Frontrunning: July 17

• Horrendous GE numbers, expect a whole lot of nonsense from CNBC today - here is also why GE Capital is praying for a CIT bankruptcy (Bloomberg and Reuters also Zero Hedge)
• Chinese bond troubles: the most data-manipulative country unable to sell bills for third time in two weeks (Bloomberg)
• California budget talks collapse, junk downgrade approaching (Bloomberg)
• Dismantling the Temple: How to fix the Fed (The Nation)
• And no green shoots here either: Bank of America credit losses soar (Reuters)
• Paul Krugman: The joy of Sachs (NYT)
• Manhattan retail storefronts hit highest vacancy rates since 2001 (Bloomberg)
• Larry Kellner, CEO of Continental Airlines to step down (AP)
• From inflation targeting to price level targeting (Morgan Stanley)
• CIT still fighting to stay out of bankruptcy (AP)
• AIG swaps may take decades to expires leaving a "toxic pool" (Bloomberg)
• The Long-Term budget outlook (CBO Blog, h/t Saul)
• Steve Forbes: Washington still abusing the economy (Forbes)
• Is China the next bubble? (Wells Fargo)
• More PIMCO propaganda: Rising tide to choppy waters (PIMCO)

Comments

[Bruce Krasting]

The GE #'s include $500mm from GECC??

That income should have been appied to book losses on CRE book?

Without that half bil. the numbers look stinky.

[Anonymous]

Something is amiss...did I just read an opinion by Krugman with which I agree?

Citigroup-so excluding the one time gain of Smith Barney, they only lost $2.4 billion?

[Gilgamesh]

I am missing the catalyst for BAC being down 5% when I left for work, to it being up when I arrived.  Let me guess, CNBC?

[Ben_the_Bald]

From Robert Reich's blog:

"When JP Morgan repaid its federal bailout of $25 billion last month it was, like Goldman, freed from stricter government oversight. The freedom has also allowed JP, like Goldman, to take tougher and more vocal stands in Washington against proposed financial regulations they dislike.

JP is mounting a furious lobbying campaign against regulations that would funnel derivatives trading through exchanges where regulators can monitor them, and thereby crimp JP's profits. Now the Street's biggest derivatives player, JP has generated billions helping clients navigate these contracts and assuming counter-party risk in such transactions. Its derivatives contracts were valued at roughly $81 trillion at the end of the first quarter, representing 40 percent of the derivatives held by all banks, according to the Office of the Comptroller of the Currency. JP has played down its potential risk exposure from these derivatives contracts, of course, but anyone who's been paying attention over the last ten months knows that unregulated derivatives have been at the center of the storm."