Weekend Reading

• California's financial depression: unemployment and underemployment rate at Great Depression levels. 23 percent unemployment for biggest state in the nation. California will not see housing peak until 2030 (Dr Housing Bubble)
• Jim Grant: Ringing the bell at the top (Financial Armageddon)
• Peter Schiff: Lehman Brothers revisited (TheStreet)
• FHA faces money squeeze after insisting it needs no new money (AP)
• 2 Nobel economists confirm that credit is not credted out of excess reserves (Washington's Blog)
• Preparing for the next Money Market crash: Fidelity, Vanguard said to plan emergency bank for money market (Bloomberg)
• The bailout bill comes due, vexing agencies (NYT)
• New deal orgy no model for current binge (IBD)
• The real banker boondoggle (New Republic)
• Treasury response to Domestic Climate Policy FOIA (Openmarket, h/t Stephen)
• Wells Fargo's commercial portfolio is a ticking time bomb (Bank Implode)
• The future of global finance (NYT)
• Is Well Fargo making AIG's suicidal mistake? (Business Insider)
• Wynn seeks $1.6 billion for Macau IPO (WSJ)
• Hitting talk shows, Obama defends health care agenda (NYT)
• $22.6 million sought from ex-Kmart chief (Boston Globe, h/t Paul)

Comments

[bpj]

F the government;http://www.digitaljournal.com/article/257008

[Anonymous]

"Jim Grant: Ringing the bell at the top"

- all I can say is that Jim should share some of what he's smoking... there's not going to be a "barn burning" recovery once the US financial system collapses.

[Shylock81611]

Jim Grant is always early two years.............

[AN0NYM0US]

Jim Grant appears to be joining ECRI - I'll give it to ECRI as they called things back in the early spring but Mr. Grant is a bit late to the party - of course the real question is how much of this "supposed" roaring recovery has been discounted - my guess is 120% if not more -

[aurum]

comparing the great depression era to todays era in the manner that grant does is moronic at best. we're 100 trillion plus in debt and everythings going to fine..what an idiot

[. . .]

Is Well Fargo making AIG's suicidal mistake? (Business Insider)

-------------

Is Business Insider smoking dope?  They say Wells Fargo has exposure under Wachovia's derivatives book.  However, Wells Fargo acquired W by merging a new, empty sub into W, so WFC isn't liable for any W liabilities except those it assumed by agreement.  The WFC-W acquisition agreement has WFC assuming W bonds and preferred stock.  Doesn't that leave W's derivative counterparties SOL if W tanks?

https://www.wachovia.com/common_files/WB_WF_Proxy_Statement_Prospectus.pdf

[SWRichmond]

Is Well Fargo making AIG's suicidal mistake?

Can the dead commit suicide?

[glenlloyd]

So, Ms. Bair is reluctant to use the line of credit with the Treasury except for emergencies. I have to wonder where FDIC will obtain the funds to survive unless they hop on the Fed led bandwagon and issue debt.

“There is a philosophical question about the Treasury credit line, whether that is there for losses we know we will have or whether it’s there for unexpected emergencies,” Ms. Bair said.

[. . .]

Can't Bair just kick the can down the road by letting letting zombie banks and buyers of zombie banks issue tons of FDIC insured bonds?  It words as long as bond purchasers are willing to trust the FDIC imprimatur, no?

[glenlloyd]

I'm betting in the end the Treasury line of credit will be used for anything and everything. This is another case where the "moral hazard" will be flushed down the toilet under the guise of avoiding catastrophe.

[buzzsaw99]

Jim Grant doesn't care if we all have to use FRNs instead of TP to wipe our asses, don't look at that, just look at the nominal dollars flowing to the pig banksters dammit!

[RobotTrader]

Normal 0 false false false MicrosoftInternetExplorer4 Normal 0 false false false MicrosoftInternetExplorer4

Can't blame Grant for becoming bullish.

Gains in so many stocks have been eye-popping, despite sky
high unemployment, no lending by banks whatsoever, worst economy in decades.

Bank stocks fail to sell off when the market corrects, big
money is buying hand over fist.

Look at consumer stocks like ANN, CHS, ARO, many are up 400%
- 800% off the lows.

Some stocks like BIDU are already approaching new highs, as
if the bear market were erased in 6 months.

Leading stocks like GMCR have had huge runs, were not even
fazed by the 2008 collapse.

And if big oils start running, they could drive the S &
P back up to 1200 in no time, then everyone will be rushing to buy stocks who
have been parked in bonds this whole time.

Watch this one closely...

[River Tam]

Grant seems like a pretty smart person to me. Wow! Look at all those kisses!

[Lionhead]

Some credit buffs may be interested in this:

http://www.reuters.com/article/bondsNews/idUSN1926823220090920?pageNumbe...

[Hephasteus]

Well. That's going to hurt business. Since IPO is the new cash flow of the new economy. Without them backing up Goldman will the right companies be allowed to treat investers like unsecured cash machines?

[Anonymous]

Here's a multiple choice question regarding the strength of the recovery:

a) The recovery will be stronger than expected
b) The recovery will be as expected
c) The recovery will be weaker than expected
d) What recovery?

As ZH readers may suspect from listening to the pundits, Answers a and b are identical. "Contrarians" are an overwhelming majority. Jim Grant curiously has joined the majority camp, apparently awestruck by stock price movements rather than anything remotely resembling a Unicorn, er, anything resembling that mythical forest growth known as a Green Shoot.

Maybe he just bought a new car or something under C4C and the new car smell has gone to his head?