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Your must read article of the day by Bennet Seddaca on which banks are most like Dead Men Walking, even the ‘rich’ are facing the repo man, and the NAR spins house sales yarns while the media nods approvingly.
As the Olympics wind down, China is looking ahead…at a mountain of US debt that is starting to look a bit shaky. So a warning of sorts is made. Meanwhile, others are starting to note (in the WSJ of all places) that the US is well on the path to repudiating its debts. That won’t help. And finally, Bernanke speaks and Wall Street jumps…at soothing words promising more cheap money and easy terms…but only the well-connected need apply.
FDIC Becomes Landlord To Thousands, IOUSA – The Movie, and US Mint Suspends Gold Coin Sales.
Things just keep getting wackier and wackier. As cynical as I am, I find I just can’t keep up (Lily Tomlinson).
Fannie and Freddie took another giant lurching step towards nationalization today while several regional banks are in deep trouble. Finally, the US is provoking an already angry bear for reasons that are puzzling, at best.
The PPI and Housing data was decidedly bearish both hitting multi-year extremes while more pontificators are now guessing that a major financial accident stills lies in wait. The top five oil majors are down a collective 600,000+ barrels of oil production which is more than the largest oil field brought on line by Saudi Arabia in the past 2 years. Looks like we need to find another couple of Saudi Arabias lying around.
Fannie and Freddie take a big hit as their debt gets shunned in a market auction taking another big step towards the ultimate taxpayer bailout. Banks are scrambling to raise cash – along with everybody else. Credit crisis anyone? And market insiders are starting to openly discuss the weird market ‘behavior’ of late which I merely shrug at and consider to be evidence of something we’ll read about when Hank Paulson writes his memoirs in 10 years.
The housing data is solidly saying that we are not yet near the bottom and that we’ll know we are there because house prices in 2008 will more closely resemble those in 2000. Inflation in the US is at a 17 year high while state pension funds want permission to make up for lost growth by tossing money in hedge funds. Also the loss of Georgia cements Russia energy monopoly over the west. Ouch.
US government reports a massive budget deficit on the back of rising outlays and shrinking receipts, more evidence of a consumer led recession is reported as retail sales shrink and reports of a massive hedge fund accident can possibly explain the weird market behavior of late.
More than 1/3rd of all houses bought over the past 5 years are worth less than their mortgage values and there’s a big disconnect between house prices in general and what home owners think theirs is worth. The trade deficit provides a perfect example of an egregious Fuzzy Number while one commentator thinks what we need is “A Good Depression”.
Dollar rally was too cute by half in its convenience to Central Banking needs, Sovereign Wealth Funds are buying US foreclosures for pennies on the dollar, a very large US naval flotilla heads to Iran?, and Credit Default Swap (CDS) market failures.
Central Banks intervene to prop the dollar, CA foreclosures shatter all records, and consumers tap credit cards at a faster rate.
To follow up on the latest Crash Course chapter I present an article from a university economist who also calls ‘shenanigans’ on a suspiciously low GDP inflation measure. Pending home sales reported higher, no word from the NAR on the impact of foreclosures on their happy report. Anatomy of a bank failure. A spectacular amount of risk for a tiny bank.
Detroit automakers are in serious need of capital. And who isn't these days? Here I explore the issues.
New Crash Course Chapter is Up – Section 16, Fuzzy Numbers
The latest installment of the Crash Course, Chapter 16 – Fuzzy Numbers is up.
In it, I explore the mechanisms by which our economic statistics, principally Inflation and GDP, have been corrupted over the years to the point that they are in danger of wandering past "useless" and into "harmful" territory.
This one took more effort than usual. The generous offer of support I recently received from a gentleman in California (thanks!) as an incentive to finish the course more quickly played a big role in keeping me moving along.
Also a special note of thanks to everyone who emailed in ideas and suggestions to solve my past recording issues. I am very pleased with the audio improvement.
States are leasing and selling public assets for some temporary budget relief, the WSJ gives some good advice on FDIC insurance but paints a stronger picture of safety than is warranted, the next big wave of mortgage trouble is starting, and TrimTabs estimates far higher job losses than the BLS. No surprises there, eh?
The most important article of the week (maybe month), automobile sales are already in a depression and signaling that the still-positive GDP numbers are as fake as Donald Trump’s hair, and uninsured municipal and state bank accounts reveal just one more way that a sinking bank could drag down a whole slew of innocent parties.
Surprisingly the official story remains that the GDP is still positive (thanks to a minuscule rate of inflation), covered bonds are being touted as the latest way to either help the beleaguered mortgage market or to transfer all the risk to taxpayers (one of the two…), and GMAC reports dismal earnings.