Economic Outlook from CEOs, Bernanke, and Beyond

Thanks for Mish for his post US CEOs Sharply Reduce Expectations for Economic Outlook, Hiring; Third Largest Plunge in 6-Month Expectations in History; Reflections On "Uncertainty".

The survey hasn't seen this outlook level since 2009, inferring a slowdown is upon us.

Ben Bernanke must have read my post on Monday.  Mish reports Bernanke Begs Congress to Address "Fiscal Cliff", Pledges to Hold Interest Rates Near Zero Through Mid-2015 Even If Economy Picks Up
Which is exactly what I posted on Monday, that the fiscal cliff is going to be a political showdown at the expense of US citizens and the world.  Mr. Bernanke not only promised to purchase 40 Billion per month indefinitely  but keep low interest rates through 2015.  Once again, I ask you, what else can the fed do to prop up inflated asset prices?  There is always more, but only if there is a situation that justifies taking more extreme measures.

Looks like Austerity is the fad in Europe, and France has joined Greece, Spain, Italy, Portugal and others in cutting back spending.  As governments around the world grow more conservative in spending, is that a economic boom or would deflation likely follow.....
Mish reports Austerity Programs Hit France; Marchers Demand Vote on Treaty; Hollande Reneges on Campaign Promise

To add fuel to the Europe fire, Mish reports Concerns Mount that ECB Bond-Buying Program Is Illegal; Concerns? What Concerns?.   If the ECB was forced to stop bond buying, even for a few months, it would be devastating to prices.

The US Federal Debt is now at over 16 Trillion dollars.   The US GDP is about 16 Trillion dollars.  Congratulations USA, we now owe as much as the entire US Generates in 1 year!.  At this point the debt should never be paid back, not that anyone believes it will.  The real issue is not actually paying back, but the interest alone today every citizen owes the US is 12K and counting.  The interest will strangle the US budget and economy in the years ahead.

What we may be facing in the years ahead is not an Arab Spring, but a World Spring, as the central banks perversion of risk pricing, asset inflation, and capitalism distortions create more acute pain.  2013 is looking to be a real fun year, and at some point I'll do gold and gold miners again.

News round up

I haven't done this in a while, but there are multiple news events worthy of your eyes.

MISH'S Global Economic Trend Analysis
Race to Debase Currency Back On - Japan Finance Minister Promises to "Intervene Until I'm Satisfied"
Head of EFSF says Bailout Fund Could One Day Issue Bonds in Yuan - My Spin - this would eventually lead to WW3

Czech PM Considers Referendum to Halt Joining EU - Unintended consequences by EU doing the 'wrong' thing.
Treaty of Debt - An Eye Opening Video on the ESM Bailout Mechanism
Spain's Unemployment "Unexpectedly" Rises to 21.52%
Shanghai Homeowners Smash Showroom in Protest of Falling Prices; Developer Warns on Price Drops; "Twilight Zone" of Phony Accounting and Shadow Money
 The "Most Transparent Administration Ever" Seeks Law to Respond to Freedom of Information Requests with "Information Does Not Exist"

The Market Ticker
Word on the street, Greek bond deal WILL trigger CDS default event

Slope of Hope
Compare the Stock Market in the Great Depression to today (worth a quick look at the charts)

Zero Hedge
Interview with Author about Germany's hyperinflation after WW1

News Update

Keep in mind folks, this is news summary in last day or so. The news is like this EVERY DAY. I just don't have the strength to read and create summaries like this. It's outright depressing.

S&P Cuts Ratings On 2,861 Classes Of Prime Jumbo-Backed RMBS - My Spin - I thought this was just a subprime issue. Jumbo loans? wow. That is going to hurt!

Fitch Downgrades Greece's Biggest Banks On Government Concerns - My Spin - Germany should cut Greece loose, they lied when they entered the EU with help of Goldman Sachs by doing some fancy paper shuffling to reduce their debt load. Kick them to the curb save the Euro. Of course, I doubt that will happen, so the Euro isn't going to be a good place to be as Greece, Spain, Italy, all start falling like dominoes and the weak leaders cave to cover all losses punishing those who have savings.

Gallup:Nearly 20% of U.S. workers underemployed - My Spin - The government has unemployment under 10%, with sketchy stats on underemployment. This poll statistic seems more real to me than government headline numbers......

Q4 Report: 11.3 Million U.S. Properties with Negative Equity - My Spin - people are crazy, walk away. Why pay for an "asset" that is worth less than you owe? I bet many of these same people buy items on sale.....why bother, pay list and give Macy's a 10% bonus for doing a good job.

Harvard’s Rogoff Sees Sovereign Defaults, ‘Painful’ Austerity - My Spin, hey Rogoff, check my blog, I was a bit early predicting sovereign defaults in Jan 2009...and again in Jan 2010, ur late to the party. Nice to see reality joining mainstream....

The FDIC is up to 702 banks with $402.8 billion in assets on the watch list, 8.7% of all lenders. My spin - The scary thing is I bet not 1 top 10 bank is on the list, and assets in top banks dwarf the 700 banks. But don't worry, FDIC has unlimited funds right?

FDIC is out of money, starting borrowing to pay off failed banks debts - My Spin - yea, well, I hope the FDIC can borrow 500 billion more to cover those banks on the watch list.

Citigroup Warns Customers It May Refuse To Allow Withdrawals in Texas - my spin - How nice Citi is giving advance warning it may refuse access to your own funds. I wonder if the law didn't prevent them from doing this in other states would they warn everyone........

Greenspan Calls Crisis ‘By Far’ Worst Ever, Recovery Uneven - My Spin - Greenspan, shut the #@$% up. You ran this runaway train for decades, and now in the final few years your prodigy Bernanke is at the helm, your going to comment how bad it is? #@$% you.

News Roundup

There has been daily events of news being reported worth noting. Of course, the mass media doesn't highlight most of them. There was some news today that inspired me to do a news roundup.

The Federal Reserve Bank made a killing on AIG contract settlement - What is great about this is, the US Treasury and Federal Reserve bank worked in concert to take taxpayer money and pay 100 cents on the dollar for paper worth 33% of that, if not less. But with this parachute bailout, the Fed makes money on selling illiquid assets. Good stuff. I wish the Federal Reserve Bank was a public company, I'd put all my stock in a company that can take taxpayer money in crisis to profit.

Obama to Push Volcker Reforms to Limit Big Bank Risks - I have covered Paul Volcker before on this blog, pretty much one of the only high ranking officials that knows what must be done to shape up America fiscally. Obama's proposal still falls short, re-instate Glass-Stegall, the law that was in place since the Great Depression, and because of it's repeal in 1999, caused the vast majority of this economic mess. And a proposal is a far-cry from enforcement.

Japan Loan Demand Falls Most in Five Years - Japan has some severe issues ahead of it, after 20 years of a depressed economy and stock market. America is following their fiscal plan, as I blogged before. Mish has a GREAT post on Japans situation.

Federal Housing Administration to Raise Fees - "The Federal Housing Administration is raising fees and tightening lending standards to shore up its strapped finances and avoid a taxpayer bailout." The FHA is basically out of money, and will need a taxpayer bailout eventually. And tightening standards? That doesn't smell to me to be a boom for housing. The FHA is an abomination to mankind and needs to be killed, as any government business that could be handled by private business.

Stiglitz Urges Second Round of U.S. Stimulus Spending - And then a third, fourth, fifth, and sixth round. Basically continuous government deficit spending until the government also goes under. The other alternative is return back to capitalism, clean house, and restructure the corporation (carrot) executive bonus system.

NY Fed’s Response to Subpoena on AIG Is ‘Incomplete,’ Issa Says - I am shocked! The Federal Reserve Bank isn't forthcoming with information? Issa must be mistaken. Accept the Mob, I mean Federal Reserve Bank is above the law and move along.

Greece widens funding search, euro takes fright - If the president of Greece happens to be reading my blog, I have the answer to your problems. Cut spending to the point your country has an annual SURPLUS instead of DEFICIT. With a company....I mean country....that takes in more money than it spends, I suspect it will make it a little easier to get funding. Just a hunch. Luckily the US is able to run infinite deficits and will never have to face this problem.

China's fourth-quarter GDP up 10.7% vs. year-ago - I used to be impressed by China's statistics, until I read about how China builds cities no one (really) can afford to live in, or have more commercial real estate in 1 city unused than all of Manhattan has. Making stuff no one uses should be excluded from GDP, and then I would be impressed.

Swiss Banker Blows Whistle on Tax Evasion - The moral of the story, only people with under billions pay taxes. So start cracking and get your savings up, so you too can avoid taxes.

China Asked Some Banks to Limit Lending, Regulator Liu Says - Drop in the bucket, not impressed, but it is a start.

And finally, we'll finish off with some nice conspiracy theory. (Johnny if ur reading, remember what I said about Obama....) I stated I don't believe in conspiracy theories, this topic is the exception. :)
TrimTabs on that ‘US government-rigged stock market’

Economic News Roundup

In its second reading of third-quarter gross domestic product, the Commerce Department said the economy grew at a 2.8 percent annual rate, rather than the 3.5 percent pace it estimated last month.
My Spin, considering job losses are between 300K and 500K per week for the last year, and GDP according to current US Government estimates is 2.8%, and US national debt was increased by about 10% in ONE YEAR, this is not good. But if we ignore massive government debt, 2.8% is respectable all things considered, but hardly considered a strong recovery.

MUMBAI: The US dollar is expected to remain the carry trade currency of choice in the near term and the unwinding of this carry trade is unlikely to be as severe as that of the yen carry trade seen in the early 2008, say currency experts.
My Spin: When Japan became the carry trade of choice for the world, they experienced a 20 year recession. Their stock market and real estate has not recovered in 20 years! Let's hope the US dollar does not become the defacto carry trade currency for the next 1 year, much less 10+ years. And disregard people who say a weak currency is good for America. Ask that person why don't they put their savings into Zimbabwe currency or Mexican Peso?

FDIC deficit $8.2 billion in Q3
MySpin: The FDIC is BANKRUPT. The FDIC is floating the idea that banks pay their FDIC premium for the next 3 years upfront to get cash. Once that money runs out, what next? Ask banks to pay a premium for next 10 years? I'll tell ya whats next, the taxpayer will print money to pay itself. If that day comes, Gold is definitely where the action will be.

U.S. consumers seem slightly more confident about the economic outlook in November, but their appraisal of short-term prospects remains decidedly glum, according to data released Tuesday by the Conference Board.
My Spin: There is hope yet, the public gets that no real improvement has been made, except a paper shuffle. Now if only people would demand to enforce the law and stop making private debt into public debt to pay for billions in bonuses.


Japan Exports Fall Least in a Year on Global Stimulus
My Spin: Read the reality: Shipments abroad slid 23.2 percent from a year earlier, compared with a 30.6 percent decline in September, the Finance Ministry said today in Tokyo. Get that? A decrease of 23% is great as compared to 30% decline?!? My Rose colored glasses aren't as bright as other peoples.

Short News roundup

McDonald's Skinner says customers in 'retreat mode'
McDonalds leaving Iceland because of currency collapse - My Spin - If the US does the same thing, wonder if they will stay....
GMAC Asks for Fresh Lifeline - My spin - I want 3 Billion or I'll declare bankruptcy
Apollo Group says SEC starts probe, 4Q profit down - My Spin - I am shocked the University of Phoenix owner may have financial irregularities. Online university degrees represent highest integrity of education.
Citibank rumored to offer clients huge discounts to pay part of their balance(43%) (zerohedge blog)
Russian Banks Count Pigs, Lingerie as Collateral - My Spin - Maybe its time I deposit my savings into a russian bank, I trust a pigs value over CDO and MBS. ;)
Edward Pinto: The Government's Loan Modification Numbers Are A Total Sham - My Spin - Translation more mortgage failures to come, housing prices to fall.
Freddie Mac Annualized Defaults Hit Record High At 7.3%
Mortgage loan application volume, decreased 12.3 percent

Market Pontifications

I was short the market big-time for months up until 8-21-09, and of course, now the market looks weak. Real traders shrug it off and move on, time for me to do the same.

The SPX retreated back to the bear trend line, I would expect Wednesday to rally somewhat. If we end with conviction down through the bear trend line, the market is looking bearish and the bull is finally dying. See chart below.

The BIG news that was of course, not mentioned almost anywhere, is China is considering reneging on commodity derivative contracts! Large US corporations like Goldman Sachs sold derivative contracts to China, and I am sure was counting on the payoff......which now may not come. This is yet another reason why all derivative markets must be formalized into an internationally agreed construct. This may rock the commodities markets as this unfolds, and yet another reason why I am not advising purchasing commodities currently.

More News
Worst of slump yet to come, says economist
Fed Will Now Monetize The Most Recently Issued Agency paper (debt)
Auto sales drop sharply with end of Clunkers program - My Spin - Is ANYONE surprised that car sales fall significantly after the government stops giving FREE $4,500.00 to buy a new car?
CIT defers interest payment, shares fall - My Spin - this company recently almost went belly up, then some "miracle money" came...and I guess went...
Citigroup sells $1.3 billion in portfolios - My Spin - Would be nice to know price paid, and if the purchaser has a relationship with US Treasury to backstop the purchase......
Credit Suisse Group AG, which downgraded U.S. stocks, prefers Japan
9 of 10 cities are forced to cut spending - My Spin - with 15% real unemployment, and state/local governments cutting back on spending, only increase spender is US Government, hardly a recipe for a new bull market.

From WebSurfinMurf's Financial Blog

Welcome new reader

This blog entry will be updated as needed, to revise my view of the US economy and the world economy. You will see text colored (blue). Click on these words to see a blog post or other material to provide detail of the basis of my view. This blog entry will be linked at the top of my blog for future new readers. If you are new to my blog, this post will help get you up to speed to better follow my current entries.

Welcome to my blog, my name is Mike Murphy, a Computer Consultant/Programmer turned arm-chair financial blogger, with help from other bloggers and friends (John Chinnock). The goal of this blog is to serve two purposes, one is to help me continually focus and articulate current thoughts of the Financial Market & US economy for my own trading. A second is to hopefully help those who know me to safeguard their savings from buy and hold mentality in this historic economic problems the US faces.

Recommended Economic Primers

My View of Economic forces
I am writing a series of articles on Monetary and Economic terms and views, click here to read this series to gain my perspective of economic concepts, starting with "What is Money?".

Video of various economic forces the world faces
This video series gives a great synopsis of many global and US economic issues. It is a MUST for anyone new to this blog. This video was created by Chris Martenson, a pay-for-blogger. CLICK HERE TO WATCH THIS GREAT VIDEO SERIES.

Short take
The US Stock market and the US economy will see substantial pressure from a massive deflationary collapse that will not end until the US government enforces honest accounting and loses by US banks are realized. Current target for S&P500 and DJIA for a "bottom" is 550/5000 respectively or lower. The US economy will be in a recession/depression that will span 5 to 10 years from the initial downturn in Dec 2007.

During the economic turmoil storage of wealth in stocks, bonds, cash, real estate, or natural resources (gold) all involve risk. In my opinion, physical gold/silver or natural resource based companies such as gold/silver miners are "safer" investments than most others in the time frame between 2009-2012+. A MUST read for new users is this blog entry (click) on buy and hold as a bad strategy.

Therefore I strongly advise against keeping money in general stock funds, better off in US short term treasury notes (cash), and/or natural resource based investments. There will come a time where US cash will have turmoil (devaluation). However this is likely to happen after 2010, but it could be triggered at any moment due to US government actions. Please read the next section, my verbose view, to better support this view.

7/26/09 - Please read this entry from friend "John Chinnock"

Verbose View

My journey
In August 2006, while talking to a friend, John Chinnock (AKA Happy John), I came to realize the world was facing a financial collapse of historic proportions. At that time I bought 1 stock a year, and my 401K was in who the heck knows funds. I tried to warn others, and to personally get more involved in my own investing. In January 2008, and I emailed friends/family on a rather accurate long term market investment indicator that screamed "get out of the stock market". In August 2008, I started this blog to "shout from the rooftops" of what seemed to be a pending market collapse, using this blog for friends/family communication. Starting in November 2008, I shifted away from shorting financial companies into heavier concentration into natural resource companies, specifically gold/silver miners. My new goal is wealth preservation (gold/silver miner plays) with secondary investments in higher risk items, such as my series on stock plays, and lottery tickets. The primary (but not all) of my stock plays can be found by clicking on a link on the right WebSurfinMurfs Stock plays.

7/26/09 - Please read this entry from friend John Chinnock

Where US (and the world) went wrong
What we are witnessing unfold before our eyes is the deleveraging of INSANE amount of money/investment leverage that was allowed during the last 10+ years.
The leveraging was done at all levels, citizen, corporations, states, and the US with debt represented as an asset. (Click for good video on current leveraging as of 7/18/09)
Much of the over-leveraging was "pulling forward" demand (demand today, pay tomorrow) for profit taking today.
Over leveraging accelerated with the repeal of Glass-Steagall act from 1930, designed specifically to prevent banks from taking part in high risk investments. Unfortunately, America created a new "investment vehicle" called Mortgage Backed Securities. Normal investments are valued at what others pay for it, called Mark to Market accounting. For example, a 2 year old Honda Element car may be valued at $9,500 because that is what people will pay to purchase it. Mortgage Backed Securities are NOT valued by what they are worth on the open market. They are valued by a "computer model". Basically, the banks can state their worth without proving it. This worked until the MBS where losing money instead of gaining, uncovering the reality behind the curtain. To this day (7/18/09) the US and the world refuses to value MBS and other securities according to their true value.
This has created distrust and prevents normal lending. The problem ISN'T banks won't lend as much as they used to back in 2007. The problem is that banks can't tell WHO is fiscally sound to lend to or they actually now have some standards (where they didn't before). Politicians are trying to force the banks to lend, which will only repeat the act of debt faulting and causing more banks to fail. This fraudulent accounting was expanded, in April 2009 existing FASB rules on Mark to Market accounting where SUSPENDED, expanding the fiscal fantasy beyond MBS to the entire banking system, creating a second equity bubble starting immediately.

A secondary problem is "Credit Default Swaps". Credit Default swaps is basically Company A "insuring" Company B for potential risk (fiscal loss) for a premium. This is an INSURANCE POLICY. But banks have worked with politicians to classify CDS as NOT insurance polices. By doing so, CDS contracts can be written with NO regulation on risk taken, or even the ability to PAY if the policy becomes activated! This is what AIG faced, large losses from CDS contracts they wrote that required payment. Also, many companies still write HUGE CDS contracts "assuming" they won't fail, so they can take the premiums today as profit. If they are wrong, AIG is small time stuff compared to a CDS market collapse. The Bank for International Settlements estimates outstanding derivatives total $592 trillion, about 10 times global gross domestic product!

Both the above issues, combine with the issue that the US does not follow international accounting standards and is falsely representing valuations of corporations by not valuing "debt" properly. (level 3 assets) Until the US achieves honest accounting and proper valuation for debt, and enforces CDS contracts to follow similar risk-management as insurance policies, the world economy cannot return to normalcy.

Is the US in a Depression?
Click here for detailed article, but in a nutshell, the US economy has been in a downturn since 2000.

Housing and Real Estate
The housing market was pumped up through outright fraud through bank lending practices. The hyper-lending atmosphere where someone could get a $600,000 no money down loan, WITHOUT proving employment fueled the bubble. Unfortunately, fraudulent lending of mortgages continues in 2009, preventing housing from attaining a normal value, and further perpetuating the financial problems. Unfortunately, the news focused on sub-prime, and stated it would be contained, but they lied. The next wave, prime mortgages, is shaping up to be worse than subprime starting in 2009. The housing market will continue to decline for years, and should flat line in 3 years or so from now.

US Banks
Many large US Banks are taking losses from MBS investments, CDS, residential, and soon commercial real estate investments. Hundreds of US banks will
fail in 2009/2010, as of 7/16/09, about 120 US banks have imploded since 2007. ONLY 22 banks failed between 2001-2006!
Unfortunately, the FDIC does not have the money to cover bank accounts. However I believe the US government will cover "at any expense" personal accounts, so I am not panicking about safety of US bank accounts (under 250K per couple per bank). Further, banks refuse to sell foreclosed houses, since the price they would get would trigger write-offs. Therefore many banks are solvent on paper, but insolvent based on true value of assets.

MORE to come
This entry will take me days/weeks to complete all my thoughts. Other topics I will cover:
China/US and long term view (10+ year)
Natural Resources as an investment (wait for lower prices)
Risk of US dollar collapsing, due to US government monetizing of debt.
Buy and hold for stock market investing does not work!
Unemployment is much worse than reported, over 10 million out of work.
Blogs to read, Overall large market view (50+ year)
Inflation in terms of gold valuation vs stock market
General advice where to invest and risks associated.
What blogs to read for your own opinions to form.
What needs to be done to rectify the US financial problems.
Explanation of links on my blog located at the right of the page.
And I am sure a few more topics. :)

NOTE: I will post on my blog when this entry post is "done", to allow regular readers to check back. Please feel free to add your own comments to help improve this page.

News Roundup 4-17-09

Goldman Sachs beat earnings at 3.39
Goldman Sachs buries losses to beat estimates - Pretty amazing that the mainstream media (CNBC) don't look below the surface when GS beat estimates this week.
Wells Fargo may need 50 Billion in capital
MetLife Won’t Seek Capital Injection From Treasury
HSBC Finds Buyers for 97% of Record Rights Offering - 22% US Stock dilution with a 41% discount.
U.S. Planning to Reveal Data on Health of Top Banks
Treasury says some Life Insurers will get TARP money
Fed sees no economic recovery this year
Nationwide Mutual cuts 480 jobs and CEO steps down
Fed buys $7.37 billion in Treasury's - I have posted my opinion on this before, click
PIMCO U.S. Debt Holdings to Highest Since 2007 - I cannot comment, PIMCO is owned by Allianz
UK Debt to reach 12% of income - Opening act for the main show, USA.
Biggest recessionary output drop since World War II - Nothing to see here, the worst is behind us, move along

CHINA

China Slows Purchases of U.S. and Other Bonds
China moving into precious metals - Copper? - If the worlds largest country believes resources makes a good investment over treasuries, I won't argue with them!
China Loans, Money Supply Jump to Records on Stimulus
China 1Q09 - 6.1% GDP estimate - AMAZING how only 6% GDP growth is considered "bad" for China. I still contend China leads the US out.
China Mulls New Stimulus to Boost Consumption, Bolster Recovery

One of the reasons I am currently bearish on gold can be found in the comic below, since gold is the "popular" play with the masses.

News Roundup 3-30-09

Russia backs return to Gold Standard to solve financial crisis - Ahh gold, solver of all the world problems. :) It would be odd if somehow the new world currency became gold. I can't see that working.
Singapore May Devalue Currency, Allow 4% Loss - Another country joins the race to the bottom
Bank of America May Increase Salaries for Investment Bankers - to compensate for congress taxation
Geithner Says Some Banks to Need ‘Large Amounts’ of Assistance
Canadian Prime Minister Would Support Bank of Canada Extraordinary Steps
Europe Central Bank joins US & world with monetary helicopter - Big news, the world is all debt spending, so relative to each other, we are the same. :)
New Task Seen for Fannie, Freddie - Continue to kill capitalism, Socialism!
MGM's Las Vegas CityCenter averts bankruptcy
George Soros: Britain may have to seek IMF rescue - The IMF doesn't have enough gold to save all the countries that will need saving.
Romania gets IMF emergency loan - Case in point for Britain....
European Industrial Orders Plunge 34%, Most on Record
IBM to shift services unit jobs to India: WSJ
China calls for new reserve currency - I have blogged on china before, part of the agenda to take over as world leader.
US concerned over assertive China - If US was very concerned, we would stop needed China to fund our debt spending.
U.K. Bond Auction Fails for First Time Since 2002
California Home Prices Sank 41% Last Month on Foreclosures
Japan Exports Drop Record 49% as Global Slump - Absolute DISASTER for Japan. Lets see how long the yen maintains its value.

Click here for video with US Treasury Geithner on "This Week", Transcript here

News Update

Obama sets primetime news conference 3/24, 8 p.m. - My Spin - I expect similar to Bush announcement "Mission Accomplished", Obama to announce "bottom is in".
Intercontinental Clears $7.15 Billion in Credit Swaps - My Spin - If the CDS market becomes traded on a regulated exchange, such as this one, this would be a major step to avoid future AIG debacles, as well as improve market stability significantly. CDS valuation is over 40 trillion, so this is a small start.
Prudential Insurance credit rating cut to baa2 from A2 - No spin
OpEd piece - The United States Of Ponzi - My Spin - More accurate than mass media spin
NAACP accuses Wells Fargo and HSBC of steering well-qualified blacks into subprime loans - My Spin - Accurate or not, this spin I suspect won't play off well with millions of Americans burned, and we now have a black president.
Mexico Applies Tariffs to U.S. Products After Truck Dispute - My Spin - such a small story, with such huge ramifications if Tariffs as a "solution" gains steam.
Honda’s Credit Rating Cut by Moody’s on Decline in Car Demand - My Spin - I'd bet on Honda over GM when this is over.
Citi Losing Economist to Treasury - My Spin - Hopefully his new employer fares better than his old one.
In a first, bankruptcy judge rules Calif. city can void union contracts - My Spin - If this ruling stands, you can expect many cities to follow. Government unions will be the next to get broken. Those decades of promised paradise benefits in retirement will be curtailed.
AIG Consumer Lender, Plane Unit Downgraded by Moody’s - No Spin
U.S. credit card defaults rise to 20 year-high - My Spin - Anyone taking bets we will see an all-time high before this is over?

In the News

Conseco's survival in question My Spin - I'll break my own rule and comment. I like Conseco, and hope they can get through this.
S&P cuts Hartford Financial Services to 'BBB'
GE Capital Default Swaps Climb to Record on Capital Concern - My Spin - How long until the US Government starts selling Credit Default Swaps?
Bernanke rips AIG - says nothing makes him angrier - My Spin - Apparently not angry enough to stop the flow of infinite cash.
S&P Downgrades Bank Of America Ratings
China moving to buy more oil, See example here - My Spin - USL is one of the possible good ways to get in on oil long-term.
Pressure to reveal major AIG counter parties grows - My Spin - Article said "Goldman Sachs, Merrill Lynch, UBS AG and Deutsche Bank AG " I'm guessing under Bush administration huge chunk went to Goldman Sachs. I have no facts but lets see how accurate I am as this unfolds.......
Toyota, Facing First Loss in 59 Years, Seeks Loans From Japan - My Spin - Japanese government BETTER demand the car workers get benfits cut! Damn inefficient laborers! If Japan "loans" money to Toyota, will America take the high road and bankrupt GM?!? (anyone else see the irony?)
Bernanke Says U.S. May Need to Expand Bank Rescue - My Spin - Bernanke said he had his fingers crossed when he indicated the last time he asked for money that was all he needed.
U.S. Jan. pending home sales down 7.7%, realtors say - My Spin - This is just plain ridiculous. There has to be a counter trend rally to collapsing home sales....then continue the collapse.

This interview with Jim Rogers is the most in-depth of all I have seen.
I'll try not to post any more of Jim rogers, as this interview should EXHAUST all of Jim Roger's views. Video 1 below, click here for two and three.

Weekend News Round-up

UPDATE 2/3/9 @8:30 am - some "good" news from government statistics, personal spending up - My Spin - Lets see if this can help stem the tide of selling
USO called self-propelled pyramid - My Spin - I fell for USO, but as blogged, flipped all to USL. As I said, there is no way to buy oil in general as an investment. OIH closest to reality by buying oil companies. USO may not have good price action this week...
Bank of America discloses 44 Billion in losses - My Spin - I now trust all the toxic assets by BOA are properly assessed now.....don't you?
HSBC plans to halt personal loans, mortgages: report
HSBC shares suspended from trading in Hong Kong - My Spin - NO COMMENT
HSBC slashes 6,100 U.S. jobs, sets huge share sale - UPDATE 3/2/9 - 8:30 am
Banking in Australia, ANZ, CBA, Westpac Outlook Cut to Negative by Moody’s
UK rates may rise before upturn, says ex-BoE deputy - My Spin - USA will also get hit with borrowing spree cost of higher interest eventually
EU Rejects Eastern Europe Bailout
Boomers: 30% underwater - My Spin - OMG, this is worse than I thought, if this many boomers are basically bankrupt, those of us left with a job are going to get the taxed hard in years to come.
Ireland on the brink of collapse - My Spin - If Ireland and England goes, europe can't be far behind.....
Berkshire Profit Plunges 96% on Stock Market Bets
FDIC needs more money for bank failures - My Spin - FDIC should be the ONLY bailout the US government supports

Weekend News Roundup

RBS and Lloyds close in on £500bn Treasury deal - Spin - any company that needs 500 Bn in handouts should be regarded with suspicion.....
RBS to sell off fifth of business - Spin - and they STILL need 100's of billions in socialized money
HSBC trying to raise $20 Billion Cash ahead of earnings - Spin - No comment
China eyes record $139 bln deficit in '09 - Spin - If the USA is a debt nation, and the Chinese are one of our main financial buyers of our debt, and THEY are running a debt.....how does this all work? Notice its billions, not trillions! And they have 1.4 billion people to USA 300 million. its peanuts.
Dubai to take up $10bn United Arab Emirates Loan - Spin - just MAYBE Dubai over-shot with development..just maybe...
Taxpayers Could Own Up to 40% of Citi's Common Stock, Diluting Value of Shares - Spin - Who needed this deal, the taxpayer or Citi? And why not get 51%? If not 100%?
Fannie Mae Rescue Hindered as Asians Seek Guarantee - Spin - Why doesn't the government just get it over with and guarantee ALL DEBT! After all, everyone deserves help!
Latvia's government collapses amid economic crisis - Spin - One of my 2009 predictions came true..and its only February!
George Soro's sees no bottom - Spin - Of course there's a bottom! Have some imagination George...say Dow 0? Military Rule in US?
Credit crunch may only have just begun, S&P warns - Spin - #$%#@$%#holes! Where where you back in 2005-6 when the writing was on the wall. Any moron can jump on the doom and gloom bandwagon now! And it was your JOB TO RESEARCH into financial risk assesment, and you FAILED. No time to get honest now, stick with AAA ratings on junk debt. This is blatant CYA for the wave of lawsuits that will put this company out of business.
Ireland continues to have financial issues - Spin - If it wasn't a member of European Union, Ireland would be toast

Weekend News Roundup

New York to lead US cities in job losses - My key reason why I believe real estate in tri-state area will continue to decline for years to come. North East is behind the curve but catching up with other areas.
Prime Minister Gordon Brown urges banks to come clean over bad assets - Echos what I previously blogged, the urgent need for world finance adopting complete economic transparency to restore trust.
Societe Generale said on Thursday that the United States' economy looks likely to enter a depression and China's could implode. - People will sell their stocks at the bottom.....
Zimbabwe unveils $100 trillion banknote - Gotta love it! Pure currency printing at its finest. Zero trust currency gone to the greatest extremes possible.
Prime Minister Gordon Brown has said he will announce a new banks rescue package on Monday aimed at encouraging them to restart lending. - Britain is following the US's lead of digging a bigger hole. Britain to guarantee loans made by banks, where is the sanity?
California controller to suspend tax refunds, welfare checks, student grants - Nothing to see here, move along. Focus on the banks, not government and state solvency.
Obama team weighs government bank to ease crisis - Basically the plan is to take the "worst" losses from banks, pretend they have higher value than reality, and have the taxpayer cover the losses. Great plan, pay private debt with public debt. Now if I can only get the government to cover my Amex bill.....
Link to FDIC Bank failures web site - Another one bites the dust, small Bank in Washington
ConocoPhillips writes off $34B in noncash assets - Yikes! One of the reasons I don't like buying oil companies.
S&P strips Spain of its AAA credit rating - Wonder when the USA will face this?
Ukraine Bonds Indicate possible Default
The price investors pay to insure themselves against the U.S. government defaulting on its debt jumped to a record high on Monday - Apparently its not just me concerned the US Government will stumble from high debt.
New Zealand inflation fall in Q4 biggest in 10 years
Royal Bank of Scotland expected to be nationalized
Fiat to take 35% stake in Chrysler
Bank of England to buy private securities - When the government starts taking ownership of private corporations, this can't be good.
Huge natural gas field off Israel’s coast found - ug, UNG cant go well.....
Asia computer sales drop for first time in 10 years
State Street: $9 Billion in potential Losses - Ugh, I had these guys shorted a while back, got shaken out.
Time to Sell US Treasuries, Biggest Korean Fund Says - I agree with this sentiment, see previous posts. However I don't think it needs to be an urgent sell, over next 6 months to a year.
Pressure on HSBC to let US sub-prime unit go bankrupt
Over 8 in 10 corporations have tax havens - Yea, the US doesn't have basic issues. Companies get profits, and avoid taxes. I want a tax haven for individuals.
Irish government plans to take steps to fully nationalize Anglo Irish Banks
Bank of America's Secret Backroom Bailout - Public media outraged? Come on, its "unlimited" taxpayer money...didn't anyone tell Yahoo that giving money away will save us all? No damage done!

I stopped at news back to the 15th, there is just too much to go through. One theme, this is a death spiral.

News Roundup Wednesday

The market is basically flat for Tuesday, there is a strong case for the market to collapse or rally in the next 3 days. Leading up to options expiration, (Saturday) the games being played is very different. To really make the games interesting, JPMorgan moved their earnings report to Thursday.

The long haul, no matter what doesn't change, read my 2009 view.

News Roundup
Citi to split into a "good bank" and a "bad bank" - Psst, don't buy shares of the bad bank.
Citi announces possible brokerage venture with Morgan Stanley - Citi seems to be re-inventing itself, and fast.
US declares former US banker Weil a fugitive - I'm actually pleasantly surprised that the US is pursuing prosecution, there is hope yet.
JPM Chase Stops Funding Mortgages Through Brokers - Tad bit late
Obama Treasury appointee Geithner failed to pay self-employment taxes - The illegal immigrant worker issue needs to be addressed already.
Federal Treasury debt hits 485 Billion in first 3 months. - Some quick math - 485 x 4 = 1.94 trillion. Yikes!
State Pensions’ $865 Billion Loss Affects New Hires - I could post a ranting entry on this topic alone. First all pensions should be halted, no new entries. Second, I feel terrible for those who believe their pensions are safe because its "guaranteed". There will be a wake up call in the next year. For Example, NJ State pension fund will be insolvent (click)
Bush asked for second half of TARP, 350 Billion, for Obama - From Obama speak, 350B is just a start.
Talk of taxing the transactions on wall street, not just prof - Normally I would entertain the idea. Until the market firms up, the government has to be insane to even think of this.
Germany to ban excessive public lending - Those Germans are crazy! Everyone knows how you fix a problem caused by excessive private debt is by excessive public debt! And the US is poised to lead the pack for the "win".
GE may face downgrade by Moody's
China's export decline most in a decade - As stated a year ago, China will not save the world from a depression....it may pull the world out of one.
Ohio's unemployment fund runs out - The conga line of states running out of funding is starting.
England to print money "in secret" - This one news piece deserves a blog entry by itself. If this occurs, kiss the Pound goodbye.
GM expects to lose 500 dealers in 2009 - next year, I would expect GM cars to be pretty cheap. The inventory has to go somewhere.
The bond bubble is an accident waiting to happen - Hold on here, I blogged this recently.


Ben Bernanke of the US Federal Treasury gave a speech today, which I recommend watching.
The speech was much longer than the video below, but the one thing Mr. Bernanke stressed, is that it's CRITICAL for the US to stabilize the banking system. I am impressed that Mr. Bernanke mentioned companies "too big the fail" makes an unlevel playing field for companies, and it needs to be addressed.
Blogger Mish provides a dissection of the speech.

Wednesdays News Roundup

I added these two links to my 2009 predictions post:
Mish (the BEST financial blogger on the NET)
Frank Shostak (Economist)
Good article explaining why Keynesian response to the downturn is not going to help.

With the new year, the news machine is on full tilt. news from last 3 days.
News
Bank of England set to lower rates to lowest level in 300 YEAR history My Spin: English are worse off than America, kiss the British pound goodbye.
Obama predicts quick approval for 300 Billion stimulus My Spin: Could make it 600 billion. Creating debt to give away money is not the solution. Paying debt down and increasing productivity, plus honest accounting to restore trust is.
New York unemployment claim system failed, overwhelmed by volume My Spin: I'm a software developer, this is highly unlikely, more like the software sucks. The news spin makes for nice news print buzz.
Construction INCREASED for non-residential - My Spin: SRS is looking even better. Build build build, create a commercial real estate collapse next.
US Commercial property in a downward spiral - My Spin: very hard to not buy SRS at these levels, with expectations it will hit over $200 in 09. But SRS is a high risk, hold short term type of play.
As vacant office space grows, so does lending crisis - My Spin: I repeat..SRS anyone?
Commercial property loans signal deepening stress - My Spin: OK..SRS..enough already we get it from various angles.
Treasury invests 15 billion in seven more banks - My Spin: The media & government are mis-using "invest". Kinda like I "invested" with homeless people. Its called giving, with no expectations of a return. If you get it back, great.
Fed started buying MBS on 1/5/09 My spin: Is there ANYTHING the government won't buy? I would like them to announce some garbage finance paper that they publicly reject isn't worth buying.
Russia reduced GAS flow to Europe My spin: Got UNG? (I have about 3K @25.10)
Credit squeeze hits largest companies hardest My Spin: ACK! Large companies employee many people, including me! :)
Obama says trillion-dollar deficits may last years My Spin: Good for gold, oil, and other resources. Bad for making a living in the USA.
Chemical giant LyondellBasell says US operations and European unit file for bankruptcy My spin: Conga line continues...
Chrysler, With $4 Billion in U.S. Aid, Won’t Report Finances My Spin: Secrecy in financial balance sheets solves everything, just look at the last 6 years, a wondrous success story. Now if I can only pull this trick with the IRS......
GE Capital plans to raise $10 billion in the biggest offering of debt backed by the FDIC My Spin: and in a couple of years when inflation hits, interest rates soar people will ask what they can do to stop it. Answer: Not let this crap happen, but there will no way to undo the damage.
77% of Americans Blame Media for making economic crisis My Spin: Want PROOF that I am on the right track?. If 77% Americans can't understand the fundamentals of the crisis, the problem is they don't READ. Thats the problem. Jon Stewart can't dive deeply into the causes. I do blame media for not freaking out in 2005 of the imending doom.
IBM to cut thousands of jobs My Spin: ACK! I love working with IBM. I hope its just the fat being let go.
Woman dies of bird flue in Bejing My Spin: Yea, thats what I need, yet another reason to go paranoid.
FOMC sees spectre of Depression from deflation My Spin: Hello? Does anyone read the REAL news, bloggers like me?
Good blog from Mish on the government rewarding bad companies and punishing good ones

Pretty Funny Comic, thanks to Blog Reader "Paul Lomba"

Back to Reality, news roundup

Obama states swift action is required to avert 10% unemployment (inferred) My Spin: Obama must have read my 2009 prediction post.
Governors urge congress to provide $1 Trillion in aid to 50 states My Spin: I saw this coming when the US took on Freddie Mac/Fannie Mae. Nice try, the states are behind the banks in priority currently.
Puerto Rico faces soaring deficit & crime rate My Spin: They are no different than the rest of the US states going bankrupt.
Berkshire Hathaway having worst performance in decades My Spin: The media loves to jump on the bashing of a success story, Mr. Buffett I guess it makes people feel good if they lost money, they are no worse than Mr. Buffett with investing.....
Ford sees 35% drop in sales for December My Spin: With so many cliff dives in Q4 2008, any recovery will be spun as bottom is in....
SEC doing their job, uncovering Ponzi schemes after Madoff debacle
California may not have money to pay citizens refunds My Spin: If the federal government is smart, they WONT let this happen, otherwise people will start to deliberately under pay taxes and owe at EOY.
Steel Industry wants a bailout My Spin: Steel is NOT too big to fail, only banks are. The american dream, 50% of americans employed by only banks...
Treasury drafts guidlines to back more Auto-industry companies My Spin: The bailout conga line knows no bounds.
US SEC chief regrets short selling ban My spin: He can go @#$%#%$ himself, and his #$$#@% regrets.
US officials admit difficulty tracking where 700 billion bailout money went My Spin: Taxpayer doesn't care, so why should the government? They voted for the congress people who supported the bill.
Trump interest payment extension expires My Spin: Anyone who invests in Trump deserves the losses they face.
China shrinks for 5th month on exports

News Dec 29th roundup

Washington Post has an in depth article on AIG history and how it's problems evolved. A good read, it is a part 1 of 2 to be published
My SPIN: Notice that the price tag for AIG is 152 Billion and counting, and GM wanted 15 Billion. I'd like to see if the execs at AIG are paid "on average" same as other insurance companies, if not, Congress should get up in arms and demand they take a pay cut before more money is dispensed, like the UAW debate.

Pawn Shops seeing higher income people in need of help
Congress to hold hearings on Madoff scandal - My Spin - After 30 years of outright fraud, a congressional hearing will fix this....where was the government regulators across all administrations?
GMAC having trouble meeting financial requirements to become a bank holding company - My Spin - if GMAC goes, so does GM.
UPDATE - GMAC got financing announced on 30th
Dollar falling due to concern over US recession - My Spin - Maybe, just maybe its our debt spending drawing concern, since the world is also in a recession.

News Update 12/28/08

Forecast of 10 municipal bankruptcies in 2009 in USA, adversely affecting 2.7 trillion bond market
Commercial Real Estate looking for bailout - My spin - Bail all industries with taxpayer money...except GM, those union workers are the REAL problem that needs to be punished.
Recession re-opens trade rift with China & USA : My Spin - The US is going to learn the hard way that being a debtor nation will NOT allow it to call the shots anymore.
UK banks face over 70 billion in losses from commercial real estate loans , RBS high on the failure list My Spin - stop socializing the banks, they "made" money the last 6 years, they can "afford" to lose money the next 2.
Only full disclosure of financials will get west going again My Spin - I assume the author read my blog posting earlier in the year, and only just got around to writing about it...
Hospitals facing financial crisis My Spin - After all the "important" companies are bailed out, I wonder how basic services such as municipal townships, schools, and hospitals will pay their bills...
GMAC is now a bank holding company, allowing it to get "bank" funds My Spin - If a car company can spin off a division to finance cars, AND also be a bank, I still hold out hope for Bennigan's .....
Cash strapped states to sell ROADS, PARKS, and other PUBLIC assets My Spin - The world has gone mad when the government "for the people" destroys the basic service it provides, public use, and all that is left is serving the wealthy....
Some US Meat plants lose right to sell to Mexico - My Spin - Trade wars are starting, and when it ends, it won't be pretty.
Amazon says 2008 was best year ever - My Spin - Lets wait and see if profits where best ever....
Fry's Electronics Exec is arrested for stealing 65 Million to pay for gambling debts - My Spin - If your going to do this, be smart enough to take the cash and flee to United Arab of Emirates to avoid extradition for crimes, like Halliburton Execs
Japan’s Industrial Output Falls 8.1% as Exports Drop by Record
NY Fed-Backed AIG Fund Buys Another $16 Billion CDOs - My Spin - AIG wanted 14 Billion, but once Congress determined there was no union involved, bumped it to 16 billion, insisting no strings attached for the taxpayer money, and to come back anytime for more.
Mortgage applications hit almost 5-year high: MBA - My Spin - Did ANYONE think to make sure that people wheren't applying at 5 banks in hopes of getting 1 approval?
Consumer spending declinded less than forecast - My Spin - I'll be impressed when the title reads increased more than forecast.
UK Recession will be worst since 1947 - My Spin - UK is worse off than the US, they are being optimistic, it will be WORSE than 1947, unless the financials are valued properly.