I just got off the horn with the Ruling Elite. We had an emergency conference call and to tell you the truth, they ain’t happy. You little people are not responding the way you are supposed to. A significant portion of you are not getting more optimistic because they tell you to. Instead of just reading the headline on Bloomberg that durable goods orders skyrocketed in June, you actually read the details that said durable goods orders plunged. It is getting difficult for the ruling elite to keep the masses sedated and dumbed down. These damn bloggers, with their facts and critical thinking, are throwing a wrench into the gears. Obama and his crack team are working round the clock to lock down the internet, but it will take time. Not that they are totally dissatisfied. They’ve been able to renovate their penthouses and purchase new mansions in the Hamptons with the billions in bonuses you supplied through TARP. The $1.2 trillion supplied by your children and grandchildren to buy up toxic mortgages off their balances sheets was a godsend. They will never call you suckers, to your face.
Could it be??? I don't know, so I'll let you decide...
Singapore has won the sweepstakes to become the world’s fastest growing economy. A white hot first half 18.1% GDP growth rate. The financial sector is booming, thanks to an explosion of newly minted Chinese billionaires. Goldman Sachs and Morgan Stanley scrambling to add local staff. Time to bury old grudges? (EWS).
When I began writing ten years ago, I would offer that the opposite of love wasn’t hate; it was apathy. I shared that thought after tech stocks dropped 40% in less than two months and then recovered half those losses the next two months. We all know what happened next; the tech sector melted 70% the next few years. Wash and rinse, Pete and repeat; we’ve seen that sequel again and again and again. From the homebuilders (real estate) to China to crude oil, a “new paradigm” arrived. Every time was different and each offered a fresh set of forward expectations that would finally prove historical precedents need not apply. I traded all of those bubbles thinking quite sure they would follow the path of false hope and empty promises paved by their predecessors. That proved true as the real estate market crashed, China imploded under the weight of the world, and crude crumbled just as it seemed ready to stake claim to the new world order. While those bubbles hit home for many Americans, they’re hardly unprecedented through a historical lens. - Todd Harrison
While some industry participants are heralding the recovery in commercial real estate, other experts warn that this is a false recovery and it's too early for such proclamations...
The Senate (Bought By) Banking Committee has spoken (the bribes finally cleared): say hello to your three brand new permadovish Keynesian kritters: Yellen, Raskin and Diamond. All three now have direct access to the Goldman Sachs emergency red telephone, the suitcase carrying the printer launch codes, and a lifetime supply of How to Lie With Impunity and to Fuck With The American People for Dummies. All three will also be shortly sworn to defraud, steal and rob the US middle class blind until the failed economic experiment is over and done with.
Bloomberg headline: "Capital Goods Orders in U.S. Climb, Signaling Investment Pickup"
Goldman Sachs: "Durable Goods Orders - Weaker than Expected"
Someone should explain to these people that propaganda is far more effective when everyone on the wrong team knows they have to lie.
Moody's Puts Too Big To Fail Banks On Outlook Negative Over Laughable Concerns Barney Frank May Just Let Them FailSubmitted by Tyler Durden on 07/28/2010 07:39 -0400
Ironically, Moody's whose own business model is now kaput courtesy of Donk (but managed to get a 6 month rolling SEC reprieve for the time being), has an unfavorable opinion on banks as a result of the just passed worst, and most corrupt legislature known to humankind. : "Moody's Investors Service today affirmed the long-term and short-term ratings of Bank of America (BAC), Citigroup (Citi), and Wells Fargo (WFC) while at the same time changing the outlook to negative from stable on their ratings that currently receive ratings uplift as a result of Moody's assumption of systemic support (including their senior debt and deposit ratings). The outlook change is prompted by the recent passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) -- a law that, over time, is expected to result in lower levels of government support for U.S. banks. "Since early 2009, Bank of America, Citigroup, and Wells Fargo's ratings have benefited from an unusual amount of support," said Sean Jones, Moody's Team Leader for North American Bank Ratings. This support has resulted in debt and deposit ratings that range from three to five notches higher than that indicated by the banks' unsupported, intrinsic financial strength. "The intent of Dodd-Frank is clearly to eliminate government -- i.e. taxpayer -- support to creditors," said Mr. Jones. To achieve this, the law attempts to strengthen the ability of regulators to resolve complex financial institutions, while at the same time strengthening the supervision and regulation of such institutions to reduce the likelihood that they will need to be resolved in the future."
The classic paradigm for thinking of the “American experience” involves the use of a “melting pot” or “patchwork” metaphor. The basic idea is that the US is a single entity comprised of a wide variety of ethnic/ social groups. This metaphor in turn is used to support the view that the US is a Democracy: a place where “your vote counts” no matter who you are.
However, to me, an examination of the real socio-political hierarchy in the US reveals that this entire “patchwork” ideology is a myth perpetuated in order to convince the general populace that they somehow matter or have an impact on the US political structure and proposed legislative policy
Here’s More Proof of the Sheer Lunacy of the European Bank Stress Tests: Passed Banks are Already Trying to Collect on Defaulted Claims of European NationsSubmitted by Reggie Middleton on 07/27/2010 13:32 -0400
European banks are already struggling to collect from fellow defaulted, sovereign (allegedly) backed banks yet we are hearing that there is no need to model in default or restructuring in the European bank stress tests. Of Iceland, Greece, Portugal, Ireland and soon Hungary are all just one-off occurrences.
- Asian stocks rise to one-month high on European stress tests.
- EU to adopt new sanctions package against Iran's nuclear program.
- European Union stress tests found banks need to raise €3.5B ($4.5B) of capital.
- Japan's stocks rise after Europe stress tests end, Yen slides.
- Global economy slowing to 3.25% from 4.7% recent average.
- IMF, EU inspectors in Greece for fiscal checkup required by rescue loans.
- Oil hover near $79 in Asia as strong US corporate earnings boost investor optimism.
- BP resumes efforts to drill relief well in Gulf of Mexico.
- Clorox expects to receive $750M for STP and Armor All.
- Deutsche Bank may report lower Q2 profit as Europe’s sovereign debt crisis led to a decline in trading revenue.
- Dubai Financial Market Co. Q2 profit tumbled 80% to 25.9 million U.A.E. dirhams ($7M).
- Embattled BP Chief Hayward to depart, Robert Dudley to succeed.
Stay tuned, we might not need QE 2.0 after all...
How Goldman's Counterparty Valuation Adjustment (CVA) Desk Saved The Firm From An AIG Blow Up (And Opens Up A Whole New Can Of Wormy Questions)Submitted by Tyler Durden on 07/25/2010 17:23 -0400
In today's NYT, Gretchen Morgenson does a good summary of how Goldman was demonstratively net short net short AIG (or net long its CDS, depending how one looks at it) via nearly 100 counterparties to the tune of just over $1.7 billion in net notional, after Chuck Grassley released several previously classified documents disclosing Goldman's CDS position as of September 15, 2008, the day of Lehman's bankruptcy. As Gretchen summarizes: "According to the document, Goldman held a total of $1.7 billion in insurance on A.I.G. from almost 90 institutions. Its exposure to A.I.G. at that time was $2.6 billion. Goldman bought most of the insurance from large foreign and domestic banks, including Credit Suisse ($310 million), Morgan Stanley ($243 million) and JPMorgan Chase ($216 million). Goldman also bought $223 million in insurance on A.I.G. from a variety of funds overseen by Pimco, the money management firm." While the topic of how the world's biggest asset management firm in the face of Pimco (and specifically its massive Total Return Fund) could have a net short CDS position (i.e., unlimited downside exposure), and how this is supposed to demonstrate prudent capital management, is ripe for evisceration, we will leave it for another day, as there is something more notable in the Grassley disclosure that has to be discussed. While Gretchen is correct that the external position of Goldman's exposure vis-a-vis AIG is indeed a total of $1.7 billion in long CDS, if one were to actually present the gross number, the truth would be starker: as the Grassley document reveals, the firm's gross exposure for its IG flow and structured finance desks goes from a positive $1.7 billion net exposure, to a ($2.9) billion net exposure, a massive $4.8 billion swing! What is it that in one fell swoop moved the firm from having a huge long bet on AIG, to a major short CDS position, one that nearly entirely covered the firm's $2.6 billion in legacy risk exposure? Enter Goldman's Counterparty Valuation Adjustment desk.
Just as Goldman's hope that the BP gusher's taking front page priority, especially in the aftermath of the rather amusing settlement between the firm and the SEC, was finally appearing to bear fruit as for the first time in over a year there was nothing relevant on the news front regarding the 200 West company, here comes Senator Chuck Grassley lobbing a grenade full of provocative and very much unanswered questions directed at the GAO, at Elizabeth Warren, and at Neil Barofsky that demand clear and prompt answers. We are also quite content that Blackrock and AIG once again manage to get themselves dirty.
This is turning into a year when the world’s least liquid, most untradeable countries offering minimal amounts of public information and disclosure, are bringing in the best returns, shutting most of us out. The mainstream BRIC countries are becoming increasingly crowded. “Frontier” or “pre-emerging” markets are the place to be.