One of the most idiotic decisions of 2010 will be the NBER's choice to pick the summer of 2009 as the end of the recession. As every upcoming quarter will confirm, GDP will decline more and more, and previous GDP numbers will be revised lower and lower, until it is confirmed that not only was the Q3 GDP substantially lower than expected (as the inventory boost is revised markedly lower), but that future periods will see flat if not negative economic growth. But even if one does believe the GDP number (which most do not, and certainly not David Rosenberg... who, nonetheless, does give credit to the PCE deflator...hmmm), the reality is that even at that growth rate, the current "recovery" which should now be 1.5 years in, is underperforming the average 2nd year recovery by over 50%. In other words, we continue to exist in a no-man's land of economic development, in which an outright collapse is solely prevented by the $3 trillion in monetary and fiscal stimuli to date, which tomorrow will grow to over $4TR. The second this Keynesian heroin is taken away, it is guaranteed that the economy will crash and burn, and the true GDP will manifest itself as it promptly catches up to where it should be: roughly 5-10% lower... and if the contraction in the shadow banking system persists, all the way up to 30%. Watch out below.

The one best thing about tomorrow, is that 29 hours from now, there will be no more speculation about what QE2 may look like, how big it will be, what the impact on stocks will be, why it will even take place considering the ISM and other economic metrics have turned up recently (and the Fed is an independent, objective force after all) and all the other topics that have clogged the pages of mainstream and alternative media for months. So as we all prepare to relegate this topic to the dustbin of history where it belongs (soon, alongside the current reserve currency), here is the definitive walkthru of what to expect tomorrow from Goldman's Ed McKelvey.

• Democracy’s Rich Pageant (The Awl)
• Democratic power at risk (Reuters)
  • Obama may face "Goldilocks" voters
  • California's high-stakes elections go down to wire
  • Obama seeks to blunt Republican attack over comment
  • Obama says troubled by comments of top Republicans
• US Federal Reserve's latest bubble threatens mayhem: The prospect of more quantitative easing (QE) is driving government bond yields to levels that price in a depression (Telegraph)
• Fed easing may mean 20 percent dollar drop: Gross (Reuters)
• US Shifts G20 Currency Focus To Trade Deficits (FT)
• Robert Rubin dares to show his face with an FT oped: How America can withstand the headwinds (FT) - here's how, go back in time, and make sure Robert Rubin was never in position of power. Does that work?
• Lessons From a Lost Decade (Hussman)
• China's Hu Jintao Says Country's Yuan Policy Is Responsible, Figaro Says (Bloomberg)

Earlier today, another member of the rapidly expanding European "periphery" (at least in terms of troubled states), Belgium, sold €3 billion in T-Bills at rates that were materially worse than the prior auction, even as the Bid To Cover remained flat or declined. This is happening even as Euribor fixings continue to surge and have hit year highs, with the 3 Month now at 1.047% (and 6 Month Euribor at 1.269%). As for the Belgium auction, here are the results. Hopefully little monetary damage occurred to the ECB as part of this latest apparent monetization.

Very little today on the economic side. Additionally, no POMOs until after QE2 is announced.

When two weeks ago we highlighted the news that key title insurers such as Fidelity National are demanding indemnity and warranty from banks, we asked "what happens if the bank is once again caught to be, gulp, lying?
Who foots the bill then? Why the buyer of course. All this does is to
remove the liability from companies like Fidelity National and puts it
back to BofA, which is already so much underwater it has no chance of
really getting out without TARP, contrarian Goldman propaganda
notwithstanding." And while our speculation provided amusement to some of the more (vastly so) polemic elements in the blogosphere, it appears that Alan Grayson took this development seriously, and sent a letter to Geithner demand that a special capital buffer be established at the TBTFs, to absorb any and all losses that will arise from foreclosuregate (especially since earlier today it was made clear that certain banks such as First Horizon don't have any provision for putbacks). In Grayson's words: "Recently, Bank of America struck a deal with Fidelity National Title Insurance to indemnify the title insurer should legal problems with foreclosures create unanticipated title liability.  Title insurers are clearly worried that they may face higher legal and policy costs if foreclosures are reversed, or should legal ambiguity cloud titles they already have insured...Since title insurers have in some cases just refused to insure this market, someone must pay for the liability these insurers have refused to incur. Both banks and regulators are claiming that the problems are simply process-oriented document errors that aren't really causing harm to the public at large.  I suspect that no one really knows the extent of the problem, or the potential liability.With that in mind, it would seem prudent to require additional capital buffers for systemically significant institutions until the extent of the foreclosure fraud crisis is understood." We wholeheartedly agree with Grayson.

BNY's always informative and entertaining Nicholas Colas has a habit of seeing the silver lining, when others only see a putrid and radioactive mushroom cloud. And in this case, we do tend to agree with him... somewhat: when looking at the transformation currently gripping stock markets, instead of taking either extreme, Colas takes the Keith Richards path: adapt and survive (instead of fading away). And in surviving, the market may just return to that “old school” model of stock picking, and thus, fundamentally based stock trading, something which all investors and market participants lament and remember fondly as a bygone era before the Fed decided to take control of the entire capital market. However, where we are far less sanguine, is that for Colas' prediction to come true, it would necessarily (and sufficiently) require the removal of the Fed and its tentacular influence on stocks. And thus the question: can the existing stock market model survive an overhaul in which the underlying economic model reverts back from a central banking primed fiat system, to some "other" form of sound monetary decision making. That, we do not know.