Florida

PIMCO vs GARY SHILLING - ROUND 1

Because Banning Propaganda “Ties the Hands of America’s Diplomatic Officials, Military, and Others by Inhibiting Our Ability to Effectively Communicate In a Credible Way”

When Mr. Market ultimately becomes disenchanted with the fiscal excesses of the sovereign deadbeats, he can express his ire most energetically. When the current bond bubble here in the US ultimately bursts, as it must, it's going to be a bloodbath.  Of course, there is much, much more at stake to coming to the correct answer on the recovery, or lack thereof, than that. For instance, poor economies make for poor reelection odds for political incumbents. And when it comes to maintaining a civil society, the lack of jobs inherent in poor economies often leads to a breakdown in civility. On that note, overall unemployment in Spain is now running at depression levels of almost 25%, and youth unemployment at close to 50%. How long do you think it will be before the citizens of this prominent member of the PIIGS will refuse being led to the slaughter and start taking out their anger on the swine (governmental and private) seen as bearing some responsibility for the malaise? Meanwhile, back here in the United States, the commander-in-chief is striding around the deck of the ship of state trying to look like the right man for the job in the upcoming election, despite the gaping hole of unemployment just under the economic water line. His future prospects are very much entangled with this question of recovery.

So, what's it going to be? Recovery… no recovery… or worse, maybe even a crash?

Something funny happened in the aftermath of the US fraudclosure settlement, in which millions of backlogged housing units were supposed to enter the foreclosure process and begin the clearing of the nearly 9 million housing units in shadow inventory: nothing. Because as RealtyTrac disclosed overnight, in April the US saw a mere 188,780 foreclosures events of various type (NOD, auction, REO) take place. Why is this number significant? Because it is the lowest in 5 years, despite shadow inventory in the US now being virtually the highest ever. But, but, "this is precisely what the foreclosure settlement was supposed to prevent" one may ask... That would be correct. Next question. In other words, not only did banks get away scott free from being litigated to the 7th circle of hell, but for them the "profitable" business model continues to be one where house lending is largely irrelevant. And why not: with NIMs are record lows, banks couldn't care less if the houses and marked down loans against them in the asset pool go up or down. The real money is made elsewhere: like hedging the IG9. In the meantime for everyone else hoping to get a true clearing price on housing and millions in units in shadow inventory being finally absorbed by the market: good luck. Not only has the foreclosure process in America ground to a complete halt but as the second chart below shows, the time to liquidation once a property enters 60 day-delinquent status just hit an all time high: that's right, the average time during which a deadbeat can occupy a home without payment if they so choose is 31 months. Thank you central planning politburo and USSA.

"Destruction leads to a very rough road. But it also breeds creation" (RHCP)

• Facebook's selling shareholders can't wait to get out of company, increase offering by 25% (Bloomberg)
• Boehner Draws Line in Sand on Debt (WSJ)
• Romney Attacks Obama Over Recovery Citing U.S. Debt Load (Bloomberg)
• BHP chairman says commodity markets to cool further (Reuters)
• Merkel’s First Hollande Meeting Yields Growth Signal for Greece (Bloomberg)
• Greek President Told Banks Anxious as Deposits Pulled (Bloomberg)
• EU to push for binding investor pay votes (FT)
• Martin Wolf: Era of a diminished superpower (FT)
• China’s Hong Kong Home-Buying Influx Wanes, Midland Says (Bloomberg)
• U.N. and Iran agree to keep talking on nuclear  (Reuters)
• US nears deal to reopen Afghan supply route (FT)

Those calling for taxing the richest more are not doing the same cost-benefit analysis I am doing that suggests that raising taxes won’t raise more revenue. But they’re not unfairly looking for a scapegoat, either. While probably the greatest culprits for the problems of recent are in government (Bush, Greenspan, Obama, Bernanke) Americans are right to be mad at the rich.

Why?

This isn’t about tax. This is about jobs, and growth. The rich, above and beyond any other group have the ability to ameliorate the economic malaise by spending and creating jobs, creating new products and new wealth. The top 1% control 42% of all financial wealth. But that money isn’t moving very much at all— the velocity of money is at historic lows. It should not be surprising that growth remains depressed and unemployment remains stubbornly high.

• European Unemployment Rate Rises to Highest in Almost 15 Years (Bloomberg)
• Chinese Activist Leaves U.S. Embassy (WSJ)
• China April bank loans slide 30 pct from March-paper (Reuters)
• Moody's warns against lack of tax hike in Japan (Reuters)
• RIM CEO Bets on BlackBerry Without Keyboard to Challenge Apple (Bloomberg)
• European visits focus on boosting trade (China Daily)
• Martin Wolf- After the bonfire of the verities (FT)
• German Jobless Unexpectedly Up in April as Crisis Flared (Bloomberg)
• Romney Refuses to See China Progress on Yuan (Bloomberg)
• Bolivia Following Argentine Takeover Deepens Regional Divide (Bloomberg)
• Plosser Says Fed Must Guard Against Long-Term Inflation (Bloomberg)

“We must hold the bailed out banks accountable for their harmful, unlawful fraud which has so deeply infected our county’s economy, security, and hope for the future”

So far, 2012 has been a banner year for the stock market, which recently closed the books on its best first quarter in 14 years. But Casey Research Chairman Doug Casey insists that time is running out on the ticking time bombs. Next week when Casey Research's spring summit gets underway, Casey will open the first general session addressing the question of whether the inevitable is now imminent. In another exclusive interview with The Gold Report, Casey tells us that he foresees extreme volatility "as the titanic forces of inflation and deflation fight with each other" and a forced shift to speculation to either protect or build wealth.

Contrary to BP's Happy Talk, the Gulf Ecosystem Is Being Decimated ...

• Fed's No. 2 Strongly Backs Low-Rate Policy (Hilsenrath)
• World Bank Cuts China 2012 Growth Outlook on Exports  (Bloomberg)
• BlackRock's Street Shortcut: Big Banks Would Be Bypassed With Bond Platform; 'Not Going to Cannibalize' (WSJ)
• George Soros - Europe’s Future is Not Up to The Bundesbank (FT)
• Fed May Have Aggravated Income Inequality, El-Erian Says(Bloomberg)
• Shirakawa Pledges Japan Easing Amid Political Pressure (Bloomberg)
• Spain’s Debt Struggle Opens Door to Sarkozy Campaign Message (Bloomberg)
• Iran Woos Oil Buyers With Easy Credit (FT)
• Syria Pledges to Observe Ceasefire (FT)

Fuel Pool 35 Miles from Boston – which Is Highly Vulnerable to Earthquakes – Contains More Radioactive Cesium than Released In BOTH Major Nuclear Accidents and ALL Nuclear Bomb Tests

While the naive public has been inundated with stories that the foreclosure pipeline has been finally unclogged following the robo-settlement (see here and here) and as a result the home "price discovery" process is well on its way, reality is just a tad different. Make that totally different. As usual, the only foreclosure report that matters, and that is even remotely close to reality, comes from RealtyTrac, and we are sad to say, it brings no good news. Quite the contrary. According to the real estate specialists, March 2012 foreclosures plunged from 206,900 in February to 198,853 in March, the first time the total number of foreclosures (either Default Notices, Foreclosure Auctions, or REOs) has dropped under 200,000 since July 2007! Which sadly means that the foreclosure dam wall has yet to crack. Of course, when it does, well "The Second Foreclosure Tsunami Is Coming, And Is About To Kill Any Hopes Of A "Housing Bottom."

NOAA just released confirmation that the first quarter of 2012 was the warmest on record. The fact that we rely on 'seasonal adjustments' in macro data that are so critical in our seeming belief in the recovery of the US economy (and its extrapolation into how many iPads will be bought next month) when the temperature is 20% hotter than average is simply incredible.