at an even 1000 bps, roughly where US Sovereign CDS will be trading in about a month.

Swiss regulator Commission de Surveillance du Secteur Financier ordered UBS to review internal controls at its Luxembourg unit and report within three months, criticizing the bank of a "grave breach" of oversight as custodian bank for Luxembourg based funds linked to Bernard Madoff. The CSSF issued a statement that is even more applicable to every fund of funds in the U.S.