Timothy Geithner

Guest Post: IEA Oil Dump A Disaster In The Making

I don’t know if anyone else has noticed, but this country has been thoroughly gutted over the past few decades. Our industrial base has been dismantled and shipped overseas to the benefit of foreign nations and corporate feudalists. Our grain reserves, once ample, have been depleted to an all time low. Our currency has been systematically debased. And now, our oil reserves, without rational cause, are being sold off only to feed the catastrophe our government is supposedly out to stop. Are the American people being prepped like a glazed ham for the fires of the globalist oven? Is this really all due to coincidence and stupidity as skeptics claim, or is there something else at work here? I find it hard to believe that the IEA and our government are not aware that their proposed strategies conflict with their own source data, or that they are completely oblivious to the destruction they are about to reap upon our economy. The latest IEA decision is just one more piece of evidence of an agenda of deliberate financial destabilization trending towards a disaster that serves the interests of a select few, to the detriment of all the rest.

Republicans Are Pushing For A "Brief" Default As China Warns US Is "Playing With Fire"

Yesterday Reuters reported that a troubling, yet potentially inevitable development may be imminent: the default of the US, granted, a short-lived one (though we are not sure just how the world's "reserve" currency will be backed by a national that is technically insolvent). Luckily for the US, everyone else (except China) is just as bankrupt. Yet if there is one thing pushing Lehman into competitive bankruptcy just so that Goldman would have a monopoly in the US fixed income sales and trading market, it is that any such action will have massive downstream consequences, and in the pyramid of "unpredictable downstream effects", the insolvency of the US is at the very top. And just to make it clear, now that a default is becoming a palpable option, China announced that the United States is "playing with fire" if it opts to briefly default on its debt, which could undermine the dollar, Li Daokui, an adviser to China's central bank said on Wednesday. Yet the statement could very well backfire after Li, speaking on the sidelines of a forum, said China needs to dissuade the United States from defaulting on its debt, but he believed China may hang on to its investment in U.S. Treasuries in any case. This is precisely the case made by Stanley Druckenmiller: in fact, should there be a technical default, US bonds will become a true safe haven investment as America will for the first time take a step to indicate that it believes the relentless abuse of its fiscal situation is coming to an end.

Today's Economic Data Docket - Nothing Happening

Absolutely nothing on the US economic docket today means stocks will fluctuate based on liesflow out of Europe, and Greece. Since today's 13th consecutive protest in Athens is expected to commence at around noon, it should be in full swing by the time NYSE circuit breakers are turned off around 2:30 pm EDT.

Lagarde A Shoo In? Not So Fast...

Following an earlier report by Handelsblatt which made it seem that Christine Lallouette Lagarde's (henceforth CLL) ascent to the head of the IMF was a fait accompli, here comes Reuters to spoil the party. As was disclosed deep in the footnote area of the German article, Christine has a bit of a legal cloud of her own to deal with. To wit: "Her prospects could be undermined by a legal row, unlikely to be resolved before June at the earliest, over her decision to settle a dispute between the state and businessman Bernard Tapie, a personal friend of President Nicolas Sarkozy. Lagarde denies any misconduct, and there is no suggestion of personal profit. But legal trouble could delay her appointment or even make her unacceptable to the IMF as it tries to polish its image after Strauss-Kahn's dramatic fall from grace." And once again nothing is ever easy for Europe: the continent which would be very glad to never again see a male figurehead atop the IMF following the latest humiliation (even though technically the IMF has the US as its key source of capital, European countries add up to well over the US stake) will likely not be willing to risk a court defeat which would likely come only after the critical decision will have to be made. Perhaps it is time to buy some puts on CLL white smoke chances after all.

March Trade Deficit Jumps To $48.2 Billion As Imports Surge

And just as Citigroup predicted, US imports surge even as US exports jump to a record $172.7 billion. But the story is once again in the GDP reducing imports which jump by a whopping $220.8 billion, a $10.4 billion jump M/M. The total deficit of $48.2 billion is the highest since the June 2010 spike which hit $49.9 billion. From the release: "Exports increased to $172.7 billion in March from $165.0 billion in February. Goods were $124.9 billion in March, up from $117.8 billion in February, and services were $47.7 billion in March, up from $47.2 billion in February. Imports increased to $220.8 billion in March from $210.4 billion in February. Goods were $187.0 billion in March, up from $176.9 billion in February, and services were $33.8 billion in March, up from $33.5 billion in February. For goods, the deficit was $62.1 billion in March, up from $59.1 billion in February. For services, the surplus was $13.9 billion, up from $13.7 billion in February." Ah, financial innovation being exported as per usual. Look for another round of Q1 GDP downgrades as this number takes out a few basis points in growth. As we know from China that April exports to the US jumped even more, this import surge will likely carry over into Q2 and result in more GDP cuts.

Banks, Hedge Funds Threaten A Repeat Of Lehman If Debt Ceiling Not Raised

As we reported yesterday, The Treasury Borrowing Advisory Committee, easily the most important 3rd party advisory structure at the US Treasury currently, chaired not surprisingly by JP Morgan and Goldman Sachs, released a letter to Tim Geithner, doubling up his calls for untold death and destruction, not to mention plunging year end bonuses, if the US is not allowed to kick the can down the road for another 1-2 years. For those curious, in addition to the Matt Zames chaired committee, other members include Soros, Tudor, Bank of America, BNY, Moore, Alliance Bernstein, Morgan Stanley, Round Table IMC, Brevan Howard, PIMCO (lol), Dodge & Cox, RBS, and Western Asset Management. The full M.A.D. letter is presented below.

Things That Make You Go Hmmm.... The Ben Bernanke Flying Circus

Today, the world has replaced Messrs.. Cleese, Chapman, Palin, Gilliam, Idle and Jones with a new ‘Flying Circus’. Their names are, for the most part, equally well-known and, sadly, becoming ever-more identified with high comedy as they try to convince the world that the dollar is, actually, in rude health. Ladies and gentlemen, I give you ‘Ben Bernanke’s Flying Circus’ - starring Ben Bernanke, Timothy Geithner, Janet Yellen, Bill Dudley, Charles Plosser, Richard Fisher & featuring Barack Obama.

The Government Shutdown Battle Is Over; Now The Real Soap Opera Ratings War Begins

For some reason, much ado is being made about the nothing that is last night's 11th (or technically 10th) hour aversion of a government shutdown. As we pointed out last week, it is not as if this strawman outcome, or for that matter the raising of the debt ceiling was ever in doubt: "look for both of these events to be consistently spun as key positive outcomes, even though the chance of these things actually not transpiring in a non-favorable light is non-existent." And sure enough, we are confident that the spin of this outcome will be extremely bullish even if in reality it is the perpetuation of a baseline status quo, while the alternative would have been unthinkable. In the grand scheme of things, this was nothing more than a free episode of political soap opera. The markets largely shrugged, because the Treasury Department still would have been able to issue and service debt and the Fed would continues to goose markets higher courtesy of POMO. Yet as Reuters points out astutely: "The battle over the U.S. budget has ended. Now the war begins. The debate over this year's budget that took the U.S. government to within an hour of a shutdown is only a dress rehearsal for bigger spending clashes to come." Here is what to look forward to, as the beltway entertainment spigot is cranked out to the max.