Hat tip to Patrick
Nervous US Banking System - Friday, July 25, 2008 - FreeMarketNews.com
1. Paulson appears on Face The Nation and says "Our banking system is a safe and a sound one." If the banking system was safe and sound, everyone would know it (or at least think it). There would be no need to say it.
2. Paulson says the list of troubled banks "is a very manageable situation". The reality is there are 90 banks on the list of problem banks. Indymac was not one of them until a month before it collapsed. How many other banks will magically appear on the list a month before they collapse?
3. In a Northern Rock moment, depositors at Indymac pull out their cash. Police had to be called in to ensure order.
4. Washington Mutual (WM), another troubled bank, refused to honor Indymac cashier's checks. The irony is it makes no sense for customers to pull insured deposits out of Indymac after it went into receivership. The second irony is the last place one would want to put those funds would be Washington Mutual. Eventually Washington Mutual decided it would take those checks but with an 8 week hold. Will Washington Mutual even be around 8 weeks from now?
Well, it certainly looks as if Treasury Secretary Paulson has understated the problem:
Two more banks fail Friday; FDIC sells deposits
Mutual of Omaha Bank takes over accounts of California, Nevada lenders
SAN FRANCISCO (MarketWatch) -- Two more banks were shut down by federal regulators late Friday, who sold the banks' deposits to Mutual of Omaha Bank. It brings to seven the number of bank failures so far this year.
The Federal Deposit Insurance Corp. said it was appointed receiver of First National Bank of Nevada, based in Reno, Nev., and First Heritage Bank of Newport Beach, Calif. - both units of First National Bank Holding Co., of Scottsdale, Ariz.
The Office of the Comptroller of the Currency, a division of the Treasury Department, said First National Bank of Nevada "was undercapitalized and had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices," according to a report in the online edition of The Wall Street Journal.
First National Bank of Nevada had 25 branches, 15 in Arizona and 10 in Nevada, some of which came from its June 30 merger with the First National Bank of Arizona.
First Heritage Bank, which specializes in commercial banking, operated three locations in the Los Angeles area. It had a first-quarter net loss of $1.9 million, according to a regulatory filing.
FDIC will retain most of First National's loan portfolio, Mutual of Omaha Bank said in a statement on its Web site.
The FDIC said the failures would likely cost the FDIC's deposit insurance fund roughly $862 million. The failed banks had combined assets of $3.6 billion, .03% of the $13.4 trillion in assets held by the 8,494 institutions insured by the FDIC.
"We would first like to reassure all customers of First National Bank of Nevada and First Heritage Bank that all their deposits are safe and accessible," Jeffrey R. Schmid, Mutual of Omaha Bank's chairman and chief executive, said in a statement. "Their deposits will automatically transition to Mutual of Omaha Bank and we will be open for business on Monday morning."
Earlier this month, IndyMac Bancorp Inc. became the biggest casualty of the subprime mortgage crisis over the weekend, as federal regulators shut down the troubled Pasadena, Calif.-based savings bank in one of the largest U.S. bank failures ever.
So, how safe is your bank and what happens when the FDIC runs out of money?
Note: The FDIC only had (before ~10% loss to IndyMac) $53 Billion (in insurance funds) backing total FDIC insured deposits of ~ $4.5 Trillion.
What happens then, when FDIC insurance is depleted - Another Gvt bailout?
As I stated in an earlier post ( Washington Mutual and National City Lead to Steepest EVER Bank Stock Decline) "Why not -- the Gvt will have already taken over Fannie and Freddie by then, so what's a few more trillion shared among the broke citizens of an already insolvent country."
So, is YOUR bank safe and do you have enough cash on hand in the event it closes? What if the FDIC goes broke and it takes 6-months or better to get your hyperinflated FDIC insurance money - compliments of our printing presses and another Gvt bailout? Are you prepared?
All the best
Randy
Saturday, July 26, 2008
Friday, July 25, 2008
Your Thoughts
Though I like to consider myself a "realist" (who has been right with many calls), lots of folks tend to label me a "doom and gloomer".
Yes, I feel our global economy is destined for significant change as the tectonic financial turmoil wreaks havoc on the world's financial systems, and I also feel the US will likely bear the brunt of this economic calamity.
The Fed's bailout/intervention and easy money policies will eventually lead to a failure in the world's reserve currency (US Dollar) and ultimately the massive inflation wave caused by these policies (and currency failure) will cause our American standard of living to fall precipitously - while our global position of dominance is lost. Timeline for this to take place: unknown, but not too far off.
Anyway, I'm starting to get off track here... My point is: I agree that my viewpoint (expecially to those unfamiliar/ignorant to these topics) is overwhelmingly negative, but I'm merely relaying the indicators that I see from reading my tea-leaves - and thus far, they have been pretty accurate.
With that said, I read quite a bit and constantly run across articles and authors who are much more "doom and gloom" than I (at least from my perspective).
A prime "doom & gloom" theme that I've run across as of late, and would like to get your thoughts on, is:
By November 08 we will experience a full-blown economic crisis, and a state of emergency (martial law) will likely have to be declared, elections suspended, and democracy as we know it replaced by something far different...
What are your thoughts on this issue? I'd really like to hear them... Do you think things could actually get this bad this quickly? Possibly a preordained/orchestrated political agenda - to keep a hold on power?
Let's hear what you're thinking - please don't sugar coat, but try to refrain from the religious bashing thing (it's counterproductive).
Looking forward to reading your comments.
Regards
Randy
Yes, I feel our global economy is destined for significant change as the tectonic financial turmoil wreaks havoc on the world's financial systems, and I also feel the US will likely bear the brunt of this economic calamity.
The Fed's bailout/intervention and easy money policies will eventually lead to a failure in the world's reserve currency (US Dollar) and ultimately the massive inflation wave caused by these policies (and currency failure) will cause our American standard of living to fall precipitously - while our global position of dominance is lost. Timeline for this to take place: unknown, but not too far off.
Anyway, I'm starting to get off track here... My point is: I agree that my viewpoint (expecially to those unfamiliar/ignorant to these topics) is overwhelmingly negative, but I'm merely relaying the indicators that I see from reading my tea-leaves - and thus far, they have been pretty accurate.
With that said, I read quite a bit and constantly run across articles and authors who are much more "doom and gloom" than I (at least from my perspective).
A prime "doom & gloom" theme that I've run across as of late, and would like to get your thoughts on, is:
By November 08 we will experience a full-blown economic crisis, and a state of emergency (martial law) will likely have to be declared, elections suspended, and democracy as we know it replaced by something far different...
What are your thoughts on this issue? I'd really like to hear them... Do you think things could actually get this bad this quickly? Possibly a preordained/orchestrated political agenda - to keep a hold on power?
Let's hear what you're thinking - please don't sugar coat, but try to refrain from the religious bashing thing (it's counterproductive).
Looking forward to reading your comments.
Regards
Randy
And Justice For All
Very good video montage put together by one of my regular readers -- thanks Tim!
Ron Paul: The Mother of All Bailouts!
Ron Paul talks about the bailout out of the housing industry and how it really just destroys the dollar and adds enormously to the debt. Also, slipped into the bill, was the stipulation that ALL credit card transactions must now be reported to the IRS.
Thursday, July 24, 2008
Nevada's fiscal woes among worst in Nation
The bad news just keeps pouring in for the once thriving, and once believed to be, "bullet-proof" Nevada economy.
Though I've been warning folks of the looming downturn since early 2006: Las Vegas—A House of Cards Bound to fall, many disregarded the info and/or considered me a nutcase.
Though I've been warning folks of the looming downturn since early 2006: Las Vegas—A House of Cards Bound to fall, many disregarded the info and/or considered me a nutcase.
Anyway, since that time, I've been trying to keep readers abreast of the unraveling situation as I see it.
A few of my situational awareness posts:
Las Vegas housing downturn is leading the Nation:
Nevada Tops in Foreclosures AND Price Declines!
Home to 15 of the top 20 zip codes hardest hit by the housing/foreclosure meltdown:
Las Vegas Tops Foreclosure List
Four years of housing gains lost in one:
We Ain't seen nothin Yet
Fewer flights mean less tourists and less gaming revenue:
Airlines: More problems for Las Vegas Strip
Las Vegas Gaming revenue is falling fast -- faster than post 9/11:
Las Vegas: Gaming Revenue down > 16%
Casino layoffs have just started:
The Las Vegas Economic Downturn Has Started
Vegas locals flat broke:
Las Vegas: All flash and no cash
High-end Auto Repo Business is booming:
Las Vegas Economic Downturn Increasing "High-line" Auto Repos.html">
Local Banks are having difficulty coping:
Local Banks Effected by Las Vegas Real Estate Crisis
Well, if the situation weren't dire enough already, it's now being reported that Nevada is among the top three in the nation for state revenue declines:
Nevada's fiscal woes among worst in nation
CARSON CITY -- As if you needed more bad news, Nevada's economic downturn now ranks as one of the worst among the 50 states.
A National Conference of State Legislatures report released Wednesday found that tax revenue in Nevada fell by 7 percent in the fiscal year that ended June 30 compared to the previous year.
Nevada ranked No. 3 among the 17 states that reported revenue declines, led by a 7.5 percent drop in Oregon and a 7.3 percent decline in Florida.
Twenty-eight states, including Nevada, expect further declines in the current fiscal year, according to the NCSL report. Nevada already has approved measures to reduce spending by $800 million in the current fiscal year.
"We are all going through the same problems," said Ben Kieckhefer, a spokesman for Gov. Jim Gibbons.
He said there is no magic tax that can snap Nevada and other states out of the economic doldrums. Gibbons remains committed in his opposition to any tax increase, Kieckhefer said.
"When the economy is struggling, it is not a good time to raise taxes," he added. "We need to cope with the revenue we have and weather the storm. If there were a recession-proof tax that didn't hurt people, then someone at MIT would have thought of it."
Kieckhefer said Nevada faces a special problem because of its tourist-based economy.
"It is not surprising that we are faced with economic problems when the national economy experiences a downturn," he said.
Since November, Nevada has cut spending in its two-year budget that ends next June 30 by $1.2 million. That is equivalent to 17.7 percent of its $6.8 billion two-year budget.
Bottom Line:
There's no end in sight to the bad news and (I believe) this bad dream will soon turn into a nightmare -- when the casino layoff's begin in earnest.
Note: I honestly get no joy out of seeing my local economy fall apart and watch neighbors/co-workers and friends lose their homes, jobs and previous way of life, but I do get a sense of "I-told-you-so".
What really bothers me though is: If a simple telecommunications manager and lay-economist (me) could plainly see this train wreck coming over two years ago, why couldn't the so-called "experts" see it -- and possibly do something to better prepare?
Randy
US Dollar Intervention
The Dollar made some gains along with equities yesterday, while commodities and metals fell.
So, can one now assume the dollar crisis is over? NOT a Chance!
Then why the uptick and how long should we expect it to last?
The strengthening dollar can likely be attributed to coordinated global dollar intervention by the central banks of the world -- to prevent a full-blown dollar rout and stave off rapidly spiraling inflationary pressures. Bernanke even stated such in his congressional testimony last week: "Dollar intervention may be justified in Disorderly Times."
In a nutshell: By supporting/manipulating the dollar, short traders are forced to cover, thus causing the dollar to rally and energy prices to fall. When used in conjunction with other instruments in the PPT arsenal (i.e. large gold and energy shorts) the effect can be pronounced.
Timesonline: Ben Bernanke highlights fight against inflation
The dollar rebounded from Tuesday's record lows as Mr Bernanke combined his own emphasis on the Fed's determination to rein-in inflation by again brandishing the threat that Washington could intervene to halt the slide in the US currency.
In a new signal of growing concern at the Fed that the dollar's rapid decline on foreign exchanges is stoking inflationary pressures by driving up America's import bills, Mr Bernanke fired a fresh warning at the markets, making clear that currency intervention remains a weapon at the disposal of the US central bank and Treasury.
“Market intervention is a policy that's been undertaken a few times. I think it's something that should be done only rarely, but there may be conditions in which markets are disorderly where some temporary action is justified,” he said.
Forbes: Time is now for intervention to prop dollar:
Intervention by the U.S. Federal Reserve, undertaken in concert with the European Central Bank and other global economic powers, could be an inflexion point for the dollar after its 6 year fall.
And with the falling dollar playing a substantial role in rising oil prices, official action to back the currency could provide relief for consumers and ease the pressure from inflation, both in the United States and globally.
It would also be a very useful and timely insurance policy against any run on the dollar should global holders of U.S. debt take fright at what may be a massive bill, and proportionally huge supply of new U.S. debt, to backstop Fannie and Freddie and sort out problems in U.S. real estate and banking.
"This is a situation crying out for intervention and leadership," said Nick Parsons, head of market strategy at nabCapital in London.
The Bush administration has long argued that the value of the dollar should be set in the free and unfettered market, though where exactly a free market can be found I am increasingly unclear.
The serial bailouts, first of Bear Stearns and now Fannie Mae and Freddie Mac, have robbed that argument of much of its moral and intellectual authority, though probably not all of its emotional appeal.
DOW COMMENTS
The DOW has rebounded nicely over the last week or so, but I now think it's time for another leg down. With Jobless Claims, Existing Home Sales, New Home Sales, Mich Sentiment and Durable Goods releases due later this week, I think it's likely we'll see a Friday closing number lower than today's 11,632.
Regards
So, can one now assume the dollar crisis is over? NOT a Chance!
Then why the uptick and how long should we expect it to last?
The strengthening dollar can likely be attributed to coordinated global dollar intervention by the central banks of the world -- to prevent a full-blown dollar rout and stave off rapidly spiraling inflationary pressures. Bernanke even stated such in his congressional testimony last week: "Dollar intervention may be justified in Disorderly Times."
In a nutshell: By supporting/manipulating the dollar, short traders are forced to cover, thus causing the dollar to rally and energy prices to fall. When used in conjunction with other instruments in the PPT arsenal (i.e. large gold and energy shorts) the effect can be pronounced.
Timesonline: Ben Bernanke highlights fight against inflation
The dollar rebounded from Tuesday's record lows as Mr Bernanke combined his own emphasis on the Fed's determination to rein-in inflation by again brandishing the threat that Washington could intervene to halt the slide in the US currency.
In a new signal of growing concern at the Fed that the dollar's rapid decline on foreign exchanges is stoking inflationary pressures by driving up America's import bills, Mr Bernanke fired a fresh warning at the markets, making clear that currency intervention remains a weapon at the disposal of the US central bank and Treasury.
“Market intervention is a policy that's been undertaken a few times. I think it's something that should be done only rarely, but there may be conditions in which markets are disorderly where some temporary action is justified,” he said.
Forbes: Time is now for intervention to prop dollar:
Intervention by the U.S. Federal Reserve, undertaken in concert with the European Central Bank and other global economic powers, could be an inflexion point for the dollar after its 6 year fall.
And with the falling dollar playing a substantial role in rising oil prices, official action to back the currency could provide relief for consumers and ease the pressure from inflation, both in the United States and globally.
It would also be a very useful and timely insurance policy against any run on the dollar should global holders of U.S. debt take fright at what may be a massive bill, and proportionally huge supply of new U.S. debt, to backstop Fannie and Freddie and sort out problems in U.S. real estate and banking.
"This is a situation crying out for intervention and leadership," said Nick Parsons, head of market strategy at nabCapital in London.
The Bush administration has long argued that the value of the dollar should be set in the free and unfettered market, though where exactly a free market can be found I am increasingly unclear.
The serial bailouts, first of Bear Stearns and now Fannie Mae and Freddie Mac, have robbed that argument of much of its moral and intellectual authority, though probably not all of its emotional appeal.
So, with that understood, how long should we expect the rally to last?
My bet is: we may see 74-75 as a rebound high for the US Dollar index, but the rally will probably end not later than August 5th... On that day, people will finally realize that Bernanke's hands are tied and can not/will not raise interest rates AT ANY TIME this year. Shortly thereafter, dollar selling will once again commence in earnest -- ultimately overtaking the efforts of our global central bank interventionists.
Bottom line: I still feel 70 will be taken out later this year.
US Dollar Index Daily Chart
US Dollar Index Weekly Chart
DOW COMMENTS
The DOW has rebounded nicely over the last week or so, but I now think it's time for another leg down. With Jobless Claims, Existing Home Sales, New Home Sales, Mich Sentiment and Durable Goods releases due later this week, I think it's likely we'll see a Friday closing number lower than today's 11,632.
Regards
Randy
Wednesday, July 23, 2008
Help to stop the Insanity!
All the stops have been pulled for a swift Fannie and Freddy rescue.
Note: A federal Bailout w/taxpayer money won't solve anything and regardless of gvt. actions, neither company will ever be restored to what they once were, nor will housing recover anytime soon.
SEC Emergency Order Leads to Dramatic Drop in Short-Selling of Fannie Mae and Freddie Mac Securities
Business Intelligence Firm Reports 90 Percent Reduction in Short Selling
According to market statistics analyzed by S3 Matching Technologies, the SEC's emergency order to enhance investor protections against "naked" short selling in 17 financial institution securities has reduced short sells by about 70 percent for the targeted symbols, and 90 percent of short selling of Fannie Mae and Freddie Mac securities. S3, which processes trades for the country's largest brokerages, compared short sells of Monday, July 14, prior to the SEC order, and Monday, July 21, the first day the emergency rule was implemented.
"Looking at the data from our clients," said Jack Holt, CEO of S3 Matching Technologies, "it seems clear the market responded to what regulators wanted. Short sells, 'naked' or not, have accounted for a little over 1 percent of our clients' total volume. 2/3rds of that short sell volume disappeared on the first day the rule went into effect. For Fannie Mae and Freddie Mac, it's more dramatic at 90 percent."
Previously CEO of Goldman Sachs and currently head of our Free Market Economy's Plunge Protection team, US Treasury Secretary Paulson Talking Up Housing Bill
Bush Drops Veto Threat on Housing Bill
Lawmakers Agree on Outline of Pact That Includes Relief for Fannie, Freddie
The White House said Wednesday that President George W. Bush has dropped his opposition to the housing package. House and Senate leaders have largely hammered out a compromise deal on a mammoth package that would permit the government to bolster Fannie Mae and Freddie Mac in an emergency, overhaul supervision of the housing-finance giants and allow the government to insure up to $300 billion in refinanced mortgages.
Lawmakers plan to raise the public-debt limit as part of the legislation to $10.6 trillion from $9.8 trillion. Congress must vote to increase the limit to account for additional borrowing, something it is loath to do, although it would have had to take that step this year even without the rescue plan for Fannie and Freddie, Democratic aides said.
Wall Street's laughing all the way to the bank
The credit crisis really puts the free in free market. The freest market is supposed to be the United States, and the evidence in favour of that argument is mounting. It's just not what you think. Free, in this case, means a free ride for a select group of people. Wall Street never looked so good, or bad, depending on your perspective.
According to the New York State Comptroller's Office, the big banks paid $33.2-billion in bonuses in 2007, down only slightly from 2006, an even more splendid year for subprime origination. During the past four years, bonuses closed in on $100-billion, not far off the writeoffs and the stimulus package.
It's pretty clear what's happening. Ultimately, the people are borrowing to pay Wall Street bonuses. After all, these handsome rewards are based on the earnings of the banks, but they're not real earnings, since the assets that produced them are subsequently written off.
So, what are "we the people" doing about the outragous lies, incompetent leadership, market manipulation and intentional wrongdoing of many in the financial industry?
Financial Crisis Protest - New York, April 25, 2008; people are finally waking up and taking action:
FedupUSA
Stop the Bailouts
Petition To STOP THE BAILOUTS! -- Please sign!
Randy
Note: A federal Bailout w/taxpayer money won't solve anything and regardless of gvt. actions, neither company will ever be restored to what they once were, nor will housing recover anytime soon.
SEC Emergency Order Leads to Dramatic Drop in Short-Selling of Fannie Mae and Freddie Mac Securities
Business Intelligence Firm Reports 90 Percent Reduction in Short Selling
According to market statistics analyzed by S3 Matching Technologies, the SEC's emergency order to enhance investor protections against "naked" short selling in 17 financial institution securities has reduced short sells by about 70 percent for the targeted symbols, and 90 percent of short selling of Fannie Mae and Freddie Mac securities. S3, which processes trades for the country's largest brokerages, compared short sells of Monday, July 14, prior to the SEC order, and Monday, July 21, the first day the emergency rule was implemented.
"Looking at the data from our clients," said Jack Holt, CEO of S3 Matching Technologies, "it seems clear the market responded to what regulators wanted. Short sells, 'naked' or not, have accounted for a little over 1 percent of our clients' total volume. 2/3rds of that short sell volume disappeared on the first day the rule went into effect. For Fannie Mae and Freddie Mac, it's more dramatic at 90 percent."
Previously CEO of Goldman Sachs and currently head of our Free Market Economy's Plunge Protection team, US Treasury Secretary Paulson Talking Up Housing Bill
Bush Drops Veto Threat on Housing Bill
Lawmakers Agree on Outline of Pact That Includes Relief for Fannie, Freddie
The White House said Wednesday that President George W. Bush has dropped his opposition to the housing package. House and Senate leaders have largely hammered out a compromise deal on a mammoth package that would permit the government to bolster Fannie Mae and Freddie Mac in an emergency, overhaul supervision of the housing-finance giants and allow the government to insure up to $300 billion in refinanced mortgages.
Lawmakers plan to raise the public-debt limit as part of the legislation to $10.6 trillion from $9.8 trillion. Congress must vote to increase the limit to account for additional borrowing, something it is loath to do, although it would have had to take that step this year even without the rescue plan for Fannie and Freddie, Democratic aides said.
Wall Street's laughing all the way to the bank
The credit crisis really puts the free in free market. The freest market is supposed to be the United States, and the evidence in favour of that argument is mounting. It's just not what you think. Free, in this case, means a free ride for a select group of people. Wall Street never looked so good, or bad, depending on your perspective.
According to the New York State Comptroller's Office, the big banks paid $33.2-billion in bonuses in 2007, down only slightly from 2006, an even more splendid year for subprime origination. During the past four years, bonuses closed in on $100-billion, not far off the writeoffs and the stimulus package.
It's pretty clear what's happening. Ultimately, the people are borrowing to pay Wall Street bonuses. After all, these handsome rewards are based on the earnings of the banks, but they're not real earnings, since the assets that produced them are subsequently written off.
So, what are "we the people" doing about the outragous lies, incompetent leadership, market manipulation and intentional wrongdoing of many in the financial industry?
Financial Crisis Protest - New York, April 25, 2008; people are finally waking up and taking action:
FedupUSA
Stop the Bailouts
Petition To STOP THE BAILOUTS! -- Please sign!
Randy
Tuesday, July 22, 2008
NAPA & San Fran Pictures
Just returned home this evening...
Though the trip started out a little rough (Virgin America had a broken plane, so we waited in the airport bar for 4 hours), we had an absolutely fantastic time.
We took lots of pictures, so allow me to share a few... Note: I've never done this before (share personal pictures), so I hope it's not too corny!
Though the trip started out a little rough (Virgin America had a broken plane, so we waited in the airport bar for 4 hours), we had an absolutely fantastic time.
We took lots of pictures, so allow me to share a few... Note: I've never done this before (share personal pictures), so I hope it's not too corny!
Finally off the ground with a much lighter wallet (bar bill!)
Entering Napa Valley
Wine Tour at Clos Du Val -- Beautiful Place!
Same Place
Amazing how small the grapes were
Wine was starting to taste REALLY Good!
San Francisco: Golden Gate Bridge -- It was COLD!
Wife in front w/Alcatraz in the Background
Lombard Street, San Fran -- Crookedest Street in the World
Same
San Fran
We took a Trolley to China Town, Financial District & Fisherman's Wharf
Lost in San Francisco
Some Girl I tried to pick up - not much personality but she sure looked good
More Grapes -- Yes I'm balding too
Another tour/wine tasting
Local Wine Train
All the best
Randy
Friday, July 18, 2008
Jim Rogers : Let Fannie and Freddie go Bankrupt
This first video is the one I was looking for earlier in the week -- after watching it on Bloomberg:
Jim Rogers in interview with Bloomberg said that government has no authority to buy Fannie and Freddie stocks and should have allowed them to go under. He said also that Paulson and Bernanke hear only Wall Street but don't care about inflation and the rest of Americans.
Jim Rogers : Let Fannie and Freddie go Bankrupt
Jim Rogers: Fannie and Freddie ... let the patient pass away
Jim Rogers in interview with Bloomberg said that government has no authority to buy Fannie and Freddie stocks and should have allowed them to go under. He said also that Paulson and Bernanke hear only Wall Street but don't care about inflation and the rest of Americans.
Jim Rogers : Let Fannie and Freddie go Bankrupt
Jim Rogers: Fannie and Freddie ... let the patient pass away
John Browne from EuroPacific Capitol on CNBC
John Brown discussing Bernanke, Paulson, the Dollar, Inflation, Recession, Depression, etc... John really gets it!
Thursday, July 17, 2008
Has anything changed?
We've had a nice stock market rally these last two days while oil dropped significantly in price -- that's a good thing, but is it sustainable?
Not a chance!
Absolutely nothing has changed from a few days ago aside from the fact the markets were SEVERELY oversold and any inkling of half-way decent news was used as a buying opportunity for traders -- a very common, short-term, Bear Market Rally
Talk of new US Oil drilling and using our Strategic Petroleum Reserves did the trick for clobbering those who were long oil, but I expect this pullback to be temporary in nature also. Until we actually get more oil supply in the global pipelines and improve the dollar's purchasing power, oil (over the longer term) will continue to climb.
Peter Schiff on Fox Bulls and Bears Yesterday
News of the day:
Merrill Lynch Posts $4.7 Billion Loss As Write-Downs Climb
Merrill Lynch & Co.'s (MER) profits fell $4.65 billion in the second quarter, the bank's fourth consecutive quarterly loss and a much deeper one than analysts expected, as write-downs on troubled assets continued to pile up.
The investment bank wrote off another $9.75 billion in value of complex securities, bad hedges with shaky bond insurers, mortgage-related assets and high risk loans. That brought Merrill's total write-downs in the year-old credit crisis to about $40 billion, among the worst on Wall Street.
Moody's Investors Service, which responded Thursday by downgrading Merrill's credit ratings, thinks the bank could see another $10 billion in write-downs in quarters to come.
Loan Losses Weigh on JPMorgan; Income Falls 53%
JPMorgan Chase said Thursday that its second-quarter income dropped 53 percent, as credit card and home loan losses spread to borrowers with the strongest credit histories.
Skip to next paragraph The bank set aside an additional $1.3 billion to cover future loan losses as the housing market and the economy worsen. JPMorgan marked down the value of unsold buyout loans and complex mortgage investments by about $1.1 billion. And it said it would take about a $540 million charge to cover the first wave of losses and litigation costs related to its acquisition of Bear Stearns in March.
Single-family building dips to slowest in 17 years
A beat-the-deadline rush to file permits for apartment construction in New York City lifted housing starts to unexpectedly high levels in June, but it was no cause for rejoicing. Construction of single-family homes nationwide fell to the slowest pace in 17 years.
Wachovia Inspected by States Over Auction-Rate Sales
Wachovia Corp.'s securities division was inspected by a team of regulators from more than five states who delivered subpoenas today as part of a probe into the company's sales of auction-rate bonds.
Investigators searched the unit's St. Louis headquarters to seek information about sales practices, internal evaluations of the auction-rate securities market and marketing strategies, Missouri's Securities Division said in a statement. More than a dozen subpoenas were issued to Wachovia executives and agents.
As much as $218 billion of auction-rate bonds sold by student-loan providers, municipalities and closed-end mutual funds remain frozen after firms abandoned their role as buyers of last resort in February. Regulators in Massachusetts last month sued UBS AG for fraud, claiming it told investors the bonds were safe and liquid.
U.S. Initial Jobless Claims Rose 18,000 to 366,000 Last Week
The number of Americans filing first-time claims for unemployment benefits rose last week, reflecting a weakening labor market.
Initial jobless claims gained 18,000 to 366,000 in the week ended July 12, the Labor Department said today in Washington.
The biggest U.S. housing recession in a generation, tightening credit and slowing consumer spending are inhibiting economic growth. A softening labor market means consumer spending may retrench, threatening to extend the slump.
``The labor market remains soft and we're going to see the unemployment rate move higher,'' said Gus Faucher, director of macroeconomics at Moody's Economy.com in West Chester, Pennsylvania. ``With the way the labor market is going, we're still likely to see claims move up. Consumers are concerned.''
US inflation rises at fastest rate in 26 years
US inflation soared at its fastest rate in 26 years during June, placing more pressure on American households already struggling with record food and fuel costs.
The cost of living rose by 1.1 per cent, the biggest increase in inflation since 1982, while core inflation which excludes food and fuel costs rose by 0.3 per cent – above analysts’ expectations.
Phila. Fed survey: Manufacturers passing price increases to customers
according to the Philadelphia Federal Reserve's monthly Business Outlook Survey released Thursday, which said area manufacturers are reporting pricing pressures from higher energy and raw material costs. Sixty-one percent of Philadelphia manufacturers who were surveyed indicated they had increased base prices since the beginning of the year.
Of the remaining 38 percent, 29 percent have tacked on surcharges, and 9 percent have existing price escalation clauses covering cost increases, according to the Philadelphia Fed's report. The respondents also indicated that a large percentage of their suppliers have instituted surcharges covering recent cost increases. The firms are seeing the bulk of the surcharges for transportation, commodities, and energy costs.
Bottom line: Nothing has changed except the temporary opening of a pressure release valve -- buying some time.
Have a great evening
Randy
Not a chance!
Absolutely nothing has changed from a few days ago aside from the fact the markets were SEVERELY oversold and any inkling of half-way decent news was used as a buying opportunity for traders -- a very common, short-term, Bear Market Rally
Talk of new US Oil drilling and using our Strategic Petroleum Reserves did the trick for clobbering those who were long oil, but I expect this pullback to be temporary in nature also. Until we actually get more oil supply in the global pipelines and improve the dollar's purchasing power, oil (over the longer term) will continue to climb.
Peter Schiff on Fox Bulls and Bears Yesterday
News of the day:
Merrill Lynch Posts $4.7 Billion Loss As Write-Downs Climb
Merrill Lynch & Co.'s (MER) profits fell $4.65 billion in the second quarter, the bank's fourth consecutive quarterly loss and a much deeper one than analysts expected, as write-downs on troubled assets continued to pile up.
The investment bank wrote off another $9.75 billion in value of complex securities, bad hedges with shaky bond insurers, mortgage-related assets and high risk loans. That brought Merrill's total write-downs in the year-old credit crisis to about $40 billion, among the worst on Wall Street.
Moody's Investors Service, which responded Thursday by downgrading Merrill's credit ratings, thinks the bank could see another $10 billion in write-downs in quarters to come.
Loan Losses Weigh on JPMorgan; Income Falls 53%
JPMorgan Chase said Thursday that its second-quarter income dropped 53 percent, as credit card and home loan losses spread to borrowers with the strongest credit histories.
Skip to next paragraph The bank set aside an additional $1.3 billion to cover future loan losses as the housing market and the economy worsen. JPMorgan marked down the value of unsold buyout loans and complex mortgage investments by about $1.1 billion. And it said it would take about a $540 million charge to cover the first wave of losses and litigation costs related to its acquisition of Bear Stearns in March.
Single-family building dips to slowest in 17 years
A beat-the-deadline rush to file permits for apartment construction in New York City lifted housing starts to unexpectedly high levels in June, but it was no cause for rejoicing. Construction of single-family homes nationwide fell to the slowest pace in 17 years.
Wachovia Inspected by States Over Auction-Rate Sales
Wachovia Corp.'s securities division was inspected by a team of regulators from more than five states who delivered subpoenas today as part of a probe into the company's sales of auction-rate bonds.
Investigators searched the unit's St. Louis headquarters to seek information about sales practices, internal evaluations of the auction-rate securities market and marketing strategies, Missouri's Securities Division said in a statement. More than a dozen subpoenas were issued to Wachovia executives and agents.
As much as $218 billion of auction-rate bonds sold by student-loan providers, municipalities and closed-end mutual funds remain frozen after firms abandoned their role as buyers of last resort in February. Regulators in Massachusetts last month sued UBS AG for fraud, claiming it told investors the bonds were safe and liquid.
U.S. Initial Jobless Claims Rose 18,000 to 366,000 Last Week
The number of Americans filing first-time claims for unemployment benefits rose last week, reflecting a weakening labor market.
Initial jobless claims gained 18,000 to 366,000 in the week ended July 12, the Labor Department said today in Washington.
The biggest U.S. housing recession in a generation, tightening credit and slowing consumer spending are inhibiting economic growth. A softening labor market means consumer spending may retrench, threatening to extend the slump.
``The labor market remains soft and we're going to see the unemployment rate move higher,'' said Gus Faucher, director of macroeconomics at Moody's Economy.com in West Chester, Pennsylvania. ``With the way the labor market is going, we're still likely to see claims move up. Consumers are concerned.''
US inflation rises at fastest rate in 26 years
US inflation soared at its fastest rate in 26 years during June, placing more pressure on American households already struggling with record food and fuel costs.
The cost of living rose by 1.1 per cent, the biggest increase in inflation since 1982, while core inflation which excludes food and fuel costs rose by 0.3 per cent – above analysts’ expectations.
Phila. Fed survey: Manufacturers passing price increases to customers
according to the Philadelphia Federal Reserve's monthly Business Outlook Survey released Thursday, which said area manufacturers are reporting pricing pressures from higher energy and raw material costs. Sixty-one percent of Philadelphia manufacturers who were surveyed indicated they had increased base prices since the beginning of the year.
Of the remaining 38 percent, 29 percent have tacked on surcharges, and 9 percent have existing price escalation clauses covering cost increases, according to the Philadelphia Fed's report. The respondents also indicated that a large percentage of their suppliers have instituted surcharges covering recent cost increases. The firms are seeing the bulk of the surcharges for transportation, commodities, and energy costs.
Bottom line: Nothing has changed except the temporary opening of a pressure release valve -- buying some time.
Have a great evening
Randy
Wednesday, July 16, 2008
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