Frontrunning: July 1

Tyler Durden's picture
  • US ADP Employment Change (Jun) M/M -473K vs. Exp. -395K (Prev. -532K, Rev. -485K) (Bloomberg)
  • Fed's Yellen says rates may stay near zero for years (Bloomberg)
  • Banks falling 23% since may foreshadow S%P slump (Bloomberg)
  • Karl Denninger: To Dennis Kneale - You're an idiot (Market Ticker)
  • Too Bernanke to fail? (WSJ)
  • Mortgage application index falls 19% last week, 7 month low (Bloomberg)
  • A forecast with hope built in (NYT)
  • Citi raises card rates on millions (FT)
  • Fed's e-mail disclosure may chill confidential bank supervision (Bloomberg)
  • Fed Funds closed at 7% on quarter-end demand (Bloomberg)
  • The fed can't save the economy on its own (MarketWatch)
  • Hedge funds get to feel like smart guys again (Bloomberg)
  • Credit Cycle: Breakdown, Adjustment and Rebuilding in the Financial Sector (Wachovia)
  • Let's be objective about the increase in the Fed's balance sheet (Northern Trust)

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Anonymous's picture

from denninger -- brilliant -- "you choose the length of the beating you wish to endure of the topic." take that, kneale, and get a new pair of glasses that don't make you look like you should be best-suited at working in an art gallery.

Anonymous's picture

OSK blows up FRPT. Ouch, for the mo-mo quants.

Also, a couple good links on Drudge this am showing how the 'bailouts' and other junk from this Administration leave no doubt that it is all being run by politicians.

After Call From Senator's Office, Small Hawaii Bank Got U.S. Aid

Rep. Kaptur gets $3.5 billion sweetener in climate bill

Chumly's picture

“The worst is behind us but we’re a long ways off from a recovery in housing,” said Mark Vitner, a senior economist at Wachovia Corp.

How many times will we hear "the worst is behind us" BS? He apparently didn't get the memo about the rising foreclosure rate in the prime borrowers sector of housing. Certainly, "the worst is behind us" - c'mon!

Re: Unemployment

I am in awe of the prophetic powers of The Great One, as we now head over 10% just as predicted. Here's my own prediction: 12-15% (BLS) by the end of 2009

The Arbitrageur

fxquant's picture

Smart idea Yellen, recreate the 2001-2004 Greenspan bubble keeping rates to low, too long. Idiocy!

Anonymous's picture

The Denninger link is outstanding. Painstakingly detailed mathematical analysis of current (projected near future) economic conditions in the US. Thank you for posting this link.

Anonymous's picture

Rothbard wrote that the Fed had precisely the same situation in the first half of 1932 with their expanding balance sheet and excess reserve expansion for the member banks.

The only difference now is that there is no constraint of a gold standard for foreigners to draw down on their deposits in the US. The Fed could pay higher interest on excess reserves but that necessarily increases the size of those reserves. And as pointed out by Rothbard, you don't need to:

"A common explanation is that the demand for loans by business fell off during the depression, because business could not see many profitable opportunities ahead. But this argument overlooks the fact that banks never have to be passive, that if they really wanted to, they could buy existing securities, and increase deposits that way. They do not have to depend upon business firms to request commercial loans, or to float new bond issues."

Anonymous's picture

At least one part of Denninger's post is completely incorrect. I've detailed it here:

Anonymous's picture

Karl Denninger is a discharge-filled douchebag. His ego is the size of the sub-prime mortgage market (and it's just as fragile).

I don't learn anything from him that I haven't already read from several different authors who are more competent at writing and economic analysis.

His biggest problem is that he's still a true believer in The System. He won't let himself arrive at the natural conclusion, which is that this motherfucker is rotten to the core and wants to fail like his love life. He thinks bringing back a few laws will cure everything. Cute.

Karl does serve one useful purpose: as a timing indicator. Karl is slow to the game. Once he finally realizes that his future will be spent guarding over his pile of back-stocked Chef Boyardee with his Florida militia members (all two of them) then I figure the rest of America will soon follow and economic armegeddon will be upon us.

Come on, Karl. Make that final connection. It's all going to end very badly.

Anonymous's picture

Haha. It is good to have an ego but I must say his post is laced with a little bit of self-adoration. I read the post today and a friend of mine is a huge fan of Karl's. I don't read his stuff because his stuff is really right wing. But, that's his prerogative. Or, is that pejorative? :)

Chumly's picture

Denninger does make some nice points. I believe that one of the most important points he makes is about excessive debt. I will continue to make the argument that this excessive debt is our inflation, the inflation of many decades compounded into this current crisis. To add to the current pain, QTM advocates who bring you the charade of QE falsely believe debt must be increased on one side of the ledger (gov‘t) to pay for the failings of the other side of the ledger (flawed financial capitalism), in order to address the current excess debt which is also causing deflation. In essence, this explains our Negative Marginal Productivity of Debt. It is the mother of all financial storms. As deflation picks-up speed so will debt inflation (so long as QTM/QE are applied) until the two implosive forces consume each other and everything in their path.

This nonsense has to stop. Mr. Bernanke, if you live a long healthy life, you may still be dead from old age as my children attempt to bring their own children into an impoverished nation whose leaders could have honestly dealt with their problems but didn’t. The dissent of the masses will only grow with this realization - this will not be our heritage! In the meantime, you have perceived mouthpieces, blathering idiots like DK, cheering you on. We will become more entrenched and WILL not go away but only grow in numbers.

The Arbitrageur

Anonymous's picture

Nikolai Kondratieff theorized all of what is going on and has happened during the preceding 4-5 decades back in 1923 (or was it 1926?). We are in the "winter" phase of the long wave or K-wave. I tend to give Mr. Kondratieff quite a bit of credibility as he accurately forecast the Great Depression 6 years (or was it 3 years?) before it began. Leave it to a socialist economist to most accurately describe the capitalist socio/economic long wave.

Anonymous's picture

We are def. headed in a longer term deflationary spiral. Lets be honest here. This economy is sunk.
hat tip for the good articles:

Having said that, unless we rethink the way we use our wealth, this world is doomed. al-Waleed bin Talal, however he came by his wealth is in a position to make a difference. Instead he chooses conspicuous self-consumption.