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Just A Reminder
By Nic Lenoir Of ICAP
In case politicians don't understand what's at stake, the market kindly gave them a little reminder with a nasty close for equities today. In the early morning it seemed people were quite willing to ignore GS's misfortunes in its dealings with the ever more schizophrenic government. Washington simply cannot understand why it can't destroy speculation and leverage yet keep the equity market up, as it is the only economic driver in the US since easy credit is no longer available. Tough indeed: since nothing or close to nothing is manufactured in the US we need our upper class's investments to skyrocket so it is inclined to spend thereby providing service jobs. US politicians have a lot of work on their plate with the financial reform. Any measures too drastic in terms of balance sheet reduction will be tough on financial assets and curb lending, and any measures to curb speculation on commodities will hit this asset class hard and the commodity stocks along with them (miners are amongst leaders in US equities). European politicians have one fine mess to sort as well and money markets are pricing in higher Libor and funding difficulties ahead already. Without expanding too much on the subject, there is no one I would like less to depend on to make the right decisions.
While stocks were within reach of new highs to start the day in the US, it seems market participants felt like taking risk off before the brainiacs try to figure out what it is exactly they want to do, and by the same token give them a reminder as to the consequences of any stupid decision. S&P is pretty close to posting a H&S on the tops (though the neckline is slightly downward sloping which is not ideal) and the support zone is 1,175/1,180. Watch out below. Similar observation on the Nasdaq future with a neckline support at 1,990. The Nikkei joins in the H&S galore, and the Dax which seems to have been more resolutely bearish (understandable given that the epicenter of the main crapshow the market is focusing on is Europe). After a 61.8% or close retracement of the initial sell-off, if the Dax goes to make new lows next week the markets should in theory accelerate to the downside. For good measure, the French index (CAC) is sitting on a major H&S and 200-dma support as well, dragged by the local banks which have the largest exposure to Greece. The one word no one wants to hear during the weekend is restructuring (synonymous of default) as it would clearly let bondholders know that they are fair game... happy days for those holding PIIGS debt if that happens. Maybe the ECB and German politicians could give Dick Fuld a call to see what he thinks, at this point though hopefully they know th answer.
Commodities curiously did not share the late day panic, and Gold was joined by Copper and Oil for more upside for a change. We have reached the 1,185/1,190 resistance in Gold but at this point there are few reasons other than madness out of the financial reform committy that can prevent a run towards new highs.
Have a great weekend and rest up as next week shall prove more dramatic than the sequal of Titanic!
Nic
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We have reached the 1,185/1,190 resistance in Gold but at this point there are few reasons other than madness out of the financial reform committy that can prevent a run towards new highs.
Run, baby, run.
OT
5 banks closed so far on Bank Failure Friday (3 from Puerto Rico) totaling a $5.9 Billion charge to the DIF.
That's what I said, $5.9 Billion loss to the Deposit Insurance Fund.
PR is going to be the 51st state...they have no choice.
3 rows of 17 stars on the flag?
52nd. Israel is the 51st.
...and since Obama says there are 57 states we've got 5 to go. Cuba ?? Phillipines ?? Newfoundland ??
Canada, Mexico? Got to use the defense budget for something after testing all those new toys on Iraqis & Afghans.
Guam, American Samoa....
Haiti...
South California?
Nancy Pelosi's old, hairy vagina.
I am Chumbawamba.
She might be shaved though.
Damn, now I have to wash my minds eye out. Where is the bleach!
2nd on Haiti. Oil and 9 million instant Democrats
Guam's too dangerous. It may tip over.
Disaster stimulus...
Holy Maple leafs Cognitive Dissonance, 5.9 billion samollies! Holy Samolly!
Now moved up to $7.3 Billion from 7 banks. This is the largest dollar amount for one week that I can find, though my research isn't complete nor adjusted for inflation.
Unbelievable. Not too hard to see how TPTB could loose the handle on this thing...
House of cards comes to mind...
As the FDIC continues its road show of confining most closures to specific geographic regions on a rolling basis. It would be interesting to note where those specific losses were concentrated...
Ok. What's the FDIC shirt. Yes, I am STILL awake. I may sleep 14 hours tonight--or wake up Sunday. You that are still awake, please put your brains together to create a great FDIC item for the Zazzle store. I already have great Sheila Bair dumbass face photos stored.
Miles, lets get the creative juices flowing on this one. FDIC--acronym for?
Fun with total bank failures graphs could be included. All proceeds to help the ZH boys and girls at www.zazzle.com/Howard_Beale. Submit your ideas through the Zazzle site or to this post and I will leave the computer open to this page as I pass out to sleepyland....
super talented graphically, mentally WOW.
see williambanzai7
http://williambanzai7.blogspot.com/2010/05/nightmare-on-wall-street.html
A NIGHTMARE ON WALL STREET:
I dont know C G but i add up closer to $ 14 B, no wonder theres been talk about a vote to let PR become a state.. HMMMMMMMMMM , I might be wrong here CG cause your DA MAN but this is what throws me on that number..."
As of December 31, 2009, Westernbank Puerto Rico had approximately $11.94 billion in total assets and $8.62 billion in total deposits. Banco Popular de Puerto Rico did not pay the FDIC a premium to assume all of the deposits of Westernbank Puerto Rico. In addition to assuming all of the deposits, Banco Popular de Puerto Rico agreed to purchase approximately $9.39 billion of the failed bank's assets. The FDIC will retain the remaining assets for later disposition. "
Good call!
I saw that as well. I'm quoting the FDIC numbers when I come up with $7.3 Billion on 7 banks tonight. But that's probably a big mistake. In fact, I've asked that question a few times on ZH. Why would we possibly assume the FDIC is telling the truth about the DIF hits, either in total or per bank. What incentive do they have to tell the truth?
The fact that they are allowing banks to mark assets at 80 to 90% of face value while functioning yet when they go under mark them down to 30-40% means to me they have no credibility what-so-ever. Either they are marking them down further than they should when they are closed in order to pass guaranteed profits to the acquiring banks in sweet heart deals or they really are worse than 30-40%. I've noticed they always cap the loss exposure the acquiring banks can take.
It smells like a sewer needs to be pumped out but without someone looking closely we'll never know for sure.
"when they go under mark them down to 30-40%"
And do you think that Citi ,Wells and 4 others are any more honest. They real book value is in that region for all of them and its not improving. Just to big to fail until they do
TD, if you're listening....can we maybe get a post on the bank failures each Friday? MW comments are drivel and calculated risk is so-so...I would much rather read the posters here hash it out.
oops
?
What do you mean by "since nothing or close to nothing is manufactured in the US...?"
My X5 was manufactured in the US, and it's surprisingly well put together.
BMW did a great job in keeping the unions out of their shop... as a result, a superior product was produced.
So, Richard Weed, is the German x5 a piece of shit or any of their cars produced by all those German union workers a piece of shit? They do not keep unions out of their shop in Germany. In fact Union members serve on their boards by law. So, tell me about those bad unions holding down the american middle class. Weed you are pathetic!
Unions are their own worst enemy. I walked away from Sheet Metal Workers and a comfortable living. Uncompetitive and entropic. Best career move I ever made. Fuck your union
This has been going on for 18 months and there have been bigger losses to the DIF. The FDIC has been broke for a while now, barely covering payouts with pre-paid fees. It will begin to matter, however, in the context of roll risk that TD mentioned where Treasury has cash flow problems while offering a 500B backstop to FDIC. Never the less, a broke FDIC is old news, and has been discussed ad naseum on ZH, and the old MW threads 2 plus years ago.
JC...can you please tell me when the last time we have had bigger losses to the DIF?
Additionally, and yes I am a noob, can you explain to me what exactly these losses mean? If they are just liabilities outweighing assets, does the FDIC just swoop in and pay everyone off at par?
Thanks for the info and sorry for the elementary questions. Cheers.
Hi rm,
I'm not sure of the exact time there was a bigger loss on one day, but I know that IndyMac by itself caused an $8.9 Billion loss to FDIC in summer 2008, so I should rephrase my comment as in the context of the last 2 years rather than 18 months. What this means prima facie is that FDIC is taking a debit to its insurance fund in the amount of $X billion. The FDIC was created to protect depositers, but in the past two years has been used as a conduit to bail out banks, negotiate takeovers, and make guarantees. See WaMu and Wachovia deals for reference. The issue of course is that the FDIC does not take in nearly enough fees to cover bank failures due to the enormous ponzi scheme known as fractional reserve lending. Ultimately this falls on treasury, which as we know is broke. The FDIC currently has a 500B credit line with Treasury, and they have yet to tap it. When, not if, this happens, it will put an extreme strain on treasury, which is issuing new debt to pay the current deficit and is also dealing with enormous amount of roll on short term debt as TD mentioned.
People think OK, the Fed will just monetize debt to cover any shortfall. This is another topic, but we shall see what the Fed is able to do in the current political environment. IMO, the Fed is slowly killing itself, and must clear the market before it goes into negative carry and by itself becomes a "net" drain on Treasury.
Anyway, my comment is more in the context that all of the comments are eerily similar to what I have seen over the past few years, and it is almost moot point. The story is the same. Eventually the debt and losses will create a cash flow negative situation and the Treasury will have a funding crisis. People have discussed this ad naseum everywhere.
Thanks for the info jc, that helps clear things up for me. Here is a link for you or anyone else that is interested to check out that I found in the comments on calculated risk that breaks down the failed bank costs by month, state, number, etc.
http://portalseven.com/banks/Failed_Banks_FDIC_Cost.jsp
I think it is important to keep drawing attention to it because it seems to be a signal that things are not getting better.
Is there a baseline? How many banks did the FDIC close per year from 2002 to 2007?
Am I the only one who thought that Nic was petulantly whiny at the open -- "Oh that GOVERNMENT better leave GS and the rest of us alone if it wants us to drive the economy, 'cause we're all America has left?"
I was a bit surprised by the emotional content of his post. He's usually pretty dry and matter of fact. I suspect many people "in the business" honestly (wish to) believe that the government wants to "fix" this problem but they are just a bunch of bumbling fools. I don't think many even consider there are forces trying to rape, rob and pillage with the goal of eventually taking the system down and rebuilding with central control.
Just my opinion.
Indeed. Ah, we all have Bad Hair Days.
Having the Government REALLY try to put some brakes on the markets (imagine an SEC that works -- heh) would, IMO, be better than the alternative of the Government saying, "OK, anything goes, Boys and Girls," which of course led to this utter insanity. Perhaps it's my Taoism (or perhaps my Aristotelianism) showing, but striving for balance and moderation between the extremes seems to be the key. It will be interesting to look back one or two decades hence and see whether the Chinese accomplish something of the sort.
Remember C D, its that time of the month again, bills are due!
Good point, Hulk. Funny how it often seems to come down to not only bringing home the bacon but then frying it up in a pan. :>)
Peanuts.....
trillion is the new billion nowadays
Market Zero, Dude.
Enough of the GS crap. Blaming the market downturn on GS is like blaming the Johnstown flood on a leaky faucet in Altoona.
Enough? You're done already? It's just begun!
Plus, the people are gettin a good in-depth learnen on why (and how) the country got smashed.
The hearings = tipping point.
not the lawsuit. the hearings!
not just Goldman. all banks, bankers, including Fed. (watch the news on NY fed)
let it all digest and watch.
takes some time
Where have you been? Name one other organization that has a former or future Goldamn Sucks employee in every key financial nexus throughout the World?
Go ahead, I'll wait....
I understand your comment but that's not my point. We all pretty much agree that the current crew has done nothing but line their pockets and tank the monetary system. How much worse can it get than idiots like Summers and Geithner at the controls? Is everyone suggesting that a $14 trillion economy is going to come to a standstill because a couple of clowns are going to be wearing a different kind of pinstripe?
Let me say it another way: On a day when rumors were rife that European banks were having trouble getting funding in the international markets, the Fed may have activated its USD/EUR swap facility and it the number for Greece, as reported by Bloomberg this morning, had now gone up to $156 billion we all sit around and worry about where Blankfien is going to play tennis? I don't want to go back to the days of worrying about how the Trilateral Commission controls the world.
I am rather concerned for bears that H&S are tracing out... this may only mean the High Frequency Gunners are simply lining up new targets to crush when the pattern that all see fails.
The continuance of the non market market will proceed again as usual until they line up new sacrificial bodies on the altar of 'thy must obey the word of Godmans Suckers'
Nic,
The world does not revolve around GS. Could today have just a little bit to do with the looming European implosion, an overbought market, horrible balance sheets and disappointing earnings?
Sure GS was an excuse, but pretty much any feather would activate the trigger for selling.
Best,
What if the world does revolve around GS? What if the government knows it needs a lot of GS, JPM, and BofA's money to provide equilibrium to the "other banking system" now that the big six are looking stable? What if the only way to do it is through busting out enough facts to put money back in, say, Bank of Seattle's vault? (see their lawsuit against GS that gets ZERO publicity). Criminal investigations have taken down giants or shaking them into large political solutions which include Bank of Seattle. The FDIC is propping up these smaller banks with smoke and mirrors. They're holding CDO's with billions in losses. The big six have those billions. The political, criminal, civil solution seems obvious to me. It has to start with....can the US destroy your entity? The power and solutions flow from there. To show that means shaking up financial stocks, I think. I wouldn't be surprised to see the DOJ arrest a few bankers related to municipal bond scam within the month.
Please, please all this GS stuff. Todays FDIC actions only further illustrate the need to nationalize the banks, oh, and mines (PM, coal, oil, gas, etc.).
I think Europe is the real factor.
Goldman Sachs is all rearview mirror stuff - though I'm happy to watch it. But GS dropped 9%, dragging other financials with it, so that does have a broader impact.
Everything is a potential black swan. But, GS would do in a pinch.
Black Swan = something unpredicted such as a volcano.
False Flag = something created, such as a military attack that can be blamed on the 'other.'
There is perhaps a word that describes the thing that the media directs our attention to, but they don't teach us that word in school so I don't know what it is.
The nonsense that GS is somehow responsible for the system having problems is getting out of hand. Every country in the EMU has been fraudulently reporting their finances since the beginning. It has not been GS that devised the socialist programs that have just about bankrupted these countries. Having to restrict spending to actual income, while trying to reduce debt, is going to be a painful exercise. GS was not the Politician running for office that plundered the state treasuries and their citizens to buy votes. The people, by their governments, decided to try to borrow themselves rich. It has always come to a bad end.
Bingo!
Ah yes, but in the case of (at least) 3 EMU nations, it was GS who directly assisted them in hiding their debt and cooking their books to gain EU acceptance.
GS isn't the one robbing the bank in these cases, but they were the ones driving the getaway car.
Bullship.
It was the Greek govt. which made the claims and took the money and blew it.
We have today the Primary Dealers selling US govt. debt. Are they committing a crime when the Dealers don't tell you that the unfunded liabilities will bury the country?
The nutters will next blame GS for the oil in the GOM because the company once sold bonds for BP. stop with the nonsense drivel.
Mr. Augy:
You're right- GS didn't create the European Utopia- but GS was the conduit to hide Greek debt in an "off-balance sheet" ruse.
So... if its sleazy, if its dubious, if its something honorable people would not do, you always find Goldman up to their nose....
Spot on, Nic.
The market action today was a clear "BACK OFF" message to the Administration & Congress.
Caught between a rock and a hard place indeed.
If the market crashes, the US arrests bankers and enters Plan B in dealing with the big banks.
It's not that easy for banks anymore.
I think they're the ones caught in a tough spot.
Banks were destined to be the punching bags in this election year. Once the healthcare distraction was put to bed, all sights turned towards Wall Street.
Arrests are a real possibility. Lately in America though, it seems like we're satisfied to prosecute a few flashy examples and not bother with going after all the criminals. Send one Blankfein-type to jail, and say "look someone paid for all the fraud!" even if it was a 1000 other guys who actually did it.
Agreed. But for the first time I'm convinced this government wants some of their money, not necessarily paid directly back to the government but back into the system as a whole, primarily American other-bank victims.
Exactly right. And by my math we would need to see *several thousand* perp walks in order to see justice done.
A cornered animal is often the most dangerous.
no doubt. I think the government is more cornered AND has more power to end lifestyles. So, if you add it up, the government is either going to lash out (doubtful) or shake the big six down (with enforcement threats as the alternative) for a big banking redistribution in return for letting some high margin business go forward. I don't see banks getting past the civil litigation from all the victims. The SEC case is just.... two victims, 1B. The Seattle case is much more.
Here is the core of the theft. They know very well that if the details of the Fed's balance sheet were made public, it would scare the crap out of everyone. For certain, it is full of worthless garbage. That would expose the amount of wealth transferred to the pockets of the wealthy.
"Obama administration officials have declined to weigh in on any specific amendments, with one exception: a move by Sen. Bernie Sanders (I., Vt.) to give the government more power to audit certain operations at the Federal Reserve. Fed and administration officials have signaled they would fight to stop it at all costs. Mr. Sanders has more than a dozen co-sponsors."
SITARPS IG, SEC, state AG's, US attorneys, Congress. There's too much going on for banks. NY Fed is on the spot too.
They actually have a lot of bankers in their sites. If they don't get what they want, then what?
If it tips, it will be a feast. It's not always rational. It could just break down into reprisals when it tips, no matter if the banks were meeting their demands.
Good commentary.
Absolutely, we finally know the nature of worthless crap held in Maiden Lane I , II and III thanks to the Boomberg FOIA suit, so we can guess the the other some 13T in MBS on the FED balance sheet is likely just as bad (i.e less than 40 cents on the $).
Don't forget that hobbit Gary Kaminsky on Fast Money today basically warning that if the gov. keep harrassing the squid the market will tank. Bring it. Tank already.
Please add very hungry sharks.
Presumably with lasers on their heads?
...and not just any lasers... we need "frickin laser beams"
Amen chancee.
You just have no clue as to how disasterous those results will be. Cheerleading for turning this country into Haiti is not helpful. Jealousy is a dangerous attribute.
I was listening to the radio today and heard comments about the last lot of problems compared earthquakes/tsunamis caused by the to big to fail giants didn't fall initially, they just created huge waves that crippled the lesser bodies, but this reverberated back to the big banks etc.
Yes and what do they do? Eh? The eruption that caused the problem then collapsed, or rather the stupid morons in charge tried to stop it by throwing money into the magma chamber!
Are we now seeing the same thing all over again with countries.. the little ones falling first... then it rippling back to the too big to fail (ROFL) US?
Who will bail out the US and the UK and Ireland and Russia and Italy and Brazil and Zimbabwe... oh sorry shouldn't have put that last one in there... they are sorted already....
Garbage. So the market is threatening politicians to back off? Like H. Paulson did before? And we need the market to skyrocket because we don't produce anything? We won't produce anything as long as speculation makes it too easy to make money without working.
And Nic, don't think politicians can fix this. No reform legislation will make this country's debts payable.
The answer to this muse is very clear...but its gonna hurt.
Thanks for your insight Nic...I truly appreciate it!
Those damn bucket shops and stock jobbers!
The upper layers of the Pyramid Ponzi scheme, top 10%, 5%, 1% can phuque off. Piece of $hit trust fund babies... When the Ponzi Pile is declared default doo-doo, they will have the hardest time in what's to come. I wonder if any of them have ever earned blisters working in a garden, strained muscles lifting bales, or tried to sleep with a growling hungry monster in their abdomen?
Jamie Dimon, is that you ghost writing for Nic this week? Think about this Jamie:
Real reform is possible that will require breaking up the mega-banks and ending To Big To Fail.
http://www.govtrack.us/congress/bill.xpd?bill=h111-5159
H.R. 5159: Safe, Accountable, Fair, and Efficient Banking Act of 2010
http://www.govtrack.us/congress/bill.xpd?bill=s111-3241
S. 3241: Safe, Accountable, Fair, and Efficient Banking Act of 2010
Time to put you banksters back in your box, at a minimum.
Next target: Bennie and the Fed-Fraudsters and monetary reform.
Oh it was not a message.
Traders are edgy about Greece and a cascade of sovereign defaults.
And this market has run up hard and is toppy as hell, and looking for a stiff correction of about 10-15%. The only ones buying are the damn banks, and unless they find a chance to make a handoff to mom and pop they take their money on the downside and do a wash and rinse.
I'm sure the government is frightened by the attack of the daytraders.
Who are these traders you speak of??? Or, perhaps you mean the ones that have been handed their scalp on a platter time and again the last 12 months. The market was due for a correction long ago and the Greece problem was always about saving the French and German banks. It's been decided, the banks will be bailed at all cost, the people will be asked to lower their standard of living and the rest will come from Uncle Ben's printing press. He'll surreptitiously backstop every toxic asset on the planet because he knows if he doesn't the game is truly over.
The market has been totally controlled by TPTB and will not be allowed to correct more than 5%. Anything more than that may cause panic and it will be harder to control. Uncle Ben will have none of that. Remember, he is convinced as a student of the Great Depression that the mistake they made was allowing the market to crash and the big banks fail. This won't happen on his watch.
Nice catch Jesse.
http://jessescrossroadscafe.blogspot.com/2010/04/when-you-lie-down-with-...
The big question on everyone's mind these days must be: When the decline comes, what will be the big run-to asset? REITs, retail, financials and insurers - again? The dollar? The dollar and gold? Gold only?
Sanity takes a long time to sink into the soft, mushy heads of characters who think ONLY of chasing paper-currency yield...
I've wondered the same thing. With many currencies suspect, gold might be the go to asset class/store of wealth - however, it would be lik a veritable firehose of global wealth trying to step down to fit into a straw. So far, that seems to be playing out at a low level. However, if things get far more dicey, and another liquidity crisis hits with cascading margin calls, will it get hammered again, or will it explode? Wish I knew.
This theatre has been equipped with multiple emergencie exits, they should be clearly illuminated at all times. In the unlikely event of a fire, please make your way through these exits in a calm and orderly fashion....
...did you know that urine is sterile. That's right! You can drink it.
urine is a mordant. used by the native american indians when naturally dyeing their wool.
This is the threat: Don't let us steal and the market gets it. Let us steal and the market still gets it, but at a later date.
Nice conspiracy theory, but utter BS.
Institutional selling has been ramping up, and whoever doesn't trust the EU to get it's collective shit together was still getting out of a big-ass position.
Ever hear of hank paulson?
"Sorry folks, but all that money you invested in stocks, bonds, insurance policies, annuities, etc - is gone. You got tricked fair and square, and now its time to move on"
Barack Obama. November 2010
...breathing new life and meaning into the moveon.org domain...
way off topic unless you will be at a supermarket checkout on Saturday morning and happen to see a copy of the National Enquirer
OBAMA CHEATING SCANDALPRESIDENT OBAMA has been caught in a shocking cheating scandal after being caught in a Washington, DC Hotel with a former campaign aide, sources say.
And now, a hush-hush security video that shows everything could topple both Obama's presidency and marriage to Michelle!
http://www.nationalenquirer.com/obama_cheating_scandal_vera_baker_video_...
one small catch
no copy of the tape so far
To be fair to the National Enquirer, their articles have just as much hard-hitting street cred as CNBC, and way more entertainment value.
NE single-handedly broke the Haircut/Rielle Hunter affair.
Barry plays for another team. No way he was there with a "her".
I guess Blankfein kisses and tells, then?
Is this the same woman who worked on the campaign and then moved to Puerto Rico right after the election? More opportunities there for the Obama victors is what I read then.
uh, I'll go with "take advantage of the ensuing crisis" for $50, Alex.
Something else to remember about Goldman Sachs. They ripped off rich people. That changes the dynamics. Every very rich person has a network just like the rich people at Goldmans. Now that they're TV scum, it becomes double as hard to be an alum. The bank with the worst reputation for shafting the the most rich gets the indictments. That's my general prediction.
Again very good commentary. I like the way you think. Please don't be shy. Continue.
This is what I believe is being overlooked. Really really rich people did get phucked. Rome didn't fall because the spoiled rich phucks were humble. Even getting several hundred thousand to play with leveraging a fraction of it get make people nutty.
What happens when a few billion leverages a few trillion? Well. Giving Paris Hilton a million to spend 10 minutes at a party comes to mind. Look at Dubai. Same as when the Empire State Bldg. was completed.
ALL GOOD THINGS COME TO AN END. Even in the Hamptons. Even at the NY Fed.
Agreed. I've been seeing it evolve over the last month to be sure. The big things and the little not much noticed things. SEC files. Neil makes those strange comments about "criminal or civil" investigation at NY Fed. (what?) Broadened criminal investigation at DOJ (expected). Civil "leak" accidental filing in the Mississippi muni bond case regarding a broad investigation into price fixing. One bloomberg story and gone. Virtually zero coverage on the mass civil litigation against banks for far MORE than the SEC is seeking in Paulson CDO. I thought Neil SIGTARP's quote was very unusual. on the record. He says I have things that must be disclosed one way or the other. Talk about teaser. Who's he teasing? Then, of course, the biggest hound not barking.....Holder. Silent Holder. What's the point of early indictments? When do you have more power, before you indict or after? I think before. They're leveraging up against the banks.
Was wondering the same thing
It is definitely diversion time:
http://www.youtube.com/watch?v=kY84MRnxVzo
Ooops, I mean the OBAMA cheating scandal breaking now...(short the world now gang)....
http://www.nationalenquirer.com/obama_cheating_scandal_vera_baker_video_...
Wait, he cheated on my FRN's? They seemed so...crisp...how could he? You must be full of it. Next you'll be telling me that the gold earrings I got from Timmay G. were tungsten-plated...as if!
TD and JG, many thanks.
Yep, the "O-scandal". no one is talking...yet.
http://www.globemagazine.com/
The rush towards Treasuries will make financing for the FDIC unlimited.
Just watch the 10-yr. yield collapse and the next auction go off 400% over subscribed.
Perhaps GS will be bailed out next via "private equity buyout", financed by ultra cheap corporate debt, evidenced by the breakout in LQD today.
They may escape the wrath of the market, but I pray they do not escape legislative decree. Break the banks! Kill The Squid.
I believe you are correct in the short term. People just do not know what to do with any "hard assets" to produce value from them. Those treasury guarantees seem a whole lot easier.
Then it will dawn on them after a couple more soverign defaults that EVERY government with a debt to GDP of more than about 20% is going to Greek them. Then it will be all over. If someone is going to spend my money on circus and wine, I can do that for myself.
The FDIC or Treasury doesn't get funds from Treasurys traded in the secondary market. The primary issuance is covering existing shortfalls, and if they want more money for the FDIC, they will have to announce a bigger auction than what was previously known, which may spook demand. It would take a real stock market "correction" for the USGov to significantly increase long bond offerings at lower and lower yields.
Frankly, it doesn't matter. Any new debt on top of what has been announced will be problematic no matter how low the yield. Aside from that, roll risk is the real problem.
We are truly doomed. Will America prevail in the 2010 elections?
We shocked the world in the 1700's. Can we do it again? Enquiring minds want to know.
Yes, but our brief affair with liberty was followed by the much more entertaining French action. Oh, and forget civil war. Who in their right mind would want to assume the mantle of this 50 stated piece of dung. I rather like the Sovie....er, Russian concept of 4 independent regions.
Ok Zero Hedge readers!.... let's see what the hell is going on with Greece and how they are going to get out of the mess and drive our markets to a continuation of the bull market... some might remember my article on Dubai alerting investors that it was a non-event.
http://www.bostonwealth.net/2009/12/14/dubai-mu...
..so wtf do I know that perhaps the average investor does not know about Greece and their plans?.. well if it helps, I am half Greek.. ok but the meat of the matter is as follows..
Greece, followed by France and then the United Kingdom has been on the forefront of supporting the Arab countries in helping seek independence and a resolution of the Israeli-Palestinian conflict....so yes in return for Greece's support, they are going to get one hell of a bailout from yours truly the Saudis, Qataris, and others....
2nd unbeknownst to many is that in the next few month there is going to be a huge conference in Athens; the 3rd Arab-Greek Economic Forum.. now how the fuck is that going to take place if Greece is broke...the motto of the conference is "Fostering business alliances to tap emerging opportunities"
Well what the hell is going to be achieved in the conference if Greece is broke and non-functional.
I tell you what is going to happen.. either Saudi Arabia, Qatar (who is so flush with money they do not know what to do with it.. and their sovereign fund is busy buying up first class hotels.. to wit...
Raffles Hotel sold to Qatari Diar for $275 Million
According to The Times, "The historic Raffles Hotel in Singapore, famed for its colonial grandeur and the Singapore Sling cocktail, is to change hands in a deal worth $275 million (£180 million). The luxury 103-room hotel, a favourite watering hole of literary figures including Somerset Maugham and Rudyard Kipling, looks set to be acquired from Fairmont Raffles Hotels International by Qatari Diar, part of the state-controlled sovereign wealth fund, the Qatar Investment Authority
..anyway continuing....either Saudi Arabia, Qatar, or Abu Dhabi or perhaps in unity as part of the GCC (Gulf Cooperation Council) is going to steal the world stage limelight by offering one heck of a massive loan guarantee to Greece... just in time for the 3rd annual Arab-Greek economic forum to flow smoothly..
My 2cents!
Not only they are being shot in one foot but they are about to shoot themselves in the other foot.
These countries, by yielding their oil against newly emitted credits, are bailing out many countries. They are the actual rescuers, not people who flush around free money.
They probably have understood they wont recover from the debt they are plunged in, that they will never be paid back in actual values.
Moving to providing Greece with loans would show how fragile their position is.
They would haveunderstood the business but could have not reacted accordingly.
3rd further news that never grapped any world headlines is the fact that the Kuwaiti Emir Sheikh Sabah Al-Ahmad Al-Sabah met with Chancellor Angela Merkel and German businessmen on April 28. He is on a whirlwind European tour that ostensibly will concentrate on developing closer relations with Germany and the Vatican. The Vatican.. wow! .. that’s really news for me.. Kuwait is still probably one of the most intolerant countries when it comes to respecting other religions…to wit.. growing up in Kuwait in the 80s.. yes a policeman yanked a cross off my neck in public and sternly warned me that such display is “haram” or forbiden; the real truth of his visit is anything other than Merkel getting on her knees and pleading with Sabah to dole out billions to Greece. The official word is “During his meeting with Chancellor Merkel he is reported to have discussed “a host of bilateral relations that would cement partnership between Kuwait and Berlin” Bullshit! The whole purpose of the meeting is nothing more than a cry for help from the Germans to the uber rich Kuwaitis to bail out Greece!
..anyway here is my entire article if anyone is interested on Greece's Savior!
http://www.bostonwealth.net/2010/05/01/greeces-savior/
non-functional?
You do mean dysfunctional? Right?
Hi Dirtt:
Whereas nonfunctional could be used; you are correct dysfuntional works better. Thanks I changed the article accordingly.
Kuwaiti are already bailing out Greece by 'accepting' to sell a very necessary commodity (oil) against debt, with the obvious prospect of never been able to recover what they are selling right now.
The whole comment reminds me of Clinton begging to China story.
When Clinton went to China, many declared she went to beg.
I for one declared she went there to deliver a formal warning to China, to get them to keep supporting the US recovery by fishing for values on the US market and at all costs do not try to cut in the US business by go round them on the world market by contracting on world resources. Clinton warned China that the US wanted to stay the middle man when it comes to this kind of stuff.
China did not listen. While they kept buying bonds, they also tried to secure their future by buying commodities and cut in the US business.
As a reaction, the US antagonized China hard, on Tibet, on Taiwan, on being a currency manipulator.
Not the reaction of a beggar but one of a ganglord who wanted to remind a rival where the latter's position is.
One, I wouldn't jump on the downhill Sterling sled just yet, long-dated maturities could have a significant impact on interest rates and the losses are managable. Secondly, unlimited support for the dollar is in direct competition with gold- that has to be the main story. Because either we have a remnant of the current financial structure or we have gold. This is a big difference, the biggest one we've had in a very long time. Since China holds USD as reserves and is an active player in the world, Globalization in now, effectively, a fact. That actually trumps a new superpower thesis.
The larger banks, other than GS which is a young turk in my opinion, have stepped to the side on this matter; the key is 'remnant', because with consumption set to rise as the middle class builds an educational base (thank you Internet and the junk posted on it), a fabulous amount of money needs to be funnelled, while at the same time prices need to be kept affordable -this is another aspect of the deflation vs. inflation argument. ..that same logic blows the lid of 'loan rates' finding an optimum distribution of resources..which is why when you start countries there is a planning commission.
..the crisis could be reduced in terms of - 'mobilizing savings' - how to.. individuals want to maxmise returns, yet are unwilling or unable when the financial mechanism is, at least, perceived to be corrupt. But even then.. assume for a second that investment flows resemble those of a 'planned' economy..savings would not choose to mobilize voluntarily, since no clear profit-maximization strategy is obvious.
The trick here to note is that governments are either in for a penny, in for a pound - or not. Either there is a vision for the details of a post-recession recovery, or there is fiscal juggling. And it's a basic thing, Consumption has to rise, globally. Those nations which have been hit hard by the crisis need investment in small factories, food procssing plants. That's the industrial side- the financial side- has effectively disintegrated and naturally pulled credit down with it, after all, we had a credit-based economy now we have several national defaults concurrently. Still, that's change. The financial side of the recovery needs to contribute to, for my money, increasing levels of consumption- whilst encouraging higher savings rate, which is why the Credit system was effective. And while that does appear to be oxymoronic it can be made to tie into a architecture where investment is planned: raise the interest paid on current accounts to 3%. That also soaks up otherwise inflationary provisions to some degree.
I prefer this than outright chaos (marginally) and gold, because after a bout of chaos I see things returning to the way things were and frankly I want space-exploration to be the next adventure for mankind, not this soul-building indenture.
Unreal. Saving and consumption?
When one saves, that is only freed consumption space to go for one who doesnt save or even better does use debt.
What is saved is not consumed and it is counter productive in a consumption game.
So..."never let a crisis go to waste" eh? I like the cut of your gibberish.
When we fall down, they'll stand up...or something.
Interesting article from the Telegraph. The quotes are the best as they reveal so much about how debtors regard their lenders in almost all situations. A lender makes a loan because they TRUST that they will be repaid. Would you want to make a loan to these people:
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7647645/EMU-domino-fears-as-Spain-downgraded-Germany-drags-feet-on-rescue.html
Note a couple of points from the article: 1) Daniel Cohn-Bendit, leader of the European Greens, said Europe’s handling of the crisis had been “catastrophic” and rebuked Germany for resorting the “discipline of the whip”. 2) “Those who chased high yield by purchasing Greek debt must share the costs,“ said Volker Wissing, chair of Bundestag’s finance committee. Leo Dautzenberg from the Christian Democrats said banks should prepare for a `haircut’ of up to 50pc. Of course, the people who bought the bonds of Greece and paid 100% for them and got a coupon promised rate of say 4% just a couple of years ago were not chasing high yields. Maybe they got 1/4% higher. But they accepted the promise of the Greek govt. to pay as agreed. Now, when a government defaults, what can you attach and sell for recovery. Nothing. But they deserve to get screwed as now they are considered just greed savers.I think they deserve to get screwed. Why would a non-Greek buy Greek debt, ever, at 1/4% more than prime debt? Only because you're dumb, or because you expect a bailout of Greece. Germany is EU's FDIC I guess. On the other side of the coin, I suppose many Greeks weren't so dumb, and invested their savings in a country with a real economy. So maybe there's some justice in the end.
I would imagine that if Goldman felt "threatened" they might be inclined to lighten up on some of their positions, which could include being long equities, being short gold, etc. Other firms, sensing this, try to front run them.
Anyway, I get it that ZH was founded to expose Goldman as greedy, deceitful, and playing by its own rules because it has seeded Government at the highest levels with its alumni. So? I look at Goldman as a private division of the US Government. Doing Americas work all over the world.
Do you want America to not have a dominant investment bank? Do you want UBS or Deutsche Bank or some foreign IB to rule the world? I don't. At least Goldman can look out for America some of the time.
Most of the mortgage crap came out of the other IBs anyway.
Sorry..."everyone was doing it" is not a valid excuse when you're talking about the clap.
SQUID is similar to typical ops, now that the jig is up they are shutting down ops their dirty work for TPTB are done, so there will be no futrther "evidence"... IRAN/CONTRA STYLE hearings all over again. There will be the usual sacraficial lambs n such but the REAL GUYS will get away... they always do.
There is a large element of bumbling and cluelessness in the middle and lower ranks. But at the very top, those in charge know what they are doing. In my opinion, this is a planned demolition. The coming global government will have to rise from the ashes of this current world...
Annoyingmouse is right, I was using 'savings' rate as a proxy for the marginal propensity to save. The gist of the argument is that to move from here, a potentially dissillusioned and unemployed population under low government spending and increasingly inequitable cost structure - towards there, a more amenable economy - only a limited number of tools are available. Credit and Faith aren't worth what they used to be, certainly they don't appear to have got things working again. Which basically just leaves the feeling of the fiat stuff in your hands... but look at these events from another perspective, the thing about the emerging markets is that they've been witnessing the events in the industrialised economies without the benefit of rose-tints. That leaves them, in effect, a better educated population when it comes to money and there would be nothing to prevent services overtaking manufacturing in those economies within our lifetimes - a 180shift in the economic landscape, couple that with low-cost, freely-available plastics and there isn't nothing short of messianic war what would turn the empires around again. This is where we are now, and it's a big deal. 3% on a current account is comfortable- you could earn, save and retire- without ever having to be truly concerned with money, it's like gilts, and it supports consumption and fits in with inheritance tax.
..note..Instant Karma..GS is like a subdivision of the USGovt.. you ever see banking renumerations? Individuals on Wall st. don't owe allegiance, or loyalty, to anyone. The work for money. They don't make laws, they pay people to make laws. The Government make laws, they also have a police force. It's a nice balance, no?
DOW chart shows an expanding wedge indicating a significant move is probable.
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